Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. L-51806 November 8, 1988

CIVIL AERONAUTICS ADMINISTRATION, petitioner,

vs.
COURT OF APPEALS and ERNEST E. SIMKE, respondents.

The Solicitor General for petitioner.

Ledesma, Guytingco, Veleasco & Associates for respondent Ernest E. Simke.

CORTES, J.:

Assailed in this petition for review on certiorari is the decision of the Court of Appeals affirming the
trial court decision which reads as follows:

WHEREFORE, judgment is hereby rendered ordering defendant to pay plaintiff the

amount of P15,589.55 as full reimbursement of his actual medical and hospital
expenses, with interest at the legal rate from the commencement of the suit; the
amount of P20,200.00 as consequential damages; the amount of P30,000.00 as
moral damages; the amount of P40,000.00 as exemplary damages; the further
amount of P20,000.00 as attorney's fees and the costs [Rollo, p. 24].

The facts of the case are as follows:

Private respondent is a naturalized Filipino citizen and at the time of the incident was the Honorary
Consul Geileral of Israel in the Philippines.

In the afternoon of December 13, 1968, 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.

The next day, December 14, 1968, private respondent was operated on for about three hours.

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].
Said claim for damages included, aside from the medical and hospital bills, consequential damages
for the expenses of two lawyers who had to go abroad in private respondent's stead to finalize
certain business transactions and for the publication of notices announcing the postponement of
private respondent's daughter's wedding which had to be cancelled because of his accident [Record
on Appeal, p. 5].

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.

Petitioner now comes before this Court raising the following assignment of errors:

1. The Court of Appeals gravely erred in not holding that the present the CAA is
really a suit against the Republic of the Philippines which cannot be sued without its
consent, which was not given in this case.

2. The Court of Appeals gravely erred in finding that the injuries of respondent Ernest
E. Simke were due to petitioner's negligence — although there was no substantial
evidence to support such finding; and that the inference that the hump or elevation
the surface of the floor area of the terrace of the fold) MIA building is dangerous just
because said respondent tripped over it is manifestly mistaken — circumstances that
justify a review by this Honorable Court of the said finding of fact of respondent
appellate court (Garcia v. Court of Appeals, 33 SCRA 622; Ramos v. CA, 63 SCRA
331.)

3. The Court of Appeals gravely erred in ordering petitioner to pay actual,

consequential, moral and exemplary damages, as well as attorney's fees to
respondent Simke — although there was no substantial and competent proof to
support said awards I Rollo, pp. 93-94 1.

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.
[91 Phil. 203 (1952)]. Petitioner contends that the said ruling does not apply in this case because:
First, in the Teodoro case, the CAA was sued only in a substituted capacity, the National Airports
Corporation being the original party. Second, in the Teodoro case, the cause of action was
contractual in nature while here, the cause of action is based on a quasi-delict. Third, there is no
specific provision in Republic Act No. 776, the law governing the CAA, which would justify the
conclusion that petitioner was organized for business and not for governmental purposes. [Rollo, pp.
94-97].

Such arguments are untenable.

First, the Teodoro case, far from stressing the point that the CAA was only substituted for the
National Airports Corporation, in fact treated the CAA as the real party in interest when it stated that:

xxx xxx xxx

 ... To all legal intents and practical purposes, the National Airports Corporation is
dead and the Civil Aeronautics Administration is its heir or legal representative,
acting by the law of its creation upon its own rights and in its own name. The better
practice there should have been to make the Civil Aeronautics Administration the
third party defendant instead of the National Airports Corporation. [National Airports
Corp. v. Teodoro, supra, p. 208.]

xxx xxx xxx

Second, the Teodoro case did not make any qualification or limitation as to whether or not the CAA's
power to sue and be sued applies only to contractual obligations. The Court in the Teodoro case
ruled that Sections 3 and 4 of Executive Order 365 confer upon the CAA, without any qualification,
the power to sue and be sued, albeit only by implication. Accordingly, this Court's pronouncement
that where such power to sue and be sued has been granted without any qualification, it can include
a claim based on tort or quasi-delict [Rayo v. Court of First Instance of Bulacan, G.R. Nos. 55273-
83, December 19,1981, 1 1 0 SCRA 4561 finds relevance and applicability to the present case.

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.

xxx xxx xxx

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. [National Airports
Corp. v. Teodoro, supra, p. 207.]

xxx xxx xxx

True, the law prevailing in 1952 when the Teodoro case was promulgated was Exec. Order 365
(Reorganizing the Civil Aeronautics Administration and Abolishing the National Airports Corporation).
Republic Act No. 776 (Civil Aeronautics Act of the Philippines), subsequently enacted on June 20,
1952, did not alter the character of the CAA's objectives under Exec, Order 365. The pertinent
provisions cited in the Teodoro case, particularly Secs. 3 and 4 of Exec. Order 365, which led the
Court to consider the CAA in the category of a private entity were retained substantially in Republic
Act 776, Sec. 32 (24) and (25). Said Act provides:
<äre||anº•1àw> 

Sec. 32. Powers and Duties of the Administrator. Subject to the general — control
and supervision of the Department Head, the Administrator shall have among others,
the following powers and duties:

xxx xxx xxx

(24) To administer, operate, manage, control, maintain and develop the Manila
International Airport and all government-owned aerodromes except those controlled
or operated by the Armed Forces of the Philippines including such powers and duties
as: (a) to plan, design, construct, equip, expand, improve, repair or alter aerodromes
 or such structures, improvement or air navigation facilities; (b) to enter into, make
and execute contracts of any kind with any person, firm, or public or private
corporation or entity; ... .

(25) To determine, fix, impose, collect and receive landing fees, parking space fees,
royalties on sales or deliveries, direct or indirect, to any aircraft for its use of aviation
gasoline, oil and lubricants, spare parts, accessories and supplies, tools, other
royalties, fees or rentals for the use of any of the property under its management and
control.

xxx xxx xxx

From the foregoing, it can be seen that the CAA 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 Tedoro case states:

xxx xxx xxx

Not all government entities, whether corporate or non-corporate, are immune from
suits. Immunity functions 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. (59 C.J.,
313) [National Airport Corporation v. Teodoro, supra, pp. 206-207;
Emphasis supplied.]

This doctrine has been reaffirmed in the recent case of Malong v. Philippine National Railways [G.R.
No. L-49930, August 7, 1985, 138 SCRA 631, where it was held that the Philippine National
Railways, although owned and operated by the government, was not immune from suit as it does not
exercise sovereign but purely proprietary and business functions. 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.

II

Petitioner tries to escape liability on the ground that there was no basis for a finding of negligence.
There can be no negligence on its part, it alleged, because the elevation in question "had a
legitimate purpose for being on the terrace and was never intended to trip down people and injure
them. It was there for no other purpose but to drain water on the floor area of the terrace" [Rollo, P.
99].
To determine whether or not the construction of the elevation was done in a negligent manner, the
trial court conducted an ocular inspection of the premises.

xxx xxx xxx

... This Court after its ocular inspection found the elevation shown in Exhs. A or 6-A
where plaintiff slipped to be a step, a dangerous sliding step, and the proximate
cause of plaintiffs injury...

xxx xxx xxx

This Court during its ocular inspection also observed the dangerous and defective
condition of the open terrace which has remained unrepaired through the years. It
has observed the lack of maintenance and upkeep of the MIA terrace, typical of
many government buildings and offices. Aside from the litter allowed to accumulate
in the terrace, pot holes cause by missing tiles remained unrepaired and unattented.
The several elevations shown in the exhibits presented were verified by this Court
during the ocular inspection it undertook. Among these elevations is the one (Exh. A)
where plaintiff slipped. This Court also observed the other hazard, the slanting or
sliding step (Exh. B) as one passes the entrance door leading to the terrace [Record
on Appeal, U.S., pp. 56 and 59; Emphasis supplied.]

The Court of Appeals further noted that:

The inclination itself is an architectural anomaly for as stated by the said witness, it is
neither a ramp because a ramp is an inclined surface in such a way that it will
prevent people or pedestrians from sliding. But if, it is a step then it will not serve its
purpose, for pedestrian purposes. (tsn, p. 35, Id.) [rollo, p. 29.]

These factual findings are binding and conclusive upon this Court. Hence, the CAA cannot disclaim
its liability for the negligent construction of the elevation since under Republic Act No. 776, it was
charged with the duty of planning, designing, constructing, equipping, expanding, improving,
repairing or altering aerodromes or such structures, improvements or air navigation facilities [Section
32, supra, R.A. 776]. In the discharge of this obligation, the CAA is duty-bound to exercise due
diligence in overseeing the construction and maintenance of the viewing deck or terrace of the
airport.

It must be borne in mind that pursuant to Article 1173 of the Civil Code, "(t)he fault or negligence of
the obligor consists in the omission of that diligence which is required by the nature of the obligation
and corresponds with the circumstances of the person, of the time and of the place." Here, the
obligation of the CAA in maintaining the viewing deck, a facility open to the public, requires that CAA
insure the safety of the viewers using it. As these people come to the viewing deck to watch the
planes and passengers, their tendency would be to look to where the planes and the incoming
passengers are and not to look down on the floor or pavement of the viewing deck. The CAA should
have thus made sure that no dangerous obstructions or elevations exist on the floor of the deck to
prevent any undue harm to the public.

The legal foundation of CAA's liability for quasi-delict can be found in Article 2176 of the Civil Code
which provides that "(w)hoever by act or omission causes damage to another, there being fault or
negligence, is obliged to pay for the damage done... As the CAA knew of the existence of the
dangerous elevation which it claims though, was made precisely in accordance with the plans and
specifications of the building for proper drainage of the open terrace [See Record on Appeal, pp. 13
and 57; Rollo, p. 391, its failure to have it repaired or altered in order to eliminate the existing hazard
constitutes such negligence as to warrant a finding of liability based on quasi-delict upon CAA.

The Court finds the contention that private respondent was, at the very least, guilty of contributory
negligence, thus reducing the damages that plaintiff may recover, unmeritorious. Contributory
negligence under Article 2179 of the Civil Code contemplates a negligent act or omission on the part
of the plaintiff, which although not the proximate cause of his injury, contributed to his own damage,
the proximate cause of the plaintiffs own injury being the defendant's lack of due care. In the instant
case, no contributory negligence can be imputed to the private respondent, considering the following
test formulated in the early case of Picart v. Smith, 37 Phil. 809 (1918):

The test by which to determine the existence of negligence in a particular case may
be stated as follows: Did the defendant in doing the alleged negligent act use that
reasonable care and caution which an ordinarily prudent man would have used in the
same situation? If not, then he is guilty of negligence. The law here in effect adopts
the standard supposed to be supplied by the imaginary conduct of the
discreet paterfamilias of the Roman law. The existence of the negligence in a given
case is not determined by reference to the personal judgment of the actor in the
situation before him. The law considers what would be reckless, blameworthy, or
negligent in the man of ordinary intelligence and prudence and determines liability by
that.

The question as to what would constitute the conduct of a prudent man in a given
situation must of course be always determined in the light of human experience and
in view of the facts involved in the particular case. Abstract speculations cannot be
here of much value but this much can be profitably said: Reasonable men-overn their
conduct by the circumstances which are before them or known to them. They are
not, and are not supposed to be omniscient of the future. Hence they can be
expected to take care only when there is something before them to suggest or warn
of danger. Could a prudent man, in the case under consideration, foresee harm as a
result of the course actually pursued' If so, it was the duty of the actor to take
precautions to guard against that harm. Reasonable foresight of harm, followed by
the ignoring of the suggestion born of this prevision, is always necessary before
negligence can be held to exist.... [Picart v. Smith, supra, p. 813; Emphasis
supplied.]

The private respondent, who was the plaintiff in the case before the lower court, could not have
reasonably foreseen the harm that would befall him, considering the attendant factual
circumstances. Even if the private respondent had been looking where he was going, the step in
question could not easily be noticed because of its construction. As the trial court found:

In connection with the incident testified to, a sketch, Exhibit O, shows a section of the
floorings oil which plaintiff had tripped, This sketch reveals two pavements adjoining
each other, one being elevated by four and one-fourth inches than the other. From
the architectural standpoint the higher, pavement is a step. However, unlike a step
commonly seen around, the edge of the elevated pavement slanted outward as one
walks to one interior of the terrace. The length of the inclination between the edges of
the two pavements is three inches. Obviously, plaintiff had stepped on the inclination
because had his foot landed on the lower pavement he would not have lost his
balance. The same sketch shows that both pavements including the inclined portion
are tiled in red cement, and as shown by the photograph Exhibit A, the lines of the
tilings are continuous. It would therefore be difficult for a pedestrian to see the
 inclination especially where there are plenty of persons in the terrace as was the
situation when plaintiff fell down. There was no warning sign to direct one's attention
to the change in the elevation of the floorings. [Rollo, pp. 2829.]

III

Finally, petitioner appeals to this Court the award of damages to private respondent. The liability of
CAA to answer for damages, whether actual, moral or exemplary, cannot be seriously doubted in
view of one conferment of the power to sue and be sued upon it, which, as held in the case of Rayo
v. Court of First Instance, supra, includes liability on a claim for quasi-dilict. In the aforestated case,
the liability of the National Power Corporation to answer for damages resulting from its act of
sudden, precipitate and simultaneous opening of the Angat Dam, which caused the death of several
residents of the area and the destruction of properties, was upheld since the o,rant of the power to
sue and be sued upon it necessarily implies that it can be held answerable for its tortious acts or any
wrongful act for that matter.

With respect to actual or compensatory damages, the law mandates that the same be proven.

Art. 2199. Except as provided by law or by stipulation, one are entitled to an

adequate compensation only for such pecuniary loss suffered by him as he has duly
proved. Such compensation is referred to as actual on compensatory damages [New
Civil Code].

Private respondent claims P15,589.55 representing medical and hospitalization bills. This Court
finds the same to have been duly proven through the testimony of Dr. Ambrosio Tangco, the
physician who attended to private respondent (Rollo, p. 26) and who Identified Exh. "H" which was
his bill for professional services [Rollo, p. 31].

Concerning the P20,200.00 alleged to have been spent for other expenses such as the
transportation of the two lawyers who had to represent private respondent abroad and the
publication of the postponement notices of the wedding, the Court holds that the same had also
been duly proven. Private respondent had adequately shown the existence of such losses and the
amount thereof in the testimonies before the trial court [CA decision, p. 81. At any rate, the findings
of the Court of Appeals with respect to this are findings of facts [One Heart Sporting Club, Inc. v.
Court of Appeals, G.R. Nos. 5379053972, Oct. 23, 1981, 108 SCRA 4161 which, as had been held
time and again, are, as a general rule, conclusive before this Court [Sese v. Intermediate Appellate
Court, G.R. No. 66186, July 31, 1987,152 SCRA 585].

With respect to the P30,000.00 awarded as moral damages, the Court holds private respondent
entitled thereto because of the physical suffering and physical injuries caused by the negligence of
the CAA [Arts. 2217 and 2219 (2), New Civil Code].

With respect to the award of exemplary damages, the Civil Code explicitly, states:

Art. 2229. Exemplary or corrective damages, are imposed, by way of example or

correction for the public good, in addition to the moral, liquidated or compensatory

Art. 2231. In quasi-delicts, exemplary damages may be granted if the defendant

acted with gross negligence.
Gross negligence which, according to the Court, is equivalent to the term "notorious negligence" and
consists in the failure to exercise even slight care [Caunan v. Compania General de Tabacos, 56
Phil. 542 (1932)] can be attributed to the CAA for its failure to remedy the dangerous condition of the
questioned elevation or to even post a warning sign directing the attention of the viewers to the
change in the elevation of the floorings notwithstanding its knowledge of the hazard posed by such
elevation [Rollo, pp. 28-29; Record oil Appeal, p. 57]. The wanton disregard by the CAA of the safety
of the people using the viewing deck, who are charged an admission fee, including the petitioner
who paid the entrance fees to get inside the vantage place [CA decision, p. 2; Rollo, p. 25] and are,
therefore, entitled to expect a facility that is properly and safely maintained — justifies the award of
exemplary damages against the CAA, as a deterrent and by way of example or correction for the
public good. The award of P40,000.00 by the trial court as exemplary damages appropriately
underscores the point that as an entity changed with providing service to the public, the CAA. like all
other entities serving the public. has the obligation to provide the public with reasonably safe service.

Finally, the award of attorney's fees is also upheld considering that under Art. 2208 (1) of the Civil
Code, the same may be awarded whenever exemplary damages are awarded, as in this case,
and,at any rate, under Art. 2208 (11), the Court has the discretion to grant the same when it is just
and equitable.

However, since the Manila International Airport Authority (MIAA) has taken over the management
and operations of the Manila International Airport [renamed Ninoy Aquino International Airport under
Republic Act No. 6639] pursuant to Executive Order No. 778 as amended by executive Orders Nos.
903 (1983), 909 (1983) and 298 (1987) and under Section 24 of the said Exec. Order 778, the MIAA
has assumed all the debts, liabilities and obligations of the now defunct Civil Aeronautics
Administration (CAA), the liabilities of the CAA have now been transferred to the MIAA.

WHEREFORE, finding no reversible error, the Petition for review on certiorari is DENIED and the
decision of the Court of Appeals in CA-G.R. No. 51172-R is AFFIRMED.

SO ORDERED.

Fernan, C.J., Gutierrez, Jr., Feliciano and Bidin, JJ., concur.