VOL.

83, JUNE 15, 1978 595

Philippine National Bank vs. Pabalan

No. L33112. 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.

Administrative Law Execution Garnishment Constitutional

Law Actions State immunity from suit Funds of the Philippine
Virginia Tobacco Administration on deposit with the Philippine
National Bank may be garnished State immunity from suit cannot
be validly invoked with regards to funds of public corporations.
This is not the first time petitioner raised that issue. It did so
before in Philippine National Bank v. Court of Industrial
Relations, 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 and Manila Hotel
Employees Association v. Manila Hotel Company, 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, a similar outcome is indicated. This petition
must be dismissed.
Same Same Same Same Same Same.As noted at the
outset, petitioner Philippine National Bank would invoke the
doctrine of nonsuability. 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

______________

* SECOND DIVISION.
 596

596 SUPREME COURT REPORTS ANNOTATED

Philippine National Bank vs. Pabalan

not be sued without its consent. If the funds appertained to one

of the regular departments or offices 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
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.
Same Same Same Governmentowned and controlled
corporations have a personality of their own, separate and distinct
from the government, their funds, therefore although considered to
be public in character, are not exempt from garnishment.The
alleged grave abuse of discretion, the basis of this certiorari
proceeding, was sought to be justified 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 Peoples Homesite and Housing Corporation was a
governmentowned 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 governmentowned and controlled
corporation, the NASSCO has a personality of its own, distinct
and separate from that of the Government. It haspursuant to
Section 2 of Executive Order No. 356, dated October 23, 1950 * *
*, pursuant to which the NASSCO has been establishedall 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.) * * *
 Same Same Corporation Law Where the government
engages in a particular business thru the instrumentality of a
corporation, it divests itself pro hac vice of its sovereign character,
so as to subject itself to the rules governing private corporations.
The National Shipyard and Steel Corporation decision was not
the first of its kind.

597

VOL. 83, JUNE 15, 1978 597

Philippine National Bank vs. Pabalan

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. In the language of
its ponente, Justice Ozaeta: On the other hand, it is wellsettled
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 tender the
corporation subject to the rules of law governing private
corporation.

ORIGINAL ACTION in the Supreme Court. Certiorari and

mandamus with preliminary injunction.
The facts are stated in the opinion of the Court.
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.

FERNANDO, Acting C.J.:

The reliance of petitioner Philippine National Bank in
this certiorari and prohibition proceeding against
respondent1 Judge Javier Pabalan who issued a writ of
execution, followed thereafter by a notice of garnishment
of the funds of2 respondent Philippine Virginia Tobacco
Administration, deposited with it, is on the fundamental
constitutional law doctrine of nonsuability of a state, it
being alleged that such funds are public in character. This
is not the first time petitioner raised that issue. It did so
before in Philippine
3
National Bank v. Court of Industrial
Relations, decided only last January. It did not meet with
success, this Court ruling in accordance with

_______________

1 Petition, Statement of Facts, par. 6, Annex A.

2 Ibid, par. 12, Annex S.
3 L32667, January 31, 1978.

598

598 SUPREME COURT REPORTS ANNOTATED

Philippine National Bank vs. Pabalan

the two previous

4
cases of National Shipyard and Steel
Corporation and Manila 5
Hotel Employees Association v.
Manila Hotel Company, that funds of public corporations
which can sue and be sued were not exempt from
garnishment. As respondent Philippine Virginia Tobacco
Administration is likewise
6
a public corporation possessed of
the same attributes, a similar outcome is indicated. This
petition must be dismissed.
It is undisputed that the judgment against respondent
Philippine Virginia Tobacco Administration had reached
the stage of finality. A writ of execution was, therefore, in7
order. It was accordingly issued on December 17, 1970.
There was a notice of garnishment for the full amount
mentioned 8in such writ of execution in the sum of
P12,724.66. 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
petitioners La Union branch, it was not until January 25,
1971 that the order sought to be set aside in9 this certiorari
proceeding was issued by respondent Judge. Its dispositive
portion reads as follows: Conformably with the foregoing,
it is now ordered, in accordance with law, that sufficient
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
onehalf of the amount
10
awarded in the decision of
November 16, 1970. Hence this certiorari and prohibition
proceeding.
As noted at the outset, petitioner Philippine National
Bank would invoke the doctrine of nonsuability. It is to be
admitted that under the present Constitution, what was
formerly im

_______________

4 118 Phil. 782 (1963).

5 73 Phil. 374 (1941).
6 Cf. Philippine Virginia Tobacco Administration v. Court of Industrial
Relations, L32052, July 25, 1975, 65 SCRA 416.
7 Annex B to Petition.
8 Annex C to Petition.
9 Annex S to Petition.
10 Ibid, 11.

599

VOL. 83, JUNE 15, 1978 599

Philippine National Bank vs. Pabalan

plicit as a fundamental doctrine in constitutional law has

been set forth in express
11
terms: The State may not be sued
without its consent. If the funds appertained to one of the
regular departments or offices 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 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 justified 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 Peoples Homesite and
Housing Corporation was a governmentowned 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
governmentowned and controlled corporation, the
NASSCO has a personality of its own, distinct and separate
from that of the Government. It haspursuant to Section 2
of Executive Order No. 356, dated October 23, 1950 * * *,
pursuant to which the NASSCO has been establishedall
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

____________

11 Article XV, Section 16, Constitution of the Philippines.

600

600 SUPREME COURT REPORTS ANNOTATED

Philippine National Bank vs. Pabalan

prevailing party which could proceed against the funds of a

corporate entity
12
even if owned or controlled by the
government.
2. The National Shipyard and Steel Corporation decision
was not the first of its kind. The ruling therein could be
inferred from the judgment announced in Manila Hotel
Employees Association
13
v. Manila Hotel Company, decided
as far back as 1941. In the language of its ponente, Justice
Ozaeta: On the other hand, it is wellsettled 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
14
to the
rules of law governing private corporations. It is worth
mentioning that Justice Ozaeta could find support for such
a pronouncement from the leading American15 Supreme
Court case of United States v. Planters Bank, with the
opinion coming from the illustrious Chief Justice Marshall.
It was handed down more than one hundred fifty 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 nonsuability.
WHEREFORE, this petition for certiorari and
prohibition is dismissed. No costs.

Barredo, Antonio, Aquino, and Santos, JJ., concur.

Concepcion Jr., J., is on leave.

Petition dismissed.

________________

12 L32667, 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, 388389.
15 9 Wheat, 904, 6 L. ed. 244.

601

VOL. 83, JUNE 15, 1978 601

Philippine National Bank vs. Pabalan

Notes.Pursuant to Act No. 3083, as amended, and

Commonweath Act 327, the Government may not be sued
in court for recovery of a sum of money unless a claim
therefor has been previously filed with the Office of the
Auditor General. (Champion Auto Supply Co., Inc. vs.
Bureau of Customs, 44 SCRA 455 Rizal Surety &
Insurance Co. vs. American Steamship Agencies Inc., 45
SCRA 41 Federal Insurance Co. vs. Republic, 45 SCRA
379 Union Insurance Society of Canton, Ltd. vs. Republic,
46 SCRA 121).
The doctrine of governmental immunity from suit
cannot, however, serve as an instrument for the
perpetration of an injustice on a citizen. (Amigable vs.
Cuenca, 43 SCRA 360).
A suit against the Philippine Veterans Administration is
not a suit against the Government of the Republic of the
Philippines. (Del Mar vs. Philippine Veterans
Administration, 51 SCRA 340).
A judgment against the State cannot be enforced by writ
of execution. (Republic vs. Villasor, 34 SCRA 83).
While the foregoing government acting through its naval
commander may be immune from suit, the naval
commander himself may however be sued in his personal
capacity. (Baer vs. Tizon, 57 SCRA 1).
The failure of the Bureau of Customs to raise the
defense of immunity from suit is of no moment the action
will not prosper. (Insurance Company of North America vs.
Osaka Shosen Kaisha, 27 SCRA 780).
The Philippine National Bank has a personality of its
own and may be sued as an entity entirely distinct from the
Republic by another government instrumentality.
(Republic vs. Philippine National Bank, 13 SCRA 24).
The plea for setting aside the notice of garnishment was
premised on the funds of the Peoples Homesite and
Housing Corporation deposited with petitioner being
public in character. The premise that the funds could be
spoken of as public in character may be accepted in the
sense that the Peoples Homesite and Housing Corporation
was a governmentowned entity. It does not follow though
that they were exempt

602

602 SUPREME COURT REPORTS ANNOTATED

New Filipino Maritime Agencies, Inc. vs. Rivera

from garnishment. National Shipyard and Steel

Corporation vs. 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 haspursuant to Seetion 2
 of Executive Order No. 356 dated October 23, 1950 * * *
pursuant to which the NASSCO has been establishedall
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.
Garnishment was the appropriate remedy for the
prevailing party which could proceed against the funds of a
corporation entity even if owned or controlled by the
government. (Philippine National Bank vs. Court of
Industrial Relations, 81 SCRA 314.)

o0o

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