5

Test to Determine if Suit is

against the state
Begoso v. PVA

Facts: 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 erroneouslydisapproved on June 21, 1955 due to his dishonorabledischarge 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. 1362amendingSection 9
of RA No. 65) as a permanently incapacitated person, which was increasedtoP100 a month
when RP 1362 was amended by RA No. 1920 on June 22, 1957,Begosafiled 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: WON the SC can entertain the suit against PVA.

Held: Yes. Ratio: Where a 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, 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.
 6

Del Mar v. PVA

FACTS 1.Petitioner filed a petition for mandamus against respondent to compel the latter to
continuepaying him his monthly life pension of P50 from March 1950 (when it was cancelled) to
June20, 1957 and from June 22, 1957, his monthly life pension, as increased by Republic Act
1920,of P100, and to pay to him as well the monthly living allowance of P10 for each of
hisunmarried minor children below eighteen years of age, pursuant to the said Republic
Act1920 which took effect on June 22, 1957. Del Mar also asked for compensatory, moral
andexemplary damages.
2. Petitioner averred that
a. he served during World War II as chief judge advocate of the Cebu Area Command(a duly
recognized guerrilla organization) with the rank of major;
b. that he subsequently obtained an honorable discharge from the service onOctober 20, 1946
on a certificate of permanent total physical disability;
c. that upon proper claim presented and after hearing and adjudication, thePhilippine Veterans
Board (the PVA's predecessor) granted him a monthly lifepension of P50 effective January 28,
1947;
d. that in March 1950, the said Board discontinued payment of his monthly life pension on the
ground that his receipt of a similar pension from the United States Government, through the
United States Veterans Administration, by reason of military service rendered in the United
States Army in the Far East during WorldWar II, precluded him from receiving any further
monthly life pension from the Philippine Government;
e. that he wrote the said Board twice, demanding that it continue paying his monthly life
pension, impugning the cancellation thereof as illegal; and that his demandswent unheeded.

3.Respondent contended that

a.petitioner is barred from claiming and receiving since he is also receiving similarpension from
the US
b. it is discretionary on its part to grant or discontinue the pension sought by del Mar.
c. alleged that the action of del Mar was premature because of his failure to
exhaustadministrative remedies before invoking judicial intervention
d. PVA cannot be sued because it is an government agency
4.Trial court ruled in favor of petitioner granting his prayers except for compensatory, moraland
exemplary damages.
5. Hence the petition by the respondent

ISSUE
2. Whether or not PVA can invoke State Immunity

RULING
2. No, state immunity can be invoked. Is the PVA exempt from the filing of an appeal bond? To
resolve this issue, we must initially determine whether the PVA is an agency or instrumentality
of the Republic of the Philippines, and, in the affirmative, whether it exercises governmental
functions. 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." Needless to state, in such actions, which, in effect, constitute suits against the
Government, the court has no option but to dismiss them Nonetheless, the rule admits of an
exception - it finds no application where 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. As clearly discernible from
the circumstances, the case at bar falls under the exception.
 7

Veterans Manpower v. CA

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.

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.
 8

Suit Against Public

Officers
PNB v. CIR

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 is 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.

Issues:Whether or not the order denying motion to quash a notice of garnishment can be
stigmatized as a grave abuse of discretion.

Discussions: 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.

Rulings: No. Supreme Court ruled that there has not been a grave abuse of discretion. The
premise that the funds could be spoken of as public in character may be accepted in the sense
that the People‘s Homesite and Housing Corporation was a government-owned entity It does
not follow though that they were exempt from garnishment. As stated in ―National Shipyard and
Steel Corporation v. Court of Industrial Relations‖, a government owned and controlled
corporation has a personality of its own, distinct and separate from that of the Government. It
may sue and be sued and may be subjected to court processes just like any other corporation.
Justice Ozaeta held that it is well settled that when the government enters into commercial
business, it abandons its sovereign capacity and is to be treated like any other corporation. By
engaging in a particular business thru the instrumentality of a corporation, the governmnent
divests itself pro hac vice of its sovereign character, so as to render the corporation subject to
the rules of law governing private corporations
 9

SSS v. CA

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

ISSUE: Whether or not SSS is immune from suit.

HELD:Negative.. The SSS has a distinct legal personality and it can be sued for damages. The
SSS doesnot enjoy immunity from suit by express statutory consent.It has corporated 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
immunityfrom suit as an entity performing governmental function, by virtue of the explicit
provision of theaforecited enabling law, the government must be deemed to have waived
immunity in respect of theSSS, although it does not thereby concede its liability that statutory
law has given to the private citizen aremedy for the enforcement and protection of his rights.
The SSS thereby has been required to submitto the jurisdiction of the court; subject to its right
to interpose any lawful defense
 10

Rayo v. CFI of Bulacan

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 prayer
of the respondents forn 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: W/N the respondent performs governmental functions with respect to the management
and operation of the Angat Dam.W/N the power of the respondent to sue and be sued under its
organic charter includes the power to be sued for tort.

HELD: 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.
 11

Malong v. PNR

Facts: The 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 and Capas. The tragedy occurred because Jaime had to sit near the door of a coach.
The 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 to pay them damages totaling
P136,370. Upon the Solicitor General's motion, the trial court dismissed the complaint. It ruled
that it had no jurisdiction because the PNR, being a government instrumentality, the action was
a suit against the State (Sec. 16, Art. XV of the Constitution).
The Malong spouses appealed to this Court pursuant to Republic Act No. 5440
R.A. No. 5440 changed the mode of appeal from courts of first instance (now Regional Trial
Courts) to the Supreme Court in cases involving only questions of law, or the constitutionality or
validity of any treaty, law, ordinance, etc. or the legality of any tax, impost, assessment or toll,
etc., or the jurisdiction of any inferior court, from ordinary appeal — i.e., by notice of appeal,
record on appeal and appeal bond, under Rule 41— to appeal by certiorari, under Rule 45

Issue/s: WON PNR is immune from suit.

WON the State acted in a sovereign capacity or in a corporate capacity when it organized the
PNR for the purpose of engaging in transportation
WON the State acted differently when it organized the PNR as successor of the Manila Railroad
Company

Held: No, PNR is NOT immune. 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
WHEREFORE, the order of dismissal is reversed and set aside. The case is remanded to the
trial court for further proceedings. Costs against the Philippine National Railways.
Ratio: 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 objects for
which the entity was organized." (Nat. Airports Corp. vs. Teodoro and Phil. Airlines, Inc., 91 Phil.
203, 206; Santos vs, Santos, 92 Phil. 281, 285; Harry Lyons, Inc. vs. USA, 104 Phil. 593.)
Suits against State agencies with respect to matters in which they have assumed to act in a
private or non-governmental capacity are not suits against the State
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
The point is that when the government enters into a commercial business it abandons its
sovereign capacity and is to be treated like any other private corporation (Bank of the U.S. vs.
Planters' Bank, 9 Wheat. 904, 6 L. ed. 244, cited in Manila Hotel Employees Association vs.
Manila Hotel Company, et al., 73 Phil. 374, 388).
There is not one law for the sovereign and another for the subject, but when the sovereign
engages in business and the conduct of business enterprises, and contracts with individuals,
whenever the contract in any form comes before the courts, the rights and obligation of the
contracting parties must be adjusted upon the same principles as if both contracting parties
were private persons. Both stand upon equality before the law, and the sovereign is merged in
the dealer, contractor and suitor (People vs. Stephens, 71 N.Y. 549).
Justice Abad Santos (Separate Opinion) : All corporations organized by the government are its
instrumentality by the very reason of their creation. But that fact alone does not invest them with
immunity from suit.
 12

Jesus Disini V. Hon. Sandiganbayan

FACTS:
· June 30, 2004 – Office of the OMB ➜ SB- 2 information against Herminio Disini –
corruption of public officials, Art 212 in rel. to Art 210 (RPC) and violation of RA 3019
➤ Conspiring together and confederating with former Pres. Marcos
➤ Taking advantage of close personal relation, intimacy and free access
· Aug. 2 – Disini ➜MTQ – crim actions has been extinguished by PRESCRIPTION and
information do not conform to the prescribed form ➜OPPOSED
· Sept. 16 – Disini ➜VOLUNTARY SUBMISSION for arraignment ➜ Plea of NOT
GUILTY ➜to obtain the SB‘s favorable action on his Motion for permission to travel abroad
· Jan. 17, 2005 – SB ➜DENIED ➜DISINI ➜ MR ➜DENIED
· (Disini‘s) ➜ challenged the jurisdiction of SB ➜ information did NOT allege that the
charges were being filed pursuant to and in connection with EO 1, 2, 14, 14-01; (2) allegations
neither pertained to the recovery of ill-gotten wealth nor involved sequestration cases; (3) cases
filed by the OMB instead of PCGG; (4) private individual, NOT charged as co-principal,
accomplice, accessory of a public officers, should be in regular courts.

HELD: SB has OEJ over the offense charged

· SG ➜ SB has jurisdiction over the offense charged because the crim cases were filed
within the purview of SEC. 4(C) of RA 8242 and both complaints were initially filed by the PCGG
pursuant to its mandate.
➤ He is involved in the same transaction, specifically the contacts awarded through his and
Marcos‘ intervention in favor of Burns and Rose to do engineering and architectural design, and
Westinghouse to do the construction of the PNPPP.
➤ Sec. 2, EO 1
· The offense have NOT yet prescribed
· In resolving the issue of prescription, the ff. must be considered:
1) The period of prescription for the offense;
2) The time when the period of prescriptions starts to run; and
3) The time when the prescriptive period is interrupted.

· GR: prescriptive period shall commence to run on the day the crime is committed.
ETR: ―BLAMELESS IGNORANCE‖ DOCTRINE
(Incorporated in SEC. 2, ACT 3326)

- The statute of limitations runs only upon discovery of the fact of the invasion of a right which
will support a cause of action.
- In other words, the court would decline to apply the statute of limitations where the plaintiff
does not know or has no reasonable means of knowing the existence of the cause of action.

➤ Penalty of the offense charged = PRISION MAYOR

➤ Period of prescription = 15 YRS.
➤ Began to run = Discovery = 1986
➤ Interrupted from April 8, 1991 (transmission of the records from PCGG to OMB)
 13

Dept. of Agriculture v. NLRC

The case is regarding money claim against Department of Agriculture (DA) as filed and
requested by National Labor Relations Commission (NLRC).
Petitioner Department of Agriculture 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, non-payment 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.
The petitioner charges the NLRC with grave abuse of discretion for refusing to quash the writ of
execution. The petitioner faults the NLRC for assuming jurisdiction over a money claim against
the Department, which, it claims, falls under the exclusive jurisdiction of the Commission on
Audit. More importantly, the petitioner asserts, the NLRC has disregarded the cardinal rule on
the non-suability of the State.
The private respondents, on the other hand, argue that the petitioner has impliedly waived its
immunity from suit by concluding a service contract with Sultan Security Agency.

Issues:
Whether or not the doctrine of non-suability of the State applies in the case.

Discussions:
Act No. 3083, aforecited, gives the consent of the State to be ―sued upon any moneyed claim
involving liability arising from contract, express or implied. However, the money claim should
first be brought to the Commission on Audit. Act 3083 stands as the general law waiving the
State‘s immunity from suit, subject to its general limitation expressed in Section 7 thereof that
‗no execution shall issue upon any judgment rendered by any Court against the Government of
the (Philippines), and that the conditions provided in Commonwealth Act 327 for filing money
claims against the Government must be strictly observed.

Rulings:
No. The rule does not say that the State may not be sued under any circumstances. The State
may at times be sued. The general law waiving the immunity of the state from suit is found in
Act No. 3083, where the Philippine government ―consents and submits to be sued upon any
money claims involving liability arising from contract, express or implied, which could serve as a
basis of civil action between private parties.‖
In this 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 the claims of the complainant security guards
clearly constitute money claims.
 14

Suit Against Public

Officers
Veterans Manpower v. CA

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.

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.
 15

Larkins v. NLRC

On August 12, 1988, private respondents filed a complaint with the Regional Arbitration Branch
No.III of the NLRC, San Fernando, Pampanga for illegal dismissal and underpayment of wages.
Larkins who was 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. Frankhauster, and Joselito Cunanan the new
contractor (JAC Maintenance Services) employed for 3 AGS.

hearings. They, likewise, failed to submit their position paper, which the Labor Arbiter deemed
a waiver on their part to do so. The case was therefore submitted for decision on the basis of
private respondents' position paper and supporting documents which therefore on November
21, 1988, 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.
g 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 of Appeal," petitioner argued that
the attempts to serve her with notices of hearing were not in accordance with the provisions of
the R.P. – U.S. Military Bases Agreement of 1947.

Issue:

Labor Arbiter did not acquire jurisdiction to entertain and decide the case. Petitioner alleges that
she never received nor was served, any summons or copies of the original and amended
complaints, and therefore the Labor Arbiter had no jurisdiction over her person under Article XIV
of the R.P. – U.S. Military Bases Agreement.
For Reference:
R.P. –U.S. Military Bases Agreement.
". . . [N]o process, civil or criminal, shall be served within any base except with the permission of
the commanding officer of such base; but should the commanding officer refuse to grant such
permission he shall forthwith take the necessary steps . . . to serve such process, as the case
may be, and to provide the attendance of the server of such process before the appropriate
court in the Philippines or procure such server to make the necessary affidavit or declaration to
prove such service as the case may require."

Ruling: Labor Arbiter has no jurisdiction over the case as summonses 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. BUT as contended
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 (cf. Vda. de Macoy v. Court of
Appeals, 206 SCRA 244 [1992]; Filmerco Commercial Co., Inc. v. Intermediate Appellate Court
, 149 SCRA 193 [1987]). 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
 16

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 (De los Santos v.
Montera 221 SCRA 15 [1993]).
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 filedthat Lt.
Col. Frankhauser and petitioner were being sued in their personal capacities fortortious acts
(United States of America v. Guinto, 182 SCRA 644 [1990]). However, private respondents
named 3 AGS as one of the respondents in their complaint.
Indeed, assuming that jurisdiction was acquired over the United States Government and
the monetary claims of private respondents proved, such awards will have to be satisfied not by
Lt. Col. Frankhauser and petitioner in their personal capacities, but bythe United States
government ( Sandres v. Veridiano II 162 SCRA 88 [1988]).
 17

Shauf v. CA

Facts: 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, for which she is eminently qualified. 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 reason of her nationality and sex. 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 ordering defendants to pay $39,662.49 as actual damages + 20% of
such amount as attorney‘s fees + P100k as moral & exemplary damages.
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 which 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.
Hence this petition for review on certiorari.

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

Held: No they are not immune.

WHEREFORE, the challenged decision and resolution of respondent Court of Appeals in CA-
G.R. CV No. 17932 are hereby ANNULLED and SET ASIDE. Private respondents are hereby
ORDERED, jointly and severally, to pay petitioners the sum of P100,000.00 as moral
damages, P20,000.00 as and for attorney's fees, and the costs of suit.

Ratio: They state that the doctrine of immunity from suit will not apply and may not be invoked
where the public official is being sued in his private and personal capacity as an ordinary
citizen. The cloak of protection afforded the officers and agents of the government is removed
the moment they are sued in their individual capacity. This situation usually arises where the
public official acts without authority or in excess of the powers vested in him.
It is a well-settled principle of law that a public official may be liable in his personal private
capacity for whatever damage he may have caused by his act done with malice and in bad faith,
or beyond the scope of his authority or jurisdiction
Director of the Bureau of Telecommunications vs. Aligaen Inasmuch as the State authorizes
only legal acts by its officers, unauthorized acts of government officials or officers are not acts of
the State, and an action against the officials or officers by one whose rights have been invaded
or violated by such acts, for the protection of his rights, is not a suit against the State within the
rule of immunity of the State from suit. In the same tenor, it has been said that an action at law
or suit in equity against a State officer or the director of a State department on the ground that,
 18

while claiming to act for the State, he violates or invades the personal and property rights of the
plaintiff, under an unconstitutional act or under an assumption of authority which he does not
have, is not a suit against the State within the constitutional provision that the State may not be
sued without its consent."The rationale for this ruling is that the doctrine of state immunity
cannot be used as an instrument for perpetrating an injustice

In the case at bar, there is nothing in the record which suggests any arbitrary, irregular or
abusive conduct or motive on the part of the trial judge in ruling that private respondents
committed acts of discrimination for which they should be held personally liable.
There is ample evidence to sustain plaintiffs' complaint that plaintiff Loida Q. Shauf was refused
appointment as Guidance Counselor by the defendants on account of her sex, color and origin.
She received a Master of Arts Degree from the University of Santo Tomas, Manila, in 1971 and
has completed 34 semester hours in psychology?guidance and 25 quarter hours in human
behavioral science. She has also completed all course work in human behavior and counselling
psychology for a doctoral degree. She is a civil service eligible. More important, she had
functioned as a Guidance Counselor at the Clark Air Base at the GS-1710-9 level for
approximately four years at the time she applied for the same position in 1976.
In filling the vacant position of Guidance Counselor, defendant Persi did not even consider the
application of plaintiff Loida Q. Shauf, but referred the vacancy to CORRO which appointed
Edward B. Isakson who was not eligible to the position.

Article XIII, Section 3, of the 1987 Constitution provides that the State shall afford full protection
to labor, local and overseas, organized and unorganized, and promote full employment and
equality of employment opportunities for all. This is a carry-over from Article II, Section 9, of the
1973 Constitution ensuring equal work opportunities regardless of sex, race, or creed..
There is no doubt that private respondents Persi and Detwiler, in committing the acts
complained of have, in effect, violated the basic constitutional right of petitioner Loida Q. Shauf
to earn a living which is very much an integral aspect of the right to life. For this, they should be
held accountable

Respondents alleged that petitioner Loida Q. Shauf failed to avail herself of her remedy under
the United States federal legislation on equality of opportunity for civilian employees, which is
allegedly exclusive of any other remedy under American law, let alone remedies before a
foreign court and under a foreign law such as the Civil Code of the Philippines.
SC: Petitioner Loida Q. Shauf is not limited to these remedies, but is entitled as a matter of plain
and simple justice to choose that remedy, not otherwise proscribed, which will best advance and
protect her interests. There is, thus, nothing to enjoin her from seeking redress in Philippine
courts which should not be ousted of jurisdiction on the dubious and inconclusive
representations of private respondents on that score.
 19

Republic v. Hon. Sandoval

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
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 event any 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.
 20

CONSENT TO BE SUED
EXPRESS CONSENT

Commonwealth Act No. 327, as amended by Section 26 of Presidential Decree No. 1445 - COA
has primary jurisdiction over money claims against government agencies and instrumentalities

"Under Commonwealth Act No. 327,25 as amended by Section 26 of

Presidential Decree No. 1445,26 it is the COA which has primary jurisdiction
over money claims against government agencies and instrumentalities.

Section 26. General jurisdiction. The authority and powers of the

Commission shall extend to and comprehend all matters relating to
auditing procedures, systems and controls, the keeping of the general
accounts of the Government, the preservation of vouchers pertaining
thereto for a period of ten years, the examination and inspection of the
books, records, and papers relating to those accounts; and the audit and
settlement of the accounts of all persons respecting funds or property
received or held by them in an accountable capacity, as well as the
examination, audit, and settlement of all debts and claims of any sort
due from or owing to the Government or any of its subdivisions,
agencies and instrumentalities. The said jurisdiction extends to all
government-owned or controlled corporations, including their subsidiaries,
and other self-governing boards, commissions, or agencies of the
Government, and as herein prescribed, including non-governmental
entities subsidized by the government, those funded by donations through
the government, those required to pay levies or government share, and
those for which the government has put up a counterpart fund or those
partly funded by the government. (Emphasis supplied.)

Pursuant to its rule-making authority conferred by the 1987

Constitution27 and existing laws, the COA promulgated the 2009 Revised
Rules of Procedure of the Commission on Audit. Rule II, Section 1
specifically enumerated those matters falling under COA‘s exclusive
jurisdiction, which include ―[m]oney claims due from or owing to any
government agency.‖ Rule VIII, Section 1 further provides:

Section 1. Original Jurisdiction - The Commission Proper shall

have original jurisdiction over: a) money claim against the Government;
b) request for concurrence in the hiring of legal retainers by government
agency; c) write off of unliquidated cash advances and dormant accounts
receivable in amounts exceeding one million pesos (P1,000,000.00); d)
request for relief from accountability for loses due to acts of man, i.e.
theft, robbery, arson, etc, in amounts in excess of Five Million pesos
(P5,000,000.00).

In Euro-Med Laboratories Phil., Inc. v. Province of Batangas,28 we

ruled that it is the COA and not the RTC which has primary jurisdiction to
pass upon petitioner‘s money claim against respondent local government
unit. Such jurisdiction may not be waived by the parties‘ failure to argue the
issue nor active participation in the proceedings. Thus:

This case is one over which the doctrine of primary jurisdiction

clearly held sway for although petitioner‘s collection suit for P487,662.80
was within the jurisdiction of the RTC, the circumstances surrounding
petitioner‘s claim brought it clearly within the ambit of the COA‘s
 21

jurisdiction.

First, petitioner was seeking the enforcement of a claim for a

certain amount of money against a local government unit. This
brought the case within the COA‘s domain to pass upon money claims
against the government or any subdivision thereof under Section 26 of
the Government Auditing Code of the Philippines:

The authority and powers of the Commission [on Audit]

shall extend to and comprehend all matters relating to x x x
the examination, audit, and settlement of all debts and
claims of any sort due from or owing to the Government or
any of its subdivisions, agencies, and instrumentalities. x x
x.

The scope of the COA‘s authority to take cognizance of claims is

circumscribed, however, by an unbroken line of cases holding statutes of
similar import to mean only liquidated claims, or those determined or
readily determinable from vouchers, invoices, and such other papers
within reach of accounting officers. Petitioner‘s claim was for a fixed
amount and although respondent took issue with the accuracy of
petitioner‘s summation of its accountabilities, the amount thereof was
readily determinable from the receipts, invoices and other documents.
Thus, the claim was well within the COA‘s jurisdiction under the
Government Auditing Code of the Philippines.

Second, petitioner‘s money claim was founded on a series of

purchases for the medical supplies of respondent‘s public hospitals. Both
parties agreed that these transactions were governed by the Local
Government Code provisions on supply and property management and their
implementing rules and regulations promulgated by the COA pursuant to
Section 383 of said Code. Petitioner‘s claim therefore involved compliance
with applicable auditing laws and rules on procurement. Such matters are
not within the usual area of knowledge, experience and expertise of most
judges but within the special competence of COA auditors and accountants.
Thus, it was but proper, out of fidelity to the doctrine of primary
jurisdiction, for the RTC to dismiss petitioner‘s complaint.

Petitioner argues, however, that respondent could no longer

question the RTC‘s jurisdiction over the matter after it had filed its answer
and participated in the subsequent proceedings. To this, we need only state
that the court may raise the issue of primary jurisdiction sua sponte
and its invocation cannot be waived by the failure of the parties to
argue it as the doctrine exists for the proper distribution of power
between judicial and administrative bodies and not for the
convenience of the parties.29 (Emphasis supplied.)

Respondent‘s collection suit being directed against a local government

unit, such money claim should have been first brought to the COA.30
Hence, the RTC should have suspended the proceedings and refer the filing of the claim before
the COA. Moreover, petitioner is not estopped from
raising the issue of jurisdiction even after the denial of its notice of appeal
and before the CA."

ACT NO. 3083 – AN ACT DEFINING THE CONDITIONS UNDER WHICH THE
GOVERNMENT OF THE PHILIPPINE ISLANDS MAY BE SUED

Section 1. Complaint against Government. – Subject to the provisions of this Act, the
Government of the Philippine Islands hereby consents and submits to be sued upon any
moneyed claim involving liability arising from contract, expressed or implied, which could serve
as a basis of civil action between private parties.
 22

Sec. 2. A person desiring to avail himself of the privilege herein conferred must show that he
has presented his claim to the Insular Auditor 1 and that the latter did not decide the same
within two months from the date of its presentation.

Sec. 3. Venue. – Original actions brought pursuant to the authority conferred in this Act shall be
instituted in the Court of First Instance of the City of Manila or of the province were the claimant
resides, at the option of the latter, upon which court exclusive original jurisdiction is hereby
conferred to hear and determine such actions.

Sec. 4. Actions instituted as aforesaid shall be governed by the same rules of procedure, both
original and appellate, as if the litigants were private parties.

Sec. 5. When the Government of the Philippine Island is plaintiff in an action instituted in any
court of original jurisdiction, the defendant shall have the right to assert therein, by way of set-off
or counterclaim in a similar action between private parties.

Sec. 6. Process in actions brought against the Government of the Philippine Islands pursuant to
the authority granted in this Act shall be served upon the Attorney-General 2 whose duty it shall
be to appear and make defense, either himself or through delegates.

Sec. 7. Execution. – No execution shall issue upon any judgment rendered by any court against
the Government of the Philippine Islands under the provisions of this Act; but a copy thereof
duly certified by the clerk of the Court in which judgment is rendered shall be transmitted by
such clerk to the Governor-General, 3 within five days after the same becomes final.

Sec. 8. Transmittal of Decision. – The Governor-General, 4 at the commencement of each

regular session of the Legislature, 5 shall transmit to that body for appropriate action all
decisions so received by him, and if said body determine that payment should be made, it shall
appropriate the sum which the Government has been sentenced to pay, including the same in
the appropriations for the ensuing year.

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

Approved: March 16, 1923.

Article 2180. The obligation imposed by article 2176 is demandable not only for one's own acts
or omissions, but also for those of persons for whom one is responsible.

The father and, in case of his death or incapacity, the mother, are responsible for the damages
caused by the minor children who live in their company.

Guardians are liable for damages caused by the minors or incapacitated persons who are under
their authority and live in their company.

The owners and managers of an establishment or enterprise are likewise responsible for
damages caused by their employees in the service of the branches in which the latter are
employed or on the occasion of their functions.

Employers shall be liable for the damages caused by their employees and household helpers
acting within the scope of their assigned tasks, even though the former are not engaged in any
business or industry.

The State is responsible in like manner when it acts through a special agent; but not when the
damage has been caused by the official to whom the task done properly pertains, in which case
what is provided in article 2176 shall be applicable.

Lastly, teachers or heads of establishments of arts and trades shall be liable for damages
caused by their pupils and students or apprentices, so long as they remain in their custody.

The responsibility treated of in this article shall cease when the persons herein mentioned prove
that they observed all the diligence of a good father of a family to prevent damage. (1903a)
 23

THE 1987 CONSTITUTION OF THE REPUBLIC OF THE PHILIPPINES – ARTICLE IX

ARTICLE IX
Constitutional Commissions

A. COMMON PROVISIONS

Section 1. The Constitutional Commissions, which shall be independent, are the Civil Service
Commission, the Commission on Elections, and the Commission on Audit.

Section 2. No member of a Constitutional Commission shall, during his tenure, hold any other
office or employment. Neither shall he engage in the practice of any profession or in the active
management or control of any business which, in any way, may be affected by the functions of
his office, nor shall he be financially interested, directly or indirectly, in any contract with, or in
any franchise or privilege granted by the Government, any of its subdivisions, agencies, or
instrumentalities, including government-owned or controlled corporations or their subsidiaries.

Section. 3. The salary of the Chairman and the Commissioners shall be fixed by law and shall
not be decreased during their tenure.

Section 4. The Constitutional Commissions shall appoint their officials and employees in
accordance with law.

Section 5. The Commission shall enjoy fiscal autonomy. Their approved annual appropriations
shall be automatically and regularly released.

Section 6. Each Commission en banc may promulgate its own rules concerning pleadings and
practice before it or before any of its offices. Such rules, however, shall not diminish, increase,
or modify substantive rights.

Section 7. Each Commission shall decide by a majority vote of all its Members, any case or
matter brought before it within sixty days from the date of its submission for decision or
resolution. A case or matter is deemed submitted for decision or resolution upon the filing of the
last pleading, brief, or memorandum required by the rules of the Commission or by the
Commission itself. Unless otherwise provided by this Constitution or by law, any decision, order,
or ruling of each Commission may be brought to the Supreme Court on certiorari by the
aggrieved party within thirty days from receipt of a copy thereof.

Section 8. Each Commission shall perform such other functions as may be provided by law.

B. THE CIVIL SERVICE COMMISSION

Section 1. (1) The civil service shall be administered by the Civil Service Commission composed
of a Chairman and two Commissioners who shall be natural-born citizens of the Philippines and,
at the time of their appointment, at least thirty-five years of age, with proven capacity for public
administration, and must not have been candidates for any elective position in the elections
immediately preceding their appointment.

(2) The Chairman and the Commissioners shall be appointed by the President with the consent
of the Commission on Appointments for a term of seven years without reappointment. Of those
first appointed, the Chairman shall hold office for seven years, a Commissioner for five years,
and another Commissioner for three years, without reappointment. Appointment to any vacancy
shall be only for the unexpired term of the predecessor. In no case shall any Member be
appointed or designated in a temporary or acting capacity.

Section 2. (1) The civil service embraces all branches, subdivisions, instrumentalities, and
agencies of the Government, including government-owned or controlled corporations with
original charters.
 24

(2) Appointments in the civil service shall be made only according to merit and fitness to be
determined, as far as practicable, and, except to positions which are policy-determining,
primarily confidential, or highly technical, by competitive examination.

(3) No officer or employee of the civil service shall be removed or suspended except for cause
provided by law.

(4) No officer or employee in the civil service shall engage, directly or indirectly, in any
electioneering or partisan political campaign.

(5) The right to self-organization shall not be denied to government employees.

(6) Temporary employees of the Government shall be given such protection as may be provided
by law.

Section 3. The Civil Service Commission, as the central personnel agency of the Government,
shall establish a career service and adopt measures to promote morale, efficiency, integrity,
responsiveness, progressiveness, and courtesy in the civil service. It shall strengthen the merit
and rewards system, integrate all human resources development programs for all levels and
ranks, and institutionalize a management climate conducive to public accountability. It shall
submit to the President and the Congress an annual report on its personnel programs.

Section 4. All public officers and employees shall take an oath or affirmation to uphold and
defend this Constitution.

Section 5. The Congress shall provide for the standardization of compensation of government
officials and employees, including those in government-owned or controlled corporations with
original charters, taking into account the nature of the responsibilities pertaining to, and the
qualifications required for, their positions.

Section 6. No candidate who has lost in any election shall, within one year after such election,
be appointed to any office in the Government or any Government-owned or controlled
corporations or in any of their subsidiaries.

Section 7. No elective official shall be eligible for appointment or designation in any capacity to
any public office or position during his tenure.

Unless otherwise allowed by law or by the primary functions of his position, no appointive official
shall hold any other office or employment in the Government or any subdivision, agency or
instrumentality thereof, including Government-owned or controlled corporations or their
subsidiaries.

Section 8. No elective or appointive public officer or employee shall receive additional, double,
or indirect compensation, unless specifically authorized by law, nor accept without the consent
of the Congress, any present, emolument, office, or title of any kind from any foreign
government.

Pensions or gratuities shall not be considered as additional, double, or indirect compensation.

C. THE COMMISSION ON ELECTIONS

Section 1. (1) There shall be a Commission on Elections composed of a Chairman and six
Commissioners who shall be natural-born citizens of the Philippines and, at the time of their
appointment, at least thirty-five years of age, holders of a college degree, and must not have
been candidates for any elective positions in the immediately preceding elections. However, a
majority thereof, including the Chairman, shall be members of the Philippine Bar who have been
engaged in the practice of law for at least ten years.

(2) The Chairman and the Commissioners shall be appointed by the President with the consent
of the Commission on Appointments for a term of seven years without reappointment. Of those
first appointed, three Members shall hold office for seven years, two Members for five years,
and the last Members for three years, without reappointment. Appointment to any vacancy shall
 25

be only for the unexpired term of the predecessor. In no case shall any Member be appointed or
designated in a temporary or acting capacity.

Sec. 2. The Commission on Elections shall exercise the following powers and functions:

(1) Enforce and administer all laws and regulations relative to the conduct of an election,
plebiscite, initiative, referendum, and recall.

(2) Exercise exclusive original jurisdiction over all contests relating to the elections, returns, and
qualifications of all elective regional, provincial, and city officials, and appellate jurisdiction over
all contests involving elective municipal officials decided by trial courts of general jurisdiction, or
involving elective barangay officials decided by trial courts of limited jurisdiction.

Decisions, final orders, or rulings of the Commission on election contests involving elective
municipal and barangay offices shall be final, executory, and not appealable.

(3) Decide, except those involving the right to vote, all questions affecting elections, including
determination of the number and location of polling places, appointment of election officials and
inspectors, and registration of voters.

(4) Deputize, with the concurrence of the President, law enforcement agencies and
instrumentalities of the Government, including the Armed Forces of the Philippines, for the
exclusive purpose of ensuring free, orderly, honest, peaceful, and credible elections.

(5) Register, after sufficient publication, political parties, organizations, or coalitions which, in
addition to other requirements, must present their platform or program of government; and
accredit citizens‘ arms of the Commission on Elections. Religious denominations and sects shall
not be registered. Those which seek to achieve their goals through violence or unlawful means,
or refuse to uphold and adhere to this Constitution, or which are supported by any foreign
government shall likewise be refused registration.

Financial contributions from foreign governments and their agencies to political parties,
organizations, coalitions, or candidates related to elections, constitute interference in national
affairs, and, when accepted, shall be an additional ground for the cancellation of their
registration with the Commission, in addition to other penalties that may be prescribed by law.

(6) File, upon a verified complaint, or on its own initiative, petitions in court for inclusion or
exclusion of voters; investigate and, where appropriate, prosecute cases of violations of election
laws, including acts or omissions constituting election frauds, offenses, and malpractices.

(7) Recommend to the Congress effective measures to minimize election spending, including
limitation of places where propaganda materials shall be posted, and to prevent and penalize all
forms of election frauds, offenses, malpractices, and nuisance candidates.

(8) Recommend to the President the removal of any officer or employee it has deputized, or the
imposition of any other disciplinary action, for violation or disregard of, or disobedience to, its
directive, order, or decision.

(9) Submit to the President and the Congress, a comprehensive report on the conduct of each
election, plebiscite, initiative, referendum, or recall.

Section 3. The Commission on Elections may sit en banc or in two divisions, and shall
promulgate its rules of procedure in order to expedite disposition of election cases, including
pre-proclamation controversies. All such election cases shall be heard and decided in division,
provided that motions for reconsideration of decisions shall be decided by the Commission en
banc.

Section 4. The Commission may, during the election period, supervise or regulate the
enjoyment or utilization of all franchises or permits for the operation of transportation and other
public utilities, media of communication or information, all grants, special privileges, or
concessions granted by the Government or any subdivision, agency, or instrumentality thereof,
including any government-owned or controlled corporation or its subsidiary. Such supervision or
regulation shall aim to ensure equal opportunity, time, and space ,and the right to reply,
 26

including reasonable, equal rates therefor, for public information campaigns and forums among
candidates in connection with the objective of holding free, orderly, honest, peaceful, and
credible elections.

Section 5. No pardon, amnesty, parole, or suspension of sentence for violation of election laws,
rules, and regulations shall be granted by the President without the favorable recommendation
of the Commission.

Section 6. A free and open party system shall be allowed to evolve according to the free choice
of the people, subject to the provisions of this Article.

Section 7. No votes cast in favor of a political party, organization, or coalition shall be valid,
except for those registered under the party-list system as provided in this Constitution.

Section 8. Political parties, or organizations or coalitions registered under the party-list system,
shall not be represented in the voters‘ registration boards, boards of election inspectors, boards
of canvassers, or other similar bodies. However, they shall be entitled to appoint poll watchers
in accordance with law.

Section 9. Unless otherwise fixed by the Commission in special cases, the election period shall
commence ninety days before the day of election and shall end thirty days thereafter.

Section 10. Bona fide candidates for any public office shall be free from any form of harassment
and discrimination.

Section 11. Funds certified by the Commission as necessary to defray the expenses for holding
regular and special elections, plebiscites, initiatives, referenda, and recalls, shall be provided in
the regular or special appropriations and, once approved, shall be released automatically upon
certification by the Chairman of the Commission.

D. THE COMMISSION ON AUDIT

Section 1. (1) There shall be a Commission on Audit composed of a Chairman and two
Commissioners, who shall be natural-born citizens of the Philippines and, at the time of their
appointment, at least thirty-five years of age, Certified Public Accountants with not less than ten
years of auditing experience, or members of the Philippine Bar who have been engaged in the
practice of law for at least ten years, and must not have been candidates for any elective
position in the elections immediately preceding their appointment. At no time shall all Members
of the Commission belong to the same profession.

(2) The Chairman and the Commissioners shall be appointed by the President with the consent
of the Commission on Appointments for a term of seven years without reappointment. Of those
first appointed, the Chairman shall hold office for seven years, one Commissioner for five years,
and the other Commissioner for three years, without reappointment. Appointment to any
vacancy shall be only for the unexpired portion of the term of the predecessor. In no case shall
any Member be appointed or designated in a temporary or acting capacity.

Section 2. (1) The Commission on Audit shall have the power, authority, and duty to examine,
audit, and settle all accounts pertaining to the revenue and receipts of, and expenditures or
uses of funds and property, owned or held in trust by, or pertaining to, the Government, or any
of its subdivisions, agencies, or instrumentalities, including government-owned or controlled
corporations with original charters, and on a post-audit basis: (a) constitutional bodies,
commissions and offices that have been granted fiscal autonomy under this Constitution; (b)
autonomous state colleges and universities; (c) other government-owned or controlled
corporations and their subsidiaries; and (d) such non-governmental entities receiving subsidy or
equity, directly or indirectly, from or through the Government, which are required by law or the
granting institution to submit to such audit as a condition of subsidy or equity. However, where
the internal control system of the audited agencies is inadequate, the Commission may adopt
such measures, including temporary or special pre-audit, as are necessary and appropriate to
correct the deficiencies. It shall keep the general accounts of the Government and, for such
period as may be provided by law, preserve the vouchers and other supporting papers
pertaining thereto.
 27

(2) The Commission shall have exclusive authority, subject to the limitations in this Article, to
define the scope of its audit and examination, establish the techniques and methods required
therefor, and promulgate accounting and auditing rules and regulations, including those for the
prevention and disallowance of irregular, unnecessary, excessive, extravagant, or
unconscionable expenditures or uses of government funds and properties.

Section 3. No law shall be passed exempting any entity of the Government or its subsidiaries in
any guise whatever, or any investment of public funds, from the jurisdiction of the Commission
on Audit.

Section 4. The Commission shall submit to the President and the Congress, within the time
fixed by law, an annual report covering the financial condition and operation of the Government,
its subdivisions, agencies, and instrumentalities, including government-owned or controlled
corporations, and non-governmental entities subject to its audit, and recommend measures
necessary to improve their effectiveness and efficiency. It shall submit such other reports as
may be required by law.

DEPT OF AGRICULTURE vs NLRC

Facts:

The case is regarding money claim against Department of Agriculture (DA) as filed and
requested by National Labor Relations Commission (NLRC).

Petitioner Department of Agriculture 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, non-payment 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.

The petitioner charges the NLRC with grave abuse of discretion for refusing to quash the writ of
execution. The petitioner faults the NLRC for assuming jurisdiction over a money claim against
the Department, which, it claims, falls under the exclusive jurisdiction of the Commission on
Audit. More importantly, the petitioner asserts, the NLRC has disregarded the cardinal rule on
the non-suability of the State.

The private respondents, on the other hand, argue that the petitioner has impliedly waived its
immunity from suit by concluding a service contract with Sultan Security Agency.

Issues:

Whether or not the doctrine of non-suability of the State applies in the case.

Discussions:

Act No. 3083, aforecited, gives the consent of the State to be ―sued upon any moneyed claim
involving liability arising from contract, express or implied. However, the money claim should
first be brought to the Commission on Audit. Act 3083 stands as the general law waiving the
State‘s immunity from suit, subject to its general limitation expressed in Section 7 thereof that
‗no execution shall issue upon any judgment rendered by any Court against the Government of
 28

the (Philippines), and that the conditions provided in Commonwealth Act 327 for filing money
claims against the Government must be strictly observed.

Rulings:

No. The rule does not say that the State may not be sued under any circumstances. The State
may at times be sued. The general law waiving the immunity of the state from suit is found in
Act No. 3083, where the Philippine government ―consents and submits to be sued upon any
money claims involving liability arising from contract, express or implied, which could serve as a
basis of civil action between private parties.‖

In this 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 the claims of the complainant security guards
clearly constitute money claims.

Merritt vs Government of the Philippine Islands

FACTS: Merrit was riding a motorcycle along Padre Faura Street when he was bumped by the
ambulance of the General Hospital. Merrit sustained severe injuries rendering him unable to
return to work. The legislature later enacted Act 2457 authorizing Merritt to file a suit against the
Government in order to fix the responsibility for the collision between his motorcycle and the
ambulance of the General Hospital, and to determine the amount of the damages, if any, to
which he is entitled. After trial, the lower court held that the collision was due to the negligence
of the driver of the ambulance. It then determined the amount of damages and ordered the
government to pay the same.

ISSUES:

1. Did the Government, in enacting the Act 2457, simply waive its immunity from suit or did it
also concede its liability to the plaintiff?

2. Is the Government liable for the negligent act of the driver of the ambulance?

HELD:

1. 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.

2. Under the Civil Code, the state is liable when it acts through a special agent, but not when the
damage should have been caused by the official to whom properly it pertained to do the act
performed. A special agent 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. This concept does not
apply to any executive agent who is an employee of the acting administration and who on his
own responsibility performs the functions which are inherent in and naturally pertain to his office
and which are regulated by law and the regulations. The driver of the ambulance of the General
Hospital was not a special agent; thus the Government is not liable. (Merritt vs Government of
the Philippine Islands, G.R. No. L-11154, March 21 1916, 34 Phil. 311)

NOTE:
 29

■ The State is responsible in like manner when it acts through a special agent; but not when the
damage has been caused by the official to whom the task done properly pertains. (Art. 2180
par. 6, Civil Code)

■ The state 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. (Merritt vs.
Government of the Philippine Islands)

■ The State is not liable for the torts committed by its officers or agents whom it employs, except
when expressly made so by legislative enactment. 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. (Merritt vs. Government of the Philippine Islands)

REPUBLIC OF THE PHILIPPINES v. HONORABLE AMANTE P. PURISIMA, ET AL.

78 SCRA 470 | August 31, 1977
Ponente: FERNANDO, Acting C.J.

FACTS:
A motion to dismiss was filed on September 7, 1972 by defendant Rice and Corn Administration
in a pending civil suit in the 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 merits of a claim against any office or entity acting as part of the machinery of the national
government unless consent be shown, had been applied in 53 other decisions. 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:
Whether the respondent‘s decision is valid.

RULING:
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 effectivity 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, is, 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.

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 have no binding force on the government.
 30

IMPLIED CONSENT
US vs RUIZ

Facts:

This is a petition to review, set aside certain orders and restrain perpetually the proceedings
done by Hon. Ruiz for lack of jurisdiction on the part of the trial court

The United States of America had a naval base in Subic, Zambales. The base was one of those
provided in the Military Bases Agreement between the Philippines and the United States.
Sometime in May, 1972, the United States invited the submission of bids for a couple of repair
projects. Eligio de Guzman land Co., Inc. responded to the invitation and submitted bids.
Subsequent thereto, the company received from the US two telegrams requesting it to confirm
its price proposals and for the name of its bonding company. The company construed this as an
acceptance of its offer so they complied with the requests. The company received a letter which
was signed by William I. Collins of Department of the Navy of the United States, also one of the
petitioners herein informing that the company did not qualify to receive an award for the projects
because of its previous unsatisfactory performance rating in repairs, and that the projects were
awarded to third parties. For this reason, a suit for specific performance was filed by him against
the US.

Issues:

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

Discussions

The traditional role of the state immunity exempts a state from being sued in the courts of
another state without its consent or waiver. This rule is necessary consequence of the principle
of independence and equality of states. However, the rules of international law are not petrified;
they are continually and evolving and because the activities of states have multiplied. It has
been necessary to distinguish them between sovereign and governmental acts (jure imperii) and
private, commercial and proprietary acts (jure gestionis). The result is that State immunity now
extends only to acts jure imperil. The restrictive application of State immunity is now the rule in
the United States, the United Kingdom and other states in western Europe.

Rulings:

Yes. The Supreme Court held that the contract relates to the exercise of its sovereign functions.
In this case the projects are an integral part of the naval base which is devoted to the defense of
both the United States and the Philippines, indisputably a function of the government of the
highest order, they are not utilized for nor dedicated to commercial or business purposes.

The restrictive application of state immunity is proper only when the proceedings arise out of
commercial transactions of the foreign sovereign. Its commercial activities of economic affairs. A
state may be descended to the level of an individual and can thus be deemed to have tacitly
given its consent to be sued. Only when it enters into business contracts.
 31

Malong vs PNR

Facts:

The 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 and Capas. The tragedy occurred because Jaime had to sit near the door of a coach.
The 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 to pay them damages totaling P136,370.

Upon the Solicitor General's motion, the trial court dismissed the complaint. It ruled that it had
no jurisdiction because the PNR, being a government instrumentality, the action was a suit
against the State (Sec. 16, Art. XV of the Constitution).

The Malong spouses appealed to this Court pursuant to Republic Act No. 5440

R.A. No. 5440 changed the mode of appeal from courts of first instance (now Regional Trial
Courts) to the Supreme Court in cases involving only questions of law, or the constitutionality or
validity of any treaty, law, ordinance, etc. or the legality of any tax, impost, assessment or toll,
etc., or the jurisdiction of any inferior court, from ordinary appeal — i.e., by notice of appeal,
record on appeal and appeal bond, under Rule 41— to appeal by certiorari, under Rule 45

Issue/s:

WON PNR is immune from suit.

WON the State acted in a sovereign capacity or in a corporate capacity when it organized the
PNR for the purpose of engaging in transportation

WON the State acted differently when it organized the PNR as successor of the Manila Railroad
Company

Held: No, PNR is NOT immune. 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

WHEREFORE, the order of dismissal is reversed and set aside. The case is remanded to the
trial court for further proceedings. Costs against the Philippine National Railways.

Ratio:

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 objects for which
the entity was organized." (Nat. Airports Corp. vs. Teodoro and Phil. Airlines, Inc., 91 Phil. 203,
206; Santos vs, Santos, 92 Phil. 281, 285; Harry Lyons, Inc. vs. USA, 104 Phil. 593.)

Suits against State agencies with respect to matters in which they have assumed to act in a
private or non-governmental capacity are not suits against the State
 32

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

The point is that when the government enters into a commercial business it abandons its
sovereign capacity and is to be treated like any other private corporation (Bank of the U.S. vs.
Planters' Bank, 9 Wheat. 904, 6 L. ed. 244, cited in Manila Hotel Employees Association vs.
Manila Hotel Company, et al., 73 Phil. 374, 388).

There is not one law for the sovereign and another for the subject, but when the sovereign
engages in business and the conduct of business enterprises, and contracts with individuals,
whenever the contract in any form comes before the courts, the rights and obligation of the
contracting parties must be adjusted upon the same principles as if both contracting parties
were private persons. Both stand upon equality before the law, and the sovereign is merged in
the dealer, contractor and suitor (People vs. Stephens, 71 N.Y. 549).

Justice Abad Santos (Separate Opinion) : All corporations organized by the government are its
instrumentality by the very reason of their creation. But that fact alone does not invest them with
immunity from suit.

DoH vs Phil Pharmawealth

Defense of state immunity does not apply where the public official is charged in his
official capacity for acts that are unauthorized or unlawful and injurious to the rights of
others neither does it apply where the public official is clearly being sued not in his
official capacity but in his personal capacity, although the acts complained of may have
been committed while he occupied a public position.

FACTS: Secretary of Health Alberto G. Romualdez, Jr. issued an Administrative Order providing
for additional guidelines for accreditation of drug suppliers aimed at ensuring that only qualified
bidders can transact business with petitioner Department of Health (DOH). Respondent Phil.
Pharmawealth, Inc. (Pharmawealth) submitted to DOH a request for the inclusion of additional
items in its list of accredited drug products, including the antibiotic ―Penicillin G Benzathine.

Petitioner DOH issued an Invitation for Bids for the procurement of 1.2 million units vials of
Penicillin G Benzathine. Despite the lack of response from DOH regarding Pharmawealth‗s
request for inclusion of additional items in its list of accredited products, the latter submitted its
bid for the Penicillin G Benzathine contract and gave the lowest bid thereof. . In view, however,
of the non-accreditation of respondent‗s Penicillin G Benzathine product, the contract was
awarded to Cathay/YSS Laboratories‗ (YSS).

Respondent Pharmawealth filed a complaint for injunction, mandamus and damages with prayer
for the issuance of a writ of preliminary injunction and/or temporary restraining order with the
Regional Trial praying, inter alia, that the trial court ―nullify the award of the Penicillin G
Benzathine contract to YSS Laboratories, Inc. and direct petitioners DOH et al. to declare
Pharmawealth as the lowest complying responsible bidder for the Benzathine contract, and that
they accordingly award the same to plaintiff company‖ and ―adjudge defendants Romualdez,
Galon and Lopez liable, jointly and severally to plaintiff. Petitioners DOH et al. subsequently
 33

filed a motion to dismiss praying for the dismissal of the complaint based on the doctrine of state
immunity. The trial court, however, denied the motion to dismiss. The Court of Appeals (CA)
denied DOH‗s petition for review which affirmed the order issued Regional Trial Court of Pasig
City denying petitioners‗ motion to dismiss the case.

ISSUE: Whether or not the charge against the public officers acting in their official capacity will
prosper

HELD: The suability 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 its
complaint, DOH sufficiently imputes grave abuse of discretion against petitioners in their official
capacity. Since judicial review of acts alleged to have been tainted with grave abuse of
discretion is guaranteed by the Constitution, it necessarily follows that it is the official concerned
who should be impleaded as defendant or respondent in an appropriate suit.

As regards petitioner DOH, the defense of immunity from suit will not avail despite its being an
unincorporated agency of the government, for the only causes of action directed against it are
preliminary injunction and mandamus. Under Section 1, Rule 58 of the Rules of Court,
preliminary injunction may be directed against a party or a court, agency or a person. Moreover,
the defense of state immunity from suit does not apply in causes of action which do not seek to
impose a charge or financial liability against the State.

Hence, the rule does not apply where the public official is charged in his official capacity for acts
that are unauthorized or unlawful and injurious to the rights of others. Neither does it apply
where the public official is clearly being sued not in his official capacity but in his personal
capacity, although the acts complained of may have been committed while he occupied a public
position.

In the present case, suing individual petitioners in their personal capacities for damages in
connection with their alleged act of ―illegally abusing their official positions to make sure that
plaintiff Pharmawealth would not be awarded the Benzathine contract [which act was] done in
bad faith and with full knowledge of the limits and breadth of their powers given by law‖ is
permissible, in consonance with the foregoing principles. For an officer who exceeds the power
conferred on him by law cannot hide behind the plea of sovereign immunity and must bear the
liability personally.

JUSMAG PHIL vs NLRC

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. 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.

 34

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 vs Republic

In January 1971, Ildefonso Santiago gratuitously donated a parcel of land to the Bureau of Plant
Industry. The terms of the donation are; that the Bureau should construct a building on the said
lot and that the building should be finished by December 7, 1974, that the Bureau should install
lighting facilities on the said lot. However, come 1976 there were still no improvements on the
lot. This prompted Santiago to file a case pleading for the revocation of such contract of
donation. The trial court dismissed the petition claiming that it is a suit against the government
and should not prosper without the consent of the government.

ISSUE: Whether or not the state has not waived its immunity from suit.

HELD: No. The government has waived its immunity and such waiver is implied by virtue of the
terms provided in the deed of donation. The government is a beneficiary of the terms of the
donation. But the government through the Bureau of Plant Industry has breached the terms of
the deed by not complying with such, therefore, the donor Santiago has the right to have his day
in court and be heard. Further, to not allow the donor to be heard would be unethical and
contrary to equity which the government so advances. Case should prosper.

Froilan vs Oriental Pan Shipping

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 instalments. 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
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.
 35

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.

Issues:

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

Discussions:

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.

Rulings:

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.
 36

SCOPE OF CONSENT
RIZAL COMMERCIAL BANK vs De Castro

Issue: Whether or not PVTA funds are public funds not subject to garnishment;

HELD:

Republic Act No. 2265 created the PVTA as an ordinary corporation with all the attributes of a
corporate entity subject to the provisions of the Corporation Law. Hence, it possesses the power
"to sue and be sued" and "to acquire and hold such assets and incur such liabilities resulting
directly from operations authorized by the provisions of this Act or as essential to the proper
conduct of such operations." [Section 3, Republic Act No. 2265.]

it is clear that PVTA has been endowed with a personality distinct and separate from the
government which owns and controls it. Accordingly, this Court has heretofore declared that the
funds of the PVTA can be garnished since "funds of public corporations which can sue and be
sued were not exempt from garnishment" [Philippine National Bank v. Pabalan, G.R. No. L-
33112, June 15, 1978, 83 SCRA 595, 598.]

Mun of San Miguel Bulacan vs Fernandez

FACTS:

The Court of First Instance of Bulacan rendered a judgment holding petitioner liable to private
respondents and ordering the municipality, among others, to pay private respondents the loss of
income from rentals on subject lots and attorney‘s fees.

ISSUE(S):

Whether or not the funds of the Municipality of San Miguel, Bulacan are public funds which are
exempt from execution.

HELD:

YES. It is a well settled doctrine of the law that not only the public property but also the taxes
and public revenues of such [municipal] 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.
 37

Mun of Makati vs CA 190 scra 206

Facts:

Petitioner Municipality of Makati expropriated a portion of land owned by private respondent

Admiral Finance Creditors Consortium, Inc. After hearing, the RTC fixed the appraised value of
the property at P5,291,666.00, and ordered petitioner to pay this amount minus the advanced
payment of P338,160.00 which was earlier released to private respondent. It then issued the
corresponding writ of execution accompanied with a writ of garnishment of funds of the
petitioner which was deposited in PNB. Petitioner filed 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. The RTC denied the motion. CA affirmed; hence, petitioner filed a petition for review
before the SC.

Issue:

1. Are the funds of the Municipality of Makati exempt from garnishment and levy upon
execution?

2. If so, what then is the remedy of the private respondents?

Held:

1. Yes. In this jurisdiction, well-settled is the rule that public funds are not subject to levy and
execution, unless otherwise provided for by statute. More particularly, the properties of a
municipality, whether real or personal, which are necessary for public use cannot be attached
and sold at execution sale to satisfy a money judgment against the municipality. 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 from its public funds an amount corresponding to the
balance due under the RTC decision, no levy under execution may be validly effected on the
public funds of petitioner.

2. Nevertheless, this is not to say that private respondent and PSB are left with no legal
recourse. Where a municipality fails or refuses, without justifiable reason, to effect payment of a
final money judgment rendered against it, the claimant may avail of the remedy of mandamus in
order to compel the enactment and approval of the necessary appropriation ordinance, and the
corresponding disbursement of municipal funds therefor.

For three years now, petitioner has enjoyed possession and use of the subject property
notwithstanding its inexcusable failure to comply with its legal obligation to pay just
compensation. Petitioner has benefited from its possession of the property since the same has
been the site of Makati West High School since the school year 1986-1987. This Court will not
condone petitioner's blatant refusal to settle its legal obligation arising from expropriation
proceedings it had in fact initiated. The State's power of eminent domain should be exercised
within the bounds of fair play and justice
 38

NIA vs CA 214 scra

FACTS:

Petitioner constructed an irrigation canal which passed through the private respondent‘s
landholdings. The canal has two outlets which provide said landholdings with water and at the
same time drains excess water.

ISSUE(S):

Whether or not NIA is immune from suit.

HELD:

NO. NIA is not immune from suit. Section 2, sub-paragraph (f) of P.D. 552 grants the NIA the
power to exercise all the powers of a corporation under the Corporation Law insofar as they are
not inconsistent with the provisions of P.D. 552. Paragraph 5 of said law also provide that
petitioner may sue and be sued in courts for all kinds of actions, whether contractual or quasi-
contractual i the recovery of compensation and damages caused by the petitioner.35

• The Supreme court reiterated that NIA is a corporate body performing proprietary
functions.

• Whose charter P.D. 552, provides it may sue and be sued.

BELGICA vs OCHOA

Novermber 19 2013

FACTS:

The NBI Investigation was spawned by sworn affidavits of six (6) whistle-blowers who declared
that JLN Corporation (Janet Lim Napoles) had swindled billions of pesos from the public coffers
for "ghost projects" using dummy NGOs. Thus, Criminal complaints were filed before the Office
of the Ombudsman, charging five (5) lawmakers for Plunder, and three (3) other lawmakers for
Malversation, Direct Bribery, and Violation of the Anti-Graft and Corrupt Practices Act. Also
recommended to be charged in the complaints are some of the lawmakers‘ chiefs -of-staff or
representatives, the heads and other officials of three (3) implementing agencies, and the
several presidents of the NGOs set up by Napoles.

Whistle-blowers alleged that" at least P900 Million from royalties in the operation of the
Malampaya gas project off Palawan province intended for agrarian reform beneficiaries has
gone into a dummy NGO. Several petitions were lodged before the Court similarly seeking that
the "Pork Barrel System" be declared unconstitutional

G.R. No. 208493 – SJS filed a Petition for Prohibition seeking that the "Pork Barrel System" be
declared unconstitutional, and a writ of prohibition be issued permanently

G.R. No. 208566 - Belgica, et al filed an Urgent Petition For Certiorari and Prohibition With
Prayer For The Immediate Issuance of Temporary Restraining Order and/or Writ of Preliminary
Injunction seeking that the annual "Pork Barrel System," presently embodied in the provisions of
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the GAA of 2013 which provided for the 2013 PDAF, and the Executive‗s lump-sum,
discretionary funds, such as the Malampaya Funds and the Presidential Social Fund, be
declared unconstitutional and null and void for being acts constituting grave abuse of discretion.
Also, they pray that the Court issue a TRO against respondents

UDK-14951 – A Petition filed seeking that the PDAF be declared unconstitutional, and a cease
and desist order be issued restraining President Benigno Simeon S. Aquino III (President
Aquino) and Secretary Abad from releasing such funds to Members of Congress

ISSUES:

1. Whether or not the 2013 PDAF Article and all other Congressional Pork Barrel Laws
similar thereto are unconstitutional considering that they violate the principles of/constitutional
provisions on (a) separation of powers; (b) non-delegability of legislative power; (c) checks and
balances; (d) accountability; (e) political dynasties; and (f) local autonomy.

2. Whether or not the phrases (under Section 8 of PD 910,116 relating to the Malampaya
Funds, and under Section 12 of PD 1869, as amended by PD 1993, relating to the Presidential
Social Fund, are unconstitutional insofar as they constitute undue delegations of legislative
power.

HELD:

1. Yes, the PDAF article is unconstitutional. The post-enactment measures which govern the
areas of project identification, fund release and fund realignment are not related to functions of
congressional oversight and, hence, allow legislators to intervene and/or assume duties that
properly belong to the sphere of budget execution. This violates the principle of separation of
powers. Congress‗role must be confined to mere oversight that must be confined to: (1)
scrutiny and (2) investigation and monitoring of the implementation of laws. Any action or step
beyond that will undermine the separation of powers guaranteed by the constitution.

Thus, the court declares the 2013 pdaf article as well as all other provisions of law which
similarly allow legislators to wield any form of post-enactment authority in the implementation or
enforcement of the budget, unrelated to congressional oversight, as violative of the separation
of powers principle and thus unconstitutional.

2. Yes. Sec 8 of PD 910- the phrase ―and for such other purposes as may be hereafter
directed by the President‖‖ constitutes an undue delegation of legislative power insofar as it
does not lay down a sufficient standard to adequately determine the limits of the President‗s
authority with respect to the purpose for which the Malampaya Funds may be used. It gives the
President wide latitude to use the Malampaya Funds for any other purpose he may direct and,
in effect, allows him to unilaterally appropriate public funds beyond the purview of the law.‖

Section 12 of PD 1869, as amended by PD 1993- the phrases:

(b) "to finance the priority infrastructure development projects‖ was declared constitutional. IT
INDICATED PURPOSE ADEQUATELY CURTAILS THE AUTHORITY OF THE PRESIDENT
TO SPEND THE PRESIDENTIAL SOCIAL FUND ONLY FOR RESTORATION PURPOSES
WHICH ARISE FROM CALAMITIES.

(b)‖ and to finance the restoration of damaged or destroyed facilities due to calamities, as may
be directed and authorized by the Office of the President of the Philippines‖ was declared
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unconstitutional.IT GIVES THE PRESIDENT CARTE BLANCHE AUTHORITY TO USE THE

SAME FUND FOR ANY INFRASTRUCTURE PROJECT HE MAY SO DETERMINE AS A
―PRIORITY‖. VERILY, THE LAW DOES NOT SUPPLY A DEFINITION OF ―PRIORITY
INFRASTRUCTURE DEVELOPMENT PROJECTS‖ AND HENCE, LEAVES THE PRESIDENT
WITHOUT ANY GUIDELINE TO CONSTRUE THE SAME.