Air Transportation Office vs Spouses David and Elisea Ramos

G.R. 159402
February 23, 2011

Point of the Case:

An agency of the State who performs purely governmental or sovereign function can exercise the
doctrine of sovereign immunity.

Facts:
Spouses David and Elisea Ramos discovered that a portion of their land (somewhere in Baguio)
was being used as part of the runway and running shoulder of the Loakan Airport which is operated by Air
Transportation Office (ATO). Sometime in 1995, respondents agreed to convey the subject portion by
deed of sale to ATO in consideration of the amount of Php 778,150.00. However, ATO failed to pay
despite repeated verbal and written demands. Thus, an action for collection against ATO was filed by the
respondents before the Regional Trial Court (RTC). ATO’s primary contention was that the deed of sale
was entered into the performance of governmental functions. RTC ruled in favor of the respondents.
Court of Appeals (CA) affirmed RTC’s decision. Hence, the petition.

Issue:
Whether or not the State’s immunity from suit can extend to ATO for being an agency of the
State.

Ruling:
No, the State’s immunity from suit does not extend to ATO because it is an agency of the State
engaged in an enterprise that is far from being the State’s exclusive prerogative. The CA 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 he exclusive prerogative of the State in its sovereign capacity.
Hence, the ATO had no claim to the State’s immunity from suit. The Supreme Court (SC) further observes
that 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 plaintiff’s property.