1) REPUBLIC OF THE PHILIPPINES VS.

VILLASOR

Facts: A writ of execution (a writ to put in force the sentence that the law has given) was issued by the court against the
funds of the Armed Forces of the Philippines to satisfy a judgment rendered against the Philippine Government.

Issue: Whether or not the writ of execution, issued by respondent judge, is valid.

Held: It was ruled that public funds cannot be the object of garnishment proceedings even if the consent to be sued had
been previously granted and even if the State liability had been adjudged. The universal rule that where the State gives
its consent to be sued by private parties either by general or special law, it may limit claimant's action 'only up to the
completion of proceedings anterior to the stage of execution' and that the power of the Courts ends when the judgment
is rendered, since government funds and properties may not be seized under writs of execution or garnishment to
satisfy such judgments, is based on obvious considerations of public policy. Disbursements of public funds must be
covered by the corresponding appropriation as required by law. The functions and public services rendered by the State
cannot be allowed to be paralyzed or disrupted by the diversion of public funds from their legitimate and specific
objects, as appropriated by law.

2) DEPARTMENT OF AGRICULTURE VS. NLRC

Facts: Petitioner Department of Agriculture (DA) and Sultan Security Agency entered into a contract for security
services to be provided by the latter to the said governmental entity. Pursuant to their arrangements, guards were
deployed by Sultan Security Agency in the various premises of the DA. Thereafter, several guards filed a complaint for
underpayment of wages, nonpayment of 13th month pay, uniform allowances, night shift differential pay, holiday pay,
and overtime pay, as well as for damages against the DA and the security agency.

The Labor Arbiter rendered a decision finding the DA jointly and severally liable with the security agency for the
payment of money claims of the complainant security guards. The DA and the security agency did not appeal the
decision. Thus, the decision became final and executory. The Labor Arbiter issued a writ of execution to enforce and
execute the judgment against the property of the DA and the security agency. Thereafter, the City Sheriff levied on
execution the motor vehicles of the DA.

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

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

The rule is not really absolute for it does not say that the State may not be sued under any circumstances. The State
may at times be sued. The State’s consent may be given expressly or impliedly. Express consent may be made through
a general law or a special law. Implied consent, on the other hand, is conceded when the State itself commences
litigation, thus opening itself to a counterclaim, or when it enters into a contract. In this situation, the government is
deemed to have descended to the level of the other contracting party and to have divested itself of its sovereign
immunity.

But not all contracts entered into by the government operate as a waiver of its non-suability; distinction must still be
made between one which is executed in the exercise of its sovereign function and another which is done in its
proprietary capacity. A State may be said to have descended to the level of an individual and can this be deemed to

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have actually given its consent to be sued only when it enters into business contracts. It does not apply where the
contract relates to the exercise of its sovereign functions.

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

But, be that as it may, the claims of the complainant security guards clearly constitute money claims. Act No. 3083 gives
the consent of the State to be sued upon any moneyed claim involving liability arising from contract, express or implied.
Pursuant, however, to Commonwealth Act 327, as amended by PD 1145, the money claim must first be brought to the
Commission on Audit.

3) REPUBLIC V. FELICIANO [ 148 SCRA 424 ]

Facts: Petitioner seeks the review of the decision of the Intermediate Appellate Court revising the order of the Court of
First Instance which dismissed the complaint of Pablo Feliciano for the recovery of ownership and possession of a
parcel of land on the ground of non-suability of the State.

Feliciano filed a complaint with the Court of First Instance against the Republic of the Philippines, represented by the
Land Authority, for the recovery of ownership and possession of a parcel of land consisting of four (4) lots with an
aggregated area of 1,364.4177 hectares, situated in Barrio of Salvacion, Municipality of Tinambac, Camarines Sur.
Feliciano alleged that he bought the property in question for Victor Gardiola by virtue of Contract of Sale and followed
by a Deed of Absolute Sale; that Gardiola had acquired the property by purchase from the heirs of Francisco Abrazado
whose title to the said property was evidenced by an informacion posesoria that upon his purchase of the property, he
took actual possession of the same, introduced various improvements therein and caused it to be surveyed in July
1952, which survey was approved by the Director of Lands on October 24, 1954.

On November 1, 1954, President Ramon Magsaysay issued a Proclamation No. 90 reserving for settlement purposes,
under the administration of te National Resettlement and Rehabilitation Administration (NARRA), a tract of land situated
in the Municipalities of Tinambac and Siruma, Camarines Sur, after which the NARRA and its successor agenby, the
Land Authority, started sub-dividing and distributing the land to the settlers; that the property in question, while located
within the reservation established under Proclamation No. 90, was the private property of Feliciano and should therefore
be excluded. Feliciano prayed that he be declared the rightful and true owner of the property in question; that his title of
ownership based on the informacion posesoria of his predecessor-in-interest be declared legal valid and subsisting and
that defendant be ordered to cancel and nullify all awards to the settlers.

ISSUE: Can the State be sued for recovery and possession of a parcel of land?

RULING: No, the suit against the State, under settled jurisprudence is not permitted, except upon a showing that the
State has consented to be sued, either expressly of by implication through the use of statutory language too plain to be
misinterpreted. It may be invoked by the courts at any stage of the proceedings. Waiver of immunity, will not be inferred
lightly, but must be construed strictly. Moreover, the Proclamation is not the legislative act. The consent of the State to
be sued must emanate from statutory authority. Waiver of State immunity can only be made by act of the legislative
body.

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 4) QUIRICO DEL MAR vs. THE PHILIPPINE VETERANS ADMINISTRATION

Del Mar averred that he served during World War II as chief judge advocate of the Cebu Area Command; he
subsequently obtained an honorable discharge from the service on October 20, 1946 on a certificate of permanent total
physical disability; he subsequently obtained an honorable discharge from the service on October 20, 1946 on a
certificate of permanent total physical disability; 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
World War II, precluded him from receiving any further monthly life pension from the Philippine Government.

PVA reiterated its contention that del Mar's receipt of a similar pension from the United States Government effectively
barred him from claiming and receiving from the Philippine Government the monthly life pension and PVA also asserted
that it is discretionary on its part to grant or discontinue the pension sought by del Mar. The action of del Mar was
premature because of his failure to exhaust administrative remedies before invoking judicial intervention, and that the
court a quo was without jurisdiction to try the case as del Mar demand partakes of a money claim against the PVA.

After due trial, the court a quo rendered judgment upholding del Mar claims. This appeal raises several questions which
will be discussed in seriatim.

1. The PVA argues that the court a quo was without jurisdiction to try civil case because it involves a money claim
against the said PVA — a mere agency of the Government performing governmental functions with no juridical
personality of its own — and, in reality, partakes of an action against the Philippine Government which is
immune from suit without its consent.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.
a. this Court referred to the claim of the private respondent therein as "a claim for a sum of money
against the Government, which claim, if adjudged finally to be meritorious, would render the Republic
of the Philippines liable therefor," since the funds from which the claim was to be satisfied were funds
appropriated by Congress for the PVA; 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."
2. del Mar alleged failure to exhaust administrative remedies before resorting to court action.
a. in the present controversy — involves a question solely of a legal nature, there arises no need for the
litigant to resort to all administrative remedies available to him before seeking judicial relief.
3. The validity of section 6 of Regulation No. 2 of the "Rules and Regulations on Veterans' Benefits" adopted by
the PVA constitutes the core of the present controversy.
a. Pursuant to the foregoing, the PVA cancelled and discontinued the monthly life pension of del Mar
reasoning that the latter's receipt of a similar pension from the United States Government precluded
his enjoying any like benefit from the Philippine Government. The principle recognizing the necessity of
vesting administrative authorities with the power to promulgate rules and regulations to implement a
given statute and to effectual its policies, constitutes well established doctrine in this jurisdiction. The
PVA's pretense that del Mar case falls under the clause of section 9 of Republic Act 65, as amended,
which excepts those who "are actually receiving a similar pension from other Government funds" from
the coverage of said section 9 — predicated upon its interpretation that the phrase other Government
funds" includes funds of the United States Government — fails to persuade this Court as a valid
argument to justify its cancellation of del Mar monthly life pens.
4. The rest of the assigned errors relate to the allege undue interference by the court a quo with the purely
discretionary functions of the PVA in the matter of granting discontinuing the pension benefits.

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 a. The law concedes to administrative bodies the authority to act on and decide claims and applications
in accordance with their judgment, in the exercise of their adjudicatory capacity.

This Court directs the appellant Philippine Veterans Administration to compute and then to pay to the appellee del Mar
his past and accumulated monthly life pension at the aforementioned statutory rates.

5) PHILIPPINE NATIONAL BANK vs. COURT OF INDUSTRIAL RELATIONS

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

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

Issue: WON the funds mentioned may be garnished?

Ruling: No

Rationale: National Shipyard and Steel Corporation v. court of Industrial Relations6 is squarely in point. As was
explicitly stated in the opinion of the then Justice, later Chief Justice, Concepcion: "The allegation to the effect that the
funds of the NASSCO are public funds of the government, and that, as such, the same may not be garnished, attached
or levied upon, is untenable for, as a government owned and controlled corporation. the NASSCO has a personality of
its own, distinct and separate from that of the Government. It has pursuant to Section 2 of Executive Order No. 356,
dated October 23, 1950 ..., pursuant to which the NASSCO has been established — 'all the powers of a corporation
under the Corporation Law ...' Accordingly, it may sue and be sued and may be subjected to court processes
just like any other corporation (Section 13, Act No. 1459), as amended."

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In a 1941 decision, Manila Hotel Employees Association v. Manila Hotel Company,8 this Court, through Justice Ozaeta,
held: "On the other hand, it is well settled that when the government enters into commercial business, it abandons its
sovereign capacity and is to be treated like any other corporation. (Bank of the United States v. Planters' Bank,9 Wheat,
904, 6 L.ed. 244). By engaging in a particular business thru the instrumentality of a corporation, the government divests
itself pro hac vice of its sovereign character, so as to render the corporation subject to the rules of law governing private
corporations."

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

6) LANSANG vs. CA

FACTS: Private respondents were allegedly given office and library space as well as kiosks area selling food and
drinks. One such kiosk was located along T.M. Kalaw St., in front of the Army and Navy Club. Private respondent
General Assembly of the Blind, Inc. (GABI) was to remit to NPDC, 40 percent of the profits derived from operating the
kiosks, without again anything shown in the record who received the share of the profits or how they were used or
spent.

With the change of government after the EDSA Revolution, the new Chairman of the NPDC, herein petitioner, sought to
clean up Rizal Park. In a written notice dated February 23, 1988 and received by private respondents on February 29,
1988, petitioner terminated the so-called verbal agreement with GABI and demanded that the latter vacate the premises
and the kiosks it ran privately within the public park. In another notice dated March 5, 1988, respondents were given
until March 8, 1988 to vacate.

The latter notice was signed by private respondent Iglesias, GABI president, allegedly to indicate his conformity to its
contents. However, Iglesias, who is totally blind, claims that he was deceived into signing the notice. He was allegedly
told by Ricardo Villanueva, then chief warden of Rizal Park, that he was merely acknowledging receipt of the notice.
Although blind, Iglesias as president was knowledgeable enough to run GABI as well as its business.

GABI's action for damages and injunction was subsequently dismissed by the RTC, ruling that the complaint was
actually directed against the State which could not be sued without its consent. Moreover, the trial court ruled that GABI
could not claim damages under the alleged oral lease agreement since GABI was a mere accommodation
concessionaire. As such, it could only recover damages upon proof of the profits it could realize from the conclusion.
The trial court noted that no such proof was presented.

On appeal, the Court of Appeals reversed the decision of the trial court. The Court of Appeals ruled that the mere
allegation that a government official is being sued in his official capacity is not enough to protect such official from
liability for acts done without or in excess of his authority.7 Granting that petitioner had the authority to evict GABI from
Rizal Park, "the abusive and capricious manner in which that authority was exercised amounted to a legal wrong for
which he must now be held liable for damages"8 according to the Court of Appeals. Hence, this petition.

Issues:
• WON the CA erred in not holding that private respondents’ complaint against petitioner, as chairman of NPDC, is
in effect a suit against the state which cannot be sued without its consent.

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 • WON CA erred in not holding that petitioner’s act of terminating respondent GABI’s concession is valid and
done in the lawful performance of official duty.

Held:
(1) NO - The doctrine of state immunity from suit applies to complaints filed against public officials for acts done in
the performance of their duties.

RULE: Suit must be regarded : as one against the state where satisfaction of the judgement against the state where the
satisfaction of the judgement against public official concerned will require the state itself to perform positive act, such as
appropriation of the amount necessary to pay the damages awarded to the plaintiff.

The rule does not apply where the public official is charged in his official capacity for acts that are unlawful and injurious
to the rights of others. Public officials are not exempt, in their personal capacity, from liability arising from acts
committed in bad faith. It also does not apply when the official acts in his personal capacity, although the acts
complained of may have been committed while he occupied a public position.

Lansang is not being in his capacity as NPDC chairman but in his personal capacity. This is evident in paragraph 4 of
the complaint which states that petitioner was sued allegedly for having personal motives in ordering the ejectment of
GABI from Rizal Park.

(2) NO - There was no evidence of any abuse of authority on the part of Lansang. Public streets, Public parks are
beyond the commerce of man. Rizal park is beyond the commerce of man and, thus, could not be subject of a
lease contract. GABI was allowed to occupy office and kiosk space in the park was a matter of accommodation
by previous administrators. Lansang may validly discontinue the accommodation extended to private
respondents, who may be ejected from the park when necessary.

7) REPUBLIC OF THE PHILIPPINES vs SANDOVAL

Petition for Certiorari to review the orders of the RTC of Manila, Branch 9

Facts:
• This case deals with the tragedy that transpired on January 22, 1987. Popularly known as the Black Thursday
or the Mendiola Massacre. Twelve people died and the heirs of these people are seeking for retribution. (the gist is
that the people marched to Mendiola because of failed agrarian reforms and the police and military were there to
defend the palace. There were shooting and no one knows who started it. End result = some people were killed.)
• Heirs of the deceased and the injured filed this case for damages.
• President Aquino issued AO no. 11 which created the Citizen’s Mendiola Commission and in their report the
recommended the criminal prosecution of four unidentified, uniformed individuals. The most significant
recommendation that they made was that the deceased and wounded victims of the Mendiola incident be
compensated by the government. This recommendation of the commission was the basis of the claim for damages
by the petitioners.
• February 23, 1988 the Solicitor General filed a motion to dismiss on the ground that the State cannot be sued
without its consent. The petitioner maintained that the State has waived its immunity from suit and that the
dismissal of the instant action is contrary to both the Constitution and the International Law on Human Rights.

Issue: WON the State has waived its immunity from suit.

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 Held: No

Ratio:

• Immunity from suit is expressly provided in Article XVI , sec. 3. The principle is based on the very essence of
sovereignty and on the practical ground that there can be no legal right as against the authority that makes the law
on which the right depends. It also rests on reason of public policy – that public policy would be hindered and the
public endangered, if the sovereign authority could be subjected to law suits at the instance of every citizen and
consequently controlled in the uses and disposition of the means required for the proper administration of the
government.
• Recommendation made by the commission does not in any way mean that liability automatically attaches to the
State. The purpose of the commission as provided for in AO 11 was to have a body that will conduct an
investigation of the disorder, deaths and casualties that took place. The findings of the commission shall only serve
as the cause of action in the event that any party decides to litigate his/her claim.
• Consent to be sued may be given impliedly it cannot be maintained that such consent was given in this case.
The commission was a fact finding body. The commission was merely a preliminary venue and it wan not an end in
itself.
• The case does not qualify as a suit against the state. Some instances when a suit against the State is proper
are
o When the Republic is sued by name
o When the suit is against an unincorporated government agency
o When the suit is on its face against a government officer but the case is such that ultimate liability
will belong not to the officer but to the government.

• The ultimate liability in this case does not pertain to the government. Based on the investigation the military
officials acted beyond their authority and there was lack of jurisdiction by the government forces in the use of
firearms. The committed a prohibited act under BP 880 as there was unnecessary firing by them in dispersing the
marchers.
• The court ruled before that an officer cannot shelter himself by plea that he is a public agent acting under the
color of his office when his acts are wholly without authority.

(8) MERITT vs GOVERNMENT OF THE PHILIPPINE ISLANDS

When the plaintiff, riding on a motorcycle, was going toward the western part of Calle Padre Faura, the General Hospital
ambulance, upon reaching said avenue, instead of turning toward the south, after passing the center thereof, so that it
would be on the left side of said avenue, as is prescribed by the ordinance and the Motor Vehicle Act, turned suddenly
and unexpectedly and long before reaching the center of the street, into the right side of Taft Avenue, without having
sounded any whistle or horn, by which movement it struck the plaintiff, who was already six feet from the southwestern
point or from the post place there.

By reason of the resulting collision, the plaintiff was so severely injured that, he was suffering from a depression in the
left parietal region, a wound in the same place and in the back part of his head, while blood issued from his nose and he
was entirely unconscious. According to the various merchants who testified as witnesses, the plaintiff's mental and
physical condition prior to the accident was excellent, and that after having received the injuries that have been
discussed, his physical condition had undergone a noticeable depreciation, for he had lost the agility, energy, and ability

7
that he had constantly displayed before the accident as one of the best constructors of wooden buildings and he could
not now earn even a half of the income that he had secured for his work because he had lost 50 per cent of his
efficiency.

We may say at the outset that we are in full accord with the trial court to the effect that the collision between the
plaintiff's motorcycle and the ambulance of the General Hospital was due solely to the negligence of the chauffeur.

As the negligence which caused the collision is a tort committed by an agent or employee of the Government, the
inquiry at once arises whether the Government is legally-liable for the damages resulting therefrom.

Act No. 2457, effective February 3, 1915, reads: An Act authorizing E. Merritt to bring suit against the Government of
the Philippine Islands and authorizing the Attorney-General of said Islands to appear in said suit. By authority of the
United States, be it enacted by the Philippine Legislature, that: SECTION 1. E. Merritt is hereby authorized to bring suit
in the Court of First Instance of the city of Manila against the Government of the Philippine Islands 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 Mr. E. Merritt is entitled on account of said collision, and the Attorney-General
of the Philippine Islands is hereby authorized and directed to appear at the trial on the behalf of the Government of said
Islands, to defendant said Government at the same.

Did the defendant, in enacting the above quoted Act, simply waive its immunity from suit or did it also concede its
liability to the plaintiff?

The plaintiff was authorized to bring this action 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 Mr. E. Merritt is entitled on account of said collision, . . . ." In the United States the rule that 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, is well settled.

As to the scope of legislative enactments permitting individuals to sue the state where the cause of action arises out of
either fort or contract - 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.

In determining the scope of this act - It simply gives authority to commence suit for the purpose of settling plaintiff's
controversies with the estate. Nowhere in the act is there a whisper or suggestion that the court or courts in the
disposition of the suit shall depart from well established principles of law, or that the amount of damages is the only
question to be settled.

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

(9) UNITED STATES OF AMERICA vs RUIZ

Facts: The USA had a naval base in Subic, Zambales. The base was one of those provided in the military bases
agreement between Philippines. and the US. Respondent alleges that it won in the bidding conducted by the US for the
construction of wharves in said base that was merely awarded to another group. For this reason, a suit for specific

8
performance was filed by him against the US.

Issue: Whether the US naval base in bidding for said contracts exercise governmental functions to be able to invoke
state immunity.

Held: 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 and
private, commercial and proprietary acts. the result is that state immunity now extends only to sovereign and
governmental acts.

The restrictive application of state immunity is proper only when the proceedings arise out of commercial transactions of
the foreign sovereign. Its commercial activities 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. It does not apply where the contracts relates the exercise of its sovereign function. In this case, the project
are integral part of the naval base which is devoted to the defense of both US and Philippines., indisputably, a function
of the government of highest order, they are not utilized for , nor dedicated to commercial or business purposes.

The Restrictive Theory of State Immunity means that a State may be said to have descended to the level of an
individual and can thus be deemed to have tacitly given its consent to be sued only when it enters into business
contracts. However, the restrictive application of State immunity is proper only when the proceedings arise out of
commercial transactions of the foreign sovereign, its commercial activities or economic affairs. It does not apply where
the contract relates to the exercise of its sovereign functions. (United States vs. Ruiz)

(10) COMMISSIONER OF PUBLIC HIGHWAYS VS BURGOS

On June 14, 1979, this Court received a pleading entitled Compromise Agreement. It reads as follows:
• [Whereas], respondents, who were sued in their official capacities, have long ceased to hold office;
• [Whereas], Gov. Eduardo R. Gullas, has been authorized by the Sangguniang Panlalawigan to negotiate and
conclude an amicable settlement of this case;
• [Whereas], after a series of conferences the latest of which was called upon the initiative of Honorable Eduardo
R. Gullas, pointed out the desirability of settling this case in the interest of all parties concerned;
• [Whereas], the private respondents-employees, duly subscribe with Gov. Gullas' views of the desirability of
settling this case noting that the deplorable conditions of some roads and bridges in the Province of Cebu await
much- needed funds for their immediate repair and/or improvement, and considering, on the other hand, the
sad plight of the private respondents-employees who have been out of job since July 1, 1968 up to the present
date;
• [Whereas], the parties after conferring together have agreed on all the terms and conditions of the final and
complete settlement of this case.
• [Now Therefore], the parties agree, to enter into a Compromise Agreement in the above-captioned case under
the following terms and conditions:
o The respondent Province of Cebu, duly authorized by proper resolution of the Sangguniang
Panlalawigan, hereby agrees to immediately appropriate and pay full back wages and salaries as
awarded by the trial Court in its decision to all the private respondents-employees from and after July
1, 1968, the date of their termination, up to the date of the approval of the herein Compromise
Agreement by the Honorable Supreme Court, except for those who are qualified for compulsory
retirement whose back salaries and wages shall be limited up to the effective date of their retirement;
o That the private respondents-employees waive, as they hereby waive, their demand for reinstatement;

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 o That private respondents-employees who are qualified for compulsory retirement as of the date of
approval of this Compromise Agreement shall be allowed to retire in accordance with the existing
retirement laws with the private respondent Province of Cebu appropriating and paying the
Government's share of the GSIS retirement and insurance premiums
o That the respondent Province of Cebu agrees to pay gratuity pay and/or optional retirement benefits to
private respondents-employees qualified for optional retirement as of the date of the approval of this
Compromise Agreement,
o That private respondents-employees shall be entitled to collect their accumulated sick leave and
vacation leave pay which shall be paid from JJ funds to be held in trust for the purpose as well as
benefits under the Medicare and Workmens Compensation Act;
o Those private respondents-employees who have died shall be paid back salaries and wages and
retirement benefits through their heirs up to the time of their death upon presentation of the
corresponding death certificate or other satisfactory proof.
o That the petitioner Commissioner of Public Highways, are absolved of any and all personal and other
civil liabilities of whatsoever nature;
o That upon approval by this Honorable Supreme Court of the herein Compromise Agreement the writ of
preliminary injunction issued by the lower Court is deemed automatically vacated and lifted
o That the amounts payable to the employees concerned, represented by Atty. Ramon B. Ceniza
subject to said lawyer's charging and retaining liens.

(11) CO KIM CHAM vs EUSEBIO VALDEZ TAN KEH

Facts of the case: Co Kim Chan had a pending civil case, initiated during the Japanese occupation, with the Court of
First Instance of Manila. After the Liberation of the Manila and the American occupation, Judge Arsenio Dizon refused
to continue hearings on the case, saying that a proclamation issued by General Douglas MacArthur had invalidated and
nullified all judicial proceedings and judgments of the courts of the Philippines and, without an enabling law, lower
courts have no jurisdiction to take cognizance of and continue judicial proceedings pending in the courts of the defunct
Republic of the Philippines (the Philippine government under the Japanese).

The court resolved three issues:

1. Whether or not judicial proceedings and decisions made during the Japanese occupation were valid and remained
valid even after the American occupation;

2. Whether or not the October 23, 1944 proclamation MacArthur issued in which he declared that “all laws, regulations
and processes of any other government in the Philippines than that of the said Commonwealth are null and void and
without legal effect in areas of the Philippines free of enemy occupation and control” invalidated all judgments and
judicial acts and proceedings of the courts;

3. And whether or not if they were not invalidated by MacArthur’s proclamation, those courts could continue hearing the
cases pending before them.

Ratio: Political and international law recognizes that all acts and proceedings of a de facto government are good and
valid. The Philippine Executive Commission and the Republic of the Philippines under the Japanese occupation may be
considered de facto governments, supported by the military force and deriving their authority from the laws of war.
Municipal laws and private laws, however, usually remain in force unless suspended or changed by the conqueror. Civil
obedience is expected even during war, for “the existence of a state of insurrection and war did not loosen the bonds of

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society, or do away with civil government or the regular administration of the laws. And if they were not valid, then it
would not have been necessary for MacArthur to come out with a proclamation abrogating them.

The second question, the court said, hinges on the interpretation of the phrase “processes of any other government”
and whether or not he intended it to annul all other judgments and judicial proceedings of courts during the Japanese
military occupation.
IF, according to international law, non-political judgments and judicial proceedings of de facto governments are valid
and remain valid even after the occupied territory has been liberated, then it could not have been MacArthur’s intention
to refer to judicial processes, which would be in violation of international law.

A well-known rule of statutory construction is: “A statute ought never to be construed to violate the law of nations if any
other possible construction remains.”

Another is that “where great inconvenience will result from a particular construction, or great mischief done, such
construction is to be avoided, or the court ought to presume that such construction was not intended by the makers of
the law, unless required by clear and unequivocal words.”

Annulling judgments of courts made during the Japanese occupation would clog the dockets and violate international
law, therefore what MacArthur said should not be construed to mean that judicial proceedings are included in the
phrase “processes of any other governments.”

In the case of US vs Reiter, the court said that if such laws and institutions are continued in use by the occupant, they
become his and derive their force from him. The laws and courts of the Philippines did not become, by being continued
as required by the law of nations, laws and courts of Japan.

It is a legal maxim that, excepting of a political nature, “law once established continues until changed by some
competent legislative power. IT IS NOT CHANGED MERELY BY CHANGE OF SOVEREIGNTY.” Until, of course, the
new sovereign by legislative act creates a change.

Therefore, even assuming that Japan legally acquired sovereignty over the Philippines, and the laws and courts of the
Philippines had become courts of Japan, as the said courts and laws creating and conferring jurisdiction upon them
have continued in force until now, it follows that the same courts may continue exercising the same jurisdiction over
cases pending therein before the restoration of the Commonwealth Government, until abolished or the laws creating
and conferring jurisdiction upon them are repealed by the said government.

DECISION: Writ of mandamus issued to the judge of the Court of First Instance of Manila, ordering him to take
cognizance of and continue to final judgment the proceedings in civil case no. 3012.

Summary of ratio:

1. International law says the acts of a de facto government are valid and civil laws continue even during occupation
unless repealed.

2. MacArthur annulled proceedings of other governments, but this cannot be applied on judicial proceedings because
such a construction would violate the law of nations.

3. Since the laws remain valid, the court must continue hearing the case pending before it.

***3 kinds of de facto government: one established through rebellion (govt gets possession and control through force or
the voice of the majority and maintains itself against the will of the rightful government)

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through occupation (established and maintained by military forces who invade and occupy a territory of the enemy in
the course of war; denoted as a government of paramount force)

through insurrection (established as an independent government by the inhabitants of a country who rise in insurrection
against the parent state)

(12) GOVERNMENT OF THE PHILIPPINE ISLANDS vs EL MONTE DE PIEDAD

Facts: On June 3, 1863, a devastating earthquake took place in the Philippine Islands, which was then under the
Spanish Crown, that devastated a lot of civilians. Therefore on October 6 of that year, a central relief board was
appointed, by authority of the King of Spain, to distribute the money voluntarily contributed by donors. After a thorough
investigation and consideration, the relief board allotted $365,703.50 to the various sufferers named in its resolution.

These were later distributed, in accordance with the above-mentioned allotments, the sum of $30,299.65, leaving a
balance of S365, 403.85 for distribution. Upon the petition of the governing body of the Monte de Piedad, dated
February 1, 1833, the Philippine Government, by order dated the 1st of that month, directed its treasurer to turn over to
the Monte de Piedad the sum of $80,000 of the relief fund in installments of $20,000 each. These amounts were
received on the following dates: February 15, March 12, April 14, and June 2, 1883, and are still in the possession of
the Monte de Piedad.

The Attorney-General in representation of the Philippine Islands, filed a claim for the $80.000, together with interest, for
the benefit of those persons or their heirs appearing in the list of names published in the Official Gazette instituted on
May 3, 1912, by the Government of the Philippine Islands, represented by the Insular Treasurer, and after due trial in
the lower court, judgment was entered in favor of the plaintiff for the sum of $80,000 gold or its equivalent in Philippine
currency, together with legal interest from February 28, 1912, and the costs of the cause. This brings us to this case.

Issue: Whether or not the government of the Philippine Islands has the capacity to file the suit to recover the $80,000 for
the earthquake beneficiaries.

Held: The decision of the lower court was upheld with costs against the appellant. The Philippine Government is the
proper party to the action. The Government of the Philippine Islands as Parens Patriae, has the right to enforce all
charities of public nature, by virtue of its general superintending authority over the public interests. The Act is only a
manifestation on the part of the Philippine Government to exercise the power or right which it undoubtedly had.
Parens Patriae: parental authority/guardian

Right to enforce all charities of a public nature by virtue of its general superintending authority over public Interests
where no other person is entrusted with it

inherent in supreme power of every state, whether lodged in a royalty or legislature & has no affinity to those arbitrary
powers w/c are sometimes exerted by irresponsible monarchs to the great detriment of the people & the destruction of
their liberties. It’s a most beneficient function & often necessary to be exercised in interest of humanity & prevention of
injury to those who can’t protect themselves.

Taking care of those who can’t vindicate their rights & protection of sovereign authority.

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