**Facts:**
This case originated when the Spouses David and Elisea Ramos discovered that a portion of their land, specifically 985 square meters in area, was being utilized as part of the runway and running shoulder of the Loakan Airport, operated by the Air Transportation Office (ATO). Subsequent negotiations led to an agreement on August 11, 1995, wherein the Ramoses would sell the affected land portion to the ATO for PHP 778,150.00. However, the ATO failed to pay the agreed amount, prompting the Ramoses to file an action for collection against the ATO and some of its officials on April 29, 1998, at the Regional Trial Court (RTC), Baguio City.
The ATO, in its defense, invoked the principle of State immunity, citing Proclamation No. 1358 by President Marcos, which reserved the land for the airport’s use, claiming the sale was executed in performance of governmental functions. The RTC, however, denied ATO’s motions for a preliminary hearing and reconsideration on the matter. Following this, the ATO sought relief through a special civil action for certiorari with the Court of Appeals (CA), which was dismissed due to lack of grave abuse of discretion on the part of the RTC. The RTC, on February 21, 2001, ruled in favor of the Ramoses, a decision affirmed by the CA on May 14, 2003, albeit with modifications on the awarded damages and attorney’s fees.
**Issues:**
The core legal issue for resolution before the Supreme Court was whether the ATO could be sued without the State’s consent, centering on the distinction between the State’s sovereign immunity and the suability of state agencies performing proprietary functions.
**Court’s Decision:**
The Supreme Court ruled that the petition for review had no merit, emphasizing that state agencies engaged in proprietary activities, as opposed to strictly governmental functions, do not enjoy sovereign immunity. It concurred with the CA’s findings, noting that the ATO’s operation and maintenance of the Loakan Airport were proprietary activities. Therefore, the ATO could be sued for claims arising from these activities. The Court further elucidated that the principle of sovereign immunity does not bar claims for compensation due to the taking of property without just and due process, referencing the act of the ATO entering into a deed of sale with the Ramoses without subsequent payment.
Additionally, the Court pointed out that the issue of ATO’s suability was moot due to the passage of Republic Act No. 9497, which established the Civil Aviation Authority of the Philippines (CAAP), effectively succeeding and inheriting the functions and liabilities of the ATO.
**Doctrine:**
The decision reiterates the established doctrine that not all government entities are immune from suit. Immunity from suit is contingent upon whether the entity performs governmental or proprietary functions. Government involvement in activities of a proprietary nature does not afford it sovereign immunity against suits arising from such activities.
**Class Notes:**
1. **Sovereign Immunity Principle:** Government cannot be sued without its consent, but this does not extend to proprietary actions performed by state agencies.
2. **Governmental vs. Proprietary Functions:** A critical distinction influencing the suability of state entities. Governmental functions pertain to the State’s sovereign activities, whereas proprietary functions relate to commercial or business-oriented activities.
3. **Legal Succession and Liabilities:** When a government agency is succeeded by another (e.g., ATO by CAAP through RA 9497), the succeeding agency inherits both powers and liabilities, including the capacity to sue and be sued.
**Historical Background:**
This case underscores the evolving nature of state agency operations in the Philippines, particularly in the context of public utilities and infrastructure development. The transition from ATO to CAAP, alongside the legal discourse on sovereign immunity, reflects broader legal and policy reforms aimed at better serving both governmental interests and private rights.
Leave a Reply