Case Summary (G.R. No. L-33112)
Applicable Law and Legal Framework
The case hinges on the constitutional principle that the State may not be sued without its consent, as expressly stated in Article XV, Section 16 of the 1935 Philippine Constitution at the time the decision was made. The petitioner relies on the doctrine of non-suability of the State, arguing that funds of PVTA, a government-owned entity, are exempt from garnishment due to their public character.
Case Background and Procedural History
A judgment against the Philippine Virginia Tobacco Administration had become final. Consequently, the writ of execution was issued on December 17, 1970, ordering the garnishment of funds amounting to ₱12,724.66 deposited in PNB’s La Union branch. Despite the PNB's objections based on the non-suability doctrine and inquiry regarding the existence of PVTA’s deposits, the respondent judge issued an order on January 25, 1971, directing that the garnishment be executed to satisfy half the amount awarded in the judgment.
Constitutional Doctrine of Non-Suability of the State
The petitioner contended that since PVTA is a public corporation with funds of a public nature, it cannot be subjected to garnishment. However, the Court referenced prevailing jurisprudence, particularly National Shipyard and Steel Corporation v. Court of Industrial Relations, establishing that government-owned or controlled corporations possessing juridical personality distinct from the State are not immune from garnishment or other court processes. The decision cited confirms that such corporations may sue and be sued and, therefore, their funds are not protected by the doctrine of State immunity.
Jurisprudential Precedents on Non-Sovereign Status of Government-Owned Corporations
The Court reaffirmed the principle that when the government engages in commercial activities through a corporation, it relinquishes its sovereign immunity for that entity. The ruling in Manila Hotel Employees Association v. Manila Hotel Company (1941) articulates this concept clearly, holding that government corporations are subject to the same rules as private corporations. Justice Ozaeta underscored this by citing the U.S. Supreme Court decision in United States v. Planters’ Bank (1824), which similarly established that government action in commercial enterprises subjects such entities to ordinary legal rules.
Final Ruling and Legal Consequence
Acknowledging the settled legal principle and the factual necessity for execution after finality of judgment, the Court dismissed PNB's petition for certiorari and prohibition. It concluded that the writ of execution and order for garnishment issued by the trial court judge were proper and within legal bounds, affirming that the public corporation's funds could be garnished despite their government ownership. The petition was dismissed with no costs imposed.
Summary of Legal Principles Affirmed
Case Syllabus (G.R. No. L-33112)
Facts of the Case
- The petitioner, Philippine National Bank (PNB), filed a certiorari and prohibition proceeding against respondent Judge Javier Pabalan for issuing a writ of execution and subsequently a notice of garnishment on funds belonging to the respondent Philippine Virginia Tobacco Administration (PVTA) deposited with the bank.
- The writ of execution was issued due to a final and executory judgment against the Philippine Virginia Tobacco Administration, with the amount garnished being P12,724.66.
- The bank objected to the garnishment on the constitutional ground of the non-suability of the State, asserting that the funds were public in character and hence exempt from garnishment.
- The respondent Judge issued an order to garnish and deliver the funds of PVTA to satisfy one-half of the judgment amount.
- This petition contended that PVTA’s funds, being public funds of a government-owned corporation, were protected under the constitutional doctrine that the State cannot be sued without its consent.
Issue Presented
- Whether the funds of the Philippine Virginia Tobacco Administration, a government-owned and controlled corporation, deposited with the petitioner bank are subject to garnishment despite their public character.
- Whether the constitutional doctrine of non-suability of the State applies as a bar to the garnishment of funds held by a government-owned corporation.
Petitioner's Arguments
- The petitioner bank relied on the fundamental constitutional doctrine that the State may not be sued without its consent, asserting that the funds of PVTA are public funds protected from garnishment.
- It maintained that the doctrine of non-suability should act as a bar to any writ of execution or garnishment issued against funds considered part of the public treasury.
- The bank insisted that these public funds are non-executable, thereby making the notice of garnishment inappropriate and illegal.
Respondents' Counterarguments and Judicial Precedents
- The Court reviewed prior rulings including Philippine National Bank v. Court of Industrial Relations where the same petition was dismissed on similar grounds.
- The Court cited two seminal cases: National Shipyard and Steel Corporation v. Court of Industrial Relations (1963) and Manila Hotel Em