SECOND
DIVISION
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PROFESSIONAL VIDEO, INC.,
Petitioner,
- versus -
TECHNICAL EDUCATION AND SKILLS DEVELOPMENT AUTHORITY,
Respondent. |
G.R. No. 155504
Present:
Quisumbing, J., Chairperson, *YNARES-SANTIAGO, **CHICO-NAZARIO, ***LEONARDO-DE
CASTRO, and brion, JJ.
Promulgated:
June 26, 2009
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D E C I S I O N
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BRION, J.:
We resolve the petition filed by
Professional Video, Inc. (PROVI)[1]
to annul and set aside the Decision[2] of
the Court of Appeals (CA) in CA-G.R. SP
No. 67599, and its subsequent Order denying PROVI’s motion for reconsideration.[3] The
assailed CA decision nullified:
a.
the
Order[4] dated
July 16, 2001 of the Regional Trial Court (RTC), Pasig City, in Civil
Case No. 68527, directing the attachment/garnishment of the properties of
respondent Technical Education and Skills Development Authority
(TESDA)
amounting to Thirty Five Million Pesos (P35,000,000.00); and
b.
the
RTC’s
THE FACTUAL BACKGROUND
PROVI is an entity engaged in the sale of high technology
equipment, information technology products and broadcast devices, including the
supply of plastic card printing and security facilities.
TESDA is an instrumentality of the government established
under Republic Act (R.A.) No. 7796 (the TESDA Act of 1994) and attached
to the Department of Labor and Employment (DOLE)
to “develop and establish a national system of skills standardization, testing,
and certification in the country.”[6] To fulfill this mandate, it sought to issue security-printed
certification and/or identification polyvinyl (PVC) cards to trainees who have passed the certification process.
TESDA’s Pre-Qualification Bids Award Committee (PBAC) conducted two (2) public biddings on
Due to the failed bidding, the PBAC recommended that TESDA
enter into a negotiated contract with PROVI. On P39,475,000) within fifteen (15) days
after TESDA’s acceptance of the contracted goods and services.
On August 24, 2000, TESDA and PROVI executed an “Addendum to
the Contract Agreement Project: PVC ID Card Issuance” (Addendum),[8] whose
terms bound PROVI to deliver one hundred percent (100%) of the enumerated supplies
to TESDA consisting of five hundred thousand (500,000) pieces of security foil;
five (5) pieces of security die with TESDA seal; five hundred thousand
(500,000) pieces of pre-printed and customized identification cards; one
hundred thousand (100,000) pieces of scannable answer sheets; and five hundred
thousand (500,000) customized TESDA holographic laminate. In addition, PROVI
would install and maintain the following equipment: one (1) unit of Micropoise,
two (2) units of card printer, three (3) units of flatbed scanner, one (1) unit
of OMR scanner, one (1) unit of Server, and seven (7) units of personal
computer.
TESDA in turn undertook to pay PROVI thirty percent (30%) of
the total cost of the supplies within thirty (30) days after receipt and
acceptance of the contracted supplies, with the balance payable within thirty
(30) days after the initial payment.
According to PROVI, it delivered the following items to TESDA
on the dates indicated:
Date Particulars Amount
P 2,764,500.00
06 June 2000 5 Micro-Poise customized die 375,000.00
Custom
hologram Foil
Total P 39,475,000.00
PROVI further alleged that out of TESDA’s liability of P39,475,000.00,
TESDA paid PROVI only P3,739,500.00, leaving an outstanding balance of P35,735,500.00,
as evidenced by PROVI’s Statement of Account.[9] Despite
the two demand letters dated March 8 and
On P35,000,000.00.[11]
TESDA responded on
Faced with these rulings, TESDA filed a Petition for Certiorari with the CA to question the RTC
orders, imputing grave abuse of discretion amounting to lack or excess of
jurisdiction on the trial court for issuing a writ of preliminary attachment against
TESDA’s public funds.[14]
The CA set aside the RTC’s orders after finding that: (a) TESDA’s
funds are public in nature and, therefore, exempt from garnishment; and (b) TESDA’s purchase of the PVC cards was a
necessary incident of its governmental function; consequently, it ruled that
there was no legal basis for the issuance of a writ of preliminary attachment/garnishment.[15] The
CA subsequently denied PROVI’s motion for reconsideration;[16] hence,
the present petition.
THE PETITION
The petition submits to this Court the
single issue of whether or not the writ of attachment against TESDA and its
funds, to cover PROVI’s claim against TESDA, is valid. The issue involves a
pure question of law and requires us to determine whether the CA was correct in
ruling that the RTC gravely abused its discretion in issuing a writ of
attachment against TESDA.
PROVI argues that the CA should have
dismissed TESDA’s petition for certiorari
as the RTC did not commit any grave abuse of discretion when it issued the
Orders dated
TESDA claims that it entered the Contract
Agreement and Addendum in the performance of its governmental function to
develop and establish a national system of skills standardization, testing, and
certification; in the performance of this governmental function, TESDA is
immune from suit. Even assuming that it had impliedly consented to be sued by
entering into a contract with PROVI, TESDA posits that the RTC still did not
have the power to garnish or attach its funds since these are public funds. Lastly,
TESDA points out that PROVI failed to comply with the elements for the valid
issuance of a writ of preliminary attachment, as set forth in Section 1, Rule
57 of the 1997 Rules of Civil Procedure.
THE COURT’S RULING
We find, as the CA did, that the
RTC’s questioned order involved a gross misreading of the law and jurisprudence
amounting to action in excess of its jurisdiction. Hence, we resolve to DENY PROVI’s petition
for lack of merit.
TESDA is
an instrumentality
of the government
undertaking governmental functions.
R.A. No. 7796 created the
Technical Education and Skills
Development Authority or TESDA under
the declared “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.”[17] TESDA
replaced and absorbed the National Manpower and Youth Council, the Bureau of
Technical and Vocational Education and the personnel and functions pertaining
to technical-vocational education in the regional offices of the Department of
Education, Culture and Sports and the apprenticeship program of the Bureau of
Local Employment of the DOLE.[18] Thus, TESDA is an unincorporated
instrumentality of the government operating under its own charter.
Among others, TESDA is
empowered to: approve trade skills standards and trade tests as established and
conducted by private industries; establish and administer a system of
accreditation of both public and private institutions; establish, develop and
support the institutions' trainors' training and/or programs; exact reasonable
fees and charges for such tests and trainings conducted, and retain such
earnings for its own use, subject to guidelines promulgated by the Authority;
and perform such other
duties and functions necessary to carry out the provisions of the Act,
consistent with the purposes of the creation of TESDA.[19]
Within TESDA’s structure,
as provided by R.A. No. 7769, is a Skills Standards and Certification Office expressly
tasked, among others, to develop and establish a national system of skills
standardization, testing and certification in the country; and to conduct
research and development on various occupational areas in order to recommend
policies, rules and regulations for effective and efficient skills
standardization, testing and certification system in the country.[20] The law likewise mandates that “[T]here shall
be national occupational skills standards to be established by TESDA-accredited
industry committees. The TESDA shall develop and implement a certification and
accreditation program in which private groups and trade associations are
accredited to conduct approved trade tests, and the local government units to
promote such trade testing activities in their respective areas in accordance
with the guidelines to be set by the TESDA. The Secretary of Labor and
Employment shall determine the occupational trades for mandatory certification.
All certificates relating to the national
trade skills testing and certification system shall be issued by the TESDA
through its Secretariat.”[21]
All these measures are undertaken pursuant to the
constitutional command that “[T]he State affirms labor as a primary social
economic force,” and shall “protect the rights of workers and promote their
welfare”;[22] that “[T]he
State shall protect and promote the right of all citizens to quality education
at all levels, and shall take appropriate steps to make such education
accessible to all”;[23]
in order “to afford protection to labor” and “promote full employment and
equality of employment opportunities for all.”[24]
Under these terms, both constitutional and statutory, we do
not believe that the role and status of TESDA can seriously be contested: it is
an unincorporated instrumentality of the government, directly attached to the DOLE
through the participation of the Secretary of Labor as its Chairman, for the
performance of governmental functions – i.e.,
the handling of formal and non-formal education and training, and skills
development. As an unincorporated
instrumentality operating under a specific charter, it is equipped with both
express and implied powers,[25]
and all State immunities fully apply to it.[26]
TESDA, as an agency of the State, cannot be sued without
its consent.
The rule that a state may not be sued without its consent is embodied
in Section 3, Article XVI of the 1987 Constitution and has been an established
principle that antedates this Constitution.[27] It
is as well a universally recognized principle of international law that exempts
a state and its organs from the jurisdiction of another state.[28] The principle is based on the very essence of
sovereignty, and on the practical ground that there can be no legal right as
against the authority that makes the law on which the right depends.[29]
It also rests on reasons of public policy — that public service would be
hindered, and the public endangered, if the sovereign authority could be
subjected to law suits at the instance of every citizen and, consequently,
controlled in the uses and dispositions of the means required for the proper
administration of the government.[30]
The proscribed suit that the state immunity principle covers
takes on various forms, namely: a suit against the Republic by name; a suit
against an unincorporated government agency; a suit against a government agency
covered by a charter with respect to the agency’s performance of governmental
functions; and a suit that on its face is against a government officer, but
where the ultimate liability will fall on the government. In the present case, the writ of attachment
was issued against a government agency covered by its own charter. As discussed above, TESDA performs
governmental functions, and the issuance of certifications is a task within its
function of developing and establishing a system of skills standardization,
testing, and certification in the country.
From the perspective of this function, the core reason for the existence
of state immunity applies – i.e., the
public policy reason that the performance of governmental function cannot be
hindered or delayed by suits, nor can these suits control the use and
disposition of the means for the performance of governmental functions. In Providence Washington Insurance Co. v.
Republic of the Philippines,[31]
we said:
[A] continued adherence to the doctrine of non-suability is not to be deplored for as against the inconvenience that may be caused private parties, the loss of governmental efficiency and the obstacle to the performance of its multifarious functions are far greater if such a fundamental principle were abandoned and the availability of judicial remedy were not thus restricted. With the well known propensity on the part of our people to go to court, at the least provocation, the loss of time and energy required to defend against law suits, in the absence of such a basic principle that constitutes such an effective obstacle, could very well be imagined.
PROVI argues that TESDA can be sued because it has effectively
waived its immunity when it entered into a contract with PROVI for a commercial
purpose. According to PROVI, since the purpose of its contract with TESDA is to
provide identification PVC cards with security seal which TESDA will thereafter
sell to TESDA trainees, TESDA thereby engages in commercial transactions not incidental
to its governmental functions.
TESDA’s response to this position is
to point out that it is not engaged in business, and there is nothing in the
records to show that its purchase of the PVC cards from PROVI is for a business
purpose. While TESDA admits that it will charge the trainees with a fee for the
PVC cards, it claims that this fee is only to recover their costs and is not
intended for profit.
We agree with TESDA.
As the appellate court found, the PVC cards purchased by TESDA from PROVI
are meant to properly identify the trainees who passed TESDA’s National Skills
Certification Program – the program that immediately serves TESDA’s mandated
function of developing and establishing a national system of skills
standardization, testing, and certification in the country.[32] Aside
from the express mention of this function in R.A. No. 7796, the details of this
function are provided under DOLE Administrative Order No. 157, S. 1992, as
supplemented by Department Order Nos. 3 thru 3-F, S. 1994 and Department Order
No. 13, S. 1994.[33]
Admittedly, the certification and classification of trainees
may be undertaken in ways other than the issuance of identification cards, as
the RTC stated in its assailed Order.[34] How
the mandated certification is to be done, however, lies within the discretion
of TESDA as an incident of its mandated function, and is a properly delegated
authority that this Court cannot inquire into, unless its exercise is attended
by grave abuse of discretion.
That TESDA sells the PVC cards to its trainees for a fee does
not characterize the transaction as industrial or business; the sale, expressly
authorized by the TESDA Act,[35]
cannot be considered separately from TESDA’s general governmental functions, as
they are undertaken in the discharge of these functions. Along this line of
reasoning, we held in Mobil
Now, the fact that a non-corporate government entity performs a function proprietary in nature does not necessarily result in its being suable. If said non-governmental function is undertaken as an incident to its governmental function, there is no waiver thereby of the sovereign immunity from suit extended to such government entity.
TESDA’s funds are public in character, hence exempt
from attachment or garnishment.
Even assuming that TESDA entered into
a proprietary contract with PROVI and thereby gave its implied consent to be
sued, TESDA’s funds are still public in nature and, thus, cannot be the valid
subject of a writ of garnishment or attachment.
Under Section 33 of the TESDA Act, the TESDA budget for the
implementation of the Act shall be included in the annual General Appropriation
Act; hence, TESDA funds, being sourced from the Treasury, are moneys belonging
to the government, or any of its departments, in the hands of public officials.[37] We specifically spoke of the limits in
dealing with this fund in Republic v.
Villasor[38] when we said:
This fundamental postulate underlying the 1935 Constitution is now made explicit in the revised charter. It is therein expressly provided, ‘The State may not be sued without its consent.’ A corollary, both dictated by logic and sound sense, from such a basic concept, is that public funds cannot be the object of garnishment proceedings even if the consent to be sued had been previously granted and the state liability adjudged. Thus in the recent case of Commissioner of Public Highways vs. San Diego, such a well-settled doctrine was restated in the opinion of Justice Teehankee:
The universal rule
that where the State gives its consent to be sued by private parties either by
general or special law, it may limit claimant's action 'only up to the
completion of proceedings anterior to the stage of execution' and that the
power of the Courts ends when the judgment is rendered, since government funds
and properties may not be seized under writs of execution or garnishment to
satisfy such judgments, is based on obvious considerations of public policy. Disbursements of public funds must be
covered by the corresponding appropriation as required by law. The functions
and public services rendered by the State cannot be allowed to be paralyzed or
disrupted by the diversion of public funds from their legitimate and specific
objects, as appropriated by law. [Emphasis supplied.]
We reiterated this doctrine in Traders Royal Bank v. Intermediate Appellate
Court,[39] where
we said:
The
NMPC’s implied consent to be sued notwithstanding, the trial court did not have
the power to garnish NMPC deposits to answer for any eventual judgment against
it. Being public funds, the deposits
are not within the reach of any garnishment or attachment proceedings. [Emphasis supplied.]
As pointed out
by TESDA in its Memorandum,[40] the
garnished funds constitute TESDA’s lifeblood – in government parlance, its MOOE[41] –
whose withholding via a writ of
attachment, even on a temporary basis, would paralyze TESDA’s functions and
services. As well, these funds also include TESDA’s Personal Services funds from
which salaries of TESDA personnel are sourced.
Again and for obvious reasons, the release of these funds cannot be
delayed.
PROVI has not shown that it is entitled to the writ of
attachment.
Even without the benefit of any
immunity from suit, the attachment of TESDA funds should not have been granted,
as PROVI failed to prove that TESDA “fraudulently misapplied or converted funds allocated under the Certificate as to
Availability of Funds.” Section 1, Rule 57 of the Rules of Court sets forth the
grounds for issuance of a writ of preliminary attachment, as follows:
SECTION
1. Grounds upon which attachment may issue. – A plaintiff or any proper
party may, at the commencement of the action or at any time thereafter, have
the property of the adverse party attached as security for the satisfaction of
any judgment that may be recovered in the following cases:
(a) In an action for recovery of a
specified amount of money or damages, other than moral and exemplary, on a
cause of action arising from law, contract, quasi-contract, delict or
quasi-delict against a party who is about to depart from the Philippines with
intent to defraud his creditors;
(b) In
an action for money or property embezzled or fraudulently misapplied or
converted to his use by a public officer, or an officer of a corporation, or an
attorney, factor, broker, agent or clerk, in the course of his employment as
such, or by any other person in a fiduciary capacity, or for a willful
violation of duty;
(c) In
an action to recover the possession of property unjustly or fraudulently taken,
detained or converted, when the property or any part thereof, has been
concealed, removed or disposed of to prevent its being found or taken by the
applicant or an authorized person;
(d) In
an action against a party who has been guilty of fraud in contracting the debt
or incurring the obligation upon which the action is brought, or in concealing
or disposing of the property for the taking, detention or conversion of which
the action is brought;
(e) In an action against a party who has
removed or disposed of his property, or is about to do so, with intent to
defraud his creditors;
(f) In an action against a party who
does not reside and is not found in the
Jurisprudence teaches us that the rule on the issuance of a
writ of attachment must be construed strictly in favor of the defendant. Attachment,
a harsh remedy, must be issued only on concrete and specific grounds and not on
general averments merely quoting the words of the pertinent rules.[42] Thus,
the applicant’s affidavit must contain statements clearly showing that the
ground relied upon for the attachment exists.
Section 1(b), Rule 57
of the Rules of Court, that PROVI relied upon, applies only where money or property has been
embezzled or converted by a public officer, an officer of a corporation, or
some other person who took advantage of his fiduciary position or who willfully
violated his duty.
PROVI, in this case, never entrusted any money or
property to TESDA. While the Contract Agreement is supported by a Certificate
as to Availability of Funds (Certificate)
issued by the Chief of TESDA’s Accounting Division, this Certificate does not
automatically confer ownership over the funds to PROVI. Absent any actual disbursement, these funds form
part of TESDA’s public funds, and TESDA’s failure to pay PROVI the amount
stated in the Certificate cannot be construed as an act of fraudulent
misapplication or embezzlement. In this
regard, Section 86 of Presidential Decree No. 1445 (The Accounting Code)
provides:
Section
86. Certificate showing appropriation
to meet contract. – Except in a case of a contract for personal service,
for supplies for current consumption or to be carried in stock not exceeding
the estimated consumption for three months, or banking transactions of
government-owned or controlled banks, no contract involving the expenditure of
public funds by any government agency shall be entered into or authorized
unless the proper accounting official or the agency concerned shall have
certified to the officer entering into the obligation that funds have been duly
appropriated for the purpose and that the amount necessary to cover the
proposed contract for the current fiscal year is available for expenditure on
account thereof, subject to verification by the auditor concerned. The certification signed by the proper
accounting official and the auditor who verified it, shall be attached to and
become an integral part of the proposed contract, and the sum so certified shall not thereafter be available for
expenditure for any other purpose until the obligation of the government agency
concerned under the contract is fully extinguished. [Emphasis supplied.]
By law, therefore, the amount stated in the
Certification should be intact and remains devoted to its purpose since its
original appropriation. PROVI can rebut
the presumption that necessarily arises from the cited provision only by evidence
to the contrary. No such evidence has
been adduced.
Section 1 (d), Rule 57
of the Rules of Court
applies where a party is guilty of fraud in contracting a debt or incurring an
obligation, or in concealing or disposing of the property for the taking,
detention or conversion of which the action is brought. In Wee
v. Tankiansee,[43] we held that for a writ of attachment
to issue under this Rule, the applicant must sufficiently show the factual
circumstances of the alleged fraud because fraudulent intent cannot be inferred
from the debtor’s mere non-payment of the debt or failure to comply with his
obligation. The affidavit, being the
foundation of the writ, must contain particulars showing how the imputed fraud
was committed for the court to decide whether or not to issue the writ. To
reiterate, a writ of attachment can only be granted on concrete and specific
grounds and not on general averments merely quoting the words of the rules.[44]
The affidavit filed
by PROVI through Elmer Ramiro, its President and Chief Executive Officer, only
contained a general allegation that TESDA had fraudulent misapplied or
converted the amount of P10,975,000.00 that was allotted to it. Clearly, we cannot infer any finding
of fraud from PROVI’s vague assertion, and the CA correctly ruled that the
lower court acted with grave abuse of discretion in granting the writ of attachment
despite want of any valid ground for its issuance.
For all these reasons, we support the appellate court’s
conclusion that no valid ground exists to support the grant of the writ of
attachment against TESDA. The CA’s annulment
and setting aside of the Orders of the RTC were therefore fully in order.
WHEREFORE, premises considered,
we hereby DENY the petition filed by
petitioner Professional Video, Inc., and AFFIRM
the Court of Appeals’ Decision dated
SO
ORDERED.
ARTURO
D. BRION
Associate Justice
WE
CONCUR:
LEONARDO A.
QUISUMBING
Associate Justice Chairperson |
|
|
CONSUELO YNARES-SANTIAGO Associate
Justice |
MINITA V. CHICO-NAZARIO Associate Justice |
TERESITA J. LEONARDO-DE CASTRO
Associate Justice
ATTESTATION
I attest that the conclusions in the
above Decision had been reached in consultation before the case was assigned to
the writer of the opinion of the Court’s Division.
LEONARDO
A. QUISUMBING
Associate Justice
Chairperson
CERTIFICATION
REYNATO
S. PUNO
Chief Justice
* Designated additional Member of the Second
Division per Special Order No. 645 dated
**
Designated additional Member of the Second Division effective
***
Designated additional Member of the Second Division effective
[1] Petition for review on certiorari under Rule 45 of the Rules of Court; rollo, pp. 8-21.
[2] Dated
[3] Dated
[4] Penned by Judge Mariano M. Singzon, Jr.; id., pp. 86-87.
[5]
[6] R.A. No. 7796, Section 14(b)(1).
[7] Rollo, pp. 45-47.
[8]
[9]
[10]
[11]
[12]
[13] Order
dated
[14]
Filed on
[15] Dated
[16]
In a Resolution dated
[17] Supra note 6, Section 2.
[18]
[19]
[20]
[21]
[22] CONSTITUTION, Article II, Section 18.
[23]
[24]
[25]
[26] See Farolan,
Jr. v. Court of Tax Appeals, G.R. No. 42204, January 21, 1993, 217 SCRA
298; Pacific Products, Inc. v. Ong, G.R.
No. 33777, January 30, 1990, 181 SCRA
536.
[27] Metran v. Paredes, 79 Phil. 819 (1948).
[28] JUSMAG
[29] Republic v. Sandoval, G.R. No. 84645, March 19, 1993,
220 SCRA 124, citing Kawanakoa v. Polyblank, 205 U.S. 349-353, 51
L. Ed. 834 (1907).
[30] Ibid., citing The Siren v. United States, 7 Wall. 152, 19 L. Ed. 129 (1869).
[31] G.R. No. L-26386,
[32] R.A. No. 7796, Section 14(b)(1).
[33] Whereas Clause of Contract Agreement Project: PVC ID Card Issuance; rollo, pp. 45-47.
[34] Supra
note 4.
[35] See:
Section 8
[36] G.R. No.
L-23139,
[37] Black’s
Law Dictionary, 6th Ed., p. 1229.
[38] G.R.
No. L-30671,
[39] G.R.
No. 68514,
[40] Rollo, pp. 188-202.
[41] Maintenance and Other Operating Expenses.
[42] Dy v. Enage, G.R. No. L-3535,
[44] D.P. Lub Oil Marketing Center, Inc. v. Nicolas,
G.R. No. 76113,