MERRITT v GOVERNMENT 34 Phil 311 TRENT; March 31, 1916 NATURE Appeal from decision of the CFI FACTS - E. Merritt, riding on a motorcycle, was hit by the General Hospital ambulance, which turned suddenly and unexpectedly to Taft Avenue without sounding any whistle or horn, in contravention of an ordinance and the Motor Vehicle Act. - Plaintiff was so severely injured. His leg showed a contraction of an inch and a half and a curvature that made his leg very weak and painful at the point of the fracture. Examination of his head revealed a notable readjustment of the functions of the brain and nerves. The patient apparently was slightly deaf, had a light weakness in his eyes and in his mental condition. This latter weakness was always noticed when the plaintiff had to do any difficult mental labor, especially when he attempted to use his money for mathematical calculations. - Witnesses testified that plaintiff’s physical and mental condition before the accident was excellent. He was one of the best contractors of wooden buildings. He could not now earn even a half of the income that he had secured for his work because he had lost 50 per cent of his efficiency. He had to dissolve a partnership that he had with an engineer and give up a contract for the construction of a building. - Trial court held that the collision was due solely on the negligence of the chauffeur and awarded the plaintiff the sum of P14, 741.

- Act No. 2457 was enacted. It states that “E. Merritt is hereby authorized to bring suit in the Court of First Instance of the city of Manila against the Government of the Philippine Islands in order to fix the responsibility for the collision between his motorcycle and the ambulance of the General Hospital, and to determine the amount of the damages, if any, to which Mr. E. Merritt is entitled on account of said collision, and the Attorney-General of the Philippine Islands is hereby authorized and directed to appear at the trial on the behalf of the Government of said Islands, to defendant said Government at the same.” ISSUES WON the government is liable for the damages resulting from a tort committed by an agent or employee of the government HELD NO Ratio The State is only liable for the acts of its agents, officers and employees when they act as special agents within the meaning of paragraph 5 of article 1903. Reasoning - In the United States the rule is that the state is not liable for the torts committed by its officers or agents whom it employs, except when expressly made so by legislative enactment. The Government does not undertake to guarantee to any person the fidelity of the officers or agents whom it employs, since that would involve it in all its operations in endless embarrassments, difficulties and losses, which would be subversive of the public interest. - As to the scope of legislative enactments permitting individuals to sue the state where the

cause of action arises out of either fort or contract, the rule is stated in 36 Cyc., 915, thus:

By consenting to be sued a state simply waives its immunity from suit. It does not thereby concede its liability to plaintiff, or create any cause of action in his favor, or extend its liability to any cause not previously recognized. It merely gives a remedy to enforce a preexisting liability and submits itself to the jurisdiction of the court, subject to its right to interpose any lawful defense.

- Paragraph 5 of article 1903 of the Civil Code reads:

The state is liable in this sense when it acts through a special agent, but not when the damage should have been caused by the official to whom properly it pertained to do the act performed, in which case the provisions of the preceding article shall be applicable.

- The obligation to indemnify for damages which a third person causes to another by his fault or negligence is based, as is evidenced by the same Law 3, Title 15, Partida 7, on that the person obligated, by his own fault or negligence, takes part in the act or omission of the third party who caused the damage. It follows therefrom that the state, by virtue of such provisions of law, is not responsible for the damages suffered by private individuals in consequence of acts performed by its employees in the discharge of the functions pertaining to their office, because neither fault nor even negligence can be presumed on the part of the state in the organization of branches of public service and in the appointment of its agents; on the contrary, we must presuppose all foresight humanly possible on its part in order that each branch of service serves the general weal an that of private persons interested in its operation. Between

these latter and the state, therefore, no relations of a private nature governed by the civil law can arise except in a case where the state acts as a judicial person capable of acquiring rights and contracting obligations. - The Civil Code in chap 2, title 16, book 4, regulates the obligations which arise out of fault or negligence; and whereas in the first article thereof. No. 1902, where the general principle is laid down that where a person who by an act or omission causes damage to another through fault or negligence, shall be obliged to repair the damage so done, reference is made to acts or omissions of the persons who directly or indirectly cause the damage, the following articles refers to this persons and imposes an identical obligation upon those who maintain fixed relations of authority and superiority over the authors of the damage, because the law presumes that in consequence of such relations the evil caused by their own fault or negligence is imputable to them. This legal presumption gives way to proof, however, because, as held in the last paragraph of article 1903, responsibility for acts of third persons ceases when the persons mentioned in said article prove that they employed all the diligence of a good father of a family to avoid the damage, and among these persons, called upon to answer in a direct and not a subsidiary manner, are found, in addition to the mother or the father in a proper case, guardians and owners or directors of an establishment or enterprise, the state, but not always, except when it acts through the agency of a special agent, doubtless because and only in this case, the fault or negligence, which is the original basis of this kind of objections, must be presumed to lie with the state.

- Although in some cases the state might by virtue of the general principle set forth in article 1902 respond for all the damage that is occasioned to private parties by orders or resolutions which by fault or negligence are made by branches of the central administration acting in the name and representation of the state itself and as an external expression of its sovereignty in the exercise of its executive powers, yet said article is not applicable in the case of damages said to have been occasioned to the petitioners by an executive official, acting in the exercise of his powers, in proceedings to enforce the collections of certain property taxes owing by the owner of the property which they hold in sublease. - The responsibility of the state is limited by article 1903 to the case wherein it acts through a special agent (one who receives a definite and fixed order or commission, foreign to the exercise of the duties of his office if he is a special official) so that in representation of the state and being bound to act as an agent thereof, he executes the trust confided to him. This concept does not apply to any executive agent who is an employee of the acting administration and who on his own responsibility performs the functions which are inherent in and naturally pertain to his office and which are regulated by law and the regulations. - The responsibility of the state is limited to that which it contracts through a special agent, duly empowered by a definite order or commission to perform some act or charged with some definite purpose which gives rise to the claim, and not where the claim is based on acts or omissions imputable to a public official charged with some administrative or technical office who can be held to the proper responsibility in the manner laid down by the law of civil responsibility.

- The chauffeur of the ambulance of the General Hospital was not such an agent within the meaning of paragraph 5 of article 1903 On the computation of damages The two items which constitute a part of the P14,741 and which are drawn in question by the plaintiff are (a) P5,000, the award awarded for permanent injuries, and (b) the P2,666, the amount allowed for the loss of wages during the time the plaintiff was incapacitated from pursuing his occupation. We find nothing in the record which would justify us in increasing the amount of the first. As to the second, the record shows, and the trial court so found, that the plaintiff's services as a contractor were worth P1,000 per month. The court, however, limited the time to 2months and 21 days, which the plaintiff was actually confined in the hospital. In this we think there was error, because it was clearly established that the plaintiff was wholly incapacitated for a period of 6 months. The mere fact that he remained in the hospital only 2 months and 21 days while the remainder of the 6 months was spent in his home, would not prevent recovery for the whole time. We, therefore, find that the amount of damages sustained by the plaintiff, without any fault on his part, is P18,075. Dispositive Judgment appealed from reversed. Whether the Government intends to make itself legally liable for the amount of damages above set forth, which the plaintiff has sustained by reason of the negligent acts of one of its employees, by legislative enactment and by appropriating sufficient funds therefor, we are not called upon to determine. This matter rests solely with the Legislature and not with the courts. ROSETE v AUDITOR GENERAL 81 Phil 453

FERIA; August 31, 1948

NATURE Appeal from the decision of the Insular Auditor FACTS - Jose Panlilio ignited his lighter near a drum into which gasoline was being drained causing fire in the warehouse of Emergency Control Administration (ECA, a government agency). - The fire destroyed the building owned by the petitioner, thereby giving rise to this claim for damages against Panlilio for his negligence and the officers of ECA for storing gasoline in said warehouse contrary to the provisions of ordinances of the City of Manila (ordinance requires a license for storing flammable substances, which ECA didn’t have). - Insular Auditor dismissed the claim hence this appeal. ISSUE WON the government is liable for the damages HELD NO - Art. 1903 of the Civil Code reads:

“Art. 1903. The obligation imposed in the preceding article is enforceable not only for personal acts and omission but also for those persons for whom another is responsible. xx “The state is liable in this sense when it acts through a special agent, but not when the damage should have been

caused by the official to whom it properly pertained to do the act performed, in which case the provisions of the preceding article shall be applicable.”

- In the case of Merritt v. Government, the court held the following:

“ ’… The state is not responsible for the damage suffered by private individuals in consequence of acts performed by its employees in the discharge of the functions pertaining to their office… n relations of a private nature governed by the civil law can arise except in a case where the state acts as a juridical person capable of acquiring rights and contracting obligations.’ xx “ ‘That the responsibility of the state is limited by article 1903 to the case wherein it acts through a special agent (and a special agent, in the sense in which these words are employed, is one who receives a definite and fixed order by the commission, foreign to the exercise of duties of his office if he is a special official) so that in representation of the state and being bound to act as an agent thereof, he executes the trust confided to him.

- There being no showing that whatever negligence may be imputed to the ECA or its officers, was done by a special agent, because the officers of the ECA did not act as special agents of the government within the above defined meaning of that wod in Article 1903 of

the Civil Code in storing gasoline in the warehouse of ECA, the government is not responsible for damages caused through such negligence. - Although there is an act (Act No. 327) authorizing the filing of claims against the government with the Insular Auditor, and appeal by private persons or entities from the latter’s decision to the Supreme Court, it does not make any and all claims against the government allowable, and the latter responsible for all claims. DISPOSITION Decision appealed from is affirmed.

Mendoza vs De Leon Date: February 11, 1916 Plaintiff – Appellee: Marcos Mendoza Defendants – Appellants: Francisco de Leon, et al Ponente: Trent Facts: 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 defendants, awarding a franchise for the same ferry to another person.

Issue: WON the defendants are liable for damages Held: Yes Ratio: 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 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.

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.

In Claussen vs. City of Luverne: “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." 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. 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. So, in Field vs. City of Des Moines, 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)

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:

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.

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, 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.

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, 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. FONTANILLA V MALIAMAN and NATIONAL IRRIGATION ADMINSITRATION 194 SCRA 486 PARAS; February 27, 1991 NATURE Resolution

FACTS - The National Irrigation Administration (NIA)

maintains that it does not perform solely and primarily proprietary functions, but is an agency of the government tasked with governmental functions, and is therefore not liable for the tortuous act of its driver Garcia, who was not its special agent.

o NIA believes this bases this on: PD 552 – amended some

provisions of RA 3601 (the law which created the

NIA) The case of Angat River

Irrigation System v. Angat River Workers’ Union

- Angat Case: Although the majority opinion declares that the Angat System, like the NIA, exercised a governmental function because the nature of its powers and functions does not show that it was intended to “bring to the Government any special corporate benefit or pecuniary profit”, a strong dissenting opinion held that Angat River system is a government entity exercising proprietary functions.

- The Angat dissenting opinion: - Alegre protested the announced termination

of his employment. He argued that although his contract did stipulate that the same would terminate on July 17, 1976, since his services were necessary and desirable in the usual business of his employer, and his employment had lasted for five years, he had acquired the status of regular employee and could not be removed except for valid cause.

- The employment contract of 1971 was executed when the Labor Code of the Philippines had not yet been promulgated,

which came into effect some 3 years after the perfection of the contract.

ISSUE WON the NIR is a government agency with a juridical personality separate and distinct from the government, thereby opening it up to the possibility that it may be held liable for the damages caused by its driver, who was not its special agent HELD YES Reasoning the functions of government have been classified into governmental or constituent and proprietary or ministrant. The former involves the exercise of sovereignty and considered as compulsory; the latter connotes merely the exercise of proprietary functions and thus considered as optional. The National Irrigation Administration was not created for purposes of local government. While it may be true that the NIA was essentially a service agency of the government aimed at promoting public interest and public welfare, such fact does not make the NIA essentially and purely a "government-function" corporation. NIA was created for the purpose of "constructing, improving, rehabilitating, and administering all national irrigation systems in the Philippines, including all communal and pump irrigation projects." Certainly, the state and the community as a whole are largely benefited by the services the agency renders, but these functions are only incidental to the principal aim of the agency, which is the irrigation of lands. NIA is a government agency invested with a corporate personality separate and distinct from the government, thus is governed by the

Corporation Law. Section 1 of Republic Act No. 3601 provides: Sec. 1. Name and Domicile — A body corporate is hereby created which shall be known as the National Irrigation Administration. . . . 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. (Emphasis for emphasis). Besides, Section 2, subsection b of P.D. 552 provides that: (b) To charge and collect from the beneficiaries of the water from all irrigation systems constructed by or under its administration, such fees or administration charges as may be necessary to cover the cost of operation, maintenance and insurance, and to recover the cost of construction within a reasonable period of time to the extent consistent with government policy; to recover funds or portions thereof expended for the construction and/or rehabilitation of communal irrigation systems which funds shall accrue to a special fund for irrigation development under section 2 hereof; Unpaid irrigation fees or administration charges shall be preferred liens first, upon the land benefited, and then on the crops raised thereon, which liens shall have preference over all other liens except for taxes on the land, and such preferred liens shall not be removed until all fees or administration charges are paid or the property is levied upon and sold by the National Irrigation Administration for the satisfaction thereof. . . . The same section also provides that NIA may sue and be sued in court.

It has its own assets and liabilities. It also has corporate powers to be exercised by a Board of Directors. Section 2, subsection (f): (f) . . . and to transact such business, as are directly or indirectly necessary, incidental or conducive to the attainment of the above powers and objectives, including the power to establish and maintain subsidiaries, and in general, to exercise all the powers of a corporation under the Corporation Law, insofar as they are not inconsistent with the provisions of this Act. DISPOSITION We conclude that the National Irrigation Administration is a government agency with a juridical personality separate and distinct from the government. It is not a mere agency of the government but a corporate body performing proprietary functions. Therefore, it may be held liable for the damages caused by the negligent act of its driver who was not its special agent. ACCORDINGLY, the Motion for Reconsideration dated January 26, 1990 is DENIED WITH FINALITY. The decision of this Court in G.R. No. 55963 and G.R. No. 61045 dated December 1, 1989 is hereby AFFIRMED. DISSENTING: PADILLA: to say that NIA has opened itself to suit is one thing; to say that it is liable for damages arising from tort committed by its employees, is still another thing. The state or a government agency performing governmental functions may be held liable for tort committed by its employees only when it acts through a special agent.

De Los Santos vs. IAC (Consti1)

Emiliano R. De Los Santos, Spouses Norma A. Padilla and Isidoro L. Padilla and the Heirs of Francisco Dayrit,

petitioners, vs. The Hon. Intermediate Appellate Court, Hon. Judge Cicerro C. Jurado and Edilberto Cadiente, respondents. Third Division Romero, June 2, 1993 Topic: Sovereignty - Suits not against the State - Expropriation Facts:

Petitioners are co-owners of a parcel of land in Barrio Wawa, Binangonan, Rizal (area: 19,061 sq m)

Petitioners allege that in October 1981, without their knowledge or consent, Lorenzo Cadiente, a private contractor and the Provincial Engineer of Rizal constructed a road 9 meters wide and 128.70 meters long occupying 1,165 sq m of their parcel of land

Aside from the road, an artificial creek 23.20 meters wide and 128.69 meters long was also constructed, occupying an area of 2,906 sq m of their property

Constructed in a zigzag manner, the creak meandered through their property

Petitioners files two cases which were later consolidated

Solicitor General filed a motion to dismiss both cases several

grounds, including that both cases were in reality suits against the state which could not be maintained without the State's consent

The lower court dismissed the petition; petitioners elevated the case to the SC on certiorari, which referred the cases back to the IAC

IAC ruled: the two actions cannot be maintained because they are suits against the State without consent

Case was again elevated to the SC on certiorari

Issue:

Whether or not the consolidated actions, as suits against the State, can be maintained

Holding:

Yes.

Ratio:

The doctrine of governmental immunity from suit cannot serve as an instrument for perpetrating an injustice on a citizen; it cannot serve as defense by the State against an action for payment by the owner

The respondent government officials executed a shortcut in appropriating petitioners'

property for public use; no expropriation proceedings had been undertaken prior to the construction of the projects

Damages may be awarded the petitioners in the form of legal interest on the price of the land to be reckoned from the time of the unlawful taking

Petition granted. Civil Cases remanded to the lower court for trial on the merits after the Republic of the Philippines shall have been impleaded as defendant in both cases. HELD:

YES.

From Amigable v Cuenca:

where a governments takes away

property from a private landowner for

public use without going through the

legal process of expropriation or negotiated

sale, a suit may properly be maintained

against the government.

The doctrine of governmental

immunity from suit cannot serve as an

instrument for perpetrating an

injustice on a citizen.

The civil action may be based under Art 32

NCC and the constitutional provisions on

rights against privation of property without

due process of law and without just

compensation.

Republic v. Sandiganbayan

G.R. No. 90478 November 21, 1991

Narvasa, J.

Facts:

Private respondents Bienvenido R. Tantoco, Jr. and Dominador R. Santiago — together with Ferdinand E. Marcos, Imelda R. Marcos, Bienvenido R. Tantoco, Sr., Gliceria R. Tantoco, and Maria Lourdes Tantoco-Pineda-are defendants in a civil case of the Sandiganbayan. The case was commenced by the Presidential Commission on Good Government (PCGG) in behalf of the Republic of the Philippines. The complaint which initiated the action was denominated one for reconveyance, reversion, accounting, restitution and damages, and was avowedly filed pursuant to Executive Order No. 14 of President Corazon C. Aquino.

Issue:

whether or not the PCGG by filing a suit has impliedly waived its immunity from suit

Held:

Yes. The consent of the State to be sued may be given expressly or impliedly. Express consent may be manifested either through a general law or a special law. Implied consent is given when the State itself commences

litigation or when it enters into a contract.

The immunity of the State from suits does not deprive it of the right to sue private parties in its own courts. The state as plaintiff may avail itself of the different forms of actions open to private litigants. In short, by taking the initiative in an action against the private parties, the state surrenders its privileged position and comes down to the level of the defendant. The latter automatically acquires, within certain limits, the right to set up whatever claims and other defenses he might have against the state.

In exercising the right of eminent domain, the State exercises its jus imperii, as distinguished from its proprietary rights or jus gestionis. Yet, even in that area, it has been held that where private property has been taken in expropriation without just compensation being paid, the defense of immunity from suit cannot be set up by the State against an action for payment by the owner. CITY OF MANILA V TEOTICA 22 SCRA 267 CONCEPCION; January 29, 1968 NATURE Appeal by certiorari from a decision of the Court of Appeals.

FACTS - Genaro N. Teotico, an accountant, was at the corner of the Old Luneta and P. Burgos Avenue, Manila, waiting for a jeep. After waiting 5 mins, he hailed a jeep that came to a stop. As he stepped down from the curb to board the jeep, and took a few steps, he fell inside a manhole on P. Burgos Avenue. Due to the fall, his head hit the rim of the manhole breaking his eyeglasses and causing broken pieces thereof to pierce his left eyelid. As blood flowed therefrom, impairing his vision, several persons came to his assistance and pulled him out of the manhole. One of them brought Teotico to the Philippine General Hospital, where his injuries were treated, after which he was taken home. In addition to the lacerated wound in his left upper eyelid, Teotico suffered contusions on the left thigh, the left upper arm, the right leg and the upper lip apart from an abrasion on the right infra-patella region. These injuries and the allergic eruption caused by anti-tetanus injections administered to him in the hospital, required further medical treatment by a private practitioner. - Teotico filed with CFI Manila, a complaint which was, subsequently, amended for damages against the City of Manila, its mayor, city engineer, city health officer, city treasurer and chief of police. - Defense pointed out that because of the lucrative scrap iron business then prevailing, stealing of iron catchbasin covers was rampant; that the Office of the City Engineer has filed complaints in court resulting from theft of said iron covers; that in order to prevent such thefts, the city government has changed the position and layout of catchbasins in the City by constructing them under the sidewalks with concrete cement covers and openings on the

side of the gutter; and that these changes had been undertaken by the city from time to time whenever funds were available. - CFI Manila sustained the theory of the defendants and dismissed the amended complaint, without costs. - This decision was affirmed by the Court of Appeals, except insofar as the City of Manila is concerned, which was sentenced to pay damages in the aggregate sum of P6,750.00.

Hence, this appeal by the City of Manila. - The first issue raised by the Manila is whether the present case is governed by Section 4 of RA 409 (Charter of the City of Manila) reading: The city shall not be liable or held for damages or injuries to persons or property arising from the failure of the Mayor, the Municipal Board, or any other city officer, to enforce the provisions of this chapter, or any other law or ordinance, or from negligence of said Mayor, Municipal Board, or other officers while enforcing or attempting to enforce said provisions. or by Article 2189 of the Civil Code of the Philippines which provides: Provinces, cities and municipalities shall be liable for damages for the death of, or injuries suffered by, any person by reason of defective conditions of road, streets, bridges, public buildings, and other public works under their control or supervision. - Manila maintains that the former provision should prevail over the latter, because RA 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. ISSUES WON City of Manila should be held liable for the

damages suffered by Teotica. HELD YES. Ratio RA 409,sec.4 refers to liability arising from negligence, in general, regardless of the object thereof, whereas Article 2189, CC 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. Reasoning The assertion to the effect that said Avenue is a national highway was made, for the first time, in its motion for reconsideration of the decision of the Court of Appeals. At any rate, under Article 2189 of the Civil Code, it is not necessary for the liability therein established to attach that the defective roads or streets belong to the province, city or municipality from which responsibility is exacted. What said article requires is that the province, city or municipality have either "control or supervision" over said street or road. Even if P. Burgos Avenue were, therefore, a national highway, this circumstance would not necessarily detract from its "control or supervision" by the City of Manila, under Republic Act 409. Then, again, the determination of whether or not P. Burgos Avenue is under the control or supervision of the City of Manila and whether the latter is guilty of negligence, in connection with the maintenance of said road, which were decided by the Court of Appeals in the affirmative, is one of fact, and the findings of said Court thereon are not subject to our review. Dispositive WHEREFORE, the decision appealed from should be as it is hereby affirmed, with costs against the City of Manila.

Voting Reyes, J.B.L., Dizon, Makalintal, Bengzon, J.P., Zaldivar, Sanchez, Castro, Angeles and Fernando, JJ., concur.

Republic vs. Palacio

G.R. No. L-20322 May 29, 1968

Facts: Ildefonso Ortiz instituted a civil case

against the Handong Irrigation Association,

Inc., a corporation with principal place of

business in Libmanan, Camarines Sur, and

the Irrigation Service Unit [ISU], an office

or agency under the Department of Public

Works and Communications, to recover

possession, with damages, a lot located in

Handong, San Juan, Libmanan, Camarines

Sur, which the Irrigation Association

allegedly entered and occupied, at the

instance of its co-defendant. For failure to

appear and answer the complaint, therein

defendant Irrigation Service Unit was

declared in default. The RTC [respondent

Judge Palacio] rendered a decision in favor

of Ortiz. The CA affirmed the decision of

the RTC. Subsequently, a writ of

garnishment was issued. Petitioner then

questions the wit of garnishment, on the sole

issue that the funds of ISU is a public fund.

Issue: Whether or not the fund of ISU can

be garnished to satisfy the award of

damages.

Held: No

The answer to the petition lies in the

determination of the function of ISU as a

government agency. The office of the ISU

was originally created under the Department

of Agriculture and Natural Resources by

virtue of a Memorandum Agreement

between the governments of the Philippines

and the United States. It was later

transferred to the Department of Public

Works and Communications as an office

directly under the Office of the Secretary,

"to prosecute to completion the

rehabilitation of pump systems transferred

from the former Irrigation Pump

Administration of the Department of

Agriculture and Natural Resources,

including the settlement of the obligations of

said administration.

It is clear from the foregoing that the ISU is

not only an office in the Government of the

Republic of the Philippines, created to

promote a specific economic policy of said

government, but also that its activity (of

selling irrigation pumps to farmers on

installment basis) is not intended to earn

profit or financial gain to its operator. The

mere fact that interests are being collected

on the balance of the unpaid cost of the

purchased pumps does not convert this

economic project of the government into a

corporate activity. As previously pointed

out, the installment payments and interests

receivable from the farmers are to be used to

replenish the counterpart funds utilized in

furtherance of the operation of the project.

The confusion arises from the Stat's waiver

to be sued. The CA assumed that because

the State has waived its immunity, its

property and funds become liable to seizure

under the legal process. This emphatically is

not the law, as held in Meritt vs. Insular

government:

"Even though the rule as to immunity of a

state from suit is relaxed, the power of the

courts ends when the judgment is rendered.

Although the liability of the state has been

judicially ascertained, the state is at liberty

to determine for itself whether to pay the

judgment or not, and execution can not issue

on a judgment against the state. Such

statutes do not authorize a seizure of state

property to satisfy judgments recovered, and

only convey implication that the legislature

will recognize such judgment as final and

make provision for the satisfaction thereof.

Judgments against a state, in cases where it

has consented to be sued, generally operate

merely to liquidate and establish plaintiff's

claim in the absence of express provision;

otherwise they can not be enforced by

processes of law; and it is for the legislature

to provide for their payment in such manner

as it sees fit."

It needs no stressing that to allow the

levying under execution of the ISU funds

would amount to diverting them from the

purpose originally contemplated by the

P.I.U.S. Bilateral Agreement, and would

amount to a disbursement without any

proper appropriation as required by law. ARANETA v JOYA 57 SCRA 59 CASTRO J.: May 24, 1974 FACTS:

-An employee of the Ace ADVERTISING Company was sent to the States to pursue studies in television. When asked about the expenses of the trip, respondent answered that these were not shouldered by the company and instead by other parties -while abroad, he continued to receive his salaries in the form of vouchers ordered and signed by respondent Joya. The petitioner signed three of these checks. The others were signed by either the respondent, or Vicente Araneta (company treasurer) who put up part of the bill connected with Taylor's trip and also handed him letters for delivery in the United States. The Ace Advertising disbursed P5,043.20, all told, on account of Taylor's travel and studies -the Ace Advertising filed a complaint with the court of first instance of Manila against the respondent for recovery of the total sum disbursed to Taylor, alleging that the trip was made without its knowledge, authority or ratification. The respondent, in his answer, denied the charge and claimed that the trip was nonetheless ratified by the company's board of directors, and that in any event under the by-laws he had the discretion, as general manager, to authorize the trip which was for the company's benefit -Joya also filed a 3rd party complaint against the two Aranetas proving that they were involved in sending Taylor abroad -trial court rendered judgment ordering the respondent to pay the Ace Advertising "the sum of P5,043.20 with interest at the legal rate from August 23, 1954 until full payment. 3rd party complaint dismissed -CA affirmed however dismissal of 3rd party complaint was reversed stating that Taylor's trip

had been neither authorized nor ratified by the company -CA noted that based on the facts, both petitioners knew and through their acts showed that they approved of the trip. “…were also privy to the unauthorized disbursement of the corporate moneys jointly with the appellant; what had happened was in truth and in fact a venture by them given their stamp of approval; and as it was an unauthorized act of expenditure of corporate funds, and it was these three without whose acts the same could not have happened, the juridical situation was a simple quasi-delict by them committed upon the corporation, for which solidary liability should have been imposed upon all in the first place” ISSUE: WON petitioner is guilty of quasi-delict HELD: Yes - The petitioner's assertion that he signed the questioned payroll checks in good faith has not been substantiated, he in particular not having testified or offered testimony to prove such claim. Upon the contrary, in spite of his being a vice-president and director of the Ace Advertising, the petitioner remained passive, throughout the period of Taylor's stay abroad, concerning the unauthorized disbursements of corporate funds for the latter. This plus the fact that he even approved thrice payroll checks for the payment of Taylor's salary, demonstrate quite distinctly that the petitioner neglected to perform his duties properly, to the damage of the firm of which he was an officer. -The fact that he was occupying a contractual position at the Ace Advertising is of no moment.

The existence of a contract between the parties, as has been repeatedly held by this Court, constitutes no bar to the commission of a tort by one against the other and the consequent recovery of damages

Lanuzo vs. Sy Bon Ping G.R. No. L-53064 September 25, 1980 Facts: Salvador Mendoza, driver of Sy Bon Ping, recklessly and negligently rammed the residential house and store or Felix Lanuzo. The total damage to his property was P13,000 and he was deprived of his monthly income from the store of P300. In a complaint for damages instituted by Lanuzo independently from the criminal action, the trial court ruled that Sy Bon Ping and Mendoza were jointly and severally liable to pay Lanuzo P 13,000.00 as damages and P 300.00, representing Lanuzo’s monthly income, until the entire P 13,000.00 has been paid in full. Issue: Whether Sy Bon Ping, as employer, and Mendoza, as employee are solidarily liable for payment of damages to Lanuzo Held: Plaintiff predicated his claim for damages on quasi-delict, which may proceed independently and regardless of the result of the criminal case. Salvador Mendoza is evidently primarily liable for his reckless driving resulting to the damage caused to Lanuzo under Article 2176 of the Civil Code

Sy Bon Ping, as employer, is also primary and direct under Article 2180 of the Civil Code, which explicitly provides: Employers shall be liable for the damages caused by their employees and household helpers acting within the scope of their assigned tasks, even though the former are not engaged in any business or industry. Sy Bon Ping failed to disprove the legal presumption of his negligence in the selection and supervision of this employee (Article 2180) and is primary and solidarily liable with Mendoza. Nevertheless, Sy Bon Ping may demand reimbursement from Mendoza for whatever amount he will have to pay the offended party to satisfy the claim for damages. Malipol vs. Tan G.R. No. L-27730 January 21, 1974 Facts: Pantaleon Malijan was walking with his companion Leonardo Amante when he was hit by a gasoline tanker, got thrown to the ground and was ran over by the tanker’s right wheel that got detached. Although he was brought to the hospital, Malijan died that night from "possible traumatic cerebral hemorrhage due to vehicular accident." The gasoline tanker at that time was driven by Ernesto Labsan and was used and owned by Lily Lim Tan for her gasoline business. The mother and minor siblings of Malijan filed a complaint for damages against Tan and Labsan. The trial court ruled

that Labsan was primarily liable to pay the damages, and in case he would not be able to do so, Tan would be subsidiarily liable. Issue: Whether the trial court erred in ruling Labsan as primarily liable for damages, and Tan as subsidiarily liable. Held: The court ruled that the trial court correctly denied the motion to set aside order of default and for new trial; however, the trial court erred in holding Tan subsidiarily liable. The action was based on quasi-delict and not to demand civil liability arising from a crime, since the complaint makes no mention of a crime. Under Article 2180 of the Civil Code, the liability of the owners and managers of an establishment or enterprise for damages caused by their employees is primary and direct, not subsidiary. Therefore, the employer, Lily Lim Tan, must be held primarily and directly, not subsidiarily, liable for damages awarded in the decision of the lower court, without prejudice to the right to demand reimbursement from damages from Ernesto Labsan for whatever she would have to pay the relatives of the deceased. Viluan vs. CA G.R. Nos. L-21477-81 (April 29, 1966) Facts: The bus owned by Francisca Viluan, and driven by Hermenigildo Aquino raced with the overtaking bus

driven by Gregorio Hufana and owned by Patricio Hufana. Aquino lost control of the bus, hitting a post and crashing into a tree, after which it burst into flames wherein seven persons were killed and thirteen others were injured. In the complaint for breach of contract of carriage and damages filed by the heirs of those who perished in the incident and Carolina Sabado, an injured passenger, Vilaun and Aquino filed third party complaints against Gregorio Hufana and his employer, Patricio Hufana, contending that the incident was their fault. The lower court found that the accident was due to the concurrent negligence of the drivers of the two buses and held both the two drivers and their employers jointly and severally liable for damages. The Court of Appeals affirmed the finding of concurrent negligence on the part of the two buses but held that only Vilaun is liable because Aquino, as driver, cannot be made jointly and severally liable in a contract of carriage. It ruled that the Hufana’s cannot be made liable since the plaintiffs did not amend their complaints in the main action so as to assert a claim against them. Issue: Whether Patricio and Gregorio Hufana should be made equally liable although they were third-party defendants and not principal defendants Held: The fact that the respondents were not sued as principal defendants but were brought into the cases as third

party defendants should not preclude a finding of their liability. Section 5 Rule 12 of the Rules of Court, precluding a judgment in favor of a plaintiff and against a third party defendant where the plaintiff has not amended his complaint to assert a claim against a third party defendant, applies only to cases where the third party defendant is brought in on an allegation of liability to the defendants. It does not apply where a thirdparty defendant is impleaded on the ground of direct liability to the plaintiffs, in which case no amendment of the plaintiffs complaint is necessary. In this case the third-party complaints filed by Viluan and Aquino charged Gregorio and Patrcio Hufana with direct liability to the plaintiffs. Amendment of the complaint is not necessary and is merely a matter of form since the liability of the Hufana’s as third-party defendant was already asserted in the third-party complaint. Regardless whether the injury is quasi-delict or breach of contract of carriage, in case of injury to a passenger due to the negligence of the driver of the bus on which he was riding and of the driver of another vehicle, the drivers as well as the owners of the two vehicles are jointly and severally liable for damages.