National Development Co. v. Tobias
REITERATIONFacts
The Antecedents: Plaintiff, National Development Company (NDC), represented by Philippine National Bank, filed a complaint on March 22, 1960, to recover P6,905.81 plus interest and attorney's fees based on a promissory note dated May 13, 1946, for P7,000.00, payable "on demand after date" to the order of NDC. Procedural History: Defendant, Jose Yulo Tobias, filed a motion to dismiss, arguing that the action had prescribed as more than ten (10) years had elapsed since the issuance of the note and the accrual of the plaintiff's action. The Court of First Instance of Negros Occidental dismissed the complaint on the ground of prescription. The Petition: Plaintiff-appellant assails the dismissal order, contending that the statute of limitations does not run against the plaintiff because it is an instrumentality of the Government.
Issue(s)
Whether the statute of limitations runs against the National Development Company (NDC), an instrumentality of the Government. Whether the NDC, in its capacity as a business corporation, can invoke exemption from the statute of limitations.
Ruling
The order of dismissal is affirmed. The National Development Company is subject to the statute of limitations.
Ratio Decidendi
On whether the statute of limitations runs against the National Development Company (NDC), an instrumentality of the Government: The Court held that the plaintiff's pretense is devoid of merit. The case cited by the plaintiff, Government of the Philippine Islands vs. Monte de Piedad, is not in point as it involved the Government of the Philippine Islands itself. The plaintiff herein is neither the Government of the Republic nor a branch or subdivision thereof. While it is an instrumentality of the Government, its causes of action are subject to the statute of limitations, as established in previous rulings. On whether the NDC, in its capacity as a business corporation, can invoke exemption from the statute of limitations: The Court clarified that the NDC does not exercise sovereign powers and is therefore not exempt from the statute of limitations. Its Organic Act (Commonwealth Act 182, as amended by Commonwealth Act 311) subjects it to the provisions of the Corporation Law and grants it general corporate powers to engage in commercial, industrial, mining, agricultural, and other enterprises for economic development or public interest. These powers are akin to those of a natural person or any other corporation, indicating its function as a business corporation rather than an entity exercising sovereign functions. The fact that it was previously sentenced to pay costs in other cases, despite the rule that no costs shall be allowed against the Republic unless otherwise provided by law, further supports the conclusion that it is not treated as the Republic itself in legal proceedings.
Main Doctrine
An instrumentality of the government, even if government-owned and controlled, which engages in purely corporate, proprietary, or business functions, is subject to the statute of limitations, as it does not exercise sovereign powers.