SECOND DIVISION

[G.R. No. L-33112. June 15, 1978.]

PHILIPPINE NATIONAL BANK , petitioner, vs. HON. JUDGE JAVIER

PABALAN, Judge of the Court of First Instance, Branch III, La Union,
AGOO TOBACCO PLANTERS ASSOCIATION, INC., PHILIPPINE
VIRGINIA TOBACCO ADMINISTRATION, and PANFILO P. JIMENEZ,
Deputy Sheriff, La Union , respondents.

Conrado E. Medina, Edgardo M. Magtalas & Walfrido Climaco for petitioner.

Felimon A. Aspirin for respondent Agoo Tobacco Planters Association, Inc.
Virgilio C. Abejo for respondent Phil. Virginia Tobacco Administration.

SYNOPSIS

Judgment was rendered against respondent Philippine Virginia Tobacco

Administration. A writ of execution, followed thereafter by a notice of garnishment of
funds for the full amount mentioned in the writ, was issued by respondent judge.
Petitioner Philippine National Bank, with whose La Union Branch the funds to be
garnished are deposited, objected and raised the doctrine of non-suablity of the state,
alleging that such funds are public in character. Failing to have the order set aside,
petitioner instituted this present action.
The Supreme Court ruled that petitioner Bank could not legally set forth as a bar
to a notice of garnishment the doctrine of non-suability for the reason that respondent
Philippine Virginia Tobacco Administration is a public corporation whose funds could
properly be made the object of a notice of garnishment.
Petition dismissed.

SYLLABUS

1. CONSTITUTIONAL LAW; DOCTRINE OF STATE IMMUNITY FROM SUIT; A

GOVERNMENT OWNED AND CONTROLLED CORPORATION HAS DISTINCT
PERSONALITY OF ITS OWN; FUNDS OF THE CORPORATE ENTITY MAY BE PROCEEDED
AGAINST. — The doctrine of non-suability cannot be legally set forth as a bar or
impediment to a notice of garnishment. In National Shipyard and Steel Corporation v.
Court of Industrial Relations, 118 Phil. 782 (1963), it was explicitly stated: "That
allegation to the effect that the funds of the NASSCO are public funds of the
government, and that, as such the same may not be garnished, attached or levied upon,
is untenable for, as a government owned and controlled corporation, the NASSCO has a
personality of its own, distinct and separate from that of the Government. It has —
pursuant to Section 2 of Executive Order No. 356, dated October 23, 1950 . . ., pursuant
to which the NASSCO has been established — "all the powers of a corporation under the
Corporation Law . . . " Accordingly, it may sue and be sued and may be subjected to
court processes just like any other corporation (Section 13, Act No. 1459, as
amended.)"
CD Technologies Asia, Inc. © 2019 cdasiaonline.com
 2. ID.; ID.; EXCEPTION. — When the government enters into commercial
business, it abandons its sovereign capacity and is to be treated like any other
corporation. By engaging in a particular business thru the instrumentality of a
corporation, the government divests itself pro hac vice of its sovereign character, so as
to render the corporation subject to the rules of law governing private corporations.
(Manila Hotel Employees Association v. Manila Hotel Company, 73 Phil. 374)

DECISION

FERNANDO , Acting C.J : p

The reliance of petitioner Philippine National Bank in this certiorari and

prohibition proceeding against respondent Judge Javier Pabalan who issued a writ of
execution, 1 followed thereafter by a notice of garnishment of the funds of respondent
Philippine Virginia Tobacco Administration, 2 deposited with it, is on the fundamental
constitutional law doctrine of non-suability of a state, it being alleged that such funds
are public in character. This is not the rst time petitioner raised that issue. It did so
before in Philippine National Bank vs. Court of Industrial Relations, 3 decided only last
January. It did not meet with success, this Court ruling in accordance with the two
previous cases of National Shipyard and Steel Corporation 4 and Manila Hotel
Employees Association v. Manila Hotel Company, 5 that funds of public corporations
which can sue and be sued were not exempt from garnishment. As respondent
Philippine Virginia Tobacco Administration is likewise a public corporation possessed
of the same attributes, 6 a similar outcome is indicated. This petition must be
dismissed. prLL

It is undisputed that the judgment against respondent Philippine Virginia

Tobacco Administration had reached the stage of nality. A writ of execution was,
therefore, in order. It was accordingly issued on December 17, 1970 7 There was a
notice of garnishment for the full amount mentioned in such writ of execution in the
sum of P12,724.66. 8 In view of the objection, however, by petitioner Philippine National
Bank on the above ground, coupled with an inquiry as to whether or not respondent
Philippine Virginia Tobacco Administration had funds deposited with petitioner's La
Union branch, it was not until January 25, 1971 that the order sought to be set aside in
this certiorari proceeding was issued by respondent Judge. 9 Its dispositive portion
reads as follows: "Conformably with the foregoing, it is now ordered, in accordance
with law, that su cient funds of the Philippine Virginia Tobacco Administration now
deposited with the Philippine National Bank, La Union Branch, shall be garnished and
delivered to the plaintiff immediately to satisfy the Writ of Execution for one-half of the
amount awarded in the decision of November 16, 1970." 1 0 Hence this certiorari and
prohibition proceeding.
As noted at the outset, petitioner Philippine National Bank would invoke the
doctrine of non-suability. It is to be admitted that under the present Constitution, what
was formerly implicit as a fundamental doctrine in constitutional law has been set forth
in express terms: "The State may not be sued without its consent." 1 1 If the funds
appertained to one of the regular departments or o ces in the government, then,
certainly, such a provision would be a bar to garnishment. Such is not the case here.
Garnishment would lie. Only last January, as noted in the opening paragraph of this
decision, this Court, in a case brought by the same petitioner precisely invoking such a
CD Technologies Asia, Inc. © 2019 cdasiaonline.com
 doctrine, left no doubt that the funds of public corporations could properly be made the
object of a notice of garnishment. Accordingly, this petition must fail.
1. The alleged grave abuse of discretion, the basis of this certiorari
proceeding, was sought to be justi ed on the failure of respondent Judge to set aside
the notice of garnishment of funds belonging to respondent Philippine Virginia
Tobacco Administration. This excerpt from the aforecited decision of Philippine
National Bank v. Court of Industrial Relations makes manifest why such an argument is
far from persuasive: "The premise that the funds could be spoken of as public in
character may be accepted in the sense that the People's Homesite and Housing
Corporation was a government-owned entity. It does not follow though that they were
exempt from garnishment. National Shipyard and Steel Corporation v. Court of
Industrial Relations is squarely in point. As was explicitly stated in the opinion of the
then Justice, later Chief Justice, Concepcion: 'The allegation to the effect that the funds
of the NASSCO are public funds of the government, and that, as such, the same may not
be garnished, attached or levied upon, is untenable for, as a government-owned and
controlled corporation, the NASSCO has a personality of its own, distinct and separate
from that of the Government. It has — pursuant to Section 2 of Executive Order No. 356,
dated October 23, 1950 . . ., pursuant to which the NASSCO has been established — "all
the powers of a corporation under the Corporation Law . . . ." Accordingly, it may be sue
and be sued and may be subjected to court processes just like any other corporation
(Section 13, Act No. 1459, as amended.)' . . . To repeat, the ruling was the appropriate
remedy for the prevailing party which could proceed against the funds of a corporate
entity even if owned or controlled by the government." 1 2
2. The National Shipyard and Steel Corporation decision was not the rst of
its kind. The ruling therein could be inferred from the judgment announced in Manila
Hotel Employees Association v. Manila Hotel Company, decided as far back as 1941. 1 3
In the language of its ponente, Justice Ozaeta: "On the other hard, it is well-settled that
when the government enters into commercial business, it abandons its sovereign
capacity and is to be treated like any other corporation. (Bank of the United States v.
Planters' Bank, 9 Wheat. 904, 6 L. ed. 244). By engaging in a particular business thru the
instrumentality of a corporation, the government divests itself pro hac vice of its
sovereign character, so as to render the corporation subject to the rules of law
governing private corporations." 1 4 It is worth mentioning that Justice Ozaeta could find
support for such a pronouncement from the leading American Supreme Court case of
United States v. Planters' Bank, 1 5 with the opinion coming from the illustrious Chief
Justice Marshall. It was handed down more than one hundred fty years ago, 1824 to
be exact. It is apparent, therefore, that petitioner Bank could not legally set forth as a
bar or impediment to a notice of garnishment the doctrine of non-suability.
WHEREFORE, this petition for certiorari and prohibition is dismissed. No costs.
Barredo, Antonio, Aquino and Santos, JJ., concur.
Concepcion Jr., J., is on leave.

Footnotes
1. Petition, Statement of Facts, par. 6, Annex A.
2. Ibid, par. 12, Annex S.

3. L-32667, January 31, 1978.

CD Technologies Asia, Inc. © 2019 cdasiaonline.com
 4. 118 Phil. 782 (1963).
5. 73 Phil. 374 (1941).

6. Cf. Philippine Virginia Tobacco Administration v. Court of Industrial Relations, L-32052,

July 25, 1975, 65 SCRA 416.

7. Annex B to Petition.
8. Annex C to Petition.

9. Annex S to Petition.
10. Ibid, 11.
11. Article XV, Section L6, Constitution of the Philippines.

12. L-32667, January 31, 1978. The National Shipyard decision, as previously mentioned,
was promulgated in 1963 and reported in 118 Phil. 782.

13. 73 Phil. 374.

14. Ibid, 388-389.

15. 9 Wheat, 904, 6 L. ed. 244.

CD Technologies Asia, Inc. © 2019 cdasiaonline.com