G.R. No. 84992 December 15, 1989
PHILIPPINE ROCK INDUSTRIES, INC., petitioner, vs. BOARD OF LIQUIDATORS, as Liquidator of the defunct REPARATIONS COMMISSION, respondents.

FACTS

Philippine Rock Industries, Inc. (Philrock) purchased defective rock pulverizing machinery from the Reparations Commission (REPACOM). It filed a complaint for specific performance or revaluation with damages against the Board of Liquidators, the liquidator of the defunct REPACOM. The Regional Trial Court ruled in favor of Philrock, awarding it over P34 million in reimbursement, damages, and attorney’s fees. Philrock then filed an urgent motion for execution pending appeal. The trial court granted this motion and issued a writ of execution, with an order of garnishment served on the Philippine National Bank against the funds of REPACOM in the account of the Board of Liquidators.
The Board of Liquidators opposed the motion for execution, arguing that the funds sought to be garnished are public funds and thus exempt from attachment and execution. It subsequently filed a petition for certiorari and prohibition with the Court of Appeals. The appellate court set aside the trial court’s order of execution, holding that the funds deposited by the Board are public funds and may not be garnished. Philrock elevated the case to the Supreme Court via this petition for review.

ISSUE

Whether the funds of the defunct REPACOM, held in the account of the Board of Liquidators at the Philippine National Bank, may be garnished to satisfy a money judgment against the Board.

RULING

No, the funds cannot be garnished. The Supreme Court affirmed the decision of the Court of Appeals, declaring the order of garnishment null and void. The legal logic rests on the doctrine of state immunity from execution and the nature of the funds involved. The Board of Liquidators is an unincorporated government agency tasked with liquidating REPACOM’s assets and liabilities. As an unincorporated agency without a separate juridical personality, a suit against it is effectively a suit against the State itself. While the State may consent to be sued, as it arguably did in this case, such consent does not extend to execution against state funds.
The Court distinguished this case from those involving government-owned or controlled corporations or non-corporate agencies established primarily for business purposes, which enjoy separate juridical personalities and whose funds, though public in character, are not exempt from garnishment. The Board of Liquidators was not created for profit or business; it performs a governmental function. Therefore, its funds are public funds immune from execution. Executive Order No. 635-A, which authorizes the Board to pay REPACOM’s obligations from the proceeds of asset disposal, is not an appropriation law. All disbursements of public funds require a corresponding legislative appropriation. A money judgment against the State merely obligates the legislature to recognize the judgment and make provision for its satisfaction; it does not authorize the court to seize state property or funds via garnishment or execution. Thus, until the legislature appropriates funds specifically to satisfy Philrock’s judgment, the writ of execution cannot be enforced.