[CASE DIGEST] Department of Agriculture v. NLRC (G.R.

No. 104269)
November 11, 1993 | G.R. No. 104269

Department of Agriculture, petitioner

National Labor Relations Commission, et al., respondents

FACTS:

On April 1, 1989, the Department of Agriculture (DoA) office in Cagayan de Oro and Sultan
Security Agency (SSA) entered into a contract where the latter was to provide security services to
the former. On September 13, 1990, several guards from SSA filed a complaint for underpayment
of wages, non-payment of 13th month pay, uniform allowances, night shift differential pay,
holiday pay, as well as for damages, against DoA and SSA. Both the DoA and SSA were
subsequently found guilty by the Executive Labor Arbiter, which also held both of them liable for
the payment of money claims amounting to P266,483.91.

On July 18, 1991, the Labor Arbiter issued a writ of execution. As a response, the DoA filed a
petition for injunction, prohibition, and mandamus, with prayer for preliminary writ of
injunction, before the NLRC. The DoA's petition was dismissed.

Following the dismissal of its petition before the NLRC, DoA filed a petition before the SC arguing
that: (a) it was 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 (b)
that NLRC had disregarded the cardinal rule on the non-suability of the State.

ISSUES:

1. Whether or not it was COA that has exclusive jurisdiction over money claims against the
Government.
2. Whether or not DoA, as an agency of the State, is covered by the principle of the non-suability
of the State.

HELD:

1. Yes, the Court ruled that money claims against the Government should be filed before the
Commission on Audit pursuant to CA Act No. 327 as amended by PD No. 1445. In the instant case,
underpayment of wages, holiday pay, overtime pay, and other similar items arising from the
Contract for Service clearly constitute money claims. As such, the writ of execution issued by the
Labor Arbiter and the resolution issued by NLRC were reversed by the Court in favor of DoA.

2. No, DoA 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 DoA's contract with SSA was clearly a proprietary act,
which essentially means that DoA cannot invoke the principle of the non-suability of the State.