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 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.
Section 3. The State may not be sued without its consent.
The territory [of Hawaii], of course, could waive its exemption (Smith v. Reeves, 178 US 436, 44 L ed 1140, 20 Sup. Ct. Rep. 919), and it took no objection to the proceedings in the cases cited if it could have done so. xxx But in the case at bar it did object, and the question raised is whether the plaintiffs were bound to yield. Some doubts have been expressed as to the source of the immunity of a sovereign power from suit without its own permission, but the answer has been public property since before the days of Hobbes. Leviathan, chap. 26, 2. A sovereign is exempt from suit, not because of any formal conception or obsolete theory, but on the logical and practical ground that there can be no legal right as against the authority that makes the law on which the right depends. "Car on peut bien recevoir loy d'autruy, mais il est impossible par nature de se donner loy." Bodin, Republique, 1, chap. 8, ed. 1629, p. 132; Sir John Eliot, De Jure Maiestatis, chap. 3. Nemo suo statuto ligatur necessitative. Baldus, De Leg. et Const. Digna Vox, 2. ed. 1496, fol. 51b, ed. 1539, fol. 61.7
[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.
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 Philippines), subsequently enacted on June 20, 1952, did not alter the character of the CAA's objectives under Exec. Order 365. The pertinent provisions cited in the Teodoro case, particularly Secs. 3 and 4 of Exec. Order 365, which led the Court to consider the CAA in the category of a private entity were retained substantially in Republic Act 776, Sec. 32(24) and (25). Said Act provides:
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
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
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.
Endnotes:
* David Ramos died on October 14, 2001, before the assailed decision was promulgated. He was substituted by his children Cherry Ramos, Joseph David Ramos and Elsie Grace R. Dizon pursuant to a resolution of the CA promulgated on April 23, 2003 (see rollo, p. 136).
** Acting Chairperson in lieu of Justice Conchita Carpio Morales who is on leave per Special Order No. 925 dated January 24, 2011.
*** Additional member per Special Order No. 926 dated January 24, 2011.
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 Id., pp. 80-87; penned by Judge Antonio C. Reyes.
3 Id.
4 Id.
5 Id., pp. 25-35.
6 205 US 349, 353 (1907).
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, Aug. 31, 1977, 78 SCRA 470, 473.
9 L-26386, Sept. 30, 1969, 29 SCRA 598, 601-602.
10 Bernas, The 1987 Constitution of the Republic of the Philippines: A Commentary, 2003 Edition, p. 1269.
11 Metropolitan Transportation Service v. Paredes, 79 Phil. 819 (1948).
12 E.g., Angat River Irrigation System, et. al. v. Angat River Worker's Union, et. al., 102 Phil. 789 (1957).
13 E.g., National Airports Corporation v. Teodoro, Sr. and Phil. Airlines Inc., 91 Phil. 203 (1952).
14 Rollo, pp. 25-35.
15 Id., pp. 29-32.
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, Aug. 31, 1971, 40 SCRA 464; Santiago v. Republic, No. L-48214, Dec. 19, 1978, 87 SCRA 294.
17 G.R. Nos. 71998-99, June 2, 1993, 223 SCRA 11.
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