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G.R. No. L-33112 – 83 SCRA 595 – Political Law – Constitutional Law – Immunity of the State from Suit
The Philippine Virginia Tobacco Administration, a government owned and controlled corporation lost a case and was directed to pay damages. The decision became final and so upon motion, Judge Javier Pabalan issued a writ of execution against PVTA and its account with the Philippine National Bank La Union was garnished. PNB La Union then filed a certiorari case against Judge Pabalan alleging that the latter failed to recognize that the questioned funds are of public character and therefore may not be garnished, attached, nor may be levied upon. The PNB La Union Branch invoked the doctrine of non suability, putting a bar on the notice of garnishment.
ISSUE: Whether or not the argument of PNB is correct.
HELD: No. Funds of government owned and controlled corporations which can sue and be sued are not exempt from garnishment. A GOCC has a personality of its own, distinct and separate from that of the Government. Accordingly, it may sue and be sued and may be subjected to court processes just like any other corporation.
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.