PHILIPPINE NATIONAL BANK (petitioner)

v.
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. (respondent)

G.R. No. L-33112; June 15, 1978

PONENTE: FERNANDO, acting C.J.

DOCTRINE:

Section 3, Article 16: General Provisions - Under the doctrine of non-suability, the State cannot be sued

without its consent

FACTS:

On December 17, 1970, Judge Javier Pabalan issued a writ of execution regarding the transfer of funds
amounting to P12,724.66 belonging to Philippine Virginia Tobacco Administration (PVTA). This amount
was then on deposited to the Philippine National Bank (PNB) La Union branch.

On January 25, 1971, it is ordered that Philippine Virginia Tobacco Administration funds deposited with
PNB 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.

Because of this, PNB invoked the doctrine of non-suability for the funds of the Philippine Virginia
Tobacco Administration. The petitioner claims that since funds are public in character, a prohibition can
be issued against Pabalan’s order.

ISSUE: Whether or not funds of Philippine Virginia Tobacco Administration (PVTA) deposited in the
Philippine National Bank (PNB) be garnished?

ARGUMENTS:

Petitioner: 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.

Respondent:

The premise that funds could be spoken as public character is explained in the National Shipyard and
Steel Corporation (NASSCO) v. Court of Industrial Relations. 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

Pursuant to Section 2 of Executive Order No. 356, dated October 23, 1950 — “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. A government owned and controlled corporation has a
distinct personality of its own; funds and of the corporate entity may be proceeded against.

HELD:

WHEREFORE: This petition for certiorari and prohibition is dismissed. No costs.

CONCLUSION:

The State may not be sued without its consent BUT this is not the case here. 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.

***** Additional Information *****

Garnishment
- a court order directing that money or property of a third party (usually wages paid by an employer) be
seized to satisfy a debt owed by a debtor to a plaintiff creditor.

Pro Hac Vice

- “for this occasion”, a legal term usually referring to a practice in common law jurisdictions, whereby a
lawyer who has not been admitted to practice in a certain jurisdiction is allowed to participate in a
particular case in that jurisdiction.