Republic of the
Supreme Court
THIRD DIVISION
|
AIR TRANSPORTATION OFFICE, Petitioner, - versus
- SPOUSES DAVID* and ELISEA RAMOS, Respondents. |
G.R.
No. 159402 Present: BRION, Acting Chairperson,** BERSAMIN, ABAD,***
VILLARAMA,
JR., and SERENO,
JJ. Promulgated: February 23, 2011 |
x-----------------------------------------------------------------------------------------x
R E S O L U T I O N
BERSAMIN, J.:
The
State’s immunity from suit does not extend to the petitioner because it is an
agency of the State engaged in an enterprise that is far from being the State’s
exclusive prerogative.
Under challenge is the decision
promulgated on
Antecedents
Spouses
David and Elisea Ramos (respondents) discovered that a portion of their land registered
under Transfer Certificate of Title No. T-58894 of the P778,150.00. However, the ATO failed to pay despite repeated
verbal and written demands.
Thus, on April 29, 1998, the
respondents filed an action for collection against the ATO and some of its
officials in the RTC (docketed as Civil Case No. 4017-R and entitled Spouses David and Elisea Ramos v. Air
Transportation Office, Capt. Panfilo Villaruel, Gen. Carlos Tanega, and Mr.
Cesar de Jesus).
In their answer, the ATO and its
co-defendants invoked as an affirmative defense the issuance of Proclamation
No. 1358, whereby President Marcos had reserved certain parcels of land that
included the respondents’ affected portion for use of the
On
After the RTC likewise denied the
ATO’s motion for reconsideration on
Subsequently,
WHEREFORE, the judgment is rendered ORDERING the defendant Air
Transportation Office to pay the plaintiffs DAVID and ELISEA RAMOS the
following: (1) The amount of P778,150.00 being the value of the parcel
of land appropriated by the defendant ATO as embodied in the Deed of Sale, plus
an annual interest of 12% from August 11, 1995, the date of the Deed of Sale
until fully paid; (2) The amount of P150,000.00 by way of moral damages
and P150,000.00 as exemplary damages; (3) the amount of P50,000.00
by way of attorney’s fees plus P15,000.00 representing the 10, more or
less, court appearances of plaintiff’s counsel; (4) The costs of this suit.
SO ORDERED.
In
due course, the ATO appealed to the CA, which affirmed the RTC’s decision on
IN
VIEW OF ALL THE FOREGOING, the appealed decision is hereby AFFIRMED, with MODIFICATION that the awarded cost
therein is deleted, while that of moral and exemplary damages is reduced
to P30,000.00 each, and attorney’s fees is lowered to P10,000.00.
No cost.
SO ORDERED.
Hence, this appeal by petition for
review on certiorari.
Issue
The
only issue presented for resolution is whether the ATO could be sued without
the State’s consent.
Ruling
The petition for review has no merit.
The immunity of the State from suit,
known also as the doctrine of sovereign immunity or non-suability of the State,
is expressly provided in Article XVI of the 1987 Constitution, viz:
Section 3. The State may not be sued without
its consent.
The immunity from suit is based on
the political truism that the State, as a sovereign, can do no wrong. Moreover,
as the eminent Justice Holmes said in Kawananakoa
v. Polyblank:[6]
The territory [of
Practical considerations dictate the establishment
of an immunity from suit in favor of the State.
Otherwise, and the State is suable at the instance of every other
individual, government service may be severely obstructed and public safety
endangered because of the number of suits that the State has to defend against.[8] Several
justifications have been offered to support the adoption of the doctrine in the
[A] continued adherence to the doctrine of
non-suability is not to be deplored for as against the inconvenience that may
be caused private parties, the loss of governmental efficiency and the obstacle
to the performance of its multifarious functions are far greater if such a
fundamental principle were abandoned and the availability of judicial remedy
were not thus restricted. With the well-known propensity on the part of our
people to go to court, at the least provocation, the loss of time and energy
required to defend against law suits, in the absence of such a basic principle
that constitutes such an effective obstacle, could very well be imagined.
An unincorporated government agency
without any separate juridical personality of its own enjoys immunity from suit
because it is invested with an inherent power of sovereignty. Accordingly, a claim for damages against the agency
cannot prosper; otherwise, the doctrine of sovereign immunity is violated.[11] However, the need to distinguish
between an unincorporated government agency performing governmental function
and one performing proprietary functions has arisen. The immunity has been
upheld in favor of the former because its function is governmental or
incidental to such function;[12]
it has not been upheld in favor of the latter whose function was not in pursuit
of a necessary function of government but was essentially a business.[13]
Should the
doctrine of sovereignty immunity or non-suability of the State be extended to
the ATO?
In its
challenged decision,[14]
the CA answered in the negative, holding:
On the first assignment of error, appellants
seek to impress upon Us that the subject contract of sale partook of a
governmental character. Apropos,
the lower court erred in applying the High Court’s ruling in National
Airports Corporation vs. Teodoro (91 Phil. 203 [1952]),
arguing that in Teodoro, the matter involved the collection of landing
and parking fees which is a proprietary function, while the case at bar
involves the maintenance and operation of aircraft and air navigational
facilities and services which are governmental functions.
We are not persuaded.
Contrary to appellants’ conclusions, it was
not merely the collection of landing and parking fees which was declared as
proprietary in nature by the High Court in Teodoro, but management and
maintenance of airport operations as a whole, as well. Thus, in the much later case of Civil
Aeronautics Administration vs. Court of Appeals (167 SCRA 28 [1988]), the
Supreme Court, reiterating the pronouncements laid down in Teodoro,
declared that the CAA (predecessor of ATO) is an agency not immune from
suit, it being engaged in functions pertaining to a private entity. It went on to explain in this wise:
x x x
The Civil Aeronautics Administration comes
under the category of a private entity.
Although not a body corporate it was created, like the National Airports
Corporation, not to maintain a necessary function of government, but to run
what is essentially a business, even if revenues be not its prime objective but
rather the promotion of travel and the convenience of the travelling public. It is engaged in an enterprise which, far
from being the exclusive prerogative of state, may, more than the construction
of public roads, be undertaken by private concerns. [National Airports Corp. v.
Teodoro, supra, p. 207.]
x x x
True, the law prevailing in 1952 when the Teodoro
case was promulgated was Exec. Order 365 (Reorganizing the Civil Aeronautics
Administration and Abolishing the National Airports Corporation). Republic Act No. 776 (Civil Aeronautics Act
of the
Sec. 32.
Powers and Duties of the Administrator. – Subject to the general
control and supervision of the Department Head, the Administrator shall have
among others, the following powers and duties:
x x x
(24) To
administer, operate, manage, control, maintain and develop the Manila
International Airport and all government-owned aerodromes except those
controlled or operated by the Armed Forces of the Philippines including such
powers and duties as: (a) to plan,
design, construct, equip, expand, improve, repair or alter aerodromes or such
structures, improvement or air navigation facilities; (b) to enter into, make
and execute contracts of any kind with any person, firm, or public or private
corporation or entity; …
(25)
To determine, fix, impose, collect and receive landing fees, parking
space fees, royalties on sales or deliveries, direct or indirect, to any
aircraft for its use of aviation gasoline, oil and lubricants, spare parts,
accessories and supplies, tools, other royalties, fees or rentals for the use
of any of the property under its management and control.
x x x
From the foregoing, it can be seen that the
CAA is tasked with private or non-governmental functions which operate to
remove it from the purview of the rule on State immunity from suit. For the correct rule as set forth in the Teodoro
case states:
x x x
Not all government entities, whether
corporate or non-corporate, are immune from suits. Immunity from suits is determined by the
character of the objects for which the entity was organized. The rule is thus stated in Corpus Juris:
Suits against State agencies with relation to
matters in which they have assumed to act in private or non-governmental
capacity, and various suits against certain corporations created by the state
for public purposes, but to engage in matters partaking more of the nature of
ordinary business rather than functions of a governmental or political
character, are not regarded as suits against the state. The latter is true, although the state may
own stock or property of such a corporation for by engaging in business
operations through a corporation, the state divests itself so far of its
sovereign character, and by implication consents to suits against the
corporation. (59 C.J., 313) [National Airports Corporation v. Teodoro, supra,
pp. 206-207; Italics supplied.]
This doctrine has been reaffirmed in the
recent case of Malong v. Philippine National Railways [G.R. No. L-49930,
August 7, 1985, 138 SCRA 63], where it was held that the Philippine National
Railways, although owned and operated by the government, was not immune from
suit as it does not exercise sovereign but purely proprietary and business
functions. Accordingly, as the CAA was
created to undertake the management of airport operations which primarily
involve proprietary functions, it cannot avail of the immunity from suit
accorded to government agencies performing strictly governmental functions.[15]
In our view, the CA thereby correctly
appreciated the juridical character of the ATO as an agency of the Government not performing a purely governmental or
sovereign function, but was instead involved in the management and
maintenance of the
We further
observe the doctrine of sovereign immunity cannot be successfully invoked to
defeat a valid claim for compensation arising from the taking without just compensation and without the
proper expropriation proceedings being first resorted to of the plaintiffs’ property.[16]
Thus, in De los Santos v. Intermediate Appellate Court,[17] the trial court’s dismissal based on
the doctrine of non-suability of the State of two cases (one of which was for
damages) filed by owners of property where a road 9 meters wide and 128.70
meters long occupying a total area of 1,165 square meters and an artificial
creek 23.20 meters wide and 128.69 meters long occupying an area of 2,906
square meters had been constructed by the provincial engineer of Rizal and a
private contractor without the owners’ knowledge and consent was reversed and
the cases remanded for trial on the merits.
The Supreme Court ruled that the doctrine of sovereign immunity was not
an instrument for perpetrating any injustice on a citizen. In exercising the right of eminent domain,
the Court explained, the State exercised its jus imperii, as distinguished from its proprietary rights, or jus gestionis; yet, even in that area, where private
property had been taken in expropriation without just compensation being paid,
the defense of immunity from suit could not be set up by the State against an
action for payment by the owners.
Lastly, the issue of whether or not
the ATO could be sued without the State’s consent has been rendered moot by the
passage of Republic Act No. 9497, otherwise known as the Civil
Aviation Authority Act of 2008.
R.A. No. 9497 abolished the ATO, to wit:
Section 4. Creation of the Authority. – There is hereby created an independent regulatory body with quasi-judicial and quasi-legislative powers and possessing corporate attributes to be known as the Civil Aviation Authority of the Philippines (CAAP), herein after referred to as the “Authority” attached to the Department of Transportation and Communications (DOTC) for the purpose of policy coordination. For this purpose, the existing Air transportation Office created under the provisions of Republic Act No. 776, as amended is hereby abolished.
x x x
Under its Transitory Provisions, R.A.
No. 9497 established in place of the ATO the Civil Aviation Authority of the
Philippines (CAAP), which thereby assumed all of the ATO’s powers, duties and
rights, assets, real and personal properties, funds, and revenues, viz:
CHAPTER XII
TRANSITORTY PROVISIONS
Section 85. Abolition of the Air Transportation Office. – The Air Transportation Office (ATO) created under Republic Act No. 776, a sectoral office of the Department of Transportation and Communications (DOTC), is hereby abolished.
All powers, duties and rights vested by law and exercised by the ATO is hereby transferred to the Authority.
All assets, real and personal properties, funds and revenues owned by or vested in the different offices of the ATO are transferred to the Authority. All contracts, records and documents relating to the operations of the abolished agency and its offices and branches are likewise transferred to the Authority. Any real property owned by the national government or government-owned corporation or authority which is being used and utilized as office or facility by the ATO shall be transferred and titled in favor of the Authority.
Section 23 of R.A. No. 9497 enumerates
the corporate powers vested in the CAAP, including
the power to sue and be sued, to enter into contracts of every class, kind and description, to construct,
acquire, own, hold, operate,
maintain, administer and lease personal and real properties, and to settle,
under such terms and conditions most advantageous to it, any claim by or
against it.[18]
With
the CAAP having legally succeeded the ATO pursuant to R.A. No. 9497, the
obligations that the ATO had incurred by virtue of the deed of sale with the
Ramos spouses might now be enforced against the CAAP.
WHEREFORE, the Court denies the petition
for review on certiorari, and affirms
the decision promulgated by the Court of Appeals.
No
pronouncement on costs of suit.
SO ORDERED.
LUCAS P. BERSAMIN
Associate Justice
WE CONCUR:
ARTURO D. BRION
Associate
Justice
Acting
Chairperson
ROBERTO A. ABAD
MARTIN S. VILLARAMA, JR.
Associate Justice Associate Justice
MARIA
Associate Justice
A T T E S T A T I O N
I
attest that the conclusions in the above Resolution had been reached in
consultation before the case was assigned to the writer of the opinion of the
Court’s Division.
ARTURO D. BRION
Associate Justice
Acting Chairperson
C E R T I F I C A T I O N
Pursuant
to Section 13, Article VIII of the Constitution, and the Division Chairperson’s
Attestation, I certify that the conclusions in the above Resolution had been
reached in consultation before the case was assigned to the writer of the
opinion of the Court’s Division.
RENATO C. CORONA
Chief Justice
*
David Ramos died on
** Acting Chairperson in lieu of Justice
Conchita Carpio Morales who is on leave per Special Order No. 925 dated
*** Additional member per Special Order No. 926
dated
[1] Rollo, pp. 25-35; penned by Associate Justice Conrado M. Vasquez (later Presiding Justice, now retired), and concurred in by Associate Justice Mercedes Gozo-Dadole (retired) and Associate Justice Rosmari D. Carandang,
[2]
[3]
[4]
[5]
[6] 205
[7] Bold emphasis supplied.
[8] Veterans
Manpower and Protective Services, Inc. v. Court of Appeals, G.R. No. 91359, Sept. 25, 1992, 214
SCRA 286, 294; Republic
v. Purisima, No. L-36084,
[9] L-26386,
[10] Bernas, The 1987 Constitution of the Republic of the
[11] Metropolitan Transportation Service v. Paredes, 79 Phil. 819 (1948).
[12] E.g.,
[13] E.g., National Airports Corporation v. Teodoro, Sr. and Phil. Airlines Inc., 91 Phil. 203 (1952).
[14] Rollo, pp. 25-35.
[15]
[16] Republic
v. Sandiganbayan, G.R. No. 90478, Nov. 2, 1991, 204 SCRA 212, 231; Ministerio v. Court of First Instance of
Cebu, No. L-31635,
[17] G.R. Nos. 71998-99,
[18] Section 23. Corporate Powers. – The Authority,
acting through the Board, shall have the following corporate powers:
(a) To succeed in its corporate name, to sue and be
sued in such corporate name xxx.
x x x
(c) To enter into, make, perform and carry out
contracts of every class, kind and description, which are necessary or
incidental to the realization of its purposes, with any person, domestic or
foreign private firm, or corporation, local or national government office,
agency and with international institutions or foreign government;
x x x
(e) To construct, acquire, own, hold, operate,
maintain, administer and lease personal and real properties, including buildings,
machinery, equipment, other infrastructure, agricultural land, and its
improvements, property rights, and interest therein x x x
x x x
(i) To settle, under such terms and conditions most
advantageous to it, any claim by or against it;
x x x