G.R. No. L-55273-83 December 19, 1981
GAUDENCIO RAYO, ET AL., petitioners, vs. COURT OF FIRST INSTANCE OF BULACAN, BRANCH V, STA. MARIA, and NATIONAL POWER CORPORATION, respondents.

FACTS

Petitioners were residents of Norzagaray, Bulacan, who filed eleven separate complaints for damages against the National Power Corporation (NPC) and its plant superintendent, Benjamin Chavez. They alleged that during Typhoon “Kading” on October 26, 1978, the NPC, through Chavez, simultaneously opened all three floodgates of the Angat Dam. This sudden release of water caused catastrophic flooding, resulting in numerous deaths and the destruction of millions of pesos worth of property. The complaints, while filed separately, shared a common cause of action based on the allegedly negligent act.
The NPC, in its answers, raised a special affirmative defense, contending it was performing a purely governmental function in the operation of the Angat Dam and therefore could not be sued without the State’s consent. The respondent court held a preliminary hearing on this defense. It subsequently issued an order dismissing all complaints against the NPC, leaving Chavez as the sole defendant. The court reasoned that while NPC’s charter granted it the power to sue and be sued, this pertained only to matters within its corporate powers and not to tort claims, for which state consent was required.

ISSUE

The core issues were: (1) whether the NPC performs a governmental function in managing and operating the Angat Dam; and (2) whether the NPC’s charter provision allowing it to “sue and be sued” includes the power to be sued for tort.

RULING

The Supreme Court granted the petition and set aside the dismissal orders. The Court found it unnecessary to delve extensively into the governmental versus proprietary function dichotomy. It anchored its decision on the distinct corporate personality of the NPC and the unambiguous scope of its charter.
The Court ruled that the NPC, as a government-owned and controlled corporation, possesses a juridical personality separate and distinct from the Philippine government itself. This separate identity is fundamental. More critically, the Court held that the charter of the NPC, Republic Act No. 6395 , explicitly provides in Section 3(d) that the corporation can “sue and be sued in any court.” This statutory grant is without any qualification or exception. The plain and comprehensive language encompasses all types of suits, including actions arising from tort or quasi-delict, such as the claims for damages due to alleged negligence in the dam’s operation. The respondent court therefore erred in imposing a limitation not found in the law. Consequently, the Supreme Court ordered the reinstatement of the complaints against the NPC.