Traders Royal Bank vs. Intermediate Appellate Court

Facts:

Traders Royal Bank (Traders), a private banking institution, sued the National Media Production Center (NMPC), represented by Director Gregorio S. Cendana, and Production Specialists, Inc. (PSI), represented by Romeo G. Jalosjos, to collect under a loan agreement. On April 9, 1981, Traders extended credit of P2,520,000 by means of a domestic standby letter of credit to guarantee coverage/broadcast rights for the 1981 Philippine Basketball Association season; the agreement required NMPC and PSI to deposit sponsor collections with Traders and to maintain a minimum current-account balance during the letter’s term.

When defendants failed to pay and did not comply with account conditions, Traders filed a collection suit in the Court of First Instance (Civil Case No. 9303-P) and obtained a writ of preliminary attachment after posting bond. The deputy sheriff collected funds from PSI and garnished sponsor collections and NMPC’s account with Traders, aggregating P1,811,888.84. PSI’s president asked that the sheriff’s collections be applied as partial payment; the trial court allowed this.

NMPC (through the Office of the Solicitor General and later private counsel) moved to dismiss for lack of jurisdiction, asserting governmental immunity from suit and that claims against it should be brought under audit procedures (Article XII, D, Sec. 2(1), 1973 Constitution and Sec. 26, Presidential Decree No. 1445). The trial court denied the motion (relying on the rule that the State may be sued when it enters contracts with private persons). NMPC then filed a petition for certiorari, prohibition and mandamus before the then Intermediate Appellate Court (IAC), contending the trial court gravely abused its discretion, that NMPC — an unincorporated government instrumentality under the Office of the President — could not be sued without consent, and that government funds were immune from attachment.

The IAC granted NMPC’s petition on July 17, 1984, holding that NMPC lacked a separate juridical personality and therefore could not be sued; it found no implied waiver of immunity by contract. Traders moved for reconsideration, which was denied, and then filed this petition for review on certiorari with the Supreme Court (Rule...(Pro-only)

Issues:

• Was the petition for certiorari, prohibition and mandamus filed by the NMPC in the Intermediate Appellate Court a proper and available remedy to obtain relief from the garnishment of government funds?

• Did the NMPC, by entering into the loan agreement (either as principal borrower or guarantor), impliedly waive its sovereign immunity and thereby become suable?

• If the NMPC impliedly consented to suit, could its deposits with Traders nonetheless be garnished ...(Pro-only)

Ruling:

• (Pro-only)

Ratio:

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Doctrine:

• (Pro-only)