EDEN C.

SUAN EH 306

Professional Video Inc. v. TESDA

(Case Digest)
Facts:
1. The case involves two parties: PROVI a business engaged in the sale of
high technology equipment, and TESDA, established under RA 7769, “to
develop and establish a national system of skills standardization,
testing, and certification in the country”.
2. TESDA, pursuant to their mandate, sought to issue printed
identification cards to trainees who have passed the certification
process. They conducted a bidding, however, it failed because they
only had two bidders, one of which was PROVI.
3. Instead, TESDA entered into an agreement with PROVI. Consequently,
both parties executed their agreement on the PVC ID Card Issuance
Project.
4. PROVI was able to deliver the items, however, TESDA failed to settle its
outstanding balance of 35 million pesos.
5. Thus, PROVI filed with the RTC a complaint for sum of money with
damages against TESDA, and prayed for the issuance of preliminary
garnishment. In response, TESDA filed a motion to quash the writ of
garnishment.
6. The RTC denied the motion to quash of TESDA. However, upon appeal
before the CA, it set aside the orders of the RTC after finding that: (a)
TESDA’s funds are public in nature, and, therefore exempt from
garnishment; and (b) purchase of the PVC cards was a necessary
incident of its governmental functions.
7. The argument of the parties are as follows:
- PROVI contended that (a) TESDA went to the level of an
ordinary citizen when it entered into a purely commercial
contract with them. PROVI was to provide the PVC cards, in
turn, TESDA will sell it to the trainees. Thus, waiving TESDA’s
immunity from suit; and (b) the writ for preliminary
attachment should be granted because TESDA misused the
funds for the supposed payment.
- On the other hand, TESDA argued that (a) the execution of
the contract was done in performance of its governmental
function. Thus, it is immune from suit; and (b) public funds
cannot be made subject to attachment or garnishment.

1
ISSUE:
1. Whether or not PROVI can sue TESDA.
2. Whether or not the writ of garnishment is valid.

RULING:
1. No. TESDA is an unincorporated instrumentality of the government,
attached to DOLE, operating under its own charter, undertaking
governmental functions---i.e the handling of formal and non-formal
education, training, and skills development. Furthermore, the fees
charged to the trainees for the PVC card, is incidental to its
governmental function. It is a means of recovering costs and not for
profit.
2. No. TESDA’s funds are public in nature since their budget is included in
the annual General Appropriation Act. Thus, the funds being sourced
from the National Treasury belongs to the government.

WHEREFORE, petition is DENIED and decision of the Court of Appeals

AFFIRMED.

Notes:
The state immunity principle covers:
1. Suit against the state
2. Suit against an unincorporated governmental agency
3. Suit against a government agency covered by a charter
4. Suit that on its face is against a governmental officer, but where the
ultimate liability will fall on the government