G.R. No. L-31948 July 25, 1978
PHILIPPINE NATIONAL RAILWAYS, petitioner, vs. UNION DE MAQUINISTAS, FOGONEROS Y MOTORMEN and THE COURT OF INDUSTRIAL RELATIONS, respondents.

FACTS

The Court of Industrial Relations (CIR) issued an order on October 6, 1969, approving the examiner’s reports and directing the Philippine National Railways (PNR) to deposit specific amounts for unpaid wages and overtime compensation due to its employees. The approved claims totaled P36,983.50, covering periods from 1952 to 1956 for personnel including Mr. Juan Mercado, motormen, maquinistas, and fogoneros. The PNR filed a motion to defer payment, citing a previous 1966 CIR order that had allowed deferment of other substantial financial obligations due to the company’s poor financial condition at that time.
Without resolving PNR’s motion for deferment, the CIR issued a writ of execution for the P36,983.50. The PNR’s subsequent motions to lift the writ and for reconsideration were denied. The PNR then filed this certiorari petition, arguing primarily that its funds, being governmental in character, are immune from garnishment or execution. It also contended that the 1969 execution order constituted grave abuse of discretion for contradicting the 1966 deferment order.

ISSUE

The main issues are: (1) Whether the funds of the Philippine National Railways, a government-owned corporation, can be garnished or levied upon execution; and (2) Whether the CIR committed grave abuse of discretion in issuing the writ of execution despite a previous order deferring payment of the PNR’s obligations.

RULING

The Supreme Court dismissed the petition for lack of merit. On the first issue, the Court ruled that the funds of the PNR are subject to garnishment and execution. Citing precedents like Philippine National Bank v. Court of Industrial Relations and National Shipyard and Steel Corporation v. Court of Industrial Relations, the Court reiterated the doctrine that a government-owned and controlled corporation, having a separate juridical personality, may sue and be sued. When the government engages in commercial business through such a corporation, it sheds its sovereign immunity for that purpose. The PNR’s funds, therefore, are not exempt from court processes meant to satisfy final money judgments.
On the second issue, the Court found no grave abuse of discretion. The 1969 order did not contradict the 1966 order but superseded it based on altered circumstances after three years. The 1966 order deferred massive obligations, including one close to a million pesos, due to the PNR’s precarious finances. In contrast, the 1969 order involved relatively smaller, long-overdue wage payments to workers, which are mandated by law and the Constitution’s social justice and protection to labor principles. The CIR’s factual determination that execution was warranted deserved respect. Thus, the petition was dismissed.