[Kaye D.

]
Case under State Immunity

Republic of the Philippines [represented?] by the Presidential Commission on Good Government

(PCGG) vs. Sandiganbayan (2nd Division) and Roberto S. Benedicto (6 March 2006)
484 SCRA 119
Garcia, J.

FACTS
BACKGROUND/FIRST STAGE. PCGG issued writs placing under sequestration all
business enterprises, entities and other propertiesreal and personalowned or
registered in the name of private respondent Benedicto.
o Among other things were his 227 shares in Negros Occidental Golf and Country
Club (NOGCC) at P150, 000.00 /per.
o In Oct.1986, a corporate policy change was implemented assessing a monthly
membership due at P150.00/share and in Mar 1987, it was changed to
P250.00/share.
o PCGG did not pay the corresponding monthly membership fee which totaled to
P2,959,471.00. Due to these delinquent shares, an auction sale by NOGCC? was
projected.
SECOND STAGE. In 1990, Republic and Benedicto entered into a Compromise
Agreement. PCGG agreed to lift the sequestration of the said 227 shares. According to
the PCGG, it is within Benedictos capacity to acquire the same out of his income from
business and exercise of profession, and that subject shares could not have been ill-
gotten. In 1992, it was approved by Sandiganbayan.

THIRD STAGE. In February 1994, Benedicto filed a motion to release the shares and be
returned to him or that a payment of 227 shares at P150, 000.00/share be made by PCGG
as part of the Compromise Agreement. This was granted by Sandiganbayan but it has to
be placed under the custody of its Clerk of Court.

o On 6 December 1994, Sandiganbayan directed PCGG to deliver the shares to the

Clerk of Court but it failed to comply without showing any justifiable ground.
Republic invokes state immunity from suit because PCGG is a government entity
[NB: the position of PCGG as a government entity was not discussed in the case]

ISSUE

Whether or not Republics invocation of state immunity from suit is tenable.

RULING

NO, PCGG cannot be benefited of state immunity. When the State, through its duly
authorized officers, takes the initiative in a suit against a private party, it descends to the
level of a private individual thereby waiving its right to immunity from suit. In the
present case, the state itself is the petitioner.

Also, by entering into a Compromise Agreement with private respondent Benedicto,

petitioner Republic thereby stripped itself of its immunity from suit and placed itself in
the same level of its adversary. When the State enters into contract, through its officers or
agents, in furtherance of a legitimate aim and purpose and pursuant to constitutional
legislative authority, whereby mutual or reciprocal benefits accrue and rights and
obligations arise therefrom, the State may be sued even without its express consent,
precisely because by entering into a contract the sovereign descends to the level of the
citizen. Its consent to be sued is implied from the very act of entering into such
contract, breach of which on its part gives the corresponding right to the other party to the
agreement.