Republic of the Philippines v PNB PNB, did so other than as an instrumentality of the Republic or the State, hence,

GR NO. L-16485 the plea of prescription cannot be maintained against it.

January 30, 1965
By: Gayares The order appealed from is hereby set aside and the case is remanded to the lower
Topic: Prescription court for further proceedings, with costs against PNB.
Petitioners: Republic of the Philippines
Respondents: Philippine National Bank
Ponente: Makalintal, J.

RECIT-READY/SUMMARY: AFP, as an instrumentality of the Republic, opened an

account with PNB. PNB allowed a stranger to withdraw an amount from the AFP’s
account. AFP filed an action to compel PNB to refund them. PNB refused. Hence
this case. PNB claimed that AFP’s action already prescribed. SC ruled that
prescription does not run against the State, which includes all its instruments.

DOCTRINE:
Prescription does not run against an instrumentality of the Republic or the State.

FACTS:
 Complaint alleges that the AFP opened a current account with PNB.
 That PNB, through negligence, paid to an unnamed person the sum of
P37k covered by two checks drawn against AFP’s account but bearing
fictitious names and forged the signatures of officers authorized to make
withdrawals.
 One of the AFP officers noticed and called the attention of PNB.
 Despite AFP’s repeated demands, PNB refused to refund the value
withdrawn, which prompted the AFP to file an action.
 PNB moved to dismiss AFP’s action on the ground that the action had
prescribed.
 RTC: Sustained the motion and dismissed the complaint on a different
ground, which is based on desnudar un santo para vestir a otro (to
unrobe an image to cloth another). The Court ruled that this is just a
waste of time and unnecessary government expense.

ISSUE:
W/N AFP’s action against PNB had already prescribed?

HELD/RATIO:
NO – The statue of limitations does not run against the state and it is neither
alleged nor shown that AFP, in making the deposit of its funds in question with