Background
Following the retrenchment of PNEI employees, multiple labor cases were filed against PNEI and APT. Labor arbiters ruled in favor of the employees, ordering PNEI and APT to pay various claims. When these decisions became final and executory, writs of execution and notices of garnishment were issued. The Republic, through APT, then filed this special civil action to prohibit the execution of these judgments against APT's funds.
History
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Various labor cases were filed against PNEI and APT in the NLRC.
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Labor arbiters rendered decisions in favor of the employees.
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Writs of execution and notices of garnishment were issued.
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The Republic, represented by APT, filed a special civil action of prohibition with the Supreme Court to set aside these writs and notices.
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The Supreme Court issued a temporary restraining order on July 5, 1995.
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The case was decided by the Supreme Court on October 17, 1996.
Facts
- 1. In December 1978, PNEI ownership was transferred to the National Investment Development Corporation (NIDC), a subsidiary of the Philippine National Bank (PNB).
- 2. In 1986, PNEI was placed under sequestration by the Presidential Commission on Good Government (PCGG).
- 3. In January 1988, the sequestration was lifted, and APT took over management of PNEI.
- 4. On May 7, 1992, PNEI filed a Petition for Suspension of Payments with the Securities and Exchange Commission (SEC).
- 5. The management committee recommended the sale of PNEI through privatization and the retrenchment of about 500 employees.
- 6. The retrenchment was carried out from November 1992 to January 1993.
- 7. Various labor complaints were filed against PNEI and APT.
Arguments of the Petitioners
- 1. APT, as an agency or instrumentality of the Republic of the Philippines, is immune from suit.
- 2. Even if APT can be sued, its funds are public in nature and cannot be garnished to satisfy judgments.
- 3. APT's liability should be limited to the assets it holds from PNEI.
Arguments of the Respondents
- 1. APT is jointly and solidarily liable with PNEI for the employees' claims.
- 2. The labor arbiters' decisions have become final and executory and should be implemented.
- 3. APT's funds can be garnished to satisfy the judgments.
Issues
- 1. Whether APT, as a government instrumentality, can be sued.
- 2. If APT can be sued, whether its funds can be garnished to satisfy judgments.
- 3. The extent of APT's liability for PNEI's obligations.
Ruling
- 1. APT can be sued as Proclamation No. 50, which created APT, clearly provides that it can "sue and be sued."
- 2. However, APT's suability does not necessarily mean liability. When the State waives its immunity, it only gives the other party an opportunity to prove that the State has a liability.
- 3. APT's liability is limited to the assets it holds from PNEI. Government funds cannot be garnished to satisfy judgments against APT.
- 4. PNEI's assets remain subject to execution by judgment creditors of PNEI.
Doctrines
- 1. State Immunity from Suit: The State may not be sued without its consent, but this immunity is not absolute.
- 2. Limitation on Execution Against Government: When the State gives consent to be sued, it does not necessarily consent to unrestrained execution against it.
- 3. Extent of Liability of Government Instrumentalities: The liability of government instrumentalities acting as conservators of assets is limited to the assets they hold from the privatized firm.
Statutory and Constitutional Provisions
- 1. Article XVI, Section 3 of the 1987 Constitution: "The State may not be sued without its consent."