CONSTITUTIONAL LAW I: STATE IMMUNITY

When the State waives its immunity, all it does is to give the other party an opportunity to prove, if it can,
that the State has a liability.

Department of Agriculture v. NLRC - GR 104269, 227 SCRA 693 [Nov 11, 1993]

Petitioner: Department of Agriculture

Respondent: The National Labor Relations Commission, et al.

Facts:

- The Department of Agriculture (DA) and Sultan Security Agency (SSA) entered into a contract for
security services to be provided by the DA.
- As agreed upon, guards of the agency were deployed in the premises of the petitioner.
- After 2 years, several guards assigned to the petitioner‘s premises filed a complaint against the
petitioner and the agency before the Regional Arbitration for numerous reasons such as
underpayment of wages, non-payment of 13th month pay, uniform allowances, night shift
differential pay, holiday pay, and overtime pay as well as for damages.
- Both the DA and SSA were found guilty by the Executive Labor Arbiter, which also held both of
them liable for the payment of money claims (amount of money that one party is seeking from
another party as compensation for damages or unpaid debts / claim for recovery of any debt,
demand or damages).
- The decision of the Executive Labor Arbiter became final and executory as he issued a writ of
execution (legal order issued by a court that authorizes the enforcement of a judgment or court
decision / court order that puts in force a judgment of possession and directs law enforcement
personnel to begin the transfer of property as the result of a legal judgment ) which resulted in
the property (motor vehicles) of the petitioner being levied (levy - legal seizure of property to
satisfy an outstanding debt / if one fails to pay his taxes, the Internal Revenue Service may
respond by levying his tax return or property).
- As a response, the petitioner filed a petition before the NLRC praying to stop the writ of
execution (petition for injunction, prohibition, and mandamus, with prayer for preliminary writ of
injunction). The petition was dismissed.
- After the dismissal of its petition, petitioner filed a petition before the Supreme Court arguing
that: (1) it was Commission on Audit COA, not NLRC, that was supposed to have jurisdiction over
money claims against the Government pursuant to Commonwealth Act No. 327 as amended by
PD No. 1445; and (2) that NLRC had disregarded the cardinal rule on the non-suability of the
State.

Ambrocio, Danielle A.
CONSTITUTIONAL LAW I: STATE IMMUNITY

Issue:

Whether or not the petitioner as an agency of the State, is covered by the principle of the non-suability of
the State.

Ruling:

No, petitioner cannot use the principle of non-suability of the State as an excuse not to be sued.

Section 3, Art. XVI of the 1987 Constitution states that "the State may not be sued without its consent."

This principle reflects a recognition of the sovereign character of the State and an express affirmation of
the unwritten rule effectively insulating it from the jurisdiction of the courts. As per Justice Holmes, a
sovereign State is exempt from suits "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."

However, this privilege is not absolute; with its consent, the State can be sued.

The Court clarifies that there are two kinds of consent: (1) express consent, which may be made either
through a general law or a special law; and (2) implied consent, which is conceded when the State either
commences litigation or enters into a contract.

But entering into a contract does not automatically mean the State can be sued. Once again, the Court
clarifies that contracts or agreements that constitute sovereign and governmental acts (jure imperii)
cannot be the subject of any lawsuit, while private, commercial, and proprietary acts (jure gestionisis)
can be made the subject of litigation.

In the instant case, express consent was provided for by Act No. 3083, which states that "the Philippine
government consents and submits to be sued upon any money claims involving liability arising from
contract, express or implied, which could serve as a basis of civil action between private parties." And as
cited earlier, money claims against the Government should be filed before the Commission on Audit.

At the same time, it is inarguable that petitioner’s contract with SSA was clearly a proprietary act, which
essentially means that petitioner cannot invoke the principle of the non-suability of the State.

Decision of the SC: “WHEREFORE, the petition is GRANTED. The resolution, dated 27 November 1991, is hereby REVERSED and SET ASIDE. The writ of execution directed
against the property of the Department of Agriculture is nullified, and the public respondents are hereby enjoined permanently from doing, issuing and implementing any and
all writs of execution issued pursuant to the decision rendered by the Labor Arbiter against said petitioner.”

Government-owned or controlled corporations have juridical personalities separate and distinct from the
government, and are thus not covered by State immunity from suit. Their funds are therefore not exempt
from garnishment.

Ambrocio, Danielle A.