G.R. No.

84992

December 15,1989

PHILIPPINE ROCK INDUSTRIES, INC. vs BOARD OF LIQUIDATORS

FACTS:

PHILROCK filed in the RTC of Manila a complaint against the Board of Liquidators, as liquidator of the
defunct REPACOM, for: (1) the replacement of the defective rock pulverizing machinery purchased from
REPACOM, or, as alternative, to refund the purchase at 31% of its contract price; (2) reparation for losses
incurred due to the increased expenses of maintaining the plant at Php5,000 a month and Php4,000 per day as
unrealized profits and exemplary damages; and (3) Php50,000 attorney fees plus expenses and costs of the suit.
The RTC decided in favor of PHILROCK. The Solicitor General, in behalf of the State, filed a notice of appeal on
the ground that the payment for damages are public funds, hence, exempt from attachment and execution.
Nevertheless, the RTC judge issued a Writ of Execution. Subsequently the Board of Liquidators filed a petition
for certiorari and prohibition in the Court of Appeals where the Court of Appeals set aside the Writ of Execution
by the RTC. Hence, this petition for review.

ISSUE:
Whether or not the Board of Liquidators, as a government agency without juridical capacity, may be sued
and held liable as litigators of REPACOM.

RULING:
No. The Board of Liquidators is a government agency, created under E.O. 372 to administer the assets
and pay the liabilities of the defunct REPACOM, thus it has no juridical personality, separate and distinct from
the government, and therefore, as a general rule, suing it is akin to suing the State. The State enjoys immunity
from suit except when it conducts business through a government-owned and controlled corporation or a non-
corporate agency set up primarily for a business purpose, and even then, the State may not be liable for damages
since the purse of the State, or the disbursement of public funds is in the discretion of the Legislature. The
functions and public services rendered by the State cannot be allowed to be paralyzed or disrupted by the
diversion of public funds from their legitimate specific objectives, as appropriated by law. Although the liability
of REPACOM has been ascertained, the State is at liberty to determine for itself how to satisfy such liability.
Funds should be appropriated by the Legislature for the specific purpose of satisfying the judgment in favor of
PHILROCK before the said judgment may be paid.

By: Liza Jane Simon