G.R. No. 233861 – 893 Phil. 399 – Political Law – Constitutional Law – State Immunity from Suit – Government Instrumentalities are Immune from Suit
In November 2005, the City of Iloilo (COI) sent a notice of garnishment to the Development Bank (DBP) of the Philippines for it to freeze the bank account of the Philippine Ports Authority (PPA) on the ground that the PPA owes Php44M in realty taxes to COI. Despite opposition from PPA, the DBP garnished the bank account of PPA. The PPA does not deny its tax liabilities. It however argued that it has already paid off its liabilities and that as a government instrumentality, its assets are exempt from taxation.
ISSUE: Whether or not the bank account of the PPA may be garnished.
HELD: No. PPA is a government instrumentality. In fact, it is exempt from local taxation. Properties of government instrumentalities are of public dominion and are thus outside the commerce of men. They are not subject to levy, encumbrance, or disposition through public or private sale since they are intended for public use. This is necessarily so because essential public services will stop if properties of public dominion are subject to encumbrances, foreclosures, and auction sale. They are exempt from execution whether by virtue of a final judgment or pending appeal.
PPA is not a GOCC. It does not have shares of stocks nor members. The docks, piers and buildings it administers are owned by the Republic. PPA is a mere trustee of these properties. PPA is clearly a government instrumentality, an agency of the government vested with corporate powers to perform efficiently its governmental functions.
