Veteran Manpower and Protective Services Inc, (VMPSI) V.

Philippine Constabulary Chief

(PC Chief) and Philippine Constabulary – Secondary Unit for Security and Investigation
Agency (PC SUSIA)
GR No. 91359, September 25, 1992
VMPSI – company engaged in security/manpower services
PC-SUSIA – government agency tasked to regulate organization and operation of security
agencies

FACTS: This is a petition for review on certiorari on the decision dated Aug 11, 1989, of the Court
of Appeals in CA-GR SP no. 15990.
Pursuant to RA 5487, a Memorandum of Agreement was executed between the PC Chief and
PADPAO fixing the minimum monthly contract rate per guard per day. Odin Agency, another
agency providing security services, file a complaint, before PADPAO, against VMPSI alleging that
VMPSI engaged in cutthroat competition when VMPSI undercut/lowered its contract rate for its
security services with MWSS. PADPAO and PC SUSIA found VMPSI guilty of cutthroat
competition and as a result, PADPAO refused to issue a clearance/certificate of membership
which is a pre-requisite/requirement in the renewal of license.
Before the Makati RTC, VMPSI filed a temporary restraining order and a writ of preliminary
injunction to preserve the status quo and to enjoin PC SUSIA from doing acts that would result in
the cancellation or non-renewals of VMPSI’s license, and to declare the amendments in RA 5487,
institutionalizing and giving power to PADPAO, unconstitutional for unfair competition. Writ of
injunction was granted.
PC Chief and PC SUSIA filed a motion to dismiss and motion to quash claiming that the suit is
against the state which it did not give its consent and therefore cannot be sued. CA ruled in favor
of the PC Chief and PC Susia and lifted the injunction.
ISSUE: Whether or not the complaint filed by VMPSI against PC Chief and PC Susia is a suit
against the state without its consent.
Court Held: Yes, it is a suit against the state without its consent.
Art XVI, Sec 3, 1987 Constitution states that State may not be sued without its consent. It also
applies to complaints filed against officials of the state for acts allegedly performed by them in the
discharge of their duties, except when in his personal/private capacity, he acts in bad faith or
beyond the scope of his authority or jurisdiction.
PC Chief/PC SUSIA acted as instrumentalities of the national government, exercising government
functions of regulating watchmen/security agencies. Such acts were performed by them as part
of their official duties without malice, gross negligence, or bad faith and no recovery may be held
against them in their private capacities.
Moreover, the MOA between the PC Chief and PADPAO is also related to the exercise of a
function sovereign in nature. State immunity is not the function of a contract by the State, but the
legal nature of the act.
The restrictive application of State Immunity is proper only when the proceedings arise out of
commercial transactions and commercial activities and the MOA is a clearly a government
function which aims to regulate operations of security agencies.
The consent of the state to be sued must emanate from statutory authority, hence from a
legislative act, and not from a memorandum. Without such consent, RTC did not acquire
jurisdiction over the public respondents. Henke the petition mush be dismissed.