DEPARTMENT OF AGRICULTURE, petitioner, vs.

THE NATIONAL LABOR

RELATIONS COMMISSION, et al., respondents.
G.R. No. 104269, November 11, 1993

Topic: Sovereign and State Immunity

Page 5 of Constitutional Law I syllabus

[Note to reciters: I will be taking the side of the Petitioner to give you time to read your
portions while I recite. Galingan natin. Lols.]

Petitioner (Department of Agriculture):

First, let us establish the facts:
- DA entered into a contract with Sultan Security Agency on April 1, 1989, for the
provision of security services to the various offices of the department.
- On September 13, 1990, several security guards under Sultan Security Agency
filed a complaint for underpayment of wages, non-payment of 13th month pay,
night shift differentials, and holiday pay among others.
- The Executive Labor Arbiter of the NLRC ruled that DA and Sultan be held
liable with Sultan Security Agency for money claims.
- In furtherance of these claims, the NLRC attached three of DA’s vehicles and
asked DA to put up a surety bond in relation to the claims of the security
guards.

On the petitioner’s side, these are our contentions:

- We are invoking the “doctrine of non-suability” which provides that the State
may not be sued without its consent as provided in Article XVI, Section 3 of the
Constitution. This is also known as “sovereign immunity”. The petitioner’s laid
out three principles in support of this doctrine.
1. This is a recognition of the sovereign character of the state. Sovereign
immunity is a legal doctrine which provides that states cannot commit a
legal wrong. This is exemplified by the legal maxim “rex non potest
peccare” meaning “the king can do no wrong”.
2. In the landmark US case of Kawananakoa vs. Polyblank, it was held that
there can be no legal right as against the authority that makes the law
on which the right depends. How can one have a right against someone
who is giving you the rights?
3. The DA, being a part of the executive department of the State, may have
its functions and public services paralyzed or disrupted should public
funds be diverted in payment of the security guards’ claims. According to
DA, such is prejudicial of the public good.

/KLManuel
Respondent (National Labor Relations Commission):
On the respondent’s side, we contend that our ruling imposing liabilities to DA and
Sultan is correct.
- In reply to the petitioner’s argument of non-suability, we say that the non-
suability of the State is not absolute, hence the phrase “without its consent”.
o Consent may be given expressly or impliedly, and the State has already
given its consent in this case. There are two arguments in support of this
claim:
1. Act No. 3083, which is titled “An Act Defining The Conditions
Under Which The Government Of The Philippine Islands May Be
Sued”, expressly provides for the State’s consent by saying that
the Philippine Government “consents and submits to be sued
upon any money claims involving liability arising from contract.”
2. In addition, In Santos v. Santos and Lyons v. United States of
America, the State also gave its implied consent by entering into a
contract with private parties, in which the State is deemed to have
descended to the level of the other contracting party, and
therefore, making itself suable.

Issue and Ruling (Supreme Court):

The issue is whether or not the State has given its consent to be sued in the instant
case.

The Supreme Court rules in favor of petitioner Department of Agriculture.

- The petition is granted.
- The writs are nullified.
- The ruling of the NLRC is reversed and set aside.

Regarding NLRC’s arguments that the State gave its consent by entering into a
contract, we must take note that this is also not an absolute rule. In United States of
America v. Ruiz, the Court held that distinction must be made between the
government’s sovereign function or governmental acts (jure impirii) and proprietary
capacity or commercial acts (jure gestionisis). The State’s immunity extends to
governmental acts, and entering into contracts with private parties does not impliedly
waive the State’s immunity to be sued when the contract is in furtherance of the
State’s sovereign function. The entering of DA into a contract with Sultan Security
Agency is necessary to its exercise of its governmental functions, and hence, no waiver
of the immunity to be sued was given by the state in such case.

The Court supports DA’s contention that public funds and assets must not be the
subject of writs or executions in satisfaction of a claim in a civil suit. Such is based on
considerations of public policy. In Commissioner of Public Highways v. San Diego, it
was stated that the loss of governmental efficiency and the obstacle to the

/KLManuel
performance of its functions would be far greater in severity than the inconvenience
that may be caused to private parties.

Wherefore,
- The petition is granted.
- The writs are nullified.
- The ruling of the NLRC is reversed and set aside.

/KLManuel