Philippine Rock Industries, Inc. vs.

Board of Liquidators
December 15, 1989

FACTS:

Petitioner, Philippine Rock Industries, Inc. (PHILROCK) filed in the Regional Trial Court of Manila, a
complaint against the Board of Liquidators as liquidator of the defunct Reparations Commission
(REPACOM), and prayed among others: that the defective rock pulverizing machinery which it purchased
from REPACOM be replaced with a new one, or to refund its value at 31% of its contract price; and for
actual damages for losses incurred, unrealized profits, exemplary damages, and attorney’s fees plus
expenses and costs of the suit. Thereafter, the RTC rendered a decision in favor of PHILROCK where
petitioner filed an urgent Motion for Execution Pending Appeal. Solicitor General, on behalf of the State,
filed a notice of appeal and an opposition to the motion on the ground that the funds sought to be
garnished by PHILROCK are public funds, hence, exempt from attachment and execution. Nevertheless, the
RTC judge issued a Writ of Execution, an order of Garnishment served to Philippine National Bank against
the funds of REPACOM in the account of the Board of Liquidators to satisfy judgment in favor of PHILROCK.
The Board filed a petition for certiorari and prohibition in the Court of Appeals where it set aside the RTC’s
order of execution. PHILROCK filed this petition for review and contended that the proceeds from the
disposal of the assets of REPACOM are funds appropriated by law.

ISSUE:

Whether the funds of REPACOM in the account of the Board of Liquidators, a government agency, in
the PNB may be garnished to satisfy a money judgment in favor of PHILROCK?

RULING:

No. The Board is a government agency under the direct supervision of the President of the Republic
created by EO 372. Pursuant to PDs 629 and 635-A, it is tasked with the specific duty of administering the
assets and paying the liabilities of the defunct REPACOM and not created for profit or to engage in
business. Although the sale of the rock pulverizing plant is proprietary in nature, it was merely incidental to
the performance of the Board’s primary governmental function of settling the affairs of REPACOM. Hence,
its funds in the PNB are public funds exempt from garnishment. Furthermore, being an unincorporated
government agency, it possesses no juridical personality, and suit directed against it, is a suit against its
principal, the State. The state enjoys immunity from suit except when it conducts business thru a
government-owned and controlled corporation or a non-corporate agency set up primarily for a business
purpose. Contention of PHILROCK is not tenable, for an executive order is not an appropriation law which
must only emanate from the legislature, not from the Chief Executive.