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State Immunity From Suit: A Basic Guide By Atty. Alexis F. Medina 1 San Sebastian College-Recoletos, Institute of Law
Sections 3, Article XVI of the Constitution provides: ―The State may not be sued without its consent.‖
STATE IMMUNITY DOCTRINE IN GENERAL Doctrine of state immunity from suit Nothing is better settled than the general rule that a sovereign state and its political subdivisions cannot be sued in the courts except when it has given its consent. (Republic v. Sandoval, 19 March 1993) The Republic cannot be proceeded against unless it allows itself to be sued. Neither can a department, bureau, agency, office, or instrumentality of the government where the suit, may result "in adverse consequences to the public treasury, whether in the disbursements of funds or loss of property. Such a doctrine was reiterated in the following cases: Republic v. Villasor, Sayson v. Singson , Director of the Bureau of Printing v. Francisco, and Republic v. Purisima. (Santiago v. Republic, G.R. No. L-48214, 19 December 1978)
Logical/practical basis There can be no legal right as against the authority that makes the law on which the right depends. (Department of Agriculture v. National Labor Relations Commission, G.R. No. 104269. November 11, 1993; Republic v. Villasor, G.R. No. L-30671 28 November 1973; Professional Video v. Technical and Educational Skills Development Authority Authority [Tesda], G.R. G.R. No. 155504, 155504, June 26, 2009) 2009) 1
Atty. Alexis F. Medina. AB Political Science, University of the Philippines (UP), Diliman; Order of the Purple Feather, UP, College of Law; Valedictorian, San Sebastian College, Manila, Institute of Law; Associate, Ponce Enrile Reyes & Manlastas Law Offices (Pecabar); Member, Alpha Phi Beta Fraternity, UP College of Law.
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The loss of governmental efficiency and the obstacle to the performance of its multifarious functions would be far greater in severity than the inconvenience that may be caused private parties, if such fundamental principle is to be abandoned. (Department of Agriculture v. National Labor Relations Commission, G.R. No. 104269. November 11, 1993) It also rests on reasons of public policy — that public service 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 dispositions of the means required for the proper administration of the government. (Republic v. Sandoval 19 March 1993; Professional Video v. Technical and Educational Skills Development Authority [Tesda], G.R. No. 155504, June 26, 2009)
State immunity as the “royal prerogative of dishonesty” The doctrine of state immunity from suit is also called "the royal prerogative of dishonesty" because it grants the state the prerogative to defeat any legitimate claim against it by simply invoking its non-suability. (Department of Agriculture v. NLRC 11 November 1993)
APPLICATION OF THE STATE IMMUNITY DOCTRINE TO THE PHILIPPINE STATE How to apply the state immunity doctrine to specific cases involving the Philippine State
Step 1. Determine if the suit qualifies as a suit against the State. Step 2. If it is a suit against the State, determine if there is an express consent to be sued. Step 3. If there is no express consent, determine if there is an implied consent to be sued. Step 4. Even if there is no consent, express or implied, determine if the case falls under the exceptions to the general rule of state immunity from suit. Step 5.
Even if the State can be sued, determine if it is liable.
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Step 6.
If the State is liable, determine if there can be execution against
it. Step 7. If execution is not allowed, determine how recovery can be made against the State.
Step 1: Determine if the suit qualifies as a suit against the State Some instances of a suit against the State: (1)
When the Republic is sued by name;
(2)
When the suit is against an unincorporated government agency;
(3) 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. (Republic v. Sandoval 19 March 1993) When the complaint is filed against officials of the state for acts allegedly performed by them in the discharge of their duties, the suit is regarded as one against the state where satisfaction of the judgment against the officials will require the state itself to perform a positive act, such as the appropriation of the amount necessary to pay the damages awarded against them. (Shauf v. Court of Appeals, G.R. No. 90314, November 27, 1990, 191 SCRA 713; Professional Video v. Technical and Educational Skills Development Authority [Tesda], G.R. No. 155504, June 26, 2009)
Cases when the state immunity doctrine does not apply 1) Relief does not requires action by the State The principle of state immunity from suit does not apply when the relief demanded by the suit requires no affirmative official action on the part of the State nor the affirmative discharge of any obligation which belongs to the State in its political capacity, even though the officers or agents who are made defendants claim to hold or act only by virtue of a title of the state and as its agents and servants. (Republic v. Sandoval 19 March 1993) 2) When the act of the public officer is ultra vires, or in bad faith, or with malice or gross negligence When the public official has committed an ultra vires act or where there is a showing of bad faith, malice or gross negligence, the public officer can be held personally liable even if such acts are claimed to have been performed in connection with official duties. (Wylie v. Rarang 209 SCRA 357) A public officer is by law not immune from damages in his/her personal capacity for acts done in bad faith which, being outside the scope of his authority, are no longer protected by the mantle of immunity for official actions. (Vinzons-Chato v. Fortune Tobacco, 19 June 2007)
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Step 2: Determine if there is an EXPRESS CONSENT to be sued 1)
UNINCORPORATED GOV’T AGENCIES:
First View: The State consents to be sued on money claims involving liability arising from contract under Act 3083. But the claim must be filed with the Commission on Audit, under CA 327 and PD 1445. Express consent may be made through a general law or a special law. In this jurisdiction, 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 claim involving liability arising from contract, express or implied, which could serve as a basis of civil action between private parties." 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, . . ." Pursuant, however, to Commonwealth Act ("C.A.") No. 327, as amended by Presidential Decree ("P.D.") No. 1445, the money claim should first be brought to the Commission on Audit. "(C)laimants have to prosecute their money claims against the Government under Commonwealth Act 327, stating that Act 3083 stands now merely 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.' "(Department of Agriculture v. NLRC, 11 November 1993)
Note however that State consent to be sued under Act 3083 extends only to liabilities arising from contract, not torts. Also, the State consenting to be sued is the Philippine State, not any foreign State.
Second View: However, in the following cases, the Supreme Court did not cite any express consent to be sued on money claims arising from contract. Instead, the Supreme Court used as basis in dismissing the cases the lack of implied State consent when unincorporated government agencies entered into contracts in the exercise of their sovereign or governmental functions. However, the Supreme Court ruled that the money claims may still be filed with the Commission on Audit, pursuant to Act No. 327.
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In Mobil Philippines Corp. v. Customs Arrastre Services (G.R. No. L23139, 17 December 1966), 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. In Professional Video v. Technical and Educational Skills Development Authority [Tesda], G.R. No. 155504, June 26, 2009, the Supreme Court ruled that TESDA cannot be sued for recovery of sum of money and damages on a contract for the supply of PVC cards to be used as ID of TESDA trainees who passed TESDA’s National Skills Certification Program – the program that immediately serves TESDA’s mandated function of developing and establishing a national system of skills standardization, testing, and certification in the country. TESDA performs governmental functions, and the issuance of certifications is a task within its function of developing and establishing a system of skills standardization, testing, and certification in the country. From the perspective of this function, the core reason for the existence of state immunity applies – i.e., the public policy reason that the performance of governmental function cannot be hindered or delayed by suits, nor can these suits control the use and disposition of the means for the performance of governmental functions. Here, however, the Supreme Court did not make any mention of the remedy of filing a claim with the Commission on Audit.
2)
INCORPORATED GOV’T AGENCIES
Express consent based on their charter. An unincorporated government agency may be sued if its charter expressly provides that it can sue and be sued. An incorporated agency has a charter of its own that invests it with a separate juridical personality, like the Social Security System, the University of the Philippines, and the City of Manila. By contrast, the unincorporated agency is so called because it has no separate juridical personality but is merged in the general machinery of the government, like the Department of Justice, the Bureau of Mines and the Government Printing Office.
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If the agency is incorporated, the test of its suability is found in its charter. The simple rule is that it is suable if its charter says so, and this is true regardless of the functions it is performing. Municipal corporations, for example, like provinces and cities, are agencies of the State when they are engaged in governmental functions and therefore should enjoy the sovereign immunity from suit. Nevertheless, they are subject to suit even in the performance of such functions because their charter provides that they can sue and be sued. State immunity from suit may be waived by general or special law. The special law can take the form of the original charter of the incorporated government agency. Jurisprudence is replete with examples of incorporated government agencies which were ruled not entitled to invoke immunity from suit, owing to provisions in their charters manifesting their consent to be sued. These include the National Irrigation Administration, the former Central Bank, and the National Power Corporation. In SSS v. Court of Appeals , the Court through Justice Melencio-Herrera explained that by virtue of an express provision in its charter allowing it to sue and be sued, the Social Security System did not enjoy immunity from suit. (German Agency For Technical Cooperation v. Court of Appeals, G.R. No. 152318, 16 April 2009)(emphasis supplied) A GOCC with original charter is not immune from suit, whether or not it performs governmental functions. A government-owned and controlled corporation "has a personality of its own distinct and separate from that of the government. Accordingly, it may sue and be sued and may be subjected to court processes just like any other corporation. (Santiago v. Republic, G.R. No. L-48214, 19 December 1978; National Shipyard and Steel Corporation v. Court of Industrial Relations, 118 Phil. 782)
A GOCC with original charter may be even be sued for torts. A government owned or controlled corporation with an original charter, whether or not it perform a governmental function, has a personality of its own, distinct and separate from that of the Government. If the charter provision says that it can 'sue and be sued in any court,' without qualification on the cause of action, thus it can include a tort claim. (See Rayo v. Court of First Instance of Bulacan, 110 SCRA 457 [1981])
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3)
LOCAL GOV’TS:
Express consent under the Local Government Code and/or charter One of the corporate powers of local government units is to sue and be sued. (See Section 22, Local Government Code) Municipal corporations, for example, like provinces and cities, are agencies of the State when they are engaged in governmental functions and therefore should enjoy the sovereign immunity from suit. Nevertheless, they are subject to suit even in the performance of such functions because their charter provides that they can sue and be sued. (German Agency For Technical Cooperation v. Court of Appeals, G.R. No. 152318, 16 April 2009)(emphasis supplied)
Step 3. Determine if there is an IMPLIED CONSENT to be sued
Implied consent, on the other hand, is conceded when the State itself 1) commences litigation, thus opening itself to a counterclaim 2) or when it enters into a contract.
Not all contracts entered into by the government operate as a waiver of its non-suability. Distinguish a) sovereign and governmental acts (jure imperii) and b) private, commercial and proprietary acts (jure gestionis). The State immunity now extends only to acts jure imperii. (see Department of Agriculture v. National Labor Relations Commission, G.R. No. 104269. November 11, 1993)
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. It does not apply where the contracts relates to
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the exercise of its sovereign functions. (Department of Agriculture v. National Labor Relations Commission, G.R. No. 104269. November 11, 1993)
Step 4. Determine if the case falls under the exceptions to the general rule of state immunity from suit
GENERAL RULE: The state may not be sued without its consent. EXCEPTIONS: In these cases, the State may still be sued even if it has no consent 1) a public officer may be sued to compel him to do an act required by law; 2) a public officer may be sued to restrain him from enforcing a law claimed to be unconstitutional; 3) a public officer may be sued to compel an officer to pay damages from an already appropriate assurance fund or a revenue officer to refund tax overpayments from a fund already available for such purpose; 4) an action may be filed to secure a judgment that the officer impleaded may satisfy himself without the government itself having to do a positive act to assist him; 5) where the government itself has violated its own laws, the aggrieved party may directly implead the government even without first filing his claim with the Commission on Audit, as the doctrine of state immunity cannot be used as an instrument for perpetrating an injustice. (Sanders v. Veridiano, 10 June 1988)
The doctrine of state immunity from suit cannot serve as an instrument for perpetrating an injustice.
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In Amigable vs. Cuenca , the Supreme Court, in effect, shred the protective shroud which shields the State from suit, reiterating the decree in the landmark case of Ministerio vs. CFI of Cebu [ that ―the doctrine of governmental immunity from suit cannot serv e as an instrument for perpetrating an injustice on a citizen.‖ It is just as important, if not more so, that there be fidelity to legal norms on the part of officialdom if the rule of law were to be maintained. (EPG Construction v. Vigilar, 16 March 2001) Amigable filed in the court a complaint against the Republic of the Philippines and Nicolas Cuenca, in his capacity as Commissioner of Public Highways for the recovery of ownership and possession of the 6,167 square meters of land traversed by the Mango and Gorordo Avenues. She also sought the payment of compensatory damages in the sum of P50,000.00 for the illegal occupation of her land, moral damages in the sum of P25,000.00, attorney's fees in the sum of P5,000.00 and the costs of the suit. The government contended that the suit was premature because no claim having been filed first before the Office of the Auditor General. Nevertheless, the Supreme Court ruled that the government should pay Amigable just compensation for the land, plus damages 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, and attorney’s fees. Citing Ministerio vs. Court of First Instance of Cebu , the Supreme Court declared that where the government takes away property from a private landowner for public use without going through the legal process of expropriation or negotiated sale, the aggrieved party may properly maintain a suit against the government without thereby violating the doctrine of governmental immunity from suit without its consent. The doctrine of governmental immunity from suit cannot serve as an instrument for perpetrating an injustice on a citizen. When the government takes any property for public use, which is conditioned upon the payment of just compensation, to be judicially ascertained, it makes manifest that it submits to the jurisdiction of a court. There is no thought then that the doctrine of immunity from suit could still be appropriately invoked. (Amigable vs. Cuenca , G.R. No. L-26400 29 February 1972) (emphasis supplied) In Republic v. UniMex Micro-Electronics (G.R. Nos. 166309-10, March 9, 2007), the Supreme Court ordered the Bureau of Customs to pay the value of the goods that were lost in the BOC’s custody, declaring that ―the situation does not allow us to reject respondent’s claim on the mere invocation of the doctrine of state immunity. Succinctly, the doctrine must be fairly observed and the State should not avail itself of this prerogative to take undue advantage of parties that may have legitimate claims against it. Citing Department of Health v. C.V. Canchela & Associates, the Supreme Court declared that it cannot sanction an injustice so patent in its face, and allow itself to be an instrument in the perpetration thereof. Justice and equity now demand that the State’s cloak of invincibility against suit and liability be shredded.
Step 5. Determine if the State is liable
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When the State waives its immunity, all it does, in effect, is to give the other party an opportunity to prove, if it can, that the State has a liability. (Department of Agriculture v. National Labor Relations Commission, G.R. No. 104269. November 11, 1993)
There seems to be a failure to distinguish between suability and liability and a misconception that the two terms are synonymous. Suability depends on the consent of the state to be sued, liability on the applicable law and the established facts. The circumstance that a state is suable does not necessarily mean that it is liable; on the other hand, it can never be held liable if it does not first consent to be sued. Liability is not conceded by the mere fact that the state has allowed itself to be sued. When the state does waive its sovereign immunity, it is only giving the plaintiff the chance to prove, if it can, that the defendant is liable. (United States v. Guinto, G.R. No. 76607, 26 February 1990)
Liability of the state for acts of special agents "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. xxx "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 of industry. "The State is responsible in like manner when it acts though a special agent, but not when the damage has been caused by the official to whom the task was done properly pertains , in which case what is provided in Article 2176 shall be applicable.‖ (Article 2180, New Civil Code) It is a well-entrenched rule in this jurisdiction, embodied in Article 2180 of the Civil Code of the Philippines, that the State is liable only for torts caused by its special agents, specially commissioned to carry out the acts complained of outside of such agent's regular duties (Merritt vs. Insular Government, supra ; Rosete vs. Auditor General, 81 Phil. 453). There being no proof that the making of the tortious inducement was authorized, neither the State nor its funds can be made liable therefor. (Republic v. Palacio, 29 May 1968)
The private respondent invokes Article 2180 of the Civil Code which holds the government liable if it acts through a special agent. The argument, it would seem, is
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premised on the ground that since the officers are designated "special agents," the United States government should be liable for their torts. There seems to be a failure to distinguish between suability and liability and a misconception that the two terms are synonymous. Suability depends on the consent of the state to be sued, liability on the applicable law and the established facts. The circumstance that a state is suable does not necessarily mean that it is liable; on the other hand, it can never be held liable if it does not first consent to be sued. Liability is not conceded by the mere fact that the state has allowed itself to be sued. When the state does waive its sovereign immunity, it is only giving the plaintiff the chance to prove, if it can, that the defendant is liable. The said article establishes a rule of liability , not suability. The government may be held liable under this rule only if it first allows itself to be sued through any of the accepted forms of consent. Moreover, the agent performing his regular functions is not a special agent even if he is so denominated, as in the case at bar. No less important, the said provision appears to regulate only the relations of the local state with its inhabitants and, hence, applies only to the Philippine government and not to foreign governments impleaded in our courts. (United States v. Guinto, G.R.
No. 76607, 26 February 1990)
Step 6. Determine if the State funds or property can be subject to execution Consent to be sued does not mean consent to execution. Even though the rule as to immunity of a state from suit is relaxed, the power of the courts ends when the judgment is rendered. (City of Caloocan v. Allarde, G.R. No. 107271, September 10, 2003 When the State gives its consent to be sued, it does not thereby necessarily consent to an unrestrained execution against it. In Republic vs. Villasor this Court, in nullifying the issuance of an alias writ of execution directed against the funds of the Armed Forces of the Philippines to satisfy a final and executory judgment, has explained, thus — 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. (Department of Agriculture v. National Labor Relations Commission, G.R. No. 104269. November 11, 1993)
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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. (The Commissioner of Public Highways v. San Diego, G.R. No. L-30098, February 18, 1970) In Republic vs. Villasor this Court, in nullifying the issuance of an alias writ of execution directed against the funds of the Armed Forces of the Philippines to satisfy a final and executory judgment, has explained, thus — 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 correspondent appropriation as required by law. (Department of Agriculture v. National Labor Relations Commission, G.R. No. 104269. November 11, 1993)
RULES ON EXECUTION AGAINST THE STATE 1. AGENCIES
EXECUTION
AGAINST
UNINCORPORATED
GOV’T
RULE: Public funds cannot be the object of garnishment. Funds and properties of unincorporated government agencies are exempt from execution and garnishment. 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. (Republic v. Villasor, G.R. No. L-30671 28 November 1973)
In Republic vs. Villasor this Court, in nullifying the issuance of an alias writ of execution directed against the funds of the Armed Forces of the Philippines to satisfy a final and executory judgment, has explained, thus — 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. (Department of Agriculture v. National Labor Relations Commission, G.R. No. 104269. November 11, 1993) Even assuming that TESDA entered into a proprietary contract with PROVI and thereby gave its implied consent to be sued, TESDA’s funds are still
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public in nature and, thus, cannot be the valid subject of a writ of garnishment or attachment. Under Section 33 of the TESDA Act, the TESDA budget for the implementation of the Act shall be included in the annual General Appropriation Act; hence, TESDA funds, being sourced from the Treasury, are moneys belonging to the government, or any of its departments, in the hands of public officials. Public funds cannot be the object of garnishment proceedings 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. (Professional Video v. Technical and Educational Skills Development Authority [Tesda], G.R. No. 155504, June 26, 2009) All government funds deposited with it by any agency or instrumentality of the government, whether by way of general or special deposit, remain government funds, since such government agencies or instrumentalities do not have any non-public or private funds of their own. (The Commissioner of Public Highways v. San Diego, G.R. No. L-30098, February 18, 1970) The rule is and has always been that all government funds deposited in the PNB or any other official depositary of the Philippine Government by any of its agencies or instrumentalities, whether by general or special deposit, remain government funds and may not be subject to garnishment or levy, in the absence of a corresponding appropriation as required by law. (City of Caloocan v. Allarde, G.R. No. 107271, September 10, 2003 Reason for the rule That 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 correspondent 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. (Department of Agriculture v. National Labor Relations Commission, G.R. No. 104269. November 11, 1993; The Commissioner of Public Highways v. San Diego, G.R. No. L-30098, February 18, 1970)
2. EXECUTION AGENCIES GEN. RULE:
AGAINST
INCORPORATED
GOV’T
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Funds and properties of incorporated government agencies may be subject to execution. In Philippine National Railways v. Union de Maquinistas, et al ., then Justice Fernando, later Chief Justice, said. "The main issue posed in this certiorari proceeding, whether or not the funds of the Philippine National Railways, could be garnished or levied upon on execution was resolved in two recent decisions, the Philippine National Bank v. Court of Industrial Relations [81 SCRA 314] and Philippine National Bank v. Hon. Judge Pabalan [83 SCRA 595]. This Court in both cases answered the question in the affirmative. There was no legal bar to garnishment or execution. The argument based on non-suability of a state allegedly because the funds are governmental in character was unavailing.So it must be again." In support of the above conclusion, Justice Fernando cited the Court's holding in Philippine National Bank v. Court of Industrial Relations , to wit: "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. National Shipyard and Steel Corporation v. Court of Industrial Relations is squarely in point. As was explicitly stated in the opinion of 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. (Philippine National Railways v. Court of Appeals, G.R. No. L-55347 October 4, 1985)
EXCEPTION TO THE GEN. RULE: Public funds of local governments are not subject to execution The funds of the Municipality of San Miguel, Bulacan, in the hands of the provincial and municipal treasurers of Bulacan and San Miguel, respectively, are public funds which are exempt from execution for the satisfaction of the money judgment in Civil Case No. 604-B. Well settled is the rule that public funds are not subject to levy and execution. The reason for this is that they are held in trust for the people, intended and used for the accomplishment of the purposes for which municipal corporations are created, and that to subject said properties and public funds to execution would materially impede, even defeat and in some instances destroy said purpose." And, in Tantoco vs. Municipal Council of Iloilo , 49 Phil. 52, it was held that "it is the settled doctrine of the law that not only the
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public property but also the taxes and public revenues of such corporations Cannot be seized under execution against them, either in the treasury or when in transit to it. Judgments rendered for taxes, and the proceeds of such judgments in the hands of officers of the law, are not subject to execution unless so declared by statute." Moreover, under Presidential Decree No. 477, known as "The Decree on Local Fiscal Administration", Section 2 (a), there must be a corresponding appropriation in the form of an ordinance duly passed by the Sangguniang Bayan before any money of the municipality may be paid out. (Municipality of San Miguel Bulacan v. Fernandez, G.R. No. L-61744, 25 June 1984)
EXCEPTION TO THE EXCEPTION: Public funds of local government units may subject to execution if there is already a corresponding appropriation as required by law However, the rule is not absolute and admits of a well-defined exception, that is, when there is a corresponding appropriation as required by law. Otherwise stated, the rule on the immunity of public funds from seizure or garnishment does not apply where the funds sought to be levied under execution are already allocated by law specifically for the satisfaction of the money judgment against the government. In such a case, the monetary judgment may be legally enforced by judicial processes. Thus, in the similar case of Pasay City Government, et al. vs. CFI of Manila, Br. X, et al ., where petitioners challenged the trial court’s order garnishing its funds in payment of the contract price for the construction of the City Hall, we ruled that, while government funds deposited in the PNB are exempt from execution or garnishment, this rule does not apply if an ordinance has already been enacted for the payment of the City’s obligations. In the instant case, the City Council of Caloocan already approved and passed Ordinance No. 0134, Series of 1992, allocating the amount of P439,377.14 for respondent Santiago’s back salaries plus interest. T hus this case fell squarely within the exception. For all intents and purposes, Ordinance No. 0134, Series of 1992, was the "corresponding appropriation as required by law." The sum indicated in the ordinance for Santiago were deemed automatically segregated from the other budgetary allocations of the City of Caloocan and earmarked solely for the City’s monetary obligation to her. The judgment of the trial court could then be validly enforced against such funds. (City of Caloocan v. Allarde, G.R. No. 107271, September 10, 2003)
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Step 7. If execution is not allowed, determine how recovery can be made against the State.
Money claims against unincorporated government agencies must be filed with the Commission on Audit The claims of private respondents, i.e., for underpayment of wages, holiday pay, overtime pay and similar other items, arising from the Contract for Security Services, clearly constitute money claims. 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, . . ." Pursuant, however, to Commonwealth Act ("C.A.") No. 327, as amended by Presidential Decree ("P.D.") No. 1445, the money claim should first be brought to the Commission on Audit. (Department of Agriculture v. National Labor Relations Commission, G.R. No. 104269. November 11, 1993)
Act 3083, the general law waiving its immunity from suit "upon any money claim involving liability arising from contract express or implied," imposed the limitation in Sec. 7 thereof that "no execution shall issue upon any judgment rendered by any Court against the Government of the (Philippines) under the provisions of this Act;" and that otherwise, the claimant would have to prosecute his money claim against the State under Commonwealth Act 327. (Belleng v. Republic, L-19856, Nov. 16, 1963 [9 SCRA 6]) Claimants have to prosecute their money claims against the Government under Commonwealth Act 327, stating that Act 3083 stands now merely as the general law waiving the State's immunity from suit, subject to the 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. (Carabao Inc. v. Agricultural Productivity Commission, G.R. No. L-29304, 30 September 1970; see also Mobil Philippines Explorers v. Customs Arrastre Service, G.R. No. L-26994, 28 November 1969) It is apparent that respondent Singson's cause of action is a money claim against the government, for the payment of the alleged balance of the cost of spare parts supplied by him to the Bureau of Public Highways. Assuming momentarily the validity of such claim, mandamus is not the remedy to enforce the collection of such claim against the State but a ordinary action for specific performance. Actually, the suit disguised as one for mandamus to compel the Auditors to approve the vouchers for payment, is a
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suit against the State, which cannot prosper or be entertained by the Court except with the consent of the State. In other words, the respondent should have filed his claim with the General Auditing Office, under the provisions of Com. Act 327, which prescribe the conditions under which money claim against the government may be filed. Commonwealth Act No. 327 provided: "In all cases involving the settlement of accounts or claims, other than those of accountable officers, the Auditor General shall act and decide the same within sixty days, exclusive of Sundays and holidays, after their presentation. If said accounts or claims need reference to other persons, office or offices, or to a party interested, the period aforesaid shall be counted from the time the last comment necessary to a proper decision is received by him." Thereafter, the procedure for appeal is indicated: "The party aggrieved by the final decision of the Auditor General in the settlement of an account or claim may, within thirty days from receipt of the decision, take an appeal in writing: (a) To the President of the United States, pending the final and complete withdrawal of her sovereignty over the Philippines, or (b) To the President of the Philippines, or (c) To the Supreme Court of the Philippines if the appellant is a private person or entity." (Sayson v. Singson, G.R. No. L-30044, 19 December 1973) Note however that in Amigable vs. Cuenca (G.R. No. L-26400 29 February 1972) the Supreme Court ruled that a suit for recovery of possession and damages against an unincorporated agency (Public Works Commission) can propsper even in the absence of a prior claim before the Auditor General, declaring that where the government takes away property from a private landowner for public use without going through the legal process of expropriation or negotiated sale, the aggrieved party may properly maintain a suit against the government without thereby violating the doctrine of governmental immunity from suit without its consent. The doctrine of governmental immunity from suit cannot serve as an instrument for perpetrating an injustice on a citizen.
The State must appropriate money to satisfy judgment against it Although the Government, as plaintiff in expropriation proceedings, submits itself to the jurisdiction of the Court and thereby waives its immunity from suit, the judgment that is thus rendered requiring its payment of the award determined as just compensation for the condemned property as a condition precedent to the transfer to the title thereto in its favor, cannot be realized upon execution. It is incumbent upon the legislature to appropriate any additional amount, over and above the provisional deposit, that may be necessary to pay the award determined in the judgment, since the Government cannot keep the land and dishonor the judgment. Judgments against the State or its agencies and instrumentalities in cases where the State has consented to be sued, operate merely to liquidate and establish the plaintiff's claim; such judgments may not be enforced by writs of execution or garnishment and it is for the legislature to provide for their payment through the corresponding appropriation, as indicated in Act 3083. (The Commissioner of Public Highways v. San Diego, G.R. No. L-30098, February 18, 1970)
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Even though the rule as to immunity of a state from suit is relaxed, the power of the courts ends when the judgment is rendered. Although the liability of the state has been judicially ascertained, the state is at liberty to determine for itself whether to pay the judgment or not, and execution cannot issue on a judgment against the state. Such statutes do not authorize a seizure of state property to satisfy judgments recovered, and only convey an implication that the legislature will recognize such judgment as final and make provision for the satisfaction thereof. ( City of Caloocan v. Allarde, G.R. No. 107271, September 10, 2003)
