G.R. No. L-20063 March 31, 1965
PHILIPPINE RESOURCES DEVELOPMENT CORPORATION, petitioner, vs. REPUBLIC OF THE PHILIPPINES, MACARIO APOSTOL and EMPIRE INSURANCE COMPANY, respondents.

FACTS

The Bureau of Prisons, in line with its duties, launched a project exploiting forest resources using prison labor, producing resin and logs for sale. In 1951, Macario Apostol contracted with the Bureau to purchase almaciga and 3,000,000 board feet of lauan logs at P88.00 per thousand board feet. To secure his obligation under the almaciga contract, Apostol posted a performance bond with Empire Insurance Company as surety. The Bureau delivered almaciga and logs to Apostol, but he failed to pay in full, leaving a balance of P34,015.06. To settle this, Apostol delivered to the Bureau 892 pieces of GI sheets, 399 GI pipes, and 2,793 pieces of black iron sheets, aggregately valued at P30,436.94. However, due to lack of supporting papers, the value was not credited to his account. The Republic filed a complaint against Apostol and Empire Insurance Company for collection. Apostol, in his answer, alleged payment in kind and admitted an unpaid balance. Empire Insurance filed an answer with cross-claim and third-party complaint against Apostol and his co-maker. The Philippine Resources Development Corporation (PRDC), of which Apostol was president, moved to intervene, claiming ownership over the properties Apostol delivered. The motion was initially denied but later allowed by the Court of Appeals, affirmed by the Supreme Court. The trial court rendered judgment condemning Apostol to pay the Republic, absolving Empire Insurance, and ordering the Republic to return the value of the properties to PRDC. The Republic and Apostol appealed to the Court of Appeals, which affirmed Apostol’s liability but reversed the trial court by dismissing the complaint in intervention and ordering Empire Insurance to pay jointly and severally with Apostol, up to P10,000.00, after crediting the value of the delivered articles. PRDC appealed to the Supreme Court.

ISSUE

Whether the complaint in intervention by Philippine Resources Development Corporation against Macario Apostol is barred by the doctrine of state immunity from suit.

RULING

No. The Supreme Court held that the complaint in intervention is, in effect, directed not against the Republic of the Philippines but against defendant Macario Apostol, who cannot avail himself of the defense of state immunity from suit. The Republic never asserted any adverse interest in the properties delivered by Apostol; instead, Apostol had asserted ownership over them. Therefore, the intervention proceeded against Apostol. The trial court’s findings, undisturbed by the Court of Appeals, established that the properties belonged to PRDC, and Apostol, as president, possessed them without ownership being conveyed to him. Apostol is bound to account for and restitute the properties or pay their value. The Supreme Court modified the judgment, ordering Apostol and Empire Insurance Company jointly and severally to pay the Republic the sum due, with Empire’s liability not exceeding P10,000.00, and ordering Apostol to return the properties to PRDC or pay their value.