G.R. No.

104269 November 11, 1993

DEPARTMENT OF AGRICULTURE, petitioner,

vs.
THE NATIONAL LABOR RELATIONS COMMISSION, et al., respondents.

Roy Lago Salcedo for private respondents.

FACTS:

On April 1, 1989, the Department of Agriculture (DoA) office in Cagayan de Oro

and Sultan Security Agency (SSA) engaged in an agreement where SSA was tasked
with providing security services to DoA. On September 13, 1990, a group of guards
from SSA filed a complaint alleging they had been underpaid wages, denied 13th month
pay, uniform allowances, night shift differential pay, holiday pay, and sought damages.
This complaint targeted both DoA and SSA. The Executive Labor Arbiter subsequently
found both entities liable for the payment of money claims totaling P266,483.91.

On July 18, 1991, a writ of execution was issued by the Labor Arbiter. In
response, DoA lodged a petition with the NLRC seeking injunction, prohibition, and
mandamus, along with a request for a preliminary writ of injunction. Unfortunately, the
NLRC dismissed DoA's petition.

Following the NLRC's dismissal of their petition, DoA filed an appeal with the SC,
contending that: (a) it should be the COA, not the NLRC, with jurisdiction over money
claims against the Government, in accordance with Commonwealth Act No. 327 as
amended by PD No. 1445; and (b) that the NLRC had disregarded the fundamental
principle of the State's immunity from suits.

ISSUE:

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

HELD:

Yes, the Court determined that claims for monetary compensation against the
Government must be brought before the Commission on Audit in accordance with CA
Act No. 327 as amended by PD No. 1445. In this instance, the allegations of
underpayment of wages, holiday pay, overtime pay, and similar items arising from the
Contract for Service indisputably constitute claims for monetary relief. Consequently,
the Court overturned the writ of execution issued by the Labor Arbiter and the resolution
issued by NLRC in favor of DoA.

No, DoA cannot utilize the doctrine of State immunity as a shield against being
taken to court.

Section 3, Art. XVI of the 1987 Constitution stipulates that "the State may not be
sued without its consent." This principle acknowledges the sovereign nature of the State
and expressly confirms the unspoken rule effectively safeguarding it from the jurisdiction
of the courts. As Justice Holmes articulated, a sovereign State is exempt from lawsuits
"not because of any formal conception or outdated 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."

Nevertheless, this privilege is not absolute; the State may be sued with its
consent.

The Court makes clear that there are two forms of consent: (1) explicit consent,
which may be granted through a general or special law; and (2) implicit consent, which
is implied when the State initiates legal action or enters into a contract.

However, simply entering into a contract does not automatically open the door to
suing the State. Once again, the Court emphasizes that contracts or agreements falling
within the realm of sovereign and governmental functions (jure imperii) are beyond the
scope of legal action, while those involving private, commercial, and proprietary matters
(jure gestionisis) may be subject to litigation.

In this particular case, explicit consent was provided by Act No. 3083, which
affirms 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." As previously noted, claims for
monetary compensation against the Government must be pursued before the
Commission on Audit.
 Simultaneously, it is beyond dispute that DoA's contract with SSA constituted a
proprietary act, signifying that DoA cannot rely on the doctrine of the non-suability of the
State.

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.

SO ORDERED.