Philippine National Bank v. Pabalan
REITERATIONFacts
The Antecedents: The Philippine National Bank (PNB) filed a certiorari and prohibition proceeding against Judge Javier Pabalan. The proceeding stemmed from a writ of execution issued by the respondent judge, followed by a notice of garnishment of funds belonging to the Philippine Virginia Tobacco Administration (PVTA) deposited with PNB. Procedural History: A judgment against PVTA had become final. A writ of execution was issued on December 17, 1970, and a notice of garnishment was served for P12,724.66. PNB objected to the garnishment, invoking the doctrine of non-suability of the state, alleging the funds were public in character. On January 25, 1971, the respondent judge issued an order directing the garnishment of sufficient funds of PVTA deposited with PNB to satisfy the writ of execution. The Petition: PNB seeks to set aside the order of garnishment, alleging grave abuse of discretion by the respondent judge in failing to uphold the doctrine of non-suability of the state.
Issue(s)
Whether the funds of a public corporation, such as the Philippine Virginia Tobacco Administration, deposited with the Philippine National Bank are exempt from garnishment by virtue of the doctrine of non-suability of the state. Whether the respondent judge committed grave abuse of discretion in ordering the garnishment of the said funds.
Ruling
The petition is dismissed. The order of garnishment is upheld.
Ratio Decidendi
On the issue of garnishment of funds of public corporations: The Court reiterated the fundamental constitutional law doctrine of non-suability of the state, which states that "The State may not be sued without its consent." However, this doctrine applies only to funds belonging to the regular departments or offices of the government. The Court clarified that funds of public corporations, which are authorized to sue and be sued, are not exempt from garnishment. These public corporations possess a personality distinct and separate from the government itself. The Court cited previous rulings in Philippine National Bank v. Court of Industrial Relations, National Shipyard and Steel Corporation v. Court of Industrial Relations, and Manila Hotel Employees Association v. Manila Hotel Company to support this position. In these cases, it was held that when the government engages in commercial business through the instrumentality of a corporation, it abandons its sovereign capacity and is treated like any other private corporation, rendering it subject to court processes, including garnishment. On the alleged grave abuse of discretion: The Court found no grave abuse of discretion on the part of the respondent judge. The judge acted in accordance with established jurisprudence when he ordered the garnishment of the funds of the Philippine Virginia Tobacco Administration. The PNB's reliance on the doctrine of non-suability was misplaced, as PVTA, being a public corporation with the capacity to sue and be sued, its funds were not shielded from execution processes. The Court emphasized that the ruling in Philippine National Bank v. Court of Industrial Relations directly addressed a similar contention by the same petitioner, affirming that funds of public corporations are subject to garnishment.
Main Doctrine
Funds of public corporations, which are authorized to sue and be sued, are not exempt from garnishment, as they are considered to have a personality distinct and separate from the government.