#7 NATIONAL DEVELOPMENT COMPANY v TABIAS credit cooperative associations, cannot be said to exercise a

GR NO. L-17467 sovereign function. It is, like all other corporations capitalized by
APRIL 23, 1963 the Government, a business corporation," and, as such, its causes
By: GUZMAN of action are subject to the statute of limitations.
Topic: PRESCRIPTION  In the case at hand, the plaintiff herein does not exercise sovereign powers
Petitioners: NATIONAL DEVELOPMENT COMPANY, represented by its Agent, THE — and, hence, cannot invoke the exemptions thereof — but is an agency for
PHILIPPINE NATIONAL BANK the performance of purely corporate, proprietary or business functions.
Respondents: JOSE YULO TABIAS
Ponente: CONCEPCION, J.

RECIT-READY: The case involved is an appeal from the CFI, dismissing the
plaintiff’s complaint on the ground of prescription of action. The plaintiff argued that
the order of dismissal was erroneous, because on the ground that statute of
limitations does not run against them because the same is an instrumentality of
Government. However, the SC ruled affirming the decision of CFI, on the ground that
the plaintiff does not exercise sovereign function and, hence, causes of action are
subject to the statute of limitation.

DOCTRINE: A government owned and controlled corporation cannot be said to exercise

a sovereign function, thus, causes of action are subject to the statute of limitations.

FACTS
 The case involved is an appeal by the plaintiff from an order of the CFI
dismissing their complaint on the ground of prescription of action.
 In March 22, 1960, plaintiff seeks to recover from defendant, the sum of
P6,905.81, plus interest and atty’s fees, under a promissory note of said
defendant, dated and issued on May 13, 1946, for the order of said plaintiff.
 Defendant filed a motion to dismiss upon the ground that the action upon
which the complaint is based has prescribed long ago for more than 10 yrs
having elapsed since May 13, 1946, when said promissory note was issued
and plaintiffs’ action accrued.
 Plaintiff argued that the order of dismissal is erroneous on the ground that
statute of limitations does not run against the plaintiff because the same is an
instrumentality of Government.

ISSUE
 WON the plaintiff is correct on pointing out that the statute of limitation does
not run against them because the same is an instrumentality of Government.

HELD/RATIO
 NO. THE SC SAID THAT THE PLAINTIFF DOES NOT EXERCISE
SOVEREIGN POWERS, AND HENCE CANNOT INVOKE THAT
PRESCRIPTION DOES NOT RUN AGAINST THEM.
 It is true that plaintiff is an instrumentality of such Government, but as this
Court has held in the case of Association Cooperativa de Credito Agricola de
Miagao vs. Monteclaro (74 Phil., 281):
o "Even the Agricultural and Industrial Bank, which is a government-
owned and controlled corporation and which has been created to
promote agriculture and industry on a larger scale than agricultural