G.R. No.

L-21484          November 29, 1969

THE AGRICULTURAL CREDIT and COOPERATIVE FINANCING ADMINISTRATION

(ACCFA), petitioner,
vs.
ACCFA SUPERVISORS' ASSOCIATION, ACCFA WORKERS' ASSOCIATION, and THE
COURT OF INDUSTRIAL RELATIONS, respondents.

The Agricultural Credit and Cooperative Financing Administration (ACCFA) was a government
agency created under Republic Act No. 821, as amended. Its administrative machinery was
reorganized and its name changed to Agricultural Credit Administration (ACA) under the Land
Reform Code (Republic Act No. 3844). On the other hand, the ACCFA Supervisors' Association
(ASA) and the ACCFA Workers' Association (AWA), hereinafter referred to as the Unions, are
labor organizations composed of the supervisors and the rank-and-file employees, respectively,
in the ACCFA (now ACA).

On October 30, 1962 the Unions, together with its mother union, the Confederation of Unions in
Government Corporations and Offices (CUGCO), filed a complaint with the Court of Industrial
Relations against the ACCFA (Case No. 3450-ULP) for having allegedly committed acts of unfair
labor practice, namely: violation of the collective bargaining agreement in order to discourage the
members of the Unions in the exercise of their right to self-organization, discrimination against
said members in the matter of promotions, and refusal to bargain.

The ACCFA moved to reconsider but was turned down in a resolution dated April 25, 1963 of the
CIR en banc. Thereupon it brought this appeal by certiorari.

During the pendency of the above mentioned case (G.R. No. L-21484), specifically on August 8,
1963, the President of the Philippines signed into law the Agricultural Land Reform Code
(Republic Act No. 3844), which among other things required the reorganization of the
administrative machinery of the Agricultural Credit and Cooperative Financing
Administration (ACCFA) and changed its name to Agricultural Credit Administration
(ACA). On March 17, 1964 the ACCFA Supervisors' Association and the ACCFA Workers'
Association filed a petition for certification election with the Court of Industrial Relations (Case No.
1327-MC) praying that they be certified as the exclusive bargaining agents for the supervisors
and rank-and-file employees, respectively, in the ACA.

Trial court allowed and certified "the ACCFA Workers' Association and the ACCFA Supervisors'
Association as the sole and exclusive bargaining representatives of the rank-and-file employees
and supervisors, respectively, of the Agricultural Credit Administration." Said order was affirmed
by the CIR en banc in its resolution dated August 24, 1964.

However, the ACA filed for a stay of execution which the trial court granted.

Issue: WON CIR(RTC) has jurisdiction to entertain the petition of the Unions for certification
election on the ground that it (ACA) is engaged in governmental functions.

Ruling:

Yes. The unions are not entitled.

Under Section 3 of the Agricultural Land Reform Code the ACA was established, among other
governmental agencies,1 to extend credit and similar assistance to agriculture, in pursuance of
the policy enunciated in Section 2(Declaration of policy).
The implementation of the policy thus enunciated, insofar as the role of the ACA therein is
concerned, is spelled out in Sections 110 to 118, inclusive, of the Land Reform Code. Section
110 provides that "the administrative machinery of the ACCFA shall be reorganized to enable it to
align its activities with the requirements and objective of this Code and shall be known as the
Agricultural Credit Administration." These include powers non really accorded to non-government
entities such as tax exemptions, registration of deeds, notarial services, and prosecution of
officials.

The power to audit the operations of farmers' cooperatives and otherwise inquire into their affairs,
as given by Section 113, is in the nature of the visitorial power of the sovereign, which only a
government agency specially delegated to do so by the Congress may legally exercise.

The implementation of the land reform program of the government according to Republic
Act No. 3844 is most certainly a governmental, not a proprietary, function; and for that
purpose Executive Order No. 75 has placed the ACA under the Land Reform Project
Administration together with the other member agencies, the personnel complement of all
of which are placed in one single pool and made available for assignment from one
agency to another, subject only to Civil Service laws, rules and regulations, position
classification and wage structures.

The appointing authority in respect of the officials and employees of the ACA is the
President of the Philippines.

The considerations set forth above militate quite strongly against the recognition of
collective bargaining powers in the respondent Unions within the context of Republic Act
No. 875, and hence against the grant of their basic petition for certification election as
proper bargaining units. The ACA is a government office or agency engaged in
governmental, not proprietary functions. These functions may not be strictly what President
Wilson described as "constituent" (as distinguished from "ministrant"),4 such as those relating to
the maintenance of peace and the prevention of crime, those regulating property and property
rights, those relating to the administration of justice and the determination of political duties of
citizens, and those relating to national defense and foreign relations. Under this traditional
classification, such constituent functions are exercised by the State as attributes of sovereignty,
and not merely to promote the welfare, progress and prosperity of the people — these letter
functions being ministrant he exercise of which is optional on the part of the government.

It was in furtherance of such policy that the Land Reform Code was enacted and the various
agencies, the ACA among them, established to carry out its purposes. There can be no dispute
as to the fact that the land reform program contemplated in the said Code is beyond the
capabilities of any private enterprise to translate into reality. It is a purely governmental function,
no less than, say, the establishment and maintenance of public schools and public hospitals. And
when, aside from the governmental objectives of the ACA, geared as they are to the
implementation of the land reform program of the State, the law itself declares that the ACA is a
government office, with the formulation of policies, plans and programs vested no longer in a
Board of Governors, as in the case of the ACCFA, but in the National Land Reform Council, itself
a government instrumentality; and that its personnel are subject to Civil Service laws and to rules
of standardization with respect to positions and salaries, any vestige of doubt as to the
governmental character of its functions disappears.

It was in furtherance of such policy that the Land Reform Code was enacted and the various
agencies, the ACA among them, established to carry out its purposes. There can be
no dispute as to the fact that the land reform program contemplated in the said Code is beyond
the capabilities of any private enterprise to translate into reality. It is a purely governmental
function, no less than, say, the establishment and maintenance of public schools and public
hospitals.
Given these, the respondent Unions are not entitled to the certification election sought in the
Court below. Such certification is admittedly for purposes of bargaining in behalf of the employees
with respect to terms and conditions of employment, including the right to strike as a coercive
economic weapon, as in fact the said unions did strike in 1962 against the ACCFA.

This is contrary to Section 11 of Republic Act No. 875, which provides:

"SEC. 11.        Prohibition Against Strike in the Government. — The terms

and conditions of employment in the Government, including any political subdivision or
instrumentality thereof, are governed by law and it is declared to be the policy of this Act that
employees therein shall not strike for the purposes of securing changes or modification in their
terms and conditions of employment. Such employees may belong to any labor organization
which does not impose the obligation to strike or to join in strike: Provided, However, that this
section shall apply only to employees employed in governmental functions of the
Government including but not limited to governmental corporations."

With the reorganization of the ACCFA and its conversion into the ACA under the Land Reform
Code and in view of our ruling as to the governmental character of the functions of the ACA, the
decision of the respondent Court dated March 25, 1963, and the resolution en banc affirming it, in
the unfair labor practice case filed by the ACCFA, which decision is the subject of the present
review in G. R. No. L-21484, has become moot and academic, particularly insofar as the order to
bargain collectively with the respondent Unions is concerned.

G.R. Nos. 70116-19 August 12, 1986

COMMISSIONER OF INTERNAL REVENUE, petitioner,

vs.
FRANK ROBERTSON, JAMES W. ROBERTSON, ROBERT H. CATHEY, JOHN L. GARRISON
AND THE COURT OF TAX APPEALS, respondents.

FACTS:

This is a Petition for Review of the consolidated decision of the ff cases:

Frank Robertson (CTA Case No. 2735)-P l32,750.65. James W. Robertson (CTA Case No.
2736)-190,433.17. Robert H. Cathey (CTA Case No. 2738)-92,013.17. John L. Garrison (CTA
Case No. 2739)-196,754.32

The above-entitled cases are consolidated as these involve similar or Identical fact situations on a
question involving the scope of the tax exemption provision in Article XII, Par. 2, of the RP-US
Military Bases Agreement of 1947, quoted as follows:

2. No national of the United States serving in or employed in the Philippines in connection with
the construction, maintenance, operation or defense of the bases and residing in the Philippines
by reason only of such employment, or his spouse and minor children and dependent parents of
either spouse, shall be liable to pay income tax in the Philippines except in respect of income
derived from Philippine sources or sources other than the United States sources.

Antecedent facts:
Petitioner Frank Robertson (CTA Case No. 2735) is an American citizen born in the Philippines
on July 8, 1924. He resided in the Philippines until repatriated to the United States in 1945 and
took residence at Long Beach, California. Soon after he was employed by the U.S. Federal
Government with a job at the U.S. Navy. His work brought him to the U.S. Navy's various
installations overseas with eventual assignment at the U.S. Naval Ship Repair Facility at Subic
Bay, Olongapo, Philippines, in 1962.

Like his brother Frank Robertson, petitioner James Robertson (CTA Case No. 2736) was born in
the Philippines on December 22, 1918 and had since resided in this country until repatriated to
the United States in 1945 and there, established his domicile. He landed a job with the U.S. Navy
Shipyard at Long Beach, California as a U.S. Federal Civil Service employee. He returned to the
Philippines in 1958 with assignment at the U.S. Naval Base at Subic Bay, Olongapo, and has
since remained thru 1972.

Similar events with : Robert H. Cathey and John Garrison.

All told, the petitioners are citizens of the United States; holders of American passports and
admitted as Special Temporary Visitors under Section 9 (a) visa of the Philippine Immigration Act
of 1940, as amended; civilian employees in the U.S. Military Base in the Philippines in connection
with its construction, maintenance, operation, and defense; and incomes are solely derived from
salaries from the U.S. government by reason of their employment in the U.S. Bases in the
Philippines."

The Court a quo after due hearing, rendered its judgment in favor of respondents cancelling and
setting aside the assessments for deficiency income taxes of respondents for the taxable years
1969-1972, inclusive of interests and penalties.

CIR alleged that the Court of Tax Appeals erred in holding that private respondents are, by virtue
of Article XII, Par 2 of the RP-US Military Bases Agreement of 1947, exempt from Philippine
income tax.

Petitioner, to support his contentions, argues that the laws granting tax exemptions must be
construed in strictissimi juris against the taxpayer, and that the burden of proof is on private
respondents, Frank Robertson, James W. Robertson, Robert J. Cathey and John L. Garrison to
establish that their residence in the country is by reason only of their employment in connection
with the construction, maintenance, operation or defense of the U.S. Bases in the Philippines as
provided for under Article XII, Par. 2 of the RP-US Military Bases Agreement of 1947 (supra).
Petitioner avers in his Brief, dated February 4, 1986, filed before this Court, that private
respondents have failed to discharge this burden, alleging, among other things, (1) that both
respondents Frank Robertson and James Robertson, who are brothers, own residential
properties respectively declared in the name of James Robertson and in the name of Frank
Robertson's wife for taxation purposes; (2) that James Robertson is now a retired Federal Civil
Service employee and presently living with his family in Olongapo City, which circumstance
indicate that respondents' residence in this country is not by reason only of his employment in the
U.S. naval base; (4) that respondent Robert H. Cathey owns the house at Quezon City where he
presently resides; (5) that the stay of respondent John Garrison who returned to the Philippines in
the year 1948 is uninterrupted except for a two-year stint in Okinawa in the years 1950 to 1952;
(6) that the issuance in San Francisco, California of a Voter's Certificate to respondent John
Garrison in 1945 does not in any way indicate that he was a U.S. resident, in the years 1969 to
1972.

Issue: WON CTA erred in granting Robertson tax exemption by virtue of Art XII, Par 2 RP-US
Military Bases Agreement of 1947?

Ruling:
The contentions of CIR do not impress the court as meritorious.

The law and the facts of the case are so clear that there is no room left for Us to doubt the validity
of private respondents' defense. In order to avail oneself of the tax exemption under the RP-US
Military Bases Agreement: he must be a national of the United States employed in connection
with the construction, maintenance, operation or defense, of the bases, residing in the Philippines
by reason of such employment, and the income derived is from the U.S. Government (Art. XII par.
2 of PI-US Military Bases Agreement of 1947). Said circumstances are all present in the case at
bar. Likewise, We find no justifiable reason to disturb the findings and rulings of the lower court in
its decision reading as follows:

We find nothing in the said treaty provision that justified the lifting of the tax exemption privilege of
the petitioners (private respondents herein). Respondent (petitioner herein) has grafted a
meaning other than that conveyed by the plain and clear tenor of the Agreement. An examination
of the words used and the circumstances in which they were used, shows the basic intendment
"to exempt all U.S. citizens working in the Military Bases from the burden of paying Philippine
Income Tax without distinction as to whether born locally or born in their country of origin."  Ubi
lex non distinguit nec nos distinguere debemos (one must not distinguish where the law does not
distinguish) (Emphasis supplied). Moreover, the ruling has altered a satisfactorily settled
application of the exemption clause and has fallen short of measuring up to the familiar principle
of International Law that, "The obligation to fulfill in good faith a treaty engagement requires that
the stipulations be observed in their spirit as well as according to their letter and that what has
been promised be performed without evasion, or subterfuge, honestly and to the best of the
ability of the party which made the promise."

It bears repeating as so disclosed in the records that the petitioners together with families upon
repatriation in 1945 had since acquired domicile and residency in the United States. And,
obtained employment with the United States Federal Service. Not until after several years of a
hiatus, petitioners did return to the Philippines not so much of honoring a pledge nor of
sentimental journey but by reason of taking up assigned duties with the United States military
bases in the Philippines where they were gainfully employed by the U.S. Federal Government. 

The circumstances in the case of Reagan vs. Commissioner of Internal Revenue (30 SCRA 968)
relied upon by petitioner in support of the government's claim are different from the circumstances
of the case herein and the ruling obtained in the former case cannot be invoked or applied in
support of petitioner's contention. A cursory reading of said case shows that William Reagan was
at one time a civilian employee of an American corporation providing technical assistance to the
U.S. Air Force in the Philippines. He questioned the payment of the income tax assessed on him
by respondent Commissioner of Internal Revenue on an amount realized by him on a sale of his
automobile to a member of the US Marine Corps., the transaction having taken place at the Clark
Field Air Base in Pampanga. It was his contention that in legal contemplation the sale was made
outside Philippine territory and therefore beyond our jurisdictional power to tax. Clearly, the facts
in said case are different from those obtaining in the present suit.

Petition dismissed. CTA affirmed.

G.R. No. 92432 February 23, 1995

T/SGT ALDORA LARKINS, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION,

Petitioner was a member of the United States Air Force (USAF) assigned to oversee the
dormitories of the Third Aircraft Generation Squadron (3 AGS) at Clark Air Base, Pampanga.

On August 10, 1988, 3 AGS terminated the contract for the maintenance and upkeep of the
dormitories with the De Guzman Custodial Services. The employees thereof, including
private respondents, were allowed to continue working for 3 AGS. It was left to the new
contractor, the JAC Maintenance Services owned by Joselito Cunanan, to decide whether it
would retain their services.

Joselito Cunanan, however, chose to bring in his own workers. As a result, the workers of
the De Guzman Custodial Services were requested to surrender their base passes to Lt. Col.
Frankhauser or to petitioner.

On August 12, 1988, private respondents filed a complaint with the Regional Arbitration
Branch No. III of the NLRC, San Fernando, Pampanga, against petitioner, Lt. Col.
Frankhauser, and Cunanan for illegal dismissal and underpayment of wages

On November 21, 1988, the Labor Arbiter rendered a decision granting all the claims of
private respondents. He found both Lt. Col. Frankhauser and petitioner "guilty of illegal
dismissal"
Petitioner appealed to the NLRC claiming that the Labor Arbiter never acquired jurisdiction
over her person because no summons or copies of the complaints, both original and
amended, were ever served on her. In her "Supplemental Memorandum to Memorandum of
Appeal," petitioner argued that the attempts to serve her with notices of hearing were not in
accordance with the provisions of the R.P. — U.S. Military Bases Agreement of 1947

NLRC issued a Resolution affirming the decision of the Labor Arbiter.

Issue: WON Labor Arbiter did not acquire jurisdiction to entertain and decide the case and
WON Petitioner was served with summons.

Ruling:
Jurisdiction was not acquired by LA and petitioner was not served with summons.

The "Agreement Between the Republic of the Philippines and the United States of America
Concerning Military Bases," otherwise known as the R.P. — U.S. Military Bases Agreement,
governed the rights, duties, authority, and the exercise thereof by Philippine and American
nationals inside the U.S. military bases in the country.

Summonses and other processes issued by Philippine courts and administrative agencies for
United States Armed Forces personnel within any U.S. base in the Philippines could be
served therein only with the permission of the Base Commander. If he withholds giving his
permission, he should instead designate another person to serve the process, and obtain the
server's affidavit for filing with the appropriate court.
Respondent Labor Arbiter did not follow said procedure. He instead, addressed the
summons to Lt. Col. Frankhauser and not the Base Commander

There is no allegation from the pleadings filed that Lt. Col. Frankhauser and petitioner
were being sued in their personal capacities for tortious acts (United States of
America v. Guinto, 182 SCRA 644 [1990]). However, private respondents named 3 AGS
as one of the respondents in their complaint
Private respondents were dismissed from their employment by Lt. Col. Frankhauser acting
for and in behalf of the U.S. Government. The employer of private respondents was not Lt.
Col. Frankhauser nor petitioner. The employer of private respondents, as found by NLRC,
was the U.S. Government which, by right of sovereign power, operated and maintained the
dormitories at Clark Air Base for members of the USAF

Unquestionably therefore, no jurisdiction was ever acquired by the Labor Arbiter over the
case and the person of petitioner and the judgment rendered is null and void

G.R. No. 196418, February 10, 2015

TECHNICAL EDUCATION AND SKILLS DEVELOPMENT AUTHORITY

(TESDA), Petitioner, v. THE COMMISSION ON AUDIT

FACTS:

The TESDA, an instrumentality of the Government established under Republic

Act No. 7796, is an attached agency of the Department of Labor and
Employment (DOLE). In view of the inadequate policy on basic health and safety
conditions of work experienced by government personnel, then DOLE Secretary
Patricia Sto. Tomas issued Administrative Order (AO) No. 430, series of 2003,
authorizing the payment of healthcare maintenance allowance of P5,000.00 to all
officials and employees of the DOLE, including its bureaus and attached
agencies.3 AO No. 430 was purportedly based on Civil Service Commission (CSC)
Memorandum Circular (MC) No. 33, series of 1997,4 and Section 34 of the
General Provisions of the 2003 General Appropriations Act.5 chanroblesvirtuallawlibrary

On post-audit, Atty. Rebecca Mislang, Officer In-Charge of the COA LAO-

National, subsequently issued Notice of Disallowance (ND) No. 2006-015 dated
May 26, 2006,7 addressed to then TESDA Director General Augusto Syjuco,
indicating that the payment of the allowance had no legal basis, it being contrary
to Republic Act No. 6758 (Salary Standardization Law of 1989).

The TESDA filed an appeal before the COA Commission Proper.

However, the COA Commission Proper denying the appeal for lack of merit.

Issue: WON COA ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO

LACK OR EXCESS OF JURISDICTION IN ISSUING THE ASSAILED DECISION
DISALLOWING THE PETITIONER’S PAYMENT OF HEALTH CARE MAINTENANCE
ALLOWANCE TO ITS MAIN OFFICE EMPLOYEES

Ruling:
The petition has no merit.

We uphold the disallowance by the COA of the payment of the P5,000.00 as

healthcare maintenance allowance. Coa properly exercised its powers and
discretion in disallowing the payment of the P5,000.00 as healthcare
maintenance allowance.

The COA is endowed with latitude to determine, prevent, and disallow irregular,
unnecessary, excessive, extravagant, or unconscionable expenditures of
government funds. It has the power to ascertain whether public funds were
utilized for the purpose for which they had been intended by law. The
Constitution has made the COA “the guardian of public funds, vesting it with
broad powers over all accounts pertaining to government revenue and
expenditures and the uses of public funds and property, including the exclusive
authority to define the scope of its audit and examination, establish the
techniques and methods for such review, and promulgate accounting and
auditing rules and regulations.”14 Thus, the COA is generally accorded complete
discretion in the exercise of its constitutional duty and responsibility to examine
and audit expenditures of public funds, particularly those which are perceptibly
beyond what is sanctioned by law.

MC No. 33 and its precursor were worded in a plain and straightforward manner
to the effect that the “(h)ealth program for employees shall include any or all of
the following: 1) Hospitalization services, and 2) Annual mental, medical-
physical examinations.” Whatever latitude was afforded to a government agency
extended only to the determination of which services to include in the program,
not to the choice of an alternative to such health program or to authorizing the
conversion of the benefits into cash. The giving of health care maintenance
allowance of P5,000.00 to the TESDA’s employees was not among any of the
hospitalization services or examinations listed in the circular.

It bears reminding that pursuant to Article VI Section 29 (1) of the 1987

Constitution, no money shall be paid out of the Treasury except in pursuance of
an appropriation made by law. Hence, the GAA should be purposeful, deliberate,
and precise in its contents and stipulations. Also, the COA was correct when it
held that the provisions of the GAA were not self-executory. This meant that the
execution of the GAA was still subject to a program of expenditure to be
approved by the President, and such approved program of expenditure was the
basis for the release of funds.

The Court agrees with the COA decision in holding that the recipients of the
healthcare maintenance allowance benefits who received the allowance of
P5,000.00 in good faith need not refund the sum received. The recipients
accepted the benefits honestly believing that they were receiving what they were
entitled to under the law. Similarly, the Court holds that the TESDA officials who
granted the allowance to the covered personnel acted in good faith in the honest
belief that there was lawful basis for such grant. In view of these considerations,
the Court declares that the disallowed benefits approved and received in good
faith need not be reimbursed to the Government. 
G.R. No. 159402               February 23, 2011

AIR TRANSPORTATION OFFICE, Petitioner,

vs.
SPOUSES DAVID* ELISEA RAMOS, Respondents.

The State’s 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 State’s exclusive prerogative.

FACTS:

Spouses David and Elisea Ramos (respondents) discovered that a portion of their land in
Baguio City 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 of
₱778,150.00. 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

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 State’s 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 ATO’s motion.

RTC ordered ATO to pay the plaintiffs. ATO appealed to CA, which affirmed RTC’s decision.

ISSUE: Whether the ATO could be sued without the State’s 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

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?

It can be seen that the CAA(predecessor of ATO) 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 non-corporate, 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.

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.

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 State’s immunity from suit. We uphold the CA’s aforequoted holding.

Whether or not the ATO could be sued without the State’s consent has been rendered moot
by the passage of Republic Act No. 9497, otherwise known as the Civil Aviation Authority
Act of 2008.
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.

G.R. No. L-30044 December 19, 1973

LORENZO SAYSON, as Highway Auditor, Bureau of Public Highways, et al. petitioners,

vs.
FELIPE SINGSON, as sole owner and proprietor of Singkier Motor Service,
What is involved is a money claim against the government, predicated on a contract. The basic
doctrine of non-suability of the government without its consent is thus decisive of the controversy.
There is a governing statute that is controlling.3 Respondent Felipe Singson, the claimant, for
reasons known to him, did not choose to abide by its terms. That was a fatal misstep. The lower
court, however, did not see it that way. We cannot affirm its decision.

FACTS:

"In January, 1967, the Office of the District Engineer requisitioned various items of spare parts for
the repair of a D-8 bulldozer, ... . The requisition (RIV No. 67/0331) was signed by the District
Engineer, Adventor Fernandez, and the Requisitioning Officer (civil engineer), Manuel S.
Lepatan. ... It was approved by the Secretary of Public Works and Communications, Antonio V.
Raquiza.
Bidding was conducted and awarded to Singkier Motor Service [owned by respondent Felipe
Singson. He was paid with the amount with the 20% retention But later on, audit findings
“excessive prices charge for purchase of spare parts and equipment shown by vouchers already
submitted”
In the interim it would appear that when the voucher and the supporting papers reached the GAO,
a canvass was made of the spare parts among the suppliers in Manila, particularly, the USI
(Phil.), which is the exclusive dealer of the spare parts of the caterpillar tractors in the Philippines.
Said firm thus submitted its quotations at P2,529.64 only which is P40,000.00 less than the price
of the Singkier.

In view of the overpricing the GAO took up the matter with the Secretary of Public Works in a third
indorsement of July 18, 1967. ... The Secretary then circularized a telegram holding the district
engineer responsible for overpricing."4 What is more, charges for malversation were filed against
the district engineer and the civil engineer involved. It was the failure of the Highways Auditor,
one of the petitioners before us, that led to the filing of the mandamus suit below, with now
respondent Singson as sole proprietor of Singkier Motor Service, being adjudged as entitled to
collect the balance of P8,706.00, the contract in question having been upheld. Hence this appeal
by certiorari.

Issue: WON the claim of Singson is valid.

Ruling:

"It is apparent that respondent Singson's cause of action is a money claim against the
government, for the payment of the alleged balance of the cost of spare parts supplied by him to
the Bureau of Public Highways. The claim is void for the cause or consideration is contrary to law,
morals or public policy, mandamus is not the remedy to enforce the collection of such claim
against the State but a ordinary action for specific performance ... . Actually, the suit disguised as
one for mandamus to compel the Auditors to approve the vouchers for payment, is a suit against
the State, which cannot prosper or be entertained by the Court except with the consent of the
State ... . In other words, the respondent should have filed his claim with the General Auditing
Office, under the provisions of Com. Act 327 ... which prescribe the conditions under which
money claim against the government may be
filed ...."5 Commonwealth Act No. 327 is quite explicit. It is therein provided: "In all cases involving
the settlement of accounts or claims, other than those of accountable officers, the Auditor
General shall act and decide the same within sixty days, exclusive of Sundays and holidays, after
their presentation. If said accounts or claims need reference to other persons, office or offices, or
to a party interested, the period aforesaid shall be counted from the time the last comment
necessary to a proper decision is received by
him."6 
It would be to disregard a basic corollary of the cardinal postulate of non-suability. It is true that
once consent is secured, an action may be filed. There is nothing to prevent the State, however,
in such statutory grant, to require that certain administrative proceedings be had and be
exhausted. 

Also, the proper forum in the judicial hierarchy can be specified if thereafter an appeal would be
taken by the party aggrieved. Here, there was no ruling of the Auditor General. Even had there
been such, the court to which the matter should have been elevated is this Tribunal; the lower
court could not legally act on the matter.

The suit for mandamus filed against petitioners, respondents below, is dismissed.