VETERANS MANPOWER AND PROTECTIVE
SERVICES, INC. VS. COURT OF APPEALS G.R. NO.
91359
SEPTEMBER 28, 1992
Facts:
Veterans Manpower and Protective Services, Inc. (VMPSI)
alleged the constitutionality of the following provisions of R.A.
5487, otherwise known as the “Private Security Agency Law”
as amended:
SEC. 4. Who may Organize a Security or Watchman Agency.
- Any Filipino citizen or a corporation, partnership, or
association, with a minimum capital of five thousand pesos, one
hundred per cent of which is owned and controlled by Filipino
citizens may organize a security or watchman agency:
Provided, That no person shall organize or have an interest in,
more than one such agency except those which are already
existing at the promulgation of this Decree: x x x.” (As
amended by P.D. Nos. 11 and 100.)
SEC. 17. Rules and Regulations by Chief, Philippine
Constabulary. -The Chief of the Philippine Constabulary, in
consultation with the Philippine Association of Detective and
Protective Agency Operators, Inc. and subject to the provision
of existing laws, is hereby authorized to issue the rules and
regulations necessary to carry out the purpose of this Act.”
VMPSI alleged that the above mentioned provisions violated
the provisions of the 1987 Constitution against monopolies,
unfair competition and combinations in restraint of trade, and
tend to favour and instutionalize the Philippine Association of
Detective and Protective Agency Operators, Inc. (PADPAO)
which is monopolistic because it has an interest in more than
one agency.
VMPSI also questioned the validity of par. 3, subparagraph (g)
of the Modifying Regulations on the Issuance of License to
Operate and Private Security Licenses and Specifying
Regulations for the Operation of PADPAO which required
that, “all private security agencies/company security forces
must register as members of any PADPAO Chapter organized
within the Region where their main offices are located...” such
membership requirement in PADPAO is compulsory in
nature, it allegedly violated legal and constitutional provisions
against monopolies, unfair competition and combinations in
the restraint of trade.
PADPAO and the Chief of Philippine Constabulary (PC Chief)
executed a Memorandum of Agreement which fixed the
minimum mothly contract rate per guard for 8 hours per day
at P2,255.00 within Metro Manila, and P2,215.00 outside
Metro Manila.
Odin Security Agency (Odin) filed a complaint with PADPAO
accusing VMPSI of cuth-throat competition by offering a
lower contract rate to MWSS, as prescribed in the MoA.
PADPAO found VMPSI guilty of such accusation. Hence, the
PADPAO Committee on Discipline recommended the
expulsion of VMPSI from PADPAO and the cancellation of
VMPSI’s license.
VMPSI made a request letter to the PC Chief to set aside or
disregard the findings of PADPAO and consider VMPSI’s
application for renewal of its license, even without a certificate
of membership from PADPAO.
Since, the PC Chief did not reply, VMPSI to file a Civil Case in
RTC Makati against the PC Chief and Philippine Constabulary
Supervisory Unit for Security and Investigation Agencies (PC-
SUSIA).
Issue:
Whether or not VMPSI’s complaint against the PC Chief and
PC-SUSIA is a suit against the State without its consent.
Held:
Yes. The suit VMPSI filed is a suit against the State without
its consent.
The PC Chief and PC-SUSIA invoked Article XVI, SEC. 3 of
the 1987 Constitution, that being instrumentalities of the
national government exercising a primarily governmental
function of regulating the organization and operation of
private detective, watchmen, or security guard agencies, said
official (the PC Chief) and agency (PC-SUSIA) may not be sued
without the Government’s consent, especially in this case
because VMPSI’s complaint seeks not only to compel the
public respondents to act in a certain way, but worse, because
VMPSI seeks actual and compensatory damages in the sum of
P1,000,000.00, exemplary damages in the same amount, and
P200,000.00 as attorney’s fees from said public respondents.
Even if its action prospers, the payment of its monetary claims
may not be enforced because the State did not consent to
appropriate the necessary funds for that purpose.
While the doctrine of state immunity appears to prohibit only
suits against the state without its consent, it is also applicable
to complaints filed against officials of the state for acts
allegedly performed by them in the discharge of their duties.
A public official may sometimes be held liable in his personal
or private capacity if he acts in bad faith, or beyond the scope
of his authority or jurisdiction, however, since the acts for
which the PC Chief and PC-SUSIA are being called to account
in this case, were performed by them as part of their official
duties, without malice, gross negligence, or bad faith, no
recovery may be had against them in their private capacities.
The correct test for the application of state immunity is not the
conclusion of a contract (MoA) by the State but the legal
nature of the act.
The restrictive application of State immunity is proper only
when the proceedings arise out of commercial transactions of
the foreign sovereign, its commercial activities or economic
affairs. Stated differently, a State may be said to have
descended to the level of an individual and can thus be deemed
to have tacitly given its consent to be sued only when it enters
into a business contract. It does not apply where the contract
relates to the exercise of its sovereign functions.
In the instant case, the Memorandum of Agreement entered
into by the PC Chief and PADPAO was intended to
professionalize the industry and to standardize the salaries of
security guards as well as the current rates of security services,
clearly, a governmental function. The execution of the said
agreement is incidental to the purpose of R.A.5487, as
amended, which is to regulate the organization and operation
of private detective, watchmen or security guard agencies.

E.MERRITT V. GOVERNMENT OF PHILIPPINE
ISLANDS
Facts: A General hospital ambulance struck E. Merritt
while riding his motorcycle. Merritt suffered life threatening
injuries on the head and legs. His injuries caused him to be in
hospital for 2 months and 21 days and a total of 6 months to
recover. He was unable to return to work for the rest of his
life as well.
An appeal by both parties was filed before the supreme court.
Merritt insist that the final court erred:
1.   In limiting the general damages the plaintiff suffered
to 5,000 instead of 25,000.
2.   In limiting the time when plaintiff was entirely
disabled to 2 months and 21 days instead of 6
months and fixing the damage in sum of 2,666
instead of 6,000.
The solicitor general in behalf of the defendant urges that
final court erred:
1.   About the collision which was due solely to the
negligence of the chauffer of the ambulance.
2.   In holding that the government is liable for the
damages.
3.   In rendering judgment against defendant a sum of
14, 741
Act no. 2457 was enacted by Philippine Legislature
by the authority of the U.S as an act authorizing E. Merritt to
bring suit against the Gov. of Philippines. On the accident
between his motorcycle and the ambulance of a General
Hospital, whereas it is not known who is responsible for the
accident nor is it possible to determine the amount of
damages, if any, to which the claimant is entitled.
Issue:
Whether or not the government is legally liable for the
damages resulting from the collision caused by the
negligence committed by an agent or employee of the
government.
Held:
No, the Supreme Court is not the one to determine
whether the government intend itself legally liable for the
amount of damages because of the negligence of one of the
agents or employees. It shall be determined by legislative
enactment.
In determining the purpose and scope of Act 2457,
the supreme court of the Philippines seeks the aid of the U.S
decisions where it is modeled. It is a rule in the U.S that the
state is not liable for the torts committed by its officers or
agents whom it employs except when expressly made so by
legislative enactment.
In addition, it is also mentioned that the state by
consenting to be sued simply waives its immunity, it does not
thereby concede its liability to the plaintiff.
To justify the decision, the supreme court also
quoted decisions of the supreme court of Spain wherein it is
said that “the state is only liable for the acts of its agents,
officers and employees when they act as special agents within
the meaning of paragraph 5 of article 1903.
However, the chauffer of the ambulance of the
General Hospital was not such agent.
AMIGABLE VS. CUENCA G.R. NO. L-26400
FEBRUARY 29, 1972
FACTS:
(1) Victoria Amigable is the legitimate owner of Lot No. 639
of the Banilad Estate in Cebu City. However, without prior
expropriation or negotiated sale, the government used a
portion of said lot, with an area of 6,167 square meters, for the
construction of the Mango and Gorordo Avenues. 

(2) Amigable's counsel wrote the President of the Philippines,
requesting payment of the portion of her lot which had been
appropriated and used by the government. 

(3) Amigable also filed in the court a quo a complaint against
the Republic of the Philippines for the recovery of ownership
and possession of the 6,167 square meters of land traversed by
the Mango and Gorordo Avenues. 

(4) Defendants claim denial over the allegations and that the
action being a suit against the Government, the claim for
moral damages, attorney's fees and costs had no valid basis
since as to these items the Government had not given its
consent to be sued. 

(5) Trial court dismissed the case and plaintiff filed an appeal
to the Court of Appeals. The latter subsequently certified the
case to the Supreme Court. 

ISSUE:
Whether or not the appellant may properly sue the
government under the facts of the case.
RULING:
When the government takes away property from a private
landowner for public use without going through the legal
process of expropriation or negotiated sale, the aggrieved
party may properly maintain a suit against the government
without thereby violating the doctrine of governmental
immunity from suit without its consent.
Considering that no annotation in favor of the government
appears at the back of her certificate of title and that she has
not executed any deed of conveyance of any portion of her lot
to the government, the appellant remains the owner of the
whole lot.
However, since restoration of possession of said portion by the
government is neither convenient nor feasible at this time
because it is now and has been used for road purposes, the only
relief available is for the government to make due
compensation which it could and should have done years ago.
The plaintiff is entitled thereto in the form of legal interest on
the price of the land from the time it was taken up to the time
that payment is made by the government.
REPUBLIC V. FELICIANO
FACTS:
Petitioner seeks the review of the decision of the
Intermediate Appellate Court dated April 30, 1985, which
dismissed the complaint of respondent Pablo Feliciano for
recovery of ownership and possession of a parcel of land
on the ground of non-suability of the State. On January
22, 1970, Feliciano filed a complaint with then Court of
First Instance of Camarines Sur against the RP, represented
by the Land Authority, for the recovery of ownership and
possession of a parcel of land, consisting of four (4) lots
with an aggregate area of 1,364.4177 hectares, situated in
the Barrio of Salvacion, Municipality of Tinambac, Camarines
Sur. Feliciano alleged that he bought the property in
question from Victor Gardiola by virtue of a Contract of
Sale dated May 31, 1952, followed by a Deed of Absolute
Sale on October 30, 1954; that Gardiola had acquired the
property by purchase from the heirs of Francisco Abrazado
whose title to the Administration (NARRA), a tract of
land situated in the Municipalities of Tinambac and Siruma,
Camarines Sur, after which the NARRA and its successor
agency, the Land Authority, started sub-dividing and
distributing the land to the settlers; that the property in
question, while located within the reservation established
under Proclamation No. 90, was the private property of
Feliciano and should therefore be excluded therefrom.
Feliciano prayed that he be declared the rightful and true
owner of the property in question consisting of 1,364.4177
hectares; that his title of ownership based on informacion
posesoria of his predecessor-ininterest be declared legally
valid and subsisting and that defendant be ordered to cancel
and nullify all awards to the settlers.
ISSUE: Whether or not the State can be sued for recovery
and possession of a parcel of land
HELD:
said property was evidenced by an informacion posesoria
that upon his purchase of the property, he took actual
possession of the same, introduced various improvements
therein and caused it to be surveyed in July 1952, which
survey was approved by the Director of Lands on October
24,1954. On November 1, 1954, President Ramon
Magsaysay issued Proclamation No. 90 reserving for
settlement purposes, under the administration of the
National Resettlement and Rehabilitation A suit against the
State, under settled jurisprudence is not permitted, except
upon a showing that the State has consented to be sued,
either expressly or by implication through the use of
statutory language too plain to be misinterpreted. It may
be invoked by the courts sua sponte at any stage of the
proceedings. Waiver of immunity, being a derogation of
sovereignty, will not be inferred lightly, but must be
construed instrictissimi juris (of strictest right). Moreover,
the Proclamation is not a legislative act. The consent of
the State to be sued must emanate from statutory
authority. Waiver of State immunity can only be made by
an act of the legislative body. Also, it is noteworthy, that
as pointed out by the Solicitor General, that the
informacion posesoria registered in the Office of the
Register of Deed of Camarines Sur on September 23, 1952
was a "reconstituted" possessory information; it was
"reconstituted from the duplicate presented to this office
(Register of Deeds) by Dr. Pablo Feliciano," without the
submission of proof that the alleged duplicate was authentic
or that the original thereof was lost. Reconstitution can be
validly made only in case of loss of the original. These
circumstances raise grave doubts as to the authenticity and
validity of the "informacion posesoria" relied upon by
respondent Feliciano. Adding to the dubiousness of said
document is the fact that "possessory information calls for
an area of only 100 hectares," whereas the land claimed
by respondent Feliciano comprises 1,364.4177 hectares, later
reduced to 7019064 hectares.
RAYO VS. CFI OF BULACAN, G.R. NO. L-55273-83
Topic: Doctrine of State Immunity

Case Doctrine: GOCCs have a personality of their own and
distinct from the
government
Facts:
Respondent corporation, National Power Corporation, acting
through its superintendent, Benjamin Chavez simultaneously
opened all three flood gates of the Angat Dam during the
typhoon “Kading” leading to several towns of Bulacan being
inundated and in Norzagaray, hundreds of residents died and
properties worth millions were destroyed. Petitioners, who
were among the victims, filed 11 complaints, with similar cause
of action, for damages against respondent corporation and
Benjamin Chavez. Respondent corporation invoked its defense
of “performing a purely governmental function in the
operation of Angat Dam, thus they cannot be sued without the
express consent of the State”. Petitioners contended that
respondent corporation was performing its proprietary
functions and stated under Section 3 (d) of R.A. No. 6395, it
can be sue and be sued in any court.
The Court of First
Instance of Bulacan dismissed all the petitioners’ complaints
and even their motion for reconsideration. Hence, the
petitioners filed for review on certiorari.
The decision in this
case is without the memorandum of the Solicitor General.
Issue:
(1) Whether or not corporation respondent performed a
governmental function in the management and operation of
the Angat Dam
(2) Whether or not the corporation respondent’s power to sue
and be sued under its organic acts, R.A. No. 6395, includes the
power to be sued for tort
Held:
It is unnecessary to determine if NPC performed its
governmental function, it is sufficient that the government
organized a private corporation and has allowed it to sue and
be sued under its charter. Further, a Government Owned and
Controlled Corporation has a personality of its own, distinct
from the government. Finally, the provision allowing the
private corporation to sue and be sued is without qualification
on the cause of action and
it can include a tort claim.
UNITED STATES OF AMERICA VS. RUIZ
Facts:
This is a petition to review, set aside certain orders and
restrain perpetually the proceedings done by Hon. Ruiz for
lack of jurisdiction on the part of the trial court.
The United States of America had a naval base in Subic,
Zambales. The base was one of those provided in the Military
Bases Agreement between the Philippines and the United
States. Sometime in May, 1972, the United States invited the
submission of bids for a couple of repair projects. Eligio de
Guzman land Co., Inc. responded to the invitation and
submitted bids. Subsequent thereto, the company received
from the US two telegrams requesting it to confirm its price
proposals and for the name of its bonding company. The
company construed this as an acceptance of its offer so they
complied with the requests. The company received a letter
which was signed by William I. Collins of Department of the
Navy of the United States, also one of the petitioners herein
informing that the company did not qualify to receive an award
for the projects because of its previous unsatisfactory
performance rating in repairs, and that the projects were
awarded to third parties. For this reason, a suit for specific
performance was filed by him against the US.
The traditional role of the state immunity exempts a state from
being sued in the courts of another state without its consent or
waiver. This rule is necessary consequence of the principle of
independence and equality of states. However, the rules of
international law are not petrified; they are continually and
evolving and because the activities of states have multiplied. It
has been necessary to distinguish them between sovereign and
governmental acts (jure imperii) and private, commercial and
proprietary acts (juregestionis). The result is that State
immunity now extends only to acts jure imperil. The
restrictive application of State immunity is now the rule in the
United States, the United Kingdom and other states in western
Europe.
Issue:
Whether or not the US naval base in bidding for said contracts
exercise governmental functions to be able to invoke state
immunity.
Held:
Yes. The Supreme Court held that the contract relates to the
exercise of its sovereign functions. In this case the projects are
an integral part of the naval base which is devoted to the
defense of both the United States and the Philippines,
indisputably a function of the government of the highest order,
they are not utilized for nor dedicated to commercial or
business purposes.
The restrictive application of state immunity is proper only
when the proceedings arise out of commercial transactions of
the foreign sovereign. Its commercial activities of economic
affairs. A state may be descended to the level of an individual
and can thus be deemed to have tacitly given its consent to be
sued. Only when it enters into business contracts.
BUREAU OF PRINTING v BUREAU OF PRINTING
EMPLOYEES ASSOCIATION
FACTS:
Respondents filed a complaint by an acting prosecutor of the
Industrial Court against petitioner, Bureau of Printing. The
complaint alleged that Serafin Salvador and Mariano Ledesma
have been engaging in unfair labor practices. Petitioners
denied the charges of unfair labor practice attributed to them.
Before the case could be heard, petitioners filed an Omnibus
Motion asking for a preliminary hearing on the question of
jurisdiction raised by them in their answer and for suspension
of the trial of the case. The motion was granted, but after
hearing, the trial judge of the Industrial Court sustained that
the functions of Bureau of Printing are exclusively proprietary
in nature and, consequently, denied the prayer for dismissal.
Reconsideration of this order having been denied by the court
in banc, the petitioners brought the case to this Court through
this petition for certiorari and prohibition.
ISSUE:
Whether or not Bureau of Printing has no juridical personality
to be sued
RULING:
YES. According to the 1987 Constitution and jurisprudence,
the rule is settled that the Government cannot be sued without
its consent, much less over its objection. In the present case,
the Bureau of Printing is an office of the Government created
by the Administrative Code of 1916. As such instrumentality
of the Government, it operates under the direct supervision of
the Executive Secretary, Office of the President and is charged
with the execution of all printing and binding, including work
incidental to those processes, required by the National
Government and such other work of the same character as said
Bureau may, by law or by order of the Executive Secretary, be
authorized to undertake. It has no corporate existence and its
appropriations are provided for in the General Appropriations
Act. Indeed as an office of the Government, without any
corporate or juridical personality, the Bureau of Printing
cannot be sued. Any suit, action, or proceeding against it, if it
were to produce any effect, would actually be a suit, action or
proceeding against the Government itself.

MOBIL PHILIPPINES EXPLORATION, INC.,
PLAINTIFF-APPELLANT, VS. CUSTOMS ARRASTRE
SERVICE AND BUREAU OF CUSTOMS
DEFENDANTS-APPELLEE
Private respondent is a naturalized Filipino citizen and at the
Topic: State Immunity
Doctrine: Performance by Non-Corporate Government
Entity of Proprietary Functions Does not Make it Suable
FACTS:
Consigned to Mobil Philippines Exploration Inc., four cases of
rotary drill parts were shipped from abroad to Manila. After a
few months, the shipment arrived in the port of Manila and
was received by Customs Arrastre Service, a unit under Bureau
of Customs in charge of handling arrastre operations. The said
government unit then delivered the shipment to the broker of
Mobil Philippines Exploration Inc. However, only three cases
of the rotary drill were delivered to the broker.
In the hopes of recovering the amount of the undelivered case,
Mobile Philippines Exploration Inc. filed a case in the Court of
First Instance of Manila against the Customs Arrastre Service
and Bureau of Customs. Customs Arrastre Service and Bureau
of Customs argued that they cannot be sued be- cause they are
not a person under the law. On the same grounds, the lower
court dismissed the case.
Mobile Philippines Exploration Inc., appealed to the Supreme
Court contending that not all gov- ernment entities are
immune from suit. Bureau of Customs, being an operator of
arrastre was performing proprietary functions and therefor
may be sued.
ISSUE:
Whether or not the Bureau of Customs is immune from suit.

HELD:

HELD:
Yes, the Bureau of Customs is immune from suit. A non-
corporate government entity performing a proprietary
function does not necessarily result in it being suable. If the
said non-governmental func- tion is undertaken as an incident
to its governmental function, waiver of immunity from suit did
not ex- tend to such government entity. In this case, the
Bureau of Customs, a part of the Department of Fi- nance had
a primary governmental function. It was to assess and collect
lawful revenues from imported articles and all other tariff and
customs duties, fees, charges, fines, and penalties. The said
duties cannot be assessed and collected without customs
authorities and officers checking and making sure that the
declaration tallied with the actual merchandise that landed.
This process of checking up required that the landed
merchandise be hauled from the ship's side to a suitable place
in the customs premises. For cus- toms officers to perform it,
an arrastre operation is required. Although said arrastre
function may be deemed proprietary, it was a necessary
incident of the primary and governmental function of the
Bureau of Customs. Engaging in the same does not necessarily
render said Bureau liable to suit. Instead, Mobil Philippines
Inc. should have filed its claim with the General Auditing
Office, under which money claims against the Government
may be filed.
CIVIL AERONAUTICS ADMINISTRATION, petitioner,
vs. COURT OF APPEALS and ERNEST E. SIMKE,
FACTS:

time of the incident was the Honorary Consul General of Israel
in the Philippines. One afternoon, private respondent with
several other persons went to the Manila International Airport
to meet his future son-in-law. In order to get a better view of
the incoming passengers, he and his group proceeded to the
viewing deck or terrace of the airport. While walking on the
terrace, then filled with other people, private respondent
slipped over an elevation about four (4) inches high at the far
end of the terrace. As a result, private respondent fell on his
back and broke his thigh bone.
Private respondent then filed an action for damages based on
quasi-delict with the Court of First Instance of Rizal, Branch
VII against petitioner Civil Aeronautics Administration or
CAA as the entity empowered "to administer, operate, manage,
control, maintain and develop the Manila International
Airport. . . ." [Sec. 32 (24), R.A. 776].
Judgment was rendered in private respondent's favor
prompting petitioner to appeal to the Court of Appeals. The
latter affirmed the trial court's decision. Petitioner then filed
with the same court a Motion for Reconsideration but this was
denied.
ISSUE:
Whether or not the present suit against the CAA is really a
suit against the Republic of the Philippines which cannot be
sued without its consent.
Invoking the rule that the State cannot be sued without its
consent, petitioner contends that being an agency of the
government, it cannot be made a party defendant in this case.
This Court has already held otherwise in the case of National
Airports Corporation v. Teodoro, Sr. 191 Phil. 203 (1952).]
Third, it has already been settled in the Teodoro case that the
CAA as an agency is 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.
CASE DIGEST: AIR TRANSPORTATION OFFICE v. maintain a necessary function of government, but to run what
SPOUSES DAVID & ELISEA RAMOS is essentially a business, even if revenues be not its prime
objective but rather the promotion of travel and the
FACTS: convenience of the travelling public. It is engaged in an
Respondent Spouses discovered that a portion of their enterprise which, far from being the exclusive prerogative of
registered land in Baguio City was being used as part of the state, may, more than the construction of public roads, be
runway and running shoulder of the Loakan Airport being undertaken by private concerns. National Airports Corp. v.
operated by petitioner Air Transportation Office (ATO). The Teodoro, 91 Phil. 203 (1952)
respondents agreed after negotiations to convey the affected
portion by deed of sale to the ATO in consideration of the The CA thereby correctly appreciated the juridical character
amount of P778, 150.00. However, the ATO failed to pay of the ATO as an agency of the Government not performing a
despite repeated verbal and written demands. purely governmental or sovereign function, but was instead
Thus, the respondents filed an action for collection against the involved in the management and maintenance of the Loakan
ATO and some of its officials in the RTC. In their answer, the Airport, an activity that was not the exclusive prerogative of
ATO and its co-defendants invoked as an affirmative defense the State in its sovereign capacity. Hence, the ATO had no
the issuance of Proclamation No. 1358, whereby President claim to the States immunity from suit. We uphold the CAs
Marcos had reserved certain parcels of land that included the aforequoted holding.
respondents affected portion for use of the Loakan Airport.
They asserted that the RTC had no jurisdiction to entertain The doctrine of sovereign immunity cannot be successfully
the action without the States consent considering that the deed invoked to defeat a valid claim for compensation arising from
of sale had been entered into in the performance of the taking without just compensation and without the proper
governmental functions. expropriation proceedings being first resorted to of the
plaintiffs property Republic v. Sandiganbayan, G.R. No. 90478,
The RTC held in favor of the Spouses, ordering the ATO to Nov. 2, 1991. DENIED.
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.

ISSUE:
Could ATO be sued without the State's consent?

HELD:
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