G.R. No. L-66321 October 31 1984 FACTS: On April 9, 1981, Traders entered into a loan agreement with the NMPC and PSI. Under the loan agreement, Traders approved a credit accommodation of two million five hundred twenty thousand pesos (P2,520,000) in favor of NMPC and PSI through a domestic stand-by letter of credit to guarantee payment of the coverage or broadcast rights for the 1981 season of the Philippine Basketball Association (PBA). Among the conditions imposed were that NMPC and PSI would deposit with Traders all collections obtained from the sponsoring companies and that during the term of said letter of credit they would maintain in their current account with the bank a balance of at least P500,000 or 20% of the face value of the letter of credit. As of July 27, 1981, the PBA had actually drawn against said letter of credit the total amount of P340,000. Inasmuch as NMPC and PSI did not make any payments on their obligation nor did they comply with the conditions. Traders filed in the Court of First Instance of Rizal at Pasay City a complaint against NMPC and PSI to collect the whole amount of P2,520,000 which the lower court issued a writ of preliminary attachment. NMPC filed a motion to dismiss the case on the ground that it cannot be sued without its consent which the lower court denied on the ground that the state may be sued without its consent if it entered into a contract with a private person. NMPC filed another motion to dismiss reiterating the stand of the Office of the Solicitor General on NMPC's immunity from suit. The court issued an order stating that "to maintain the authoritative dignity" of the court, the order of September 21, 1982 denying the motion to dismiss should be respected. NMPC filed before the then Intermediate Appellate Court a petition for Certiorari, prohibition and mandamus. ISSUE: 1. Whether or not by entering into the contract with Traders, the NMPC waived immunity from suit. 2. Whether or not the contract is undertaken as an incident of governmental function HELD: 1. No. It ruled that NMPC's act of entering into a contract did not mean that it voluntarily waived its immunity from suit "inasmuch as NMPC truly has no personality of its own." 2. No. By the terms of the contract, the NMPC was engaged in a business undertaking which was certainly beyond its function of disseminating governmental information. Prepared by:
A Short View of the Laws Now Subsisting with Respect to the Powers of the East India Company
To Borrow Money under their Seal, and to Incur Debts in
the Course of their Trade, by the Purchase of Goods on
Credit, and by Freighting Ships or other Mercantile
Transactions