Philippine Resources Development Corporation v. Republic
REITERATIONFacts
The Antecedents: The Bureau of Prisons, to enforce discipline and train prisoners, engaged in exploiting forest resources using prison labor. Macario Apostol contracted with the Bureau of Prisons to purchase almaciga and 3,000,000 board feet of lauan logs. To secure his obligation, Apostol posted a performance bond of P10,000.00 with Empire Insurance Company as surety. The Bureau delivered the goods, but Apostol failed to pay the full amount of P34,015.06. Apostol then delivered GI sheets, GI pipes, and black iron sheets valued at P30,436.94 to settle his obligation. However, these were not credited due to lack of supporting papers. Procedural History: The Republic of the Philippines filed a collection case against Apostol and Empire Insurance Company. Apostol admitted a balance of P758.12, claiming payment in kind. Philippine Resources Development Corporation (PRDC), where Apostol was president, filed a motion to intervene, claiming ownership of the properties delivered by Apostol. The trial court denied the motion for lack of legal interest, but the Court of Appeals reversed this, allowing the intervention. This Court affirmed the Court of Appeals' decision. The trial court then admitted the complaint in intervention. The Republic raised the defense of state immunity. The trial court ruled, condemning Apostol to pay the Republic, absolving Empire Insurance Company, and ordering the Republic to return the value of the properties to the Intervenor (PRDC) or pay P31,436.94 in default. The Republic and Apostol appealed to the Court of Appeals, which dismissed the Republic's appeal for abandonment. The Court of Appeals affirmed the trial court's decision regarding Apostol's liability to the Republic but reversed the part concerning the complaint in intervention, dismissing it and ordering Empire Insurance Company to pay jointly and severally with Apostol up to P10,000.00. PRDC appealed to this Court. The Petition: The Philippine Resources Development Corporation appealed the Court of Appeals' decision, particularly the dismissal of its complaint in intervention.
Issue(s)
Whether the claim of the Philippine Resources Development Corporation (PRDC) for ownership of properties delivered by Macario Apostol to the Bureau of Prisons is barred by state immunity from suit. Whether Macario Apostol is liable to PRDC for the value of the properties he delivered to the Bureau of Prisons.
Ruling
The Court modified the judgment. Defendants Macario Apostol and Empire Insurance Company, jointly and severally, are ordered to pay the plaintiff the sum of P34,015.06, with legal interest, provided Empire Insurance Company's liability shall not exceed P10,000.00. The dismissal of the complaint in intervention is set aside as against defendant Macario Apostol, who is ordered to return to petitioner PRDC the specified properties, or in default thereof, to pay PRDC the value of P30,436.94, with legal interest from the date of the filing of the complaint in intervention.
Ratio Decidendi
On the issue of state immunity from suit: The Court held that a claim against the State cannot be maintained without its consent. However, the Court clarified that PRDC's complaint in intervention was, in effect, directed not against the plaintiff Republic of the Philippines, but against defendant Macario Apostol, who could not avail himself of the defense of immunity from suit. Therefore, as to Apostol, the complaint in intervention should not have been dismissed. The Court reasoned that the intervention asserted ownership of properties Apostol delivered to the Bureau of Prisons to pay his personal account, and the Republic had not asserted any interest adverse to PRDC's claim. Instead, Apostol himself had adversely asserted ownership over the properties. On the liability of Macario Apostol to PRDC: The Court found that the properties in question—892 pieces of GI sheets, 399 GI pipes, and 2,793 pieces of black iron sheets—belonged to PRDC, based on the findings of the trial court undisturbed by the Court of Appeals, and on Apostol's subsequent admission. The record did not indicate that PRDC conveyed ownership to Apostol; rather, the properties came into Apostol's possession as president of PRDC. Consequently, Apostol was bound to account for and restitute these properties to PRDC, or, if restitution was no longer possible, to pay PRDC their value. The Court affirmed the trial court's finding that the value of these properties was P30,436.94.
Main Doctrine
A claim against the State requires its consent; however, a claim for ownership of properties delivered as payment for a personal debt, asserted by a third party, may proceed against the individual debtor even if the State is involved in the collection of the debt.