G.R. No. L-5122; April 30, 1952
NATIONAL AIRPORTS CORPORATION, petitioner, vs. JOSE TEODORO, SR., as Judge of the Court of First Instance of Negros Occidental and PHILIPPINE AIRLINES, INC., respondents.

FACTS

The National Airports Corporation was organized under Republic Act No. 224 , with the Corporation Law applicable to it. It was abolished by Executive Order No. 365 on November 10, 1950, and replaced by the Civil Aeronautics Administration. Prior to its abolition, Philippine Airlines, Inc. paid the National Airports Corporation P65,245 as landing and parking fees for Bacolod Airport No. 2 up to July 31, 1948. The landowner, Capitol Subdivision, Inc., sued Philippine Airlines to recover this amount. Philippine Airlines filed a third-party complaint against the National Airports Corporation, serving summons on the Civil Aeronautics Administration. The third-party complaint alleged payment was made to the National Airports Corporation based on the belief it was the lessee and operator of the airport and would pay the landowners. The Solicitor General, answering for the National Airports Corporation, moved to dismiss the third-party complaint on two grounds: first, the National Airports Corporation had lost its juridical personality; second, as an agency of the Republic, it was incapable of suing or being sued. Executive Order No. 365 transferred all assets, rights, obligations, and liabilities of the National Airports Corporation to the Civil Aeronautics Administration.

ISSUE

Whether the court has jurisdiction to entertain the third-party complaint against the abolished National Airports Corporation, and whether the Civil Aeronautics Administration, as its successor, can be sued.

RULING

The petition is denied. The court has jurisdiction. The Civil Aeronautics Administration, although an unincorporated agency, has the power to sue and be sued. This power is implied from its authority to execute contracts, purchase property, grant concessions, charge fees, and manage property under Executive Order No. 365. As the entity that acquired all properties, rights, and assumed all liabilities of the National Airports Corporation, the Civil Aeronautics Administration has the greater power to prosecute and defend suits on its behalf. Denying creditors access to the courts would allow the government to impair corporate obligations by converting corporations into unincorporated agencies, which was not the intention of the dissolution. Not all government entities are immune from suit; immunity depends on the character of their obligations. The Civil Aeronautics Administration, like the National Airports Corporation, runs a business enterprise (airport operations) that is not an exclusive governmental function but can be undertaken by private concerns, placing it in the category of a private entity for such transactions. Therefore, it cannot claim sovereign immunity. The National Airports Corporation is abolished for all purposes, with nothing left to liquidate, as all its assets and obligations were transferred to the Civil Aeronautics Administration, which acts as its legal representative. The procedural error of naming the National Airports Corporation as the third-party defendant instead of the Civil Aeronautics Administration can be corrected by amendment.