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PROFESSIONAL VIDEO v. TECHNICAL EDUCATION

FACTS:

Professional Video, Inc. (PROVI) filed a petition seeking to annul the decision of the Court of Appeals (CA) and its subsequent order denying PROVI's motion for reconsideration. The CA ruling nullified the Regional Trial Court's (RTC) order directing the attachment/garnishment of Technical Education and Skills Development Authority's (TESDA) properties amounting to Thirty-Five Million Pesos (P35,000,000.00).

PROVI is engaged in the sale of high technology equipment and TESDA is a government instrumentality attached to the Department of Labor and Employment (DOLE). TESDA wanted to issue security-printed certification and identification PVC cards to trainees who passed the certification process.

TESDA failed in public biddings, prompting the Pre-Qualification Bids Award Committee (PBAC) to recommend a negotiated contract with PROVI. TESDA and PROVI entered into a Contract Agreement for the provision of goods and services related to PVC card printing and encoding. An Addendum was later executed to include additional supplies and equipment delivery.

PROVI alleged that TESDA only paid a portion of the agreed amount, leaving an outstanding balance. As a result, PROVI filed a complaint for sum of money with damages and applied for a writ of preliminary attachment/garnishment. The RTC granted the attachment and denied TESDA's motion to discharge/quash the writ. TESDA then filed a petition for certiorari with the CA, which set aside the RTC's orders based on TESDA's public funds exemption from garnishment. PROVI then brought the case to the Supreme Court, questioning the validity of the attachment against TESDA.

ISSUES:

  1. Whether or not the Regional Trial Court (RTC) committed a gross misreading of the law and jurisprudence amounting to action in excess of its jurisdiction.

  2. Whether or not TESDA is an unincorporated instrumentality of the government undertaking governmental functions.

  3. Whether or not TESDA, as an agency of the State, can be sued without its consent.

  4. Whether TESDA is immune from suit based on the doctrine of non-suability of the State.

  5. Whether TESDA engaged in a commercial transaction not incidental to its governmental functions.

  6. Whether the trial court had the power to garnish NMPC deposits to answer for any eventual judgment against it.

  7. Whether PROVI is entitled to the writ of attachment.

  8. Whether or not a valid ground exists to support the grant of a writ of attachment against TESDA.

  9. Whether or not the lower court and the CA acted with grave abuse of discretion in granting the writ of attachment without valid grounds.

RULING:

  1. The Supreme Court found that the RTC committed a gross misreading of the law and jurisprudence amounting to action in excess of its jurisdiction. Therefore, PROVI's petition was denied for lack of merit.

  2. TESDA is an unincorporated instrumentality of the government undertaking governmental functions. It was created under the policy of the State to provide relevant, accessible, high-quality, and efficient technical education and skills development in support of the development of high-quality Filipino middle-level manpower responsive to and in accordance with Philippine development goals and priorities. TESDA operates under its own charter and is empowered to perform various duties and functions related to technical-vocational education and skills development.

  3. TESDA, as an agency of the State, cannot be sued without its consent. The principle that a state may not be sued without its consent is embodied in the 1987 Constitution and is a universally recognized principle of international law. This principle is based on the essence of sovereignty and the practical ground that there can be no legal right against the authority that makes the law on which the right depends. The state immunity principle applies to suits against the Republic by name, unincorporated government agencies, government agencies covered by a charter with respect to their performance of governmental functions, and suits where the ultimate liability will fall on the government. Since TESDA performs governmental functions, it is covered by state immunity and cannot be sued without its consent.

  4. Yes, TESDA is immune from suit based on the doctrine of non-suability of the State. The purpose of state immunity from suit is to ensure the efficient performance of governmental functions, and abandoning this principle would hinder government efficiency. TESDA, being a government entity, is entitled to the protection of state immunity from suit.

  5. No, TESDA did not engage in a commercial transaction not incidental to its governmental functions. The purchase of PVC cards from PROVI is necessary for the proper identification of trainees in TESDA's National Skills Certification Program, which is a mandate of TESDA. Any fees charged by TESDA in relation to the sale of these cards are only intended to recover their costs and not for profit. Therefore, the transaction is still within TESDA's general governmental functions.

  6. The trial court did not have the power to garnish NMPC deposits. Being public funds, the deposits are not within the reach of any garnishment or attachment proceedings.

  7. PROVI is not entitled to the writ of attachment. PROVI failed to prove that TESDA "fraudulently misapplied or converted funds allocated under the Certificate as to Availability of Funds."

  8. No, there is no valid ground to support the grant of a writ of attachment against TESDA. The affidavit filed by PROVI, the petitioner, only contained a general allegation of fraudulent misappropriation or conversion of funds by TESDA. The court cannot infer any finding of fraud from such vague assertion.

  9. Yes, the lower court and the CA acted with grave abuse of discretion in granting the writ of attachment without valid grounds. The CA correctly ruled that the lower court erred in granting the writ based on PROVI's vague allegations.

PRINCIPLES:

  • TESDA is an unincorporated instrumentality of the government undertaking governmental functions.

  • TESDA operates under its own charter and is empowered to perform various duties and functions related to technical-vocational education and skills development.

  • TESDA cannot be sued without its consent as an agency of the State.

  • The principle that a state may not be sued without its consent is based on the essence of sovereignty and the practical ground that there can be no legal right against the authority that makes the law on which the right depends.

  • State immunity applies to suits against the Republic by name, unincorporated government agencies, government agencies covered by a charter with respect to their performance of governmental functions, and suits where the ultimate liability will fall on the government.

  • Doctrine of non-suability of the State - The government is immune from suits without its consent, as suits against the government may hinder or delay the performance of governmental functions.

  • Implied waiver of sovereign immunity - A governmental entity engaging in proprietary functions does not necessarily waive its sovereign immunity. If the proprietary function is undertaken as an incident to its governmental function, sovereign immunity is not waived.

  • Exemption of public funds from attachment or garnishment - Public funds, even if the government entity gives its consent to be sued, cannot be the subject of garnishment or attachment. This is in line with public policy and to ensure that public funds are used for their intended purposes.

  • Public funds are not subject to garnishment or attachment proceedings.

  • The rule on the issuance of a writ of attachment must be construed strictly in favor of the defendant.

  • Section 1(b), Rule 57 of the Rules of Court applies only where money or property has been embezzled or converted by a public officer, an officer of a corporation, or someone who took advantage of their fiduciary position or willfully violated their duty.

  • The amount stated in a Certification as to Availability of Funds remains devoted to its purpose since its original appropriation, unless evidence to the contrary is presented.

  • In order for a writ of attachment to issue, the applicant must sufficiently show the factual circumstances of the alleged fraud.

  • Fraudulent intent cannot be inferred from the debtor's mere non-payment of the debt or failure to comply with obligations.

  • A writ of attachment can only be granted on concrete and specific grounds, not on general averments.