Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-9596 February 11, 1916
MARCOS MENDOZA, plaintiff-appellee,
vs.
FRANCISCO DE LEON, ET AL., defendants-appellants.
Luis Morales for appellant.
Hugo Sansano for appellee.
TRENT, J.:
This is an action for damages against the individual members of the municipal council of the
municipality of Villasis, Pangasinan, for the revocation of the lease of an exclusive ferry privilege duly
awarded to the plaintiff under the provisions of Act No. 1643 of the Philippine Commission. After use
of a little more than one year, the plaintiff was forcibly ejected under and pursuance of a resolution
adopted by the herein defendants, awarding a franchise for the same ferry to another person.
Municipalities of the Philippine Islands organized under the Municipal Code have both governmental
and corporate or business functions. Of the first class are the adoption of regulation against fire and
disease, preservation of the public peace, maintenance of municipal prisons, establishment of primary
schools and post-offices, etc. Of the latter class are the establishment of municipal waterworks for the
use of the inhabitants, the construction and maintenance of municipal slaughterhouses, markets, stables,
bathing establishments, wharves, ferries, and fisheries. Act No. 1643 provides that the use of each
fishery, fish-breeding ground, ferry, stable, market, and slaughterhouse belonging to any municipality
or township shall be let to the highest bidder annually or for such longer period not exceeding five
years as may have been previously approved by the provincial board of the province in which the
municipality or township is located.
The two fold character of the powers of a municipality under our Municipal Code (Act No. 82) is so
apparent and its private or corporate powers so numerous and important that we find no difficulty in
reaching the conclusion that the general principles governing the liability of such entities to applicable
to it. The distinction between governmental powers on the one hand, and corporate or proprietary or
business powers on the other, as the latter class is variously described in the reported cases, has been
long recognized in the United States and there is no dissent from the doctrine.
In Wilcox vs. City of Rochester (190 N. Y., 137), it was said:
The broad general doctrine of the Maxmilian case (Maxmilian vs. Mayor, etc., New York, 62 N.
Y. 160), which is certainly not now open to question in the courts of this State, is that "two
kinds of duties are imposed on municipal corporations, the one governmental and a branch of
the general administration of the state, the other quasi private or corporate;" and "that in the
exercise of the latter duties the municipality is liable for the acts of its officers and agents, while
in the former it is not." (Cullen, J., in Lefrois vs. Co. of Monroe, 162 N. Y., 563, 567.)
The Maxmilian case is quoted with approval in Bond vs. Royston (130 Ga., 646).
In Co. Comm's of Anne Arundel Co. vs. Duckett (20 Md., 468, 476; 83 Am. Dec., 557), it was said:
With regard to the liability of a public municipal corporation for the acts of its officers, the
distinction is between an exercise of those legislative powers which it holds for public purposes,
 and as part of the government of the country, and those private franchise which belong to it, as a
creation of the law; within the sphere of the former, it enjoys, the exemption of the government,
from responsibility for its own acts, and for the acts of those who are independent corporate
officers, deriving their rights and duties from the sovereign power. But in regard to the latter, it
is responsible for the acts of those who are in law its agents, though they may not be appointed
by itself.
This case was quoted with approval in Trammell vs. Russellville (34 Ark., 105; 36 Am. Rep., 1); and in
McIlhenney vs. Wilmington (127 N. C., 146; 50 L. R. A. 470).
In Cummings vs. Lobsitz (42 Okla., 704; L. R. A., N. S., 1915 B, p. 415), it was said:
A distinction is made between the liability of a municipal corporation for the acts of its officers
in the exercise of powers which it possesses for public purpose and which it holds as agent of
the state, and those powers which embrace private or corporate duties and are exercised for the
advantage of the municipality and its inhabitants. When the acts of its officers come within the
powers which it has as agent of the state, it is exempt from liability for its own acts and the acts
of its officers; if the acts of the officer or agent of the city are for the special benefits of the
corporation in its private or corporate interest, such officer is deemed the agent or servant of the
city, but where the act is not in relation to a private or corporate interest of the municipality, but
for the benefit of the public at large, such acts by the agents and servants are deemed to be acts
by public or state officers, and for the public benefit.
The distinction is also recognized by Dillon in his work on Municipal Corporations (5th ed.) section 38
and 39.
As is indicated in some of the above quoted cases, the municipality is not liable for the acts of its
officers or agents in the performance of its governmental functions. Governmental affairs do not lose
their governmental character by being delegated to the municipal governments. Nor of the municipality
which, for convenience the state allows the municipality to select, change their character. To preserve
the peace, protect the morals and health of the community and so on to administer government, whether
it be done by the central government itself or is shifted to a local organization. And the state being
immune for injuries suffered by private individuals in the administration of strictly governmental
functions, like immunity is enjoyed by the municipality in the performance of the same duties, unless it
is expressly made liable by statute.
The state cannot, without its consent expressed through legislation, be sued for injuries resulting
from an act done in the exercise of its lawful governmental powers and pertaining to the
administration of government. ... Municipal corporations are agents of the state in the exercise
of certain governmental powers. The preservation of the health and peace of its inhabitants and
fire protection afforded the property owner, are governmental functions. (Burke vs. City of
South Omaha, 79 Neb., 793.)
In Nicholson vs. Detroit (129 Mich., 246; 56 L. R. A., 601), it was said:
It is the well-settled rule that the state is not liable to private persons who suffer injuries through
the negligence of its officers — and the rule extends to township and cities — while in the
performance of state functions, imposed upon them by law. This subject is fully discussed in
Detroit vs. Blackeby (21 Mich., 84; 4 Am. Rep., 450). It was there held that cities are
governmental agencies, and that their "officers are in no such sense municipal agents; that their
negligence is the neglect of the municipality; nor will their misconduct be chargeable against
them, unless act complained of the either authorized or ratified." And in a large number of cases
it has been held that there is no such liability on the part of such governmental agency unless it
 has been imposed by statute, and in such case it is necessarily limited by the statute.
In Claussen vs. City of Luverne (103 Minn., 491; 15 L. R. A., N. S., 698), it was said:
It is elementary that neither the state nor any of the subdivisions, like a municipality, through
which it operates, is liable for torts committed by public officers, save in definitely excepted
classes of cases. The exemption is based upon the sovereign character of the state and its
agencies, and upon the absence of obligation, and not on the ground that no means for remedy
have been provided. "The government," said Mr. Justice Story, "does not undertake to guarantee
to any person the fidelity of the officers or agents whom it employs, since that would involve in
all its operations in endless embarrassments, difficulties and losses, which would be subversive
of the public interest." (U.S. vs. Kirkpatrick, 9 Wheat., 720; 6 L. ed., 199; Beers vs. Arkansas,
20 How., 527; 15 L. ed., 991.) This general exemption has been applied to municipal
corporations in so far as the acts complained of were, in the language of the memorandum of the
trial court, "done in exercising powers for the public at large as a governing agency." While so
acting, the city cannot be held liable for misfeasance; and ... the rule of respondeat superior has
no application.
Nor are officers or agents of the Government charged with the performance of governmental duties
which are in their nature legislative, or quasi judicial, liable for the consequences of their official acts,
unless it be shown that they act willfully and maliciously, and with the express purpose of inflicting
injury upon the plaintiff. If they exercise their honest judgment in the performance of their duties, their
errors cannot be charged against them. (People vs. May, 251 Ill., 54; Salt Lake County vs. Clinton
[Utah, 1911], 117 Pac., 1075; Comanche County vs. Burks (Tex. Civ. App., 1914), 166 S. W., 470;
Monnier vs. Godbold, 116 La., 165; 5 L. R. A., N. S., 463; Ray vs. Dodd, 132 Mo. App., 444; Johnson
vs. Marsh, 82 N. J. L.M, 4; Gregory vs. Brooks, 37 Conn., 3645; Lecourt vs. Gaster, 50 La. Ann., 521.)
So it may be said that in so far as its governmental functions are concerned, a municipality is not liable
at all, unless expressly made so by statute; nor are its officers, so long as they perform their duties
honestly and in good faith. The most common illustration of both phrases of this rule is the action for
false imprisonment so often brought either against a municipality or a municipal police officer. (Bartlett
vs. City of Columbus, 101 Ga., 300; 44 L. R. A., 795; Peter vs. City of Lindborg, 40 Kan., 654.) So, in
Field vs. City of Des Moines (39 Iowa, 575), it was held that a municipality, acting under authority
given it by the central government to destroy houses in the path of a conflagration, was not liable in
damages in the absence of a statute expressly making it so.
From what has already been said, it should be clear that a municipality is not exempt from
liability for the negligent performance of its corporate or proprietary or business functions. In
the administration of its patrimonial property, it is to be regarded as a private corporation or
individual so far as its liability to third persons on contract or in tort is concerned. Its contracts,
validly entered into, may be enforced and damages may be collected from it for the torts of its
officers or agents within the scope of their employment in precisely the same manner and to the
same extent as those of private corporations or individuals. As to such matters the principles of
respondeat superior applies. It is for these purposes that the municipality is made liable to suits in
the courts.
Municipal corporations are subject to be sued upon contracts and in tort. In a previous
chapter we have considered at length the authority of such corporations to make
contracts, the mode of exercising, and the effect of transcending the power. This leaves but
little to add in this place respecting their liability in actions ex contractu. Upon an
authorized contract — that is, upon a contract within the scope of the charter or
legislative powers of the corporation and duly made by the proper officers or agents —
they are liable in the same manner and to the same extent as private corporations or
 natural persons. (Dillon on Municipal Corporations, 5th ed., sec. 1610.)
The same author says in section 1647:
The rule of law is a general one, that the superior or employer must answer civilly of the
negligence or want of skill of his agent or servant in the course or line of his employment,
by which another, who is free from contributory fault, is injured. Municipal corporations,
under the conditions herein stated, fall within the operation of this rule of law, and are
liable, accordingly, to civil actions for damages when the requisite elements of liability
coexist. To create such liability, it is fundamentally necessary that the act done which is
injurious to others must be within the scope of the corporate powers as prescribed by
charter or positive enactment (the extent of which powers all persons are bound, at their
peril, know); in other words, it must not be ultra vires in the sense that it is not within the
power or authority of the corporation to act in reference to it under any circumstances. If
the act complained of necessarily lies wholly outside of the general or special powers of the
corporation as conferred in its charter or by statute, the corporation can in no event be
liable to an action for damages, whether it directly commanded the performance of the act
whether it be done by its officers without its express command; for a corporation cannot
of course be impliedly liable to a greater extent than it could make itself by express
corporate vote or action.
It often happens that the same agent or agency has both a governmental and a corporate character.
Such, for instance, are a municipal water system designed both for protection against fire (a
governmental function) and to supply water to the inhabitants for profit (a corporate function) (Omaha
Water Co. vs. Omaha, 12 L.R.A., N. S., 736l 77 C.C.A., 267; 147 Fed., 1; Judson vs. Borough of
Winsted, 80 Conn., 3841 15 L. R. A., N. S., 91); a municipal light plant both for lighting the streets (a
governmental function) and for furnishing light to the inhabitants at a profit (a corporate function)
(Fisher vs. NewBern, 140 N. C., 506; 111 Am. St. Rep., 857); an agent who is at the same time a police
officer and a caretaker of a municipal toll bridge (Woodhull vs. Mayor, etc., of New York, 150 N. Y.,
450). It is, also, sometimes the case that considerable difficulty is experienced in determining whether a
particular municipal duty is governmental or corporate.
But questions such as these do not arise in the case at bar. Here is it clear that the leasing of a municipal
ferry to the highest bidder for a specified period of time is not a governmental but a corporate function.
Such a lease, when validly entered into, constitutes a contract with the lessee which the municipality is
bound to respect. The matter is thus summed up by Dillon on Municipal Corporations (5th ed., sec.
1306):
Ordinances made by municipalities under charter or legislative authority, containing grants to
water and light companies and other public service corporations of the right to use the streets for
pipes, mains, etc., upon the condition of the performance of service by the grantee, are, after
acceptance and performance by the grantee, contracts protected by the prohibition of the Federal
Constitution against the enactment of any State law impairing the obligation of contracts.
Again, this author, adopting the language of the court in In re Fay (15 Pick. [Mass.], 243), says, in
section 277:
If a municipal corporation, seized of a ferry, lease the same, through the agency of the mayor
and aldermen, with a covenant of quiet enjoyment, this covenant will not restrain in them by
statute, to license another ferry over the same waters, if in their judgment (which cannot be
reviewed by the courts) the public necessity and convenience require it. On such a covenant the
city may be liable to the covenantees; but the powers vested in the city officers as trustees for
the public cannot be thus abrogated. If, however, city in its corporate capacity is the legal owner
 of an exclusive franchise, its grantees or lessees would hold it, notwithstanding any license to
others, whether granted by the mayor and aldermen or any other tribunal.
It seems clear, therefore, that under the provisions of Municipal Code and Act No. 1634, above referred
to, the plaintiff had a vested right to the exclusive operation of the ferry in question for the period of his
lease. Were the municipality a party to this action, it would be patent that a judgment for damages
against it for the rescission of the contract would be proper. This, be it said, is the usual method of
exacting damages, either ex contractu or ex delicto arising from the exercise of corporate powers of
municipalities. But the present action is against the members of the municipal council personally, and
the question arises: Are they liable? In administering the patrimonial property of municipalities, the
municipal council occupies, for most purposes, the position of a board of directors of a private
corporation. In disposing of the local public utilities, if the term may be used, such as the fishing and
ferry rights, etc., they must exercise considerable judgment. It required some considerable amount of
business acumen to compel performance on the part of lessees of these privileges in accordance with
the terms of their leases and in a manner which will not cause the property to deteriorate. Questions
must continually arise which are not expressly provided for in contracts and which must be settled, if
possible, in a manner that will preserve the just claims of the municipality. Indeed, it is not at all
improbable that on occasion the councilors may have reason to believe that a particular contract
has been rescinded by the other party or has never been legally entered into, in both of which
cases, decisive steps must be taken to safeguard the interest of the municipality. Thus, in
Municipality of Moncada vs. Cajuigan (21 Phil. Rep., 184), the lessee of a municipal fishery was
evicted for failing to pay his quarterly rents. The municipal authorities rightly held that the
contract was rescinded but forcibly evicted the lessee instead of resorting to the courts. Hence, in
an action by the municipality against the lessee and his bondsmen to recover rent arrears,
damages were allowed the lessee on his counterclaim for the loss caused by the forcible eviction.
Nevertheless, we do not think the councilors could have been held personally liable for their error
in resorting to forcible eviction of the lessee. Theirs was an error of judgment, and honest mistake
on their part as to the rights of the municipality in the premises. We think the rule of personal
liability should be with municipal councilors in such matters as it is with the directors or
managers of an ordinary private corporation.
Under the rule that directors are not liable for mistakes of judgment, it follows naturally that
they are not liable for the mismanagement of the corporate affairs where such mismanagement
is a mistake of judgment. The wisdom of this rule is not only approved by common experience
but by law writers and all courts. A rule so rigid as to hold directors personally liable for honest
mistakes in corporate management would deter all prudent business men from accepting such
positions. The remedy of stockholders in all such cases is by a change in the directory. ... The
rule is that courts will not interfere even in the doubtful cases. But directors and managing
officers may be liable for mismanagement to warrant the interposition of a court either as
against the contemplated action of the directors, or a majority of the stockholders, or to give
relief by way of damages after the action as been taken; a case must be made out which plainly
shows that such action is so far opposed to the true interests of the corporation itself as to lead
to clear inference that no one thus acting could have been influenced by any honest desire to
secure such interests, but that he must have acted with an intent to subserve some outside
purpose, regardless of the consequences to the corporation, and in a manner inconsistent with its
interests. (Thompson on Corporations, sec. 1298.)
In the case at bar, there is not a scintilla of evidence that there was any justifiable reason for forcibly
evicting the plaintiff from the ferry which he had leased. On the contrary, the defendant councilors
attempted to justify their action on the ground that the ferry which he was operating was not the one
leased to him; this, in spite of the fact that the vice-president had personally placed him in possession
of it more than a year before, and the fact that he had operated this ferry for over year, evidently with
the knowledge of the defendants. The evidence is so clear that the ferry of which the plaintiff was
dispossessed was the one which he leased that no reasonable man would entertain any doubt whatever
upon the question. Hence, we cannot say that in rescinding the contract with the plaintiff, thereby
making the municipality liable to an action for damages for no valid reason at all, the defendant
councilors were honestly acting for the interests of the municipality. We are, therefore, of the opinion
that the defendants are liable jointly and severally for the damages sustained by the plaintiff from the
rescission of his contract of lease of the ferry privilege in question. In reaching this conclusion, we
have not failed to take into consideration the rule enunciated in Dennison vs. The Moro Province (R.G.
No. 8173, March 28, 1914; not reported), nor the distinction made by the courts in the United States
between the liability of a municipal corporation, made such acceptance of a village or city charter, and
the involuntary quasi corporations known as counties, towns, school districts, and especially the
townships of New England. Upon the question of the amount of damages sustained, we accept the
findings of the lower court.
For the foregoing reasons, the judgment appealed from is affirmed, with cost. So ordered.
Arellano, C.J., Torres, Johnson and Araullo, JJ., concur.
Moreland, J., concurs in the result.

THIRD DIVISION

LIWAYWAY VINZONS-CHATO, G.R. No. 141309

Petitioner,
Present:
- versus - Ynares-Santiago, J. (Chairperson),
Austria-Martinez,
Chico-Nazario, and
Nachura, JJ.
FORTUNE TOBACCO
CORPORATION, Promulgated:
Respondent.
June 19, 2007
x ---------------------------------------------------------------------------------------- x

DECISION

YNARES-SANTIAGO, J.:

Petitioner assails the May 7, 1999 Decision[1] of the Court of Appeals in CA-G.R. SP
No. 47167, which affirmed the September 29, 1997 Order[2] of the Regional Trial Court
(RTC) of Marikina, Branch 272, in Civil Case No. 97-341-MK, denying petitioners
motion to dismiss. The complaint filed by respondent sought to recover damages for the
alleged violation of its constitutional rights arising from petitioners issuance of Revenue
Memorandum Circular No. 37-93 (RMC 37-93), which the Court declared invalid in
Commissioner of Internal Revenue v. Court of Appeals.[3]

Petitioner Liwayway Vinzons-Chato was then the Commissioner of Internal Revenue

while respondent Fortune Tobacco Corporation is an entity engaged in the manufacture
of different brands of cigarettes, among which are Champion, Hope, and More
cigarettes.

On June 10, 1993, the legislature enacted Republic Act No. 7654 (RA 7654), which took
effect on July 3, 1993. Prior to its effectivity, cigarette brands Champion, Hope, and
More were considered local brands subjected to an ad valorem tax at the rate of 20-45%.
However, on July 1, 1993, or two days before RA 7654 took effect, petitioner issued
RMC 37-93 reclassifying Champion, Hope, and More as locally manufactured cigarettes
bearing a foreign brand subject to the 55% ad valorem tax.[4] RMC 37-93 in effect
subjected Hope, More, and Champion cigarettes to the provisions of RA 7654,
specifically, to Sec. 142,[5] (c)(1) on locally manufactured cigarettes which are
currently classified and taxed at 55%, and which imposes an ad valorem tax of 55%
provided that the minimum tax shall not be less than Five Pesos (P5.00) per pack.[6]

On July 2, 1993, at about 5:50 p.m., BIR Deputy Commissioner Victor A. Deoferio, Jr.
sent via telefax a copy of RMC 37-93 to Fortune Tobacco but it was addressed to no one
in particular. On July 15, 1993, Fortune Tobacco received, by ordinary mail, a certified
xerox copy of RMC 37-93. On July 20, 1993, respondent filed a motion for
reconsideration requesting the recall of RMC 37-93, but was denied in a letter dated July
30, 1993.[7] The same letter assessed respondent for ad valorem tax deficiency
amounting to P9,598,334.00 (computed on the basis of RMC 37-93) and demanded
payment within 10 days from receipt thereof.[8] On August 3, 1993, respondent filed a
petition for review with the Court of Tax Appeals (CTA), which on September 30, 1993,
issued an injunction enjoining the implementation of RMC 37-93.[9] In its decision
dated August 10, 1994, the CTA ruled that RMC 37-93 is defective, invalid, and
unenforceable and further enjoined petitioner from collecting the deficiency tax
assessment issued pursuant to RMC No. 37-93. This ruling was affirmed by the Court of
Appeals, and finally by this Court in Commissioner of Internal Revenue v. Court of
Appeals.[10] It was held, among others, that RMC 37-93, has fallen short of the
requirements for a valid administrative issuance.

On April 10, 1997, respondent filed before the RTC a complaint[11] for damages against
petitioner in her private capacity. Respondent contended that the latter should be held
liable for damages under Article 32 of the Civil Code considering that the issuance of
RMC 37-93 violated its constitutional right against deprivation of property without due
process of law and the right to equal protection of the laws.
Petitioner filed a motion to dismiss[12] contending that: (1) respondent has no cause of
action against her because she issued RMC 37-93 in the performance of her official
function and within the scope of her authority. She claimed that she acted merely as an
agent of the Republic and therefore the latter is the one responsible for her acts; (2) the
complaint states no cause of action for lack of allegation of malice or bad faith; and (3)
the certification against forum shopping was signed by respondents counsel in violation
of the rule that it is the plaintiff or the principal party who should sign the same.

On September 29, 1997, the RTC denied petitioners motion to dismiss holding that to
rule on the allegations of petitioner would be to prematurely decide the merits of the
case without allowing the parties to present evidence. It further held that the defect in the
certification against forum shopping was cured by respondents submission of the
corporate secretarys certificate authorizing its counsel to execute the certification against
forum shopping. The dispositive portion thereof, states:

WHEREFORE, foregoing premises considered, the motion to dismiss filed by the defendant Liwayway
Vinzons-Chato and the motion to strike out and expunge from the record the said motion to dismiss
filed by plaintiff Fortune Tobacco Corporation are both denied on the grounds aforecited. The
defendant is ordered to file her answer to the complaint within ten (10) days from receipt of this Order.

SO ORDERED.[13]

The case was elevated to the Court of Appeals via a petition for certiorari under Rule 65.
However, same was dismissed on the ground that under Article 32 of the Civil Code,
liability may arise even if the defendant did not act with malice or bad faith. The
appellate court ratiocinated that Section 38, Book I of the Administrative Code is the
general law on the civil liability of public officers while Article 32 of the Civil Code is
the special law that governs the instant case. Consequently, malice or bad faith need not
be alleged in the complaint for damages. It also sustained the ruling of the RTC that the
defect of the certification against forum shopping was cured by the submission of the
corporate secretarys certificate giving authority to its counsel to execute the same.
Undaunted, petitioner filed the instant recourse contending that the suit is grounded on
her acts done in the performance of her functions as a public officer, hence, it is Section
38, Book I of the Administrative Code which should be applied. Under this provision,
liability will attach only when there is a clear showing of bad faith, malice, or gross
negligence. She further averred that the Civil Code, specifically, Article 32 which allows
recovery of damages for violation of constitutional rights, is a general law on the
liability of public officers; while Section 38, Book I of the Administrative Code is a
special law on the superior public officers liability, such that, if the complaint, as in the
instant case, does not allege bad faith, malice, or gross negligence, the same is
dismissible for failure to state a cause of action. As to the defect of the certification
against forum shopping, she urged the Court to strictly construe the rules and to dismiss
the complaint.

Conversely, respondent argued that Section 38 which treats in general the public officers
acts from which civil liability may arise, is a general law; while Article 32 which deals
specifically with the public officers violation of constitutional rights, is a special
provision which should determine whether the complaint states a cause of action or not.
Citing the case of Lim v. Ponce de Leon,[14] respondent alleged that under Article 32 of
the Civil Code, it is enough that there was a violation of the constitutional rights of the
plaintiff and it is not required that said public officer should have acted with malice or in
bad faith. Hence, it concluded that even granting that the complaint failed to allege bad
faith or malice, the motion to dismiss for failure to state a cause of action should be
denied inasmuch as bad faith or malice are not necessary to hold petitioner liable.

The issues for resolution are as follows:

(1) May a public officer be validly sued in his/her private capacity for acts done in connection with the
discharge of the functions of his/her office?

(2) Which as between Article 32 of the Civil Code and Section 38, Book I of the Administrative Code
should govern in determining whether the instant complaint states a cause of action?

(3) Should the complaint be dismissed for failure to comply with the rule on certification against forum
shopping?

(4) May petitioner be held liable for damages?

On the first issue, the general rule is that a public officer is not liable for damages
which a person may suffer arising from the just performance of his official duties
and within the scope of his assigned tasks. [15] An officer who acts within his
authority to administer the affairs of the office which he/she heads is not liable for
damages that may have been caused to another, as it would virtually be a charge
against the Republic, which is not amenable to judgment for monetary claims
without its consent.[16] However, a public officer is by law not immune from
damages in his/her personal capacity for acts done in bad faith which, being outside
the scope of his authority, are no longer protected by the mantle of immunity for
official actions.[17]

Specifically, under Section 38, Book I of the Administrative Code, civil liability may
arise where there is bad faith, malice, or gross negligence on the part of a superior public
officer. And, under Section 39 of the same Book, civil liability may arise where the
subordinate public officers act is characterized by willfulness or negligence. Thus

Sec. 38. Liability of Superior Officers. (1) A public officer shall not be civilly liable for acts done in
the performance of his official duties, unless there is a clear showing of bad faith, malice or gross
negligence.

xxxx
Section 39. Liability of Subordinate Officers. No subordinate officer or employee shall be civilly
liable for acts done by him in good faith in the performance of his duties. However, he shall be liable
for willful or negligent acts done by him which are contrary to law, morals, public policy and good
customs even if he acts under orders or instructions of his superior.

In addition, the Court held in Cojuangco, Jr. v. Court of Appeals,[18] that a public
officer who directly or indirectly violates the constitutional rights of another, may be
validly sued for damages under Article 32 of the Civil Code even if his acts were not so
tainted with malice or bad faith.

Thus, the rule in this jurisdiction is that a public officer may be validly sued in his/her
private capacity for acts done in the course of the performance of the functions of the
office, where said public officer: (1) acted with malice, bad faith, or negligence; or (2)
where the public officer violated a constitutional right of the plaintiff.

Anent the second issue, we hold that the complaint filed by respondent stated a cause of
action and that the decisive provision thereon is Article 32 of the Civil Code.

A general statute is one which embraces a class of subjects or places and does not omit
any subject or place naturally belonging to such class. A special statute, as the term is
generally understood, is one which relates to particular persons or things of a class or to
a particular portion or section of the state only.[19]

A general law and a special law on the same subject are statutes in pari materia and
should, accordingly, be read together and harmonized, if possible, with a view to giving
effect to both. The rule is that where there are two acts, one of which is special and
particular and the other general which, if standing alone, would include the same matter
and thus conflict with the special act, the special law must prevail since it evinces the
legislative intent more clearly than that of a general statute and must not be taken as
intended to affect the more particular and specific provisions of the earlier act, unless it
is absolutely necessary so to construe it in order to give its words any meaning at all.[20]

The circumstance that the special law is passed before or after the general act does not
change the principle. Where the special law is later, it will be regarded as an exception
to, or a qualification of, the prior general act; and where the general act is later, the
special statute will be construed as remaining an exception to its terms, unless repealed
expressly or by necessary implication.[21]

Thus, in City of Manila v. Teotico,[22] the Court held that Article 2189 of the Civil Code
which holds provinces, cities, and municipalities civilly liable for death or injuries by
reason of defective conditions of roads and other public works, is a special provision and
should prevail over Section 4 of Republic Act No. 409, the Charter of Manila, in
determining the liability for defective street conditions. Under said Charter, the city shall
not be held for damages or injuries arising from the failure of the local officials to
enforce the provision of the charter, law, or ordinance, or from negligence while
enforcing or attempting to enforce the same. As explained by the Court:

Manila maintains that the former provision should prevail over the latter, because Republic Act 409 is a
special law, intended exclusively for the City of Manila, whereas the Civil Code is a general law,
applicable to the entire Philippines.

The Court of Appeals, however, applied the Civil Code, and, we think, correctly. It is true that, insofar
as its territorial application is concerned, Republic Act No. 409 is a special law and the Civil Code a
general legislation; but, as regards the subject matter of the provisions above quoted, Section 4 of
Republic Act 409 establishes a general rule regulating the liability of the City of Manila for damages or
injury to persons or property arising from the failure of city officers to enforce the provisions of said
Act or any other law or ordinance, or from negligence of the city Mayor, Municipal Board, or other
officers while enforcing or attempting to enforce said provisions. Upon the other hand, Article 2189 of
the Civil Code constitutes a particular prescription making provinces, cities and municipalities . . .
liable for damages for the death of, or injury suffered by, any person by reason specifically of the
defective condition of roads, streets, bridges, public buildings, and other public works under their
control or supervision. In other words, said section 4 refers to liability arising from negligence, in
general, regardless of the object thereof, whereas Article 2189 governs liability due to defective
streets, in particular. Since the present action is based upon the alleged defective condition of a
road, said Article 2189 is decisive thereon.[23]

In the case of Bagatsing v. Ramirez,[24] the issue was which law should govern the
publication of a tax ordinance, the City Charter of Manila, a special act which treats
ordinances in general and which requires their publication before enactment and after
approval, or the Tax Code, a general law, which deals in particular with ordinances
levying or imposing taxes, fees or other charges, and which demands publication only
after approval. In holding that it is the Tax Code which should prevail, the Court
elucidated that:

There is no question that the Revised Charter of the City of Manila is a special act since it relates only
to the City of Manila, whereas the Local Tax Code is a general law because it applies universally to all
local governments. Blackstone defines general law as a universal rule affecting the entire community
and special law as one relating to particular persons or things of a class. And the rule commonly said is
that a prior special law is not ordinarily repealed by a subsequent general law. The fact that one is
special and the other general creates a presumption that the special is to be considered as remaining an
exception of the general, one as a general law of the land, the other as the law of a particular case.
However, the rule readily yields to a situation where the special statute refers to a subject in
general, which the general statute treats in particular. Th[is] exactly is the circumstance
obtaining in the case at bar. Section 17 of the Revised Charter of the City of Manila speaks of
ordinance in general, i.e., irrespective of the nature and scope thereof, whereas, Section 43 of the
Local Tax Code relates to ordinances levying or imposing taxes, fees or other charges in
particular. In regard, therefore, to ordinances in general, the Revised Charter of the City of
Manila is doubtless dominant, but, that dominant force loses its continuity when it approaches
the realm of ordinances levying or imposing taxes, fees or other charges in particular. There, the
Local Tax Code controls. Here, as always, a general provision must give way to a particular provision.
Special provision governs.

Let us examine the provisions involved in the case at bar. Article 32 of the Civil Code
provides:

ART. 32. Any public officer or employee, or any private individual, who directly or indirectly
obstructs, defeats, violates, or in any manner impedes or impairs any of the following rights and
liberties of another person shall be liable to the latter for damages:

xxxx

(6) The right against deprivation of property without due process of law;

xxxx

(8) The right to the equal protection of the laws;

xxxx

The rationale for its enactment was explained by Dean Bocobo of the Code
Commission, as follows:

DEAN BOCOBO. Article 32, regarding individual rights, Attorney Cirilo Paredes proposes that Article
32 be so amended as to make a public official liable for violation of another persons constitutional
rights only if the public official acted maliciously or in bad faith. The Code Commission opposes this
suggestion for these reasons:

The very nature of Article 32 is that the wrong may be civil or criminal. It is not necessary therefore
that there should be malice or bad faith. To make such a requisite would defeat the main purpose of
Article 32 which is the effective protection of individual rights. Public officials in the past have abused
their powers on the pretext of justifiable motives or good faith in the performance of their duties.
Precisely, the object of the Article is to put an end to official abuse by the plea of good faith. In the
United States this remedy is in the nature of a tort.

Mr. Chairman, this article is firmly one of the fundamental articles introduced in the New Civil Code to
implement democracy. There is no real democracy if a public official is abusing and we made the
article so strong and so comprehensive that it concludes an abuse of individual rights even if done in
good faith, that official is liable. As a matter of fact, we know that there are very few public officials
who openly and definitely abuse the individual rights of the citizens. In most cases, the abuse is
justified on a plea of desire to enforce the law to comply with ones duty. And so, if we should limit the
scope of this article, that would practically nullify the object of the article. Precisely, the opening object
of the article is to put an end to abuses which are justified by a plea of good faith, which is in most
cases the plea of officials abusing individual rights.[25]
The Code Commission deemed it necessary to hold not only public officers but also
private individuals civilly liable for violation of the rights enumerated in Article 32 of
the Civil Code. It is not necessary that the defendant under this Article should have acted
with malice or bad faith, otherwise, it would defeat its main purpose, which is the
effective protection of individual rights. It suffices that there is a violation of the
constitutional right of the plaintiff.[26]

Article 32 was patterned after the tort in American law.[27] A tort is a wrong, a tortious
act which has been defined as the commission or omission of an act by one, without
right, whereby another receives some injury, directly or indirectly, in person, property, or
reputation.[28] There are cases in which it has been stated that civil liability in tort is
determined by the conduct and not by the mental state of the tortfeasor, and there are
circumstances under which the motive of the defendant has been rendered immaterial.
The reason sometimes given for the rule is that otherwise, the mental attitude of the
alleged wrongdoer, and not the act itself, would determine whether the act was
wrongful.[29] Presence of good motive, or rather, the absence of an evil motive, does
not render lawful an act which is otherwise an invasion of anothers legal right; that
is, liability in tort is not precluded by the fact that defendant acted without evil
intent.[30]

The clear intention therefore of the legislature was to create a distinct cause of action in
the nature of tort for violation of constitutional rights, irrespective of the motive or intent
of the defendant.[31] This is a fundamental innovation in the Civil Code, and in enacting
the Administrative Code pursuant to the exercise of legislative powers, then President
Corazon C. Aquino, could not have intended to obliterate this constitutional protection
on civil liberties.
In Aberca v. Ver,[32] it was held that with the enactment of Article 32, the principle of
accountability of public officials under the Constitution acquires added meaning and
assumes a larger dimension. No longer may a superior official relax his vigilance or
abdicate his duty to supervise his subordinates, secure in the thought that he does not
have to answer for the transgressions committed by the latter against the constitutionally
protected rights and liberties of the citizen. Part of the factors that propelled people
power in February 1986 was the widely held perception that the government was callous
or indifferent to, if not actually responsible for, the rampant violations of human rights.
While it would certainly be too naive to expect that violators of human rights would
easily be deterred by the prospect of facing damage suits, it should nonetheless be made
clear in no uncertain terms that Article 32 of the Civil Code makes the persons who are
directly, as well as indirectly, responsible for the transgression, joint tortfeasors.

On the other hand, Sections 38 and 39, Book I of the Administrative Code, laid down the
rule on the civil liability of superior and subordinate public officers for acts done in the
performance of their duties. For both superior and subordinate public officers, the
presence of bad faith, malice, and negligence are vital elements that will make them
liable for damages. Note that while said provisions deal in particular with the liability of
government officials, the subject thereof is general, i.e., acts done in the performance of
official duties, without specifying the action or omission that may give rise to a civil suit
against the official concerned.

Contrarily, Article 32 of the Civil Code specifies in clear and unequivocal terms a
particular specie of an act that may give rise to an action for damages against a public
officer, and that is, a tort for impairment of rights and liberties. Indeed, Article 32 is the
special provision that deals specifically with violation of constitutional rights by public
officers. All other actionable acts of public officers are governed by Sections 38 and 39
of the Administrative Code. While the Civil Code, specifically, the Chapter on Human
Relations is a general law, Article 32 of the same Chapter is a special and specific
provision that holds a public officer liable for and allows redress from a particular class
of wrongful acts that may be committed by public officers. Compared thus with Section
38 of the Administrative Code, which broadly deals with civil liability arising from
errors in the performance of duties, Article 32 of the Civil Code is the specific provision
which must be applied in the instant case precisely filed to seek damages for violation of
constitutional rights.

The complaint in the instant case was brought under Article 32 of the Civil Code.
Considering that bad faith and malice are not necessary in an action based on Article 32
of the Civil Code, the failure to specifically allege the same will not amount to failure to
state a cause of action. The courts below therefore correctly denied the motion to dismiss
on the ground of failure to state a cause of action, since it is enough that the complaint
avers a violation of a constitutional right of the plaintiff.

Anent the issue on non-compliance with the rule against forum shopping, the subsequent
submission of the secretarys certificate authorizing the counsel to sign and execute the
certification against forum shopping cured the defect of respondents complaint. Besides,
the merits of the instant case justify the liberal application of the rules.[33]

WHEREFORE, in view of the foregoing, the petition is DENIED. The Decision of the
Court of Appeals dated May 7, 1999 which affirmed the Order of the Regional Trial
Court of Marikina, Branch 272, denying petitioners motion to dismiss, is AFFIRMED.
The Presiding Judge, Regional Trial Court of Marikina, Branch 272, is hereby
DIRECTED to continue with the proceedings in Civil Case No. 97-341-MK with
dispatch.
With costs.

SO ORDERED.

CONSUELO YNARES-SANTIAGO
Associate Justice

WE CONCUR:

MA. ALICIA AUSTRIA-MARTINEZ

Associate Justice

MINITA V. CHICO-NAZARIO ANTONIO EDUARDO B. NACHURA

Associate Justice Associate Justice

ATTESTATION

I attest that the conclusions in the above decision were reached in consultation before the
case was assigned to the writer of the opinion of the Courts Division.
CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson, Third Division
 CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution and the Division Chairpersons
Attestation, it is hereby certified that the conclusions in the above Decision were reached
in consultation before the case was assigned to the writer of the opinion of the Courts
Division.

REYNATO S. PUNO
Chief Justice

[1]Rollo, pp. 62-71. Penned by Associate Justice Hector L. Hofilea and concurred in by Associate
Justices Omar U. Amin and Teodoro P. Regino.
[2] Id. at 598-602. Penned by Judge Reuben P. De La Cruz.
[3] 329 Phil. 987 (1996).
[4] Prior to its amendment by RA 7654, Section 142(c)(1) of the National Internal Revenue Code, (as amended by R.A. No.
6956), provides:
On locally manufactured cigarettes bearing a foreign brand, fifty-five percent (55%) Provided, That this rate shall
apply regardless of whether or not the right to use or title to the foreign brand was sold or transferred by its owner to the
local manufacturer. Whenever it has to be determined whether or not a cigarette bears a foreign brand, the listing of brands
manufactured in foreign countries appearing in the current World Tobacco Directory shall govern.
[5] Pertinent portion thereof, states:
SEC. 142. Cigars and Cigarettes.
xxxx
(c) Cigarettes packed by machine. - There shall be levied, assessed and collected on cigarettes packed by machine a tax at
the rates prescribed below based on the constructive manufacturers wholesale price or the actual manufacturers wholesale
price, whichever is higher:
(1) On locally manufactured cigarettes which are currently classified and taxed at fifty-five percent (55%) or the
exportation of which is not authorized by contract or otherwise, fifty-five (55%) provided that the minimum tax shall not be
less than Five Pesos (P5.00) per pack.
(2) On other locally manufactured cigarettes, forty-five percent (45%) provided that the minimum tax
shall not be less than Three Pesos (P3.00) per pack.
[6]Commissioner of Internal Revenue v. Court of Appeals, supra note 3 at 1001-1003; Separate
Opinion of Justice Josue N. Bellosillo, id. at 1014-1015.
[7] Id. at 1004.
[8] Rollo, pp. 542-543.
[9] Id. at 569.
[10]Supra note 3. The motion for reconsideration of the Courts Decision was denied with finality on
October 7, 1996.
[11] Rollo, pp. 533-552.
[12] Id. at 555-584.
[13] Id. at 602. Petitioner filed a motion for reconsideration but was denied on December 4, 1997 (Rollo, pp. 603-606).
[14] No. L-22554, August 29, 1975, 66 SCRA 299.
Orocio v. Commission on Audit, G.R. No. 75959, August 31, 1992, 213 SCRA 109, 126, cited in
[15]
Agpalo, Philippine Administrative Law, 2004 edition, p. 473.
[16] Republic v. Court of Appeals, G.R. No. 86147, February 26, 1990, 182 SCRA 721, 728.
[17] Meneses v. Court of Appeals, G.R. No. 82220, July 14, 1995, 246 SCRA 162, 174.
[18] G.R. No. 119398, July 2, 1999, 309 SCRA 602, 604.
[19] Agpalo, Statutory Construction, second edition (1990), p. 197.
[20] Id. at 197-198.
[21] Id. at 198.
[22] G.R. No. L-23052, January 29, 1968, 22 SCRA 267.
[23] Id. at 269-270. Emphasis supplied.
[24] G.R. No. L-41613, December 17, 1976, 74 SCRA 306, 311-312. (Emphasis added)
[25] Report of the Special Joint Committee of the Congress on the Amendments to the New Civil Code, XVI The Lawyers
Journal, No. 5, May 31, 1951, 258. Cited in Lim v. Ponce de Leon, supra note 14 at 309. Article 32 of the Civil Code was
also applied in the following cases: Aberca v. Ver, G.R. No. L-69866, April 15, 1988, 160 SCRA 590; MHP Garments, Inc.
v. Court of Appeals, G.R. No. 86720, September 2, 1994, 236 SCRA 227; Cojuangco, Jr. v. Court of Appeals, supra note 18;
Obra v. Court of Appeals, G.R. No. 120852, October 28, 1999, 317 SCRA 594; Lui v. Matillano, G.R. No. 141176, May 27,
2004, 429 SCRA 449; Silahis International Hotel, Inc. v. Soluta, G.R. No. 163087, February 20, 2006, 482 SCRA 660.
[26] Silahis International Hotel, Inc. v. Soluta, supra.
Report of the Special Joint Committee of the Congress on the Amendments to the New Civil Code,
[27]
XVI The Lawyers Journal, No. 5, May 31, 1951, p. 259.
[28] 74 Am Jur 2d, Torts, 1, 620.
[29] Id., 6, 623-624.
[30] Id. at 624.
[31]In the report on the Special Joint Committee of the Congress on the Amendments to the New Civil
Code, Dean Bocobo expressed that while the defendant may not be exonerated on the basis solely of
good faith, the inherent justifiability of his/her act, which is up to the courts to decide under the
peculiar circumstance of each case, may be the basis of absolution. Thus:
CONGRESSMAN DE LEON. So that Mr. Justice, under the provisions [Article 32] of the new Civil
Code, there is no more plea of acting in good faith?
DEAN BOCOBO. It would not be good faith but it would be inherent justifiability of the act, which is
up to our courts to decide under the peculiar circumstance of each case, because we had back in our
minds the old saying that Hell is paved with good intentions. (Lawyers Journal, No. 5, May 31, 1951,
p. 259.)
[32] Supra note 25.
[33] LDP Marketing, Inc. v. Monter, G.R. No. 159653, January 25, 2006, 480 SCRA 137, 144-145.
EN BANC
[G.R. No. L-9228. December 26, 1958.]
LEONARDO DIAZ, ET AL., petitioners-appellees, vs. FELIX P. AMANTE, respondent-appellant.
Benjamin V. Coruña and Jose J. Diaz for appellees.
Assistant City Attorney Raymundo Rallos and Angel F. Lobaton for appellant.
SYLLABUS
1. PUBLIC OFFICERS; DISMISSAL OF MEMBERS OF POLICE FORCE; WHEN ILLEGAL.
— The dismissal of detectives or members of the police force made in a manner contrary to the
procedure prescribed in Republic Act No. 557, is illegal and of no valid effect. Executive Order No.
264 promulgated on April 1, 1940 is no longer in force, the same having been impliedly repealed by
said Republic Act No. 557.
2. ID.; APPOINTMENT OF NON-ELIGIBLE TO POSITION IN THE CLASSIFIED SERVICE;
TENURE OF OFFICE. — In accordance with Section 682 of the Revised Administrative Code, when a
position in the classified service is filed by one who is not a qualified civil service eligible, his
appointment is limited to the period necessary to enable the appointing officer to secure a civil service
eligible, qualified for the position, and in no case is such temporary appointment for a longer period
than three months.
3. MUNICIPAL CORPORATIONS; LIABILITY FOR DAMAGES ARISING FROM
NEGLIGENT ACTS OF OFFICIALS; LIABILITY OF NEGLIGENT OFFICIAL. — The city
government cannot be made liable for damages arising from the failure of the mayor to enforce any
provisions of the law or from his negligence in the enforcement of any of its provisions. The mayor is
personally liable.
4. ID.; LIABILITY OF NEGLIGENT OFFICIALS FOR MORAL DAMAGES. — But while
respondent mayor in separating the petitioners from the service acted with gross negligence, or in bad
faith, the award of moral damages against said mayor is not justified, for the same is already included
in, if not absorbed by, the back salaries he was ordered to pay to petitioners.
5. ID.; LIABILITY FOR EXEMPLARY DAMAGES. — Exemplary damages should be imposed
if only to curtail the abuses that some public officials are prone to commit upon coming to power in
utter disregard of the civil service rules which constitute the only safeguard of the tenure of office
guaranteed by our Constitution.
DECISION
BAUTISTA ANGELO, J p:
Leonardo Diaz and Alberto Aguilar filed a petition for mandamus in the Court of First Instance of
Negros Occidental against Felix P. Amante in his capacity as Mayor of Bacolod City to compel the
latter to reinstate them to their positions as members of the police force of said city.
The trial court, after hearing, rendered judgment ordering the respondent to reinstate petitioners as
prayed for and to pay them (a) their unpaid salaries from August 16, 1951 up to the date of their
reinstatement; (b) the sum of P5,000.00 as moral damages; (c) the sum of P2,000.00 as exemplary
damages; and (d) to pay the costs of the proceedings. Respondent took the case on appeal to this Court
on the ground that the only issue involved is one of law.
Leonardo Diaz was given a temporary appointment as third class patrolman on July 23, 1946 with an
annual salary of P480.00. On October 1, 1946, he was given a promotion in salary in the amount of
P600.00 per annum. On November 18, 1946, he was appointed also in a temporary capacity as second
class officer with a salary of P660.00 per annum. On January 16, 1947, he was promoted to first class
traffic officer with a salary of P690.00 per annum. On April 1, 1947, he was promoted in salary to
P720.00 per annum. On July 1, 1947, he was given for the first time a permanent appointment as
second class detective with a salary of P900.00 per annum. On July 1, 1948 and July 1, 1949, he was
given a salary increase as permanent second class detective with a salary of P960.00 and P1,020.00 per
annum respectively. On June 1, 1950, he was again promoted to first class detective with a salary of
P1,080.00 per annum. And on July 1, 1951, his salary as permanent first class detective was increased
to P1,320.00 per annum. He is a civil service eligible, having passed the qualifying examination for
patrolman with a rating of 83%.
Alberto Aguilar is not a civil service eligible but on September 8, 1949 he was appointed as patrolman
effective July 1, 1949. On February 8, 1950, he was promoted to second class detective, and when he
was dismissed on August 15, 1951, he was a first class detective. He is an old veteran, having been a
guerrilla under Lt. Col. Salvador Abcede.
On August 15, 1951, both Diaz and Aguilar were notified by respondent of their separation from the
service effective at the close of business hours of said day for lack of trust and confidence upon the
recommendation of the chief of police. With regard to Aguilar, he was separated on the additional
ground of immorality and of maintaining a house of prostitution. His position was filled by a civil
service eligible on August 16, 1951. As a justification for the action he has taken against petitioners,
respondent invoked the provisions of Executive Order No. 264 promulgated by President Quezon on
April 1, 1940 believing that petitioners as detectives who occupy confidential positions could be
separated upon a moment's notice for lack of trust and confidence, and his authority to dismiss them
was sustained by the Executive Secretary who in an indorsement intimated that the removal of a
detective from the service for lack of confidence was lawful. His action was also sustained by a
provincial circular issued on April 3, 1954 by the Executive Secretary confirming the propriety of his
action.
With regard to petitioner Diaz, who admittedly was a civil service eligible and was extended on more
than one occasion a permanent appointment as member of the police force of Bacolod City, there is no
question that his dismissal was illegal for having been made in a manner contrary to the procedure
prescribed in Republic Act No. 557. 1 Executive Order No. 264 is no longer in force, the same having
been impliedly repealed by said Act. Thus, in Mission vs. Del Rosario, 94 Phil., 483; 50 Off. Gaz., No.
4, 1571, this Court said: "It appearing that petitioners, as detectives, or members of the police force of
Cebu City, were separated from the service not for any of the grounds enumerated in Republic Act No.
557, and without the benefit of investigation or trial therein prescribed, the conclusion is inescapable
that their removal is illegal and of no valid effect. In this sense, the provisions of Executive Order No.
264 of the President of the Philippines should be deemed as having been impliedly repealed in so far as
they may be inconsistent with the provisions of said Act."
A different consideration should be made with regard to petitioner Aguilar for it appears that he was not
a civil service eligible even if he was extended several appointments as detective or patrolman by the
City Mayor of Bacolod, for not being a civil service eligible, he is not qualified for a permanent
appointment. Thus, in one case, this Court said: "In accordance with Section 682 of the Revised
Administrative Code, when a position in the classified service is filled by one who is not a qualified
civil service eligible, his appointment is limited to the period necessary to enable the appointing officer
to secure a civil service eligible, qualified for the position, and in no case is such temporary
appointment for a longer period than three months. As petitioners herein were not civil service eligibles
at the time of their appointment, and it does not appear that they have since then qualified for the
positions they are holding, their respective appointments were only for a period of three months and not
more." (Pana, et al. vs. City Mayor, et al., 94 Phil., 103; 50 Off. Gaz. [1] 146). 2 The case of Aguilar
comes squarely within the purview of this ruling.
The lower court ordered respondent not only to reinstate petitioners but also to pay them their back
salaries and moral and exemplary damages in the aggregate amount of P7,000.00. We agree with the
trial court that respondent should be made to pay the back salaries of petitioners for the reason that
under the Charter of the City of Bacolod (Section 5, Commonwealth Act No. 326), the city cannot be
made liable for damages arising from the failure of the mayor to enforce any provisions of the law or
from his negligence in the enforcement of any of its provisions. We may also agree with the trial court
in holding that respondent in separating the petitioners from the service acted with gross negligence, if
not in bad faith, considering the events of contemporary history that had happened in his province and
his official acts amounting to abuse of authority of which the trial court took judicial notice in its
decision, but we believe that the sum of P5,000.00 it slapped upon respondent as moral damages is not
justified, for the same is already included in, if not absorbed by, the back salaries he was ordered to pay
to petitioners. And with regard to the sum of P2,000.00 which respondent was ordered to pay as
exemplary damages, the same is somewhat excessive, considering that respondent acted in the belief
that he had the requisite authority under Executive Order No. 264 of the President which at that time
has not yet been declared repealed by the Supreme Court. But these damages should be imposed if only
to curtail the abuses that some public officials are prone to commit upon coming to power in utter
disregard of the civil service rules which constitute the only safeguard of the tenure of office
guaranteed by our Constitution. These damages should therefore be reduced to P1,000.00.
Wherefore, the decision appealed from is hereby modified as follows: respondent, or the incumbent
Mayor of Bacolod City, is ordered to reinstate petitioner Leonardo Diaz as prayed for; respondent
Amante is ordered to pay petitioner Diaz his unpaid salaries from August 16, 1951 up to the date of his
reinstatement and the sum of P1,000.00 as exemplary damages. In all other respects, the decision
appealed from is hereby reversed. With costs against respondent.
Paras, C.J., Padilla, Montemayor, Labrador, Concepcion, Reyes, J.B.L. and Endencia, JJ., concur.
Footnotes
1. Uy vs. Rodriguez, 95 Phil., 493; 50 Off. Gaz., No. 8, pp. 3574- 76; Abella vs. Rodriguez, 95
Phil. 289; 50 Off. Gaz., No. 7, pp. 3039- 41; Mission vs. Del Rosario, 94 Phil., 488; 50 Off. Gaz., No.
4, pp. 1571; Palamine vs. Zagado, 94 Phil., 494; 50 Off. Gaz., No. 4, pp. 1566-67.
2. See also Reyes, et al. vs. Dones, et al., 103 Phil., 884; 56 Off. Gaz. (3) 509.

033 Phil 508

FIRST DIVISION
[G.R. No. 9596. February 11, 1916.]
MARCOS MENDOZA, plaintiff-appellee, vs. FRANCISCO DE LEON ET AL., defendants-appellants.
Luis Morales for the appellants.
Hugo Sansano for appellee.
SYLLABUS
1. MUNICIPAL CORPORATIONS; GOVERNMENTAL POWERS AND CORPORATE
POWERS; LIABILITY TO PRIVATE PERSONS. — The Municipal Code confers both governmental
and business or corporate powers upon municipal corporations. For the exercise of the former it is not
liable to private persons. It's liability to them for the wrongful exercise of the latter is the same as that
of a private corporation or individual.
2. ID.; ID.; ID.; OFFICERS AND AGENTS — Officers and agents of municipal corporations
charged with the performance of governmental duties which are their nature legislative, judicial, or
quasi-judicial, are not liable for the consequences of their official act unless it be shown that they act
willfully and maliciously, with the express purpose of inflicting injury upon the plaintiff.
3. ID.; ID.; ID.; ID. — Officers of municipalities charged with the administration of patrimonial
property of a municipal corporation are liable for mismanagement of its affairs as are directors or
managing officers of private corporations; not for mere mistakes of judgment, but only when their acts
are so far opposed to the true interests of the municipality as to lead to the clear inference that no one
thus acting could have been influenced by any honest desire to secure such interests, but that they must
have acted with an intent to subserve some outside purpose regardless of the consequences to the
municipality and in a manner inconsistent with its interest.
4. ID.; ID.; ID.; ID. — The defendant councillors regularly leased an exclusive ferry privilege to
the plaintiff for two years. After continuous user of a little more than one year, they forcibly evicted
him on the pretext that he was not operating the ferry leased to him. Held: Under the evidence of
record, that there is no manner of doubt that this pretext was absolutely without foundation and as there
was therefore no occasion whatever for rescinding the contract, the defendant councillors are liable
personally for the damages resulting to the lessee by their wrongful action.
DECISION
TRENT, J p:
This is an action for damages against the individual members of the municipal council of the
municipality of Villasis, Pangasinan, for the revocation of the lease of an exclusive ferry privilege
awarded to the plaintiff under the provisions of Act. No. 1634 of the Philippine Commission. After user
of a little more than one year, the plaintiff was forcibly ejected under and in pursuance of a resolution
adopted by the herein defendants, awarding a franchise for the same ferry to another person.
Municipalities of the Philippine Islands organized under the Municipal Code have both governmental
and corporate or business functions. Of the first class are the adoption of regulations against fire and
disease, preservation of the public peace maintenance of municipal prisons, establishment of primary
schools and post-offices, etc. Of the latter class are the establishment of municipal waterworks for the
use of the inhabitants, the construction and maintenance of municipal slaughterhouses, markets, stables,
bathing establishments, wharves, ferries, and fisheries. Act No. 1634 provides that the use of each
fishery, fish-breeding ground, ferry, stable, market, slaughterhouse belonging to any municipality or
township shall be let to the highest bidder annually or for such longer period not exceeding five years
as may have been previously approved by the provincial board of the province in which the
municipality or township is located.
The twofold character of the powers of a municipality, under our Municipal Code (Act No. 82) is so
apparent and its private or corporate powers so numerous and important that we find no difficulty in
reaching the conclusion that the general principles governing the liability of such entities to private
individuals as enunciated in the United States are applicable to it. The distinction between
governmental powers on the one hand, and corporate or proprietary or business powers on the other, as
the latter class is variously described in the reported cases, has long been recognized in the United
States and there is no dissent from the doctrine.
In Wilcox vs. City of Rochester (190 N.Y., 137), it was said:
"The broad general doctrine of the Maxmilian case (Maxmilian vs. Mayor, etc., New York, 62 N.Y.,
160), which is certainly not now open to question in the courts of this State, is that 'two kinds of duties
are imposed on municipal corporations, the one governmental and a branch of the general
administration of the state, the other quasi private or corporate;' and 'that in the exercise of the latter
duties the municipality is liable for the acts of its officers and agents, while in the former it is not.'
(Cullen, J., in Lefrois vs Co. of Monroe, 162 N.Y., 563, 567.)"
The Maxmilian case is quoted with approval in Bond vs. Royston (130 Ga., 646).
In Co. Comm's of Anne Arundel Co. vs. Duckett (20 Md., 468, 476; 83 Am. Dec., 557), it was said:
"With the regard to the liability of a public municipal corporation for the acts of its officers, the
distinction is between an exercise of those legislative powers which it holds for the public purposes,
and as part of the government of the country, and those private franchises which belong to it, as a
creation of the law; within the sphere of the former, it enjoys the exemption of the government, from
responsibility for its own acts, and for the acts of those who are independent corporate officers,
deriving their rights and duties from the sovereign power. But in regard to the latter, it is responsible for
the acts of those who are in law its agents, though they may not be appointed by itself."
This case is quoted with approval in Trammell vs. Russellville (34 Ark., 105; 36 Am. Rep., 1); and in
McIlheney vs. Wilmington (127 N. C., 146; 50 L. R. A., 470).
In Cummings vs. Lobsitz (42 Okla., 704; L. R. A., N. S., 1915 B, p. 415), it was said:
"A distinction is made between the liability of a municipal corporation for the acts of its own officers in
the exercise of powers which it possesses for the public purpose and which it holds as agent of the
state, and those powers which embrace private or corporate duties and are exercised for the advantage
of the municipality and its inhabitants. When the acts of its officers come within the powers which it
has as agent of the state, it is exempt from liability for its own acts and the acts of its officers; if the acts
of the officer or agent of the city are for the special benefit of the corporation in its private or corporate
interest, such officer is deemed the agent or servant of the city, but where the act is not in relation to a
private or corporate interest of the municipality, but for the benefit of the public at large, such acts by
the agents and servants are deemed to be acts by public or state officers, and for the public benefit."
The distinction is also recognized by Dillon in his work on Municipal Corporations (5th ed.) sections
38 and 39.
As is indicated in some of the above quoted cases, the municipality is not liable for the acts of its
officers or agents in the performance in the performance of its governmental functions.
Governmental affairs do not lose their governmental character by being delegated to the
municipal government. Nor does the fact that such duties are performed by such officers of the
municipality which, for convenience, the state allows the municipality to select, change their
character. To preserve the peace, protect the morals and health of the community and so on is to
administer government, whether it be done by the central government itself or is shifted to a local
organization. And the state being immune for injuries suffered by private individuals in the
administration of strictly governmental functions, like immunity is enjoyed by the municipality
in the performance of the same duties, unless it is expressly made liable by statute.
"The state cannot, without its consent expressed through legislation, be sued for injuries resulting from
an act done in the exercise of its lawful governmental powers and pertaining to the administration of
government. . . . Municipal corporations are agents of the state in the exercise of certain governmental
powers. The preservation of the health and peace of its inhabitants and fire protections afforded the
property owner, are governmental functions." (Burke vs. City of South Omaha, 79 Neb., 793)
In Nicholson vs. Detroit (129 Mich., 246; 56. L. R. A., 601), it was said:
"It is the well-settled rule that the state is not liable to private persons who suffer injuries through
negligence of its officers — and the rule extends to townships and cities — while in the performance of
state functions, imposed upon them by the law. This subject is fully discussed in Detroit vs. Blackeby
(21 Mich., 84; 4 Am. Rep., 450). It was there held that cities are governmental agencies, and that their
'officers are in no such sense municipal agents; that their negligence is the neglect of the municipality;
nor will their misconduct be chargeable against them, unless the act complained of be either authorized
or ratified.' And in a large number of cases it has been held that there is no such liability on the part of
such governmental agency unless it has been imposed by statute, and in such case it is necessarily
limited by the statute."
In Claussen vs City of Luverne (103 Minn., 491; 15 L. R. A., N. S., 698), it was said:
"It is elementary that neither the state nor any of the subdivisions, like a municipality, through which it
operates, is liable for torts committed by public officers, save in definitely excepted classes of cases.
The exemption is based upon the sovereign character of the state and its agencies, and upon the absence
of obligation, and not on the ground that by no means for remedy has been provided. 'The government,'
said Mr. Justice Story, 'does not undertake to guarantee to any person the fidelity of the officers or
agents whom it employs, since that would involve it in all its operations in endless embarrassments,
difficulties and losses, which would be subversive of the public interest.' (U.S. vs Kirkpatrick, 9
Wheat., 720; 6 L. ed., 199; Beers vs. Arkansas, 20 How., 527; 15 L. ed., 991) This general exemption
has been applied to municipal corporations in so far as the acts complained of were, in the language of
the memorandum of the trial court, 'done in exercising powers for the public at large as a governing
agency.' While so acting, the city cannot be held liable for misfeasance; and . . . the rule of respondeat
superior has no application."
Nor are officers or agents of the Government charged with the performance of governmental duties
which are in their nature legislative, or quasi judicial, liable for the consequences of their official acts,
unless it be shown that they act willfully and maliciously, and with the express purpose of inflicting
injury upon the plaintiff. If they exercise their honest judgment in the performance of their duties, their
errors cannot be charged against them. (People vs. May, 251 Ill., 54; Salt Lake County vs. Clinton
[Utah, 1911], 117 Pac., 1075; Comanche County vs. Burks (Tex. Civ. App., 19140, 166 S. W., 470;
Monnier vs. Godbold, 1166 La., 165; 5 L. R. A., N. S., 463; Ray vs. Dodd, 132 Mo. App., 444; Johnson
vs. Marsh, 82 N. J. L., 4; Gregory vs. Brooks, 37 Conn., 365; Lecourt vs. Gaster, 50 La. Ann., 521.) So
it may be said that in so far as its governmental functions are concerned, a municipality is not liable at
all, unless expressly made by statute; nor are its officers, so long as they perform their duties honestly
and in good faith. The most common illustration of both phases of this rule is the action for false
imprisonment so often brought against a municipality or a municipal officer. (Bartlett vs. City of
Columbus, 101 Ga., 300; 44 L. R. A. 795; Peters vs. City of Lindsborg, 40 Kan., 654.) So, in Field vs.
City of Des Moines (39 Iowa, 575), it was held that a municipality, acting under authority given it by
the central government to destroy houses in the path of a conflagration, was not liable in damages in
the absence of a statute expressly making it so.
From what has already been said, it should be clear that a municipality is not exempt from liability for
the negligent performance of its corporate or proprietary or business functions. In the administration of
its patrimonial property, it is to be regarded as a private corporation or individual 153113-13 so far as
its liability to third persons on contract or in tort is concerned. Its contracts, valid entered into, may be
enforced and damages may be collected from it for the torts of its officers or agents within the scope of
their employment in precisely the same manner and to the same extent as those of private corporations
or individuals. As to such matters the principles respondeat superior applies. It is for these purposes that
the municipality is made liable to suits in the courts.
"Municipal corporations are subject to be sued upon contracts and in tort. In a previous chapter we
have considered at length the authority of such corporations to make contracts, the mode of exercising,
and the effect of transcending the power. This leaves but little to add in this place respecting their
liability in actions ex contractu. Upon an authorized contract — that is, upon a contract within the
scope of the charter or legislative powers of the corporation and duly made by the proper officers or
agents — they are liable in the same manner and to the same extent as private corporations or natural
persons." (Dillon on Municipal Corporations, 5th ed., sec. 1610.)
The same author says in section 1647:
"The rule of law is a general one, that the superior or employer must answer civilly for the
negligence or want of skill of his agent or servant in the course or line of his employment, by
which another, who is free from contributory fault, is injured. Municipal corporations, under the
conditions herein stated, fall within the operation of this rule of law, and are liable, accordingly,
to civil actions for damages when the requisite elements of liability coexist. To create such
liability, it is fundamentally necessary that the act done which is injurious to others must be
within the scope of the corporate powers as prescribed by charter or positive enactment (the
extent of which powers all persons are bound, at their peril, to know); in other words, it must not
be ultra vires in the sense that it is not within the power or authority of the corporation to act in
reference to it under any circumstances. If the act complained of necessarily lies wholly outside of
the general or special powers of the corporation as conferred in its charter or by statute, the
corporation can in no event be liable to an action for damages, whether it directly commanded
the performance of the act or whether it be done by its officers without its express command; for
a corporation cannot of course, be impliedly liable to a greater extent than it could make itself by
express corporate vote or action."
It often happens that the same agent or agency has both a governmental and a corporate character.
Such, for instance, are a municipal water system designed both for protection against fire (a
governmental function) and to supply water to the inhabitants for profit (a corporate function) (Omaha
Water Co., vs. Omaha, 12 L. R. A., N. S. 736; 77 C. C. A., 267; 147 Fed., 1; Judson vs. Borough of
Winsted, 80 Conn., 384; 15 L. R. A., N. S., 91); a municipal light plant both for lighting the streets (a
governmental function) and for furnishing light to the inhabitants at a profit (a corporate function)
(Fisher vs. New Bern, 140 N. C., 506; 111 Am. St. Rep., 857); an agent who is at the same time a
police officer and a caretaker of a municipal toll bridge (Woodhull vs. Mayor, etc., of New York, 150
N. Y., 450). It is, also, sometimes the case that considerable difficulty is experienced in determining
whether a particular municipal duty is governmental or corporate.
But questions such as these do not arise in the case at bar. Here it is clear that the leasing of a municipal
ferry to the highest bidder for a specified period of time is not a governmental but corporate function.
Such a lease, when validly entered into, constitutes a contract with the lessee which the municipality is
bound to respect. The matter is thus summed up by Dillon on Municipal Corporations (5th ed., sec.
1306):
"Ordinances made by municipalities under charter or legislative authority, containing grants to water
and light companies and other public service corporations of the right to use the street pipes, mains,
etc., upon the condition of the performance of service by the grantee, are, after acceptance and
performance by the grantee, contracts protected by the prohibition of the Federal Constitution against
the enactment of any State Law impairing the obligation of contracts."
Again, this author, adopting the language of the court in In re Fay (15 Pick. [Mass.], 243), says, in
section 277:
"If a municipal corporation, seized of a ferry, lease the same, through the agency of the mayor and
aldermen, with a covenant of quiet enjoyment, this covenant will not restrain the mayor and aldermen
from exercising the powers vested in them by statute, to license another ferry over the same waters, if
in their judgment (which cannot be reviewed by the courts) the public necessity and convenience
require it. On such a covenant the city may be liable to the covenantees; but the powers vested in the
city officers as trustees of the public cannot be thus abrogated. If, however, the city in its corporate
capacity is the legal owner of an exclusive franchise, its grantees or lessees would hold it,
notwithstanding any license to others, whether granted by the mayor and aldermen or any other
tribunal."
It seems clear, therefore, that under the provisions of the Municipal Code and Act No. 1634, above
referred to, the plaintiff had a vested right to the exclusive operation of the ferry in question for the
period of his lease. Were the municipality a party to this action, it would be patent that a judgment for
damages against it for the rescission of the contract would be proper. This, be it said, is the usual
method of exacting damages, either ex contractu or ex delicto arising from the exercise of corporate
powers of municipalities. But the present action is against the members of the municipal council
personally, and the question arise: Are they liable? In administering the patrimonial property of
municipalities, the municipal council occupies, for most purposes, the position of a board of directors
of a private corporation. In disposing of the local public utilities, if the term may be used, such as the
fishing and ferry rights, etc., they must exercise considerable judgment. It requires some considerable
amount of business acumen to compel performance on the part of lessees of these privileges in
accordance with the terms of their leases and in a manner in which will not cause the property to
deteriorate. Questions must continually arise which are not expressly provided for in the contracts and
which must be settled, if possible, in a manner that will preserve the just claims of the municipality.
Indeed, it is not at all improbable that on occasion the councilors may have reason to believe that a
particular contract has been rescinded by the other party or has never been legally entered into, in both
of which cases, decisive steps must be taken to safeguard the interest of the municipality. Thus, in
Municipality of Moncada vs. Cajuigan (21 Phil. Rep., 184), the lessee of a municipal fishery was
evicted for failing to pay his quarterly rents. The municipal authorities rightly held that the contract was
rescinded but forcibly evicted the lessee instead of resorting to the courts. Hence, in an action by the
municipality against the lessee and his bondsmen to recover rent arrears, damages were allowed the
lessee on his counterclaim for the loss caused by the forcible eviction. Nevertheless, we do not think
the councilors could have been personally held liable for their error in resorting to forcible eviction of
the lessee. Theirs was an error of judgment, and honest mistake on their part as to the rights of the
municipality in the premises. We think the rule of personal liability should be with municipal
councilors in such matters as it is with the directors or managers of an ordinary private corporation.
"Under the rule that directors are not liable for mistakes of judgment, it follows naturally that they are
not liable for the mismanagement of the corporate affairs where such mismanagement is a mistake of
judgment. The wisdom of this rule is not only approved by common experience but by law writers and
all courts. A rule so rigid as to hold directors personally liable for honest mistakes in corporate
management would deter all prudent business men from accepting such positions. The remedy of
stockholders in all such cases is by a change in the directory. . . . The rule is that the courts will not
interfere even in doubtful cases. But directors and managing directors may be liable for
mismanagement to warrant the interposition of a court either as against the contemplated action of the
directors, or a majority of the stockholders, or to give relief by way of damages after the action has
been taken; a case must be made out which plainly shows that such action is so far opposed to the true
interests of the corporation itself as to lead to the clear inference that no thus acting could have been
influenced by any honest desire to secure such interests, but that he must have acted with an intent to
subserve some outside purpose, regardless of the consequences to the corporation, and in a manner
inconsistent with its interests." (Thompson on Corporations, sec. 1298.)
In the case at bar, there is not a scintilla of evidence that there was any justifiable reason for forcibly
evicting the plaintiff from the ferry which he had leased. On the contrary, the defendant councilors
attempted to justify their action on the ground that the ferry which he was operating was not the one
leased to him; this in spite of the fact the vice-president had personally placed him in possession of it
more than a year before, and the fact that he had operated this ferry for over a year, evidently with the
knowledge of the defendants. The evidence is so clear that the ferry of which the plaintiff was
dispossessed was the one which he had leased that no reasonable man would entertain any doubt
whatever upon the question. Hence, we cannot say that in rescinding the contract with the plaintiff,
thereby making the municipality liable to an action for damages for no valid reason at all, the defendant
councilors were honestly acting for the interests of the municipality. We are, therefore, of the opinion
that the defendants are liable jointly and severally for the damages sustained by the plaintiff from the
rescission of his contract of lease of the ferry privilege in question. In reaching this conclusion, we
have not failed to take into consideration the rule enunciated in Dennison vs. The Moro Province (R. G.
No. 8173, March 28, 1914; not reported), nor the distinction made by the courts in the United States
between the liability of a municipal corporation, made such by acceptance of a village or city charter,
and the involuntary quasi corporations known as counties, towns, schools districts, and especially the
townships of New England. Upon the question of the amount of damages sustained, we accept the
findings of the lower court.
For the foregoing reasons, the judgment appealed from is affirmed, with costs. So ordered.
Arellano, C. J., Torres, Johnson, and Araullo, JJ. concur.
Moreland, J. concurs in the result.

EN BANC
[G.R. No. 94125. March 3, 1993.]
MAYOR JESUS MIGUEL YULO, REPRESENTING THE MUNICIPALITY OF CALAMBA,
LAGUNA, petitioner, vs. THE CIVIL SERVICE COMMISSION, APOLONIO A. ELASIGUE, AND
TEOFILO G. MAMPLATA, ET AL., ** respondents.
Emilio C. Capulong, Jr. for private respondents.
SYLLABUS
1. LAW ON PUBLIC OFFICIALS; REMOVAL FROM OFFICE; GROUNDS;
"QUESTIONABLE INTEGRITY"; MUST BE PROVEN WITH SUFFICIENT EVIDENCE. — As
records indicate, the Merit Systems Protection Board found that there was no sufficient evidence to
prove the guilt of private respondents. As to what were the charges levelled against the dismissed
employees, petitioner Yulo could merely insinuate that some of said employees were of "questionable
integrity." In support thereof, petitioner submitted sworn statements to that effect, belatedly dated either
January 24 or 30, 1990. It is glaringly obvious, therefore, that at the time private respondents were
dismissed from the service on November 24, 1986, there was no evidence to substantiate the claim of
questionable integrity. Simply stated, respondents were removed without cause.
2. ID.; ID.; WITHOUT CAUSE; VIOLATES CONSTITUTIONAL RIGHT TO SECURITY OF
TENURE. — Aside from petitioner's unproven allegation of "questionable integrity," neither has he
shown that respondents herein were removed for cause much less that the supposed reorganization was
undertaken on the ground of economy or redundancy. While there may be a decrease in the number of
positions, i.e., from 285 to 266 as a result of the reorganization, the number of regular employees, on
the other hand, increased from 231 to 263 brought about by the appointment of forty-eight (48) new
employees. As found by the MSPB, the separated employees were holding permanent appointments at
the time of their removal and as such, they enjoy preference in reappointment to a similar position in
the new staffing pattern. Be that as it may, it is undeniable that private respondent's employment with
the municipality was unlawfully terminated. On this score alone, the dismissed employees ought to and
must be reinstated. Illegal removal of career civil service employees in violation of their constitutional
right to security of tenure will not be condoned under the guise of reorganization (Pari-an v. Civil
Service Commission, 202 SCRA 772 [1991]).
3. ID.; ID.; ID.; RECEIPT OF SEPARATION BENEFITS DOES NOT PRECLUDE
EMPLOYEES' RIGHT TO REINSTATEMENT. — We cannot sustain petitioner's claim that the overt
acts of Mamplata, et al. in filing their separation clearances and accepting terminal leave benefits estop
them from further claiming reinstatement. Receipt by private respondents of their separation benefits
does not preclude them from assailing the termination of their services and praying for their
reinstatements (Urgelio v. Osmeña, Jr., 10 SCRA 253 [1964]).
4. ID.; GOVERNMENT; EXTENT AND LIMITATION OF ITS LIABILITY FOR ACTS
COMMITTED BY ITS OFFICIALS OR AGENTS. — It is a rule in this jurisdiction that the
government, whether national, provincial or municipal, shall be liable for the acts of its officers or
agents only when such officers or agents had acted strictly within the scope of their authority as
created, conferred and defined by law (See Mechem, Public Off. & Officers, Secs. 82, 829, 830, 834).
However, a public official may be liable in his personal capacity for whatever damage he may have
caused by his act done with malice and in bad faith, or beyond the scope of his authority or jurisdiction
(Dumlao v. Court of Appeals, 114 SCRA 247 [1982]). In the case at bar, respondent Elasigue,
terminated the subject employees as a result of the reorganization and approval of the new staffing
pattern of the municipality by the Sangguniang Bayan of Calamba. Otherwise stated, Elasigue in
terminating the services of respondent employees acted in his official capacity in the performance of
his official duty. In the absence of any proof that a public officer has acted with malice or bad faith, he
cannot be charged with personal liability for damages that may thereafter result (Mabutol v. Pascual,
124 SCRA 867 [1983]). Indeed, municipal officers are liable for damages if they act maliciously or
wantonly, and if the work which they perform is done to injure an individual rather than to discharge a
public duty (Rama v. Court of Appeals, 148 SCRA 496 [1987]). Such malice or bad faith on the part of
a public officer in the performance of his duties must be shown persuasively.
DECISION
BIDIN, J p:
This petition seeks to set aside Resolution No. 89-939 dated December 7, 1989 and Resolution No. 90-
472 dated May 23, 1990 of respondent Civil Service Commission directing petitioner Mayor Jesus
Miguel Yulo of Calamba, Laguna to reinstate private respondents Teofilo Mamplata, et al., and to pay
their backwages.
On November 24, 1986, private respondent Apolonio A. Elasigue, Officer-in-Charge of the
Municipality of Calamba, Laguna terminated the services of private respondents Mamplata and forty-
three (43) other employees of said municipality based on the reorganization and approval of the new
staffing pattern thereof (Annex "A", p. 1; Rollo, p. 17). cdrep
Private respondents Mamplata and the other separated employees assailed the action of respondent
Elasigue before the Inter-Agency Review Committee created under Executive Order No. 17 of the then
President Corazon Aquino. Since the private respondents were not removed pursuant to Executive
Order No. 17 and there is no showing that the reorganization was undertaken to circumvent the said
statute, the Committee referred the case to the Merit Systems Protection Board (MSPB) of respondent
Civil Service Commission. Pending disposition of the case by the MSPB, Elasigue lost in the
mayoralty election in 1988 to petitioner Yulo.
The MSPB, finding that there was no sufficient evidence to prove the guilt of private respondents,
ordered the reinstatement of Mamplata and twenty eight (28) other employees and the payment of their
backwages by the municipality (Rollo, p. 18).
Petitioner Yulo, as the elected mayor of Calamba, Laguna, filed a Motion for Reconsideration but to no
avail. On appeal, respondent Commission affirmed the decision of the MSPB. The Motion for
Reconsideration filed later on by petitioner was denied by respondent Commission which upheld its
earlier ruling but reduced the number of employees to be reinstated to twenty one (21) (CSC Resolution
No. 90-472, dated May 23, 1992), namely:
1. Teofilo Mamplata
2. Felipe Lazareto
3. Teresita Ancheta
4. Lourdes Coro
5. Elvira Arevale
6. Rodolfo Adato
7. Gertrudes Terzol
8. Maxima Palema
9. Lourdes Belolo
10. Arturo Samiano
11. Bayas Bacobe.
12. Isagani Fameronag
13. Silvino Canillas
14. Leoncio Edrozo
15. Benigno Alcantara
16. Danilo Salustiano
17. Saturnino Centeno, Sr. ***
18. Fernando Ustaris
19. Elpidio Garcia
21. Rafael Alcantara
20. Ricardo Ferrer
21. Rafael Alcantara
the reason being that during the pendency of the case before the MSPB and respondent Commission,
some were re-employed while two of the dismissed employees, Cresencia Belarmino and Marcial
Manila died. Their untimely death notwithstanding, respondent Commission ordered the payment of
their backwages up to the time of their respective demise.
Hence, this petition.
The issue in this case is whether the removal of private respondents Mamplata, et al. from office due to
the reorganization and approval of a new staffing pattern of the municipal government of Calamba is
valid.
Petitioner maintains that the separation of private respondents was valid and in consonance with
Section 2, Article III of the Freedom Constitution which provides that:
"All elective and appointive officials under the 1973 Constitution shall continue in office until
otherwise provide by proclamation or executive order or upon the designation or appointment and
qualification of their successors, if such appointment is made within the period of one year from
February 25, 1986."
To further support this contention, petitioner cites this Court's ruling in Dario vs. Mison (176 SCRA 84
[1989]) wherein We held that:
"By its terms, the authority to remove public officials under the Provisional Constitution ended on
February 25, 1987, advanced by jurisprudence to February 2, 1987 . . . "
Therefore, petitioner argues, the removal of respondents Mamplata, et al., on November 24, 1986 was
valid because the same was effected before the expiration of the period above cited. prcd
The argument is devoid of merit. In his narration of facts, petitioner himself admitted that private
respondents' services were terminated pursuant to the reorganization and approval of the new staffing
pattern of Calamba on November 3, 1986 (Rollo, pp. 4-5). Petitioner's argument to the effect that
respondents were separated from the service by virtue of the Freedom Constitution or Executive Order
No. 17 is palpably an afterthought. That is why when the respondents appealed their dismissal to the
Inter-Agency Review Committee created under Executive Order No. 17, said Committee refused to
take cognizance of said appeal on the ground that the dismissal was not made pursuant to the Freedom
Constitution or Executive Order No. 17 and instead referred the case on appeal to the MSPB.
It is thus crystal clear that private respondents were not separated from the service based on Section 2,
Article III of the Freedom Constitution or Executive Order No. 17 implementing the then basic law. On
the contrary, their services were terminated as a "result of the reorganization and approval of the new
staffing pattern of the municipality of Calamba on November 3, 1986" stated in the individual notices
of termination served upon them by the then OIC Mayor.
As aptly explained by the respondent Commission:
"The first ground, raised by appellant Yulo is devoid of merit. He argued that the separation of said
employees was in accordance with the Freedom Constitution of 1986 and the existing laws and
jurisprudence on reorganization. It may be reiterated here that the main reason why the then inter-
agency Review Committee refused to take cognizance of the instant case was because Mamplata et al.
were not removed pursuant to Executive Order No. 17. Said Executive Order prescribed the rules and
guidelines for the implementation of Section 2, Article III of the Freedom Constitution. This
declaration on the part of the Committee, in essence, meant that said municipal employees were not
separated from the service under the Freedom Constitution thereby negating the very foundation of
Mayor Yulo's argument. Although, admittedly there was a reorganization of the Municipal Government
of Calamba, Laguna, reorganization per se does not serve as a license for the local chief executive to
separate career municipal officials and employees whimsically and indiscriminately. 'Reorganization is
improper or invalid when effected without observing the prescribed priorities in retention and
separation, and without making a fair, just and correct evaluation of the personnel concerned taking
into account the relevant factors given' [ABACA, Sisinio, et al., CSC Resolution dated September 20,
1988]"(CSC Resolution No. 89-939, p. 2; Rollo, p. 18; emphasis supplied).
Petitioner Yulo's argument that private respondents were separated by virtue of the Freedom
Constitution is therefore erroneous.
Not only that. As records further indicate, the MSPB found that there was no sufficient evidence to
prove the guilt of private respondents. As to what were the charges levelled against the dismissed
employees, petitioner Yulo could merely insinuate that some of said employees were of "questionable
integrity". In support thereof, petitioner submitted sworn statements to that effect (Exhs. "F" to "M";
Rollo, pp. 42-56), belatedly dated either January 24 or 30, 1990.
It is glaringly obvious, therefore, that at the time private respondents were dismissed from the service
on November 24, 1986, there was no evidence to substantiate the claim of questionable integrity.
Simply stated, respondents were removed without cause.
As this Court held in Dario v. Mison (supra):
"At this point, we must distinguish removals from separations arising from abolition of office (not by
virtue of the Constitution) as a result of reorganization carried out by reason of economy or to remove
redundancy of operations. In the latter case, the Government is obliged to prove good faith. In case of
removal undertaken to comply with clear and explicit constitutional mandates, the Government is not
hard put to prove anything, plainly and simply because the Constitution allows it. (citing Ginson v.
Municipality of Murcia, 157 SCRA 1 [1988] and other cases). cdrep
Aside from petitioner's unproven allegation of "questionable integrity", neither has he shown that
respondents herein were removed for cause much less that the supposed reorganization was undertaken
on the ground of economy or redundancy. While there may be a decrease in the number of positions,
i.e., from 285 to 266 as a result of the reorganization, the number of regular employees, on the other
hand, increased from 231 to 263 brought about by the appointment of forty-eight (48) new employees.
As found by the MSPB, the separated employees were holding permanent appointments at the time of
their removal and as such, they enjoy preference in reappointment to a similar position in the new
staffing pattern (Rollo, p. 21, citing CSC MC 5, s. 1988).
Be that as it may, it is undeniable that private respondents' employment with the municipality was
unlawfully terminated. On this score alone, the dismissed employees ought to and must be reinstated.
Illegal removal of career civil service employees in violation of their constitutional right to security of
tenure will not be condoned under the guise of reorganization (Pari-an v. Civil Service Commission,
202 SCRA 772 [1991]).
Neither can we sustain petitioner's claim that the overt acts of Mamplata, et al. in filing their separation
clearances and accepting terminal leave benefits estop them from further claiming reinstatement.
Incidentally, petitioner presented no evidence before the respondent Commission to prove that private
respondents have actually received their separation benefits. It is only at this late instance when it opted
to do so (Rollo, pp. 208-225).
In any event, receipt by private respondents of their separation benefits does not preclude them from
assailing the termination of their services and praying for their reinstatements (Urgelio v. Osmeña, Jr.,
10 SCRA 253 [1964]).
Petitioner finally argues that if the separation of Mamplata, et al. be declared illegal, the consequent
damage in the form of backwages among others, should be the personal liability of private respondent
Elasigue and not the innocent taxpayers of Calamba, Laguna.
Petitioner's argument cannot be sustained. It is a rule in this jurisdiction that the government, whether
national, provincial or municipal, shall be liable for the acts of its officers or agents only when such
officers or agents had acted strictly within the scope of their authority as created, conferred and defined
by law (See Mechem, Public Off. & Officers, Secs. 82, 829, 830, 834). However, a public official may
be liable in his personal capacity for whatever damage he may have caused by his act done with malice
and in bad faith, or beyond the scope of his authority or jurisdiction (Dumlao v. Court of Appeals, 114
SCRA 247 [1982]). cdll
It is worth noting that respondent Elasigue terminated the subject employees as a result of the
reorganization and approval of the new staffing pattern of the municipality by the Sangguniang Bayan
of Calamba. Otherwise stated, Elasigue in terminating the services of respondent employees acted in
his official capacity in the performance of his official duty. In the absence of any proof that a public
officer has acted with malice or bad faith, he cannot be charged with personal liability for damages that
may thereafter result (Mabutol v. Pascual, 124 SCRA 867 [1983]). Indeed, municipal officers are liable
for damages if they act maliciously or wantonly, and if the work which they perform is done to injure
an individual rather than to discharge a public duty (Rama v. Court of Appeals, 148 SCRA 496 [1987]).
Such malice or bad faith on the part of a public officer in the performance of his duties must be shown
persuasively.
WHEREFORE, the petition is DISMISSED for lack of merit. Accordingly, the Municipality of
Calamba, Laguna is hereby ordered to REINSTATE the twenty (20) personnel named in CSC
Resolution No. 90-472 and pay their backwages equivalent to five (5) years (Cristobal v. Melchor, 78
SCRA 175 [1977]; Ginzon v. Municipality of Murcia, 158 SCRA 1 [1988]) less the amount of terminal
pay received, it appearing from private respondents manifestation dated January 11, 1993 that they are
still jobless from the time of their removal from the service up to present.
SO ORDERED.
Narvasa, C .J ., Cruz, Feliciano, Padilla, Griño-Aquino, Regalado, Davide, Jr., Romero, Nocon,
Bellosillo, Melo, Campos, Jr. and Quiason, JJ ., concur.
Gutierrez, Jr., J ., is on leave.
Footnotes
** Actual title of the petition.
• Died of Koch's pleurisy with effussion on August 2, 1991.

THIRD DIVISION
[G.R. No. 97882. August 28, 1996.]
THE CITY OF ANGELES, Hon. ANTONIO ABAD SANTOS, in his capacity as MAYOR of Angeles
City, and the SANGGUNIANG PANLUNGSOD OF THE CITY OF ANGELES, petitioners, vs.
COURT OF APPEALS and TIMOG SILANGAN DEVELOPMENT CORPORATION, respondents.
Quiason Makalintal Barot Torres Ibarra & Sison for petitioners.
Angara Abello Concepcion Regala & Cruz for private respondent.
 7. ADMINISTRATIVE LAW; LOCAL GOVERNMENT CODE; A PUBLIC OFFICIAL IS
LIABLE FOR DAMAGES CAUSED BY HIS ACT DONE WITH MALICE AND IN BAD
FAITH OR BEYOND THE SCOPE OF HIS AUTHORITY OR JURISDICTION. — In theory,
the cost of such demolition, and the reimbursement of the public funds expended in the
construction thereof, should be borne by the officials of the City of Angeles who ordered and
directed such construction. This Court has time and again ruled that public officials are not
immune from damages in their personal capacities arising from acts done in bad faith.
Otherwise stated, a public official may be liable in his personal capacity for whatever damage
he may have caused by his act done with malice and in bad faith or beyond the scope of his
authority or jurisdiction. In the instant case, the public officials concerned deliberately violated
the law and persisted in their violations, going so far as attempting to deceive the courts by their
pretended change of purpose and usage for the center, and "making a mockery of the judicial
system." Indisputably, said public officials acted beyond the scope of their authority and
jurisdiction and with evident bad faith. However, as noted by the trial court, the petitioners
mayor and members of the Sangguniang Panlungsod of Angeles City were sued only in their
official capacities, hence, they could not be held personally liable without first giving them
their day in court. Prevailing jurisprudence holding that public officials are personally
liable for damages arising from illegal acts done in bad faith are premised on said officials
having been sued both in their official and personal capacities. STIcEA

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-52179 April 8, 1991
MUNICIPALITY OF SAN FERNANDO, LA UNION, petitioner
vs.
HON. JUDGE ROMEO N. FIRME, JUANA RIMANDO-BANIÑA, IAUREANO BANIÑA, JR.,
SOR MARIETA BANIÑA, MONTANO BANIÑA, ORJA BANIÑA, AND LYDIA R. BANIÑA,
respondents.
Mauro C. Cabading, Jr. for petitioner.
Simeon G. Hipol for private respondent.

MEDIALDEA, J.:
This is a petition for certiorari with prayer for the issuance of a writ of preliminary mandatory
injunction seeking the nullification or modification of the proceedings and the orders issued by the
respondent Judge Romeo N. Firme, in his capacity as the presiding judge of the Court of First Instance
of La Union, Second Judicial District, Branch IV, Bauang, La Union in Civil Case No. 107-BG, entitled
"Juana Rimando Baniña, et al. vs. Macario Nieveras, et al." dated November 4, 1975; July 13, 1976;
August 23,1976; February 23, 1977; March 16, 1977; July 26, 1979; September 7, 1979; November 7,
1979 and December 3, 1979 and the decision dated October 10, 1979 ordering defendants Municipality
of San Fernando, La Union and Alfredo Bislig to pay, jointly and severally, the plaintiffs for funeral
expenses, actual damages consisting of the loss of earning capacity of the deceased, attorney's fees and
costs of suit and dismissing the complaint against the Estate of Macario Nieveras and Bernardo
Balagot.
The antecedent facts are as follows:
Petitioner Municipality of San Fernando, La Union is a municipal corporation existing under and in
accordance with the laws of the Republic of the Philippines. Respondent Honorable Judge Romeo N.
Firme is impleaded in his official capacity as the presiding judge of the Court of First Instance of La
Union, Branch IV, Bauang, La Union. While private respondents Juana Rimando-Baniña, Laureano
Baniña, Jr., Sor Marietta Baniña, Montano Baniña, Orja Baniña and Lydia R. Baniña are heirs of the
deceased Laureano Baniña Sr. and plaintiffs in Civil Case No. 107-Bg before the aforesaid court.
At about 7 o'clock in the morning of December 16, 1965, a collision occurred involving a passenger
jeepney driven by Bernardo Balagot and owned by the Estate of Macario Nieveras, a gravel and sand
truck driven by Jose Manandeg and owned by Tanquilino Velasquez and a dump truck of the
Municipality of San Fernando, La Union and driven by Alfredo Bislig. Due to the impact, several
passengers of the jeepney including Laureano Baniña Sr. died as a result of the injuries they sustained
and four (4) others suffered varying degrees of physical injuries.
On December 11, 1966, the private respondents instituted a compliant for damages against the Estate of
Macario Nieveras and Bernardo Balagot, owner and driver, respectively, of the passenger jeepney,
which was docketed Civil Case No. 2183 in the Court of First Instance of La Union, Branch I, San
Fernando, La Union. However, the aforesaid defendants filed a Third Party Complaint against the
petitioner and the driver of a dump truck of petitioner.
Thereafter, the case was subsequently transferred to Branch IV, presided over by respondent judge and
was subsequently docketed as Civil Case No. 107-Bg. By virtue of a court order dated May 7, 1975, the
private respondents amended the complaint wherein the petitioner and its regular employee, Alfredo
Bislig were impleaded for the first time as defendants. Petitioner filed its answer and raised affirmative
defenses such as lack of cause of action, non-suability of the State, prescription of cause of action and
the negligence of the owner and driver of the passenger jeepney as the proximate cause of the collision.
In the course of the proceedings, the respondent judge issued the following questioned orders, to wit:
(1) Order dated November 4, 1975 dismissing the cross-claim against Bernardo Balagot;
(2) Order dated July 13, 1976 admitting the Amended Answer of the Municipality of San
Fernando, La Union and Bislig and setting the hearing on the affirmative defenses only with
respect to the supposed lack of jurisdiction;
(3) Order dated August 23, 1976 deferring there resolution of the grounds for the Motion to
Dismiss until the trial;
(4) Order dated February 23, 1977 denying the motion for reconsideration of the order of July
13, 1976 filed by the Municipality and Bislig for having been filed out of time;
(5) Order dated March 16, 1977 reiterating the denial of the motion for reconsideration of the
order of July 13, 1976;
(6) Order dated July 26, 1979 declaring the case deemed submitted for decision it appearing that
parties have not yet submitted their respective memoranda despite the court's direction; and
(7) Order dated September 7, 1979 denying the petitioner's motion for reconsideration and/or
order to recall prosecution witnesses for cross examination.
On October 10, 1979 the trial court rendered a decision, the dispositive portion is hereunder quoted as
follows:
IN VIEW OF ALL OF (sic) THE FOREGOING, judgment is hereby rendered for the plaintiffs,
and defendants Municipality of San Fernando, La Union and Alfredo Bislig are ordered to pay
jointly and severally, plaintiffs Juana Rimando-Baniña, Mrs. Priscilla B. Surell, Laureano
Baniña Jr., Sor Marietta Baniña, Mrs. Fe B. Soriano, Montano Baniña, Orja Baniña and Lydia
B. Baniña the sums of P1,500.00 as funeral expenses and P24,744.24 as the lost expected
earnings of the late Laureano Baniña Sr., P30,000.00 as moral damages, and P2,500.00 as
attorney's fees. Costs against said defendants.
The Complaint is dismissed as to defendants Estate of Macario Nieveras and Bernardo Balagot.
SO ORDERED. (Rollo, p. 30)
Petitioner filed a motion for reconsideration and for a new trial without prejudice to another motion
which was then pending. However, respondent judge issued another order dated November 7, 1979
denying the motion for reconsideration of the order of September 7, 1979 for having been filed out of
time.
Finally, the respondent judge issued an order dated December 3, 1979 providing that if defendants
municipality and Bislig further wish to pursue the matter disposed of in the order of July 26, 1979, such
should be elevated to a higher court in accordance with the Rules of Court. Hence, this petition.
Petitioner maintains that the respondent judge committed grave abuse of discretion amounting to
excess of jurisdiction in issuing the aforesaid orders and in rendering a decision. Furthermore,
petitioner asserts that while appeal of the decision maybe available, the same is not the speedy and
adequate remedy in the ordinary course of law.
On the other hand, private respondents controvert the position of the petitioner and allege that the
petition is devoid of merit, utterly lacking the good faith which is indispensable in a petition for
certiorari and prohibition. (Rollo, p. 42.) In addition, the private respondents stress that petitioner has
not considered that every court, including respondent court, has the inherent power to amend and
control its process and orders so as to make them conformable to law and justice. (Rollo, p. 43.)
The controversy boils down to the main issue of whether or not the respondent court committed grave
abuse of discretion when it deferred and failed to resolve the defense of non-suability of the State
amounting to lack of jurisdiction in a motion to dismiss.
In the case at bar, the respondent judge deferred the resolution of the defense of non-suability of the
State amounting to lack of jurisdiction until trial. However, said respondent judge failed to resolve such
defense, proceeded with the trial and thereafter rendered a decision against the municipality and its
driver.
The respondent judge did not commit grave abuse of discretion when in the exercise of its judgment it
arbitrarily failed to resolve the vital issue of non-suability of the State in the guise of the municipality.
However, said judge acted in excess of his jurisdiction when in his decision dated October 10, 1979 he
held the municipality liable for the quasi-delict committed by its regular employee.
The doctrine of non-suability of the State is expressly provided for in Article XVI, Section 3 of the
Constitution, to wit: "the State may not be sued without its consent."
Stated in simple parlance, the general rule is that the State may not be sued except when it gives
consent to be sued. Consent takes the form of express or implied consent.
Express consent may be embodied in a general law or a special law. The standing consent of the State
to be sued in case of money claims involving liability arising from contracts is found in Act No. 3083.
A special law may be passed to enable a person to sue the government for an alleged quasi-delict, as in
Merritt v. Government of the Philippine Islands (34 Phil 311). (see United States of America v. Guinto,
G.R. No. 76607, February 26, 1990, 182 SCRA 644, 654.)
Consent is implied when the government enters into business contracts, thereby descending to the level
of the other contracting party, and also when the State files a complaint, thus opening itself to a
counterclaim. (Ibid)
Municipal corporations, for example, like provinces and cities, are agencies of the State when they are
engaged in governmental functions and therefore should enjoy the sovereign immunity from suit.
Nevertheless, they are subject to suit even in the performance of such functions because their charter
provided that they can sue and be sued. (Cruz, Philippine Political Law, 1987 Edition, p. 39)
A distinction should first be made between suability and liability. "Suability depends on the consent of
the state to be sued, liability on the applicable law and the established facts. The circumstance that a
state is suable does not necessarily mean that it is liable; on the other hand, it can never be held liable if
it does not first consent to be sued. Liability is not conceded by the mere fact that the state has allowed
itself to be sued. When the state does waive its sovereign immunity, it is only giving the plaintiff the
chance to prove, if it can, that the defendant is liable." (United States of America vs. Guinto, supra, p.
659-660)
Anent the issue of whether or not the municipality is liable for the torts committed by its employee, the
test of liability of the municipality depends on whether or not the driver, acting in behalf of the
municipality, is performing governmental or proprietary functions. As emphasized in the case of Torio
vs. Fontanilla (G. R. No. L-29993, October 23, 1978. 85 SCRA 599, 606), the distinction of powers
becomes important for purposes of determining the liability of the municipality for the acts of its agents
which result in an injury to third persons.
Another statement of the test is given in City of Kokomo vs. Loy, decided by the Supreme Court of
Indiana in 1916, thus:
Municipal corporations exist in a dual capacity, and their functions are twofold. In one they
exercise the right springing from sovereignty, and while in the performance of the duties
pertaining thereto, their acts are political and governmental. Their officers and agents in such
capacity, though elected or appointed by them, are nevertheless public functionaries performing
a public service, and as such they are officers, agents, and servants of the state. In the other
capacity the municipalities exercise a private, proprietary or corporate right, arising from their
existence as legal persons and not as public agencies. Their officers and agents in the
performance of such functions act in behalf of the municipalities in their corporate or individual
capacity, and not for the state or sovereign power." (112 N.E., 994-995) (Ibid, pp. 605-606.)
It has already been remarked that municipal corporations are suable because their charters grant them
the competence to sue and be sued. Nevertheless, they are generally not liable for torts committed by
them in the discharge of governmental functions and can be held answerable only if it can be shown
that they were acting in a proprietary capacity. In permitting such entities to be sued, the State merely
gives the claimant the right to show that the defendant was not acting in its governmental capacity
when the injury was committed or that the case comes under the exceptions recognized by law. Failing
this, the claimant cannot recover. (Cruz, supra, p. 44.)
In the case at bar, the driver of the dump truck of the municipality insists that "he was on his way to the
Naguilian river to get a load of sand and gravel for the repair of San Fernando's municipal streets."
(Rollo, p. 29.)
In the absence of any evidence to the contrary, the regularity of the performance of official duty is
presumed pursuant to Section 3(m) of Rule 131 of the Revised Rules of Court. Hence, We rule that the
driver of the dump truck was performing duties or tasks pertaining to his office.
We already stressed in the case of Palafox, et. al. vs. Province of Ilocos Norte, the District Engineer,
and the Provincial Treasurer (102 Phil 1186) that "the construction or maintenance of roads in which
the truck and the driver worked at the time of the accident are admittedly governmental activities."
After a careful examination of existing laws and jurisprudence, We arrive at the conclusion that the
municipality cannot be held liable for the torts committed by its regular employee, who was then
engaged in the discharge of governmental functions. Hence, the death of the passenger –– tragic and
deplorable though it may be –– imposed on the municipality no duty to pay monetary compensation.
All premises considered, the Court is convinced that the respondent judge's dereliction in failing to
resolve the issue of non-suability did not amount to grave abuse of discretion. But said judge exceeded
his jurisdiction when it ruled on the issue of liability.
ACCORDINGLY, the petition is GRANTED and the decision of the respondent court is hereby
modified, absolving the petitioner municipality of any liability in favor of private respondents.
SO ORDERED.
Narvasa, Cruz, Gancayco and Griño-Aquino, JJ., concur.

[G.R. No. 109406. September 11, 1998.]

1. ADMINISTRATIVE LAW; GOVERNMENT CORPORATIONS; GOVERNMENT-OWNED

AND CONTROLLED CORPORATIONS; GOVERNMENTAL FUNCTIONS
DISTINGUISHED FROM PROPRIETARY FUNCTIONS. — Government-owned and
controlled corporations may perform governmental or proprietary functions or both, depending
on the purpose for which they have been created. If the purpose is to obtain special corporate
benefits or earn pecuniary profit, the function is proprietary. If it is in the interest of health,
safety and for the advancement of public good and welfare, affecting the public in general, the
function is governmental. Powers classified as "proprietary" are those intended for private
advantage and benefit. AASEcH