PNB Vs CIR

PHILIPPINE JURISPRUDENCE - FULL TEXT
The Lawphil Project - Arellano Law Foundation

G.R. No. L-32667 January 31, 1978
PHIL. NATIONAL BANK vs. COURT OF INDUSTRIAL RELATIONS
Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-32667 January 31, 1978
PHILIPPINE NATIONAL BANK, petitioner,
vs.
COURT OF INDUSTRIAL RELATIONS, GABRIEL V. MANANSALA and GILBERT P. LORENZO, in his official capacity as
authorized Deputy sheriff, respondents.
Conrado E. Medina for petitioner.
Gabriel V. Manansala in his own behalf.
Jose K. Manguiat, Jr. for respondent Court.
FERNANDO, J.:
The issue raised in this certiorari proceeding is whether or not an order of the now defunct respondent Court of Industrial
Relations denying for lack of merit petitioner's motion to quash a notice of garnishment can be stigmatized as a grave abuse of
discretion. What was sought to be garnished was the money of the People's Homesite and Housing Corporation deposited at
petitioner's branch in Quezon City, to satisfy a decision of respondent Court which had become final and executory. 1 A writ of
execution in favor of private respondent Gabriel V. Manansala had previously been issued. 2 He was the counsel of the
prevailing party, the United Homesite Employees and Laborers Association, in the aforementioned case. The validity of the
order assailed is challenged on two grounds: (1) that the appointment of respondent Gilbert P. Lorenzo as authorized deputy
sheriff to serve the writ of execution was contrary to law and (2) that the funds subject of the garnishment "may be public in
character." 3 In thus denying the motion to quash, petitioner contended that there was on the part of respondent Court a failure
to abide by authoritative doctrines amounting to a grave abuse of discretion. After a careful consideration of the matter, it is the
conclusion of this Tribunal that while the authorization of respondent Lorenzo to act as special deputy sheriff to serve the
notice of garnishment may be open to objection, the more basic ground that could have been relied upon not even
categorically raised, petitioner limiting itself to the assertion that the funds "could be public" in character, thus giving rise to the
applicability of the fundamental concept of non-suability is hardly persuasive. The People's Homesite and Housing
Corporation had a juridical existence enabling it sue and be sued. 4 Whatever defect could be attributed therefore to the order
denying the motion to quash could not be characterized as a grave abuse of discretion. Moreover, with the lapse of time during
which private respondent had been unable to execute a judgment in his favor, the equities are on his side. Accordingly, this
petition must be dismissed.
The order of August 26, 1970 of respondent Court denying the motion to quash, subject of this certiorari proceeding, reads as
follows: "The Philippine National Bank moves to quash the notice of garnishment served upon its branch in Quezon City by the
authorized deputy sheriff of this Court. It contends that the service of the notice by the authorized deputy sheriff of the court
contravenes Section 11 of Commonwealth Act No. 105, as amended which reads:" 'All writs and processes issued by the
Court shall be served and executed free of charge by provincial or city sheriffs, or by any person authorized by this Court, in
the same manner as writs and processes of Courts of First Instance.' Following the law, the Bank argues that it is the Sheriff of
Quezon City, and not the Clerk of this Court who is its Ex-Officio Sheriff, that has the authority to serve the notice of
garnishment, and that the actual service by the latter officer of said notice is therefore not in order. The Court finds no merit in
this argument. Republic Act No. 4201 has, since June 19, 1965, already repealed Commonwealth Act No. 103, and under this
law, it is now the Clerk of this Court that is at the same time the Ex-Officio Sheriff. As such Ex-Officio Sheriff, the Clerk of this
Court has therefore the authority to issue writs of execution and notices of garnishment in an area encompassing the whole of
the country, including Quezon City, since his area of authority is coterminous with that of the Court itself, which is national in
nature. ... At this stage, the Court notes from the record that the appeal to the Supreme Court by individual employees of
PHHC which questions the award of attorney's fees to Atty. Gabriel V.
Manansala, has already been dismissed and that the same became final and executory on August 9, 1970. There is no longer
any reason, therefore, for withholding action in this case. [Wherefore], the motion to quash filed by the Philippine National
Bank is denied for lack of merit. The said Bank is therefore ordered to comply within five days from receipt with the 'notice of
Garnishment' dated May 6, 1970." 5 There was a motion for reconsideration filed by petitioner, but in a resolution dated
September 22, 1970, it was denied. Hence, this certiorari petition.
As noted at the outset, the petition lacks merit.

1. The plea for setting aside the notice of garnishment was promised on the funds of the People's homesite and Housing
Corporation deposited with petitioner being "public in character." There was not even a categorical assertion to that effect. It is
only the possibility of its being "public in character." The tone was thus irresolute,the approach difficult The premise that the
funds could be spoken of as public in character may be accepted in the sense that the People's Homesite and Housing
Corporation was a government-owned entity It does not follow though that they were exempt from garnishment. National
Shipyard and Steel Corporation v. court of Industrial Relations 6 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 has pursuant to Section 2 of Executive Order No. 356, dated October 23, 1950 ..., pursuant to which the
NASSCO has been established 'all 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." 7
The similarities between the aforesaid case and the present litigation are patent. Petitioner was similarly a government-owned
corporation. The principal respondent was the Court of Industrial Relations. The prevailing parties were the employees of
petitioner. There was likewise a writ of execution and thereafter notices of garnishment served on several banks. There was
an objection to such a move and the ruling was adverse to the National Shipyard and Steel Corporation. Hence the filing of a
petition for certiorari. To repeat, the ruling was quite categorical Garnishment was the appropriate remedy for the prevailing
party which could proceed against the funds of a corporate entity even if owned or controlled by the government. In a 1941
decision, Manila Hotel Employees Association v. Manila Hotel Company, 8 this Court, through Justice Ozaeta, held: "On the
other hand, it is well settled 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 governmnent divests itself pro hac vice of its
sovereign character, so as to render the corporation subject to the rules of law governing private corporations."
2. It is worth noting that the decision referred to, the Bank of the United States v. Planters' Bank, 10 was promulgated by the
American Supreme Court as early as 1824, the opinion being penned by the great Chief Justice Marshall. As was pointed out
by him: "It is, we think, a sound principle, that when a government becomes a partner in any trading company, it divests itself,
so far as concerns the transactions of that company, of its sovereign character, and takes that of a private citizen. Instead of
communicating to the company its privileges and its prerogatives, it descends to a level with those with whom it associates
itself, and takes the character which belongs to its associates, and to the business which is to be transacted. Thus, many
states of this Union who have an interest in banks, are not suable even in their own courts; yet they never exempt the
corporation from being sued. The state of Georgia, by giving to the bank the capacity to sue and be sued, voluntarily strips
itself of its sovereign character, so far as respects the transactions of the bank, and waives an the privileges of that character.
As a member of a corporation, a government never exercises its sovereignty. It acts merely as a corporator, and exercises no
other power in the management of the affairs of the corporation, that are expressly given by the incorporating act." 11 The
National Shipyard and Steel Corporation case, therefore, merely reaffirmed one of the oldest and soundest doctrines in this
branch of the law.
3. The invocation of Republic v. Palacio, 12 as well as Commissioner of Public Highways v. San Diego, 13 did not help the cause
of petitioner at all The decisions are not applicable. If properly understood they can easily be distinguished. As is clear in the
opinion of Justice J.B.L. Reyes in Republic v. Palacio, the Irrigation Service Unit which was sued was an office and agency
under the Department of Public Works and Communications. The Republic of the Philippines, through the then Solicitor
General, moved for the dismissal of such complaint, alleging that it "has no juridical personality to sue and be sued." 14 Such a
motion to dismiss was denied. The case was tried and plaintiff Ildefonso Ortiz, included as private respondent in the Supreme
Court proceeding, obtained a favorable money judgment. It became final and executory. Thereafter, it appeared that the
Solicitor General was served with a copy of the writ of execution issued by the lower court followed by an order of garnishment
15
Again, there was an urgent motion to lift such order, but it was denied. A certiorari and prohibition proceeding was then filed
with the Court of Appeals. The legality of the issuance of such execution and punishment was upheld, and the matter was
elevated to this Tribunal The Republic was sustained. The infirmity of the decision reached by the Court of Appeals, according
to the opinion, could be traced to the belief that there was a waiver of "governmental immunity and, by implication, consent to
the suit." 16 There was no such waiver. Even if there were, it was stressed by justice J.B.L. Reyes: "It is apparent that this
decision of the Court of Appeals suffers from the erroneous assumption that because the State has waived its immunity, its
property and funds become liable to seizure under the legal process. This emphatically is not the law. (Merritt v. Insular
Government, 34 Phil 311)." 17 To levy the execution of such funds, according to him, would thus "amount to a disbursement
without any proper appropriation as required by law " 18 In Commissioner of Public Highways v. San Diego, the opening
paragraph of Justice Teehankee was quite specific as to why there could be neither execution nor garnishment of the money
of petitioner Bureau of Public Highways: "In this special civil action for certiorari and prohibition, the Court declares null and
void the two questioned orders of respondent Court levying upon funds of petitioner Bureau of Public Highways on deposit
with the Philippine National Bank, by virtue of the fundamental precept that government funds are not subject to execution or
garnishment." 19 The funds appertained to a governmental office, not to a government-owned or controlled corporation with a
separate juridical personality. In neither case therefore was there an entity with the capacity to sue and be sued, the funds of
which could thereafter be held liable to execution and garnishment in the event of an adverse judgment.
4. Both the Palacio and the Commissioner of Public Highways decisions, insofar as they reiterate the doctrine that one of the
coronaries of the fundamental concept of non-suability is that governmental funds are immune from garnishment, refer to
Merritt v. Insular Government, a 1916 decision 20 Since then such a principle has been followed with undeviating rigidity, the
latest case in point being Republic v. Villasor, 21 promulgated in 1973. It is an entirely different matter if, according to Justice
Sanchez in Ramos v. Court of Industrial Relations, 22 the office or entity is "possessed of a separate and distinct corporate
existence." 23 Then it can sue and be sued. Thereafter, its funds may be levied upon or garnished. That is what happened in
this case.
5. With the crucial issue thus resolved in favor of the correctness of the order assailed, the other objection raised, namely that
respondent Court acted erroneously in having a special sheriff serve to the writ of execution, hardly needs any extensive
decision. It is true that in the aforesaid Commissioner of Public Highways opinion, this Court held that there is no authorization
in law for the appointment of special sheriffs for the service of writs of execution. 24 In the order sought to be nullified, the then
Judge Joaquin M. Salvador of respondent Court pointed out that under a later Act, 25 the Court of Industrial Relations Act was
amended with the proviso that its Clerk of Court was the ex-oficio sheriff. The point raised in the petition that it should be the
sheriff of Quezon City that ought to have served the writ of execution would thus clearly appear to be inconclusive. There is to
be sure no thought of deviating from the principle announced in the Commissioner of Public Highways case. That is as it ought
to be. Even if, however, there is sufficient justification for the infirmity attributed to respondent Court by virtue of such a ruling,
still considering all the circumstances of this case, it clearly does not call for the nullification of the order in question. What
cannot be denied is that the writ of execution was issued as far back as May 5, 1970 by the then Clerk of Court of respondent
Tribunal as the authorized sheriff. It would be, to say the least, unfair and unequitable if, on the assumption that such Clerk of
Court lacked such competence, a new writ of execution had to be issued by the proper official At any rate, what is important is
that the judgment be executed. That is to achieve justice according to law. It would be to carry technicality, therefore, to an
absurd length if just because of such a mistake, assuming that it is, but undoubtedly one committed in good faith, further delay
would get be imposed on private respondent by characterizing the order sought to be nullified amounting to a grave abuse of
discretion.
WHEREFORE, the petition for certiorari is dismissed. No costs.
Barredo, Antonio and Concepcion, Jr., JJ., concur.
Aquino, J., concurs in the result.
Santos J., is on leave.
Footnotes
1 Case No. 2810-V of the Court of Industrial Relations.
2 Petition, Annex A.
3 Ibid, 13.
4 Under Presidential Decree No 757 (1975), the People's Homesite and Housing Corporation was
dissolved and the National Housing Authority created.
5 Petition, Annex F.
6 118 Phil. 782 (1963).
7 Ibid, 788.
8 73 Phil. 374.
9 Ibid, 388-389.
10 9 Wheat, 904, 6 L.ed 244.
11 Ibid, 907-908.
12 L-20322, May 29, 1968, 23 SCRA 899.
13 L-30098, February 18,1970, 31 SCRA 616.
14 23 SCRA 899, 901. The other defendant was the Handog Irrigation, Inc.
15 Ibid, 901.
16 Ibid, 905.
17 Ibid.
18 Ibid, 906.
19 31 SCRA 616, 618.
20 34 SCRA 311.
21 L-30671, November 28, 1973, 54 SCRA 83.
22 L-22753, December 18, 1967, 21 SCRA 1283.
23 Ibid, 1287.
24 31 SCRA 616, 631.
25 Republic Act No. 4201(1965).

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PHILIPPINE JURISPRUDENCE - FULL TEXT

The Lawphil Project - Arellano Law Foundation

Republic of the Philippines

As noted at the outset, the petition lacks merit.

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