G.R. No.

104269 November 11, 1993

DEPARTMENT OF AGRICULTURE, petitioner, vs.

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

FACTS:

In 1989, Department of Agriculture went into contract with Sultan Security Agency for their
security services for cost cutting reasons.
In 1990, the security guards led complaint against the DA and Sultan Security Agency for
underpayment of wages, non-payment of 13th month pay, uniform allowances, night shift
di erential pay, holiday pay and overtime pay, as well as for damages before the Regional
Arbitration Branch X of Cagayan de Oro and found them liable for the payment aggregating to
P266,483.91 wherein the decision became nal and executory without any appeal from the
parties.
Department of Agriculture eventually led for petition for certiorari claiming that NLRC has
disregarded the cardinal rule on non-suitability of the State, and that tehy have no jurisdiction
over the matter.

ISSUE:

Whether or not the NLRC has jurisdiction over the matter.

Whether or not the NLRC violated the rule on non-suitability of the State.

RULE:

None. Pursuant to CA 3083 as amended by PD 1145, money claims against government

entities should rst be brought to Commission on Audit.

Yes, the State’s immunity from suits arise from acts exercising its sovereignty, but not on its
commercials transactions.

ANALYSIS:

Our constitution states that “The State may not be sued without its consent” based on the
essence of sovereignty, exempt from suit 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. It was
also noted that continued adherence to the doctrine of non-suitability so as to not result to loss
of governmental e ciency to perform its functions.
Express and implied consents may waive the State’s immunity.
Implied consent, on the other hand, is conceded when the State itself commences litigation,
thus opening itself to a counterclaim or when it enters into a contract. In this situation, the
government is deemed to have descended to the level of the other contracting party and to
have divested itself of its sovereign immunity - which is what the respondents and NLRC is
relying to. However, not all contracts entered into by the government operate as a waiver of its
non-suability; distinction must still be made between one which is executed in the exercise of
its sovereign function and another which is done in its proprietary capacity.
The contract between the Department of Agriculture and Sultan Security Agency is not deemed
an act of commercial transaction, but rather, relates to its exercise of sovereign functions.
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Under CA 3083 as amended by PD 1145, 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, such as what occurred
between the Department of Agriculture and Sultan Security Agency. Money claims should rst
be brought to Commission on Audit.

CONCLUSION:

Petition was granted nullifying the execution issued by the NLRC against the petitioners,
Department of Agriculture.

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