G.R. No. L-4699 November 26, 1952
TEODORA SANTOS, assisted by her husband DONATO DE CASTRO, JOSEFINA SANTOS, assisted by her husband Santiago Rodriguez and EMILIANA SANTOS, plaintiffs-appellants, vs. LEONCIO SANTOS, THE ADMINISTRATOR OF THE CIVIL AERONAUTICS ADMINISTRATION, and NATIONAL AIRPORTS CORPORATION, defendants-appellees.

FACTS

The plaintiffs, Teodora Santos and her nieces Josefina and Emiliana Santos, are co-owners by inheritance of a parcel of land (Lot No. 4) in Las Piñas, Rizal. They claim undivided shares of 1/7 for Teodora and 1/14 each for Josefina and Emiliana, with defendant Leoncio Santos owning the remaining 5/7. They allege that from 1945 to 1949, Leoncio Santos collected rentals from the U.S. Army for the use of the land without accounting for or delivering their shares. They further allege that Leoncio Santos sold the entire lot to the National Airports Corporation (predecessor of the Civil Aeronautics Administration or CAA) on or about May 13, 1949, without their knowledge and consent. They filed a complaint for accounting of rentals, partition of the land, and to declare the sale null and void as to their shares, also seeking to have the CAA vacate their portions and pay reasonable rental. The Administrator of the CAA moved to dismiss the complaint against it, invoking state immunity from suit, arguing the CAA lacked juridical personality to be sued. The lower court granted the motion, ruling that the CAA, not being a juridical person, could not be subject to the court’s jurisdiction.

ISSUE

Whether the complaint against the Administrator of the Civil Aeronautics Administration should be dismissed on the ground of state immunity from suit or lack of capacity to be sued.

RULING

No. The order dismissing the complaint against the Civil Aeronautics Administration is reversed. The Supreme Court held that the principle of state immunity from suit does not apply to the Civil Aeronautics Administration under the circumstances. The Court reasoned that the state may be sued when it enters into a contract, as it descends to the level of a citizen, and its consent to be sued is implied. The National Airports Corporation, which originally acquired the land from Leoncio Santos, was created by statute ( Republic Act No. 224 ) and had the capacity to enter into contracts. This corporation was abolished by Executive Order No. 365, series of 1950, and the Civil Aeronautics Administration was created, taking over all its assets and assuming all its liabilities. Consequently, the CAA stepped into the shoes of the National Airports Corporation and may be sued regarding the contract of sale. The Court cited its prior ruling in National Airports Corporation vs. Teodoro (G.R. No. L-5122, April 30, 1952), which held that the CAA may be sued and state immunity does not apply. The case was remanded to the lower court for further proceedings. The Court noted that if the plaintiffs establish their co-ownership shares, they cannot be deprived of their proprietary rights by the sale made by their co-owner without their consent, and Leoncio Santos would be liable for warranty to the CAA. The accounting of past rentals, however, would be the exclusive liability of Leoncio Santos and not the CAA.