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Glenda Mae G.

Gemal Constitutional Law 1-A

REPUBLIC V. VILLASOR
G.R. No. L-30671, November 28, 1973

FACTS:

On July 7, 1969, a decision was rendered in Special Proceedings No. 2156-R in favor of
respondents P.J. Kiener Co., Ltd., Gavino Unchuan, and International Construction Corporation
and against petitioner confirming the arbitration award in the amount of P1,712,396.40. The
award is for the satisfaction of a judgment against the Philippine Government. On June 24,
1969, respondent Honorable Guillermo Villasor issued an Order declaring the decision final and
executory. Villasor directed the Sheriffs of Rizal Province, Quezon City as well as Manila to
execute said decision. The Provincial Sheriff of Rizal served Notices of Garnishment with several
Banks, especially on Philippine Veterans Bank and PNB. The funds of the Armed Forces of the
Philippines on deposit with Philippine Veterans Bank and PNB 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 AFP. Petitioner, on
certiorari, filed prohibition proceedings against respondent Judge Villasor for acting in excess of
jurisdiction with grave abuse of discretion amounting to lack of jurisdiction in granting the
issuance of a Writ of Execution against the properties of the AFP, hence the notices and
garnishment are null and void.

ISSUE:

Whether or not the Writ of Execution issued by Judge Villasor valid?

RULING:

No. 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. A sovereign is exempt from suit, not because of any forma 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. The State may not be sued without its
consent. 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. The universal rule that where the State
gives its consent to be sued by private parties either by general or special law, it may limit
claimant’s action only up to the completion of proceedings anterior to the stage of execution
and that the power of the Courts ends when the judgment is rendered, since the government
funds and properties may not be seized under writs of execution or garnishment to satisfy such
judgments, is based on obvious considerations of public policy. Disbursements of public funds
must be covered by the corresponding appropriation as required by law. The functions and
public services rendered by the State cannot be allowed to be paralyzed or disrupted by the
diversion of public funds from their legitimate and specific objects, as appropriated by law.

LASCO vs. UNRFNRE

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G.R. Nos. 109095-109107 February 23, 1995

FACTS:

Petitioners filed a complaint for illegal dismissal and damages after being dismissed from
their employment with the United Nations Revolving Fund for Natural Resources Exploration
(UNRFNRE) which was involved in a joint project of the Philippine Government and the United
Nations for exploration work in Dinagat Island. The UNRFNRE filed a Motion to Dismiss and
alleged that respondent Labor Arbiter had no jurisdiction over its personality since
the UNRFNRE enjoyed diplomatic immunity pursuant to the 1946 Convention on the Privileges
and Immunities of the United Nations. The respondent attached a letter from the Department
of Foreign Affairs acknowledging its immunity from suit, prompting the Labor Arbiter to issue an
order dismissing the complaints. Petitioners filed a motion for reconsideration which was
denied.

ISSUE:

Did the private respondent waive its diplomatic immunity when it engaged in
exploration work and entered into a contract of employment with the petitioners?

RULING:

No. The Supreme Court dismissed the petition, stating that the presence of the private
respondent in the Philippines was not because of a commercial venture but because of a joint
project entered into by the Philippine Government and the United Nations for mineral
exploration in Dinagat Island. The mission of the UNRFNRE was not to exploit our natural
resources and gain monetarily but to help improve the quality of life of the people which
included that of the petitioners.
However, this is not to say that petitioner have no recourse. Section 31 of the
Convention on the Privileges and Immunities of the Specialized Agencies of the United Nations
states that "each specialized agency shall make a provision for appropriate modes of settlement
of: (a) disputes arising out of contracts or other disputes of private character to which the
specialized agency is a party."

SEAFDEC v. NLRC
G.R. No. 86773, February 14, 1992

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FACTS:

SEAFDEC-AQD is a department of an international organization, the Southeast Asian


Fisheries Development Center, organized through an agreement in 1967 by the governments of
Malaysia, Singapore, Thailand, Vietnam, Indonesia and the Philippines with Japan as the
sponsoring country.

Juvenal Lazaga was employed as a Research Associate on a probationary basis by


SEAFDEC-AQD. Lacanilao in his capacity as Chief of SEAFDEC-AQD sent a notice of termination to
Lazaga informing him that due to the financial constraints being experienced by the
department, his services shall be terminated. SEAFDEC-AQD's failure to pay Lazaga his
separation pay forced him to file a case with the NLRC. The Labor Arbiter and NLRC ruled in
favor of Lazaga. Thus SEAFDEC-AQD appealed, claiming that the NLRC has no jurisdiction over
the case since it is immune from suit owing to its international character and the complaint is in
effect a suit against the State which cannot be maintained without its consent.

ISSUES:

1. Does the NLRC have jurisdiction over SEAFDEC-AQD?

HELD:

Southeast Asian Fisheries Development Center-Aquaculture Department (SEAFDEC-AQD)


is an international agency beyond the jurisdiction of public respondent NLRC. Being an
intergovernmental organization, SEAFDEC including its Departments (AQD), enjoys functional
independence and freedom from control of the state in whose territory its office is located.
Southeast Asian Fisheries Development Center-Aquaculture Department (SEAFDEC-AQD) is an
international agency beyond the jurisdiction of public respondent NLRC. Being an
intergovernmental organization, SEAFDEC including its Departments (AQD), enjoys functional
independence and freedom from control of the state in whose territory its office is located.

ERNESTO CALLADO vs. INTERNATIONAL RICE RESEARCH INSTITUTE (IRRI)


G.R. No. 106483, May 22, 1995

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FACTS:
Ernesto Callado, petitioner, was employed as a driver at the IRRI. One day while driving
an IRRI vehicle on an official trip to the NAIA and back to the IRRI, petitioner figured in an
accident. Petitioner was informed of the findings of a preliminary investigation conducted by
the IRRI's Human Resource Development Department Manager. He was charged with driving an
institute vehicle while on official duty under the influence of liquor; serious misconduct
consisting of failure to report to supervisors the failure of the vehicle to start because of a
problem with the car battery, and gross and habitual neglect of duties. Petitioner submitted his
answer and defenses to the charges against him. However, IRRI issued a Notice of Termination
to petitioner. Thereafter, he filed a complaint before the Labor Arbiter for illegal dismissal, illegal
suspension and indemnity pay with moral and exemplary damages and attorney's fees. IRRI
wrote the Labor Arbiter to inform him that the Institute enjoys immunity from legal process by
virtue of Article 3 of P.D No. 1620, and that it invokes such diplomatic immunity and privileges
as an international organization in the instant case filed by petitioner, not having waived the
same. While admitting IRRI's defense of immunity, the Labor Arbiter, nonetheless, cited an
Order issued by the Institute to the effect that "in all cases of termination, respondent IRRI
waives its immunity," and, accordingly, considered the defense of immunity no longer a legal
obstacle in resolving the case. The NLRC found merit in private respondent's appeal and, finding
that IRRI did not waive its immunity, ordered the aforesaid decision of the Labor Arbiter set
aside and the complaint dismissed. In this petition petitioner contends that the immunity of the
IRRI as an international organization granted by Article 3 of P.D No. 1620 may not be invoked in
the case at bench inasmuch as it waived the same by virtue of its Memorandum on "Guidelines
on the handling of dismissed employees in relation to P.D. 1620."

ISSUE: Whether or not (IRRI) waive its immunity from suit in this dispute which arose from an
employer-employee relationship?

RULING: No. P.D. No. 1620, Article 3 provides that the Institute 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 representatives. There is in this
case "a categorical recognition by the Executive Branch of the Government that IRRI enjoys
immunities accorded to international organizations, which determination has been held to be a
political question conclusive upon the Courts in order not to embarrass a political department
of Government. It is a recognized principle of international law and under our system of
separation of powers that diplomatic immunity is essentially a political question and courts
should refuse to look beyond a determination by the executive branch of the government, and
where the plea of diplomatic immunity is recognized and affirmed by the executive branch of
the government as in the case at bar, it is then the duty of the courts to accept the claim of
immunity upon appropriate suggestion by the principal law officer of the government or other
officer acting under his direction. The raison d'etre for these immunities is the assurance of
unimpeded performance of their functions by the agencies concerned. 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. In cases involving dismissed employees, the
Institute may waive its immunity, signifying that such waiver is discretionary on its part.

BEGOSA vs. PVA


G.R. No. L-25916, April 30, 1970

FACTS:

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Glenda Mae G. Gemal Constitutional Law 1-A
The plaintiff sought the aid of the judiciary to obtain the benefits to which he believed
he was entitled under the Veterans’ Bill of Rights. He filed his claim for disability pension on
March 4, 1955 but was erroneously disapproved on June 21, 1955 due to his dishonorable
discharge from the army. The Board of Administrators of PVA finally approved his claim on
September 2, 1964, entitling him with a pension of P30 a month, to take effect on October 5 of
that year. Believing that his pension should have taken effect back in 1955 when his claim was
disapproved, and that he is entitled to a higher pension of P50 (RA No. 1362 amending Section
9 of RA No. 65) as a permanently incapacitated person, which was increased to P100 a month
when RP 1362 was amended by RA No. 1920 on June 22, 1957, Begosa filed a case against PVA
in the Court of First Instance. CFI ruled in favor plaintiff. Defendants claim that the plaintiff has
not exhausted all administrative remedies before resorting to court action and that the
plaintiff’s claim is in reality a suit against the Government which cannot be entertained by this
Court for lack of jurisdiction because the Government has not given its consent.

ISSUE:
Whether or not the SC can entertain the suit against PVA.

RULING:
Yes. Where litigation may have adverse consequences on the public treasury, whether in
the disbursements of funds or loss of property, the public official proceeded against not being
liable in his personal capacity, and then the doctrine of non-suitability may appropriately be
invoked. However, it has no application where the suit against such a functionary had to be
instituted because of his failure to comply with the duty imposed by statue appropriating public
funds for the benefit of plaintiff. Also, where there is a stipulation of facts, the question before
the lower court being solely one of law and on the face of the decision, the actuation of
appellants being patently illegal, the doctrine of exhaustion of administrative remedies certainly
does not come into play.

DEL MAR vs. PVA


G.R. No. L-27299, June 27, 1973

FACTS:

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Del Mar, the petitioner, was relieved with honorable discharge with permanent total
physical disability. Philippine Veterans administration granted him pension but was soon
discontinued because he received the same pension under the United States Veterans
Administration.

ISSUE:
Whether or not the case is a suit against the state.

RULING:
As a general proposition, the rule – well-settled in this jurisdiction – on the immunity of
the Government from suit without its consent holds true in all actions resulting in “adverse
consequences on the public treasury, whether in the disbursements of funds or loss of
property.” It is not a suit against the State when a claimant institutes an action against a
functionary who fails to comply with his statutory duty to release the amount claimed from the
public funds already appropriated by statute for the benefit of the said claimant. Also, the court
a quo was without jurisdiction to try the case as Del Mar demand partakes of a money claim
against PVA – a mere agency of the Philippine Government – and, in effect, of a suit against the
Government which is not suitable without its consent.

VETERANS MANPOWER V. CA
G.R. No. 91359, September 25, 1992

FACTS:

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Veterans Manpower and Protective Services, Inc. (VMPSI) alleges that the provisions
under Section 4 and 17 of Republic Act No. 5487 or the Private Security Agency Law violate the
1987 Constitution against monopolies, unfair competition and combinations in restraint of
trade, and tend to favor and institutionalize the Philippine Association of Detective and
Protective Agency Operators, Inc. (PADPAO) which is monopolistic because it has an interest in
more than one security agency. Respondent VMPSI likewise questions the validity of paragraph
3, subparagraph (g) of the Modifying Regulations on the Issuance of License to Operate and
Private Security Licenses and Specifying Regulations for the Operation of PADPAO issued by then
PC Chief Lt. Gen. Fidel V. Ramos, through Col. Sabas V. Edades, requiring that “all private security
agencies/company security forces must register as members of any PADPAO Chapter organized
within the Region where their main offices are located...”. As such membership requirement in
PADPAO is compulsory in nature; it allegedly violates legal and constitutional provisions against
monopolies, unfair competition and combinations in restraint of trade. A Memorandum of
Agreement was executed by PADPAO and the PC Chief, which fixed the minimum monthly
contract rate per guard for eight (8) hours of security service per day at P2,255.00 within Metro
Manila and P2,215.00 outside of Metro Manila. Odin Security Agency (Odin) filed a complaint
with PADPAO accusing VMPSI of cut-throat competition by undercutting its contract rate for
security services rendered to the Metropolitan Waterworks and Sewerage System (MWSS),
charging said customer lower than the standard minimum rates provided in
the Memorandum of Agreement dated May 12, 1986. PADPAO found VMPSI guilty of cut-throat
competition, hence, the PADPAO Committee on Discipline recommended the expulsion of
VMPSI from PADPAO and the cancellation of its license to operate a security agency. The PC-
SUSIA affirmed the findings and likewise recommended the cancellation of VMPSI’s license. As a
result, PADPAO refused to issue a clearance/certificate of membership to VMPSI. VMPSI made
a request letter to the PC Chief to set aside or disregard the findings of PADPAO and consider
VMPSI’s application for renewal of its license, even without a certificate of membership from
PADPAO.

ISSUE:
Whether or not VMPSI’s complaint against the PC Chief and PC-SUSIA is a suit against
the State without its consent.

RULING:
Yes. A public official may sometimes be held liable in his personal or private capacity if
he acts in bad faith, or beyond the scope of his authority or jurisdiction, however, since the acts
for which the PC Chief and PC-SUSIA are being called to account in this case, were performed as
part of their official duties, without malice, gross negligence, or bad faith, no recovery may be
had against them in their private capacities. Furthermore, the Supreme Court agrees with the
Court of Appeals that the Memorandum of Agreement dated May 12, 1986 does not constitute
an implied consent by the State to be sued. The consent of the State to be sued must emanate
from statutory authority, hence, a legislative act, not from a mere memorandum. Without such
consent, the trial court did not acquired jurisdiction over the public respondents. Petition for
review is denied and the judgment appealed from is affirmed in to.

PNB v. CIR
G.R. No. L-32667, January 31, 1978
FACTS:

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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: That the
appointment of respondent Gilbert P. Lorenzo as authorized deputy sheriff to serve the writ of
execution was contrary to law and that the funds subject of the garnishment “may be public in
character.” In thus denying the motion to quash, petitioner contended that there was on the
part of respondent Court a failure to abide by authoritative doctrines amounting to a grave
abuse of discretion. The Philippine National Bank (PNB) moves to quash the notice of
garnishment are denied for the lack of merit. PNB is therefore ordered to comply within five
days from receipt with the ‘notice of Garnishment’ dated May 6, 1970.” The petitioner filed a
motion for reconsideration, but it was denied. Hence, this certiorari petition.

ISSUE:
Whether or not the funds mentioned may be garnished.

RULING:
According to the doctrine of state immunity, under suits against Government Agencies:
“An incorporated Agency has a charter of its own that invests it with a separate judicial
personality. If the agency is incorporated, the test of suability is found in its charter.” From the
opinion being penned by the great Chief Justice Marshall. As was pointed out by him: “It is, we
think, a sound principle, that when a government becomes a partner in any trading company, it
divests itself, so far as concerns the transactions of that company, of its sovereign character, and
takes that of a private citizen. Instead of communicating to the company its privileges and its
prerogatives, it descends to a level with those with whom it associates itself, and takes the
character which belongs to its associates, and to the business which is to be transacted.

SSS v. CA
G.R. No. L-41299, February 21, 1983

FACTS:

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Spouses David and Socorro Cruz, applied and granted a real estate loan by the SSS with
residential lot located at Pateros, Rizal as collateral. The spouses Cruz complied with their
monthly payments. When delayed were incurred in their monthly payments SSS filed a petition
for foreclosure of their real estate mortgage executed by the spouses Cruz on the ground that
the spouses Cruz defaulted in payment, Pursuant for these application for foreclosure notices
were published on the second notice the counsel for spouses Cruz sent a letter to SSS informing
the latter that his clients are up to date in their payment of the monthly amortization and the
SSS should discontinued the publication of the notices of foreclosure. This request remain
unheaded, this spouses Cruz filed an action for damages against SSS before RTC in Rizal. SSS
invoking its immunity from suit being an agency of the government performing government
function. The trial court and court of appeal nevertheless awarded damages in favor of spouses
Cruz which was affirmed by court of appeal, Hence this petition.

ISSUE:
Whether or not SSS is immune from suit.

RULING:
No. The SSS has a distinct legal personality and it can be sued for damages. The SSS does
not enjoy immunity from suit by express statutory consent. It has corporate power separate and
distinct from the government. SSS own organic act specifically provides that it can sue and be
sued in court. These words “sue and be sued” embrace all civil process incident to a legal action.
So that even assuming that the SSS, as it claims, enjoys immunity from suit as an entity
performing governmental function, by virtue of the explicit provision of the afforested enabling
law, the government must be deemed to have waived immunity in respect of the SSS, although
it does not thereby concede its liability that statutory law has given to the private citizen a
remedy for the enforcement and protection of his rights. The SSS thereby has been required to
submit to the jurisdiction of the court; subject to its right to interpose any lawful defense.

RAYO V. CFI OF BULACAN


G.R. No. L-55273-83 December 19, 1981

FACTS:
At the height of the infamous typhoon "Kading", the respondent opened simultaneously
all the three floodgates of the Angat Dam which resulted in a sudden, precipitate and
simultaneous opening of said floodgates several towns in Bulacan were inundated. The
petitioners filed for damages against the respondent corporation. Petitioners opposed the

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prayer of the respondents for dismissal of the case and contended that the respondent
corporation is merely performing a propriety functions and that under its own organic act, it can
sue and be sued in court.

ISSUE:
Whether or not the power of the respondent to sue and be sued under its organic
charter includes the power to be sued for tort.

RULING:
The government has organized a private corporation, put money in it and has allowed it
to sue and be sued in any court under its charter. As a government owned and controlled
corporation, it has a personality of its own, distinct and separate from that of the government.
Moreover, the charter provision that it can sue and be sued in any court.

MALONG V. PNR
G.R. NO. L-49930, AUGUST 7, 1985

FACTS:
The Petitioners, Malong spouses alleged in their complaint that on October 30, 1977
their son, Jaime Aquino, a paying passenger, was killed when he fell from a PNR train while it
was between Tarlac City and Capas. The said train was overloaded with passengers and baggage
in view of the proximity of All Saints Day. The Malong spouses prayed that the PNR be ordered

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to pay them damages totaling P136,370. The trial court dismissed the complaint, ruling that it
had no jurisdiction because the PNR, being a government instrumentality, the action was a suit
against the State. The petitioners appealed to SC pursuant to RA No. 5440.

ISSUE:
Whether or not the PNR is immune from suit?

RULING:
No. Although the PNR is a government instrumentality under Republic Act No. 4156, as
amended by Republic Act No. 6366 and Presidential Decree No. 741, it was held that the State
divested itself of its sovereign capacity when it organized the PNR which is no different from its
predecessor, the Manila Railroad Company. The PNR did not become immune from suit. It did
not remove itself from the operation of articles 1732 to 1766 of the Civil Code on common
carriers.
However, as held in precedents, the correct rule is that "not all government entities,
whether corporate or non-corporate, are immune from suits. Immunity from suit is determined
by the character of the” objectives “for which the entity was organized.”
The Manila Hotel case also relied on the following rulings: “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.”
Furthermore, it would be unjust if the heirs of the victim of an alleged negligence of the
PNR employees could not sue the PNR for damages. Like any private common carrier, the PNR is
subject to the obligations of persons engaged in that private enterprise. It is not performing any
governmental function.

JESUS P. DISINI V. THE HON. SANDIGANBAYAN, ET. AL.,


G.R. No. 180564, June 22, 2010

FACTS:
On 16 February 1989, the Republic of the Philippines (Republic) and Jesus P. Disini
(Disini) entered into an Immunity Agreement (the Immunity Agreement) under which Disini
undertook to testify for the Republic and provide its lawyers with the information, affidavits,

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and documents they needed in its case against Westinghouse Electric Corporation before the
United States District Court of New Jersey and in the arbitration case that Westinghouse
International Projects Company and others filed against the Republic before the International
Chamber of Commerce Court of Arbitration. Disini worked for his second cousin, Herminio T.
Disini (Herminio), as an executive in the latter’s companies from 1971 to 1984. The Republic
believed that the Westinghouse contract for the construction of the Bataan Nuclear Power
Plant, brokered by one of Herminio’s companies, had been attended by anomalies. In the
Immunity Agreement, the Republic guaranteed that, apart from the two Westinghouse cases, it
would not compel Disini to testify in any other domestic or foreign proceeding brought by the
Republic against Herminio. Disini complied with his undertaking but 18 years later, upon the
Republic’s application, the Sandiganbayan issued a subpoena against Disini, commanding him to
testify and produce documents before that court in an action that the Republic filed against
Herminio. Disini moved to quash the subpoena, invoking the Immunity Agreement. The
Sandiganbayan ignored the motion and issued a new subpoena directing him to testify before it.
Subsequently, the PCGG revoked and nullified the Immunity Agreement insofar as it prohibited
the Republic from requiring Disini to testify against Herminio. Later on, the Sandiganbayan
denied Disini’s motion to quash the subpoena. Disini, thus, brought the matter to the Supreme
Court. The Republic maintained that the PCGG’s power to grant immunity under Section 5 of
Executive Order 14 covered only immunity from civil or criminal prosecution and did not cover
immunity from providing evidence in court. The Republic argued that Disini’s immunity from
testifying against Herminio contravened the state’s policy to recover ill-gotten wealth acquired
under the regime of former President Marcos. The Republic further argued that under the last
sentence of paragraph 3 of the Immunity Agreement which reads: “Nothing herein shall affect
Jesus P. Disini’s obligation to provide truthful information or testimony,” Disini, despite the
immunity given him against being compelled to testify in other cases, was to “provide truthful
information or testimony” in such other cases.
For his part, Disini argued that the Republic, through the PCGG, was estopped from
revoking the questioned immunity as it had made him believe that it had the authority to
provide such guarantee. The Republic countered by invoking Section 15, Article XI of the 1987
Constitution which provides that “(t)he right of the State to recover properties unlawfully
acquired by public officials or employees from them or from their nominees, or transferees,
shall not be barred by prescription, laches or estoppel.”

ISSUES:
(as defined by the Supreme Court):
(1) Whether or not the PCGG acted within its authority when it revoked and nullified the
Immunity Agreement; and
(2) Whether or not the Sandiganbayan gravely abused its discretion when it denied
Disini’s motion to quash the subpoena.
Held: The language of Section 5, Executive Order 14 affords latitude to the PCGG in
determining the extent of the criminal immunity it may grant. It has discretion to grant
appropriate levels of criminal immunity depending on the situation of the witness and his
relative importance to the prosecution of ill-gotten wealth cases. It can even agree, as in this
case, to conditions expressed by the witness as sufficient to induce cooperation. Trusting in the
Government’s honesty and fidelity, Disini agreed and fulfilled his part of the bargain. Surely, the
principle of fair play, which is the essence of due process, should hold the Republic on to its
promise. If Disini refuses to testify in those other cases as ordered by Sandiganbayan, it was
certain to result in prosecution for criminal contempt (a conduct directed against the authority
and dignity of the court or a judge acting judicially; an act obstructing the administration of
justice which tends to bring the court into disrepute or disrespect), punishable by a fine or
imprisonment or both. In criminal contempt, the proceedings are regarded as criminal and the
rules of criminal procedure apply. The grant, therefore, of immunity to Disini against being

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compelled to testify was ultimately a grant of immunity from criminal prosecution, something
that fell within the express coverage of the immunity given him. The questioned immunity did
not contravene the state’s public policy respecting the recovery of illegally acquired wealth
under the regime of former President Marcos. The authority that adopted such policy, former
President Corazon C. Aquino, was the same authority that gave the PCGG the power to grant
immunity to witnesses whom it might use to recover illegally acquired wealth during that
regime. In the case of Tanchanco vs. Sandiganbayan, the Court regarded as valid and binding on
the government the immunity it gave former National Food Authority Administrator, Jesus
Tanchanco, for all “culpable acts of his during his service in the Marcos government,” which
would include possible prosecution for any illegal wealth that he might himself have acquired
during that service. The Court did not regard such immunity in contravention of the state policy
on recovery of ill-gotten wealth under the auspices of the Marcos regime. The last sentence in
paragraph 3 of the Immunity Agreement that enjoined Disini to “provide truthful information or
testimony,” despite the guarantee not to be compelled to testify against Herminio, merely
emphasized the fact that such concessions did not affect his obligation to “provide truthful
information or testimony” in the two Westinghouse cases. The grant of immunity to Disini
against being compelled to testify in “other cases” against Herminio was quite clear and did not
need any interpretation. The estoppel Disini invoked did not have the effect, if recognized, of
denying the state its right to recover whatever ill-gotten wealth Herminio may have acquired
under the Marcos regime. The action against Herminio could continue, hampered only by the
exclusion of Disini’s testimony. And there are other ways of proving the existence of ill-gotten
wealth. Although the government cannot be barred by estoppel based on unauthorized acts of
public officers, such principle cannot apply to this case since PCGG acted within its authority
when it provided Disini with a guarantee against having to testify in other cases. A contract is
the law between the parties; it cannot be withdrawn except by their mutual consent. This
applies with more reason in this case where Disini already complied with the terms of the
Immunity Agreement. To allow the Republic to revoke the Immunity Agreement at this late
stage would run afoul of the rule that a party to a compromise cannot ask for a rescission after
it had enjoyed its benefits. The Court should not allow the Republic, to put it bluntly, to double
cross Disini. The Immunity Agreement was the result of a long drawn out process of
negotiations with each party trying to get the best concessions out of it. The Republic did not
have to enter into that agreement; it was free not to. But when it did, it needed to fulfill its
obligations honorably as Disini did. More than any one, the government should be fair. PCGG’s
revocation of the questioned immunity and Sandiganbayan’s denial of Disini’s motion to quash
the subpoena were both annulled.

Department of Agriculture vs. NLRC


G.R. No. 104269, November 11, 1993

FACTS:
Petitioner Department of Agriculture (DA) and Sultan Security Agency entered into a
contract for security services to be provided by the latter to the said governmental entity.
Pursuant to their arrangements, guards were deployed by Sultan Security Agency in the various
premises of the DA. Thereafter, several guards filed a complaint for underpayment of wages,

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nonpayment of 13th month pay, uniform allowances, night shift differential pay, holiday pay,
and overtime pay, as well as for damages against the DA and the security agency.
The Labor Arbiter rendered a decision finding the DA 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. Thereafter, the City Sheriff levied on
execution the motor vehicles of the DA.

ISSUE:
Whether or not the doctrine of non-suability of the State applies in the case
HELD:
The basic postulate enshrined in the Constitution that “the State may not be sued
without its consent” reflects nothing less than a 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 is not really absolute for it does not say that the State may not be sued under
any circumstances. The State may at times be sued. The State’s 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 into 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 the complainant security guards clearly constitute
money claims. Act No. 3083 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 327, as amended by PD 1145, the money claim must first be brought to the
Commission on Audit.

VETERANS MANPOWER AND PROTECTIVE SERVICES, INC. V. CA


G.R. No. 91359, September 25, 1992

FACTS:
Veterans Manpower and Protective Services, Inc. (VMPSI) alleges that the provisions
under Section 4 and 17 of Republic Act No. 5487 or the Private Security Agency Law violate the
1987 Constitution against monopolies, unfair competition and combinations in restraint of
trade, and tend to favor and institutionalize the Philippine Association of Detective and

14
Glenda Mae G. Gemal Constitutional Law 1-A
Protective Agency Operators, Inc. (PADPAO) which is monopolistic because it has an interest in
more than one security agency.
Respondent VMPSI likewise questions the validity of paragraph 3, subparagraph (g) of
the Modifying Regulations on the Issuance of License to Operate and Private Security Licenses
and Specifying Regulations for the Operation of PADPAO issued by then PC Chief Lt. Gen. Fidel V.
Ramos, through Col. Sabas V. Edades, requiring that “all private security agencies/company
security forces must register as members of any PADPAO Chapter organized within the Region
where their main offices are located...”. As such membership requirement in PADPAO is
compulsory in nature; it allegedly violates legal and constitutional provisions against
monopolies, unfair competition and combinations in restraint of trade.
A Memorandum of Agreement was executed by PADPAO and the PC Chief, which fixed
the minimum monthly contract rate per guard for eight (8) hours of security service per day at
P2, 255.00 within Metro Manila and P2, 215.00 outside of Metro Manila.
Odin Security Agency (Odin) filed a complaint with PADPAO accusing VMPSI of cut-throat
competition by undercutting its contract rate for security services rendered to the Metropolitan
Waterworks and Sewerage System (MWSS), charging said customer lower than the standard
minimum rates provided in the Memorandum of Agreement dated May 12, 1986.
PADPAO found VMPSI guilty of cut-throat competition; hence, the PADPAO Committee
on Discipline recommended the expulsion of VMPSI from PADPAO and the cancellation of its
license to operate a security agency. The PC-SUSIA affirmed the findings and likewise
recommended the cancellation of VMPSI’s license. As a result, PADPAO refused to issue a
clearance/certificate of membership to VMPSI.
VMPSI made a request letter to the PC Chief to set aside or disregard the findings of
PADPAO and consider VMPSI’s application for renewal of its license, even without a certificate of
membership from PADPAO.

ISSUE:
Whether or not VMPSI’s complaint against the PC Chief and PC-SUSIA is a suit against
the State without its consent.

HELD:
Yes.
A public official may sometimes be held liable in his personal or private capacity if he
acts in bad faith, or beyond the scope of his authority or jurisdiction, however, since the acts for
which the PC Chief and PC-SUSIA are being called to account in this case, were performed as
part of their official duties, without malice, gross negligence, or bad faith, no recovery may be
had against them in their private capacities. Furthermore, the Supreme Court agrees with the
Court of Appeals that the Memorandum of Agreement dated May 12, 1986 does not constitute
an implied consent by the State to be sued. The consent of the State to be sued must emanate
from statutory authority, hence, a legislative act, not from a mere memorandum. Without such
consent, the trial court did not acquired jurisdiction over the public respondents. Petition for
review is denied and the judgment appealed from is affirmed in toto.

LARKINS VS. NLRC


G.R. No. 92432, February 23, 1995.

FACTS:
On August 12, 1988, private respondents filed a complaint with the Regional Arbitration
Branch No. III of the NLRC, San Fernando, Pampanga, against petitioner Larkins, a member of
the United States Air Force (USAF) assigned to oversee the dormitories of the Third Aircraft
Generation Squadron (3 AGS) at Clark Air Base, Pampanga., Lt. Col.Frankhauser, and Cunanan

15
Glenda Mae G. Gemal Constitutional Law 1-A
(the new contractor ) for illegal dismissal and underpayment of wages. Petitioner and Lt. Col.
Frankhauser failed to answer the complaint and to appear at the hearings. They, likewise, failed
to submit their position paper, which the Labor Arbiter deemed a waiver on their part to do so.
On the basis of private respondents' position paper and supporting documents, the Labor
Arbiter rendered a decision granting all the claims of private respondents. He found both Lt. Col.
Frankhauser and petitioner "guilty of illegal dismissal" and ordered them to reinstate private
respondents with full back wages, or if that is no longer possible, to pay private respondents'
separation pay. Petitioner appealed to the NLRC claiming that the Labor Arbiter never acquired
jurisdiction over her person because no summons or copies of the complaints, both original and
amended, were ever served on her. In her "Supplemental Memorandum to Memorandum of
Appeal," petitioner argued that the attempts to serve her with notices of hearing were not in
accordance with the provisions of the RP-US Military Bases Agreement of 1947.

ISSUE:
WON the questioned resolutions are null and void.

HELD:
No, jurisdiction was never acquired by the Labor Arbiter over the case and the person of
petitioner and the judgment rendered is null and void. Summons and other processes issued by
Philippine courts and administrative agencies for United States
Armed Forces personnel within any U.S. base in the Philippines could be served therein
only with the permission of the Base Commander. If he withholds giving his permission, he
should instead designate another person to serve the process, and obtain the server's affidavit
for filing with the appropriate court. Respondent Labor Arbiter did not follow said procedure.
He instead, addressed the summons to Lt. Col. Frankhauser and not the Base Commander.
Respondents do not dispute petitioner's claim that no summons was ever issued and served on
her. They contend, however, that they sent notices of the hearings to her notices of hearing are
not summonses. The provisions and prevailing jurisprudence in Civil Procedure may be applied
by analogy to NLRC proceedings (Revised Rules of the NLRC, Rule I, Sec. 3). It is basic that the
Labor Arbiter cannot acquire jurisdiction over the person of the respondent without the latter
being served with summons. In the absence of service of summons or a valid waiver thereof,
the hearings and judgment rendered by the Labor Arbiter are null and void. Petitioner, in the
case at bench, appealed to the NLRC and participated in the oral argument before the said body.
This, however, does not constitute a waiver of the lack of summons and a voluntary submission
of her person to the jurisdiction of the Labor Arbiter. She may have raised in her pleadings
grounds other than lack of jurisdiction, but these grounds were discussed in relation to and as a
result of the issue of the lack of jurisdiction. In effect, petitioner set forth only one issue and
that is the absence of jurisdiction over her person. If an appearance before the NLRC is precisely
to question the jurisdiction of the said agency over the person of the defendant, then this
appearance is not equivalent to service of summons. Be that as it may, on the assumption that
petitioner validly waived service of summons on her, still the case could not prosper. There is no
allegation from the pleadings filed that Lt. Col. Frankhauser and petitioner were being sued in
their personal capacities for tortious acts. However, private respondents named 3 AGS as one of
the respondents in their complaint. Private respondents were dismissed from their employment
by Lt. Col. Frankhauser acting for and in behalf of the U.S. Government. The employer of private
respondents was neither Lt. Col. Frankhauser nor petitioner. The employer of private
respondents, as found by NLRC, was the U.S. Government which, by right of sovereign power,
operated and maintained the dormitories at Clark Air Base for members of the USAF. Indeed,
assuming that jurisdiction was acquired over the United States Government andthe monetary
claims of private respondents proved, such awards will have to besatisfied not by Lt. Col.
Frankhauser and petitioner in their personal capacities, but by the United States government.

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Glenda Mae G. Gemal Constitutional Law 1-A

SHAUF V. CA
G.R. No. 90314, November 27, 1990.

FACTS:
Petitioner, Loida Shauf, a Filipino by origin and married to an American who is a member
of the US Air Force, was rejected for a position of Guidance Counselor in the Base Education
Office at Clark Air Base. She boasts of related working experience and being a qualified
dependent locally available. By reason of her non-selection, she filed a complaint for damages
and an equal employment opportunity complaint against private respondents, Don Detwiler
(civillian personnel officer) and Anthony Persi (Education Director), for alleged discrimination by

17
Glenda Mae G. Gemal Constitutional Law 1-A
reason of her sex (female), color (brown) and national origin (Filipino by birth). Shauf was
offered a temporary position as a temporary Assistant Education Adviser for a 180-day period
with the condition that if a vacancy occurs, she will be automatically selected to fill the vacancy.
But if no vacancy occurs after 180 days, she will be released but will be selected to fill a future
vacancy if she’s available. Shauf accepted the offer. During that time, Mrs. Mary Abalateo’s was
about to vacate her position. But Mrs. Abalateo’s appointment was extended thus, Shauf was
never appointed to said position. She claims that the Abalateo’s stay was extended indefinitely
to deny her the appointment as retaliation for the complaint that she filed against Persi. Persi
denies this allegation. He claims it was a joint decision of the management & it was in
accordance of with the applicable regulation.
Shauf filed for damages and other relief in different venues such as the Civil Service
Commission, Appeals Review Board, Philippine Regional Trial Court, etc. RTC ruled in favor of
Shauf . Both parties appealed to the CA. Shauf prayed for the increase of the damages to be
collected from defendants. Defendants on the other hand, continued using the defense that
they are immune from suit for acts done/statements made by them in performance of their
official governmental functions pursuant to RP-US Military Bases Agreement of 1947. They claim
that the Philippines does not have jurisdiction over the case because it was under the exclusive
jurisdiction of a US District Court. They likewise claim that petitioner failed to exhaust all
administrative remedies thus case should be dismissed. CA reversed RTC decision. According to
the CA, defendants are immune from suit. Shauf claims that the respondents are being sued in
their private capacity thus this is not a suit against the US government w/c would require
consent. Respondents still maintain their immunity from suit. They further claim that the rule
allowing suits against public officers & employees for criminal & unauthorized acts is applicable
only in the Philippines & is not part of international law.

ISSUE:
WON private respondents are immune from suit being officers of the US Armed Forces

HELD:
No, the respondents cannot rely on the US blanket of diplomatic immunity for all its acts
or the acts of its agents in the Phils. Private respondents are personally liable in indemnifying
petitioner Shauf.
While the doctrine of immunity is also applicable to complaints filed against state
officials, it only contemplates acts done in their official capacity. This does not cover acts
contrary to law & injurious to the rights of the plaintiff. When an official acts in a manner that
invades or violates the personal & property rights of another, the aggrieved party may sue the
official & such suit will not be a suit against the state. (Director of the Bureau of
Telecommunications vs. Aligaen) The doctrine of immunity from suit will not apply where the
public official is being sued in his private & personal capacity as an ordinary citizen.
The discrimination is very evident. Shauf was not considered for the position even if she
was previously employed as a Guidance Counselor at the Clark Airbase. She was not granted an
interview. The person appointed was not even qualified for that position and that person kept
the position despite orders from the US Civil Service Commission for his removal. Extension of
Abalateo’s services is another proof. She was not appointed even if US officials found her highly
qualified for the position (letters from the Director of the US Civil Service Commission, Staff
Judge Advocate of the Department of Air Force). Shauf has proven that discrimination did occur
whereas respondents merely denied allegations.
The US Constitution assures everyone of equality in employment & work opportunities
regardless of sex, race, or creed. The Philippine Constitution has a similar provision. Persi &
Detwiler violated Shauf’s constitutional right to earn a living, an integral aspect of her right to
life. Thus, they should be accountable. Though Shauf is entitled to damages, she should not be
paid for the supposedly unearned income had she been hired as a Guidance Counselor. She

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Glenda Mae G. Gemal Constitutional Law 1-A
never acquired rights over that amount because she was never appointed. Shauf followed the
proper procedure in seeking relief for the defendants’ discriminatory acts. The Department of
Air Force in Washington told her that one of her appeal rights would be to file a civil action if a
final decision has not been rendered after 180 days from the dated of the initial appeal to the
Commission. The appeal was lodged on Sept. 30, 1978 and it has not been decided up to the
time SC has decided. Shauf is entitled to choose the remedy, not otherwise prohibited, which
will best advance & protect her interests.

REPUBLIC V. HON. EDILBERTO SANDOVAL


G.R. No. 84607, March 19, 1993.

FACTS:
Farmer-rallyists marched to Malacanang calling for a genuine land reform program.
There was a marchers-police confrontation which resulted in the death of 12 rallyists and scores
were wounded. As a result, then Pres. Aquino issued AO 11 creating the Citizens Mendiola
Commission for the purpose of conducting an investigation. The most significant
recommendation of the Commission was for the heirs of the deceased and wounded victims to
be compensated by the government. Based on such recommendation, the victims of Mendiola

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Glenda Mae G. Gemal Constitutional Law 1-A
massacre filed an action for damages against the Republic and the military/police officers
involved in the incident.

ISSUES:
(1) Whether or not there is a valid waiver of immunity
(2) Whether or not the State is liable for damages

HELD:
The Court held that there was no valid waiver of immunity as claimed by the petitioners.
The recommendation made by the Commission to indemnify the heirs of the deceased and the
victims does not in any way mean that liability attaches to the State. AO 11 merely states the
purpose of the creation of the Commission and, therefore, whatever is the finding of the
Commission only serves as the basis for a cause of action in the eventany party decides to
litigate the same. Thus, the recommendation of the Commission does not in any way bind the
State.
The State cannot be made liable because the military/police officers who allegedly were
responsible for the death and injuries suffered by the marchers acted beyond the scope of their
authority. It is a settled rule that the State as a person can commit no wrong. The military and
police officers who were responsible for the atrocities can be held personally liable for damages
as they exceeded their authority, hence, the acts cannot be considered official.

COMMONWEALTH ACT NO. 327


June 18, 1938

COMMONWEALTH ACT NO. 327 - AN ACT FIXING THE TIME WITHIN WHICH THE
AUDITOR GENERAL SHALL RENDER HIS DECISIONS AND PRESCRIBING THE MANNER OF APPEAL
THERE FROM

Section 1. In all cases involving the settlement of accounts or claims, other than those of
accountable officers, the Auditor General shall act and decide the same within sixty days,
exclusive of Sundays and holidays, after their presentation. If said accounts or claims need

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Glenda Mae G. Gemal Constitutional Law 1-A
reference to other persons, office or offices, or to a party interested, the period aforesaid shall
be counted from the time the last comment necessary to a proper decision is received by him.
With respect to the accounts of accountable officers, the Auditor General shall act on the same
within one hundred days after their submission, Sundays and holidays excepted.

In case of accounts or claims already submitted to but still pending decision by the
Auditor General on or before the approval of this Act, the periods provided in this section shall
commence from the date of such approval.

Section2. The party aggrieved by the final decision of the Auditor General in the
settlement of an account for claim may, within thirty days from receipt of the decision, take an
appeal in writing:

(a) To the President of the United States, pending the final and complete withdrawal of
her sovereignty over the Philippines, or

(b) To the President of the Philippines, or

(c) To the Supreme Court of the Philippines if the appellant is a private person or entity.
If there are more than one appellant, all appeals shall be taken to the same authority
resorted to by the first appellant.

From a decision adversely affecting the interests of the Government, the appeal may be
taken by the proper head of the department or in case of local governments by the head of the
office or branch of the Government immediately concerned.
The appeal shall specifically set forth the particular action of the Auditor General to
which exception is taken with the reasons and authorities relied on for reversing such decision.

Section3. This Act shall take effect upon its approval.

APPROVED:
June 18. 1938.

REPUBLIC ACT NO. 3083

REPUBLIC ACT NO. 3083 - AN ACT TO REGULATE THE FILING, PROCESSING AND
SETTLEMENT OF DAMAGE CLAIMS RESULTING FROM NUCLEAR INCIDENTS, TO APPROPRIATE
FUNDS THEREFOR, AND TO HOLD HARMLESS, INDEMNIFY, AND DEFEND THE DESIGNER,
MANUFACTURER, CONTRACTOR AND/OR SUPPLIER THAT SHALL UNDERTAKE TO DESIGN,
MANUFACTURE, FURNISH AND/OR SUPPLY THE REACTOR FACILITY AND EQUIPMENT FOR THE
PHILIPPINE NUCLEAR RESEARCH REACTOR PROJECT AND OTHER SIMILAR PROJECTS FROM
LIABILITY ARISING FROM NUCLEAR INCIDENTS, AND FOR OTHER PURPOSES

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Glenda Mae G. Gemal Constitutional Law 1-A
Section 1. In order to protect the inhabitants of the Philippines and to promote the
peaceful uses of atomic energy, in the interest of the general welfare of the Philippines, the
Government of the Republic of the Philippines shall indemnify and hold harmless and defend at
its expense the designer, manufacturer, contractor and/or supplier that shall undertake to
design, manufacture for, or otherwise furnish equipment or services to the Philippine
Government, its instrumentality or agency, for the reactor facility or other equipment for the
Philippine Nuclear Research Reactor Project, from any and all liability for personal injury or
property damage arising out of or resulting from a nuclear incident, and the National Science
Development Board is hereby empowered to provide by contract with the designer,
manufacturer, contractor and/or supplier of nuclear equipment, that such designer,
manufacturer, contractor and/or supplier shall be indemnified, held harmless and defended at
the expense of the Philippine Government from any and all liability arising out of or resulting
from a nuclear incident: Provided, however, That the Government shall retain whatever rights it
may otherwise have under existing laws against said manufacturer, contractor, or supplier if the
nuclear incident is the proximate result of willful misconduct, or bad faith, on the part of any
corporate officer, director, or responsible officers of the designer, manufacturer, contractor
and/or supplier, as the case may be: Provided, further, That the total liability of the designer,
manufacturer, contractor and/or supplier shall not exceed the total value of the contract price:
Provided, finally, That the total liability of said designer, manufacturer, contractor and/or
supplier shall be over and above the liabilities, obligations and warranties assumed by it on the
services, equipment, and materials furnished under its contract with the National Science
Development Board for the furnishing of the equipment and services for the reactor facility or
other equipment of the Philippine Nuclear Research Reactor Project.

Responsible officers as used in this section shall be determined in the indemnity


agreement to be executed between the National Science Development Board and said designer,
manufacturer, contractor and/or supplier.

Sec. 2. For the purposes of this Act:

(a) The term "Nuclear Research Reactor Project" is meant the reactor project
established or to be established under the Agreement for Cooperation between the
Government of the Republic of the Philippines and the Government of the United States of
America signed on July 27, 1955, including its amendments.
(b) The term "liability" means any liability for personal injury or property damage
arising out of or resulting from a nuclear incident.
(c) The term "personal injury" means bodily injury, sickness, or disease, including
death resulting therefrom.
(d) The term "property damage" or "damage to property" means physical injury to or
destruction or radioactive contamination of property, or loss of use of property so injured,
destroyed or contaminated.
(e) The term "nuclear incident" means any occurrence causing personal injury or
property damage arising out of or resulting from the radioactive, toxic, explosive, or other
hazardous properties of radioactive material.

Sec. 3. In order to carry out the purpose of this Act and to adjudicate claims for
compensation for personal injury or property damage arising out of or resulting from a nuclear
incident, there is hereby created a Nuclear Indemnity Board to be composed of the Vice-
Chairman of the National Science Development Board as Chairman, the Commissioner of the
Philippine Atomic Energy Commission and one other member to be appointed by the President
of the Philippines, with the consent of the Commission on Appointments, who must be a
diplomat in radiology or medical radio-therapy with at least five years of clinical practice, as

22
Glenda Mae G. Gemal Constitutional Law 1-A
members. The Vice-Chairman of the National Science Development Board and the
Commissioner of the Philippine Atomic Energy Commission shall serve ex officio without extra
compensation and the third member shall receive a per diem of fifty pesos for each meeting
actually attended: Provided, That the monthly total of such per diem shall not exceed two
hundred pesos. The operating expenses of the Nuclear Indemnity Board shall be borne out of
the regular appropriation of the National Science Development Board.

No action, suit or proceeding for compensation for personal injury or property damage
arising out of or resulting from a nuclear incident may be instituted against the designer,
manufacturer, contractor and/or supplier of nuclear equipment, and all such claims for
compensation shall be filed with the Nuclear Indemnity Board which is hereby exclusively
empowered to settle the above-mentioned claims on a fair and reasonable basis taking into due
account the purposes of this Act: Provided, however, That any provision of law to the contrary
notwithstanding, any such claim shall be barred unless brought within ten years from the date
of the event causing injury or damage and within two years from time to time the injury or
damage, or a subsequent aggravation thereof, came to the knowledge of, or could have been
ascertained by the exercise of ordinary care by the aggrieved party: Provided, further, That the
proper courts of the Republic of the Philippines shall have exclusive jurisdiction in the case of a
nuclear incident occurring in the course of carriage of fuel elements or other radioactive
materials capable of causing a nuclear incident belonging to or in the charge of the Philippine
Government, or any of its agencies or instrumentalities, where such nuclear incident occurs
outside Philippine territory: And provided, finally, That the aggregate liability of the Philippine
Government under this Act shall not exceed the amount of five million pesos which is hereby
appropriated out of any funds in the National Treasury not otherwise appropriated.

Sec. 4. For the purpose of carrying out its functions under this Act the Nuclear
Indemnity Board shall have the following powers:

(a) To promulgate such rules and regulations as may be necessary to carry out the
purposes of this Act including rules or procedure governing the filing, processing and settlement
of claims: Provided, however, That the concurrence of at least two members shall be required in
order for the Board to make an award, order or decision: Provided, further, That in the hearing,
investigation and determination of any question or controversy, and in exercising any duties and
powers under this Act, the Nuclear Indemnity Board shall act according to justice and equity
and substantial merits of the case, and shall use every and all reasonable means to ascertain the
facts in each case speedily and objectively and without regard to technicalities of law or
procedure;

(b) To issue subpoena and subpoena duces tecum;


(c) To administer oaths;
(d) To grant reasonable compensation in an amount not more than twenty-five pesos
for each day of attendance, but in no case to exceed more than one hundred pesos a month, to
an expert witness or resource person who is not a government official or employee, whose
services may be availed of by the Nuclear Indemnity Board as provided herein; and
(e) Such other powers as may be necessary to carry out the purposes of this Act.

Sec. 5. Upon a showing that the government's liability in any one incident will
probably exceed the limit of liability imposed by the preceding section, the Board may, in its
sound discretion, for the purpose of ensuring the equitable and just distribution of damages,
either issue orders apportioning the payments and permitting partial payments to be made to
claimants or issue an order setting aside a part of the funds available for possible latent injuries
not discovered until a later time, or both.

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Glenda Mae G. Gemal Constitutional Law 1-A

Sec. 6. When a nuclear incident occurs, the Board shall investigate or cause to be
investigated the cause or extent of the damage and may for that purpose compel all persons
exposed to radiation to report to the Board for examination not later than three months from
the date of the order requiring their appearance. In determining the amount of damages the
Board may, in its sound discretion, take into account the inexcusable violation of the foregoing
obligation to report to the Board for examination.

Sec. 7. The Nuclear Indemnity Board is hereby authorized to call upon the National
Science Development Board, the Philippine Atomic Energy Commission and other government
agencies and instrumentalities for assistance and cooperation in the discharge of its powers,
duties and functions under this Act.

Sec. 8. Any aggrieved claimant may appeal from any final order, award or decision of
the Board to the Supreme Court in accordance with the provisions of Rule forty-five of the Rules
of Court. Findings of fact by the Board shall be conclusive in the absence of fraud, collusion or
evident mistake.

Sec. 9. This Act shall take effect upon its approval.

APPROVED:
June 17, 1961

MERITT V. GOVT. OF THE PHIL. ISLANDS


G.R. No. L-11154, March 21 1916, 34 Phil. 311

FACTS:

E. Merritt was a constructor who was excellent at his work. One day, while he was riding
his motorcycle along Calle Padre Faura, he was bumped by a government ambulance. The driver
of the ambulance was proven to have been negligent. Because of the incident, Merritt was
hospitalized and he was severely injured beyond rehabilitation so much so that he could never
perform his job the way he used to and that he cannot even earn at least half of what he used
to earn.

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Glenda Mae G. Gemal Constitutional Law 1-A
In order for Merritt to recover damages, he sought to sue the government which later
authorized Merritt to sue the government by virtue of Act 2457 enacted by the legislature (An
Act authorizing E. Merritt to bring suit against the Government of the Philippine Islands and
authorizing the Attorney-General of said Islands to appear in said suit). The lower court then
determined the amount of damages and ordered the government to pay the same.

ISSUE:
Whether or not the government is liable for the negligent act of the driver of the
ambulance.

HELD:
No.
By consenting to be sued a state simply waives its immunity from suit. It does not
thereby concede its liability to plaintiff, or create any cause of action in his favor, or extend its
liability to any cause not previously recognized. It merely gives a remedy to enforce a preexisting
liability and submits itself to the jurisdiction of the court, subject to its right to interpose any
lawful defense. It follows therefrom that the state, by virtue of such provisions of law, is not
responsible for the damages suffered by private individuals in consequence of acts performed
by its employees in the discharge of the functions pertaining to their office, because neither
fault nor even negligence can be presumed on the part of the state in the organization of
branches of public service and in the appointment of its agents. The State can only be liable if it
acts through a special agent (and a special agent, in the sense in which these words are
employed, is one who receives a definite and fixed order or commission, foreign to the exercise
of the duties of his office if he is a special official) so that in representation of the state and
being bound to act as an agent thereof, he executes the trust confided to him.
In the case at bar, the ambulance driver was not a special agent nor was a government
officer acting as a special agent hence, there can be no liability from the government. “The
Government does not undertake to guarantee to any person the fidelity of the officers or agents
whom it employs, since that would involve it in all its operations in endless embarrassments,
difficulties and losses, which would be subversive of the public interest.”

REPUBLIC V. PURISIMA 78 SCRA 470


G.R. No. L-26823, November 17, 1980.

FACTS:
A motion to dismiss was filed on September 7, 1972 by defendant Rice and Corn
Administration in a pending civil suit inthe sala of respondent Judge for the collection of a
money claim arising from an alleged breach of contract, the plaintiff being private respondent
Yellow Ball Freight Lines, Inc. At that time, the leading case of Mobil Philippines Exploration,Inc.
v. Customs Arrastre Service, where Justice Bengzon stressed the lack of jurisdiction of a court to
pass on the meritsof a claim against any office or entity acting as part of the machinery of the
national government unless consent beshown, had been applied in 53 other decisions.

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Glenda Mae G. Gemal Constitutional Law 1-A
Respondent Judge Amante P. Purisima of the Court of First Instance of Manila denied the
motion to dismiss dated October 4, 1972. Hence, the petition for certiorari and prohibition.

ISSUE:
WON the respondent’s decision is valid.

HELD:
No.
The position of the Republic has been fortified with the explicit affirmation found in this
provision of the present Constitution: "The State may not be sued without its consent. “The
doctrine of non-suability recognized in this jurisdiction even prior to the affectivity of the [1935]
Constitution is a logical corollary of the positivist concept of law which, to para-phrase Holmes,
negates the assertion of any legal right as against the state, in itself the source of the law on
which such a right may be predicated. Nor is this all, even if such a principle does give rise to
problems, considering the vastly expanded role of government enabling it to engage in business
pursuits to promote the general welfare, it is not obeisance to the analytical school of thought
alone that calls for its continued applicability. Nor is injustice thereby cause private parties. They
could still proceed to seek collection of their money claims by pursuing the statutory remedy of
having the Auditor General pass upon them subject to appeal to judicial tribunals for final
adjudication. We could thus correctly conclude as we did in the cited Providence Washington
Insurance decision: "Thus the doctrine of non-suability of the government without its consent,
as it has operated in practice, hardly lends itself to the charge that it could be the fruitful parent
of injustice, considering the vast and ever-widening scope of state activities at present being
undertaken. Whatever difficulties for private claimants may still exist, from an objective
appraisal of all factors, minimal. In the balancing of interests, so unavoidable in the
determination of what principles must prevail if government is to satisfy the public weal, the
verdict must be, as it has been these so many years, for its continuing recognition as a
fundamental postulate of constitutional law." [Switzerland General Insurance Co.,Ltd. v.
Republic of the Philippines]

***The consent, to be effective, must come from the State acting through a duly
enacted statute as pointed out by Justice Bengzon in Mobil. Thus, whatever counsel for
defendant Rice and Corn Administration agreed to had no binding force on the government.

U.S. V. RUIZ 136 SCRA 487


GR No. L-35645; May 22, 1985.

FACTS:
Sometime in May 1972, the United States invited the submission of bids for certain naval
projects. Eligio de Guzman & Co. Inc. responded to the invitation and submitted bids.
Subsequently, the company received two telegrams requesting it to confirm its price. In June
1972, the company received a letter which said that the company did not qualify to receive an
award for the projects. The company then sued the United States of America and individual
petitioners demanding that the company perform the work on the projects, or for the

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petitioners to pay damages and to issue a writ of preliminary injunction to restrain the
petitioners from entering into contracts with third parties concerning the project.

ISSUE:
1) Do the petitioners exercise governmental or proprietary functions?
2) Does the Court have jurisdiction over the case?

HELD:
The rule of State immunity exempts a State from being sued in the courts of another
state without its consent or waiver. This is a necessary consequence of the principles of
independence and equality of states. However, state immunity now extends only to
governmental acts of the state. The restrictive application of State immunity is proper only
when the proceedings arise out of commercial transactions of the foreign sovereign. In this
case, the projects are integral part of the naval base which is devoted to the defense of the USA
and Philippines which is, indisputably, a function of the government. As such, by virtue of state
immunity, the courts of the Philippines have no jurisdiction over the case for the US government
has not given consent to the filing of this suit.

THE DEPARTMENT OF HEALTH VS. PHIL. PHARMAWEALTH, INC.


G.R. No. 169304 March13, 2007

FACTS:
Respondent Phil. Pharmawealth, Inc. is a domestic corporation engaged in the business
of manufacturing and supplying pharmaceutical products to government hospitals in the
Philippines. Then Secretary of Health Alberto G. Romualdez, Jr. issued Administrative Order
(A.O.) No. 27 outlining the guidelines and procedures on the accreditation of government
suppliers for pharmaceutical products. A.O. No. 27 was later amended by providing for
additional guidelines for accreditation of drug suppliers aimed at ensuring that only qualified

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Glenda Mae G. Gemal Constitutional Law 1-A
bidders can transact business with petitioner. Respondent submitted to petitioner DOH a
request for the inclusion of additional items in its list of accredited drug products, including the
antibiotic "Penicillin G Benzathine." DOH issued an Invitation for Bids for the procurement of 1.2
million units vials 0f Penicillin G Benzathine. Despite the lack of response from petitioner DOH
regarding respondent’s request for inclusion of additional items in its list of accredited products,
respondent submitted its bid for the Penicillin G Benzathine contract. Only two companies
participated, the respondent being the lower bidder. In view, however, of the non-accreditation
of respondent’s Penicillin G Benzathine product, the contract was awarded to the other
company. Hence, respondent filed a complaint injunction, mandamus and damages against
DOH.

ISSUE:
WON DOH can invoke immunity from suit.

HELD:
NO.
The stability of a government official depends on whether the official concerned was
acting within his official or jurisdictional capacity, and whether the acts done in the
performance of official functions will result in a charge or financial liability against the
government. In the first case, the Constitution itself assures the availability of judicial review,
and it is the official concerned who should be impleaded as the proper party. As regards
petitioner DOH, the defense of immunity from suit will not avail despite it being an
unincorporated agency of the government, for the only causes of action directed against it are
preliminary injunction and mandamus.

JUSMAG Phil. V. NLRC 239 SCRA 224


_______________________________
FACTS:
Florento Sacramento (private respondent) was one of the 74 security assistance support
personnel (SASP) working at the Joint United States Military Assistance Group to the Philippines
(JUSMAG- Phils.). He had been with JUSMAG from 1969- 1992. When dismissed, he held the
position of illustrator 2 and incumbent Pres. of JUSMAG Phils.- Filipino Civilian Employees
Association, a labor org. duly registered with DOLE. His services were terminated allegedly due
to the abolition of his position.

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Glenda Mae G. Gemal Constitutional Law 1-A
Sacramento filed a complaint with DOLE on the ground that he was illegally suspended
and dismissed from service by JUSMAG. He asked for reinstatement. JUSMAG filed a Motion to
Dismiss invoking immunity from suit. The Labor Arbiter in an Order, dismissed the complaint for
want of jurisdiction. Sacramento appealed to the NLRC which reversed the decision of the Labor
Arbiter and held that the petitioner had lost his right not to be sued because (1) the principle of
estoppel- JUSMAG failed to refute the existence of employer- employee relationship (2) Jusmag
has waived its right to immunity from suit when it hired the services to private respondent.
Hence, this petition.

ISSUE:
Whether or not JUSMAG has immunity from suit.

HELD:
Yes.
When JUSMAG took the services of the private respondent, it was performing a
governmental function in behalf of the United States pursuant to the Military Assistance
Agreement between the Phils. and the US. JUSMAG consists of Air, Naval and Army group and
its primary task was to advise and assist the Phils. on air force, army and naval matters. A suit
against JUSMAG is one against the United States government, and in the absence of any waiver
or consent of the latter to the suit, the complaint against JUSMAG cannot prosper.
Immunity of State from suit is one of these universally recognized principles. In
international law, "immunity" is commonly understood as an exemption of the state and its
organs from the judicial jurisdiction of another state. This is anchored on the principle of the
sovereign equality of states under which one state cannot assert jurisdiction over another in
violation of the maxim par in parem non habet imperium (an equal has no power over an
equal).
As it stands now, the application of the doctrine of immunity from suit has been
restricted to sovereign or governmental activities and does not extend to commercial, private
and proprietary acts.

SANTIAGO V. REPUBLIC 87 SCRA 284


GR No. L-48214, December 19, 1978.

FACTS:
On August 9, 1976, Ildefonso Santiago through his counsel filed an action for revocation
of a Deed of Donation executed by him and his spouse in January of 1971, with the Bureau of
Plant Industry as the Donee, in the Court of First Instance of Zamboanga City. Mr. Santiago
alleged that the Bureau, contrary to the terms of donation, failed to install lighting facilities and
water system on the property and to build an office building and parking lot thereon which
should have been constructed and ready for occupancy on before December7, 1974. That

29
Glenda Mae G. Gemal Constitutional Law 1-A
because of the circumstances, Mr. Santiago concluded that he was exempt from compliance
with an explicit constitutional command, as invoked in the Santos v Santos case, a 1952 decision
which is similar. The Court of First Instance dismissed the action in favor of the respondent on
the ground that the state cannot be sued without its consent, and Santos v Santos case is
discernible. The Solicitor General, Estelito P. Mendoza affirmed the dismissal on ground of
constitutional mandate. Ildefonso Santiago filed a petition for certiorari to the Supreme Court.

ISSUE:
Whether or not the state can be sued without its consent.

HELD:
The Supreme Court rules, that the constitutional provision shows a waiver. Where there
is consent, a suit may be filed. Consent need not to be express. It can be implied. In this case it
must be emphasized, goes no further than a rule that a donor, with the Republic or any of its
agency being a Donee, is entitle to go to court in case of an alleged breach of the conditions of
such donation.

FROILAN VS PAN ORIENTAL SHIPPING


G.R. No. L-6060, September 30, 1954.

FACTS:
Plaintiff, Fernando Froilan filed a complaint against the defendant-appellant, Pan
Oriental Shipping Co., alleging that he purchased from the Shipping Commission the vessel for
P200,000, paying P50,000 down and agreeing to pay the balance in installments. 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. For various reasons, among them the non-payment of the
installments, the Shipping Commission tool possession of said vessel and considered the

30
Glenda Mae G. Gemal Constitutional Law 1-A
contract of sale cancelled. 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. Plaintiff appealed the action of the Shipping Commission to the President of the
Philippines and, in its meeting the Cabinet restored him to all his rights under his original
contract with the Shipping Commission. Plaintiff had repeatedly demanded from the Pan
Oriental Shipping Co. the possession of the vessel in question but the latter refused to do so.
Plaintiff, 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 . 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.
Pan Oriental protested to this restoration of Plaintiff ‘s rights under the contract of sale,
for the reason that when the vessel was delivered to it, the Shipping Administration had
authority to dispose of said authority to the property, Plaintiff having already relinquished
whatever rights he may have thereon. Plaintiff paid the required cash of P10,000.00 and as Pan
Oriental refused to surrender possession of the vessel, he filed an action to recover possession
thereof and have him declared the rightful owner of said property. The Republic of the
Philippines was allowed to intervene in said civil case praying for the possession of the in order
that the chattel mortgage constituted thereon may be foreclosed.

ISSUE:
Whether or not the Court has jurisdiction over the intervenor with regard to the
counterclaim.

HELD:
When the government enters into a contract, for the State is then deem to have divested
itself of the mantle of sovereign immunity and descended to the level of the ordinary individual.
Having done so, it becomes subject to judicial action and processes.
Yes. The Supreme Court held that the government impliedly allowed itself to be sued
when it filed a complaint in intervention for the purpose of asserting claim for affirmative relief
against the plaintiff to the recovery of the vessel. 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.

RCBC v. De Castro, 168 SCRA 49


____________________________

FACTS:
On January 26, 1970, BADOC filed an Urgent Ex-Parte Motion for a Writ of Execution of
the said Partial Judgment which was granted on the same day by the herein respondent judge
who acted in place of the Hon. Judge San Diego who had just been elevated as a Justice of the
Court of Appeals. Accordingly, the Branch Clerk of Court on the very same day, issued a Writ of
Execution addressed to Special Sheriff Faustino Rigor, who then issued a Notice of Garnishment
addressed to the General Manager and/or Cashier of Rizal Commercial Banking Corporation

31
Glenda Mae G. Gemal Constitutional Law 1-A
(hereinafter referred to as RCBC) requesting a reply within five (5) days to said garnishment as
to any property which the Philippine Virginia Tobacco Administration.

Upon receipt of such Notice, RCBC notified PVTA thereof to enable the PVTA to take the
necessary steps for the protection of its own interest. Upon an Urgent Ex-Parte Motion dated
January 27, 1970 filed by BADOC, the respondent Judge issued an Order granting the Ex-Parte
Motion and directing the herein petitioner "to deliver in check the amount garnished to Sheriff
Faustino Rigor and Sheriff Rigor in turn is ordered to cash the check and deliver the amount to
the plaintiff's representative and/or counsel on record.

In compliance with said Order, petitioner delivered to Sheriff Rigor a certified check in
the sum of P 206,916.76.

Respondent PVTA filed a Motion for Reconsideration dated February 26,1970 which was
granted in an Order dated April 6,1970, setting aside the Orders of Execution and of Payment
and the Writ of Execution and ordering petitioner and BADOC "to restore, jointly and severally,
the account of PVTA with the said bank in the same condition and state it was before the
issuance of the aforesaid Orders by reimbursing the PVTA of the amount of P 206, 916.76 with
interests at the legal rate from January 27, 1970 until fully paid to the account of the PVTA.
The Motion for Reconsideration of the said Order of April 6, 1970 filed by herein
petitioner was denied in the Order of respondent judge dated June 10, 1970 and on June 19,
1970.

ISSUE:
1. Whether or not PVTA funds are public funds not subject to garnishment; and
2. Whether or not the respondent Judge correctly ordered the herein petitioner to
reimburse the amount paid to the Special Sheriff by virtue of the execution issued pursuant to
the Order/Partial Judgment dated January 15, 1970.

HELD:
It must be noted that the Order of respondent Judge dated April 6, 1970 directing the
plaintiff to reimburse PVTA t e amount of P206, 916.76 with interests became final it should be
pointed out that RCBC did not deliver the amount on the strength solely of a Notice of
Garnishment; rather, the release of the funds was made pursuant to the aforesaid Order of
January 27, 1970. The bank had already filed a reply to the Notice of Garnishment stating that it
had in its custody funds belonging to the PVTA, which, in fact was the basis of the plaintiff in
filing a motion to secure delivery of the garnished amount to the sheriff. The bank, upon the
receipt of the Notice of Garnishment, duly informed PVTA thereof to enable the latter to take
the necessary steps for the protection of its own interest. That the sheriff, upon delivery of the
check to him by RCBC encashed it and turned over the proceeds thereof to the plaintiff was no
longer the concern of RCBC as the responsibility over the garnished funds passed to the court.
Thus, no breach of trust or dereliction of duty can be attributed to RCBC in delivering its
depositor's funds pursuant to a court order which was merely in the exercise of its power of
control over such funds.
As stated earlier, the order directing the bank to deliver the amount to the sheriff was
distinct and separate from the order directing the sheriff to encash the said check. The bank had
no choice but to comply with the order demanding delivery of the garnished amount in check.
The very tenor of the order called for immediate compliance therewith. On the other hand, the
bank cannot be held liable for the subsequent encashment of the check as this was upon order
of the court. To expose garnishees to risks for obeying court orders and processes would only
undermine the administration of justice.

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Glenda Mae G. Gemal Constitutional Law 1-A
WHEREFORE, the petition is hereby granted and the petitioner is ABSOLVED from any
liability to respondent PVTA for reimbursement of the funds garnished. The questioned Order of
the respondent Judge ordering the petitioner, jointly and severally with BADOC, to restore the
account of PVTA are modified accordingly.

MUN. OF SAN MIGUEL, BULACAN V. FERNANDEZ 130 SCRA 556


G.R. No. L-61744, June 25, 1984.

In Civil Case No. 604-B, entitled "Margarita D. Vda. de Imperio, et al. vs. Municipal
Government of San Miguel, Bulacan, et al.", the then Court of First Instance of Bulacan, on April
28, 1978, rendered judgment holding herein petitioner municipality liable to private
respondents, as follows:
WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiffs
and against the defendant
Municipal Government of San Miguel Bulacan, represented by Mayor Mar Marcelo G.
Aure and its Municipal Treasurer:

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Glenda Mae G. Gemal Constitutional Law 1-A
1. ordering the partial revocation of the Deed of Donation signed by the deceased Carlos
Imperio in favor of the
Municipality of San Miguel Bulacan, dated October 27, 1947 insofar as Lots Nos. 1, 2, 3,
4 and 5, Block 11 of Subdivision Plan Psd-20831 are concerned, with an aggregate total area of
4,646 square meters, which lots are among those covered and described under TCT No. T-1831
of the Register of Deeds of Bulacan in the name of the Municipal Government of San Miguel
Bulacan,
2. ordering the defendant to execute the corresponding Deed of Reconveyance over the
aforementioned five lots in favor of the plaintiffs in the proportion of the undivided one-half (½)
share in the name of plaintiffs Margarita D. Vda. de Imperio,Adoracion, Rodolfo, Conrado,
Ernesto, Alfredo, Carlos, Jr. and Juan, all surnamed Imperio, and the remaining undivided one-
half (½) share in favor of plaintiffs uses Marcelo E. Pineda and Lucila Pongco;
3. ordering the defendant municipality to pay to the plaintiffs in the proportion
mentioned in the immediately preceding paragraph the sum of P64,440.00 corresponding to
the rentals it has collected from the occupants for their use and occupation of the premises
from 1970 up to and including 1975, plus interest thereon at the legal rate from January 1970
until fully paid;
4. ordering the restoration of ownership and possession over the five lots in question in
favor of the plaintiffs in the same proportion aforementioned;
5. ordering the defendant to pay the plaintiffs the sum of P3,000.00 for attomey's fees;
and to pay the cost of suit.
The counterclaim of the defendant is hereby ordered dismissed for lack of evidence
presented to substantiate the same.
SO ORDERED. (pp. 11-12, Rollo)
The foregoing judgment became final when herein petitioner's appeal was dismissed
due to its failure to file the record on appeal on time. The dismissal was affirmed by the then
Court of Appeals in CA-G.R. No. SP-12118 and by this Court in G.R. No. 59938. Thereafter, herein
private respondents moved for issuance of a writ of execution for the satisfaction of the
judgment. Respondent judge, on July 27, 1982, issued an order, to wit: Considering that an
entry of judgment had already been made on June 14, 1982 in G. R. No. L-59938 and;
Considering further that there is no opposition to plaintiffs' motion for execution dated July 23,
1983; Let a writ of execution be so issued, as prayed for in the aforestated motion. (p. 10, Rollo)

Petitioner, on July 30, 1982, filed a Motion to Quash the writ of execution on the ground
that the municipality's property or funds are all public funds exempt from execution. The said
motion to quash was, however, denied by the respondent judge in an order dated August 23,
1982 and the alias writ of execution stands in full force and effect.
On September 13, 1982, respondent judge issued an order which in part, states: It is
clear and evident from the foregoing that defendant has more than enough funds to meet its
judgment obligation. Municipal Treasurer Miguel C, Roura of San Miguel, Bulacan and Provincial
Treasurer of Bulacan Agustin O. Talavera are
therefore hereby ordered to comply with the money judgment rendered by Judge
Agustin C. Bagasao against said
municipality. In like manner, the municipal authorities of San Miguel, Bulacan are
likewise ordered to desist from plaintiffs' legal possession of the property already returned to
plaintiffs by virtue of the alias writ of execution.
Finally, defendants are hereby given an inextendible period of ten (10) days from receipt
of a copy of this order by the Office of the Provincial Fiscal of Bulacan within which to submit
their written compliance, (p. 24, Rollo)
When the treasurers (provincial and municipal) failed to comply with the order of
September 13, 1982, respondent judge issued an order for their arrest and that they will be

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Glenda Mae G. Gemal Constitutional Law 1-A
release only upon compliance thereof.Hence, the present petition on the issue whether the
funds of the Municipality of San Miguel, Bulacan, in the hands of the
provincial and municipal treasurers of Bulacan and San Miguel, respectively, are public
funds which are exempt from execution for the satisfaction of the money judgment in Civil Case
No. 604-B.Well settled is the rule that public funds are not subject to levy and execution. The
reason for this was explained in the case of Municipality of Paoay vs. Manaois, 86 Phil. 629 "that
they are held in trust for the people, intended and used for the accomplishment of the purposes
for which municipal corporations are created, and that to subject said properties and public
funds to execution would materially impede, even defeat and in some instances destroy said
purpose." And, 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,
Presidential Decree No. 477, known as "The Decree on Local Fiscal Administration", Section 2
(a), provides:

SEC. 2. Fundamental Principles. — Local government financial affairs, transactions, and


operations shall be governed by the fundamental principles set forth hereunder:
(a) No money shall be paid out of the treasury except in pursuance of a lawful
appropriation or other specific statutory authority.
xxx xxx xxx
Otherwise stated, there must be 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, Section 15, Rule 39 of the New Rules of Court, outlines
the procedure for the enforcement of money judgment:
(a) By levying on all the property of the debtor, whether real or personal, not otherwise
exempt from execution, or only on such part of the property as is sufficient to satisfy the
judgment and accruing cost, if he has more than sufficient property for the purpose;
(b) By selling the property levied upon;
(c) By paying the judgment-creditor so much of the proceeds as will satisfy the judgment
and accruing costs; and
(d) By delivering to the judgment-debtor the excess, if any, unless otherwise, directed by
judgment or order of the court.
The foregoing has not been followed in the case at bar.
ACCORDINGLY, the petition is granted and the order of respondent judge, dated July 27,
1982, granting issuance of a writ of execution; the alias writ of execution, dated July 27, 1982;
and the order of respondent judge, dated September 13, 1982, directing the Provincial
Treasurer of Bulacan and the Municipal Treasurer of San Miguel, Bulacan to comply with
themoney judgments, are SET ASIDE; and respondents are hereby enjoined from implementing
the writ of execution.

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Glenda Mae G. Gemal Constitutional Law 1-A

MUNICIPALITY OF MAKATI VS. COURT OF APPEALS


G.R. Nos. 89898-99 October 1, 1990

FACTS:
Petitioner Municipality of Makati expropriated a portion of land owned by private
respondents, Admiral Finance Creditors Consortium, Inc. After proceedings, the RTC of Makati
determined the cost of the said land which the petitioner must pay to the private respondents
amounting to P5,291,666.00 minus the advanced payment of P338,160.00. It issued the
corresponding writ of execution accompanied with a writ of garnishment of funds of the
petitioner which was deposited in PNB. However, such order was opposed by petitioner through

36
Glenda Mae G. Gemal Constitutional Law 1-A
a motion for reconsideration, contending that its funds at the PNB could neither be garnished
nor levied upon execution, for to do so would result in the disbursement of public funds without
the proper appropriation required under the law, citing the case of Republic of the Philippines v.
Palacio.The RTC dismissed such motion, which was appealed to the Court of Appeals; the latter
affirmed said dismissal and petitioner now filed this petition for review.

ISSUE:
Whether or not funds of the Municipality of Makati are exempt from garnishment and
levy upon execution.

HELD:
It is petitioner's main contention that the orders of respondent RTC judge involved the
net amount of P4,965,506.45, wherein the funds garnished by respondent sheriff are in excess
of P99,743.94, which are public fund and thereby are exempted from execution without the
proper appropriation required under the law. There is merit in this contention. In this
jurisdiction, well-settled is the rule that public funds are not subject to levy and execution,
unless otherwise provided for by statute. Municipal revenues derived from taxes, licenses and
market fees, and which are intended primarily and exclusively for the purpose of financing the
governmental activities and functions of the municipality, are exempt from execution. Absent a
showing that the municipal council of Makati has passed an ordinance appropriating the said
amount from its public funds deposited in their PNB account, no levy under execution may be
validly effected. However, this court orders petitioner to pay for the said land which has been in
their use already. This Court will not condone petitioner's blatant refusal to settle its legal
obligation arising from expropriation of land they are already enjoying. The State's power of
eminent domain should be exercised within the bounds of fair play and justice.

37