BACANI vs. NACOCO

LEOPOLDO T. BACANI and MATEO A. MATOTO, Plaintiffs–Appellees,

vs.

NATIONAL COCONUT CORPORATION, ET AL., Defendants, NATIONAL COCONUT CORPORATION and BOARD OF LIQUIDATORS, Defendants–Appellants.

G.R. No. L-9657
NOVEMBER 29, 1956

FACTS:

The plaintiffs are court stenographers assigned in Branch VI of the Court of First Instance of Manila. During the pendency of Civil Case No. 2293 of said court, entitled Francisco Sycip vs. National Coconut Corporation, Assistant Corporate Counsel Federico Alikpala, counsel for defendant, requested said stenographers for copies, of the transcript of the stenographic notes taken by them during the hearing. Plaintiffs complied with the request by delivering to Counsel Alikpala the needed transcript containing 714 pages and thereafter submitted to him their bills for the payment of their fees. The National Coconut Corporation paid the amount of P564 to Leopoldo T. Bacani and P150 to Mateo A. Matoto for said transcript at the rate of P1 per page.

Upon inspecting the books of this corporation, the Auditor General disallowed the payment of these fees and sought the recovery of the amounts paid. The respondents argue that National Coconut Corporation may be considered as included in the term “Government of the Republic of the Philippines” for the purposes of the exemption of the legal fees provided for in Rule 1-30 of the Rules of Court.

ISSUE:

WON NACOCO is a part of the Government of the Philippines by virtue of its performance of government functions.

HELD:

No, NACOCO does not acquire that status for the simple reason that it does not come under the classification of municipal or public corporation. To resolve the issue in this case requires a little digression on the nature and functions of our government as instituted in our Constitution. To begin with, we state that the term “Government” may be defined as “that institution or aggregate of institutions by which an independent society makes and carries out those rules of action which are necessary to enable men to live in a social state, or which are imposed upon the people forming that society by those who possess the power or authority of prescribing them” (U.S. vs. Dorr, 2 Phil., 332). This institution, when referring to the national government, has reference to what our Constitution has established composed of three great departments, the legislative, executive, and the judicial, through which the powers and functions of government are exercised. These functions are twofold: constitute and ministrant. The former are those which constitute the very bonds of society and are compulsory in nature; the latter are those that are undertaken only by way of advancing the general interests of society, and are merely optional.

To this latter class belongs the organization of those corporations owned or controlled by the government to promote certain aspects of the economic life of our people such as the National Coconut Corporation. These are what we call government-owned or controlled corporations, which may take on the form of a private enterprise or one organized with powers and formal characteristics of a private corporation under the Corporation Law.

But while NACOCO was organized for the ministrant function of promoting the coconut industry, however, it was given a corporate power separate and distinct from our government, for it was made subject to the provisions of our Corporation Law in so far as its corporate existence and the powers that it may exercise are concerned (sections 2 and 4, Commonwealth Act No. 518).

―Government of the Republic of the Philippines” used in section 2 of the Revised Administrative Code refers only to that government entity through which the functions of the government are exercised as an attribute of sovereignty, and in this are included those arms through which political authority is made effective whether they be provincial, municipal or other form of local government. These are what we call municipal corporations. They do not include government entities, which are given a corporate personality, separate and distinct from the government and ‘which are governed by the Corporation Law. Their powers, duties and liabilities have to be determined in the light of that law and of their corporate charters.

As this Court has aptly said, “The mere fact that the Government happens to be a majority stockholder does not make it a public corporation” (National Coal Co. vs. Collector of Internal Revenue, 46 Phil., 586-597). “By becoming a stockholder in the National Coal Company, the Government divested itself of its sovereign character as far as respects the transactions of the corporation. Unlike the Government, the corporation may be sued without its consent, and is subject to taxation. Yet the National Coal Company remains an agency or instrumentality of government.” (Government of the Philippine Islands vs. Springer, 50 Phil., 288.)

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