Kawananokoa v.

Polyblank, 205 U.S. 349 (1907)

This is an appeal from a decree affirming a decree of foreclosure and sale under a mortgage executed by the
appellants to the appellee, Sister Albertina

The defendants (appellants) pleaded to the jurisdiction that after the execution of the mortgage a part of the
mortgaged land had been conveyed by them to one Damon, and by Damon to the territory of Hawaii, and was now
part of a public street.

The appellants contend that the owners of the equity of redemption in all parts of the mortgage land must be joined,
and that no deficiency judgment should be entered until all the mortgaged premises have been sold. In aid of their
contention, they argue that the territory of Hawaii is liable to suit like a municipal corporation, irrespective of the
permission given by its statutes, which does not extend to this case.

W/N the State is exempt from suit.

Under Equity Rule 92, where a part of the mortgage premises has been sold to the sovereign power which refuses to
waive its exemption from suit, the court can, all other parties being joined, except the land so conveyed and decree
sale of the balance and enter deficiency judgment for sum remaining due if proceeds of sale are insufficient to pay
the debt.

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, and as this doctrine is not confined to full sovereign powers, it extends to those, such as the territories of
the United States, which in actual administration originate and change the law of contract and property.

A territory of the United States differs from the District of Columbia in that the former is itself the fountain from
which rights ordinarily flow, although Congress may intervene, while, in the latter, the body of private rights is
created and controlled by Congress, and not by a legislature of the District.

II. Suits Against Public Officials as Suits Against the State

A. Test: will require an affirmative act from the state

Garcia vs. Chief of Staff, 16 SCRA 120

The complaint alleged: that sometime in July, 1948, the plaintiff suffered injuries while undergoing the 10-month
military training at Camp Florida Blanca, Pampanga he filed his claim under Commonwealth Act 400

April, 1957 - he submitted some papers in support of his claim to the Adjutant General's Office upon the latter's
request;

May 2, 1957 - he received a letter from the said Adjutant General's Office disallowing his claim for disability
benefits;

November 24, 1958 - after further demands of the plaintiff, the Adjutant General's Office denied the said claim,
alleging that Commonwealth Act 400 had already been repealed by Republic Act 610 which took effect on January
1, 1950; that by reason of the injuries suffered by plaintiff he was deprived of his sight or vision rendering him
permanently disabled; and that by reason of the unjustified refusal by defendants of plaintiff's claim, the latter was
deprived of his disability pension.

W/N the court of Frist instance has no jurisdiction over the subject matter, it being a money claim against the
government

Held:

This Court has already held (New Manila Lumber Co. Inc. vs. Republic, G.R. No. L-14248, April 28, 1960) that a
claim for the recovery of money against the government should be filed with the Auditor General , in line with
the principle that the State cannot be sued without its consent. Commonwealth Act 327 provides:

SECTION 1. 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

SEC. 2. 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:

(c) To the Supreme Court of the Philippines, if the appellant is a private person or entity.

The well-established rule that no recourse to court can be had until all administrative remedies had been exhausted
and that actions against administrative officers should not be entertained if superior administrative officers could
grant relief is squarely applicable to the present case.

Ruiz vs. Cabahug, 102 Phil 110 (1957)

Secretary of National Defense accepted the bid of the Allied Technologists, Inc., to furnish the architectural and
engineering services in the construction of the Veterans Hospital. When the defendants-officials paid the Allied
Technologists the contract price for the architectural engineering service, they retained 15 per cent of the sum due,
for the reason that defendant Panlilio has asserted that he is the sole and only architect of the Veterans Hospital to
the exclusion of plaintiffs Ruiz and Herrera.

The defendants desist from recognizing Panlilio as the sole and only architect of the Veterans Hospital and from
paying him the 15 per cent.

W/N THE PRESENT SUIT IS ONE AGAINST THE GOVERNMENT AND THEREFORE CANNOT BE
VALIDLY ENTERTAINED BECAUSE THE GOVERNMENT CANNOT BE SUED WITHOUT ITS CONSENT.

The suit, is directed against the officials and against them alone, not against the Government, which does not have
any interest in the outcome of the controversy between plaintiffs, and Panlilio on the other. The suit is between these
alone, to determine who is entitled to the amount retained by the officials; and if the latter did aid and abet Panlilio
in his pretense, to the exclusion and prejudice of plaintiffs, it is natural that they alone, and not the Government,
should be the subject of the suit. Had said officials chosen not to take sides in the controversy between the
architects, and had disclaimed interest in said controversy, the suit would have been converted into one of
interpleader. But they have acted to favor one side, and have abetted him in his effort to obtain payment to him of
the sum remaining unpaid and credit for the work, to the exclusion of the plaintiffs. Hence, the suit.

The general rule that a sovereign state and its political subdivision cannot be sued in the courts except upon the
statutory consent of the state. 

But the rule applies only when the state or its subdivision is actually made a party upon the record, or is actually
necessary to be made a party in order to furnish the relief demanded by the suit. It does not apply when the suit is
against an officer or agent of the state, and 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 disclaim any personal interest in themselves
and claim to hold or to act only by virtue of a title of the state and as its agents and servants.

Under the facts and circumstances alleged in the amended complaint, which should be taken on its face value, the
suit is not one against the Government, or a claim against it, but one against the officials to compel them to act in
accordance with the rights to be established by the contending architects, or to prevent them from making payment
and recognition until the contending architects have established their respective rights and interests in the funds
retained and in the credit for the work done.

B. Effect when public officer acts without, or in excess of, jurisdiction

Festejo vs. Fernando, GR No. L-5156, March 11, 1954

Isaias Fernando, Director, Bureau of Public Works, without obtaining first a right of way, and without the consent
and knowledge of the plaintiff, unlawfully took possession of portions of the three parcels of land, and caused an
irrigation canal to be constructed on the portion of the three parcels of land.

W/N Isaias Fernando acted in excess of jurisdiction

Held:

In the dissenting opinion of Concepcion

The Government is, "the real party in interest as defendant" in the case at bar. In other words, the same partakes of
the nature of a suit against the state and may not be maintained without its consent.

 The irrigation projects and system reffered to in the complaint — of which the defendant, Isaias Fernando,
according to the same pleading, is "in charge" and for which he is "responsible" as Director of the Bureau of Public
Works — are established and operated with public funds, which pursuant to the Constitution, must be appropriated
by law. Irrespective of the manner in which the construction may have been undertaken by the Bureau of Public
Works, the system or canal is, therefore, a property of the Government.

In praying that possession of the portions of land occupied by the irrigation canal involved in the present case be
returned to plaintiff therein, and that said land be restored to its former condition, plaintiff seeks to divest the
Government of its possession of said irrigation canal, and, what is worse, to cause said property of the Government
to be removed or destroyed.

According to Cruz;

Where a public officer acts without or in excess of jurisdiction, any injury caused by him is his own personal
liability and cannot be imputed to the State.

The Director of Public Works took over without authority property belonging to the plaintiff and constructed a
public irrigation canal. The SC held that the action for recovery of the land or its value was properly filed against the
defendant in his personal capacity and was therefore not covered by the doctrine of State immunity.

III. Suits Against Government Agencies

1. If incorporated: consult charter
 Bermoy vs. Philippine Normal College, GR No. L-8670, May 18, 1956

On July 6, 1954, (24) twenty-four employees from its dormitory known as Normal Hall of the Philippine Normal
College, filled an action in the COF of Manila against the PNC for the recovery of salary differentials and overtime
pay. The Solicitor General on behalf of the defendant answers and denies the latter liability. The court ordered it
dismissed before the case was tried on the merits, on the ground that neither one of the defendants was a corporation
or a juridical entity with capacity to be sued. The plaintiffs took an appeal to Supreme Court, alleging that it was an
error to dismiss their case on the ground that, R.A. No. 416 took effect July, 1949 converted PNS to PNC, thus
created a Board of Trustees to administer the affairs as a corporation under section 13 of the amended Act 1455
(Corporate Law), with the power “to sue and to be sued in any court.”

Issue: Whether or not the PNC as a government corporation can be sued.

Held: The state has already given the consent by investing the college with express power to be sued in the court.
The act Authorizes the College to be sued is also made clear in Section 6, where it is provided that “all process
against the Board of Trustees shall be served on the President or Secretary thereof”. One  of the  powers 
specifically  enumerated  in the   the  Corporation Law is  the power "to  sue  and be   sued  in any.court."    With
this  express grant  of power, we   don't  see how it  could be  doubted that  the Philippine Normal College  could be
made  a  defendant  in  a  suit  in court. The order appealed from is re revoked and the case remanded to the court of
origin for further proceedings. No cost.

Arcega vs. CA, 66 SCRA 229

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 payment 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. 

Whether suits against the Central Bank for refund is a suit against the State?

Held:It is not a suit against the state. This suit is brought against the Central Bank of the Philippines, an entity authorizes  by its
charter to sue and be sued. The consent of the State to be sued, therefore, has been given.