State Immunity

Post updated on: Jul 30, 2025 @ 6:02 am

The doctrine of State Immunity, also known as “the royal prerogative of dishonesty,” posits that the State cannot be sued without its consent. This fundamental principle is enshrined in the Constitution to prevent the paralysis or disruption of governmental functions and public services that would occur if the State’s time, efficiency, and resources were constantly diverted to litigation filed by private parties. The rationale is that there can be no legal right against the authority that makes the law on which the right depends.

However, this doctrine is not absolute and may be waived. The waiver of immunity does not, by itself, concede liability, but merely grants the plaintiff the opportunity to prove the State’s liability while the State retains all lawful defenses.

Here’s a breakdown of the nuances of State Immunity:

1. Waiver of State Immunity:

Express Consent: This is given through a general law, such as Act No. 3083, which allows the Philippine government to be sued upon any money claim arising from a contract, express or implied, that could form the basis of a civil action between private parties. Consent may also be granted through a special law.
Implied Consent:
- Entering into a Contract: When the State enters into a private contract or engages in a business operation, it is generally deemed to have descended to the level of the other contracting party and implicitly waived its sovereign immunity. However, this applies only if the contract or business operation is not incidental to the performance of a governmental function.
- Commencing Litigation: If the State itself files a complaint in court, it opens itself to counterclaims, thereby implying consent to be sued.
- Eminent Domain Cases: The State cannot hide behind its immunity when it takes private property for public use without following proper expropriation proceedings or paying just compensation. To do so would perpetuate an injustice.

2. Distinction Between Governmental (Jure Imperii) and Proprietary (Jure Gestionis) Acts:

The traditional rule of State immunity has evolved into a restrictive doctrine which distinguishes between sovereign or governmental acts (jure imperii) and private, commercial, or proprietary acts (jure gestionis).
Immunity extends only to jure imperii acts. These are acts relating to the exercise of the State’s sovereign functions, such as the conduct of public bidding for military facilities or a diplomatic mission’s maintenance.
Immunity does not apply to jure gestionis acts, which are considered a waiver of immunity. Examples include hiring a cook for a recreation center open to the general public or engaging in business operations.
The authority of city mayors to issue business permits, while a power granted by the Local Government Code, is an exercise of the State’s police power (a governmental act), not a proprietary function. Therefore, consent to be sued for actions related to permit issuance is not implied.
As discussed in our conversation, the celebration of a town fiesta is an example of a proprietary function of a municipality.

3. Scope of Consent and Execution of Judgments:

Even when the State consents to be sued, the action may be limited to proceedings anterior to the stage of execution.
Government funds and properties generally cannot be seized through writs of execution or garnishment to satisfy judgments. This is based on the public policy that government functions and services should not be paralyzed or disrupted by the diversion of public funds from their legitimate and specific objects, as appropriated by law.
Properties held for public uses and governmental purposes are generally not subject to levy and sale under execution. However, property held by a municipal corporation in a proprietary capacity (patrimonial property) may be subject to execution.
If a money judgment is rendered against the government, the claimant must file a claim with the Commission on Audit (COA), which has primary jurisdiction to examine, audit, and settle money claims against the government.
If a municipality fails or refuses, without justifiable reason, to pay a final money judgment, the claimant may avail of the remedy of mandamus to compel the enactment of an appropriation ordinance and disbursement of funds.

4. Suability of Government Agencies:

The question of an agency’s suability depends on whether it is incorporated or unincorporated.
- Incorporated Agencies: These have their own charter that grants them a separate juridical personality. Their suability depends on whether their charter explicitly provides the authority to “sue and be sued,” regardless of the nature of their functions (governmental or proprietary). For example, the Central Bank of the Philippines (now BSP) is an incorporated agency with an express waiver in its charter, making it suable even though its function as a central monetary authority is governmental.
- Unincorporated Agencies: These have no separate juridical personality and are considered merged with the general machinery of the government. A suit against them is necessarily a suit against the State. Their suability depends on the nature of the function they are performing – governmental or proprietary. For instance, the Philippine Textile Research Institute (PTRI), as an unincorporated agency performing a governmental function, ordinarily enjoys immunity from suit, but it may be sued if it enters into a contract from which the liability arises, thereby implying consent. Similarly, the Bureau of Customs, whose primary function is governmental (assessing and collecting revenues), is generally immune, even if an incidental function like arrastre service could be deemed proprietary.

5. Liability of LGUs for Damages:

When an LGU performs governmental functions, the State is liable only for the tortious acts of its special agents. A “special agent” is one who receives a definite and fixed order or commission that is foreign to the exercise of the duties of his or her office.
Conversely, when an LGU performs proprietary functions, the State becomes liable as an ordinary employer for the tortious acts of its employees.
Public officials, including those in LGUs, who act without or in excess of jurisdiction, are personally liable for any injury or damage caused by such acts, and this liability cannot be imputed to the State.

For a comprehensive strategic recommendation, the next step could be to evaluate how specific LGU projects or initiatives could be structured (e.g., as public-private partnerships, or through incorporated entities) to mitigate potential state immunity issues and manage liability, particularly when proprietary functions are involved.