Dept. of Agriculture v. NLRC

G.R. No. 104269 November 11, 1993

Vitug, J.

Facts:

                The Department of Agriculture (herein petitioner) and Sultan Security Agency entered into a contract on 01 April 1989 for security services to be provided by the latter to the said governmental entity. Save for the increase in the monthly rate of the guards, the same terms and conditions were also made to apply to another contract, dated 01 May 1990, between the same parties. Pursuant to their arrangements, guards were deployed by Sultan Agency in the various premises of the petitioner.

On 13 September 1990, several guards of the Sultan Security Agency filed a complaint for underpayment of wages, non-payment of 13th month pay, uniform allowances, night shift differential pay, holiday pay and overtime pay, as well as for damages, before the Regional Arbitration Branch X of Cagayan de Oro City against the Department of Agriculture and Sultan Security Agency.

The Executive Labor Arbiter rendered a decision finding herein petitioner and jointly and severally liable with Sultan Security Agency for the payment of money claims, aggregating.

Issue:

                whether the petitioner has impliedly waived its immunity from suit by concluding a service contract with Sultan Security Agency

Held:

                The state may not be sued without its consent;” its clear import then is that the State may at times be sued. The States’ consent may be given expressly or impliedly. Express consent may be made through a general law or a special law. In this jurisdiction, the general law waiving the immunity of the state from suit is found in Act No. 3083, where 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.” 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. This rule, relied upon by the NLRC and the private respondents, 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 is executed in the exercise of its sovereign function and another which is done in its proprietary capacity.

The Department of Agriculture has not pretended to have assumed a capacity apart from its being a governmental entity when it entered into the questioned contract; nor that it could have, in fact, performed any act proprietary in character.

But, be that as it may, the claims of private respondents, i.e. for underpayment of wages, holiday pay, overtime pay and similar other items, arising from the Contract for Service, clearly constitute money claims. Act No. 3083, aforecited, gives the consent of the State to be “sued upon any moneyed claim involving liability arising from contract, express or implied, . . . Pursuant, however, to Commonwealth Act (“C.A.”) No. 327, as amended by Presidential Decree (“P.D.”) No. 1145, the money claim first be brought to the Commission on Audit.

The Labor code, in relation to Act No. 3083, provides the legal basis for the State liability but the prosecution, enforcement or satisfaction thereof must still be pursued in accordance with the rules and procedures laid down in C.A. No. 327, as amended by P.D. 1445.

When the state gives its consent to be sued, it does thereby necessarily consent to unrestrained execution against it. tersely put, when the State waives its immunity, all it does, in effect, is to give the other party an opportunity to prove, if it can, that the State has a liability.

The universal rule that where the State gives its consent to be sued by private parties either by general or special law, it may limit the claimant’s action “only up to the completion of proceedings anterior to the stage of execution” and that the power of the Courts ends when the judgment is rendered, since government funds and properties may not be seized under writs or execution or garnishment to satisfy such judgments, is based on obvious considerations of public policy. Disbursements of public funds must be covered by the correspondent appropriation as required by law.