DEVELOPMENT BANK OF THE PHILIPPINES, PETITIONER, VS. THE REFEREE, ESTANISLAO D. SARTO, WORKMEN’S COMPENSATION UNIT, R. O. 6, MELCHORA C. VDA. DE BRITANICO, FOR HERSELF AND IN BE…

On December 5, 1967 Melchora Z. Vda.
de Brita­nico and her minor children filed a notice
and claim for compensation under the Workmen’s Compensation Act, as amended,
against respondent Development Bank of the Philippines – hereinafter referred
to as DBP – with respondent Estanislao D. Sarto of the Workmen’s Com­pensation Unit, Regional Office
No. 6, at the City of Naga, Philippines, on the death
of her husband Wilfre­do V. Britanico
on October 29, 1967 as a result of an illness contracted in line of duty in
connection with his employment as records and mailing clerk of said DBP.  The DBP, through counsel, filed a motion to
dismiss the claim upon the ground that employees of the DBP are not covered by
the Workmen’s Compensation Act, as amend­ed. 
Respondent referee Estanislao D. Sarto of the Workmen’s Compensation Commission, on March 11, 1968, denied the motion to
dismiss.  Petitioner DBP filed a motion
for reconsideration of the referee’s order denying the motion to dismiss the
claim, but said referee denied the motion for reconsideration.  Petitioner DBP files this petition for
prohibition before this Court, praying that respondent referee Estanislao Sarto be declared without jurisdiction over the subject matter of
the claim for death compensation and that he be enjoined from fur­ther
proceeding with the hearing of the said claim under the Workmen’s Compensation
Act.

Petitioner DBP, in its petition, alleges that its employees are
not covered by the provision of Sec. 3 of the Workmen’s Compensation Act, as
amended, which reads as follows:

“Sec. 3, Applicable to Government.
— This Act shall also be applicable to all officials, employees, and laborers
in the service of the National Government and its political subdivisions and instrumenta­lities:  Provided, however, that officials, laborers,
and employees insured with the GSIS, and their dependents when entitled to the
benefits of the said insurance system shall, in addition to the same, be
entitled to the benefits granted by this Act.” (As amended by R.A. No.
4119)

It is the stand of petitioner DBP that the term “National
Government and its political subdivisions and instrumentalities” are those
institutions through which the state exercises its sovereign power designed to
carry on the essential functions of government, and that the DBP, as a
government-owned or controlled cor­poration is not included in the term
“political sub­divisions and instrumentalities” of the national
govern­ment.

The contention of petitioner cannot be sustained.  We hold that the DBP is an instrumentality
of the nation­al government of the Republic of the Philippines.  To promote the welfare, progress and
prosperity of the people is among the functions of the government, and to
perform this function the government has to act through certain agencies or
instrumentalities.  One such
instrumentality by which the government of the Republic of the Philippines
performs its function of promoting the economic development of the country is
the DBP.  It is admitted that the DBP is
a government-owned and controll­ed corporation. 
By express provision of Section 1 of Republic Act No. 2081, creating the
DBP, this bank was created “to promote credit facilities for the
rehabilita­tion and development and expansion of agriculture and industry, the
reconstruction of property damaged by war and the broadening and
diversification of the national economy, and to promote the establishment of
private de­velopment banks in provinces and cities.”

The DBP has taken over the functions of the former Agricultural
and Industrial Bank and the Rehabilitation Finance Corporation.  On June
9, 1939, by Commonwealth Act No. 459, the Agricultural and
Industrial Bank was created.  On October 29, 1946, by Republic Act
No. 85, the Rehabilitation Finance Corporation was created, and all the powers
vested in, duties conferred upon, and the capital, assets, accounts, choses in action, etc. of the Agricultural and Industrial
Bank were transferred to the Rehabilitation Finance Corporation.  On June 14, 1958, by Republic Act No. 2031,
the Rehabilitation Finance Corporation was converted into the Development Bank
of the Philippines, and in Sect­ion 28 of the said Act it is provided that
“whenever the phrase ‘Rehabilitation Finance Corporation’ x x x appears in R.A. No. 85 or in
any other Act or Executive Order, the same shall mean and refer to the
‘Development Bank of the Philippines’ x x x and that “upon the approval of this Act all the
assets and liabilities as well as the personnel of the Rehabilitation Finance
Corporation are hereby trans­ferred to the Bank.”

In the case of Credito Agricola de Miagao vs. Mon­teclaro, et al.^[1]
this Court held that “the Agricultural and Industrial Bank, which is a
government-owned and con­trolled corporation and which has been created to
promote agricultural credit cooperative associations cannot be said to exercise
a sovereign function.” It follows that the DBP, which has taken over the
functions of the Agri­cultural and Industrial Bank – which later became the
Rehabilitation Finance Corporation – cannot be said to exercise a portion of
the sovereign from the government.  The
DBP only exercises proprietary function, as an instrumentality of the
government.  In the same way that this
Court has held that other government-owned and controlled corporations, like
the National Coal Com­pany^[2],
the National Coconut Corporation^[3],
and the Philippine National Bank^[4],
simply exercise proprietary functions and have nothing to do with the exercise
of political sovereignty, so the DBP simply exercises pro­prietary functions
and has nothing to do with the exer­cise of the sovereign power of the
government.

The DBP, therefore, being an instrumentality of the national
government of the Republic of the Philip­pines, it follows that its employees are
covered by the Workmen’s Compensation Act, under Section 3 of said Act, as
amended.

This Court, therefore, finds the instant peti­tion for
prohibition without merit, and resolves to DISMISS the same.

IT IS SO ORDERED.

Reyes, C.J., Reyes, Dizon, Makalintal, Sanchez,
Castro, Angeles and Fernando, JJ., concur.

^[1] 74 Phil. 281.

^[2] National Coal Co. vs. Collector of Internal Revenue, 46
Phil. 586; Government of the Philippine Islands vs. Springer, 50 Phil. 288.

^[3] Bacani, et al., vs. National Coconut Corpora­tion,
100 Phil. 568, 573-574.

^[4] Republic of the Philippines vs. Philippine National Bank, G.R. No. L-16485, January 30, 1965.