DAR vs. NLRC

DEPARTMENT OF AGRICULTURE, Petitioner,
vs
THE NATIONAL LABOR RELATIONS COMMISSION, ET AL., Respondents.

227 SCRA 693
Nov. 11, 1993

FACTS:

The DAR and Sultan Security Agency entered into a contract for security services to be provided by the latter to the said governmental entity. Several guards of the agency assigned to the petitioner‘s premises filed a complaint for underpayment of wages, non-payment of 13^th month pay, uniform allowances, night shift differential pay, holiday pay, and overtime pay as well as for damages, before the Regional

Arbitration, against the petitioner and the agency. The Executive Labor arbiter rendered a decision finding the petitioner and the agency jointly and severally liable for the payment of the money claims. The decision became final and executory. The Labor Arbiter then issued a writ of execution which resulted in the property of the petitioner being levied. The petitioner asserts the rule of non-suability of the State.

ISSUE:

Can the Department of Agriculture be sued under the contract entered with the agency?

HELD:

YES. The basic postulate under Art. X section 3 of the Constitution that ―the State may not be sued without its consent is not absolute for it does not say that the State may not be sued under any circumstances. On the contrary, as correctly phrased, the doctrine only conveys ―that the State may not be sued without its consent. Its import then is that the State may at times be sued. The State‘s consent may be given either expressly or impliedly. Express consent may be made through a general law waiving the immunity of the State from suit which is found in Act 3083, where the Philippine government ―consents and submits to be sued upon any money claim involving liability arising from contract, express or implied, which could serve as basis of civil action between private parties. Implied consent on the other hand, is conceded when the State itself commences litigation, thus opening itself to 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. The rule relied upon by the NLRC is not, however, without qualification. Not all contracts entered into by the government operate as a waiver of its non-suability. Distinction must still be made between one which was executed in the exercise of its sovereign function and another which is done in its proprietary capacity. In the instant case, the petitioner has not pretended to have assumed a capacity apart from its being a governmental entity when it entered into the questioned contract, not that it could have in fact performed any act proprietary in character, but be that as it may, the claims of private respondents arising from the contract for security services clearly constitute money claims for which Act 3083 gives the consent of the state to be sued.

However, when the State gives its consent to be sued, it does not thereby necessarily consent to an unrestricted execution against it. When the State waives immunity, all it does, in effect, is to give the other party an opportunity to prove, if it can, that the state has any liability.