THIRD DIVISION

PHILIPPINE AGILA SATELLITE G.R. No. 142362

INC. and MICHAELC. U. DE GUZMAN,
Complainants, Present:

QUISUMBING, J.,
Chairperson,
- versus - CARPIO,
CARPIO MORALES,
TINGA, and
VELASCO, JR., JJ.
JOSEFINA TRINIDAD-LICHAUCO
Undersecretary for Communi- Promulgated:
cations, Department of Transportation
and Communication (DOTC), May 3, 2006
Respondents.
x--------------------------------------------------------------------------x

DECISION

TINGA, J.:

This Petition for Review on Certiorari seeks the reversal of the Decision1[1] dated 21 February 2000 of the
Court of Appeals in C.A. G.R. No. SP 49422. The assailed Decision authorized the dismissal of a civil complaint
against respondent Josefina Trinidad-Lichauco (Lichauco), former Undersecretary for Communications of the
Department of Transportation and Communication (DOTC), on the premise that the complaint constituted a suit
against the State.

A brief rundown of the relevant facts is in order.

Petitioner Philippine Agila Satellite Inc. (PASI) is a duly organized corporation, whose President and Chief
Executive Officer is co-petitioner Michael C.U. De Guzman. PASI was established by a consortium of private
telecommunications carriers2[2] which in 1994 had entered into a Memorandum of Understanding (MOU) with the

1[1]Penned by Associate Justice Eugenio Labotoria, concurred in by Associate Justices

Jesus Elbinias and Marina Buzon.

2[2]Particularly consisting of Capitol Wireless, Inc.; Clavecilla Electronics and Telecom

Corporation; Digital Telecommunications Philippines; Domestic Satellite Phils.; Eastern
Telecommunications Philippines, Inc.; Express Telecommunications Company; GMCR, Inc;
International Communications Corporation; Isla Communications Company, Inc.; Liberty
Broadcasting Network, Inc; Philippine Communications Satellite Corporation; Philippine Global
Communications, Inc.; Philippine Long Distance Telephone Company; Pilipino Telephone
DOTC, through its then Secretary Jesus Garcia, concerning the planned launch of a Philippine-owned satellite into
outer space. Under the MOU, the launch of the satellite was to be an endeavor of the private sector, and the satellite
itself to be owned by the Filipino-owned consortium (subsequently organized as PASI).3[3] The consortium was to
grant the Philippine government one (1) transponder free of charge for the governments exclusive use for non-
commercial purpose, as well as the right of first refusal to another one (1) transponder in the Philippine satellite, if
available.4[4] The Philippine government, through the DOTC, was tasked under the MOU to secure from the
International Telecommunication Union the required orbital slot(s) and frequency assignment(s) for the Philippine
satellite.

PASI itself was organized by the consortium in 1996. The government, together with PASI, coordinated
through the International Telecommunication Union two (2) orbital slots, designated as 161 East Longitude and 153
East Longitude, for Philippine satellites. On 28 June 1996, PASI wrote then DOTC Secretary Amado S. Lagdameo,
Jr., seeking for official Philippine government confirmation on the assignment of the two aforementioned Philippine
orbital slots to PASI for its satellites, which PASI had designated as the Agila satellites.5[5] Secretary Lagdameo, Jr.
replied in a letter dated 3 July 1996, confirming the Philippine Governments assignment of Philippine orbital slots
161E and 153E to [PASI] for its [Agila] satellites.6[6]

PASI avers that after having secured the confirmation from the Philippine government, it proceeded with
preparations for the launching, operation and management of its satellites, including the availment of loans, the
increase in its capital, negotiation with business partners, and an initial payment of US$3.5 Million to the French
satellite manufacturer. However, respondent Lichauco, then DOTC Undersecretary for Communications, allegedly
embarked on a crusade to malign the name of [Michael de Guzman] and sabotage the business of PASI. Lichaucos
purported efforts against PASI culminated allegedly in her offering orbital slot 153 East Longitude

Corporation; Radio Communications of the Philippines, Inc.; and Smart Communications, Inc. See
rollo, pp. 57-59.

3[3]Id. at 60.

4[4]Id. at 61.

5[5]Id. at 64.

6[6]Id. at 65.
for bidding to other parties sometime in December 1997, despite the prior assignment to PASI of the said slot.7[7] It
was later claimed by PASI that Lichauco subsequently awarded the orbital slot to an entity whose indentity was
unknown to PASI.8[8]

Aggrieved by Lichaucos actions, PASI and De Guzman instituted on 23 January 1998 a civil complaint
against Lichauco, by then the Acting Secretary of the DOTC, and the Unknown Awardee who was to be the recipient
of orbital slot 153 East Longitude. The complaint, alleging three (3) causes of action, was for injunction, declaration
of nullity of award, and damages. The first cause of action, for injunction, sought to establish that the award of orbital
slot 153 East Longitude should be enjoined since the DOTC had previously assigned the same orbital slot to PASI.
The second cause of action, for declaration of nullity of award, averred that the award to the unknown bidder is null
and void, as it was rendered by Lichauco beyond her authority.9[9]

The third cause of action, for damages, imputed several acts to Lichauco as part of her alleged crusade to
malign the name of plaintiff [D]e Guzman and sabotage the business of [PASI]:

12. xxx

(a) On 4 December 1996, in a meeting with the members of the Board of

Directors of plaintiff corporation, defendant Lichauco then uttered disparaging and
defamatory comments against plaintiff de Guzman. These defamatory remarks triggered
efforts from within the plaintiff corporation aimed at ousting plaintiff de Guzman from his
position.

(b) Defendant Lichauco, then an undersecretary of DOTC, wrote Mr. Jesli Lapuz
on 5 December 1996 (barely two days after plaintiff de Guzman wrote him) to deny that the
DOTC has assigned the two (2) Philippine orbital slots to plaintiff corporation. Defendant
Lichauco falsely asserted that only orbital slot 161 E was assigned to plaintiff, orbital slot
153 E was not.

In the same letter, defendant Lichauco branded as FALSE plaintiff de Guzmans claim that
Agila is a registered corporate name of plaintiff corporation.

A copy of the letter is attached as Annex E.

7[7]The assignment of the other orbital slot, 161 East Longitude, was previously affirmed
by the DOTC to PASI and formally effected through an Agreement on Transponder Agreement
dated 16 June 1997. See rollo, p. 89.

8[8]See id. at 50.

9[9]Id. at 50-51.
 (c) Not contented, defendant Lichauco, again for reasons known only to her, and
with malice aforethought, made defamatory remarks against plaintiffs during a
telecommunications forum held in Makati City sometime in October 1997 in the presence
of public officials and business executives.

(d) Defendant Lichauco did not spare plaintiff corporation from her unprovoked
defamation. Defendant Lichauco arrogantly said that she had asked President Fidel V.
Ramos to sue plaintiff Michael de Guzman. With the same degree of arrogance she
threatened plaintiff corporation not to use the name Agila, otherwise she would fight plaintiff
corporation and would make sure that the name of Agila would never be given back to
plaintiff corporation.

(e) To top it all, defendant Lichauco without basis and with evident bad faith,
said that plaintiff corporation will never pay its contractors.

(f) In December 1997, defendant Lichauco delivered the coup de grace. Again,
acting unilaterally, without prior notice to plaintiff corporation and in gross violation of
DOTCs earlier assignment to plaintiff corporation of orbital slot 153 E, defendant Lichauco
offered said slot to interested applicants. A copy of the notice of offer is attached as Annex
F.

13. Plaintiffs learned of defendant Lichaucos acts after orbital slot 153 E was
offered for bidding. To plaintiff coprorations knowledge, the orbital slot was eventually
awarded to defendant Unknown Awardee.

x x x x10[10]

The complaint alleged that since Lichaucos act of offering and awarding orbital slot 153 East Longitude was
patently illegal and violative of DOTCs prior commitment to PASI, Lichauco should be enjoined from performing
any acts and entering into or executing any agreement or arrangement of whatever nature in connection with the said
orbital slot. The complaint also averred that the purported award of the orbital slot to the Unknown Awardee was
illegal, and thus should be declared null and void. Finally, the complaint alleged a cause of action for damages against
Lichauco, cast in the following manner:

xxxx

21. Defendant Lichauco attacked the good name and reputation of plaintiffs.

22. She willfully caused damage to plaintiffs by orchestrating the above-described acts which
are contrary to law; morals and basic norms of good faith.

10[10]Rollo, pp. 49-50.

23. She interefered with and violated plaintiff corporations contract with DOTC by offering
and awarding orbital slot 153 E to defendant Unknown Awardee.

24. Because of defendant Lichaucos reprehensible acts, plaintiffs suffered actual damages of
at least P10 million each, for all of which defendant Lichauco should be held liable to pay.

25. By reason of defendant Lichaucos illegal and malicious acts, plaintiff corporations
business name and goodwill was tarnished, for which plaintiff corporation should be
indemnified by way of moral damages in the amount of at least P10 million.

26. For the same reasons, plaintiff de Guzman suffered and continue to suffer extreme mental
anguish, serious anxiety, wounded feelings, moral shock and besmirched reputation, for all
of which plaintiff de Guzman should be indemnified in the amount of at least P10 million.

27. Defendant Lichauco should also be sanctioned, as a deterrent for public good, to pay each
plaintiff exemplary damages in the amount of at least P5 million.

28. In order to protect and enforce their rights, plaintiffs were compelled to institute this suit,
engage the services of counsel and incur litigation expenses, for all of which plaintiffs should
be indemnified in the amount of at least P500 Thousand each.11[11]

xxxx

In sum, petitioners sought the following reliefs for the three (3) causes of action:

11[11]Id. at 51-52.
 xxxx

3. After trial of the issues, render judgment as follows:

[a] On the first cause of action, making permanent the writ of preliminary
injunction;
[b] On the second cause of action, declaring the offer and award of orbital slot
153 E to defendant Unknown Awardee null and void.
[c] On the third cause of action, directing defendant Lichauco to pay the following
sums:

i. P10 million each to plaintiffs as actual damages;

ii. P10 million to plaintiff corporation as moral damages;
iii. P10 million to plaintiff de Guzman as moral damages;
iv. P5 million each to plaintiffs as exemplary damages;
v. P500 Thousand each to plaintiffs as attorneys fees and litigation expenses.

x x x x12[12]

The complaint was filed before the Regional Trial Court (RTC) of Mandaluyong City, and subsequently
raffled to Branch 214. On 2 February 1998, the RTC issued a temporary restraining order against Lichauco, who
received the summons together with the complaint on 28 January 1998. Lichauco failed to file an answer within the
reglementary period, but eight (8) days after the lapse thereof, she filed a Manifestation and Motion asking for a new
five (5)-day period, or until 25 February 1998, to file a responsive pleading to the complaint. However, she filed
instead a Motion to Admit with attached Motion to Dismiss on 27 February 1998. She rooted her prayer for the
dismissal of the complaint primarily on the grounds that the suit is a suit against the State which may not be sued
without its consent; that the complaint stated no cause of action; and that the petitioners had failed to exhaust
administrative remedies by failing to seek recourse with the Office of the President.

In an order13[13] dated 14 August 1998, the RTC denied the motion to dismiss. It characterized the defense
of state immunity as at very least a contentious issue which can not be resolved by mere allegations in the pleadings
but which can be best threshed out in a litig[i]ous forum where parties are accorded enormous (sic) opportunity to
argue for the ascertainment of whether the act complained of are indeed within the parameters and prerogatives of the
authority exercising the same.14[14] The RTC also noted that the allegations in the complaint regarding the ultimate
facts sufficiently presented an ultra vires act of Lichauco, and that she was being sued in her personal capacity. As to
the argument pertaining to the non-exhaustion of administrative remedies, the RTC noted that the principle is not an

12[12]Id. at 53.

13[13]Penned by Judge Edwin D. Sorongon.

14[14]Rollo, p. 112.
inflexible rule, and may be dispensed with when its application would cause great and irreparable damage or when it
would not constitute a plain, speedy and adequate remedy.15[15]

Lichauco assailed the RTC order through a Petition for Certiorari under Rule 65 before the Court of Appeals,
which subsequently nullified the RTC order in the Decision now assailed before us. The Court of Appeals sustained
the contention that the complaint is a suit against the State with the following ratiocination:

The suit is to the mind of this court a suit against the state.

The notice of offer signed by herein petitioner allegedly tainted with bad faith was done in
the exercise of and in pursuance of an official duty. Her duties are as follows:

SEC. 10. Powers and Duties of the Undersecretary. The Undersecretary

shall:

(1) Advise and assist the Secretary in the formulation and implementation
of department objectives and policies;
(2) Oversee all the operational activities of the department for which he
shall be responsible to the Secretary;
(3) Coordinate the programs and projects of the department and be
responsible for its economical, efficient and effective administration:

xxx xxx xxx

It is apparent from the above enumeration that the petitioner is directly under and
answerable to the DOTC Secretary. We can therefore conclude that her official acts such as the said
notice of offer was with the blessing and prior approval of the DOTC Secretary himself.

Being an official act, it is also protected by the presumption that the same was performed
in good faith and in the regular performance of official duty.

Acts in Line of Duty or under Color of Authority. As a rule, a public

officer, whether judicial, quasi-judicial, or executive, is not personally liable to
one injured in consequence of an act performed within the scope of his official
authority, and in the line of his official duty. In order that acts may be done within
the scope of official authority, it is not necessary that they be prescribed by statute,
or even that they be specifically directed or requested by a superior officer, but it
is sufficient if they are done by an officer in relation to matters committed by law
to his control or supervision, or that they have more or less connection with such
matters, or that they are governed by a lawful requirement of the department under
whose authority the officer is acting. Under this principle, state building
commissioners who, in obedience to a stature, discharge one who has been
employed to construct a state building, take possession of the work, and place it
in the hands of another contractor, are not liable to the former contractor in
damages, since in so doing they are merely acting in the line of their duty. An
officer is not personally responsible for the necessary and unavoidable destruction
of goods stored in buildings, when such buildings were destroyed by him in the

15[15]Id. at 113.
 lawful performance of a public duty imposed on him by a valid and constitutional
statute.

xxx xxx xxx

Error or Mistake in Exercise of Authority. Where an officer is invested

with discretion and is empowered to exercise his judgment in matters brought
before him he is sometimes called a quasi-judicial officer, and when so acting he
is usually given immunity from liability to persons who may be injured as the
result of an erroneous or mistaken decision, however, erroneous judgment may
be, provided the acts complained of are done within the scope of the officers
authority, and without willfulness, malice, or corruption. (43 Am. Jur., pp. 85-86).

In Sanders vs. Veridiano[16[16]], the Supreme Court held:

Given the official character of the above-described letters, we have to

conclude that the petitioners were, legally speaking, being sued as officers of the
United States government. As they have acted on behalf of that government, and
within the scope of their authority, it is that government and not the petitioners
personally, that is responsible for their acts. Assuming that the trial can proceed
and it is proved that the claimants have a right to the payment of damages, such
award will have to be satisfied not by the petitioners in their personal capacities
but by the United States government as their principal. This will require that
government, viz.: the appropriation of the necessary amount to cover the damages
awarded, thus making the action a suit against that government without its
consent.

There should be no question by now that such complaint cannot prosper

unless the government sought to be held ultimately liable has given its consent to
be sued. So we have ruled not only in Baer but in many other decisions where we
upheld the doctrine of state immunity as applicable not only to our own
government but also to foreign States sought to be subjected to the jurisdiction of
our courts.

xxx xxx xxx

The Court finds that, even under the law of public officers, the acts of the petitioners are
protected by the presumption of good faith, which has not been overturned by the private
respondents. Even mistakes concededly committed by such public officers are not
actionable as long as it is not shown that they were motivated by malice or gross negligence
amounting to bad faith. This too is well-settled.17[17]

16[16]Cited as 162 SCRA 88.

17[17]Rollo, pp. 39-42.

 Preliminarily, we discuss the procedural grounds cited by petitioners which they assert are sufficient to have
caused the dismissal of Lichaucos petition before the Court of Appeals. Petitioners claim that contrary to Section 1,
Rule 65 of the 1997 Rules of Civil Procedure, Lichauco failed to attach all pleadings and documents relevant to her
petition, and that those that were attached were merely duplicate original copies. Lichauco counters that for the
viability of her petition for certiorari, all that she needed to attach were her motion to dismiss, the RTC orders acting
on such motion, her motion for reconsideration of the denial of her motion to dismiss, and petitioners opposition to
said motion for reconsideration. She claims that only these motions and submission were relevant to the resolution of
her petition.18[18]

In her comment, Lichaucho claims that she did not have to attach the complaint to the copy of the petition
she sent to the petitioners herein, since the latter obviously retained the original copy of the complaint they filed.19[19]
However, her petition before the appellate court does not indicate that the same complaint was included as an
attachment, and indeed, there is a curious absence of any averment on Lichuacos part that she indeed attached the said
complaint to her petition.20[20] Certainly, in a petition for certiorari assailing the denial of a motion to dismiss a
complaint, the very complaint itself is a document relevant and pertinent to the special civil action. It should be
remembered that unlike in an ordinary appeal that is given due course,21[21] the case record is not automatically
elevated to the court exercising jurisdiction over a special civil action for certiorari; hence there is an even more
impelling need to attach all pleadings and documents to the special civil action, as mandated under Section 1, Rule 65
of the 1997 Rules of Civil Procedure. After all, how could the court a quo properly ascertain whether or not the motion
to dismiss itself should have been granted if it did not have a copy of the complaint sought to be dismissed itself.

Nonetheless, the requirement to attach such relevant pleadings under Section 1, Rule 65 is read in relation to
Section 3, Rule 46, which states that the failure of the petitioner to comply with any of the documentary requirements,
such as the attachment of such relevant pleadings, shall be sufficient ground for the dismissal of the petition. The
procedural rule accords sufficient discretion to the court hearing the special civil action whether or not to dismiss the
petition outright for failure to comply with said requirement. If the court does dismiss the petition on that ground, the
dismissal would be justifiable under Section 3, Rule 46, and generally such action of the court cannot be assailed as
constituting either grave abuse of discretion or reversible error of law. If the court, on the other hand, takes cognizance
of the petition despite such lapses, the phrasing of Section 3, Rule 46 sufficiently justifies such adjudicative recourse.
Indeed, the ultimate logic behind rules of procedure being the promotion of the objective of securing a just, speedy

18[18]Id. at 214.

19[19]See id. at 215.

20[20]In her Comment, the Office of the Solicitor General, in behalf of Lichauco, states:
Respondent [Lichauco] attached the following to her petition filed before the Court of Appeals, to
wit: (a) Original copies of the assailed orders as Annexes A and B; (b) [respondent]s motion to
dismiss as Annex C; (c) Copy of [respondent]s motion for reconsideration as Annex D; and (d)
[petitioner]s opposition to the motion for reconsideration as Annex E. See id. at 214.

21[21]See Section 8, Rule 45, 1997 Rules of Civil Procedure.

and inexpensive disposition of every action and proceeding,22[22] the higher interests of justice may at times
sufficiently warrant the allowance of the petition for certiorari despite such lapses, especially if they are nonetheless
correctible through subsequent submissions.

In any event, the Court is willing to overlook Lichaucos failure to attach the complaint in her petition for
certiorari before the Court of Appeals, an oversight sadly ignored by the appellate court. There are weighty issues at
hand relating to the doctrine of state immunity from suit and the requisites of a motion to dismiss.

There is a connective issue between these two aspects in that if the State is sued without its consent, the
corresponding suit must be dismissed. At times, it would be teasingly obvious, even from the moment of the filing of
the complaint, that the suit is one against the State. A cursory examination of the caption of the complaint can
sometimes betray such proscribed intent, as when the suit is directly initiated against the Republic of the Philippines,
any foreign government, or an unincorporated government agency as the named respondents. In such cases, obviously
there is need for immediate caution, although if it is somehow established that those respondents had given their
consent to be sued, the suit may nonetheless prosper.

The present action was denominated against Lichauco and the unknown awardee, Lichauco was identified in
the complaint as acting Secretary of the [DOTC].23[23] The hornbook rule is that a suit for acts done in the
performance of official functions against an officer of the government by a private citizen which would result in a
charge against or financial liability to the government must be regarded as a suit against the State itself, although it
has not been formally impleaded.24[24] However, government immunity from suit will not shield the public official
being sued if the government no longer has an interest to protect in the outcome of a suit; or if the liability of the
officer is personal because it arises from a tortious act in the performance of his/her duties.

Petitioner insists that Lichauco is being sued for her acts committed in excess of her authority, ultra vires in
nature, and tortious in character. The Court of Appeals responded that such acts fell within Lichaucos official duties
as DOTC Undersecretary, thus enjoying the presumption that they were performed in good faith and in the regular
performance of official duty. This rationale is pure sophistry and must be rejected outright.

We do not doubt the existence of the presumptions of good faith or regular performance of official duty, yet
these presumptions are disputable25[25] and may be contradicted and overcome by other evidence.26[26] Many civil

22[22]See Section 6, Rule 1, 1997 Rules of Civil Procedure.

23[23]Rollo, p. 46.

24[24]See e.g., Isberto v. Raquiza, G.R. No. L-35001, 25 September 1975, 67 SCRA 116,
119 (1975).

25[25]See e.g., Section 3(m), Rule 131, Rules of Court.

actions are oriented towards overcoming any number of these presumptions, and a cause of action can certainly be
geared towards such effect. The very purpose of trial is to allow a party to present evidence overcome the disputable
presumptions involved. Otherwise, if trial is deemed irrelevant or unnecessary, owing to the perceived indisputability
of the presumptions, the judicial exercise would be relegated to a mere ascertainment of what presumptions apply in
a given case, nothing more. Consequently, the entire Rules of Court is rendered as excess verbiage, save perhaps for
the provisions laying down the legal presumptions.

If this reasoning of the Court of Appeals were ever adopted as a jurisprudential rule, no public officer could
ever be sued for acts executed beyond their official functions or authority, or for tortious conduct or behavior, since
such acts would enjoy the presumption of good faith and in the regular performance of official duty. Indeed, few civil
actions of any nature would ever reach the trial stage, if a case can be adjudicated by a mere determination from the
complaint or answer as to which legal presumptions are applicable. For example, the presumption that a person is
innocent of a wrong is a disputable presumption on the same level as that of the regular performance of official
duty.27[27] A civil complaint for damages necessarily alleges that the defendant committed a wrongful act or omission
that would serve as basis for the award of damages. With the rationale of the Court of Appeals, such complaint can be
dismissed upon a motion to dismiss solely on the ground that the presumption is that a person is innocent of a wrong.

So obviously, the Decision of the Court of Appeals cannot receive the imprimatur of this Court. Still, the
question of whether Lichauco may validly invoke state immunity from suit to secure the outright dismissal of
petitioners complaint warrants closer examination.

As earlier noted, the complaint alleges three (3) causes of action against Lichauco: one for injunction against
her performing any act in relation to orbital slot 153 East Longitude; one for declaration of nullity of award, seeking
to nullify the alleged award of orbital slot 153 East Longitude; and one for damages against Lichauco herself.
Evidently, the first two causes of action stem from Lichaucos act of offering orbital slot 153 East Longitude for
bidding, through the Notice of Offer which was attached to the complaint.

In her Motion to Dismiss, Lichauco asserts that she is being sued for issuing the aforementioned Notice of
Offer, which fell within her official functions as DOTC Undersecretary for Communications. She claims that it was
Secretary Lagdameo who authorized her to offer orbital slot 153 East Longitude for bidding, and she thus acted well
within the scope of her authority to advise and assist the DOTC Secretary in the formulation and implementation of
department objectives and policies.

The Notice of Offer cites Department Circular 97-01, signed by then DOTC Secretary Arturo Enrile, as
authority for it. The Court has examined the aforementioned Department Circular, issued on 17 October 1997, which
establishes the Guidelines on the Procurement of Orbital Slots and Frequency Registration of Philippine Satellites.
Therein, the DOTC is mandated to conduct a bidding process in case there are competing applications for any one of
the assigned or applied-for-orbital slots28[28]. Further, the Department Circular states that the DOTC shall publish in
three newspapers of general circulation a notice of offer for the government assigned, initiated and applied for orbital
slots.29[29]

26[26]See Section 3, Rule 131, Rules of Court.

27[27]See Section 3(a), Rule 131, Rules of Court.

28[28]Article III, sec. 6, DOTC Department Circular No. 97-01 (17 October 1997).
 Thus, insofar as the first two causes of action are concerned, Lichauco may have a point when she asserts
that they were based on acts which she performed in her capacity as DOTC Undersecretary. But does this necessarily
mean that these two causes of action may thus be dismissed on the basis of state immunity of suit?

As stated earlier, it is when the acts done in the performance of official functions by an officer of the
government will result in a charge against or financial liability to the government that the complaint must be regarded
as a suit against the State itself. However, the distinction must also be raised between where the government official
concerned performs an act in his/her official and jurisdictional capacity and where he performs an act that constitutes
grave abuse of discretion tantamount to lack of jurisdiction. In the latter case, the Constitution itself assures the
availability of judicial review, and it is the official concerned who should be impleaded as the proper party- defendant
or respondent.

On this point, our ruling in J.M. Tuazon & Co. v. Land Tenure Administration30[30] is material. Petitioners
therein had filed a special civil action for prohibition to nullify Republic Act No. 2616, or law that directed the
expropriation of the Tatalon Estate in Quezon City. Impleaded as respondents were the officials and government
agency tasked to undertake such expropriation. The respondents alleged that the petition for prohibition was actually
a suit against the State without its consent. The Court, through then Associate Justice (later Chief Justice) Enrique
Fernando, debunked the argument, ruling instead that the petition was within the ambit of judicial review:

[T]he power of judicial review is granted, if not expressly, at least by clear implication
from the relevant provisions of the Constitution. This power may be exercised when the party
adversely affected by either a legislative or executive act, or a municipal ordinance for that matter,
files the appropriate suit to test its validity. The special civil action of prohibition has been relied
upon precisely to restrain the enforcement of what is alleged to be an unconstitutional statute. As it
is a fundamental postulate that the Constitution as the supreme law is binding on all governmental
agencies, failure to observe the limitations found therein furnishes a sufficient ground for a
declaration of nullity of the government measure challenged. The argument then that the
government is the adverse party and that, therefore, must consent to its being sued certainly is far
from persuasive. x x x x31[31]

The Court further noted that it was well-settled for the purpose of obtaining a judicial declaration of nullity,
it is enough if the respondents or defendants named be the government officials who would give operation and effect
to official action allegedly tainted with unconstitutionality.32[32]

Unlike in J.M. Tuason, the case at bar does not seek to nullify an unconstitutional law or measure. However,
the first two causes of action do sufficiently impute grave abuse of discretion against Lichauco in her official capacity.

29[29]Article III, sec. 7, id.

30[30]G.R. No. L-21064, 18 February 1970, 31 SCRA 413.

31[31]Id. at 421-422.

32[32]Id. at 422.
Since judicial review of acts alleged to have been tainted with grave abuse of discretion is guaranteed by the
Constitution, it necessarily follows in such instances that it is the official concerned who should be impleaded as
defendant or respondent in the appropriate suit.

Moreover, if the suit had been directed against Lichauco alone, and in her personal capacity, yet it sought, as
it now does, the nullification of the Notice of Offer or the awards thereon, such remedy could not avail even if granted.
Lichauco, in her personal capacity, cannot be directed to set aside the Notice of Offer, the award of the bid, or to issue
a new award herself. It is only because Lichauco was sued in her official capacity as the DOTC Undersecretary that
she, or her successors in office, could be judicially compelled to act in such fashion.

As to the first two (2) causes of action, the Court rules that the defense of state immunity from suit do not
apply since said causes of action cannot be properly considered as suits against the State in constitutional
contemplation. These causes of action do not seek to impose a charge or financial liability against the State, but merely
the nullification of state action. The prayers attached to these two causes of action are for the revocation of the Notice
of Bid and the nullification of the purported award, nothing more. Had it been so that petitioner additionally sought
damages in relation to said causes of action, the suit would have been considered as one against the State. Had the
petitioner impleaded the DOTC itself, an unincorporated government agency, and not Lichauco herself, the suit would
have been considered as one against the State. But neither circumstance obtains in this case.

Parenthetically, it may be noted that at the time of the filing of the complaint, Lichauco herself was already
the acting head of the DOTC, owing to the sudden death of then Secretary Enrile a few days before. At that stage, any
suit seeking to nullify the Notice of Bid and the alleged award to the Unknown Bidder should have properly
denominated Lichauco as the respondent, and not the DOTC.

Nonetheless, as to the first two causes of action, there was a viable ground to dismiss the complaint: the non-
exhaustion of administrative remedies. Indeed, such ground was alleged by Lichauco in her Motion to Dismiss. Yet
the principle of non-exhaustion of administrative remedies admits to several exceptions. In its Order denying the
motion to dismiss the complaint, the RTC adequately dispensed with the objection, applying the established exceptions
to the rule of non-exhaustion of administrative remedies. To wit:

Turning to the matter pertaining to non-exhaustion of administrative remedies, it is

fundamental that this principle is not an inflexible rule. It yields to many accepted exceptions.
(Rocamora vs. RTC Cebu, G.R. No. 65307). As in this case, this principle can be dispensed with
when its application would cause great and irreparable damage and when it does not provide a plain,
speedy and adequate remedy.

When the subject orbital slot 153 E was bidded out to other applicants, the damage and
injury plaintiffs stand to suffer was clear, present, and substantiated that this Court was impelled to
provide urgent needed measure such as the issuance of writ of injunction against the public
defendant. Indeed, under the circumstances then obtaining it was impractical for the plaintiffs to
first proceed to the administrative official concerned before taking court action.33[33]

A different set of principles applies to the third cause of action, anchored as it is on alleged acts that are
tortious in character or otherwise beyond the scope of Lichaucos official duties. The complaint alleges that Lichauco
uttered several disparaging and defamatory remarks against petitioners and made false assertions against them in her
letter to the Land Bank President.

33[33]Rollo, p. 113.
 The veracity of those allegations is of course presented at the trial to be determined on the basis of the
evidence. However, if proven, they would establish liability on the part of Lichauco that is not shielded by the doctrine
of state immunity from suit. The doctrine, as summarized in Shauf v. Court of Appeals :34[34]

While the doctrine appears to prohibit only suits against the state without its consent, it is
also applicable to complaints filed against officials of the state for acts allegedly performed by them
in the discharge of their duties. The rule is that if the judgment against such officials will require the
state itself to perform an affirmative act to satisfy the same, such as the appropriation of the amount
needed to pay the damages awarded against them, the suit must be regarded as against the state itself
although it has not been formally impleaded. It must be noted, however, that the rule is not so all-
encompassing as to be applicable under all circumstances.

It is a different matter where the public official is made to account in his capacity as
such for acts contrary to law and injurious to the rights of plaintiff. As was clearly set forth
by Justice Zaldivar in Director of the Bureau of Telecommunications, et al. vs. Aligaen, etc.,
et al. 'Inasmuch as the State authorizes only legal acts by its officers, unauthorized acts of
government officials or officers are not acts of the State, and an action against the officials or
officers by one whose rights have been invaded or violated by such acts, for the protection of
his rights, is not a suit against the State within the rule of immunity of the State from suit. In
the same tenor, it has been said that an action at law or suit in equity against a State officer or the
director of a State department on the ground that, while claiming to act for the State, he violates or
invades the personal and property rights or the plaintiff, under an unconstitutional act or under an
assumption of authority which he does not have, is not a suit against the State within the
constitutional provision that the State may not be sued without its consent.' The rationale for this
ruling is that the doctrine of state immunity cannot be used as an instrument for perpetrating an
injustice.35[35]

The doctrine poses no controversy if after trial on the merits, it is established that the public official concerned
had committed illegal or tortious acts against the plaintiff. How does it apply in relation to a motion to dismiss on the
ground of state immunity from suit, necessarily lodged before trial on the merits?

Our ruling in United States of America v. Reyes36[36] warrants due consideration. The Court therein, through
then Associate Justice (later Chief Justice) Hilario G. Davide, Jr., ruled that a motion to dismiss averring immunity
from suit of a State and its functionaries was actually grounded on the specific ground for dismissal of the lack of
cause of action, for even assuming that the defendants had committed the injurious acts complained of, no action may

34[34]G.R. No. 90314, 27 November 1990, 191 SCRA 713.

35[35]Id. at 726-727. Citations omitted.

36[36]Id. at 206.
be maintained thereon, because of the principle of state immunity.37[37] Pertinently, the Court noted that a motion to
dismiss on the ground of failure to state a cause of action hypothetically admits the truth of the allegations in the
complaint.

Thus, Lichauco, in alleging in her Motion to Dismiss that she is shielded by the States immunity from suit,
to hypothetically admitted the truth of the allegations in the complaint. Such hypothetical admission has to be deemed
a concession on her part that she had performed the tortious or damaging acts against the petitioners, which if true,
would hold her liable for damages.

Of course, Lichauco could very well raise the defense of state immunity from suit in regard to the third cause
of action with the assertion that the acts complained of constituting said cause of action fell within her official functions
and were not tortuous in character. Still, to establish such assertions of fact, a full-blown trial on the merits would be
necessary, as would the case be if Lichauco raised the defense that she did not commit these acts complained of.
Certainly, these defenses cannot be accorded merit before trial, factual as they are in character.

All told, contrary to the ruling of the Court of Appeals, we find no grave abuse of discretion on the part of
the RTC in denying Lichaucos Motion to Dismiss.

WHEREFORE, the PETITION is GRANTED. The Decision of the Court of Appeals dated 21 February 2000
is SET ASIDE and the Order dated 14 August 1998 of the Regional Trial Court of Mandaluyong City is
REINSTATED. The Regional Trial Court is ordered to try and decide the case on the merits with deliberate dispatch.
No costs.

SO ORDERED.

DANTE O. TINGA
Associate Justice

WE CONCUR:

LEONARDO A. QUISUMBING
Associate Justice
Chairman

ANTONIO T. CARPIO CONCHITA CARPIO MORALES

Associate Justice Associate Justice

37[37]G.R. No. 79253, 1 March 1993, 219 SCRA 192.

 PRESBITERO J. VELASCO, JR.
Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the case was
assigned to the writer of the opinion of the Courts Division.

LEONARDO A. QUISUMBING
Associate Justice
Chairman, Third Division

CERTIFICATION

Pursuant to Section 13, Article VII of the Constitution, and the Division Chairmans Attestation, it is hereby certified
that the conclusions in the above Decision had been reached in consultation before the case was assigned to the
writer of the opinion of the Courts Division,

ARTEMIO V. PANGANIBAN
Chief Justice

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 Decision38[1] of the Court of Appeals in CA-G.R. SP No. 47167, which
affirmed the September 29, 1997 Order39[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.40[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.41[4] RMC 37-93 in effect subjected Hope, More, and Champion cigarettes
to the provisions of RA 7654, specifically, to Sec. 142,42[5] (c)(1) on locally manufactured cigarettes which are

38[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.

39[2] Id. at 598-602. Penned by Judge Reuben P. De La Cruz.

40[3] 329 Phil. 987 (1996).

41[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.

42[5] Pertinent portion thereof, states:

SEC. 142. Cigars and Cigarettes.

xxxx
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.43[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, 1993.44[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.45[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 37-93.46[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.47[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 complaint48[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 dismiss49[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.

(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.

43[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.

44[7] Id. at 1004.

45[8] Rollo, pp. 542-543.

46[9] Id. at 569.

47[10] Supra note 3. The motion for reconsideration of the Courts Decision was denied with finality
on October 7, 1996.

48[11] Rollo, pp. 533-552.

49[12] Id. at 555-584.

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.50[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,51[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:

50[13] Id. at 602. Petitioner filed a motion for reconsideration but was denied on December 4, 1997 (Rollo, pp. 603-
606).

51[14] No. L-22554, August 29, 1975, 66 SCRA 299.

 (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.52[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.53[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.54[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,55[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.

52[15] Orocio v. Commission on Audit, G.R. No. 75959, August 31, 1992, 213 SCRA 109, 126,
cited in Agpalo, Philippine Administrative Law, 2004 edition, p. 473.

53[16] Republic v. Court of Appeals, G.R. No. 86147, February 26, 1990, 182 SCRA 721, 728.

54[17] Meneses v. Court of Appeals, G.R. No. 82220, July 14, 1995, 246 SCRA 162, 174.

55[18] G.R. No. 119398, July 2, 1999, 309 SCRA 602, 604.
 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.56[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.57[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.58[21]

Thus, in City of Manila v. Teotico,59[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

56[19] Agpalo, Statutory Construction, second edition (1990), p. 197.

57[20] Id. at 197-198.

58[21] Id. at 198.

59[22] G.R. No. L-23052, January 29, 1968, 22 SCRA 267.

 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.60[23]

In the case of Bagatsing v. Ramirez,61[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

60[23] Id. at 269-270. Emphasis supplied.

61[24] G.R. No. L-41613, December 17, 1976, 74 SCRA 306, 311-312. (Emphasis added)
 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.62[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.63[26]

Article 32 was patterned after the tort in American law.64[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.65[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

62[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.

63[26] Silahis International Hotel, Inc. v. Soluta, supra.

64[27] 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, p. 259.

65[28] 74 Am Jur 2d, Torts, 1, 620.

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.66[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.67[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.68[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,69[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.

66[29] Id., 6, 623-624.

67[30] Id. at 624.

68[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.)

69[32] Supra note 25.

 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.70[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

70[33] LDP Marketing, Inc. v. Monter, G.R. No. 159653, January 25, 2006, 480 SCRA 137, 144-145.
 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

Today is Saturday, May 26, 2018

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-55963 December 1, 1989
SPOUSES JOSE FONTANILLA AND VIRGINIA FONTANILLA, petitioners,
vs.
HONORABLE INOCENCIO D. MALIAMAN and NATIONAL IRRIGATION ADMINISTRATION, respondents.
G.R. No. L-61045 December 1, 1989
NATIONAL IRRIGATION ADMINISTRATION, appellant,
vs.
SPOUSES JOSE FONTANILLA and VIRGINIA FONTANILLA, appellees.
Cecilio V. Suarez, Jr. for Spouses Fontanilla.
Felicisimo C. Villaflor for NIA.

PARAS, J.:
In G.R. No. L-55963, the petition for review on certiorari seeks the affirmance of the decision dated March 20, 1980 of the then Court of
First Instance of Nueva Ecija, Branch VIII, at San Jose City and its modification with respect to the denial of petitioner's claim for moral
and exemplary damages and attorneys fees.
In G.R. No. 61045, respondent National Irrigation Administration seeks the reversal of the aforesaid decision of the lower court. The
original appeal of this case before the Court of Appeals was certified to this Court and in the resolution of July 7, 1982, it was docketed
with the aforecited number. And in the resolution of April 3, this case was consolidated with G.R. No. 55963.
It appears that on August 21, 1976 at about 6:30 P.M., a pickup owned and operated by respondent National Irrigation Administration, a
government agency bearing Plate No. IN-651, then driven officially by Hugo Garcia, an employee of said agency as its regular driver,
bumped a bicycle ridden by Francisco Fontanilla, son of herein petitioners, and Restituto Deligo, at Maasin, San Jose City along the
Maharlika Highway. As a result of the impact, Francisco Fontanilla and Restituto Deligo were injured and brought to the San Jose City
Emergency Hospital for treatment. Fontanilla was later transferred to the Cabanatuan Provincial Hospital where he died.
Garcia was then a regular driver of respondent National Irrigation Administration who, at the time of the accident, was a licensed
professional driver and who qualified for employment as such regular driver of respondent after having passed the written and oral
examinations on traffic rules and maintenance of vehicles given by National Irrigation Administration authorities.
The within petition is thus an off-shot of the action (Civil Case No. SJC-56) instituted by petitioners-spouses on April 17, 1978 against
respondent NIA before the then Court of First Instance of Nueva Ecija, Branch VIII at San Jose City, for damages in connection with the
death of their son resulting from the aforestated accident.
After trial, the trial court rendered judgment on March 20, 1980 which directed respondent National Irrigation Administration to pay
damages (death benefits) and actual expenses to petitioners. The dispositive portion of the decision reads thus:
. . . . . Judgment is here rendered ordering the defendant National Irrigation Administration to pay to the heirs of
the deceased P12,000.00 for the death of Francisco Fontanilla; P3,389.00 which the parents of the deceased
had spent for the hospitalization and burial of the deceased Francisco Fontanilla; and to pay the costs. (Brief
for the petitioners spouses Fontanilla, p. 4; Rollo, p. 132)
Respondent National Irrigation Administration filed on April 21, 1980, its motion for reconsideration of the aforesaid decision which
respondent trial court denied in its Order of June 13, 1980. Respondent National Irrigation Administration thus appealed said decision to
the Court of Appeals (C.A.-G.R. No. 67237- R) where it filed its brief for appellant in support of its position.
Instead of filing the required brief in the aforecited Court of Appeals case, petitioners filed the instant petition with this Court.
The sole issue for the resolution of the Court is: Whether or not the award of moral damages, exemplary damages and attorney's fees
is legally proper in a complaint for damages based on quasi-delict which resulted in the death of the son of herein petitioners.
Petitioners allege:
1. The award of moral damages is specifically allowable. under paragraph 3 of Article 2206 of the New Civil
Code which provides that the spouse, legitimate and illegitimate descendants and ascendants of the deceased
may demand moral damages for mental anguish by reason of the death of the deceased. Should moral
damages be granted, the award should be made to each of petitioners-spouses individually and in varying
amounts depending upon proof of mental and depth of intensity of the same, which should not be less than
P50,000.00 for each of them.
2. The decision of the trial court had made an impression that respondent National Irrigation Administration
acted with gross negligence because of the accident and the subsequent failure of the National Irrigation
Administration personnel including the driver to stop in order to give assistance to the, victims. Thus, by reason
of the gross negligence of respondent, petitioners become entitled to exemplary damages under Arts. 2231
and 2229 of the New Civil Code.
3. Petitioners are entitled to an award of attorney's fees, the amount of which (20%) had been sufficiently
established in the hearing of May 23, 1979.
4. This petition has been filed only for the purpose of reviewing the findings of the lower court upon which the
disallowance of moral damages, exemplary damages and attorney's fees was based and not for the purpose of
disturbing the other findings of fact and conclusions of law.
The Solicitor General, taking up the cudgels for public respondent National Irrigation Administration, contends thus:
1. The filing of the instant petition is rot proper in view of the appeal taken by respondent National Irrigation
Administration to the Court of Appeals against the judgment sought to be reviewed. The focal issue raised in
respondent's appeal to the Court of Appeals involves the question as to whether or not the driver of the vehicle
that bumped the victims was negligent in his operation of said vehicle. It thus becomes necessary that before
petitioners' claim for moral and exemplary damages could be resolved, there should first be a finding of
negligence on the part of respondent's employee-driver. In this regard, the Solicitor General alleges that the
trial court decision does not categorically contain such finding.
2. The filing of the "Appearance and Urgent Motion For Leave to File Plaintiff-Appellee's Brief" dated December
28, 1981 by petitioners in the appeal (CA-G.R. No. 67237-R; and G. R. No.61045) of the respondent National
Irrigation Administration before the Court of Appeals, is an explicit admission of said petitioners that the herein
petition, is not proper. Inconsistent procedures are manifest because while petitioners question the findings of
fact in the Court of Appeals, they present only the questions of law before this Court which posture confirms
their admission of the facts.
3. The fact that the parties failed to agree on whether or not negligence caused the vehicular accident involves
a question of fact which petitioners should have brought to the Court of Appeals within the reglementary period.
Hence, the decision of the trial court has become final as to the petitioners and for this reason alone, the
petition should be dismissed.
4. Respondent Judge acted within his jurisdiction, sound discretion and in conformity with the law.
5. Respondents do not assail petitioners' claim to moral and exemplary damages by reason of the shock and
subsequent illness they suffered because of the death of their son. Respondent National Irrigation
Administration, however, avers that it cannot be held liable for the damages because it is an agency of the
State performing governmental functions and driver Hugo Garcia was a regular driver of the vehicle, not a
special agent who was performing a job or act foreign to his usual duties. Hence, the liability for the tortious act
 should. not be borne by respondent government agency but by driver Garcia who should answer for the
consequences of his act.
6. Even as the trial court touched on the failure or laxity of respondent National Irrigation Administration in
exercising due diligence in the selection and supervision of its employee, the matter of due diligence is not an
issue in this case since driver Garcia was not its special agent but a regular driver of the vehicle.
The sole legal question on whether or not petitioners may be entitled to an award of moral and exemplary damages and attorney's fees
can very well be answered with the application of Arts. 2176 and 2180 of theNew Civil Code.
Art. 2176 thus provides:
Whoever by act omission causes damage to another, there being fault or negligence, is obliged to pay for
damage done. Such fault or negligence, if there is no pre-existing cotractual relation between the parties, is
called a quasi-delict and is governed by the provisions of this Chapter
Paragraphs 5 and 6 of Art. 21 80 read as follows:
Employers shall be liable for the damages caused by their employees and household helpers acting within the
scope of their assigned tasks, even the though the former are not engaged in any business or industry.
The State is responsible in like manner when it acts through a special agent.; but not when the damage has
been caused by the official to whom the task done properly pertains, in which case what is provided in Art.
2176 shall be applicable.
The liability of the State has two aspects. namely:
1. Its public or governmental aspects where it is liable for the tortious acts of special agents only.
2. Its private or business aspects (as when it engages in private enterprises) where it becomes liable as an
ordinary employer. (p. 961, Civil Code of the Philippines; Annotated, Paras; 1986 Ed. ).
In this jurisdiction, the State assumes a limited liability for the damage caused by the tortious acts or conduct of its special agent.
Under the aforequoted paragrah 6 of Art. 2180, the State has voluntarily assumed liability for acts done through special agents. The
State's agent, if a public official, must not only be specially commissioned to do a particular task but that such task must be foreign to
said official's usual governmental functions. If the State's agent is not a public official, and is commissioned to perform non-
governmental functions, then the State assumes the role of an ordinary employer and will be held liable as such for its agent's tort.
Where the government commissions a private individual for a special governmental task, it is acting through a special agent within the
meaning of the provision. (Torts and Damages, Sangco, p. 347, 1984 Ed.)
Certain functions and activities, which can be performed only by the government, are more or less generally agreed to be
"governmental" in character, and so the State is immune from tort liability. On the other hand, a service which might as well be provided
by a private corporation, and particularly when it collects revenues from it, the function is considered a "proprietary" one, as to which
there may be liability for the torts of agents within the scope of their employment.
The National Irrigation Administration is an agency of the government exercising proprietary functions, by express provision of Rep. Act
No. 3601. Section 1 of said Act provides:
Section 1. Name and domicile.-A body corporate is hereby created which shall be known as the National
Irrigation Administration, hereinafter called the NIA for short, which shall be organized immediately after the
approval of this Act. It shall have its principal seat of business in the City of Manila and shall have
representatives in all provinces for the proper conduct of its business.
Section 2 of said law spells out some of the NIA's proprietary functions. Thus-
Sec. 2. Powers and objectives.-The NIA shall have the following powers and objectives:
(a) x x x x x x x x x x x x x x x x x x
(b) x x x x x x x x x x x x x x x x x x
(c) To collect from the users of each irrigation system constructed by it such fees as may be necessary to
finance the continuous operation of the system and reimburse within a certain period not less than twenty-five
years cost of construction thereof; and
(d) To do all such other tthings and to transact all such business as are directly or indirectly necessary,
incidental or conducive to the attainment of the above objectives.
Indubitably, the NIA is a government corporation with juridical personality and not a mere agency of the government. Since it is a
corporate body performing non-governmental functions, it now becomes liable for the damage caused by the accident resulting from the
tortious act of its driver-employee. In this particular case, the NIA assumes the responsibility of an ordinary employer and as such, it
becomes answerable for damages.
This assumption of liability, however, is predicated upon the existence of negligence on the part of respondent NIA. The negligence
referred to here is the negligence of supervision.
At this juncture, the matter of due diligence on the part of respondent NIA becomes a crucial issue in determining its liability since it has
been established that respondent is a government agency performing proprietary functions and as such, it assumes the posture of an
ordinary employer which, under Par. 5 of Art. 2180, is responsible for the damages caused by its employees provided that it has failed
to observe or exercise due diligence in the selection and supervision of the driver.
It will be noted from the assailed decision of the trial court that "as a result of the impact, Francisco Fontanilla was thrown to a distance
50 meters away from the point of impact while Restituto Deligo was thrown a little bit further away. The impact took place almost at the
edge of the cemented portion of the road." (Emphasis supplied,) [page 26, Rollo]
The lower court further declared that "a speeding vehicle coming in contact with a person causes force and impact upon the vehicle that
anyone in the vehicle cannot fail to notice. As a matter of fact, the impact was so strong as shown by the fact that the vehicle suffered
dents on the right side of the radiator guard, the hood, the fender and a crack on the radiator as shown by the investigation report
(Exhibit "E"). (Emphasis supplied) [page 29, Rollo]
It should be emphasized that the accident happened along the Maharlika National Road within the city limits of San Jose City, an urban
area. Considering the fact that the victim was thrown 50 meters away from the point of impact, there is a strong indication that driver
Garcia was driving at a high speed. This is confirmed by the fact that the pick-up suffered substantial and heavy damage as above-
described and the fact that the NIA group was then "in a hurry to reach the campsite as early as possible", as shown by their not
stopping to find out what they bumped as would have been their normal and initial reaction.
Evidently, there was negligence in the supervision of the driver for the reason that they were travelling at a high speed within the city
limits and yet the supervisor of the group, Ely Salonga, failed to caution and make the driver observe the proper and allowed speed limit
within the city. Under the situation, such negligence is further aggravated by their desire to reach their destination without even
checking whether or not the vehicle suffered damage from the object it bumped, thus showing imprudence and reckelessness on the
part of both the driver and the supervisor in the group.
Significantly, this Court has ruled that even if the employer can prove the diligence in the selection and supervision (the latter aspect
has not been established herein) of the employee, still if he ratifies the wrongful acts, or take no step to avert further damage, the
employer would still be liable. (Maxion vs. Manila Railroad Co., 44 Phil. 597).
Thus, too, in the case of Vda. de Bonifacio vs. B.L.T. Bus Co. (L-26810, August 31, 1970, 34 SCRA 618), this Court held that a driver
should be especially watchful in anticipation of others who may be using the highway, and his failure to keep a proper look out for
reasons and objects in the line to be traversed constitutes negligence.
Considering the foregoing, respondent NIA is hereby directed to pay herein petitioners-spouses the amounts of P12,000.00 for the
death of Francisco Fontanilla; P3,389.00 for hospitalization and burial expenses of the aforenamed deceased; P30,000.00 as moral
damages; P8,000.00 as exemplary damages and attorney's fees of 20% of the total award.
SO ORDERED.
Padilla, Sarmiento and Regalado, JJ., concur.
Melencio- Herrera (Chairperson,), J., is on leave.

The Lawphil Project - Arellano Law Foundation

Today is Saturday, May 26, 2018

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.

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Today is Saturday, May 26, 2018

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-55963 December 1, 1989
SPOUSES JOSE FONTANILLA AND VIRGINIA FONTANILLA, petitioners,
vs.
HONORABLE INOCENCIO D. MALIAMAN and NATIONAL IRRIGATION ADMINISTRATION, respondents.
G.R. No. L-61045 December 1, 1989
NATIONAL IRRIGATION ADMINISTRATION, appellant,
vs.
SPOUSES JOSE FONTANILLA and VIRGINIA FONTANILLA, appellees.
Cecilio V. Suarez, Jr. for Spouses Fontanilla.
Felicisimo C. Villaflor for NIA.

PARAS, J.:
In G.R. No. L-55963, the petition for review on certiorari seeks the affirmance of the decision dated March 20, 1980 of the then Court of
First Instance of Nueva Ecija, Branch VIII, at San Jose City and its modification with respect to the denial of petitioner's claim for moral
and exemplary damages and attorneys fees.
In G.R. No. 61045, respondent National Irrigation Administration seeks the reversal of the aforesaid decision of the lower court. The
original appeal of this case before the Court of Appeals was certified to this Court and in the resolution of July 7, 1982, it was docketed
with the aforecited number. And in the resolution of April 3, this case was consolidated with G.R. No. 55963.
It appears that on August 21, 1976 at about 6:30 P.M., a pickup owned and operated by respondent National Irrigation Administration, a
government agency bearing Plate No. IN-651, then driven officially by Hugo Garcia, an employee of said agency as its regular driver,
bumped a bicycle ridden by Francisco Fontanilla, son of herein petitioners, and Restituto Deligo, at Maasin, San Jose City along the
Maharlika Highway. As a result of the impact, Francisco Fontanilla and Restituto Deligo were injured and brought to the San Jose City
Emergency Hospital for treatment. Fontanilla was later transferred to the Cabanatuan Provincial Hospital where he died.
Garcia was then a regular driver of respondent National Irrigation Administration who, at the time of the accident, was a licensed
professional driver and who qualified for employment as such regular driver of respondent after having passed the written and oral
examinations on traffic rules and maintenance of vehicles given by National Irrigation Administration authorities.
The within petition is thus an off-shot of the action (Civil Case No. SJC-56) instituted by petitioners-spouses on April 17, 1978 against
respondent NIA before the then Court of First Instance of Nueva Ecija, Branch VIII at San Jose City, for damages in connection with the
death of their son resulting from the aforestated accident.
After trial, the trial court rendered judgment on March 20, 1980 which directed respondent National Irrigation Administration to pay
damages (death benefits) and actual expenses to petitioners. The dispositive portion of the decision reads thus:
. . . . . Judgment is here rendered ordering the defendant National Irrigation Administration to pay to the heirs of
the deceased P12,000.00 for the death of Francisco Fontanilla; P3,389.00 which the parents of the deceased
had spent for the hospitalization and burial of the deceased Francisco Fontanilla; and to pay the costs. (Brief
for the petitioners spouses Fontanilla, p. 4; Rollo, p. 132)
Respondent National Irrigation Administration filed on April 21, 1980, its motion for reconsideration of the aforesaid decision which
respondent trial court denied in its Order of June 13, 1980. Respondent National Irrigation Administration thus appealed said decision to
the Court of Appeals (C.A.-G.R. No. 67237- R) where it filed its brief for appellant in support of its position.
Instead of filing the required brief in the aforecited Court of Appeals case, petitioners filed the instant petition with this Court.
The sole issue for the resolution of the Court is: Whether or not the award of moral damages, exemplary damages and attorney's fees
is legally proper in a complaint for damages based on quasi-delict which resulted in the death of the son of herein petitioners.
Petitioners allege:
1. The award of moral damages is specifically allowable. under paragraph 3 of Article 2206 of the New Civil
Code which provides that the spouse, legitimate and illegitimate descendants and ascendants of the deceased
may demand moral damages for mental anguish by reason of the death of the deceased. Should moral
damages be granted, the award should be made to each of petitioners-spouses individually and in varying
amounts depending upon proof of mental and depth of intensity of the same, which should not be less than
P50,000.00 for each of them.
2. The decision of the trial court had made an impression that respondent National Irrigation Administration
acted with gross negligence because of the accident and the subsequent failure of the National Irrigation
Administration personnel including the driver to stop in order to give assistance to the, victims. Thus, by reason
of the gross negligence of respondent, petitioners become entitled to exemplary damages under Arts. 2231
and 2229 of the New Civil Code.
3. Petitioners are entitled to an award of attorney's fees, the amount of which (20%) had been sufficiently
established in the hearing of May 23, 1979.
4. This petition has been filed only for the purpose of reviewing the findings of the lower court upon which the
disallowance of moral damages, exemplary damages and attorney's fees was based and not for the purpose of
disturbing the other findings of fact and conclusions of law.
The Solicitor General, taking up the cudgels for public respondent National Irrigation Administration, contends thus:
1. The filing of the instant petition is rot proper in view of the appeal taken by respondent National Irrigation
Administration to the Court of Appeals against the judgment sought to be reviewed. The focal issue raised in
respondent's appeal to the Court of Appeals involves the question as to whether or not the driver of the vehicle
that bumped the victims was negligent in his operation of said vehicle. It thus becomes necessary that before
petitioners' claim for moral and exemplary damages could be resolved, there should first be a finding of
negligence on the part of respondent's employee-driver. In this regard, the Solicitor General alleges that the
trial court decision does not categorically contain such finding.
2. The filing of the "Appearance and Urgent Motion For Leave to File Plaintiff-Appellee's Brief" dated December
28, 1981 by petitioners in the appeal (CA-G.R. No. 67237-R; and G. R. No.61045) of the respondent National
Irrigation Administration before the Court of Appeals, is an explicit admission of said petitioners that the herein
petition, is not proper. Inconsistent procedures are manifest because while petitioners question the findings of
fact in the Court of Appeals, they present only the questions of law before this Court which posture confirms
their admission of the facts.
3. The fact that the parties failed to agree on whether or not negligence caused the vehicular accident involves
a question of fact which petitioners should have brought to the Court of Appeals within the reglementary period.
Hence, the decision of the trial court has become final as to the petitioners and for this reason alone, the
petition should be dismissed.
4. Respondent Judge acted within his jurisdiction, sound discretion and in conformity with the law.
5. Respondents do not assail petitioners' claim to moral and exemplary damages by reason of the shock and
subsequent illness they suffered because of the death of their son. Respondent National Irrigation
Administration, however, avers that it cannot be held liable for the damages because it is an agency of the
State performing governmental functions and driver Hugo Garcia was a regular driver of the vehicle, not a
special agent who was performing a job or act foreign to his usual duties. Hence, the liability for the tortious act
should. not be borne by respondent government agency but by driver Garcia who should answer for the
consequences of his act.
6. Even as the trial court touched on the failure or laxity of respondent National Irrigation Administration in
exercising due diligence in the selection and supervision of its employee, the matter of due diligence is not an
issue in this case since driver Garcia was not its special agent but a regular driver of the vehicle.
The sole legal question on whether or not petitioners may be entitled to an award of moral and exemplary damages and attorney's fees
can very well be answered with the application of Arts. 2176 and 2180 of theNew Civil Code.
Art. 2176 thus provides:
 Whoever by act omission causes damage to another, there being fault or negligence, is obliged to pay for
damage done. Such fault or negligence, if there is no pre-existing cotractual relation between the parties, is
called a quasi-delict and is governed by the provisions of this Chapter
Paragraphs 5 and 6 of Art. 21 80 read as follows:
Employers shall be liable for the damages caused by their employees and household helpers acting within the
scope of their assigned tasks, even the though the former are not engaged in any business or industry.
The State is responsible in like manner when it acts through a special agent.; but not when the damage has
been caused by the official to whom the task done properly pertains, in which case what is provided in Art.
2176 shall be applicable.
The liability of the State has two aspects. namely:
1. Its public or governmental aspects where it is liable for the tortious acts of special agents only.
2. Its private or business aspects (as when it engages in private enterprises) where it becomes liable as an
ordinary employer. (p. 961, Civil Code of the Philippines; Annotated, Paras; 1986 Ed. ).
In this jurisdiction, the State assumes a limited liability for the damage caused by the tortious acts or conduct of its special agent.
Under the aforequoted paragrah 6 of Art. 2180, the State has voluntarily assumed liability for acts done through special agents. The
State's agent, if a public official, must not only be specially commissioned to do a particular task but that such task must be foreign to
said official's usual governmental functions. If the State's agent is not a public official, and is commissioned to perform non-
governmental functions, then the State assumes the role of an ordinary employer and will be held liable as such for its agent's tort.
Where the government commissions a private individual for a special governmental task, it is acting through a special agent within the
meaning of the provision. (Torts and Damages, Sangco, p. 347, 1984 Ed.)
Certain functions and activities, which can be performed only by the government, are more or less generally agreed to be
"governmental" in character, and so the State is immune from tort liability. On the other hand, a service which might as well be provided
by a private corporation, and particularly when it collects revenues from it, the function is considered a "proprietary" one, as to which
there may be liability for the torts of agents within the scope of their employment.
The National Irrigation Administration is an agency of the government exercising proprietary functions, by express provision of Rep. Act
No. 3601. Section 1 of said Act provides:
Section 1. Name and domicile.-A body corporate is hereby created which shall be known as the National
Irrigation Administration, hereinafter called the NIA for short, which shall be organized immediately after the
approval of this Act. It shall have its principal seat of business in the City of Manila and shall have
representatives in all provinces for the proper conduct of its business.
Section 2 of said law spells out some of the NIA's proprietary functions. Thus-
Sec. 2. Powers and objectives.-The NIA shall have the following powers and objectives:
(a) x x x x x x x x x x x x x x x x x x
(b) x x x x x x x x x x x x x x x x x x
(c) To collect from the users of each irrigation system constructed by it such fees as may be necessary to
finance the continuous operation of the system and reimburse within a certain period not less than twenty-five
years cost of construction thereof; and
(d) To do all such other tthings and to transact all such business as are directly or indirectly necessary,
incidental or conducive to the attainment of the above objectives.
Indubitably, the NIA is a government corporation with juridical personality and not a mere agency of the government. Since it is a
corporate body performing non-governmental functions, it now becomes liable for the damage caused by the accident resulting from the
tortious act of its driver-employee. In this particular case, the NIA assumes the responsibility of an ordinary employer and as such, it
becomes answerable for damages.
This assumption of liability, however, is predicated upon the existence of negligence on the part of respondent NIA. The negligence
referred to here is the negligence of supervision.
At this juncture, the matter of due diligence on the part of respondent NIA becomes a crucial issue in determining its liability since it has
been established that respondent is a government agency performing proprietary functions and as such, it assumes the posture of an
ordinary employer which, under Par. 5 of Art. 2180, is responsible for the damages caused by its employees provided that it has failed
to observe or exercise due diligence in the selection and supervision of the driver.
It will be noted from the assailed decision of the trial court that "as a result of the impact, Francisco Fontanilla was thrown to a distance
50 meters away from the point of impact while Restituto Deligo was thrown a little bit further away. The impact took place almost at the
edge of the cemented portion of the road." (Emphasis supplied,) [page 26, Rollo]
The lower court further declared that "a speeding vehicle coming in contact with a person causes force and impact upon the vehicle that
anyone in the vehicle cannot fail to notice. As a matter of fact, the impact was so strong as shown by the fact that the vehicle suffered
dents on the right side of the radiator guard, the hood, the fender and a crack on the radiator as shown by the investigation report
(Exhibit "E"). (Emphasis supplied) [page 29, Rollo]
It should be emphasized that the accident happened along the Maharlika National Road within the city limits of San Jose City, an urban
area. Considering the fact that the victim was thrown 50 meters away from the point of impact, there is a strong indication that driver
Garcia was driving at a high speed. This is confirmed by the fact that the pick-up suffered substantial and heavy damage as above-
described and the fact that the NIA group was then "in a hurry to reach the campsite as early as possible", as shown by their not
stopping to find out what they bumped as would have been their normal and initial reaction.
Evidently, there was negligence in the supervision of the driver for the reason that they were travelling at a high speed within the city
limits and yet the supervisor of the group, Ely Salonga, failed to caution and make the driver observe the proper and allowed speed limit
within the city. Under the situation, such negligence is further aggravated by their desire to reach their destination without even
checking whether or not the vehicle suffered damage from the object it bumped, thus showing imprudence and reckelessness on the
part of both the driver and the supervisor in the group.
Significantly, this Court has ruled that even if the employer can prove the diligence in the selection and supervision (the latter aspect
has not been established herein) of the employee, still if he ratifies the wrongful acts, or take no step to avert further damage, the
employer would still be liable. (Maxion vs. Manila Railroad Co., 44 Phil. 597).
Thus, too, in the case of Vda. de Bonifacio vs. B.L.T. Bus Co. (L-26810, August 31, 1970, 34 SCRA 618), this Court held that a driver
should be especially watchful in anticipation of others who may be using the highway, and his failure to keep a proper look out for
reasons and objects in the line to be traversed constitutes negligence.
Considering the foregoing, respondent NIA is hereby directed to pay herein petitioners-spouses the amounts of P12,000.00 for the
death of Francisco Fontanilla; P3,389.00 for hospitalization and burial expenses of the aforenamed deceased; P30,000.00 as moral
damages; P8,000.00 as exemplary damages and attorney's fees of 20% of the total award.
SO ORDERED.
Padilla, Sarmiento and Regalado, JJ., concur.
Melencio- Herrera (Chairperson,), J., is on leave.

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