Public corporations, government entities, etc.

GOVERNMENT-OWNED AND CONTROLLED CORPORATIONS ARE NOT GOVERNMENT ENTITIES. - Does the fact that these corporations perform certain functions of government make them a part of the Government of the Philippines?

The answer is simple: they do not acquire that status for the simple reason that they do not come under the classification of municipal or public corporation. Take for instance the National Coconut Corporation. While it was organized with the purpose of "adjusting the coconut industry to a position independent of trade preferences in the United States" and of providing "Facilities for the better curing of copra products and the proper utilization of coconut by-products," a function which our government has chosen to exercise to promote the coconut industry, it however 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). It may sue and be sued in the same manner as any other private corporations, and in this sense it is an entity different from our government.

As the Supreme 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., 586-587).

"By becoming a stockholder in the National Coal Company, the Government divested itself of its sovereign character so 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.)

To recapitulate, we may mention that the term "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. They do not therefore come within the exemption clause prescribed in section 16, Rule 130 of our Rules of Court.
"Public corporations are those formed or organized for the government of a portion of the State." (Section 3, Republic Act No. 1459, Corporation Law).

"The generally accepted definition of a municipal corporation would only include organized cities and towns, and like organizations, with political and legislative powers for the local, civil government and police regulations of the inhabitants of the particular district included in the boundaries of the corporation." (Heller vs. Stremmel, 52 Mo. 309, 312.)

"In its more general sense the phrase 'municipal corporation' may include both towns and counties, and other public corporations created by government for political purposes. In its more common and limited signification, it embraces only incorporated villages, towns and cities." (Dunn vs. Court of County Revenues, 85 Ala. 144, 146, 4 So. 661; McQuillin, Municipal Corporations, 2nd ed., Vol. 1, p. 385.)

"We may, therefore, define a municipal corporation in its historical and strict sense to be the incorporation, by the authority of the government, of the inhabitants of a particular place or district, and authorizing them in their corporate capacity to exercise subordinate specified powers of legislation and regulation with respect to their local and internal concerns. This power of local government is the distinctive purpose and the distinguishing feature of a municipal corporation proper." (Dillon, Municipal Corporations, 5th ed., Vol. I, p. 59; Bacani vs. NACOCO; G.R. No. L-9657, November 29, 1956)