1) [G.R. No. 143377.

February 20, 2001]

SHIPSIDE INCORPORATED vs. COURT OF APPEALS

FACTS:

On 1958, original certificate of land title was issued in favor of Rafael Galvez over four
parcels of land, lots 1, 2, 3, and 4. On 1960, lots no. 1 and 4 were sold by Galvez to four buyers,
namely Filipina Mamaril, Cleopatra Llana, Regina Bustos, and Erlinda Balatbat. Consequently,
transfer certificate was issued in favor of the buyers. Later on the same year, the buyers sold
the lots no. 1 and 4 to Lepanto Consolidated Mining Company (LCMC) and transfer certificate
was issued in the name of the latter as the owner. On February 1963, unknown to LCMC, the
Court of First Instance of La Union issued an order declaring the lands under Rafael Galvez’
name null and void and ordered its cancellation thereof. The real property sought to be
cancelled was as stated part of Camp Wallace which belongs rightfully to the Republic of the
Philippines (the State). On October 1963, LCMC sold the lots 1 and 4 to Shipside Incorporated,
the petitioners of the case.

In the meantime, Galvez filed his motion for reconsideration with the trial court but was
denied on 1965. On 1973, on appeal, Court of Appeals ruled in favor of the Republic of the
Philippines and issued an entry of judgment certifying its decision as final and executory on 0ct.
23, 1973. Twenty four years after, on 1999, the Solicitor General (the nation’s chief attorney)
received a letter that the orders and decision of the trial court have not been executed in the
Register of deeds despite receipt of the writ of execution. The Sol Gen filed a complaint before
the RTC against the heirs of Rafael Galvez, including among others, Shipside Inc and praying for
revival of judgment and cancellation of titles in the latter’s name. On July 1999, Shipside Inc
filed its motion to dismiss because accordingly, 1) the plaintiff is not a real party-in interest
because part of Camp Wallace were already under the ownership of Bases Conversion Devt
Authority (BCDA) which has a separate personality from the government, and 2) Plaintiff’s
cause of action is barred by prescription. On Aug. 1999, Solgen filed a motion to dismiss alleging
that 1) the real party in interest is the Republic of the Phil. And 2) Prescription does not run
against the State.

ISSUE/S.
1) Whether or not the Republic of the Philippines (the State) may sue or be sued in behalf
of government agencies/corporations invested with proprietary functions, particularly,
the BCDA
2) Whether or not prescription does not run against the State

RULING.

1) No. The Court held that Republic of the Philippines may not sue or be sued in behalf of a
corporation, though performing governmental functions, has and granted with a
personality separate from the government. With the transfer of Camp Wallace to the
BCDA, the government no longer has a right or interest to protect. Consequently, the
 Republic is not a real party in interest and it may not institute the instant action. A real
party in interest is the party who stands to be benefited or injured by the judgment in
the suit, or the party entitled to the avails of the suit. Being the owner of the areas
covered by Camp Wallace, it is the Bases Conversion and Development Authority, not
the Government, which stands to be benefited if the land issued in the name of
petitioner is cancelled. Having the capacity to sue or be sued, it should thus be the BCDA
which may file an action to cancel the petitioner's title, not the Republic, the former
being the real party in interest. One having no right or interest to protect cannot invoke
the jurisdiction of the court as a party plaintiff in an action.

2) While it is true that prescription does not run against the State, the same may not
be invoked by the government in this case since it is no longer interested in the subject
matter. While Camp Wallace may have belonged to the government at the time Galvez’
title was ordered cancelled, the same no longer holds true at the time of the institution
of the case by the Sol Gen. .RA 7277 created Bases Conversion and Development
Authority (BSDA). With the transfer of Camp Wallace to the BCDA, the government has
no longer a right or protect. The rule that prescription does not run against the State
does not apply to corporations or artificial bodies created by the State for special
purposes, it being said that when the title of the Republic has been divested, its
grantees, although artificial bodies of its own creation, are in the same category as
ordinary persons.