Philippine National Bank v.

Pabalan
June 15, 1978 ; GR No. L-33112

Facts:

The case was filed by petitioner (PNB) requesting for certiorari against the writ of execution authorized
by the Hon Judge Pabalan regarding the transfer of funds amounting to P12,724.66 belonging to
Philippine Virginia Tobacco Administration (PVTA)

Philippine National Bank (PNB) of La Union filed an administrative complaint against Judge Pabalan for
grave abuse of discretion, alleging that the latter failed to recognize that the questioned funds are of
public character and therefore may not be garnished, attached or levied upon.

The PNB La Union Branch invoked the doctrine of non-suability, putting a bar on the notice of
garnishment.

Issues:

(1) Whether or not Philippine National Bank can be sued.

(2) Whether or not the notice of garnishment of funds of Philippine Virginia Tobacco deposited with
the petitioner bank is valid.

Rulings:

PVTA is also a public corporation with the same attributes, a similar outcome is attributed.

The government has entered with them into a commercial business hence it has abandoned its
sovereign capacity and has stepped down to the level of a corporation. Therefore, it is subject to rules
governing ordinary corporations and in effect can be sued. Therefore, the petition of PNB La Union is
denied.

The Supreme Court ruled that the funds held by PNB is subject for garnishment. Funds of public
corporations which can sue and be sued are not exempt from garnishment. Thus, the writ of execution
be imposed immediately.

Discussions:

The consent of the state to be sued may be given expressly or impliedly. In this case, Consent to be sued
was given impliedly when the State enters into a commercial contract. When the State enters into a
contract, the State is deemed to have divested itself of the mantle of sovereign immunity and
descended to the level of the ordinary individual. Hence, Funds of public corporations could properly be
made the object of a notice of garnishment.