Waiver of Express Immunity

Express Consent; General or Special Law

 Merritt v. 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. 

ISSUE:
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:
■ 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)

FACTS: The facts of the case took place in the 1910’s. E. Merritt was a constructor  who was excellent at his work. One day,
while he was riding his motorcycle along Calle Padre Faura, he was bumped by a government ambulance. The driver of the
ambulance was proven to have been negligent. Because of the incident, Merritt was hospitalized and he was severely
injured beyond rehabilitation so much so that he could never perform his job the way he used to and that he cannot even
earn at least half of what he used to earn.

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

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

In the case at bar, the ambulance driver was not a special agent nor was a government officer acting as a special agent
hence, there can be no liability from the government. “The Government does not undertake to guarantee to any person the
fidelity of the officers or agents whom it employs, since that would involve it in all its operations in endless
embarrassments, difficulties and losses, which would be subversive of the public interest.”

IMMUNITY AGAINST EXECUTION OF JUDGMENT: SUABILITY v. LIABILITY

MERRITT v. GOVERNMENT OF THE PHILIPPINES

By consenting to be sued a state simply waives its immunity from suit. It does not thereby concede its liability to plaintiff, or
create any cause of action in his favor, or extend its liability to any cause not previously recognized. It merely gives a
remedy to enforce a preexisting liability and submits itself to the jurisdiction of the court, subject to its right to interpose
any lawful defense. It follows therefrom that the state, by virtue of such provisions of law, is not responsible for the
damages suffered by private individuals in consequence of acts performed by its employees in the discharge of the
functions pertaining to their office, because neither fault nor even negligence can be presumed on the part of the state in
the organization of branches of public service and in the appointment of its agents. The State can only be liable if it acts
through a special agent (and a special agent, in the sense in which these words are employed, is one who receives a definite
and fixed order or commission, foreign to the exercise of the duties of his office if he is a special official) so that in
representation of the state and being bound to act as an agent thereof, he executes the trust confided to him.

In the case at bar, the ambulance driver was not a special agent nor was a government officer acting as a special agent
hence, there can be no liability from the government. “The Government does not undertake to guarantee to any person the
fidelity of the officers or agents whom it employs, since that would involve it in all its operations in endless
embarrassments, difficulties and losses, which would be subversive of the public interest.”

REPUBLIC v. VILLASOR
Facts:

The case was filed by the Republic of the Philippines requesting to nullify the ruling of The Court of First Instance in
Cebu in garnishing the public funds allocated for the Arm Forces of the Philippines.

A decision was rendered in Special Proceedings in favor of respondents P. J. Kiener Co., Ltd., Gavino Unchuan, and
International Construction Corporation, and against the petitioner herein, confirming the arbitration award in the amount
of P1,712,396.40, subject of Special Proceedings. The respondent Honorable Guillermo P. Villasor, issued an Order declaring
the said decision final and executory, directing the Sheriffs of Rizal Province, Quezon City and Manila to execute the said
decision. The corresponding Alia Writ of Execution was issued. On the strength of the aforementioned Alias Writ of
Execution, the Provincial Sheriff of Rizal served Notices of Garnishment with several Banks. The funds of the Armed Forces
of the Philippines on deposit with Philippine Veterans Bank and PNB are public funds duly appropriated and allocated for
the payment of pensions of retirees, pay and allowances of military and civilian personnel and for maintenance and
operations of the AFP.

  Petitioner, filed prohibition proceedings against respondent Judge Villasor for acting in excess of jurisdiction with
grave abuse of discretion amounting to lack of jurisdiction in granting the issuance of a Writ of Execution against the
properties of the AFP, hence the notices and garnishment are null and void.

 
Issues:

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

2. Whether or not the notice of garnishment issued by Judge Villasor is valid.

Discussions:

1. The provision of Sec 3 Article XVI declares that “the State may not be sued without its consent”. This provision is
merely a recognition of the sovereign character of the State and express an affirmation of the unwritten rule
insulating it from the jurisdiction of the courts of justice. Another justification is the practical consideration that the
demands and inconveniences of litigation will divert time and resources of the State from the more pressing
matters demanding its attention, to the prejudice of the public welfare.

2. As a general rule, whether the money is deposited by way of general or special deposit, they remain government
funds and are not subject to garnishment. An exception of the rule is a law or ordinance that has been enacted
appropriating a specific amount to pay a valid government obligation.

Rulings:

It is a fundamental postulate of constitutionalism flowing from the juristic concept of sovereignty that the state as
well as its government is immune from suit unless it gives its consent. A sovereign is exempt from suit, not because of any
formal conception or obsolete theory, but on the logical and practical ground that there can be no legal right as against the
authority that makes the law on which the right depends. A continued adherence to the doctrine of non-suability is not to
be deplored for as against the inconvenience that may cause private parties, the loss of government efficiency and the
obstacle to the performance of its multifarious functions are far greater is such a fundamental principle were abandoned
and the availability of judicial remedy were not thus restricted.

What was done by respondent Judge is not in conformity with the dictates of the Constitution. From a logical and
sound sense from the basic concept of the non-suability of the State, public funds cannot be the object of a garnishment
proceeding even if the consent to be sued had been previously granted and the state liability adjudged. 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.

PNB v. PABALAN

FACTS: On December 17, 1970, Judge Javier Pabalan issued a writ of execution followed thereafter by a notice of
garnishment on the funds of Philippine Virginia Tobacco Administration (PVTA) in the sum of P12,724.66 deposited with
the Philippine National Bank in La Union. PNB La Union filed an administrative complaint against Pabalan for grave abuse of
discretion, alleging that the latter failed to recognize that the questioned funds are of public character and therefore may
not be garnished, attached, nor may be levied upon. The PNB La Union Branch invoked the doctrine of non suability, putting
a bar on the notice of garnishment.

ISSUE: Whether or not PNB may be sued.

HELD: Yes. Funds of public corporations which can sue and be sued are not exempt from garnishment. PVTA is also a public
corporation with the same attributes, a similar outcome is attributed. The government has entered with them into a
commercial business hence it has abandoned its sovereign capacity and has stepped down to the level of a corporation.
Therefore, it is subject to rules governing ordinary corporations and in effect can be sued. Therefore, the petition of PNB La
Union is denied.

Facts:

Private respondent Judge Pabalan rendered a Decision against Philippine Virginia Tobacco Administration. Accordingly, a
writ of execution and a notice of garnishment was issued. Petitioner Philippine National Bank, however, filed a petition for
certiorari and prohibition against Judge Pabalan, invoking the doctrineof non-suability of a state, it being alleged that such
funds are public in character.
Issue: WON the funds of PVTA deposited with the PNB exempt from garnishment

Held:

No. Under the present Constitution, what was formerly implicit as a fundamentaldoctrine in constitutional law has been set
forth in express terms: “The State may not be sued without its consent.” If the funds appertained to one of the
regulardepartments or offices in the government, then, certainly, such a provision would be a bar to garnishment. But funds
of public corporations which can sue and be sued are not exempt from garnishment. As respondent Philippine Virginia
Tobacco Administration is likewise a public corporation possessed of the same attributes, its funds that are deposited with
PNB are not exempt from garnishment.

SUITS AGAINST GOVERNMENT AGENCIES

Chartered Agencies

ARCEGA v. CA

FACTS: The petitioner Alicia O. Arcega, doing business under the firm name “Fairmont Ice Cream Company,” filed
a complaint before the court against the respondents Central Bank of the Philippines and
Philippine National Bank, for the refund from allegedly unauthorized payments made by her of the 17% special
excise tax on foreign exchange. The Central Bank moved to dismiss the complaint on the grounds,
among others, that  the trial court has no jurisdiction over the subject-matter of the action, because the
judgment sought will constitute a financial charge against the Government, and therefore the suit is one
against the Government, which cannot prosper without its consent, and in this
case no such consent has been given.

The petitioner appealed, but the court dismissed the complaint on the ground set forth in the Central
Bank’s motion to dismiss. The petitioner Arcega filed a motion for reconsideration of the resolution to which an
opposition was filed by the Central Bank. This time, the Central Bank submitted a certification that the balance
of the collected special excise tax on sales of foreign exchange was turned over to the Treasurer of the
Philippines. Then the court denied the petitioner’s motion for reconsideration as a result Arcega appealed to the
Court of Appeals. Holding that the suit is indirectly against the Republic of the Philippines which cannot be sued
without its consent, the Court of Appeals affirmed the dismissal of the complaint. Finally the petitioner filed an
appeal before the Supreme Court. 

Issue: Whether a suit against the Central Bank for refund

a suit against the State?

HELD: It is not a suit against the state. The charted of the Central Bank of the Philippines  authorize that
it can to sue and be sued. The consent of the State to be sued, therefore, has been given. The Supreme Court
impleaded the National Treasurer and the Secretary of Finance as parties defendant.

1. The suability of the Central Bank for the refund of taxes collected by it under Republic Act 601, as
amended, was upheld in Central Azucarera Don Pedro vs. Central Bank of the Philippines,1 which ruling merited
elaboration in Olizon vs. Central Bank2 as follows:

It is next urged that inasmuch as the amounts here involved have already been turned over to the
national treasury the present action may no longer be maintained since it would, in effect, be a suit against the
State without its consent.

We cannot agree to the proposition. This suit is brought against the Central Bank of the Philippines, an
entity authorized by its charter to sue and be sued. The consent of the State to thus be sued, therefore, has
been given.
 This doctrine was reiterated in Philippines Acetylene Co. vs. Central Bank of the Philippines 3 where it was
pointedly stated that "sec. 5 of Republic Act No. 601 (as amended) directs that refund of taxes be made by the
Central Bank."

The courts below, therefore, erred in dismissing the complaint on the ground that the Central Bank was
non-suable for the refund of taxes it had collected under the statute..

RAYO v. CFI OF BULACAN

RAYO vs. CFI BULACAN

Facts:

During the height of typhoon Kading, the respondent corporation acting through itsplant superintendent,
Benjamin Chavez, opened simultaneously all the threefloodgates of the Angat Dam. As a direct and immediate
result, several towns inBulacan where inundated and the hardest hit was Norzagaray. About a hundred ofits
residents died and properties worth million of pesos were destroyed. Thepetitioners, who were among the
many unfortunate victims of the man-caused flood,filed eleven complaints for damages against the National
Power Corporation and theplant superintendent of Angat Dam. The respondent corporation filed
separateanswers to each of those eleven complaints and invoking in each answer a specialand affirmative
defense that in the operation of the Angat Dam, it is performing apurely governmental function, and it cannot
be sued without the express consent ofthe State. The petitioners opposed the prayer of the respondent for
dismissal of thecase and contended that the respondent corporation is performing notgovernmental but
proprietary functions and that under its own organic act, it cansue and be sued in court.

Issue:

Whether respondent National Power Corporation performs a governmentalfunction with respect to the
management and operation of the Angat Dam; andWhether the power of respondent National Power
Corporation to sue and be suedunder its organic charter includes the power to be sued for tort.

Held:

The Government has organized a private corporation, put money in it and hasallowed it to sue and be sued in
any court under its charter. The National PowerCorporation, a government owned and controlled corporation,
has a personality ofits own, distinct and separate from that of the government. The charter provisionthat the
National Power Corporation can sue and be sued in any court is withoutqualification on the cause of action and
can include a tort claim.

The petition isgranted.

Notes:

Government Owned and Controlled Corporations (GOCC) have a personality of theirown, separate and distinct
from the government, their funds, therefore althoughconsidered to be public in character, are not exempt
from garnishment.

 
PNR v. IAC

FACTS:

o That plaintiff was passing thru the town of Calumpit Bulacan, temporarily while the bridge at Hagonoy,
Bulacan was construction;
o That defendant PNR is a purely government owned and regularly passes along the intersection of Barrio
Balungao. Calumpit, Bulacan, in going to San Fernando, La Union from Manila and return;
o That on August 10 1974, at about 1:20 pm, passenger train no 73 hit and bumped the right mid portion
of the plaintiff’s passenger bus no. 1066 while the rear portion of said bus was at the railroad track and
its direction was towards Hogonoy Bulacan at about 1:30 in the afternoon.
o That at the time of the collision there was a slight rainfall in the vicinity of the scene of the accident and
that there was at said no bar, semaphores, and signal lights that would warn the public of the
approaching train.
o That on account of the said collision, the Baliuag Transit Bus with b1066 driven by Romeo Hughes was
damaged and 18 of its passengers died and the rest who were more that 53 passengers suffered physical
injuries;

ISSUES: Who between the driver Romeo Hughes of the Baliuag Incorporated and the train Engr of the PNR
was negligent in the operation of their respective vehicles or whether both were negligent?

Coul either of the companies Baliuag Transit and PNR be held accountable for the collision because of
Negligence.

HELD: The instant case 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 Article 1732-1766 of the Civil Code on common carrier.

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.

When it is apparent or when in the exercise of reasonable diligence commensurate with the
surroundings it should be apparent to the company that a person on its track or to get on its track unaware
of his danger or cannot get out of the way, it becomes the duty of the company to use such precaution, by
warnings, applying brakes or otherwise, as may be reasonable necessary to avoid injury to him.

What exacerbates against petitioners’ contention is the authority in this jurisdiction to the effect that
the failure of a railroad company to install a semaphore or at the very least, to post a flagman or watchman
to warn the public of the passing train amount to negligence.

NATIONAL AIRPORTS CORPORATION v. TEODORO

FACTS:

The National Airports Corporation was organized under Republic Act No. 224, which expressly made the
provisions of the Corporation Law applicable to the said corporation. It was abolished by Executive Order No.
365 and to take its place the Civil Aeronautics Administration was created.

Before the abolition, the Philippine Airlines, Inc. paid to the National Airports Corporation P65,245 as fees for
landing and parking for the period up to and including July 31, 1948. These fees are said to have been due
and payable to the Capitol Subdivision, Inc., who owned the land used by the National  Airports Corporation
as airport. The owner commenced an action in the court against the Philippine Airlines, Inc.

The Philippine Airlines, Inc. countered with a third-party complaint against the National Airports
Corporation, which by that time had been dissolved, and served summons on the Civil Aeronautics
Administration. The third party plaintiff alleged that it had paid to the National Airports Corporation the fees
claimed by the Capitol Subdivision, Inc. “on the belief and assumption that the third party defendant was the
lessee of the lands subject of the complaint and that the third party defendant and its predecessors in
interest were the operators and maintainers of said airport and, further, that the third party defendant
would pay to the landowners, particularly the Capitol Subdivision, Inc., the reasonable rentals for the use of
their lands.”

The Solicitor General, after answering the third party complaint, filed a motion to dismiss on the ground that
the court lacks jurisdiction to entertain the third- party complaint, first, because the National Airports
Corporation “has lost its juridical personality,” and, second, because agency of the Republic of the
Philippines, unincorporated and not possessing juridical personality under the law, is incapable of suing and
being sued

Issues: Whether or not the Civil Aeronautics Administration should be regarded as engaged in private
functions and therefore subject to suit.

Discussions: Not all government entities, whether corporate or non corporate, are immune from suits. The
power to sue and be sued is implied from the power to transact private business. And if it has the power to
sue and be sued on its behalf, the Civil Aeronautics Administration with greater reason should have the
power to prosecute and defend suits for and against the National Airports Corporation, having acquired all
the properties, funds and choses in action and assumed all the liabilities of the latter. The rule is thus stated
in Corpus Juris:

Suits against state agencies with relation to matters in which they have assumed to act in private or
nongovernment capacity, and various suits against certain corporations created by the state for public
purposes, but to engage in matters partaking more of the nature of ordinary business rather than functions
of a governmental or political character, are not regarded as suits against the state. The Latter is true,
although the state may own stock or property of such a corporation for by engaging in business operations
through a corporation the state divests itself so far of its sovereign character, and by implication consents to
suits against the corporation.

RULING:

Yes. The Supreme Court ruled that the Civil Aeronautics Administration comes under the category of a
private entity. Although not a body corporate it was created, like the National Airports Corporation, not to
maintain a necessary function of government, but to run what is essentially a business, even if revenues be
not its prime objective but rather the promotion of travel and the convenience of the traveling public. It is
engaged in an enterprise which, far from being the exclusive prerogative of state, may, more than the
construction of public roads, be undertaken by private concerns.

In the light of a well-established precedents, and as a matter of simple justice to the parties who dealt with
the National Airports Corporation on the faith of equality in the enforcement of their mutual commitments,
the Civil Aeronautics Administration may not, and should not, claim for itself the privileges and immunities
of the sovereign state.
 

BUREAU OF PRINTING, SERAFIN SALVADOR and MARIANO LEDESMA, vs. THE BUREAU OF PRINTING
EMPLOYEES ASSOCIATION (NLU), et al.

Facts:

The action in question was upon complaint of the respondents Bureau of Printing Employees Association
(NLU)Pacifico Advincula, Roberto Mendoza, Ponciano Arganda and Teodulo Toleran filed by an acting
prosecutor of the Industrial Court against herein petitioner Bureau of Printing, Serafin Salvador, the Acting
Secretary of the Department of General Services, and Mariano Ledesma the Director of the Bureau of
Printing. The complaint alleged that Serafin Salvador and Mariano Ledesma have been engaging in unfair
labor practices by interfering with, or coercing the employees of the Bureau of Printing particularly the
members of the complaining association petition, in the exercise of their right to self-organization an
discriminating in regard to hire and tenure of their employment in order to discourage them from pursuing
the union activities. The petitioners Bureau of Printing, Serafin Salvador and Mariano Ledesma denied the
charges of unfair labor practices attributed to the and, by way of affirmative defenses, alleged, among other
things, that respondents Pacifico Advincula, Roberto Mendoza Ponciano Arganda and Teodulo Toleran were
suspended pending result of an administrative investigation against them for breach of Civil Service rules
and regulations petitions; that the Bureau of Printing has no juridical personality to sue and be sued; that
said Bureau of Printing is not an industrial concern engaged for the purpose of gain but is an agency of the
Republic performing government functions. For relief, they prayed that the case be dismissed for lack of
jurisdiction. Thereafter, before the case could be heard, petitioners filed an "Omnibus Motion"asking for a
preliminary hearing on the question of jurisdiction raised by them in their answer and for suspension of
thetrial of the case on the merits pending the determination of such jurisdictional question. The motion was
granted, butafter hearing, the trial judge of the Industrial Court in an order dated January 27, 1959 sustained
the jurisdiction of thecourt on the theory that the functions of the Bureau of Printing are "exclusively
proprietary in nature," and,consequently, denied the prayer for dismissal. Reconsideration of this order
having been also denied by the court inbanc.

Note: The Bureau of Printing is an office of the Government created by the Administrative Code of 1916 (Act
No. 2657). As suchinstrumentality of the Government, it operates under the direct supervision of the
Executive Secretary, Office of the President, and is"charged with the execution of all printing and binding,
including work incidental to those processes, required by the National Government and such other work of
the same character as said Bureau may, by law or by order of the (Secretary of Finance)Executive Secretary,
be authorized to undertake . . .." (See. 1644, Rev. Adm. Code). It has no corporate existence, and
itsappropriations are provided for in the General Appropriations Act. Designed to meet the printing needs of
the Government, it is primarily a service bureau and obviously, not engaged in business or occupation for
pecuniary profit.

Issue: whether or not Bureau of Printing can be sued.

Ruling:

No. Indeed, as an office of the Government, without any corporate or juridical personality, the Bureau of
Printingcannot be sued. Any suit, action or proceeding against it, if it were to produce any effect, would
actually be a suit, actionor proceeding against the Government itself, and the rule is settled that the
Government cannot be sued without itsconsent, much less over its objection.It is true that the Bureau of
Printing receives outside jobs and that many of its employees are paid for overtime work onregular working
days and on holidays, but these facts do not justify the conclusion that its functions are
"exclusivelyproprietary in nature." Overtime work in the Bureau of Printing is done only when the interest of
the service so requires.As a matter of administrative policy, the overtime compensation may be paid, but
such payment is discretionary withthe head of the Bureau depending upon its current appropriations, so
that it cannot be the basis for holding that thefunctions of said Bureau are wholly proprietary in character.
Clearly, while the Bureau of Printing is allowed toundertake private printing jobs, it cannot be pretended
that it is thereby an industrial or business concern. The additional work it executes for private parties is
merely incidental to its function, and although such work may be deemed proprietary in character, there is
no showing that the employees performing said proprietary function are separate and distinct from those
employed in its general governmental functions.

MOBIL PHILIPPINES v. CUSTOMS ARRASTRE SERVICE

FACTS: Four cases of rotary drill parts shipped from abroad via S.S. “Leoville,” consigned to Mobil Philippines
Exploration, Inc., Manila arrived sometime in November 1962 at the Port of Manila and was released to the
protection of the Customs Arrastre Service (CAS), operations, the unit of the Bureau of Customs that handles
such arrastre operations. However, instead of the expected four cases, CAS was only able to deliver three.
The plaintiff, Mobil Phils., filed a suit in the CFI of Manila against the two entities, to recover the value of the
missing case at 18,493.37 pesos plus damages. Meanwhile, the defendants filed a motion to dismiss the
complaint claiming that both entities were not suable. The appellant now contends that not all government
entities are immune from suit; that defendant Bureau of Customs as operator of the arrastre service at the
Port, is discharging proprietary functions and as such, can be sued by private individuals.

ISSUE: Whether or not the defendants can use State Immunity as a defense.

RULING: The court affirmed the order of dismissal for appeal, with costs against the appellant.

Reason: The defendants were performing a function proprietary in nature, however, as the Bureau of
Customs is part of the Department of Finance, its personality is as part of the national government. Its
primary function is assessing and collecting revenues from imported articles and all other tariff and customs
duties, a governmental function. Although the function of arrastre service is deemed proprietary, it is a
necessary unit of the primary and governmental function of the Bureau of Customs, and engaging in the
same does not necessarily render said Bureau liable to suit. Otherwise, it could not perform one of its
governmental functions if it is vulnerable to suit. Therefore, the defendants at the case at bar can use the
doctrine of Sovereign or State Immunity as a defense.

Another Ruling from another digest: The Bureau of Custom, is a part of Department of Finance. It does not
have a separate juridical personality of its own apart from that of the national government. Its primary
function is governmental, that of assessing and collecting lawful revenues from imported articles and all
other tariff and customs duties, fees, charges, fines and penalties (Sec. 602, R.A. 1937). To this function,
arrastre service is a necessary incident. As stated in the law, agencies of the government is not suable if it
is performing governmental functions and if it an unincorporated government entity without a separate
juridical personality.

Yes. The Supreme Court ruled that the Bureau of Customs cannot be sued for recovery of money and
damages involving arrastre services, considering that said arrastre function may be deemed proprietary,
because it is a necessary incident of the primary and governmental function of the Bureau of Customs.
The Court ruled that the fact that a non-corporate government entity performs a function proprietary in
nature does not necessarily result in its being suable. If said non-governmental function is undertaken as
an incident to its governmental function, there is no waiver thereby of the sovereign immunity from suit
extended to such government entity. The Supreme Court ruled that the plaintiff should have filed its
present claim to the General Auditing Office, it being for money under the provisions of Commonwealth
Act 327, which state the conditions under which money claims against the Government may be filed.

IMMUNITY NOT AN INSTRUMENT TO PERPETUATE INJUSTICE

SANTIAGO v. REPUBLIC

FACTS: 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.

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

The writ of  Certiorari prayed is granted and the order of dismissal of October 20, 1977 is nullified, set aside
and declare to be without force and effect. The Court of First Instance of Zamboanga City, Branch II, is
hereby directed to proceed with this case, observing the procedure set forth in the rules of court. No cost.

FROM THE FULLTEXT: Fortunately, the constitutional provision itself snows a waiver. Where there is
consent, a suit may be filed. Consent need not be express. It can be implied. So it was more than implied
in Ministerio v. Court of First Instance of Cebu: "The doctrine of governmental immunity from suit cannot
serve as an instrument for perpetrating an injustice on a citizen. The fact that this decision arose from a suit
against the Public Highways Commissioner and the Auditor General for failure of the government to pay for
land necessary to widen a national highway, the defense of immunity without the consent proving
unavailing, is not material. The analogy is quite obvious. Where the government ordinarily benefited by the
taking of the land, the failure to institute the necessary condemnation proceedings should not be a bar to an
ordinary action for the collection of the just compensation due. Here, the alleged failure to abide by the
conditions under which a donation was given should not prove an insuperable obstacle to a civil action, the
consent likewise being presumed. This conclusion is strengthened by the fact that while a donation partakes
of a contract, there is no money claim, and therefore reliance on Commonwealth Act No. 327 would be
futile.

 Our decision, it must be emphasized, goes no further than to rule that a donor, with the Republic or any of
its agency being the donee, is entitled to go to court in case of an alleged breach of the conditions of such
donation. He has the right to be heard. Under the circumstances, the fundamental postulate of non-suability
cannot stand in the way. It is made to accommodate itself to the demands of procedural due process, which
 is the negation of arbitrariness and inequity. The government, in the final analysis, is the beneficiary. It
thereby manifests its adherence to the highest ethical standards, which can only be ignored at the risk of
losing the confidence of the people, the repository of the sovereign power. The judiciary under this
circumstance has the grave responsibility of living up to the ideal of objectivity and impartiality, the very
essence of the rule of law. Only by displaying the neutrality expected of an arbiter, even if it happens to be
one of the departments of a litigant, can the decision arrived at, whatever it may be, command respect and
be entitled to acceptance.

VICTORIA AMIGABLE vs. NICOLAS CUENCA G.R. No. L-26400 February 29, 1972

FACTS:

Victoria Amigable, is the registered owner of a lot in Cebu City. Without prior expropriation or negotiated sale,
the government used a portion of said lot for the construction of the Mango and Gorordo Avenues. On March
27, 1958 Amigable's counsel wrote the President of the Philippines, requesting payment of the portion of her lot
which had been appropriated by the government. The claim was indorsed to the Auditor General, who
disallowed it in his 9th Endorsement. Thus, Amigable filed in the court a quo a complaint against
the Republic of the Philippines and Nicolas Cuenca (Commissioner of Public Highways) for the recovery
of ownership and possession of her lot. The defendants denied the plaintiff’s allegations stating: (1) that the
action was premature, the claim not having been filed first with the Office of the Auditor General; (2) that the
right of action for the recovery had already prescribed; (3) that the action being a suit against the Government,
the claim for moral damages ,attorney's fees and costs had no valid basis since the Government had not given its
consent to be sued; and(4) that inasmuch as it was the province of Cebu that appropriated and used the area
involved in the construction of Mango Avenue, plaintiff had no cause of action against the defendants. On July
29, 1959, the court rendered its decision holding that it had no jurisdiction over the plaintiff's cause of action for
the recovery of possession and ownership of the lot on the ground that the government cannot be sued without
its consent; that it had neither original nor appellate jurisdiction to hear and decide
plaintiff'sclaim for compensatory damages, being a money claim against the government; and that it had longpr
escribed, nor did it have jurisdiction over said claim because the government had not given its consent tobe
sued. Accordingly, the complaint was dismissed.

ISSUE: W/N the appellant may properly sue the government

RULING: Yes. Considering that no annotation in favor of the government appears at the back of her certificate of
title and that she has not executed any deed of conveyance of any portion of her lot to the government, the
appellant remains the owner of the whole lot. As registered owner, she could bring an action to recover
possession of the portion of land in question at anytime because possession is one of the attributes
of ownership. However, since restoration of possession of said portion by the government is neither convenient
or feasible at this time because it is now and has been used for road purposes, the only relief available is for the
government to make due compensation which it could and should have done years ago. To determine the due
compensation for the land, the basis should be the price or value thereof at the time of the taking.

As regards the claim for damages, the plaintiff is entitled thereto in the form of legal interest on the price of  the
land from the time it was taken up to the time that payment is made by the government. 

In addition, the government should pay for attorney's fees, the amount of which should be fixed by the trial
court after hearing. WHEREFORE, the decision appealed from is hereby set aside and the case remanded to the
court a quo for the determination of compensation, including attorney's fees, to which the appellant is entitled
as above indicated