AIR TRANSPORTATION OFFICE vs. SPOUSES DAVID* ELISEA RAMOS
(G.R. No. 159402 - February 23, 2011)
FACTS:
Respondents agreed after negotiations to convey a portion of their land by deed of sale to
petitioner which was utilizing said portion of land as part of the runway and running shoulder of the
Loakan Airport in its operations. However, petitioner failed to pay the amount of P778,150.00 despite
repeated verbal and written demands.
Consequently, the respondents filed an action for collection against the petitioner and some of
its officials in the Regional Trial Court (RTC) on April 29, 1998. The petitioner and its co-defendants
referred to Proclamation No. 1538 as affirmative defense. Said proclamation provides that Pres. Marcos
had reserved certain parcels of land including the respondents’ affected portion for use of the Loakan
Airport. They declared that the RTC had no jurisdiction over the case considering that the deed of sale
had been entered in the performance of governmental functions.
The RTC denied petitioner’s motion for a preliminary hearing of the affirmative defense.
Likewise, the RTF denied the petitioner’s subsequent motion for reconsideration. The petitioner then
commenced a special civil action for certiorari in the Court of Appeals which, in due course, affirmed
RTC’s orders. Hence, this appeal by petition for Hence, this appeal by petition for certiorari.
ISSUE:
Whether or not the petitioner could be sued without the State’s consent.
RULING:
YES. The petitioner can be sued without the State’s consent.
As declared by the High Court in the case of National Airports Corporation vs. Teodoro,
management and maintenance of airport operations are not functions of governmental or political
character. It is a settled rule that when the government engages in commercial business or enters into a
contract, it can be sued upon the theory that it has descended to the level of a private individual and has
given its consent to be sued under such contract and thereby divested itself of its immunity from suits.
The Air Transportation Office, although a Government agency, was not performing a purely
governmental or sovereign function but purely proprietary and business functions. Assuming, arguendo,
that ATO was performing a governmental function, Proclamation No. 1538 could not be successfully
invoked against an action for payment by owners exercising its constitutional right of eminent domain as
the doctrine of sovereign immunity does not justify the taking of private property for public use without
just compensation.