Department of Agriculture vs. National Labor Relations Commission NLRC G.R. No.

104269, November 11, 1993 Facts: Petitioner Department of Agriculture (DA) and Sultan Security Agency entered into a contract for security services to be provided by the latter to the said governmental entity. Pursuant to their arrangements, guards were deployed by Sultan Security Agency in the various premises of the DA. Thereafter, several guards 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 CDOC against the DA and the security agency. The Labor Arbiter rendered a decision finding the DA jointly and severally liable with the security agency for the payment of money claims of the complainant security guards. The DA and the security agency did not appeal the decision. Thus, the decision became final and executory. The Labor Arbiter issued a writ of execution to enforce and execute the judgment against the property of the DA and the security agency. Thereafter, the City Sheriff levied on execution the motor vehicles of the DA. DA filed a petition for injunction, prohibition and mandamus with prayer for preliminary injunction with NLRC alleging that the writ issued was effected without the Labor Arbiter having duly acquired jurisdiction over the petitioner, and therefore, the decision of the Labor Arbiter was null and void. The NLRC promulgated its assailed resolution. 1.) that The enforcement and execution of the judgments against petitioner in NLRC are temporarily suspended for a period of two months. 2.) , petitioner is ordered and directed to source for funds within the period above-stated and to deposit the sums of money equivalent to the aggregate amount. 3.) petitioner is likewise directed to put up and post sufficient surety and supersedeas bond equivalent to at least to fifty (50%) percent of the total monetary award. 4) City Sheriff is ordered to immediately release the properties of petitioner. 5.) . The right of any of the judgment debtors to claim reimbursement against each other for any payments made. Finally, the petition for injunction is dismissed for lack of basis. The writ of preliminary injunction previously issued is Lifted and Set Aside and in lieu thereof, a Temporary Stay of Execution is issued for a period of two (2) months but not extending beyond the last quarter of calendar year 1991, conditioned upon the posting of a surety or supersedeas bond by petitioner within ten (10) days from notice pursuant to paragraph 3 of this disposition. The motion to admit the complaint in intervention is Denied for lack of merit while the motion to dismiss the petition filed by Duty Sheriff is Note. The petitioner filed to the Supreme Court a case charging the NLRC with grave abuse of discretion for refusing to quash or reject the writ of execution. The petitioner fault the NLRC for assuming jurisdiction over a money claim against the Department, which, it claims, falls under the exclusive jurisdiction of the Commission on Audit. More importantly, the petitioner asserts, the NLRC has disregarded the cardinal rule on the non-suability of the State. The private respondents, on the other hand, argue that the petitioner has impliedly waived its immunity from suit by concluding a service contract with Sultan Security Agency. Issue: Whether or not the doctrine of non-suability of the State applies in the case

Held: The basic postulate enshrined in the Constitution that the State may not be sued without its consent reflects nothing less than a recognition of the sovereign character of the State and an express affirmation of the unwritten rule effectively insulating it from the jurisdiction of courts. It is based on the very essence of sovereignty. A sovereign is exempt from suit based 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. The rule is not really absolute for it does not say that the State may not be sued under any circumstances. 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. 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. But 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. A State may be said to have descended to the level of an individual and can this be deemed to have actually given its consent to be sued only when it enters into business contracts. It does not apply where the contract relates to the exercise of its sovereign functions. In the case, the DA 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 the complainant security guards clearly constitute money claims. Act No. 3083 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 327, as amended by PD 1145, the money claim must first be brought to the Commission on Audit. The Supreme Court GRANTED the petition of the petitioner. The resolution, dated 27 November 1991, is hereby REVERSED and SET ASIDE. The writ of execution directed against the property of the Department of Agriculture is nullified, and the public respondents are hereby enjoined permanently from doing, issuing and implementing any and all writs of execution issued pursuant to the decision rendered by the Labor Arbiter against said petitioner. NOTES: petition for injunction, prohibition and mandamus - When any tribunal, board or officer exercising judicial or quasi-judicial functions has acted without or in excess of its or his jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, and there is no appeal, or any plain, speedy, and adequate remedy in the ordinary course of law, a person aggrieved thereby may file a verified petition in the proper court, alleging the facts with certainty and praying that judgment be rendered annulling or modifying the proceedings of such tribunal, board or officer, and granting such incidental reliefs as law and justice may require. ACT NO. 3083 - AN ACT DEFINING THE CONDITIONS UNDER WHICH THE GOVERNMENT OF THE PHILIPPINE ISLANDS MAY BE SUED Section 1. Complaint against Government. Subject to the provisions of this Act, the Government of the Philippine Islands hereby consents and submits to be sued upon any moneyed claim involving

liability arising from contract, expressed or implied, which could serve as a basis of civil action between private parties. COMMONWEALTH ACT NO. 327 - AN ACT FIXING THE TIME WITHIN WHICH THE AUDITOR GENERAL SHALL RENDER HIS DECISIONS AND PRESCRIBING THE MANNER OF APPEAL THEREFROM SECTION 1. In all cases involving the settlement of accounts or claims, other than those of accountable officers, the Auditor General shall act and decide the same within sixty days, exclusive of Sundays and holidays, after their presentation. If said accounts or claims need reference to other persons, office or offices, or to a party interested, the period aforesaid shall be counted from the time the last comment necessary to a proper decision is received by him. With respect to the accounts of accountable officers, the Auditor General shall act on the same within one hundred days after their submission, Sundays and holidays excepted. PRESIDENTIAL DECREE No. 1445 - ORDAINING AND INSTITUTING A GOVERNMENT AUDITING CODE OF THE PHILIPPINES Section 49. Period for rendering decisions of the Commission. The Commission shall decide any case brought before it within sixty days from the date of its submission for resolution. If the account or claim involved in the case needs reference to other persons or offices, or to a party interested, the period shall be counted from the time the last comment necessary to a proper decision is received by it. Section 50. Appeal from decisions of the Commission. The party aggrieved by any decision, order or ruling of the Commission may within thirty days from his receipt of a copy thereof appeal on certiorari to the Supreme Court in the manner provided by law and the Rules of Court. When the decision, order, or ruling adversely affects the interest of any government agency, the appeal may be taken by the proper head of that agency.