Palit-ang, Aleph Jireh G.

Local Government

CITY OF MANILA vs. HON. INTERMEDIATE APPELLATE COURT

G.R. No. 71159 November 15, 1989
 

FACTS
 
The deceased husband of plaintiff Irene Sto. Domingo and father of the litigating minors, Vivencio
Sto. Domingo, Sr. was buried 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 with an expiry date of June 6, 2021. Apart from the 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 for such in favor of the Sto. Domingos.
 
Believing in good faith that, in accordance with Administrative Order No. 5, Series of 1975 of Manila,
subject lot was leased to the bereaved family for five (5) years only. On the basis of a certification
dated January 25, 1978, the authorities of the North Cemetery authorized the exhumation and
removal of the remains of Vivencio Sto. Domingo, Sr. from the subject lot and placed it in a bag or
sack to be kept in the depository 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, to their shock that the resting place of their dear departed is
not there anymore. Then, Irene Sto. Domingo was informed that she can look for the bones of her
deceased husband in the warehouse of the cemetery. However, according to her, it was just
impossible to locate the remains of her late husband in a depository containing thousands of sacks
of human bones. 
 
Aggrieved, the widow and children filed an 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.
 
The trial court in its decision 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 the remains
of Vivencio. The decision was appealed to the Court of Appeals which modified the decision by
awarding damages for breach of contract, moral damages, exemplary damage, attorney’s fees and
the cost of the suit. The petitioners' motion for reconsideration was denied. Hence, this petition.
 

STATEMENT OF THE CASE

 
This is a petition for review on certiorari seeking to reverse and set aside: (a) the Decision of the
Intermediate Appellate Court, dated May 31, 1984 entitled Irene Sto. Domingo et al., v. City Court of
Manila et al., modifying the decision of the then Court of First Instance of Manila, Branch VIII,
ordering the defendants (herein petitioners,) to give plaintiffs (herein private respondents) the right to
use a burial lot in the North Cemetery corresponding to the unexpired term of the fully paid lease
sued upon, to search the remains of the late Vivencio Sto. Domingo, Sr. and to bury the same in a
substitute lot to be chosen by the plaintiffs; and (b) the Resolution of the Court of Appeals dated May
28, 1985 denying petitioner's motion for reconsideration.
  
 
ISSUE
 
WHETHER OR NOT THE OPERATIONS AND FUNCTIONS OF A PUBLIC CEMETERY ARE A
GOVERNMENTAL, OR A CORPORATE OR PROPRIETARY FUNCTION OF THE CITY OF
MANILA. 
 

RULING
 
Corporate or proprietary, not governmental.      
 
While petitioners alleged that the North Cemetery is exclusively devoted for public use or purpose,
and that the City is immune from tort liability, private respondents maintain that the City of Manila

Page 1 of 14
 Palit-ang, Aleph Jireh G.
Local Government

entered into a contract of lease which involve the exercise of proprietary functions with private
respondent. The city and its officers therefore can be sued for any violation of the contract of lease.
 
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. In the absence of a special law, the North Cemetery is a
patrimonial property of the City of Manila which was created by resolution of the Municipal Board of
August 27, 1903 and January 7, 1904.
 
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. 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 respondent superior (Torio v. Fontanilla), 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. When subject lot was
certified on January 25, 1978 as ready for exhumation, the lease contract for fifty (50) years was still
in full force and effect.
 
 
DOCTRINES:
 
The Doctrine of Respondent Superior in Torio v. Fontanilla, declared that with respect to proprietary
functions the settled rule is that a municipal corporation can be held liable to third persons ex
contractu.
 
Municipal corporations are subject to be sued upon contracts and in tort....
xxx xxx xxx
... 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. 
 
 

Page 2 of 14
 Palit-ang, Aleph Jireh G.
Local Government

MUNICIPALITY OF SAN FERNANDO v. FIRME

G.R. L-52179 April 08, 1991
 

FACTS
 
A collision occurred on December 16, 1965, involving a passenger jeepney, a gravel and sand truck
and a dump truck of the Municipality of San Fernando, La Union 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.
 
The heirs of Baniña Sr., herein respondents filed a complaint for damages against the owner and
driver of the jeepney. However, the aforesaid defendants filed a Third Party Complaint against the
petitioner municipality and its driver. 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.
 
Thereafter, the case was subsequently transferred to branch presided by Judge Firme. The heirs of
Baniña Sr. amended the complaint wherein the petitioner and its regular employee Bislig were
impleaded as defendants. Judge Firme rendered a decision that petitioner Municipality of San
Fernando, La Union and Alfredo Bislig are ordered to pay jointly and severally the plaintiffs. 
 
Petitioner filed a motion for reconsideration and for a new trial without prejudice to another motion
which was then pending, and maintains that the respondent judge committed grave abuse of
discretion amounting to excess of jurisdiction in issuing the aforesaid orders and in rendering a
decision, however it was denied. Hence, this petition for certiorari.

 
STATEMENT OF THE CASE
 
This is a petition for certiorari with prayer for the issuance of a writ of preliminary mandatory
injunction seeking the nullification or modification of the proceedings and the orders issued by the
respondent Judge Romeo N. Firme, in his capacity as the presiding judge of the Court of First
Instance of La Union, Second Judicial District, Branch IV, Bauang, La Union in Civil Case No. 107-
BG, entitled "Juana Rimando Baniña, et al. vs. Macario Nieveras, et al." dated November 4, 1975;
July 13, 1976; August 23,1976; February 23, 1977; March 16, 1977; July 26, 1979; September 7,
1979; November 7, 1979 and December 3, 1979 and the decision dated October 10, 1979 ordering
defendants Municipality of San Fernando, La Union and Alfredo Bislig to pay, jointly and severally,
the plaintiffs for funeral expenses, actual damages consisting of the loss of earning capacity of the
deceased, attorney's fees and costs of suit and dismissing the complaint against the Estate of
Macario Nieveras and Bernardo Balagot.

ISSUES
 
1. 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.

2. WHETHER OR NOT THE MUNICIPALITY MAY INVOKE THE DEFENSE OF NON-

SUABILITY OF THE STATE.

3. WHETHER OR NOT THE MUNICIPALITY IS LIABLE FOR THE TORTS COMMITTED BY

ITS EMPLOYEE IN PERFORMING GOVERNMENTAL FUNCTIONS.

RULING
 
1. NO.
 
The respondent judge did not commit grave abuse of discretion when in the exercise of its judgment
it arbitrarily failed to resolve the vital issue of non-suability of the State in the guise of the

Page 3 of 14
 Palit-ang, Aleph Jireh G.
Local Government

municipality. However, said judge acted in excess of his jurisdiction when in his decision he held the
municipality liable for the quasi-delict committed by its regular employee.

2. NO.
 
The doctrine of non-suability of State as expressly provided in Section 3, Article XVI of the
Constitution states that the state cannot be sued without its consent. The general rule is that the
State may not be sued except when it gives consent to be sued. Consent takes the form of express
or implied consent.  Express consent may be embodied in a general law or a special law. Consent is
implied when the State files a complaint, thus opening itself to a counterclaim. 
 
Municipal corporations 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.
 
A distinction should first be made between suability and liability. "Suability depends on the consent
of the state to be sued, liability on the applicable law and the established facts. The circumstance
that a state is suable does not necessarily mean that it is liable; on the other hand, it can never be
held liable if it does not first consent to be sued. Liability is not conceded by the mere fact that the
state has allowed itself to be sued. When the state does waive its sovereign immunity, it is only
giving the plaintiff the chance to prove, if it can, that the defendant is liable."
 
3. NO. 
 
Municipal corporations are generally not liable for torts committed by them in the discharge of
governmental functions and can be held answerable only if it can be shown that they were acting in
a proprietary capacity. In permitting such entities to be sued, the State merely gives the claimant the
right to show that the defendant was not acting in its governmental capacity when the injury was
committed or that the case comes under the exceptions recognized by law. Failing this, the claimant
cannot recover. As emphasized in the case of Torio vs. Fontanilla, the distinction of powers
becomes important for purposes of determining the liability of the municipality for the acts of its
agents which result in an injury to third persons.
 
It was found that the driver of the dump truck was performing duties or tasks pertaining to his office.
The municipality cannot be held liable for the torts committed by its regular employee, who was then
engaged in the discharge of governmental functions. Hence, the death of the passenger –– tragic
and deplorable though it may be –– imposed on the municipality no duty to pay monetary
compensation.
 
Therefore, the petition is granted, absolving the petitioner municipality of any liability in favor of
private respondents.
 
 
DOCTRINES

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." The general rule is that the
State may not be sued except when it gives consent to be sued. Consent takes the form of express
or implied consent.
 
Express consent may be embodied in a general law or a special law. The standing consent of the
State to be sued in case of money claims involving liability arising from contracts is found in Act No.
3083. A special law may be passed to enable a person to sue the government for an alleged quasi-
delict, as in Merritt v. Government of the Philippine Islands.
 
Consent is implied when the government enters into business contracts, thereby descending to the
level of the other contracting party, and also when the State files a complaint, thus opening itself to a
counterclaim. 
 
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.

Page 4 of 14
 Palit-ang, Aleph Jireh G.
Local Government

 
In the case of City of Kokomo v. Loy the Supreme Court of Indiana states that:

 “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 on behalf of the municipalities in their
corporate or individual capacity, and not for the state or sovereign power."
 
 
 

Page 5 of 14
 Palit-ang, Aleph Jireh G.
Local Government

DACANAY vs. ASISTIO

G.R. No. 93654 May 6, 1992
 

FACTS
 
In 1979, MMC Ordinance No. 79-02 was enacted by the Metropolitan Manila Commission,
designating certain city and municipal streets, roads and open spaces as sites for flea markets.
Pursuant thereto, the Caloocan City mayor opened up seven (7) flea markets in that city. One of
those streets was the "Heroes del '96" where the petitioner lives. Upon application of vendors
several vendors, the respondents city mayor and city engineer, issued them licenses to conduct
vending activities on said street.
 
In 1987, Antonio Martinez, as OIC city mayor of Caloocan City, caused the demolition of the market
stalls on Heroes del '96, V. Gozon and Gonzales streets. To stop Mayor Martinez' efforts to clear the
city streets, stallowners filed an action for prohibition against the City of Caloocan, the OIC City
Mayor and the City Engineer and/or their deputies, praying for the issuance of writ of preliminary
injunction ordering these city officials to discontinue the demolition of their stalls during the pendency
of the action.
 
The RTC dismissed the petition and lifted the writ of preliminary injunction which it had earlier
issued. The trial court found that Heroes del '96, Gozon and Gonzales streets are of public dominion,
hence, outside the commerce of man. 
 
However, shortly after the decision came out, the city administration in Caloocan City changed
hands. City Mayor Macario Asistio, Jr., as successor of Mayor Martinez, did not pursue the latter's
policy of clearing and cleaning up the city streets.
 
Invoking the trial court's decision, Francisco U. Dacanay, a concerned citizen, taxpayer and
registered voter, who resides on Heroes del '96 Street, one of the affected streets, wrote a letter to
Mayor Asistio, Jr., calling his attention to the illegally-constructed stalls on Heroes del '96 Street and
asked for their demolition. Dacanay followed up that letter but there was no response.
 
Dacanay sought President Corazon C. Aquino's intervention by writing her a letter on the matter.
The acting Caloocan City secretary, in a letter, informed the Presidential Staff Director that the city
officials were still studying the issue of whether or not to proceed with the demolition of the market
stalls.
 
Dacanay filed a complaint against Mayor Asistio and Engineer Sarne in the Office of the
OMBUDSMAN. In their letter-comment, said city officials explained that in view of the huge number
of stallholders involved, not to mention their dependents, it would be harsh and inhuman to eject
them from the area in question, for their relocation would not be an easy task.
 
In reply, Dacanay maintained that respondents have been derelict in the performance of their duties
and through manifest partiality constituting a violation of Section 3(e) of R.A. 3019, have caused
undue injury to the Government and given unwarranted benefits to the stallholders.
 
The OMBUDSMAN then rendered a final evaluation and report, finding that the respondents' inaction
is purely motivated by their perceived moral and social responsibility toward their constituents, but
"the fact remains that there is an omission of an act which ought to be performed, in clear violation of
Sections 3(e) and (f) of Republic Act 3019." The OMBUDSMAN recommended the filing of the
corresponding information in court.
 
As the stallholders continued to occupy Heroes del '96 Street, through the tolerance of the public
respondents, and in clear violation of the decision of the RTC, Dacanay filed the present petition for
mandamus, praying that the public respondents be ordered to enforce the final decision which
upheld the city mayor's authority to order the demolition of market stalls on V. Gozon, Gonzales and
Heroes del '96 Streets and to enforce P.D. No. 772 and other pertinent laws.
 

STATEMENT OF THE CASE

 

Page 6 of 14
 Palit-ang, Aleph Jireh G.
Local Government

This issue is posed by the petitioner, an aggrieved Caloocan City resident who filed a special civil
action of mandamus against the incumbent city mayor and city engineer, to compel these city
officials to remove the market stalls from certain city streets which the aforementioned city officials
have designated as flea markets, and the private respondents (stallholders) to vacate the streets.
 
 
ISSUE
 
WHETHER OR NOT PUBLIC STREETS OR THOROUGHFARES BE LEASED OR LICENSED TO
MARKET STALLHOLDERS BY VIRTUE OF A CITY ORDINANCE OR RESOLUTION OF THE
METRO MANILA COMMISSION.
 

RULING
 
NO. 
 
There is no doubt that the disputed areas from which the private respondents' market stalls are
sought to be evicted are public streets, therefore, outside the commerce of man. Being outside the
commerce of man, it may not be the subject of lease or other contract. 
 
As the stallholders pay fees to the City Government for the right to occupy portions of the public
street, the City Government, contrary to law, has been leasing portions of the streets to them. Such
leases or licenses are null and void for being contrary to law. The right of the public to use the city
streets may not be bargained away through contract. The interests of a few should not prevail over
the good of the greater number in the community whose health, peace, safety, good order and
general welfare, the respondent city officials are under legal obligation to protect.
 
The Executive Order issued by Acting Mayor Robles authorizing the use of Heroes del '96 Street as
a vending area for stallholders who were granted licenses by the city government contravenes the
general law that reserves city streets and roads for public use. Mayor Robles' Executive Order may
not infringe upon the vested right of the public to use city streets for the purpose they were intended
to serve: i.e., as arteries of travel for vehicles and pedestrians. 
Therefore, petitioner and the general public have a legal right to the relief demanded and that the
public respondents have the corresponding duty, arising from public office, to clear the city streets
and restore them to their specific public purpose. The respondents City Mayor and City Engineer of
Caloocan City or their successors in office are ordered to immediately enforce and implement the
decision declaring that Heroes del '96, V. Gozon, and Gonzales Streets are public streets for public
use, and they are ordered to remove or demolish, or cause to be removed or demolished, the market
stalls occupying said city streets.
 

DOCTRINES
 
In Municipality of Cavite vs. Rojas, it was held that properties for public use may not be leased to
private individuals. Such a lease is null and void for the reason that a municipal council cannot
withdraw part of the plaza from public use. If possession has already been given, the lessee must
restore possession by vacating it and the municipality must thereupon restore to him any sums it
may have collected as rent.
 
A public street is a property for public use, hence outside the commerce of man.
 
The public has a vested right to use city streets for the purpose they were intended to serve: i.e., as
arteries of travel for vehicles and pedestrians.
 
Any executive order or city resolution cannot change the nature of the public street because it is
going to be contrary to the general law.

The interests of a few should not prevail over the good of the greater number in the community
whose health, peace, safety, good order and general welfare, the respondent city officials are under
legal obligation to protect.

 
 

Page 7 of 14
 Palit-ang, Aleph Jireh G.
Local Government

QUISUMBING vs. GARCIA 

G.R. No. 175527 December 8, 2008

FACTS

COA conducted a financial audit on the Province of Cebu for the period ending December 2004. Its
audit team rendered a report, which states: "Several contracts in the total amount of
P102,092,841.47 were not supported with a Sangguniang Panlalawigan resolution authorizing the
Provincial Governor to enter into a contract, as required under Section 22 of R.A. No. 7160." The
audit team then recommended that, "Henceforth, the local chief executive must secure a
sanggunian resolution authorizing the former to enter into a contract as provided under Section 22 of
R.A. No. 7160."

Gov. Garcia, without waiting for the resolution of the reconsideration sought, instituted an action for
Declaratory Relief before the RTC. She alleged that the infrastructure contracts subject of the audit
report complied with the bidding procedures provided under R.A. No. 9184 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.

The trial court declared Gov. Garcia need not secure prior authorization from the Sangguniang
Panlalawigan of Cebu before entering into the questioned contracts. 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 remedy of declaratory relief is improper because a breach had already been
committed and it is considered an ordinary civil action. The trial court denied the motion for
reconsideration filed by the petitioners. 

In the Petition for Review, petitioners insisted that the RTC committed reversible error in granting
due course to Gov. Garcia’s petition for declaratory relief despite a breach of the law subject of the
petition having already been committed. Petitioners further maintained that prior authorization from
the Sangguniang Panlalawigan should be secured before Gov. Garcia could validly enter into
contracts involving monetary obligations on the part of the province.

Respondent COA maintain that Sections 306 and 346 of R.A. No. 7160 cannot be considered
exceptions to Sec. 22(c) of R.A. No. 7160. 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) of R.A. No. 7160. COA officials also
claim that the petition for declaratory relief should have been dismissed for the failure of Gov. Garcia
to exhaust administrative remedies, rendering the petition not ripe for judicial determination.

STATEMENT OF THE CASE

Gabriel Luis Quisumbing (Quisumbing), Estrella P. Yapha, Victoria G. Corominas, and Raul D.
Bacaltos (Bacaltos), collectively petitioners, assail the Decision of the Regional Trial Court (RTC) of
Cebu City, Branch 9, in Civil Case No. CEB-31560, dated July 11, 2006, which declared that under
the pertinent provisions of Republic Act No. 7160 (R.A. No. 7160), or the Local Government Code,
and Republic Act No. 9184 (R.A. No. 9184), or the Government Procurement Reform Act,
respondent Cebu Provincial Governor Gwendolyn F. Garcia (Gov. Garcia), need not secure the prior
authorization of the Sangguniang Panlalawigan before entering into contracts committing the
province to monetary obligations.

ISSUE

1. WHETHER OR NOT THE PROVINCIAL GOVERNOR IS REQUIRED TO OBTAIN PRIOR

AUTHORIZATION OF THE SANGGUNIAN PANLALAWIGAN OF CEBU BEFORE SHE CAN
ENTER INTO THE QUESTIONED CONTRACTS.

Page 8 of 14
 Palit-ang, Aleph Jireh G.
Local Government

2. WHETHER OR NOT R.A. NO. 9184 REQUIRES THE HEAD OF THE PROCURING ENTITY
TO SECURE A RESOLUTION FROM THE SANGGUNIAN CONCERNED BEFORE
ENTERING INTO A CONTRACT

3. WHETHER OR NOT 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

4. WHETHER OR NOT SANGGUNIAN AUTHORIZATION SEPARATE FROM THE

APPROPRIATION ORDINANCE IS REQUIRED.

RULING

1. YES 

There are two basic premises from which the Court proceed to discuss the question of whether prior
approval by the Sangguniang Panlalawigan was required before Gov. Garcia could have validly
entered into the questioned contracts. 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.

Sec. 22(c) of R.A. No. 7160 provides prior authorization by the sanggunian concerned is required
before the local chief executive may enter into contracts on behalf of the local government unit.

Gov. Garcia posits that Sections 306 and 346 of R.A. No. 7160 are the exceptions to Sec. 22(c) and
operate to allow her to enter into contracts on behalf of the Province of Cebu without further authority
from the Sangguniang Panlalawigan. However Sec. 306 of R.A. No. 7160 merely contains a
definition of terms and is read in conjunction with Sec. 346, that 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. 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. 

The fact that the Province of Cebu operated under a reenacted budget in 2004 lent a complexion to
this case which the trial court did not apprehend. 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." The word "only" indicated the items for which disbursements may
be made under a reenacted budget are exclusive. 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.

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. R.A. No. 7160 does
not expressly state the form that the authorization by the sanggunian has to take, it may be done by

Page 9 of 14
 Palit-ang, Aleph Jireh G.
Local Government

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.

2. YES

R.A. No. 9184 establishes the law and procedure for public procurement. Sec. 37 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 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 with Sec. 22(c)
of R.A. No. 7160, the 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.

3. YES. 

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. The
conversion of the petition into an ordinary civil action is warranted under Sec. 6, Rule 63 of the Rules
of Court.

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 question which should have been answered by the trial court, 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. 

4. It should be resolved depending on the particular circumstances of the case. 

Resort to the appropriation ordinance is necessary in order to determine if there is a provision

therein which specifically covers the expense to be incurred or the contract to be entered into.
Should the appropriation ordinance, for instance, already contain in sufficient detail the project and
cost of a capital outlay such that all that the local chief executive needs to do after undergoing the
requisite public bidding is to execute the contract, no further authorization is required, the
appropriation ordinance already being sufficient.

DOCTRINES

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."

Disbursement, as used in Sec. 346, 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.

In Martelino v. National Home Mortgage Finance Corporation, the Court held that the purpose of the action for
declaratory relief is to secure an authoritative statement of the rights and obligations of the parties under a
statute, deed, contract, etc., for their guidance in its enforcement or compliance and not to settle issues arising
from its alleged breach. It may be entertained only before the breach or violation of the statute, deed, contract,
etc. to which it refers. Where the law or contract has already been contravened prior to the filing of an action for
declaratory relief, the court can no longer assume jurisdiction over the action. Under such circumstances,
inasmuch as a cause of action has already accrued in favor of one or the other party, there is nothing more for
the court to explain or clarify, short of a judgment or final order.

In cases, 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

Page 10 of 14
 Palit-ang, Aleph Jireh G.
Local Government

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. The appropriation covers the expenditures which are to be made by the local
government unit, such as current operating expenditures and capital outlays.

TORIO V. FONTANILLA
G.R. No. L-29993 October 23, 1978

 FACTS

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 sub-committee 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. 

The "zarzuela" entitled "Midas Extravaganza" was donated by an association of Malasiqui

employees of the Manila Railroad Company in Caloocan, Rizal, and one of the members of the
group was Vicente Fontanilla. 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 that caused his death.

The heirs of Vicente Fontanilia filed a complaint against the Municipality of Malasiqui and its  the
Municipal Council with the Court of First Instance of Manila to recover damages. The defendant
municipality invoked inter alia the principal defense that as a legally and duly organized public
corporation it performs sovereign functions and the holding of a town fiesta was an exercise of its
governmental functions from which no liability can arise to answer for 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 and that they had exercised due care and
diligence in implementing the municipal ordinance. 

After trial, it was declared that the Executive Committee appointed by the municipal council had
exercised due diligence and care like a good father of the family in selecting a competent man to
construct a stage strong enough for the occasion and that if it collapsed that was due to forces
beyond the control of the committee on entertainment, consequently, the defendants were not liable
for damages for the death of Vicente Fontanilla. 

However, the Court of Appeals reversed the trial court's decision and ordered all the defendants-
appellees to pay jointly and severally the heirs of Vicente Fontanilla for moral and actual damages,
its attorney's fees and the costs.

STATEMENT OF THE CASE

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.

ISSUES

1. 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.

2. WHETHER OR NOT THE MUNICIPALITY OF MALASIQUI IS LIABLE FOR THE DEATH OF

FONTANILLA.

Page 11 of 14
 Palit-ang, Aleph Jireh G.
Local Government

3. WHETHER OR NOT THE MUNICIPAL COUNCILORS  WHO ENACTED THE ORDINANCE

AND CREATED THE FIESTA COMMITTEE ARE LIABLE FOR THE DEATH OF
FONTANILLA.

RULING 

1. The holding of the town fiesta in 1959 by the municipality of Malasiqui Pangasinan, was an
exercise of a private or proprietary function of the municipality.

Under Philippine laws municipalities are political bodies corporate and as such are endowed with the
faculties of municipal corporations to be exercised by and through their respective municipal
governments in conformity with law, and in their proper corporate name, they may inter alia sue and
be sued, and contract and be contracted with. 

The powers of a municipality are twofold in character public, governmental or political on the one
hand, and corporate, private, or proprietary on the other. Governmental powers are those exercised
by the corporation 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 other hand are exercised
for the special benefit and advantage of the community and include those which are ministerial
private and corporate.

This distinction of powers becomes important for purposes of determining the liability of the
municipality for the acts of its agents which result in an injury to third persons.

If the injury is caused in the course of the performance of a governmental function or duty no
recovery, as a rule, can be. had from the municipality unless there is an existing statute on the
matter, nor from its officers, so long as they performed their duties honestly and in good faith or that
they did not act wantonly and maliciously.

Applying the general tests given above, 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 Chapter on Municipal Law of the Revised Administrative Code provides 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. The basic element, however beneficial to the public the undertaking may be, is that it
is governmental in essence, otherwise, the function becomes private or proprietary in character.
Easily, no governmental or public policy of the state is involved in the celebration of a town fiesta.

2. YES.

Under the doctrine of respondent superior, petitioner-municipality is to be held liable for damages for
the death of Vicente Fontanilia if that was at- tributable to the negligence of the municipality's
officers, employees, or agents. It is also provided in Art. 2176 and Art. 2180 of the Civil Code.

The Court affirmed the findings of the respondent appellate court that the facts as presented to it
establish negligence as a matter of law and that the Municipality failed to exercise the due diligence
of a good father of the family.

Liability rests on negligence which is "the want of such care as a person of ordinary prudence would
exercise under the circumstances of the case."

The participants in the stage show had the right to expect that the Municipality through its
"Committee on entertainment and stage" would build or put up a stage or platform strong enough to
sustain the weight or burden of the performance and take the necessary measures to insure the
personal safety of the participants.

THE Municipality cannot evade ability and/or liability although 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"

Page 12 of 14
 Palit-ang, Aleph Jireh G.
Local Government

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. NO.

The Court of Appeals erred in ruling that the holding of a town fiesta is not a governmental function
and that there was negligence on their part for not maintaining and supervising the safe use of the
stage, in applying Article 27 of the Civil Code against them and in not holding Jose Macaraeg liable
for the collapse of the stage and the consequent death of Vicente Fontanilla. Article 27 of the Civil
Code against the for this particular article covers a case of nonfeasance or non-performance by a
public officer of his official duty; it does not apply to a case of negligence or misfeasance in carrying
out an official duty.

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 Court absolved the municipal councilors from any liability for the death of Vicente Fontanilla.
The records do not show that said petitioners directly participated in the defective construction of the
"zarzuela" stage or that they personally permitted spectators to go up the platform.

DOCTRINES

In McQuillin on Municipal Corporations, the is stated:

 "A municipal corporation proper has ... a public character as regards the state at large
insofar as it is its agent in government, and private (so-called) insofar as it is to promote local
necessities and conveniences for its own community. “

City of Kokomo v. Loy, decided by the Supreme Court of Indiana in 1916, thus:

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 in. individual capacity, and not for the state or sovereign power.

With respect to proprietary functions, the settled rule is that a municipal corporation can be held
liable to third persons ex contract 13 or ex delicto. 

Municipal corporations are subject to be sued upon contracts and in tort. …

xxx xxx xxx

The rule of law is a general one, that the superior or employer must answer civilly for the
negligence or want of skill of its agent or servant in the course or fine of his employment, by
which another, who is free from contributory fault, is injured. Municipal corporations under
the conditions herein stated, fall within the operation of this rule of law, and are liable,
accordingly, to civil actions for damages when the requisite elements of liability co-exist. ...
(Dillon on Municipal Corporations, 5th ed. Sec. 1610,1647, cited 

Page 13 of 14
 Palit-ang, Aleph Jireh G.
Local Government

Liability rests on negligence which is "the want of such care as a person of ordinary prudence would
exercise under the circumstances of the case."

In Miguel v. The Court of appeal. et al., held that the Supreme Court is vested with ample authority
to review matters not assigned as errors in an appeal if it finds that their consideration and resolution
are indispensable or necessary in arriving at a just decision in a given case, and that tills is author
under Sec. 7, Rule 51 of the Rules of Court. 

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 ordinary doctrine is that a Director, merely by reason of his office, is not personally liable for the
torts of his corporation; he must be shown to have personally voted for or otherwise participated in
them.." . . (Fletcher Cyclopedia Corporations, Vol. 3A, Chapt. 11, p. 207)

"Officers of a corporation ‘are not held liable for the negligence of the corporation merely because of
their official relation to it, but because of some wrongful or negligent act by such officer amounting to
a breach of duty which resulted in an injury . . . To make an officer of a corporation liable for the
negligence of the corporation there must have been upon his part such a breach of duty as
contributed to, or helped to bring about, the injury; that is to say, he must be a participant in the
wrongful act.." . . (pp. 207-208, ibid.)

"Directors who merely employ one to give n fireworks exhibition on the corporate grounds are not
personally liable for the negligent acts of the exhibitor." (p. 211, ibid.)

Page 14 of 14