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CONSTITUTIONAL LAW I 1

PNB v. CIR (1978) of its own, distinct and separate from that of the
G.R. No. L-32667 Government"

Facts: The now defunct Court Industrial Relations, The similarities between the aforesaid case and the
through Gilbert P. Lorenzo as its appointed deputy present litigation are patent. Petitioner was similarly a
sheriff, served a notice of garnishment. What was government-owned corporation. The principal
sought to be garnished was the money of the People’s respondent was the Court of Industrial Relations. The
Homesite and Housing Corporation deposited at the prevailing parties were the employees of petitioner.
petitioner’s branch in Quezon City. There was likewise a writ of execution and thereafter
notices of garnishment served on several banks. There
Petitioner moved to quash the notice of garnishment. was an objection to such a move and the ruling was
However, the respondent court denied it. The adverse to the National Shipyard and Steel
petitioner then challenged the validity of the denial on Corporation. Hence the filing of a petition for certiorari.
two grounds: To repeat, the ruling was quite categorical.
(1) that the appointment of respondent Gilbert P. Garnishment was the appropriate remedy for the
Lorenzo as authorized deputy sheriff to serve prevailing party which could proceed against the funds
the writ of execution was contrary to law and of a corporate entity even if owned or controlled by the
(2) that the funds subject of the garnishment "may government.
be public in character."
In a 1941 decision, Manila Hotel Employees Association
The subject of the certiorari proceeding filed by the v. Manila Hotel Company, this Court, through Justice
petitioner is the allegation that the CIR committed a Ozaeta, held: "On the other hand, it is well settled that
grave abuse of discretion by denying the motion to when the government enters into commercial
quash. business, it abandons its sovereign capacity and is to be
treated like any other corporation. By engaging in a
Issue: Whether or not the funds which were subject to particular business thru the instrumentality of a
garnishment were of public character. corporation, the government divests itself pro hac vice
of its sovereign character, so as to render the
Ruling: No, they are not. corporation subject to the rules of law governing
private corporations."
The plea for setting aside the notice of garnishment
was promised on the funds of the People's Homesite The invocation of Republic v. Palacio as well as
and Housing Corporation deposited with petitioner Commissioner of Public Highways v. San Diego did not
being "public in character." There was not even a help the cause of the petitioner at all because such
categorical assertion by the petitioner to that effect. It decisions from both cases were not applicable to the
is only the possibility of its being "public in character." case at bar. The fund from the foregoing cases
The premise that the funds could be spoken of as public appertained to that of a government office, as opposed
in character may be accepted in the sense that the to a government-owned or controlled corporation with
People's Homesite and Housing Corporation was a a separate judicial personality. In neither case
government-owned entity. therefore was there an entity with a capacity to sue
and be sued. Both decisions, insofar as they reiterate
It does not follow though that they were exempt from the doctrine that one of the coronaries of the
garnishment. National Shipyard and Steel Corporation fundamental concept of non-suability is that
v. Court of Industrial Relations, as cited by the Court, is governmental funds are immune from garnishment.
squarely in point. As was explicitly stated in the opinion Since then such a principle has been followed with
of the then Justice, later Chief Justice, Concepcion: undeviating rigidity. It is an entirely different matter if
"The allegation to the effect that the funds of the the office or entity is "possessed of a separate and
NASSCO are public funds of the government, and that, distinct corporate existence." Then it can sue and be
as such, the same may not be garnished, attached or sued. Thereafter, its funds may be levied upon or
levied upon, is untenable for… a government owned garnished. That is what happened in this case.
and controlled corporation (GOCC)… has a personality