Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION

G.R. Nos. L-71998-99 June 2, 1993

EMILIANO R. DE LOS SANTOS, SPOUSES NORMA A. PADILLA and ISIDORO L. PADILLA and
the HEIRS OF FRANCISCO DAYRIT, petitioners,
vs.
THE HON. INTERMEDIATE APPELLATE COURT, HON. JUDGE CICERRO C. JURADO and
EDILBERTO CADIENTE, respondents.
Isidoro L. Padilla for petitioners.
Joaquin G. Mendoza for E. Cadiente.

ROMERO, J.:
Questioned in the instant petition for review on certiorari is the Decision of the then Intermediate
Appellate Court 1affirming the December 1, 1982 order of the then Court of First Instance of Rizal, Branch
XXII at Pasig 2 in civil Cases Nos. 46800 which states in toto:
It appearing that the construction of the road and creek in question was a project
undertaken under the authority of the Minister of Public Works, the funding of which
was the responsibility of the National Government and that the defendants impleaded
herein are Edilberto Cadiente and Nestor Agustin and not the Republic of the
Philippines which cannot be sued without its consent, this court hereby resolves to
dismiss these two (2) cases without pronouncement as to costs.
SO ORDERED.
Civil Cases Nos. 46800 and 46801 were both filed on July 13, 1982 by petitioners who are coowners under TCT No. 329945 of a parcel of land located in Barrio Wawa, Binangonan, Rizal with an
area of nineteen thousand sixty-one (19,061) square meters. In Civil Case No. 46800, petitioners
alleged in the petition for prohibition that in October 1981, without their knowledge or consent,
Lorenzo Cadiente, a private contractor and the Provincial Engineer of Rizal constructed a road nine
(9) meters wide and one hundred twenty-eight meters and seventy centimeters (128.70) long
occupying a total area of one thousand one hundred sixty-five (1,165) square meters of their land.
Petitioners added that aside from the road, the said respondents also constructed, without their
knowledge and consent, an artificial creek twenty three meters and twenty centimeters (23.20) wide
and one hundred twenty-eight meters and sixty-nine centimeters long (128.69) occupying an area of

two thousand nine hundred six (2,906) square meters of their property. Constructed in a zig-zag
manner, the creek meandered through their property.
Alleging that it completed, the road and the creek would "serve no public profitable and practicable
purpose but for respondents' personal profit, to the great damage and prejudice of the taxpayers and
the petitioners," the same petitioners invoked their rights under Art. IV Secs. 1 and 2, of the Bill of
Rights of the 1973 Constitution and prayed for the issuance of restraining order or a writ of
preliminary injunction to stop the construction. They also prayed that after hearing on the merits,
judgment be rendered: (1) declaring illegal the construction of the road and artificial creek which was
made without their knowledge and consent, "without due process and without just compensation and
in violation of the provision of statute law and of the Philippine Constitution;" (2) issuing a permanent
prohibition; (3) ordering respondents to pay petitioners "jointly and collectively" P15,00.00 as
attorney's fees and P600.00 for each appearance, and (4) ordering the respondents to pay the costs
of the suit. 3
An action for damages, Civil Case No. 46801 on the other hand, was founded on Art. 32, paragraphs
6 and 7 of the Civil Code and the constitutional provisions on the right against deprivation of property
without due process of law and without just compensation.
Thereafter, the two cases were consolidated. On November 11, 1982, the Solicitor General filed a
motion to dismiss both cases on the following grounds: (a) with respect to Civil Case No. 46800, the
pendency of Civil Case No. 46801 which involved the same parties and cause of action; (b) both
cases were in reality suits against the state which could not be maintained without the State's
consent; and (c) lack of cause of action.
Consequently, the lower court issued the aforequoted Order of December 1, 1982. Their motion for
the reconsideration of said Order having been denied, petitioners elevated (to) the cases to this
Court through an "appeal by certiorari" which was docketed as G. R. No. 63610. The Second
Division of this Court, however, referred the cases to the then Intermediate Appellate Court pursuant
to Sec. 16 of the Interim Rules. 4 In due course, the Appellate court rendered a Decision on May 22,
1985 which disposed of the cases thus:
Accordingly, the two actions cannot be maintained. They are in reality suits against
the state which has not given its consent to be sued (Minister [sic] vs. CFI, 40 SCRA
464; Isberto vs. Raquiza, 67 SCRA 116; Begosa v. Chairman, PVA, 32 SCRA 466).
Appellants' remedy lies elsewhere.
Appellants assert that the taking of their property in the manner alleged in these two
cases was without due process of law. This is not correct. The appealed order has
not closed the door to appellants right, if any, to just compensation for the alleged
area of their land which was expropriated. The court below dismissed the cases for
lack of consent on the part of the state to be sued herein. We repeat appellants'
remedy for just compensation lies elsewhere.
WHEREFORE, the order appealed from is in full accord with the evidence and the
law and is hereby therefore affirmed in all its parts. Costs against appellants.
SO ORDERED. 5

Consequently, petitioners elevated the cases to this Court through a petition for review on certiorari.
The petition is anchored on the ruling of the Court in Amigable v. Cuenca 6 which states: ". . . . where
the government takes away property from a private landowner for public use without going through the
legal process of expropriation or negotiated sale," a suit may properly be maintained against the
government.
We hold for the petitioners.
That the principle of state immunity from suit cannot be invoked to defeat petitioners' claim has long
been settled. In Ministerio v. Court of First Instance of Cebu, 7 the Court held:
. . . . The doctrine of governmental immunity from suit cannot serve as an instrument
for perpetrating an injustice on a citizen. Had the government followed the procedure
indicated by the governing law at the time, a complaint would have been filed by it,
and only upon payment of the compensation fixed by the judgment, or after tender to
the party entitled to such payment of the amount fixed, may it "have the right to enter
in and upon the land so condemned" to appropriate the same to the public use
defined in the judgment. If there were an observance of procedural regularity,
petitioners would not be in the said plaint they are now. It is unthinkable then that
precisely because there was a failure to abide by what the law requires, the
government would stand to benefit. It just as important, if not more so, that there be
fidelity to legal norms on the part of the officialdom if the rule of law were to be
maintained. It is not too much to say that when the government takes any property
for public use, which is conditioned upon the payment of just compensation, to be
judicially ascertained, it makes manifest that it submits to the jurisdiction of a court.
There is no thought then that the doctrine of immunity from suit could still be
appropriately invoked.
We find the facts of the Ministerio case on all fours with the instant cases insofar as the fact that the
respondent government officials executed a shortcut in appropriating petitioners' property for public
use is concerned. As in the Amigable case, no expropriation proceedings were initiated before
construction of the projects began. In like manner, nowhere in his pleadings in the cases at bar does
the Solicitor General mention that the fact that expropriation proceedings had in fact been
undertaken before the road and artificial creek were constructed. Thus, quoting the answer of the
defendants in Civil Case No. 46801, the Solicitor General summarized the facts which defendants
considered as constituting justification for the construction as follows:
10. The construction of the road and creek in question on the property which at the
time was said to be public property, was initiated, and construction effected, through
the usual and ordinary course, as shown by the following:
a. November 5, 1979 Engr. Data who was the incumbent District
Engineer submitted (thru channels) plans, program of works and
detailed estimates for approval of higher authorities, thru the initiation
of Mayor Ynares and Assemblyman Gilberto Duavit;
b. February 18, 1980 Regional Director Eduardo L. Lagunilla,
MPW Region IV, EDSA, Quezon City endorsed said request to the
Minister of Public Works;.

c. February 13, 1981 Assemblyman Gilberto Duavit sent a handwritten follow-up note regarding the project;
d. June 17, 1981 The undersigned defendant Nestor Agustin was
designated Chief Civil Engineer of the Rizal Engineer District, Vice
Engr. Cresencio Data who reached his compulsory retirement age;
e. September 23, 1981 Funds in the amount of P588,000.00 was
released for partial implementation of the project. The total amount
requested was P1,200,000. 00;
f. October 19, 1981 The undersigned submitted a request to the
MPWH Central Office seeking authority to effect implementation of
the project;
g. October 29, 1981 The Regional Director approved the plans and
program of works for the project in the amount of P588,000.00;
h. November 11, 1981 The Honorable Minister Jesus S. Hipolito
granted the request to undertake the implementation of the project;
i. November 25, 1981 Project implementation was started;
j. March 3, 1982 Construction of rock bulkhead was completed;
k. November 23, 1982 P249,000.00 was released for improvement
(deepening and diverting of flow) of Binangonan River which was a
complimentary structure of Binangonan port system;
l. April 9, 1982 Implementation was started. Contract for this
project was approved by the Regional Director in favor of
EDILBERTO CADIENTE CONSTRUCTION;
m. May 21, 1982 Deepening slightly of the adjacent portion of the
rock bulkhead was completed.
11. The construction of the structures was done in good faith;
The construction of the roadway and deepening of the creek was designated to
generate for the municipality of Binangonan, Rizal more benefits in the form of
substantial revenue from fishing industry, parking area, market rentals, development
site, and road system improvements. The area covered by said public improvements
is part of the Laguna Lake area which is submerged in water even during dry season.
The municipal mayor of Binangonan, Rizal stated that said area is public property. 8
Public respondents' belief that the property involved is public, even if buttressed by statements of
other public officials, is no reason for the unjust taking of petitioners' property. As TCT No. 329945
shows, the property was registered under the Torrens system in the names of "Emiliano R. de los

Santos, married to Corazon Dayrit; and Norma Alabastro, married to Isidro L. Padilla" as early as
March 29, 1971. Had the public respondents, including the other officials involved in the
construction, performed their functions by exercising even the ordinary diligence expected of them
as public officials, they would not have failed to note that the property is a private one. A public
infrastructure losses its laudability if, in the process of undertaking it, private rights are disregarded.
In this connection, the Court said in Republic v. Sandiganbayan: 9
It can hardly be doubted that in exercising the right of eminent domain, the State
exercises its jus imperii, as distinguished from its proprietary rights of jus gestionis.
Yet, even in that area, it has been held that where private property has been taken in
expropriation without just compensation being paid, the defense of immunity from
suit cannot be set up by the State against an action for payment by the owner.
Public respondents' assertion that the project had been completed on May 21, 1982 meets strong
opposition from the petitioners who insist that the project "until now is not yet finished." 10 This factual
issue needs determination which only the trial court can undertake. Thus, the need for a full blown trial on
the merits. We do not subscribe to the appellate court's suggestion that the remedy of the petitioners "lies
elsewhere."
The filing of another case to determine just compensation is superfluous. The issue may be threshed
out below for practical reasons in the event that it is shown later that it is no longer possible to
prohibit the public respondents from continuing with the public work. As held in the Amigable case,
damages may be awarded the petitioners in the form of legal interest on the price of the land to be
reckoned from the time of the unlawful taking.
WHEREFORE, the petition is hereby GRANTED and Civil Cases Nos. 46800 and 46801 shall be
REMANDED to the lower court for trial on the merits after the Republic of the Philippines shall have
been impleaded as defendant in both cases.
Feliciano, Davide, Jr., Romero, and Melo, JJ. concur.
Bidin, J. took no part.

ANGEL MINISTERIO and ASUNCIONSADAYA vs.

THE COURT OF FIRST INSTANCE OF CEBU
40 scra 464

FACTS: Petitioners sought the payment of just compensation for a registered lot
alleging that in 1927 the National Government through its authorized
representatives took physical and material possession of it and used it for the
widening of a national road, without paying just compensation and without any
agreement, either written or verbal. There was an allegation of repeated demands
for the payment of its price or return of its possession, but defendants Public
Highway Commissioner and the Auditor General refused to restore its possession.

ISSUE: Whether or not the defendants are immune from suit.

HOLDING: NO. Where the judgment in such a case would result not only in the
recovery of possession of the property in favor of said citizen but also in a charge
against or financial liability to the Government, then the suit should be regarded as
one against the government itself, and, consequently, it cannot prosper or be
validly entertained by the court except with the consent of said Government. In as
much as the State authorizes only legal acts by its officers, unauthorized acts of
government officials or officers are not acts of the State, and an action against the
officials or officers by one whose rights have been invaded or violated by such acts,
for the protection of his rights, is not a suit against the State within the rule of
immunity of the State from suit.

NOTE: When the government takes any property for public use, which is condition
upon the payment of just compensation, to be judicially ascertained, it makes

manifest that it submits to the jurisdiction of a court. The Court may proceed with
the complaint and determine the compensation to which the petitioner are entitle
(Ministerio vs.CFI, 40 SCRA 464)

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-36084 August 31, 1977
REPUBLIC OF THE PHILIPPINES, petitioner,
vs.
HONORABLE AMANTE P. PURISIMA, the Presiding Judge of the court of first Instance of
Manila (Branch VII), and YELLOW BALL FREIGHT LINES, INC., respondents.
Solicitor General Estelito P. Mendoza, Assistant Solicitor General Santiago M. Kapunan, Solicitor
Oscar C. Fernandez and Special Attorney Renato P. Mabugat for petitioner.
Jose Q. Calingo for private respondent.

FERNANDO, Acting C.J.:

The jurisdictional issued raised by Solicitor General Estelito P. Mendoza on behalf of the Republic of
the Philippines in this certiorari and prohibition proceeding arose from the failure of respondent
Judge Amante P. Purisima of the Court of First Instance of Manila to apply the well-known and ofreiterated doctrine of the non-suability of a State, including its offices and agencies, from suit without
its consent. it was so alleged in a motion to dismiss filed by defendant Rice and Corn Administration
in a pending civil suit in the sala of respondent Judge for the collection of a money claim arising from
an alleged breach of contract, the plaintiff being private respondent Yellow Ball Freight Lines,
Inc. 1 Such a motion to dismiss was filed on September 7, 1972. At that time, the leading case of Mobil
Philippines Exploration, Inc. v. Customs Arrastre Service, 2 were Justice Bengzon stressed the lack of
jurisdiction of a court to pass on the merits of a claim against any office or entity acting as part of the
machinery of the national government unless consent be shown, had been applied in 53 other
decisions. 3 There is thus more than sufficient basis for an allegation of jurisdiction infirmity against the

order of respondent Judge denying the motion to dismiss dated October 4, 1972. 4 What is more, the
position of the Republic has been fortified with the explicit affirmation found in this provision of the present
Constitution: "The State may not be sued without its consent." 5

The merit of the petition for certiorari and prohibition is thus obvious.
1. There is pertinence to this excerpt from Switzerland General Insurance Co., Ltd. v. Republic of the
Philippines:6 "The doctrine of non-suability recognized in this jurisdiction even prior to the effectivity of the
[1935] Constitution is a logical corollary of the positivist concept of law which, to para-phrase Holmes,
negates the assertion of any legal right as against the state, in itself the source of the law on which such a
right may be predicated. Nor is this all. Even if such a principle does give rise to problems, considering
the vastly expanded role of government enabling it to engage in business pursuits to promote the general
welfare, it is not obeisance to the analytical school of thought alone that calls for its continued
applicability. Why it must continue to be so, even if the matter be viewed sociologically, was set forth
inProvidence Washington Insurance Co. v. Republic thus: "Nonetheless, 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 the 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." 7 It only
remains to be added that under the present Constitution which, as noted, expressly reaffirmed such a
doctrine, the following decisions had been rendered: Del mar v. The Philippine veterans
Administration; 8 Republic v. Villasor; 9 Sayson v. Singson; 10 and Director of the Bureau of Printing v.
Francisco. 11
lwphl@it

2. Equally so, the next paragraph in the above opinion from the Switzerland General Insurance
Company decision is likewise relevant: "Nor is injustice thereby cause private parties. They could still
proceed to seek collection of their money claims by pursuing the statutory remedy of having the
Auditor General pass upon them subject to appeal to judicial tribunals for final adjudication. We
could thus correctly conclude as we did in the cited Provindence Washington Insurance decision:
"Thus the doctrine of non-suability of the government without its consent, as it has operated in
practice, hardly lends itself to the charge that it could be the fruitful parent of injustice, considering
the vast and ever-widening scope of state activities at present being undertaken. Whatever
difficulties for private claimants may still exist, is, from an objective appraisal of all factors, minimal.
In the balancing of interests, so unavoidable in the determination of what principles must prevail if
government is to satisfy the public weal, the verdict must be, as it has been these so many years, for
its continuing recognition as a fundamental postulate of constitutional law." 12
3. Apparently respondent Judge was misled by the terms of the contract between the private
respondent, plaintiff in his sala, and defendant Rice and Corn Administration which, according to
him, anticipated the case of a breach of contract within the parties and the suits that may thereafter
arise. 13 The consent, to be effective though, must come from the State acting through a duly enacted
statute as pointed out by Justice Bengzon in Mobil. Thus, whatever counsel for defendant Rice and Corn
Administration agreed to had no binding force on the government. That was clearly beyond the scope of
his authority. At any rate, Justice Sanchez, in Ramos v. Court of Industrial Relations, 14 was quite
categorical as to its "not [being] possessed of a separate and distinct corporate existence. On the
contrary, by the law of its creation, it is an office directly 'under the Office of the President of the
Philippines." 15

WHEREFORE, the petitioner for certiorari is granted and the resolution of October 4, 1972 denying
the motion to dismiss filed by the Rice and Corn Administration nullified and set aside and the
petitioner for prohibition is likewise granted restraining respondent Judge from acting on civil Case
No. 79082 pending in his sala except for the purpose of ordering its dismissal for lack of jurisdiction.
The temporary restraining order issued on February 8, 1973 by this Court is made permanent
terminating this case. Costs against Yellow Ball Freight Lines, Inc.
Antonio, Aquino, Concepcion, Jr. and Santos, JJ., concur.
Barredo, J., took no part.

Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION

G.R. No. 70547 January 22, 1993

PHILIPPINE NATIONAL RAILWAYS and HONORIO CABARDO, petitioners,
vs.
INTERMEDIATE APPELLATE COURT, and BALIWAG TRANSIT, INC., respondents.
The Solicitor General for petitioner.
Leopoldo Sta. Maria for private respondents.

MELO, J.:
The imputation of culpa on the part of herein petitioners as a result of the collision between its strain,
bound for Manila from La Union, with a Baliwag transit bus at the railroad crossing on the road going
to Hagonoy, Bulacan on August l0, 1974, is the subject of the petition at bar directed against the
judgment of affirmance rendered by respondent court, through the Fourth Civil Cases Division
(Sison, Bidin (P), Veloso, JJ.), vis-a-vis the decretal portion handed down by the court of origin in:

1. Ordering the defendants, jointly and severally to pay the plaintiff the amount of
P179,511.52 as actual damages.
2. Ordering the defendants jointly and severally to pay the plaintiff P436,642.03 as
reimbursement for the damages paid by the plaintiff to death, injury and damage
claimants.
3. Ordering the defendants jointly and severally to pay exemplary damages in the
amount of P50, 000.00 to the plaintiff.
4. Ordering the defendants jointly and severally to pay the plaintiff attorney's fees in
the amount of P5, 000.00.
5. Ordering the defendants, jointly and severally to pay the plaintiff interest at the
legal rate on the above amounts due the plaintiff from August 10, 1974 until fully
paid.
6. Ordering the defendants to pay the cost of this suit.
7. Ordering the dismissal of the defendants' counterclaim for lack of factual and legal
basis. (p. 101, Record on Appeal; p. 103. Rollo.)
Culled from the text of the assailed disposition are the facts of the case at bar which are hereunder
adoptedverbatim:
The case arose from a collision of a passenger express train of defendant Philippine
National Railways, (PNR) coming from San Fernando, La Union and bound for
Manila and a passenger bus of Baliwag Transit, Inc. which was on its way to
Hagonoy, Bulacan, from Manila, but upon reaching the railroad crossing at Barrio
Balungao, Calumpit, Bulacan at about 1:30 in the afternoon of August 10, 1974, got
stalled and was hit by defendant's express train causing damages to plaintiff's bus
and its passengers, eighteen (18) of whom died and fifty-three (53) others suffered
physical injuries. Plaintiff alleging that the proximate cause of the collision was the
negligence and imprudence of defendant PNR and its locomotive engineer, Honorio
Cirbado, in operating its passenger train in a busy intersection without any bars,
semaphores, signal lights, flagman or switchman to warn the public of approaching
train that would pass through the crossing, filed the instant action for Damages
against defendants. The defendants, in their Answer traversed the material allegation
of the Complaint and as affirmative defense alleged that the collision was caused by
the negligence, imprudence and lack of foresight of plaintiff's bus driver, Romeo
Hughes.
At the pre-trial conference held on June 23, 1976, the parties agreed on a partial
stipulation of facts and issues which as amplified at the continuation of the pre-trial
conference, on July 12, 1976, are as follows:
1 That plaintiff is a duly constituted corporation registered with the
Securities and Exchange Commission engaged in the business of
transportation and operating public utility buses for the public with

lines covering Manila, Caloocan City, Quezon City, Malabon, Rizal,

Bulacan, Pampanga and Nueva Ecija, and particularly from Manila to
Hagonoy, Bulacan and return in the month of August, l974 passing
thru the town of Calumpit Bulacan, temporarily while the bridge at
Hagonoy, Bulacan was under construction;
2 That defendant Philippine National Railways is a purely government
owned and controlled corporation duly registered and existing virtue
of Presidential Decree No. 741, with capacity to sue and be sued,
and is likewise engaged in transporting passengers and cargoes by
trains and buses and that, it operates a train line between San
Fernando, La Union and Manila particularly Passenger Express Train
with Body No. 73, passing along the intersection of Barrio Balungao,
Calumpit, Bulacan, in going to San Fernando, La Union from Manila
and return;
3. That on August 10, 1974, at about 1:20 o'clock in the afternoon, a
Baliuag Transit Bus with Body No. 1066 and Plate No. XS-929 PUBBulacan '74 was driven by its authorized driver Romeo Hughes and
PNR Train No. 73 was operated by Train Engineer Honorio Cabardo
alias Honorio Cirbado and at the railroad intersection at Barrio
Balungao, Calumpit, Bulacan, said passenger train No. 73 hit and
bumped the right mid portion of the plaintiff's passenger bus No.
1066, while the rear portion of said bus was at the railroad track and
its direction was towards Hagonoy, Bulacan at about 1:30 o'clock in
the afternoon;
4. That at the time of the collision there was a slight rainfall in the
vicinity of the scene of the accident and that there was at said
intersection no bars, semaphores, and signal lights that would warn
the public of the approaching train that was about to pass through the
intersection and likewise there was no warning devices to passing
trains showing that they were about to pass an intersection in going
to Manila from San Fernando, La Union and back;
5. That on account of said collision, the Baliuag Transit Bus with Body
No. 1066 driven by Romeo Hughes was damaged and eighteen (18)
of its passengers died and the rest who were more than fifty three
(53) passengers suffered physical injuries;
6. That after the investigation the Chief of Police of Calumpit,
Bulacan, filed a criminal case of Reckless Imprudence Causing
Multiple Homicide with Multiple Physical Injuries and Damage to
Property against Romeo Hughes y Parfan, driver of the Baliuag
Transit bus docketed under Crim. Case No. 2392; while the train
Engineer Honorio Cabardo alias Honorio Cirbado was not included
as an accused in said case, although his train No. 73 was the one
that hit and bumped the right rear portion of the said bus;

7. That immediately after the said accident Major Manuel A. Macam,

Chief of the Municipal Police of Calumpit, Bulacan, together with
some of his policemen conducted an investigation of the accident;
8. That at the railroad crossing in Calumpit, Bulacan where the
accident took place there is no railroad crossing bar, however, during
the pre-war days there was a railroad crossing bar at said
intersection; that, however, there was only one sign of railroad
crossing "Stop, Look and Listen" placed on a concrete slab and
attached to a concrete post existing at the approach of the railroad
track from the Highway going towards Hagonoy, Bulacan and that
after the said railroad track there was a designated jeep parking area
at the right side in the direction from the Highway to Hagonoy
Bulacan;
9. That the train No. 73 driven by Train Engineer Honorio Cabardo
alias Honorio Cirbado stopped after passing the railroad crossing at a
distance of about 50 meters from the said intersection after the
collision on August, 1974;
10. That the expected time of arrival of said Train No. 73 in Manila
was 2:41 P.M. and its departure time from San Fernando, La Union
was 9:00 A.M. and its expected arrival at Calumpit, Bulacan was 1:41
P.M. with no stop at Calumpit, Bulacan.
SIMPLIFICATION OF ISSUES
11. That the principal issue in the instant case is who between the
driver Romeo Hughes of Baliuag Transit, Incorporated and the train
engineer Honorio Cabardo alias Honorio Cirbado of the Philippine
National Railways was negligent or whether or not both are negligent;
that likewise which of said companies was negligent at said railroad
intersection;
12. That another additional issue is whether the Baliuag Transit
Incorporated has exercised the diligence of a good father of the
family in the selection and supervision of its employees. (pp.
85-87, Record on Appeal). ( Annex A, Petition; pp. 79-82, Rollo)
In addition, respondent court deemed it necessary to reflect the salient findings of the case for
damages as formulated by the trial court:
Posed for resolution are the following issues: Who between the driver Romeo
Hughes of the Baliuag Transit Incorporated and Honorio Cabardo, train Engineer of
the Philippine National Railways was negligent in the operation of their respective
vehicles, or whether or both were negligent? Could either of the companies Baliuag
Transit Incorporated and the Philippine National Railways be held accountable for
the collision because of negligence?

The defendants presented several statements or affidavits of alleged witnesses to

the collision, specifically Exhibits 2, 3, 4, 5, 6, 11, 13, 14, 15, 16, 17, 18 and 19; the
Court is at a loss as to why the persons who gave the said statements were not
presented as witnesses during the trial of the
case, as aptly said, the statements are hearsay evidence (Azcueta v. Cabangbang,
45 O.G. 144); at most they be taken as proof only of the fact that statements of
said persons were taken and that investigation was conducted of the incident; the
Court cannot consider the averments in said statements as testimonies or evidence
of truth.
Defendants endeavored to show that the proximate and immediate cause of the
collision was the negligence of the bus driver because the driver did not make a stop
before ascending the railtrack; he did not heed the warning or shoutings of
bystanders and passengers and proceeded in traversing the railtrack at a fast speed;
that the bus driver was in fact violating Section 42(d) of R.A. 4136, otherwise known
as the Land Transportation and Traffic Code for failure to "stop, look, and listen" at
the intersection, before crossing the railtrack; that it is incumbent upon him to take
the necessary precautions at the intersection because the railroad track is in itself a
warning; and the bus driver ignored such a warning and must assume the
responsibility for the result of the motion taken by him (U.S. v. Mananquil, 42 Phil. 90)
Except the testimony of the train engineer Cabardo, there is no admissible evidence
to show that indeed, the bus driver did not take the necessary precaution in
traversing the track. Note that he first noticed the bus when it was only 15 meters
away from him; he could not have possibly noticed the position of the bus before
negotiating the track.
On the other hand, it was shown by plaintiff that the bus driver Romeo Hughes took
the necessary precautions in traversing the track.
The bus driver had stopped before traversing the track and in fact asked the
conductor to alight and made a "Look and Listen" before proceeding; the conductor
had done just that and made a signal to proceed when he did not see any oncoming
train. (TSN, October 2l, 1976, p. 4); plaintiff's bus drivers and conductors are
enjoined to observe such a precautionary measure in seminars conducted by the
company. (TSN, September 23, 1976. pp. 26-27).
The evidence disclosed that the train was running fast because by his own testimony,
the train engineer had testified that before reaching the station of Calumpit the terrain
was downgrade and levelled only after passing the Calumpit bridge (TSN, July 28,
1976, p. 14 ); the tendency of the train, coming from a high point is to accelerate as
the gravity will necessarily make it so, especially when it is pulling seven coaches
loaded with goods and passengers.
Moreover, upon impact, the bus loaded with passengers was dragged and thrown
into a ditch several meters away; the train had stopped only after the engine portion
was about 190 meters away from the fallen bus; several passengers were injured
and at least 20 died; such facts conclusively indicate that the train was speeding,
because if it were moving at moderate speed, it would not run some 190 meters after

impact and throw the bus at quite a distance especially so when it is claimed that the
train's emergency brakes were applied.
Further, the train was an express train; its departure was 9:00 A.M. at San Fernando,
La Union and expected in Manila at 2:41 P.M.; the collision occurred at 1:30 P.M. or 4
1/2 hours after it left La Union; surely, the train could have not negotiated such a
distance in so short a time if it were not running at fast speed.
It may be argued that a railroad is not subject to the same restrictions to the speed of
its train as a motorists (Mckelvey v. Delaware L. and W.R. Co. 253 App. D.V. 109,
300 NYS 1263 ); but it does not follow that a train will be permitted to run fast under
all conditions at any rate of speed it may choose. It must regulate its speed with
proper regard for the safety of human life and property (Johnson v. Southern Pacific
Company (Cal. App. 288 p. 81), considering the surrounding circumstances
particularly the nature of the locality (Atchinson, T. and SFR Co. v. Nicks (Arts) 165 p.
2d 167).
Cabardo's route included the passage over the said intersection; he could have
noticed that it is a very busy intersection because the crossroad leads to the
Calumpit Poblacion as well as to the neighboring town of Hagonoy; there was a
parking lot by the side of the track whereat passengers board jeepneys for the
neighboring barrios and towns; stalls abound in the vicinity and bystanders
congregate nearby. A prudent train operator must, under the circumstances, slacken
his speed almost for the protection of motorists and pedestrians, not only when a
collision is inevitable but even if no hindrance is apparent on the way;
Moreover, there was an intermittent rain at the time of the collision (see stipulation of
facts and photographs); the condition of the weather was such that even if for this
reason alone, the train engineer should have foreseen that danger of collision lurked
because of poor visibility of slippery road; he should have taken extra precaution by
considerably slackening its speed. This he failed to do even if the nature of his job
required him to observe care exercised by a prudent man.
Contributory negligence may not be ascribed to the bus driver; it was evident that he
had taken the necessary precautions before passing over the railway track; if the bus
was hit, it was for reasons beyond the control of the bus driver because he had no
place to go; there were vehicles to his left which prevented him in swerving towards
that direction; his bus stalled in view of the obstructions in his front where a sand and
gravel truck stopped because of a jeep maneuvering into a garage up front. All the
wheels at the bus have already passed the rail portion of the track and only the rear
portion of the bus' body occupied or covered the railtrack. This was evident because
the part of the bus hit by the train was the rear since the bus fell on a nearby ditch.
Otherwise, if the bus was really hit in mid-body, the bus could have been halved into
two because of the force of the impact.
The stipulation of facts between the parties show that there was no crossing bar at
the railroad intersection at Calumpit, Bulacan at the time of collision (par. 8,
Stipulation of Facts); the plaintiff contended and the defendants did not deny, that
there were no signal lights, semaphores, flagman or switchman thereat; the absence

of such devices, the plaintiff argues constitute negligence on the part of the
Philippine National Railways.
A railroad is not required to have a gate (crossing bar) or a flagman, or to maintain
signals at every intersection; only at such places reasonably necessary; what is
considered reasonably necessary will depend on the amount of travel upon the road,
the frequency with which trains pass over it and the view which could be obtained of
trains as they approach the crossing, and other conditions (Pari v. Los Angeles, Ry.
Corporation (Cal A2d) 128 p2d 563; Swdyk v. Indiana Harbor Belt R. Co. 148 F. 2d
795, and others).
As has been amply discussed, the crossroad at the intersection at Calumpit is one
which is a busy thoroughfare; it leads to the Poblacion at Calumpit and other barrios
as well as the town of Hagonoy; the vicinity is utilized as a parking and waiting area
for passengers of jeepneys that ply between the barrios, clearly, the flow of vehicular
traffic thereat is huge. It can be said also that, since there is no other railtrack going
North except that one passing at Calumpit, trains pass over it frequently;
A portion of the intersection is being used as a parking area with stalls and other
obstructions present making it difficult, if not impossible, to see approaching trains
(see photographs).
The failure of the Philippine National Railways to put a cross bar, or signal light,
flagman or switchman, or semaphores is evidence of negligence and disregard of the
safety of the public, even if there is no law or ordinance requiring it, because public
safety demands that said devices or equipments be installed, in the light of aforesaid
jurisprudence. In the opinion of this Court the X sign or the presence of "STOP,
LOOK, LISTEN" warnings would not be sufficient protection of the motoring public as
well as the pedestrians, in the said intersection;
The parties likewise have stipulated that during the pre-war days, there was a
railroad crossing bar at the said intersection (Par-8, Stipulation of Facts). It appears
that it was a self imposed requirement which has been abandoned. In a case it was
held that where the use of a flagman was self imposed, the abandonment thereof
may constitute negligence. (Fleming v. Missouri and A. Ry. Co. 198 ARDC 290, 128
S.W. 2d 286 and others; cited in Sec. 1082 SCRWARTZ, Vol. 2). Similarly, the
abandonment by the PNR of the use of the crossing bar at the intersection at
Calumpit constitutes negligence, as its installation has become imperative, because
of the prevailing circumstances in the place.
A railroad company has been adjudged guilty of negligence and civilly liable for
damages when it failed to install semaphores, or where it does not see to it that its
flagman or switchman comply with their duties faithfully, to motorist injured by a
crossing train as long as he had crossed without negligence on his part (Lilius vs.
MRR, 39 Phil. 758). (Decision, pages 94-100, R A.; pp. 83-89,Rollo).
On the aspect of whether the Philippine National Railways enjoys immunity from suit, respondent
court initially noted that an exculpation of this nature that was raised for the first time on appeal may
no longer be entertained in view of the proscription under Section 2, Rule 9 of the Revised Rules of

Court, apart from the fact that the lawyer of petitioner agreed to stipulate inter alia that the railroad
company had capacity to sue and be sued. This being so, respondent court continued, PNR was
perforce estopped from disavowing the prejudicial repercussion of an admission in judicio. Even as
the laws governing the creation and rehabilitation of the PNR were entirely mute on its power to sue
and be sued, respondent court nonetheless opined that such prerogative was implied from the
general power to transact business pertinent or indispensable to the attainment of the goals of the
railroad company under Section 4 of Republic Act No. 4156 as amended by Republic Act No. 6366:
Sec. 4 General Powers The Philippine National Railways shall have the following
general powers:
(a) To do all such other things and to transact all such business directly or indirectly
necessary, incidental or conducive to the attainment of the purpose of the
corporation; and
(b) Generally, to exercise all powers of a railroad corporation under the Corporation
law.
in conjunction with Section 2(b) of Presidential Decree No. 741:
(b) To own or operate railroad transways, bus lines, trucklines, subways, and other
kinds of land transportation, vessels, and pipelines, for the purpose of transporting
for consideration, passengers, mail and property between any points in the
Philippines;
Thus, respondent court utilized the doctrine of implied powers announced in National Airports
Corporation vs. Teodoro, Sr. and Philippine Airlines, Inc. (91 Phil. 203 [1952]), to the effect that the
power to sue and be sued is implicit from the faculty to transact private business. At any rate,
respondent court characterized the railroad company as a private entity created not to discharge a
governmental function but, among other things, to operate a transport service which is essentially a
business concern, and thus barred from invoking immunity from suit.
In brushing aside petitioners' asseveration that the bus driver outraced the train at the crossing,
respondent court observed that the bus was hit by the train at its rear portion then protruding over
the tracks as the bus could not move because another truck at its front was equally immobile due to
a jeep maneuvering into a nearby parking area. Under these tight conditions, respondent court
blamed the train engineer who admitted to have seen the maneuvering jeep at a distance (TSN, July
28, 1976, page 18) and had the last clear chance to apply the brakes, knowing fully well that the
vehicles following the jeep could not move away from the path of the train. Apart from these
considerations, it was perceived below that the train was running fast during the entire trip since the
train stopped 190 meters from the point of impact and arrived at Calumpit, Bulacan earlier than its
expected time of arrival thereat.
Moreover, respondent court agreed with the conclusion reached by the trial court that the absence of
a crossing bar, signal light, flagman or switchman to warn the public of an approaching train
constitutes negligence per the pronouncement of this Court in Lilius vs. Manila Railroad
Company (59 Phil 758 [1934]).

Concerning the exercise of diligence normally expected of an employer in the selection and
supervision of its employees, respondent court expressed the view that PNR was remiss on this
score since it allowed Honorio Cabardo, who finished only primary education and became an
engineer only through sheer experience, to operate the locomotive, not to mention the fact that such
plea in avoidance was not asserted in the answer and was thus belatedly raised on appeal.
Petitioner moved to reconsider, but respondent court was far from persuaded. Hence, the petition
before Us which, in essence, incorporates similar disputations anent PNR's immunity from suit and
the attempt to toss the burden of negligence from the train engineer to the bus driver of herein
private respondent.
The bone of contention for exculpation is premised on the familiar maxim in political law that the
State, by virtue of its sovereign nature and as reaffirmed by constitutional precept, is insulated from
suits without its consent (Article 16, Section 3, 1987 Constitution). However, equally conceded is the
legal proposition that the acquiescence of the State to be sued can be manifested expressly through
a general or special law, or indicated implicitly, as when the State commences litigation for the
purpose of asserting an affirmative relief or when it enters into a contract (Cruz, Philippine Political
Law, 1991 edition, page 33; Sinco, Philippine Political Law, Eleventh Edition, 1962, page 34). When
the State participates in a covenant, it is deemed to have descended from its superior position to the
level of an ordinary citizen and thus virtually opens itself to judicial process. Of course, We realize
that this Court qualified this form of consent only to those contracts concluded in a proprietary
capacity and therefore immunity will attach for those contracts entered into in a governmental
capacity, following the ruling in the 1985 case ofUnited States of America vs. Ruiz (136 SCRA 487
[1985]; cited by Cruz, supra at pages 36-37). But the restrictive interpretation laid down therein is of
no practical worth nor can it give rise to herein petitioner PNR's exoneration since the case
of Malong vs. Philippine National Railways (138 SCRA 63, [1985]); 3 Padilla, 1987 Constitution with
Comments and Cases, 1991 edition, page 644), decided three months after Ruiz was promulgated,
was categorical enough to specify that the Philippine National Railways "is not performing any
governmental function" (supra, at page 68).
In Malong, Justice Aquino, speaking for the Court en banc, declared:
The Manila Railroad Company, the PNR's predecessor, as a common carrier, was
not immune from suit under Act No. 1510, its charter.
The PNR Charter, Republic Act No. 4156, as amended by Republic Act No. 6366 and
Presidential Decree No. 741, provides that the PNR is a government instrumentality
under government ownership during its 50-year term, 1964 to 2014. It is under the
Office of the President of the Philippines. Republic Act No. 6366 provides:
Sec. 1-a. Statement of policy. The Philippine National Railways,
being a factor for socio-economic development and growth, shall be a
part of the infrastructure program of the government and as such
shall remain in and under government ownership during its corporate
existence. The Philippine National Railways must be administered
with the view of serving the interests of the public by providing them
the maximum of service and, while aiming at its greatest utility by the
public, the economy of operation must be ensured so that service can
be rendered at the minimum passenger and freight prices possible.

The charter also provides:

Sec. 4. General powers. The Philippine National Railways shall
have the following general powers:
(a) To do all such other things and to transact all such business
directly or indirectly necessary, incidental or conducive to the
attainment of the purpose of the corporation; and
(b) Generally, to exercise all powers of a railroad corporation under
the Corporation Law. (This refers to Sections 81 to 102 of the
Corporation Law on railroad corporations, not reproduced in the
Corporation Code.)
Section 36 of the Corporation Code provides that every corporation has the power to sue and be
sued in its corporate name. Section 13(2) of the Corporation Law provides that every corporation
has the power to sue and be sued in any court.
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 (Justice Holmes
in Kawananakoa vs. Polyblank, 205 U.S. 353, 51 L. 3d 834).
The public service would be hindered, and public safety endangered, if the supreme
authority could be subjected to suit at the instance of every citizen and,
consequently, controlled in the use and disposition of the means required for the
proper administration of the Government (The Siren vs. U.S., 7 Wall. 152, 19 L. ed.
129). (at pp.
65-66).
To the pivotal issue of whether the State acted in a sovereign capacity when it organized the PNR for
the purpose of engaging in transportation, Malong continued to hold that:
. . . in the instant case the State divested itself of its sovereign capacity when it
organized the PNR which is no different from its predecessor, the Manila Railroad
Company. The PNR did not become immune from suit. It did not remove itself from
the operation of Articles 1732 to 1766 of the Civil Code on common carriers.
The correct rule is that "not all government entities, whether corporate or
noncorporate, are immune from suits. Immunity from suit is determined by the
character of the objects for which the entity was organized." (Nat. Airports Corp. vs.
Teodoro and Phil. Airlines, Inc., 91 Phil. 203, 206; Santos vs. Santos, 92 Phil. 281,
285; Harry Lyons, Inc. vs. USA, 104 Phil. 593).
Suits against State agencies with respect to matters in which they have assumed to
act in a private or nongovernmental capacity are not suits against the State (81
C.J.S. 1319).

Suits against State agencies with relation to matters in which they

have assumed to act in a private or nongovernmental 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 the 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 implicating consents to suits against the corporation. (81
C.J.S. 1319).
The foregoing rule was applied to State Dock Commissions carrying on business
relating to pilots, terminals and transportation (Standard Oil Co. of New Jersey vs.
U.S., 27 Fed. 2nd 370) and to State Highways Commissions created to build public
roads and given appropriations in advance to discharge obligations incurred in their
behalf (Arkansas State Highway Commission vs. Dodge, 26 SW 2nd 879 and State
Highway Commission of Missouri vs. Bates, 296 SW 418, cited in National Airports
case).
The point is that when the government enters into a commercial business it
abandons its sovereign capacity and is to be treated like any other private
corporation (Bank of the U.S. vs. Planters' Bank, 9 Wheat. 904, 6 L ed. 244, cited in
Manila Hotel Employees Association vs. Manila Hotel Company, et al., 73 Phil. 374,
388). The Manila Hotel case also relied on the following rulings:
By engaging in a particular business through the instrumentality of a
corporation, the government divests itself pro hac vice of its
sovereign character, so as to render the corporation subject to the
rules of law governing private corporations.
When the State acts in its proprietary capacity, it is amenable to all
the rules of law which bind private individuals.
There is not one law for the sovereign and another for the subject,
but when the sovereign engages in business and the conduct of
business enterprises, and contracts with individuals, whenever the
contract in any form comes before the courts, the rights and
obligation of the contracting parties must be adjusted upon the same
principles as if both contracting parties were private persons. Both
stand upon equality before the law, and the sovereign is merged in
the dealer, contractor and suitor (People vs. Stephens, 71 N.Y. 549).
It should be noted that in Philippine National Railways vs. Union de Maquinistas, etc.,
L-31948, July 25, 1978, 84 SCRA 223, it was held that the PNR funds could be
garnished at the instance of a labor union.

It would be unjust if the heirs of the victim of an alleged negligence of the PNR
employees could not sue the PNR for damages. Like any private common carrier, the
PNR is subject to the obligations of persons engaged in that private enterprise. It is
not performing any governmental function.
Thus, the National Development Company is not immune from suit. It does not
exercise sovereign functions. It is an agency for the performance of purely corporate,
proprietary or business functions (National Development Company vs. Tobias, 117
Phil. 703, 705 and cases cited therein; National Development Company vs. NDC
Employees and Workers' Union, L-32387, August 19, 1975, 66 SCRA 18l, 184).
Other government agencies not enjoying immunity from suit are the Social Security
System (Social Security System vs. Court of Appeals,
L-41299, February 21, 1983, 120 SCRA 707) and the Philippine National Bank
(Republic vs. Philippine National Bank, 121 Phil. 26). (at pp. 66-68).
We come now to the question of whether respondent court properly agreed with the trial court in
imputing negligence on the part of the train engineer and his employer.
It was demonstrated beyond cavil in the course of the pre-trial hearings held for the purpose of
stipulating on crucial facts that the bus was hit on the rear portion thereof after it crossed the railroad
tracks. Then, too the train engineer was frank enough to say that he saw the jeep maneuvering into
a parking area near the crossing which caused the obstruction in the flow of traffic such that the
gravel and sand truck including the bus of herein private respondent were not able to move forward
or to take the opposite lane due to other vehicles. The unmindful demeanor of the train engineer in
surging forward despite the obstruction before him is definitely anathema to the conduct of a prudent
person placed under the same set of perceived danger. Indeed:
When it is apparent, or when in the exercise of reasonable diligence commensurate
with the surroundings it should be apparent, to the company that a person on its
track or to get on its track is unaware of his danger or cannot get out of the way, it
becomes the duty of the company to use such precautions, by warnings, applying
brakes, or otherwise, as may be reasonably necessary to avoid injury to him.
(65 Am. Jur., Second Edition. p. 649).
Likewise, it was established that the weather condition was characterized with intermittent rain which
should have prompted the train engineer to exercise extra precaution. Also, the train reached
Calumpit, Bulacan ahead of scheduled arrival thereat, indicating that the train was travelling more
than the normal speed of 30 kilometers per hour. If the train were really running at 30 kilometers per
hour when it was approaching the intersection, it would probably not have travelled 190 meters more
from the place of the accident (page 10, Brief for Petitioners). All of these factors, taken collectively,
engendered the concrete and yes, correct conclusion that the train engineer was negligent who,
moreover, despite the last opportunity within his hands vis-a-vis the weather condition including the
presence of people near the intersection, could have obviated the impending collision had he
slackened his speed and applied the brakes (Picart vs. Smith, 37 Phil. 809 [1918]).Withal, these
considerations were addressed to the trial judge who, unlike appellate magistrates, was in a better
position to assign weight on factual questions. Having resolved the question of negligence between
the train engineer and the bus driver after collating the mass of evidence, the conclusion reached
thereafter thus commands great respect especially so in this case where respondent court gave its

nod of approval to the findings of the court of origin (Co vs. Court of Appeals, 193 SCRA 198; 206
[1991]); Amigo vs. Teves, 50 O.G. 5799; Regalado, Remedial Law Compendium, Fifth edition, page
353).
What exacerbates against petitioners' contention is the authority in this jurisdiction to the effect that
the failure of a railroad company to install a semaphore or at the very least, to post a flagman or
watchman to warn the public of the passing train amounts to negligence (Lilius vs. Manila Railroad
Company, 59 Phil. 758 [1934]).
WHEREFORE, the petition is hereby DISMISSED and the decision of respondent court AFFIRMED.
SO ORDERED.
Gutierrez, Jr., Davide, Jr. and Romero, JJ., concur.
Bidin, J., took no part.

PNR v. IAC
GR No. 70547; January 22, 1993
FACTS:
The passenger express train of Philippine National Railways (PNR) and a passenger
bus of Baliwag Transit Inc. collided at the railroad crossing at Barrio Balungao,
Calumpit Bulacan at 1:30 in the afternoon of August 10, 1947 causing damage to
the bus and its passengers, 18 of whom died and 53 suffered physical injuries.
Plaintiff alleges that the collision was due to the negligence and imprudence of PNR
and its engineer Honorio Cirbado in operating in a busy intersection without any
bars, semaphores, signal lights, flagman or switchman.
ISSUE:
1) Who between the petitioner and respondent was negligent?
2) Is PNR immune from suit?
HELD:
There is no admissible evidence to show that the bus driver did not take necessary
precaution in traversing the track. Contributory negligence may not be ascribed to
the bus driver for he had taken necessary precautions before passing over the
railway track. The failure of PNR, on the other hand, to put a cross bar, or signal
light, flagman, or switchman or semaphores is evidence of negligence on their part.
By the doctrine of implied powers, the power to sue and be sued is implicit from the
faculty to transact private business. PNR is not exercising governmental powers, as
such it is not immune from suit.

Republic of the Philippines

Supreme Court
Manila

THIRD DIVISION
AIR TRANSPORTATION
OFFICE,
Petitioner,

- versus -

G.R. No. 159402

Present:
BRION, Acting Chairperson,**
BERSAMIN,
ABAD,***
VILLARAMA, JR., and
SERENO, JJ.

SPOUSES DAVID* and

Promulgated:
ELISEA RAMOS,
February 23, 2011
Respondents.
x-----------------------------------------------------------------------------------------x
R E S O LUTIO N
BERSAMIN, J.:
The States 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 States
exclusive prerogative.
Under challenge is the decision promulgated on May 14, 2003,[1] by which
the Court of Appeals (CA) affirmed with modification the decision rendered
on February 21, 2001 by the Regional Trial Court, Branch 61 (RTC),
in Baguio City in favor of the respondents.[2]
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 Baguio City land records with an area of 985 square meters, more or less, was
being used as part of the runway and running shoulder of the Loakan Airport being
operated by petitioner Air Transportation Office (ATO). On August 11, 1995, the
respondents agreed after negotiations to convey the affected portion by deed of sale
to the ATO in consideration of the amount ofP778,150.00. 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 entitledSpouses 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 Loakan Airport. They asserted that the RTC had no jurisdiction to
entertain the action without the States consent considering that the deed of sale had
been entered into in the performance of governmental functions.
On November 10, 1998, the RTC denied the ATOs motion for a preliminary
hearing of the affirmative defense.
After the RTC likewise denied the ATOs motion for reconsideration
on December 10, 1998, the ATO commenced a special civil action for certiorari in
the CA to assail the RTCs orders. The CA dismissed the petition for certiorari,
however, upon its finding that the assailed orders were not tainted with grave abuse
of discretion.[3]
Subsequently, February 21, 2001, the RTC rendered its decision on the merits,
[4]
disposing:
WHEREFORE, the judgment is rendered ORDERING the defendant Air
Transportation Office to pay the plaintiffs DAVID and ELISEA RAMOS
the following: (1) The amount ofP778,150.00 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 attorneys fees plusP15,000.00
representing the 10, more or less, court appearances of plaintiffs counsel;
(4) The costs of this suit.
SO ORDERED.

In due course, the ATO appealed to the CA, which affirmed the RTCs decision
on May 14, 2003,[5] viz:
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 attorneys 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 States 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 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]

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 Philippines, but that offered in Providence Washington Insurance Co. v.
Republic of the Philippines[9] is the most acceptable explanation, according to
Father Bernas, a recognized commentator on Constitutional Law,[10] to wit:
[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 Courts
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:

xxx
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.]
xxx
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 CAAs
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:
xxx
(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.
xxx
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:
xxx
Not all government entities, whether corporate or noncorporate, 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.

Italics supplied.]

206-207;

This doctrine has been reaffirmed in the recent case

of Malong v. Philippine National Railways [G.R. No. L49930, 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 Loakan Airport, an activity that was not the exclusive prerogative of the
State in its sovereign capacity. Hence, the ATO had no claim to the States
immunity from suit. We uphold the CAs aforequoted holding.
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 courts 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 States
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.
xxx

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 ATOs 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 LOURDES P. A. SERENO

Associate Justice
AT T E S TAT 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 Courts
Division.
ARTURO D. BRION
Associate Justice
Acting Chairperson
C E R T I F I C AT I O N
Pursuant to Section 13, Article VIII of the Constitution, and the Division
Chairpersons 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 Courts Division.

RENATO C. CORONA
Chief Justice

G.R. No. 159402 : February 23, 2011

AIR TRANSPORTATION OFFICE,Petitioner, v. SPOUSES DAVID*ELISEA RAMOS,
Respondents.
BERSAMIN, J.:
FACTS:
Respondent Spouses discovered that a portion of their registered land in Baguio City was
being used as part of the runway and running shoulder of the Loakan Airport being operated
by petitioner Air Transportation Office (ATO). The respondents agreed after negotiations to
convey the affected portion by deed of sale to the ATO in consideration of the amount of
P778,150.00. However, the ATO failed to pay despite repeated verbal and written demands.
Thus, the respondents filed an action for collection against the ATO and some of its officials
in the RTC. 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 Loakan Airport.
They asserted that the RTC had no jurisdiction to entertain the action without the States
consent considering that the deed of sale had been entered into in the performance of
governmental functions.
The RTC held in favor of the Spouses, ordering the ATO to pay the plaintiffs Spouses 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
attorneys fees plus P15,000.00 representing the 10, more or less, court appearances of
plaintiffs counsel; (4) The costs of this suit.
On appeal, the CA affirmed the RTCs decision withmodification deleting the awarded cost,
and reducing the moral and exemplary damage to P30,000.00 each, and attorneys fees is
lowered to P10,000.00.
Hence, this appeal by petition for review on certiorari.
ISSUE: Whether the ATO could be sued without the State's consent.
HELD: The decision of the Court of Appeals is sustained.

POLITICAL LAW state immunity

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. 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; 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. National Airports Corporation v. Teodoro, Sr. and Phil.
Airlines Inc., 91 Phil. 203 (1952)
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.
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, 91 Phil. 203 (1952)
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 Loakan Airport, an activity that was not
the exclusive prerogative of the State in its sovereign capacity. Hence, the ATO had no claim
to the States immunity from suit. We uphold the CAs aforequoted holding.
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.Republic v.
Sandiganbayan, G.R. No. 90478, Nov. 2, 1991.
DENIED.