FACTS:
In 1999, TESDA, an instrumentality of the government established under R.A. No. 7796 (the TESDA Act of 1994) and attached to the DOLE to develop and establish a national system of skills standardization, testing, and certification in the country.
To fulfill this mandate, it sought to issue security-printed certification and/or identification polyvinyl (PVC) cards to trainees who have passed the certification process.
Professional Video Inc. (PROVI) signed and executed the “Contract Agreement Project PVC ID Card issuance” for the provision of goods and services in the printing and encoding of the PVC cards. PROVI was to provide TESDA with the system and equipment compliant with the specifications defined in the proposal. In return, TESDA would pay PROVI a specified sum of money after TESDA’s acceptance of the contracted goods and services. PPOVI alleged that TESDA has still an outstanding balance and still remains unpaid.
TESDA claims that it entered the Contract Agreement and Addendum in the performance of its governmental function to develop and establish a national system of skills standardization, testing, and certification; in the performance of this governmental function, TESDA is immune from suit.
ISSUE:
Can TESDA be sued without its consent?
RULING:
TESDA, as an agency of the State, cannot be sued without its consent. The rule that a state may not be sued without its consent is embodied in Section 3, Article XVI of the 1987 Constitution and has been an established principle that antedates this Constitution. It is as well a universally recognized principle of international law that exempts a state and its organs from the jurisdiction of another state.
The principle is based on the very essence of sovereignty, and on the practical ground that there can be no legal right as against the authority that makes the law on which the right depends. It also rests on reasons of public policy. That public service would be hindered, and the public endangered, if the sovereign authority could be subjected to law suits at the instance of every citizen and, consequently, controlled in the uses and dispositions of the means required for the proper administration of the government.
The proscribed suit that the state immunity principle covers takes on various forms, namely: a suit against the Republic by name; a suit against an unincorporated government agency; a suit against a government agency covered by a charter with respect to the agencys performance of governmental functions; and a suit that on its face is against a government officer, but where the ultimate liability will fall on the government. In the present case, the writ of attachment was issued against a government agency covered by its own charter.
As discussed above, TESDA performs governmental functions, and the issuance of certifications is a task within its function of developing and establishing a system of skills standardization, testing, and certification in the country. From the perspective of this function, the core reason for the existence of state immunity applies i.e., the public policy reason that the performance of governmental function cannot be hindered or delayed by suits, nor can these suits control the use and disposition of the means for the performance of governmental functions.