INCORPORATED GOVERNMENT AGENCIES

Rayo vs CFI
G.R. No. L-55273-83 December 19, 1981
ABAD SANTOS, J.

FACTS:

At about midnight on October 26, 1978, during the height of that infamous typhoon "KADING"
the respondent corporation, acting through its plant superintendent, Benjamin Chavez, opened or
caused to be opened simultaneously all the three floodgates of the Angat Dam. And as a direct and
immediate result of the sudden, precipitate and simultaneous opening of said floodgates several towns
in Bulacan were inundated. About a hundred of its residents died or were reported to have died and
properties worth millions of pesos destroyed or washed away. Petitioners, who were among the
many unfortunate victims of that man-caused flood, filed with the respondent Court eleven
complaints for damages against the respondent corporation. The respondent corporation invoked in
each answer a special and affirmative defense that "in the operation of the Angat Dam," it is
"performing a purely governmental function", hence it "cannot be sued without the express consent of
the State. Petitioners opposed the prayer for dismissal and contended that Respondent Corporation is
performing not governmental but merely proprietary functions and that under its own organic act,
Section 3 (d) of Republic Act No. 6395, it can sue and be sued in any court.

ISSUE:

Whether or not respondent National Power Corporation performs a governmental function with
respect to the management and operation of the Angat Dam.

HELD:

NO,It is not necessary to write an extended dissertation on whether or not the NPC performs a
governmental function with respect to the management and operation of the Angat Dam. It is sufficient
to say that the government has organized a private corporation, put money in it and has allowed it to
sue and be sued in any court under its charter. (R.A. No. 6395, Sec. 3 (d).) As a government owned and
controlled corporation, it has a personality of its own, distinct and separate from that of the
Government. Moreover, the charter provision that the NPC can "sue and be sued in any court" is
without qualification on the cause of action and accordingly it can include a tort claim such as the one
instituted by the petitioners. Thus, the petition is hereby granted. Costs against the NPC.
INCORPORATED GOVERNMENT AGENCIES

HON. RAMON J. FAROLAN, JR VS COURT OF TAX APPEALS and BAGONG BUHAY TRADING
G.R. No. 42204 January 21, 1993
ROMERO, J.:

FACTS:

On January 30, 1972, the vessel S/S "Pacific Hawk" with Registry No. 170 arrived at the Port of
Manila carrying, among others, 80 bales of screen net consigned to Bagong Buhay Trading (Bagong
Buhay). Acting on the strength of information that the shipment consisted of "mosquito net" made of
nylon dutiable under Tariff Heading No. 62.02 of the Tariff and Customs Code, the Office of the Collector
of Customs ordered a re-examination of the shipment. A report on the re-examination revealed that the
shipment consisted of 80 bales of screen net, each bale containing 20 rolls or a total of 1,600 rolls. Since
the shipment was also misdeclared as to quantity and value, the Collector of Customs forfeited the
subject shipment in favor of the government. Upon review, the Court of Tax Appeals reversed the
decision of the Commissioner of Customs. It ruled that the Commissioner erred in imputing fraud upon
private respondent because fraud is never presumed and thus concluded that the forfeiture of the
articles in question was not in accordance with law. Private respondent alleges that of the 143,454 yards
(64 bales) released to Bagong Buhay, only 116,950 yards were in good condition and the 26,504 yards
were in bad condition. Consequently, private respondent demands that the Bureau of Customs be
ordered to pay for damages for the 43,050 yards it actually lost.

ISSUE:

Whether or not the Collector of Customs may be held liable for the 43,050 yards actually lost by
private respondent.

HELD:

No, The Bureau of Customs cannot be held liable for actual damages that the private
respondent sustained with regard to its goods. Otherwise, to permit private respondent's claim to
prosper would violate the doctrine of sovereign immunity. Since it demands that the Commissioner of
Customs is ordered to pay for actual damages it sustained, for which ultimately liability will fall on the
government, it is obvious that this case has been converted technically into a suit against the state.

On this point, the political doctrine that "the state may not be sued without its consent," categorically
applies. As an unincorporated government agency without any separate juridical personality of its own,
the Bureau of Customs enjoys immunity from suit. Along with the Bureau of Internal Revenue, it is
invested with an inherent power of sovereignty, namely, taxation. As an agency, the Bureau of Customs
performs the governmental function of collecting revenues which is definitely not a proprietary
function. Thus, private respondent's claim for damages against the Commissioner of Customs must fail.
IMPLIED CONSENT

REPUBLIC OF THE PHILIPPINES

FACTS:

This involves the 227 shares of stock from Negros Occidental Golf and Country Club, Inc. owned by
respondent Benedicto, thought to have been ill-gotten, which the PCGG fiscal agents sequestered and
took over. The PCGG and Benedicto entered into a Compromise Agreement of lifting the sequestration
of the shares and implying that they were not ill-gotten and Benedicto was well within his financial
capacity to purchase them. Benedicto filed a Motion for Release and return of stocks, which the
Sandiganbayan approved, plus PCGGs payment of the membership fee, whose noncompliance (or delay
of compliance) thereof resulted in the foreclosure of the stocks and its consequent public sale.

ISSUE:
Whether or not PCGG immune from this suit?

HELD:
NO, when the government itself is the suitor, it exempts itself from the state immunity principle.
By taking initiative of the suit against a private party, it descends to the level of a private individual as
well and opens itself to whatever counterclaims the other party may apply. Its consent to be sued is
implied from the very act of entering into such contract, their Compromise Agreement as an
example.Petition (of petitioner PCGG) is DISMISSED.
IMPLIED CONSENT
FERNANDO A. FROILAN vs
PAN ORIENTAL SHIPPING COMPANY, defendant-appellant,REPUBLIC OF THE PHILIPPINES, and COMPANIA MARITIMA
G.R. No. L-11897 October 31, 1964

FACTS:

Defendant Pan Oriental took possession of the vessel in question after it had been repossessed
by the Shipping Administration and title thereto reacquired by the government, following the original
purchaser, Fernando Froilan, default in his payment of the unpaid balance and insurance premiums for the
said vessel. Pan Oriental chartered said vessel and operated the same after it had repaired the vessel
and paid the stipulated initial payment, thereby exercising its option to purchase, pursuant to a
bareboat charter contract entered between said company and shipping Corporation. The Cabinet
resolved to restore Froilan to his rights under the original contract of sale on condition that he shall pay
a sum of money upon delivery of the vessel to him, that he shall continue paying the remaining
installments due, and that he shall assume the expenses incurred for the repair and by docking of the vessel.
Pan Oriental protested to this restoration of Froilans rights under the contract of sale, for the reason that when the
vessel was delivered to it, the Shipping Administration had authority to dispose of said authority to the
property, Froilan having already relinquished whatever rights he may have thereon. Froilan paid the
required cash of P10,000.00 and as Pan Oriental refused to surrender possession of the vessel, he filed
an action for in the CFI of Manila to recover possession thereof and have him declared the rightful
owner of said property. The Republic of the Philippines was allowed to intervene in said civil case
praying for the possession of the in order that the chattel mortgage constituted there on may be
foreclosed.

ISSUE:

Whether or not the Governments motion to dismiss Pan Oriental counterclaims may prosper.

HELD:
Under the circumstances already had voted to, Pan Oriental cannot be considered a possessor in
bad faith until after the institution of the instant case. However, since it is not disputed that said
appellant is entitled to the refund of such expenses with the right to retain the vessel until he has been
reimbursed therefore. As it is by the corrected acts of defendant and intervenor Republic of the
Philippines that the appellant ha a lien far his expenses, appellees Froilan, Compania Maratma, and the
Republic of the Philippines are declared liable for the reimbursement to appellant of its legitimate
expenses, as allowed by law, with legal interest from the time of disbursement.
IMPLIED CONSENT

BENITO E. LIM vs.HERBERT BROWNELL

Plaintiff Benito E. Lim, as administrator of the intestate estate of Arsenia Enriquez, filed a
complaint in the Court of First Instance of Manila against the Alien Property Administrator (later
substituted by the Attorney General of the United States) for the recovery of four (4) parcels of land
(which were subsequently transferred to the Republic of the Philippines) with a prayer for the payment
of back rentals. The Republic of the Philippines intervened in the case. The defendant Attorney General
of the United States and the defendant-intervenor Republic of the Philippines each filed an answer,
alleging by way of affirmative defense, among others, that the lower court had no jurisdiction over the
claim for rentals since the action in that regard constituted a suit against the Republic to which it had
not given its consent. The private respondents intervened in Civil Case No. 0025.

ISSUE:
Whether or not Civil case No. 0025 a suit against the Government.

HELD:
No,In the present case, the private respondents intervened in Civil Case No. 0025 merely to
unite with the defendants therein in resisting the claims of petitioner, as plaintiff, and for that reason
asked for no affirmative relief against any party in their answer in intervention. In other words, this is
not a case where the private respondents take the initiative in an action against petitioner by filing a
complaint in intervention or a complaint. As observed by respondent Sandiganbayan: llcd
"In intervening, Palanca and his co-stockholders have for their purpose to exclude the BREDCO lots and
stocks or, at least, their 35% interest in the BREDCO project from any possible judgment directing
reconveyance of the alleged ill-gotten wealth to the plaintiff. They do not pray for damages against the
latter. In effect, they occupy a defensive position as regards those shares of stock or interest. The fact
that they interjected themselves into his litigation at their own initiative does not alter the essential
nature of their intervention." Private respondents' action for intervention in Civil Case No. 0025 is not,
therefore, a suit or counter-suit against petitioner Republic of the Philippines.
Having arrived at the above conclusions, the Court finds no need to further discuss the petitioner's
pretense that the private respondents' claims are claims as between and/or among Ferdinand and
Imelda Marcos, et al., and that the same is not cognizable by respondent Sandiganbayan but by the
regular courts. It suffices to state that, as already stated, in intervening in Civil Case No. 0025, private
respondents merely joined the defendants therein in resisting the claims of petitioner, as plaintiff, and
that they asked no affirmative relief against any party in their answer in intervention. They do not
appear to have any controversy with the defendants, Ferdinand and Imelda Marcos, et al.
The petition in the present case is hereby DISMISSED.
IMPLIED CONSENT

Francisco Malong vs Philippine National Railways

FACTS:
The Petitioners, Malong spouses alleged in their complaint that on October 30, 1977 their son,
Jaime Aquino, a paying passenger, was killed when he fell from a PNR train while it was between Tarlac
City and Capas. The said train was overloaded with passengers and baggage in view of the proximity of
All Saints Day. The Malong spouses prayed that the PNR be ordered to pay them damages totaling
P136,370, The trial court dismissed the complaint, ruling that it had no jurisdiction because the PNR,
being a government instrumentality, the action was a suit against the State. The petitioners appealed to
SC pursuant to RA No. 5440.

ISSUE:
Whether or not the PNR is immune from suit?

HELD:
NO. Although the PNR is a government instrumentality under Republic Act No. 4156, as
amended by Republic Act No. 6366 and Presidential Decree No. 741, it was held that the State divested
itself of its sovereign capacity when it organized the PNR which is no different from its predecessor, the
Manila Railroad Company. The PNR did not become immune from suit. It did not remove itself from the
operation of articles 1732 to 1766 of the Civil Code on common carriers. However, as held in
precedents, the correct rule is that "not all government entities, whether corporate or non-corporate,
are immune from suits. Immunity from suit is determined by the character of the objectives for which
the entity was organized.

The order of dismissal is reversed and set aside. The case is remanded to the trial court for
further proceedings, costs against the Philippine National Railways.It would be unjust if the heirs of the
victim of an alleged negligence of the PNR employees could not sue the PNR for damages. Like any
private common carrier, the PNR is subject to the obligations of persons engaged in that private
enterprise. It is not performing any governmental function.