3. State Immunity (See also PD 1445, Sec. 26)

State Immunity (1987 CONST., art. XVI, sec. 3; P.D. No. 1445)

> 1987 CONST., art. XVI, sec. 3 SECTION 3. The State may not be sued without its consent.

Summary of Rule

General Rule: The State cannot be sued

• Constitutional Basis: Section 3, Article XVI. The State may not be sued without its consent.
• International Law Basis: Par in parem non habet imperium.
• “an equal does not have power over an equal”
• Jurisprudential Basis
• Positivist Theory – There can be no legal right as against the authority that makes the laws on which the right depends. Also called the doctrine of Royal Prerogative of Dishonesty [Department of Agriculture v. NLRC, G.R. No. 104269 (1993)].
• Sociological Theory – If the State is amenable to suits, all its time would be spent defending itself from suits and this would prevent it from performing its other functions [Republic v. Villasor, G.R. No. L30671 (1973)].

Exception: When the State consents to be sued.

How consent is given:

• Express
• Through general law; or
• Through special law
• Implied
• When the State enter into business contracts with individuals (performing proprietary functions);
• When the State commences litigation and becomes vulnerable to counterclaim;
• When it would be inequitable for the State to invoke immunity; and
• In eminent domain cases.

State

A community of persons, more or less numerous, permanently occupying a definite portion of territory, independent of external control, and possessing a government to which a great body of the inhabitants render habitual obedience; a politically organized sovereign community independent of outside control bound by ties of nationhood, legally supreme within its territory, acting through a government functioning under a regime of law [Collector of Internal Revenue v. Campos Rueda, G.R. No. 13250 (1971)].

The State as a person of international law should possess the following qualifications: (a) a permanent population; (b) a defined territory; (c) government; and (d) capacity to enter into relations with the other States [Article 1, Montevideo Convention].

Two Theories of Sovereign Immunity [US v. Ruiz, G.R. No. L-35645 (1985)]

• Absolute Theory — A sovereign cannot, without its consent, be made a respondent in the courts of another sovereign.

This derives from the principle of sovereign equality found in Article 2(1) of the UN Charter as well as generally accepted principles of international law.

• Restrictive Theory — The immunity of the sovereign is recognized only with regard to public acts or acts (jure imperii) of state, but not regard to private acts or acts (jure gestionis) The Philippines follows the restrictive theory.

Suits Against the State

A suit against the State may proceed when the State has given express or implied consent to be sued.

What is the general rule on immunity?

The jurisdiction of a State within its territory is complete and absolute.

When is a suit considered a suit against the State?

• If it produces adverse consequences to public treasury in terms of disbursement as well as loss of government property, regardless of the defense;
• When the Republic is sued in its name;
• When the suit is against an unincorporated government agency; and
• Even when the suit, on its face, is against an officer but liability will belong to/fall on the government.

When is a suit NOT against the State?

• When it partakes of the nature of ordinary business rather than functions of a governmental or political character;
• When the purpose of the suit is to compel an officer charged with the duty of making payments pursuant to an appropriation made by law in favor of the plaintiff to make such payment, since the suit is intended to compel performance of a ministerial duty [Begosa v. Philippine Veterans Association, G.R. No. L-25916 (1970)];
• When it is clear that the respondent is a public officer sued in a private capacity;
• When the action, whether in rem or otherwise, does not seek relief that would effectively operate against the State or its property or require affirmative action by the State.

Updated: When the government takes private property for public use and enters into possession, it impliedly waives immunity from suit (Department of Transportation v. Spouses Abecina, G.R. No. 206484, 29 June 2016).

What is state immunity?

The State may not be sued without its consent. This is based on the principle of par in parem non habet imperium (an equal has no power over an equal). (Bernas, Public International Law, 2009)

Updated: When the government takes property for public use and enters into possession, it impliedly waives immunity from suit (Department of Transportation v. Spouses Abecina, G.R. No. 206484, 29 June 2016).

What is the scope of state immunity?

• Absolute
• Qualified immunity or restrictive application of State immunity.

State immunity now extends only to acts jure imperii. When the proceedings arise out of commercial transactions of the foreign sovereign, its commercial activities or economic affairs, such are jus gestionis, which are not covered by immunity. However, it does not apply where the contract relates to the exercise of its sovereign functions (USA v Guinto, G.R. No. 76607, February 26, 1990).

Official Capacity vs. Personal Capacity

The doctrine of non-suability applies only in cases wherein the complaint is against officials of state for acts performed in discharge of duties or his official capacity. When officials abuse this authority gravely (like discriminatory behavior), this is no longer an official state act and the official may now be sued in his personal capacity [Shauf v. CA, G.R. No. 90314 (1990)].

Updated: State immunity is not limited to suits against officials: a government that takes property for public use and enters into possession impliedly waives immunity from suit, while an official may be personally liable for acts done with malice, bad faith, or beyond authority (Department of Transportation v. Spouses Abecina, G.R. No. 206484, 29 June 2016; Arigo v. Palatino, G.R. No. 206510, 16 September 2014).

What is the doctrine of sovereign immunity?

Immunity from jurisdiction is enjoyed by both the head of State and by the State itself (Bernas, Public International Law, 2009).

Updated: The State impliedly waives immunity from suit when it takes property for public use and enters into possession (Department of Transportation v. Spouses Abecina, G.R. No. 206484, 29 June 2016).

Beyond Scope of Authority

When officials, while discharging their official functions, commit acts that are beyond their scope of authority (i.e. police forces firing upon civilians and killing them, mistakenly believing they were Communists), they will be liable in their personal capacity and thus will not be covered by state immunity [Republic v. Sandoval, G.R. No. 84607 (1993)].

What is the process of suggestion?

In the Philippines, the practice is for the foreign government of the international organization to first secure an executive endorsement of its claim of sovereign or diplomatic immunity. The DFA has made the endorsement through the following:

• A letter that the defendant cannot be sued because it has diplomatic immunity. (International Catholic Migration Commission v. Calleja, G.R. No. 85750, September 28, 1990).
• A manifestation in Court and memorandum as amicus curiae (Baer v. Tizon, G.R. L-24294, May 3, 1974).

The fact that the Solicitor General has endorsed a claim of a State immunity from suit does not sufficiently substitute for the DFA certification (GTZ v. CA, G.R. No. 152318, April 16, 2009).

The determination by the department is considered a political question that is conclusive upon Philippine courts.

Waiver of Immunity

When the State expressly states their consent to be sued through legislation (including treaties), it waives its immunity from suit. However, this waiver of immunity may be limited to certain legal actions (i.e. under the VFA, there is a waiver of immunity by the US under criminal jurisdiction but not to civil actions) [Arigo v. Swift, G.R. No. 206510 (2014)].

Updated: The government impliedly waives immunity from suit when it takes property for public use and enters into possession (Department of Transportation v. Spouses Abecina, G.R. No. 206484, 29 June 2016).

Implied Consent

• In instances when the State takes private property for public use or purpose (eminent domain)
• When the State enters into a business contract (in jure gestionis or proprietary functions)
• When it would be inequitable for the State to invoke its immunity.
• If the government files a complaint, the defendant may file a counterclaim against it. When the state files a complaint, suability will result only where the government is claiming affirmative relief from the defendant.

Note: When the DOTC constructed the encroaching structures and subsequently entered into the FLA with Digitel for their maintenance, it was carrying out a sovereign function. Therefore, these are acts jure imperii that fall within the cloak of state immunity. However, the doctrine of state immunity cannot serve as an instrument for perpetrating an injustice to a citizen. The SC, citing Ministerio v. CFI (1971), held that 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. The Department's entry into and taking of possession of the respondents' property amounted to an implied waiver of its governmental immunity from suit [DOTC v. Sps. Abecina, G.R. No. 206484 (2016)].

What is State Immunity from Suit

It refers to a principle by which a state, its agents, and property are immune from the jurisdiction of another state (MAGALLONA).

This principle is premised on the juridical equality of states, according to which a state may not impose its authority or extend its jurisdiction to another state without the consent of the latter through a waiver of immunity.

Thus, domestic courts must decline to hear cases against foreign sovereigns out of deference to their role as sovereigns.

Suits against Government Agencies:

Suability depends on whether the agency is incorporated (i.e. there is a separate charter) or unincorporated (i.e. no separate personality).

• Incorporated: If the charter provides that the agency can sue, then the suit will lie. The provision in the charter constitutes express consent [SSS v. Court of Appeals, G.R. No. L-41299 (1983)].
• Unincorporated: There must be an inquiry unto the principal functions of government.
• If governmental: No suit without its consent [Bureau of Printing v. Bureau of Printing Employees Association, G.R. No. L-15751 (1961)].
• If proprietary: The suit will lie because when the State engages in principally proprietary functions, it descends to the level of a private individual, and may, therefore be vulnerable to suit [Civil Aeronautics Administration v. Court of Appeals, G.R. No. L-51806 (1988)].

The sovereign/proprietary distinction helps determine immunity from suit, but does not by itself determine liability. Suability and liability are distinct; a government taking of property for public use may be sued upon for just compensation under Article III, Section 9 of the 1987 Constitution [Department of Transportation v. Spouses Abecina, G.R. No. 206484, 29 June 2016].

Note: The State's immunity from suit did not extend to the NHA despite its being a government-owned and controlled corporation. Under Section 6(i) of PD No. 757, which was its charter, the NHA could sue and be sued. There is no question that the NHA could sue or be sued, and thus could be held liable under the judgment rendered against it. But the universal rule remains to be that the State, although it gives its consent to be sued either by general or special law, may limit the claimant's action only up to the completion of proceedings anterior to the stage of execution. The power of the court ends when the judgment is rendered because government funds and property may not be seized pursuant to writs of execution or writs of garnishment to satisfy such judgments. The functions and public services of the State cannot be allowed to be paralyzed or disrupted by the diversion of public funds from their legitimate and specific objects, and as appropriated by law. The rule is based on obvious considerations of public policy [National Housing Authority v. Roxas, G.R. No. 171953 (2015)].

Updated: When the government takes property for public use and enters into possession, it impliedly waives immunity from suit (Department of Transportation v. Spouses Abecina, G.R. No. 206484, 29 June 2016).

What are the types of immunity?

• Absolute sovereign immunity – where a state cannot be sued in a foreign court no matter what the act it is sued for; or
• Restrictive sovereign immunity – where a state is immune from suits involving governmental actions (jure imperii), but not from those arising from commercial or non-governmental activity (jure gestionis). (Bernas, Public International Law, 2009)

Restrictive sovereign immunity is the prevailing approach: a foreign state is generally immune for sovereign acts (jure imperii), but not for commercial or proprietary acts (jure gestionis). The maxim par in parem non habet imperium states that all states are sovereign equals and cannot assert jurisdiction over one another. A contrary attitude would "unduly vex the peace of nations". (Bernas, Public International law, 2009)

Exceptions to Prior Consent Rule

Jurisprudence provides these exceptions, when the State or public officer may be sued without prior consent:

• To compel the State or public officer to do an act required by law;
• To restrain the State or public officer from enforcing an act claimed to be unconstitutional;
• To compel the payment of damages from an already appropriated assurance fund or to refund tax over-payments from a fund already available for the purpose;
• To secure a judgment that the officer impleaded may satisfy by himself without the State having to do a positive act to assist him;
• Where the government itself has violated its own laws [Sanders v. Veridiano II, G.R. No. L-46930 (1988)].

Updated: When the government takes property for public use and enters into possession, it impliedly waives immunity from suit (Department of Transportation v. Spouses Abecina, G.R. No. 206484, 29 June 2016).

What is the status of principle of sovereign immunity from suits in international law?

It is a customary norm of international law that holds, unless waived by the state concerned.

Such immunity applies even if the claim against the state is for violation of a jus cogens norm in international law.

Furthermore, State assets are also immune from execution in connection with such claim. (Germany v. Italy, Jurisdictional Immunities of the State Case, ICJ, February 3, 2012).

Scope of Consent

Consent to be sued is not a concession of liability. Suability depends on the consent of the State to be sued, and liability on the applicable law and the established facts. The circumstance that a State is suable does not necessarily mean that it is liable, but it can never be held liable if it does not first consent to be sued. When the State does waive its sovereign immunity, it is only giving the plaintiff the chance to prove that it is liable [USA v. Guinto, G.R. No. 76607 (1990)].

Estoppel

General Rule: The State cannot be put in estoppel by the mistakes or errors of its officials or agents [Republic v. Galeno, G.R. No. 215009 (2017)].

Exception: Estoppel cannot be invoked against the State if doing so would defeat a policy adopted to protect the public. Exceptionally, it may apply when the interests of justice clearly require it. Respondent had already acquired a vested right on the tax classification of its San Mig Light as a new brand. To allow petitioner to change its position will result in deficiency assessments in substantial amounts against respondent to the latter's prejudice [Commissioner of Internal Revenue v. San Miguel Corporation, G.R. Nos. 205045 & 205723 (2017)].

Can the immunity be invoked in non- commercial transactions of ships owned and operated by a State?

Unless otherwise agreed between the States concerned, a State which owns or operates a ship cannot invoke immunity from jurisdiction before a court of another State which is otherwise competent in a proceeding which relates to the operation of that ship if, at the time the cause of action arose, the ship was used for other than government non-commercial purposes. (UN Convention on Jurisdictional Immunities of States and Their Property, art. 16)

What is the rule on immunity of warships from execution?

Warships, defined as ships belonging to the armed forces of a state under specific criteria, enjoy complete immunity from the jurisdiction of any state other than the flag state.

The rule on immunity of warships from execution is established to protect these vessels from certain legal actions, ensuring their immunity from arrest and search in national or international waters, foreign taxation, foreign state regulations requiring the flying of a foreign flag, and granting exclusive control over persons and acts performed on board.