REPUBLIC OF THE PHILIPPINES, petitioner,
vs.
HON. PERFECTO R. PALACIO, as Judge of the Court of First Instance of Camarines Sur,
MACARIO M. OFILADA, as ex-officio Sheriff of Manila, and ILDEFONSO ORTIZ, respondents.
G.R. No. L-20322 [ May 29, 1968]
Facts:
Ildefonso Ortiz instituted a civil action against the Handog Irrigation Association, Inc, a corporation, and the irrigation Service Unit, an office under the Department of Public Works and Communications to recover possession, with damages, a 958 sqm lot which the Irrigation Association allegedly entered and occupied. For failure to answer, the defendants were declared in default. Later, The Republic, through the Solicitor General, moved for the dismissal of the complaint on the ground that the Irrigation Service Unit(ISU) has no juridical entity to sue and be sued. The motion was denied on the ground that defendant is engaged in the business of selling irrigation pumps on installment plan. A writ of execution was issued and later on a writ of garnishment was issued against the deposit/trust fund of the ISU with Philippine National Bank. The Solicitor General moved for the lifting of the order on the ground that the trust fund is a public fund exempt from garnishment. On appeal, the CA sustained the validity of the writ.
ISSUE:
Whether or not the ISU may be sued and the trust fund be the subject of garnishment.
RULING:
No. The Court ruled that the ISU is a government agency engaged in the administration of irrigation system to promote an economic policy of sustaining development and growth in agriculture. Aside from being an agency of the government pursuing a governmental function, the fact that it is collecting payment for irrigation pumps will not make the ISU one engaged in business. The installment payment being collected is not for profit but merely for the purpose of financing the cost of the pump and its maintenance and administration.
In addition, although the State allowed its self to be sued, the trust fund may not be automatically the subject of garnishment due to the fact that it is a public fund. Being a public fund, it may only be appropriated by law and may not be use for garnishment at the expense of the public.
