TORIO VS.

FONTANILLA
No. L-29993. October 23, 1978.*

FACTS:
These Petitions for review present the issue of whether or not the celebration of a town fiesta authorized
by a municipal council under Sec. 2282 of the Municipal Law as embodied in the Revised Administrative
Code is a governmental or a corporate or proprietary function of the municipality. A resolution of that
issue will lead to another, viz: the civil liability for damages of the Municipality of Malasiqui, and the
members of the Municipal Council of Malasiqui, province of Pangasinan, for a death which occurred
during the celebration of the town fiesta on January 22, 1959, and which was attributed to the
negligence of the municipality and its council members. The following facts are not in dispute:
On October 21, 1958, the Municipal Council of Malasiqui, Pangasinan, passed Resolution No. 159
whereby “it resolved to manage the 1959 Malasiqui town fiesta celebration on January 21, 22, and 23,
1959.” Resolution No. 182 was also passed creating the “1959 Malasiqui Town Fiesta Executive
Committee” which in turn organized a subcommittee on entertainment and stage, with Jose Macaraeg as
Chairman. The council appropriated the amount of P100.00 for the construction of 2 stages, one for the
“zarzuela” and another for the “cancionan”. Jose Macaraeg supervised the construction of the stage and
as constructed the stage for the “zarzuela” was “5-1/2 meters by 8 meters in size, had a wooden floor
high at the rear and was supported by 24 bamboo posts—4 in a row in front, 4 in the rear and 5 on each
side—with bamboo braces.” 1 The “zarzuela” entitled “Midas Extravanganza” was donated by an
association of Malasiqui employees of the Manila Railroad Company in Caloocan, Rizal. The troupe arrived
in the evening of January 22 for the performance and one of the members of the group was Vicente
Fontanilla. The program started at about 10:15 o’clock that evening with some speeches, and many
persons went up the stage. The “zarzuela” then began but before the dramatic part of the play was
reached, the stage collapsed and Vicente Fontanilla who was at the rear of the stage was pinned
underneath. Fontanilla was taken to the San Carlos General Hospital where he died in the afternoon of
the following day. The heirs of Vicente Fontanilla filed a complaint with the Court of First Instance of
Manila on September 11, 1959 to recover damages. Named party-defendants were the Municipality of
Malasiqui, the Municipal Council of Malasiqui and all the individual members of the Municipal Council in
1959. Answering the complaint defendant municipality invoked inter alia the principal defense that as a
legally and duly organized public corporation it performs sovereign functions and the molding of a town
fiesta was an exercise of its governmental functions from which no liability can arise to answerfor the
negligence of any of its agents. The defendant councilors in turn maintained that they merely acted as
agents of the municipality in carrying out the municipal ordinance providing for the management of the
town fiesta celebration and as such they are likewise not liable for damages as the undertaking was not
one for profit; furthermore, they had exercised due care and diligence in implementing the municipal
ordinance.

CFI held that the municipal council exercised due diligence in selecting the person to construct the stage
and dismissed the complaint.
CA reversed the decision and held all defendants solidarily liable for damages.

ISSUES:
1. Whether the celebration of a town fiesta authorized by a municipal council a governmental or a
corporate function of the municipality?
2. Whether the municipality liable for the death of Fontanilla?
3. Whether the municipal councilors who enacted the ordinance and created the fiesta committee liable
for the death of Fontanilla?

HELD:
1. The holding of the town fiesta in 1959 by the municipality of Malsiqui Pangasinan was an exercise of a
private or proprietary function of the municipality.
Section 2282 of the Chatter on Municipal Law of the Revised Administrative Code simply gives authority
to the municipality to celebrate a yearly fiesta but it does not impose upon it a duty to observe one.
Holding a fiesta even if the purpose is to commemorate a religious or historical event of the town is in
essence an act for the special benefit of the community and not for the general welfare of the
public performed in pursuance of a policy of the state. The mere fact that the celebration, as claimed was
not to secure profit or gain but merely to provide entertainment to the town inhabitants is not a
conclusive test. For instance, the maintenance of parks is not a source of income for the nonetheless it is
private undertaking as distinguished from the maintenance of public schools, jails, and the like which are
for public service. No governmental or public policy of the state is involved in the celebration of a town
fiesta.

Municipal corporations exist in a dual capacity, and their functions are two fold. In one they exercise the
right springing from sovereignty, and while in the performance of the duties pertaining thereto, their acts
are political and governmental Their officers and agents in such capacity, though elected or appointed by
the are nevertheless public functionaries performing a public service, and as such they are officers,
agents, and servants of the state. In the other capacity, the municipalities exercise a private, proprietary
or corporate right, arising from their existence as legal persons and not as public agencies. Their officers
and agents in the performance of such functions act in behalf of the municipalities in their corporate or
individual capacity, and not for the state or sovereign power.

2. Under the doctrine of respondent superior, petitioner-municipality is liable for damages for the death
of Vicente Fontanilla because the accident was attributable to the negligence of the municipality's
officers, employees, or agents.
Art. 2176, Civil Code: Whoever by act or omission causes damage to another, there being fault or
negligence, is obliged to pay for the damage done. . .
Art. 2180, Civil Code: The obligation imposed by article 2176 is demandable not only for one's own acts
or omission, but also for those of persons for whom one is responsible.
It was found that the stage was not strong enough considering that only P100.00 was appropriate for the
construction of two stages and while the floor of the "zarzuela" stage was of wooden planks, the post
and braces used were of bamboo material. The collapse of the stage was also attributable to the great
number of onlookers who mounted the stage. The municipality and/or its agents had the necessary
means within its command to prevent such an occurrence. But they failed take the necessary steps to
maintain the safety of the stage, particularly, in preventing non-participants or spectators from mounting
and accumulating on the stage.
Municipality cannot evade ability and/or liability under the fact that it was Jose Macaraeg who
constructed the stage. The municipality acting through its municipal council appointed Macaraeg as
chairman of the sub-committee on entertainment and in charge of the construction of the "zarzuela"
stage. Macaraeg acted merely as an agent of the Municipality. Under the doctrine of respondent superior
mentioned earlier, petitioner is responsible or liable for the negligence of its agent acting within his
assigned tasks.
3. The celebration of a town fiesta by the Municipality of Malasiqui was not a governmental function. The
legal consequence thereof is that the Municipality stands on the same footing as an ordinary private
corporation with the municipal council acting as its board of directors. It is an elementary principle that a
corporation has a personality, separate and distinct from its officers, directors, or persons composing it
and the latter are not as a rule co-responsible in an action for damages for tort or negligence culpa
aquilla committed by the corporation's employees or agents unless there is a showing of bad faith or
gross or wanton negligence on their part. The records do not show that municipal councilors directly
participated in the defective construction of the "zarzuela" stage or that they personally permitted
spectators to go up the platform. Thus, they are absolved from liability.
MUNICIPALITY OF SAN FERNANDO, LA UNION VS. FIRME
G.R. No. 52179. April 8, 1991.

FACTS:
Petitioner Municipality of San Fernando, La Union is a municipal corporation existing under and in
accordance with the laws of the Republic of the Philippines. Respondent Honorable Judge Romeo N.
Firme is impleaded in his official capacity as the presiding judge of the Court of First Instance of La
Union, Branch IV, Bauang, La Union. While private respondents Juana Rimando-Baniña, Laureano Baniña,
Jr., Sor Marietta Baniña, Montano Baniña, Orja Baniña and Lydia R. Baniña are heirs of the deceased
Laureano Baniña Sr. and plaintiffs in Civil Case No. 107-Bg before the aforesaid court. At about 7 o’clock
in the morning of December 16, 1965, a collision occurred involving a passenger jeepney driven by
Bernardo Balagot and owned by the Estate of Macario Nieveras, a gravel and sand truck driven by Jose
Manandeg and owned by Tanquilino Velasquez and a dump truck of the Municipality of San Fernando, La
Union and driven by Alfredo Bislig. Due to the impact, several passengers of the jeepney including
Laureano Baniña Sr. died as a result of the injuries they sustained and four (4) others suffered varying
degrees of physical injuries. On December 11, 1966, the private respondents instituted a compliant for
damages against the Estate of Macario Nieveras and Bernardo Balagot, owner and driver, respectively, of
the passenger jeepney, which was docketed Civil Case No. 2183 in the Court of First Instance of La
Union, Branch I, San Fernando, La Union. However, the aforesaid defendants filed a Third Party
Complaint against the petitioner and the driver of a dump truck of petitioner. Thereafter, the case was
subsequently transferred to Branch IV, presided over by respondent judge and was subsequently
docketed as Civil Case No. 107-Bg. By virtue of a court order dated May 7, 1975, the private respondents
amended the complaint wherein the petitioner and its regular employee, Alfredo Bislig were impleaded
for the first time as defendants. Petitioner filed its answer and raised affirmative defenses such as lack of
cause of action, non-suability of the State, prescription of cause of action and the negligence of the
owner and driver of the passenger jeepney as the proximate cause of the collision.

Respondent Judge Romeo N. Firme ordered defendants Municipality of San Fernando, La Union and
Alfredo Bislig to pay, jointly and severally, the plaintiffs for funeral expenses.
Private respondents stress that petitioner has not considered that every court, including respondent
court, has the inherent power to amend and control its process and orders so as to make them
conformable to law and justice.

ISSUE: Whether or not the respondent court committed grave abuse of discretion when it deferred and
failed to resolve the defense of non-suability of the State amounting to lack of jurisdiction in a motion to
dismiss.

RULING:
Non-suability of the state.
The doctrine of non-suability of the State is expressly provided for in Article XVI, Section 3 of the
Constitution, to wit: "the State may not be sued without its consent."Consent takes the form of express
or implied consent.
Municipal corporations, for example, like provinces and cities, are agencies of the State when they are
engaged in governmental functions and therefore should enjoy the sovereign immunity from suit.
Nevertheless, they are subject to suit even in the performance of such functions because their charter
provided that they can sue and be sued.
"Suability depends on the consent of the state to be sued, liability on the applicable law and the
established facts. The circumstance that a state is suable does not necessarily mean that it is liable; on
the other hand, it can never be held liable if it does not first consent to be sued. Liability is not conceded
by the mere fact that the state has allowed itself to be sued. When the state does waive its sovereign
immunity, it is only giving the plaintiff the chance to prove, if it can, that the defendant is liable."
Anent the issue of whether or not the municipality is liable for the torts committed by its employee, the
test of liability of the municipality depends on whether or not the driver, acting in behalf of the
municipality, is performing governmental or proprietary functions.

Dual capacity of LGU.

Municipal corporations exist in a dual capacity, and their functions are twofold. In one they exercise the
right springing from sovereignty, and while in the performance of the duties pertaining thereto, their acts
are political and governmental. Their officers and agents in such capacity, though elected or appointed by
them, are nevertheless public functionaries performing a public service, and as such they are officers,
agents, and servants of the state. In the other capacity the municipalities exercise a private, proprietary
or corporate right, arising from their existence as legal persons and not as public agencies. Their officers
and agents in the performance of such functions act in behalf of the municipalities in their corporate or
individual capacity, and not for the state or sovereign power."
It has already been remarked that municipal corporations are suable because their charters grant them
the competence to sue and be sued. Nevertheless, they are generally not liable for torts committed by
them in the discharge of governmental functions and can be held answerable only if it can be shown that
they were acting in a proprietary capacity.
In the case at bar, the driver of the dump truck of the municipality insists that "he was on his way to the
Naguilianriver to get a load of sand and gravel for the repair of San Fernando's municipal streets."
In the absence of any evidence to the contrary, the regularity of the performance of official duty is
presumed pursuant to Section 3(m) of Rule 131 of the Revised Rules of Court. Hence, We rule that the
driver of the dump truck was performing duties or tasks pertaining to his office.
We already stressed in the case of Palafox, et. al. vs. Province of IlocosNorte, the District Engineer, and
the Provincial Treasurer (102 Phil 1186) that "the construction or maintenance of roads in which the truck
and the driver worked at the time of the accident are admittedly governmental activities."
After a careful examination of existing laws and jurisprudence, We arrive at the conclusion that the
municipality cannot be held liable for the torts committed by its regular employee, who was then
engaged in the discharge of governmental functions.
QUISUMBING VS. GARCIA
G.R. No. 175527. December 8, 2008.

FACTS:
The Commission on Audit (COA) conducted a financial audit on the Province of Cebu for the period
ending December 2004. Its audit team rendered a report, Part II of which states: "Several contracts in
the total amount ofP102,092,841.47 were not supported with a Sangguniang Panlalawigan resolution
authorizing the Provincial Governor to enter into a contract, as required under Section 22 1 of R.A. No.
7160." The audit team then recommended that the Governor secure such sanggunian resolution. Gov
Garcia sought reconsideration of the findings and recommendation of the COA. However, without waiting
for the resolution of the reconsideration sought, she instituted an action for Declaratory Relief before the
RTC of Cebu City. Impleaded as respondents are several COA officials and the Sanggunian Panlalawigan
of Cebu, represented by Vice Mayor Sanchez.

Alleging that the infrastructure contracts subject of the audit report complied with the bidding procedures
provided under R.A. No. 9184 (Government Procurement Reform Act) and were entered into pursuant to
the general and/or supplemental appropriation ordinances passed by the Sangguniang Panlalawigan,
Gov. Garcia alleged that a separate authority to enter into such contracts was no longer necessary.

RTC ruled pursuant to Sections 22(c) in relation to Sections 306 and 346 of the LGC and Section 37 of
the Government Procurement Reform Act, the Governor of Cebu need not secure prior authorization by
way of a resolution from the Sangguniang Panlalawigan of the Province of Cebu before she enters into a
contract involving monetary obligations on the part of the Province of Cebu when there is a prior
appropriation ordinance enacted. It is only when the contract (entered into by the local chief executive)
involves obligations which are not backed by prior ordinances that the prior authority of the sanggunian
concerned is required. In this case, the Sangguniang Panlalawigan of Cebu had already given its prior
authorization when it passed the appropriation ordinances which authorized the expenditures in the
questioned contracts.

The trial court also declared that the Sangguniang Panlalawigan does not have juridical personality nor is
it vested by R.A. No. 7160 with authority to sue and be sued. The trial court accordingly dismissed the
case against respondent members of the Sangguniang Panlalawigan. On the question of the remedy of
declaratory relief being improper because a breach had already been committed, the trial court held that
the case would ripen into and be treated as an ordinary civil action.

MR was denied.

On appeal, COA officials maintained that Sections 306 and 346 of the LGC cannot be considered
exceptions to Sec. 22(c). Sec. 346 allegedly refers to disbursements which must be made in accordance
with an appropriation ordinance without need of approval from the sanggunian concerned. Sec. 306, on
the other hand, refers to the authorization for the effectivity of the budget and should not be mistaken
for the specific authorization by the Sangguniang Panlalawigan for the local chief executive to enter into
contracts under Sec. 22(c). The question that must be resolved by the Court should allegedly be whether
the appropriation ordinance referred to in Sec. 346 in relation to Sec. 306 of R.A. No. 7160 is the same
prior authorization required under Sec. 22(c) of the same law.

1 Sec. 22. Corporate Powers.– Every local government unit, as a corporation, shall have the following powers:
xxx
(c) Unless otherwise provided in this Code, no contract may be entered into by the local chief executive in behalf of the
local government unit without prior authorization by the sanggunian concerned. A legible copy of such contract shall be
posted at a conspicuous place in the provincial capitol or the city, municipal or barangay hall.
The OSG filed a Comment pointing out that the instant petition raises factual issues warranting its denial.
There is an issue on whether there were ordinances authorizing the expenditures incurred in entering
into the questioned contracts. Sec. 323 of the LGC allows disbursements for salaries and wages of
existing positions, statutory and contractual obligations and essential operating expenses authorized in
the annual and supplemental budgets of the preceding year (which are deemed reenacted in case the
sanggunian concerned fails to pass the ordinance authorizing the annual appropriations at the beginning
of the ensuing fiscal year). Contractual obligations not included in the preceding year’s annual and
supplemental budgets allegedly require the prior approval or authorization of the local sanggunian.

Note that two things are settled in this case. First, the Province of Cebu was operating under a reenacted
budget in 2004. Second, Gov. Garcia entered into contracts on behalf of the province while this reenacted
budget was in force.

ISSUE: Whether the Provincial Governor required to obtain prior authorization of the Sanggunian
Panlalawigan of Cebu before she can enter into the questioned contracts?

HELD: The case should be remanded to the trial court. If the contracts were disbursements
then no prior authorization is necessary. However, if they are new contracts, prior
authorization of the Sanggunian is indispensable

As it clearly appears from the Sec 22 (c) of the LGC, prior authorization by the sanggunian concerned is
required before the local chief executive may enter into contracts on behalf of the local government unit.
Sec. 306 of R.A. No. 7160 merely contains a definition of terms. Read in conjunction with Sec. 346, Sec.
306 authorizes the local chief executive to make disbursements of funds in accordance with the ordinance
authorizing the annual or supplemental appropriations. The "ordinance" referred to in Sec. 346 pertains
to that which enacts the local government unit’s budget, for which reason no further authorization from
the local council is required, the ordinance functioning, as it does, as the legislative authorization of the
budget.

To construe Sections 306 and 346 of R.A. No. 7160 as exceptions to Sec. 22(c) would render the
requirement of prior sanggunian authorization superfluous, useless and irrelevant. There would be no
instance when such prior authorization would be required, as in contracts involving the disbursement of
appropriated funds. Yet, this is obviously not the effect Congress had in mind when it required, as a
condition to the local chief executive’s representation of the local government unit in business
transactions, the prior authorization of the sanggunian concerned. The requirement was deliberately
added as a measure of check and balance, to temper the authority of the local chief
executive, and in recognition of the fact that the corporate powers of the local government unit are
wielded as much by its chief executive as by its council. However, the sanggunian authorization may be
in the form of an appropriation ordinance passed for the year which specifically covers the project, cost
or contract to be entered into by the local government unit.

Sec. 323 of R.A. No. 7160 provides that in case of a reenacted budget, "only the annual appropriations
for salaries and wages of existing positions, statutory and contractual obligations, and essential operating
expenses authorized in the annual and supplemental budgets for the preceding year shall be deemed
reenacted and disbursement of funds shall be in accordance therewith." It should be observed that, as
indicated by the word "only" preceding the above enumeration in Sec. 323, the items for which
disbursements may be made under a reenacted budget are exclusive. Clearly, contractual obligations
which were not included in the previous year’s annual and supplemental budgets cannot be disbursed by
the local government unit. It follows, too, that new contracts entered into by the local chief executive
require the prior approval of the sanggunian.

The words "disbursement" and "contract" separately referred to in Sec. 346 and 22(c) of R.A. No. 7160
should be understood in their common signification. Disbursement is defined as "To pay out, commonly
from a fund. To make payment in settlement of a debt or account payable." “Contract,” on the other
hand, is defined by our Civil Code as "a meeting of minds between two persons whereby one binds
himself, with respect to the other, to give something or to render some service." And so, to give life to
the obvious intendment of the law and to avoid a construction which would render Sec. 22(c) of R.A. No.
7160 meaningless, disbursement, as used in Sec. 346, should be understood to pertain to payments for
statutory and contractual obligations which the sanggunian has already authorized thru ordinances
enacting the annual budget and are therefore already subsisting obligations of the local government unit.
Contracts, as used in Sec. 22(c) on the other hand, are those which bind the local government unit to
new obligations, with their corresponding terms and conditions, for which the local chief executive needs
prior authority from the sanggunian.

Sec. 465, Art. 1, Chapter 3 of R.A. No. 7160 states that the provincial governor shall "[r]epresent the
province in all its business transactions and sign in its behalf all bonds, contracts, and obligations, and
such other documents upon authority of the Sangguniang Panlalawigan or pursuant to law or
ordinances." Sec. 468, Art. 3 of the same chapter also establishes the sanggunian’s power, as the
province’s legislative body, to authorize the provincial governor to negotiate and contract loans, lease
public buildings held in a proprietary capacity to private parties, among other things. The foregoing
inexorably confirms the indispensability of the sanggunian’s authorization in the execution of contracts
which bind the local government unit to new obligations. Note should be taken of the fact that R.A. No.
7160 does not expressly state the form that the authorization by the sanggunian has to take.
Such authorization may be done by resolution enacted in the same manner prescribed by ordinances,
except that the resolution need not go through a third reading for final consideration unless the majority
of all the members of the sanggunian decides otherwise.

R.A. No. 9184 establishes the law and procedure for public procurement. Sec. 37 2 thereof explicitly
makes the approval of the appropriate authority which, in the case of local government units, is the
sanggunian, the point of reference for the notice to proceed to be issued to the winning bidder. This
provision, rather than being in conflict with or providing an exception to Sec. 22(c) of R.A. No. 7160,
blends seamlessly with the latter and even acknowledges that in the exercise of the local government
unit’s corporate powers, the chief executive acts merely as an instrumentality of the local council. Read
together, the cited provisions mandate the local chief executive to secure the sanggunian’s
approval before entering into procurement contracts and to transmit the notice to proceed
to the winning bidder not later than seven (7) calendar days therefrom.

Parenthetically, Gov. Garcia’s petition for declaratory relief should have been dismissed because it was
instituted after the COA had already found her in violation of Sec. 22(c) of R.A. No. 7160. One of the
important requirements for a petition for declaratory relief under Sec. 1, Rule 63 of the Rules of Court is
that it be filed before breach or violation of a deed, will, contract, other written instrument, statute,
executive order, regulation, ordinance or any other governmental regulation. Thus, the trial court erred in
assuming jurisdiction over the action despite the fact that the subject thereof had already been breached
by Gov. Garcia prior to the filing of the action. Nonetheless, the conversion of the petition into an
ordinary civil action is warranted under Sec. 6, Rule 633 of the Rules of Court.

Erroneously, however, the trial court did not treat the COA report as a breach of the law and proceeded
to resolve the issues as it would have in a declaratory relief action. Thus, it ruled that prior authorization
is not required if there exist ordinances which authorize the local chief executive to enter into contracts.
The problem with this ruling is that it fails to take heed of the incongruent facts presented by the parties.

2 Sec. 37 provides: "The Procuring Entity shall issue the Notice to Proceed to the winning bidder not later than seven (7)
calendar days from the date of approval of the contract by the appropriate authority x x x."
3 Sec. 6. Conversion into ordinary action.–If before the final termination of the case, a breach or violation of an instrument

or a statute, executive order or regulation, ordinance, or any other governmental regulation should take place, the action
may thereupon be converted into an ordinary action, and the parties shall be allowed to file such pleadings as may be
necessary or proper.
What the trial court should have done, instead of deciding the case based merely on the memoranda
submitted by the parties, was to conduct a full-blown trial to thresh out the facts and make an informed
and complete decision. The question which should have been answered by the trial court, and which it
failed to do was whether, during the period in question, there did exist ordinances (authorizing Gov.
Garcia to enter into the questioned contracts) which rendered the obtention of another authorization
from the Sangguniang Panlalawigan superfluous. It should also have determined the character of the
questioned contracts, i.e., whether they were, as Gov. Garcia claims, mere disbursements pursuant to the
ordinances supposedly passed by the sanggunian or, as COA offcials claim, new contracts which obligate
the province without the provincial board’s authority.

It cannot be overemphasized that the paramount consideration in the present controversy is the fact that
the Province of Cebu was operating under a re-enacted budget in 2004, resulting in an altogether
different set of rules as directed by Sec. 323 of R.A. 7160. This Decision, however, should not be so
construed as to proscribe any and all contracts entered into by the local chief executive without formal
sanggunian authorization. In cases, for instance, where the local government unit operates under an
annual as opposed to a re-enacted budget, it should be acknowledged that the appropriation passed by
the sanggunian may validly serve as the authorization required under Sec. 22(c) of R.A. No. 7160. After
all, an appropriation is an authorization made by ordinance, directing the payment of goods and services
from local government funds under specified conditions or for specific purposes.

[See 2nd par of doctrine ]

In view of the foregoing, the instant case should be treated as an ordinary civil action requiring for its
complete adjudication the confluence of all relevant facts. Guided by the framework laid out in this
Decision, the trial court should receive further evidence in order to determine the nature of the
questioned contracts entered into by Gov. Garcia, and the existence of ordinances authorizing her acts.
CITY OF MANILA VS. INTERMEDIATE APPELLATE COURT
G.R. No. 71159. November 15, 1989

FACTS:
“Brought on February 22, 1979 by the widow and children of the late Vivencio Sto. Domingo, Sr. was this
action for damages against the City of Manila; Evangeline Suva of the City Health Office; Sergio Mallari,
officer-in-charge of the North Cemetery; and Joseph Helmuth, the latter’s predecessor as officer-in-
charge of the said burial grounds owned and operated by the City Government of Manila. “Vivencio Sto.
Domingo, Sr. deceased husband of plaintiff Irene Sto. Domingo and father of the litigating minors, died
on June 4, 1971 and buried on June 6, 1971 in Lot No. 159, Block No. 194 of the North Cemetery which
lot was leased by the city to Irene Sto. Domingo for the period from June 6, 1971 to June 6, 2021 per
Official Receipt No. 61307 dated June 6, 1971 (see Exh. A) with an expiry date of June 6, 2021/ Full
payment of the rental therefor of P50.00 is evidenced by the said receipt which appears to be regular on
its face. Apart from the aforementioned receipt, no other document was executed to embody such lease
over the burial lot in question. In fact, the burial record for Block No. 194 of Manila North Cemetery in
which subject Lot No. 159 is situated does not reflect the term of duration of the lease thereover in favor
of the Sto. Domingos. “Believing in good faith that, in accordance with Administrative Order No. 5, Series
of 1975, dated March 6, 1975, of the City Mayor of Manila prescribing uniform procedure and guidelines
in the processing of documents pertaining to and for the use and disposition of burial lots and plots
within the North Cemetery, etc., subject Lot No. 159 of Block 194 in which the mortal remains of the late
Vivencio Sto. Domingo were laid to rest, was leased to the bereaved family for five (5) years only, subject
lot was certified on January 25, 1978 as ready for exhumation.
“On the basis of such certification, the authorities of the North Cemetery then headed by defendant
Joseph Helmuth authorized the exhumation and removal from subject burial lot the remains of the late
Vivencio Sto. Domingo, Sr., placed the bones and skull in a bag or sack and kept the same in the
depository or bodega of the cemetery. Subsequently, the same lot in question was rented out to another
lessee so that when the plaintiffs herein went to said lot on All Souls Day in their shock, consternation
and dismay, that the resting place of their dear departed did not anymore bear the stone marker which
they lovingly placed on the tomb. Indignant and disgusted over such a sorrowful finding, Irene Sto.
Domingo lost no time in inquiring from the officer-incharge of the North Cemetery, defendant Sergio
Mallari, and was told that the remains of her late husband had been taken from the burial lot in question
which was given to another lessee. “Irene Sto. Domingo was also informed that she can look for the
bones of her deceased husband in the warehouse of the cemetery where the exhumed remains from the
different burial lots of the North Cemetery are being kept until they are retrieved by interested parties.
But to the bereaved widow, what she was advised to do was simply unacceptable. According to her, it
was just impossible to locate the remains of her late husband in a depository containing thousands upon
thousands of sacks of human bones. She did not want to run the risk of claiming for the wrong set of
bones. She was even offered another lot but was never appeased. She was too aggrieved that she came
to court for relief even before she could formally present her claims and demands to the city government
and to the other defendants named in the present complaint.”

Trial Court – ordered the defendants to give plaintiffs the right to make use of another single lot in the
cemetery for the remaining 43 years of the lease and to search without let up for the remains of
Vivencio.

Court of Appeals – modified the decision by awarding damages for breach of contract, moral damages,
exemplary damaged, attorney’s fees and the cost of the suit.

ISSUE:
WON the operations and functions of a public cemetery are a governmental, or a corporate or proprietary
function of the City of Manila. (Corporate or Proprietary NOT Governmental)

HELD:

Under Philippine laws, the City of Manila is a political body corporate and as such endowed with the
faculties of municipal corporations to be exercised by and through its city government in conformity with
law, and in its proper corporate name. It may sue and be sued, and contract and be contracted with.

Its powers are twofold in character: public, governmental or political on the one hand, and corporate,
private and proprietary on the other.

Governmental powers are those exercised in administering the powers of the state and promoting the
public welfare and they include the legislative, judicial, public and political.

Municipal powers on the one hand are exercised for the special benefit and advantage of the community
and include those which are ministerial, private and corporate.

In connection with the powers of a municipal corporation, it may acquire property in its public or
governmental capacity, and private or proprietary capacity.

The New Civil Code divides such properties into property for public use and patrimonial properties (Article
423), and further enumerates the properties for public use as provincial roads, city streets, municipal
streets, the squares, fountains, public waters, promenades, and public works for public service paid for
by said provisions, cities or municipalities, all other property is patrimonial without prejudice to the
provisions of special laws.

Thus in Torio v. Fontanilla, the Court declared that with respect to proprietary functions the settled rule is
that a municipal corporation can be held liable to third persons ex contractu or ex delicto.

“While the following are corporate or proprietary in character, viz: municipal waterworks, slaughter
houses, markets, stables, bathing establishments, wharves, ferries and fisheries. Maintenance of parks,
golf courses, cemeteries and airports among others, are also recognized as municipal or city activities of
a proprietary character.”

With the acts of dominion, there is, therefore no doubt that the North Cemetery is within the class
of property which the City of Manila owns in its proprietary or private character.

Furthermore, there is no dispute that the burial lot was leased in favor of the private respondents. Hence,
obligations arising from contracts have the force of law between the contracting parties. Thus a lease
contract executed by the lessor and lessee remains as the law between them. Therefore, a breach of
contractual provision entitles the other party to damages even if no penalty for such breach is prescribed
in the contract.

Under the doctrine of respondeat superior, petitioner City of Manila is liable for the tortious act committed
by its agents who failed to verify and check the duration of the contract of lease. The contention of the
petitioner-city that the lease is covered by Administrative Order No. 5, series of 1975 dated March 6,
1975 of the City of Manila for five (5) years only beginning from June 6, 1971 is not meritorious for the
said administrative order covers new leases.
INCIONG VS. DOMINGO
G.R. No. 96628. July 3, 1992.

FACTS:
For failure of the Philippine Sugar Commission (PHILSUCOM), now Philippine Sugar Refineries
Corporation, to pay real estate taxes due on its sugar refinery situated at Barangay Caloocan, Balayan,
Batangas, the Provincial Treasurer of Batangas scheduled the sale of said refinery at public auction on
March 6, 1986. To restrain the sale, PHILSUCOM filed a petition for prohibition in the Court of Appeals
against the Provincial Treasurer and Provincial Assessor of Balayan, Batangas. The petition was docketed
as CA GR SP No. 08467. On March 5, 1986, the Court of Appeals issued a restraining order directing
respondents therein to maintain the status quo. Meanwhile, Barangay Caloocan thru herein petitioner
Atty. Ceferino Inciong filed a Motion for Intervention alleging that it (Barangay Caloocan) is an
indispensable party in the case as it has a 10% share of the property tax sought to be collected from
PHILSUCOM. Thereafter, Barangay Caloocan filed an Answer to PHILSUCOM’s Petition as well as a motion
for reconsideration of the restraining order of March 5, 1986. On December 24, 1986, PHILSUCOM and
the Municipal Treasurer of Balayan, Batangas entered into an Amnesty Compromise Agreement pursuant
to and in conformity with Executive Order No. 42 dated August 22, 1986. The agreement was submitted
to the Court of Appeals and the case was accordingly dismissed. PHILSUCOM paid the amount of
P7,199,887.51 to the Municipal Treasurer. Out of this amount, the Municipal Treasurer allocated to
Barangay Caloocan as its share 10% or a total of P719,988.75. Consequently, Atty. Ceferino Inciong filed
a case for payment of attorney’s fees against the Province of Batangas, Municipality of Balayan and
Barangay Caloocan, before the Regional Trial Court, Branch XI, Balayan, Batangas.
This decision has long become final, hence, a writ of execution was issued. But, when the Withdrawal
Voucher was presented for audit to satisfy the writ of execution, the Provincial Auditor of Batangas
referred the matter en consulta to the COA RegionalDirector.
Issue:
Whether Atty. Inciong is entitled of its Attorney’s Fee.
Ruling:
YES, the COA in the exercise of its powers, cannot diminish the substantive right of person to recover
attorney’s fees under the final and executory decision.
As correctly stated by the Office of the Solicitor General, the position of respondent Chairman of the COA
disallowing payment of attorney’s fees to petitioner Atty. Ceferino Inciong is not proper, in the light of the
following considerations:
(1) The employment by Barangay Caloocan of petitioner as its counsel, even if allegedly
unauthorized by the Sangguniang Barangay, is binding on Barangay Caloocan as it took no
prompt measure to repudiate petitioner’s employment (Province of Cebu v. Intermediate
Appellate Court, 147 SCRA 447).
(2) The Decision of RTC directing Barangay Caloocan to pay attorney’s fees to petitioner, has
become final and executory and is binding upon Barangay Caloocan (Mercado v. Court of
Appeals, 162 SCRA 75).
(3) COA Circular No. 86-255 cannot diminish the substantive right of petitioner to recover attorney’s
fees under the final and executory decision of RTC.
PROVINCE OF CEBU VS. INTERMEDIATE APPELLATE COURT
No. L-72841. January 29, 1987.

FACTS:
On 1964, while then incumbent Governor Espina was on official business in Manila, the Vice-Gov,
Almendras and 3 members of the Provincial Board enacted A Resolution donating to the City of Cebu an
area of over 380 hectares. The deed of donation was immediately executed in behalf of the Province of
Cebu by Vice-Governor Almendras and accepted in behalf of the City of Cebu by Mayor Sergio Osmeña,
Jr. The document of donation was prepared and notarized by a private lawyer. The donated lots were to
be sold by the City of Cebu to raise funds that would be used to finance its public improvement projects.
Upon his return from Manila, Governor Espina disagreed with the donation and to prevent the sale of the
lots, the officers and members of the Cebu Mayor's League along with some taxpayers, including Atty.
Garcia, filed a case seeking to have the donation declared illegal, null and void Named defendants in the
suit were the City of Cebu, City Mayor Sergio Osmeña, Jr. and the Cebu provincial officials responsible for
the donation of the province-owned lots. Subsequently, the court dismissed the Case on the ground that
plaintiffs were not the real parties in interest in the case. After the city announced the sale of the lots,
Governor Espina, engaged the services of respondent Garcia, for the annulment of the deed of donation
The Provincial Board passed a resolution authorizing the Provincial Attorney, Baguia, to enter his
appearance for the Province of Cebu and for the incumbent Governor, Vice-Governor and members of the
Provincial Board in this case. A compromise agreement was reached between the province of Cebu and
the city of Cebu. For services rendered atty, Garcia filed a Notice of Attorney's Lien, praying that his
statement of claim of attorney's lien in said case be entered upon the records. To said notice, petitioner
Province of Cebu opposed: the payment of attorney's fees are not allowed by law.
TC: In favor of atty Garcia; on the basis of quantum meruit and fixing the amount at P30,000.00. Both
parties appealed from the decision to the Court of Appeals.
The CA upheld the TC but reduced the amount of the fees.

ISSUE: Whether the governor may validly engage the services of a private lawyer and whether the
province may be held liable to pay the fees.

HELD: Collaboration of a private law firm with the fiscal and the municipal attorney is not allowed. Sec.
1683 Revised Administrative Code:”The provincial fiscal shall represent the province and any
municipality,..When the provincial fiscal is disqualified to serve any municipality or other political
subdivision of a province, a special attorney may be employed by its council” The municipality's authority
to employ a private lawyer is expressly limited only to situations where the provincial fiscal is disqualified
to represent it Ratio: (1) local government should not be burdened with the expenses of hiring a private
lawyer; (2) the interests of the municipal corporation would be best protected if a government lawyer
handles its litigations. RIBO However, the circumstances obtaining in the case at bar are such that the
rule (governor must be authorized by resolution to hire private lawyer) cannot be applied. The Provincial
Board would never have given such authorization. The present case, the controversy involved an
intramural fight between the Provincial Governor on one hand and the members of the Provincial Board
on the other hand. The Provincial Board would not adopt a resolution authorizing the Governor to employ
Atty. Garcia to act as counsel for the Province of Cebu for the purpose of filing and prosecuting a case
against the members to the same Provincial Board According to the claimant A strict application of the
provisions of the Revise Administrative Code on the matter would deprive the plaintiffs in the court below
of redress for a valid grievance. Respondent counsel's representation of the Province of Cebu became
necessary because of the Provincial Board's failure or refusal to direct the bringing of the action to
recover the properties it had donated to the City of Cebu. Anent the question of liability for respondent
counsel's services, the general rule that an attorney cannot recover his fees from one who did not employ
him or authorize his employment, is subject to its own exception. His authority to appear for and
represent petitioner in litigation, not having been questioned in the lower court, it will be presumed on
appeal that counsel was properly authorized to file the complaint and appear for his client. We apply a
rule in the law of municipal corporations: "that a municipality may become obligated upon an implied
contract to pay the reasonable value of the benefits accepted or appropriated by it as to which it has the
general power to contract. The petitioner cannot set up the plea that the contract was ultra vires and still
retain benefits thereunder. Having regarded the contract as valid for purposes of reaping some benefits,
the petitioner is estopped to question its validity for the purposes of denying answerability.