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 - Case Digest
Ponente: BAUTISTA ANGELO, J
(TOPIC: Government; functions; incorporated)
FACTS:
● The plaintiffs (Leopoldo T. Bacani and Mateo A. Matoto) are court stenographers
assigned in Branch 6 of CFI of Manila who was commissioned by NACOCO’s
counsel, Atty. Alikpala to make copies of the transcript of the stenographic notes
taken by them during the hearing of Civil Case No. 2293 (Francisco Sycip vs.
National Coconut Corporation)
● Plaintiffs complied delivering a transcript containing 714 pages and thereafter
submitted bills for the payment of their fees and were then was paid at the rate
of Php 1 per page. (Bacani - Php 564, Matoto - Php 150) by NACOCO.
● Upon discovery of such payment by the Auditor General(A.G) of NACOCO, he
disallowed the payment and sought to recover the amounts paid.
● On January 19, 1953 the A.G of NACOCO required the plaintiffs (Leopoldo T.
Bacani and Mateo A. Matoto) to reimburse the said payment under the Circular of
DOJ, wherein the opinion was expressed that the NACOCO is a Government entity
and thus exempt from the payment of the said fees in accordance with Sec. 16 of
Rule 130 of ROC.
● On February 6, 1954, the A.G. issued an order directing the Cashier of DOJ to
deduct the salary of both plaintiffs every payday beginning on March 30, 1954.
(Bacani - Php 25, Matoto - Php 10)
● To prevent such deduction the plaintiffs (Leopoldo T. Bacani and Mateo A. Matoto)
filed an action to CFI of Manila arguing that the defendant is not a government
entity within the purview of section 16, Rule 130 of the Rules of Court.
● The CFI ruled after trial that (1) "that defendant National Coconut Corporation is
not a government entity within the purview of section 16, Rule 130 of the Rules
of Court; (2) that the payments already made by said defendant to plaintiffs
herein and received by the latter from the former in the total amount of P714, for
copies of the stenographic transcripts in question, are valid, just and legal; and
(3) that plaintiffs are under no obligation whatsoever to make a refund of these
payments already received by them. The following ruling is then appealed in the
Supreme Court.

ISSUE/S:
1.Whether or not NACOCO is a government entity that would be entitled to be
under the purview of the Sec. 16 of Rule 130 of Rules of Court?

HELD:
No. NACOCO is not a government entity but a government-owned or controlled
corporation thus cannot be under the purview of the Sec. 16 of Rule 130 of Rules of
Court.

It must be understood 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 forms 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.

And the functions of such government is classified into :

(1) Constituent functions which constitute the very bonds of society and are
compulsory in nature and (2) Ministrant functions are those that are
undertaken only by way of advancing the general interests of society and are
merely optional.

NACOCO falls under the ministrant functions because in Commonwealth Act No. 518
section 2, it states that the purpose of NACOCO is to “adjust the coconut industry to a
position independent of trade preferences in the United States" and provide "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. Also, section 4 provides that, 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.