Macalinao, Romielyn P.

Subject: Constitutional Law 1

Topic: Non-suability of the State
Title: PNB vs PABALAN
Reference: 83 SCRA 595

FACTS

The reliance of petitioner Philippine National Bank in this

certiorari and prohibition proceeding against respondent Judge Javier
Pabalan who issued a writ of execution, followed thereafter by a notice
of garnishment of the funds of respondent Philippine Virginia Tobacco
Administration, deposited with it, is on the fundamental constitutional
law doctrine of non-suability of a state, it being alleged that such funds
are public in character.

On 17 Dec 1970, Judge Pabalan issued a writ of execution

followed thereafter by a notice of garnishment of the funds of
Philippine Virginia Tobacco Administration in the sum of P12,724.66
deposited with the petitioner bank.

In view of the objection by petitioner Philippine National Bank

on the above ground, coupled with an inquiry as to whether or not
respondent Philippine Virginia Tobacco Administration had funds
deposited with petitioner's La Union branch, it was not until January
25, 1971 that the order sought to be set aside in this certiorari
proceeding was issued by respondent Judge.

PNB La Union filed an administrative complaint against Pabalan

for grave abuse of discretion, alleging that the latter failed to recognize
that the questioned funds are of public character and therefore may
not be garnished, attached or levied upon. The PNB La Union Branch
invoked the doctrine of non suability, putting a bar on the notice of
garnishment.

ISSUES

Whether or not PNB may be sued?

RULINGS

Yes, the Philippine National Bank may be sued.

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 be a bar to garnishment.

However, in the case at bar, petitioner precisely invoking such

a doctrine, left no doubt that the funds of public corporations could
properly be made the object of a notice of garnishment.

Funds of public corporations which can sue and be sued are not
exempt from garnishment. The Philippine Virginia Tobacco
Administration is also a public corporation with the same attributes, a
similar outcome is attributed. The government has entered with them
into a commercial business hence it has abandoned its sovereign
capacity and has stepped down to the level of a 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.

Therefore, it is subject to rules governing ordinary corporations

and in effect can be sued. Therefore, the petition of Philippine
National Bank of La Union is denied.