PNB vs. Pabalan

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.

83 SCRA 595
June 15, 1978

FACTS:

A judgment was rendered against Philippine Virginia Tobacco Administration (PVTA). Judge Javier Pabalan issued a writ of execution followed thereafter by a notice of garnishment of the funds of respondent PVTA which were deposited with the Philippine National Bank (PNB). PNB objected on the constitutional law doctrine of non-suability of a state. It alleged that such funds are public in character.

ISSUE:

Was the contention of PNB correct?

HELD:

NO. 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. If the funds appertained to one of the regular departments or offices in the government, then, certainly such a provision would lie a bar to garnishment. Such is not the case here. Garnishment would lie. The Supreme Court, in a case brought by the same petitioner precisely invoking such doctrine, left no doubt that the funds of a public corporation could properly be made the object of a notice of garnishment.

It is well settled that when the government enters into commercial business, its abandons its sovereign capacity and is to be treated like any other corporation. (Manila Hotel Employees Association vs. Manila Hotel Company)