Rosete vs. The Auditor General

The State is not liable for damages caused by the negligence of government officers in storing gasoline in a government warehouse, because such officers were not "special agents" within the meaning of Article 1903 of the Civil Code. A "special agent" is one who receives a definite and fixed order or commission foreign to the exercise of the duties of his office; the concept does not apply to an executive agent who performs functions inherent in and naturally pertaining to his office.

Inocencio Rosete was a private individual whose property — including professional and cultural books, jewelry, clothing, furniture, silverware, and other household equipment — was destroyed in a fire that originated from the motor pool warehouse of the Emergency Control Administration (ECA), a government agency, located at No. 2262 Azcarraga, Manila. The ECA was organized by the government for purposes similar to those of the Philippine Relief and Rehabilitation Administration (PRRA), created by Commonwealth Act No. 716. Commonwealth Act No. 327 authorized private parties to file claims against the Government with the Insular Auditor and to appeal adverse decisions to the Supreme Court. The claim was grounded on Article 1903 of the Civil Code, which governs State liability for damages caused through a "special agent."

On November 2, 1945, a fire broke out at the ECA motor pool located at No. 2262 Azcarraga, Manila, where the Emergency Control Administration maintained a warehouse or bodega used for storing oil, gasoline, and other supplies. According to petitioner's claim, the fire was started when one Jose Frayno y Panlilio recklessly ignited his cigarette-lighter near a five-gallon drum into which gasoline was being drained. The resulting blaze consumed the ECA warehouse and spread to surrounding inhabited houses, destroying the property of Inocencio Rosete and his family — including professional and cultural books, jewelry, clothing, furniture, silverware, and other household equipment — with total losses amounting to ₱35,376. Frayno was subsequently prosecuted by the City Fiscal.

The storage of gasoline and other combustible and inflammable substances in the City of Manila required a license and permit under Acts 649, 650, and 651 of the Revised Ordinances of Manila and Ordinance No. 1985. On November 10, 1945, the Mayor of Manila certified that the ECA had not been granted any permit to store gasoline at its Azcarraga motor pool, a certification corroborated by the Acting Assistant Treasurer and the Acting Chief of the Fire Department of Manila. Petitioner contended that the ECA's storage of gasoline without the requisite permits constituted negligence in violation of city ordinances, rendering the government liable under Article 1903 of the Civil Code.

Rosete filed his claim with the Auditor General, who denied it on October 3, 1946, on the theory that "the government cannot be prejudiced by the illegal or tortious acts of its servants." The Auditor General did not examine the merits of the claim as to the amount thereof. Rosete thereafter appealed to the Supreme Court.

• Government Negligence Under Article 1903: Petitioner contended that the Auditor General erred in not finding the ECA and its officers guilty of negligence in storing a highly combustible and inflammable substance in its warehouse in Manila in violation of city ordinances, and therefore the government is liable for the damages sustained under Article 1903 of the Civil Code.
• Applicability of Marine Trading vs. Government: Petitioner cited Marine Trading vs. Government, 39 Phil. 29, as supporting recovery against the government for tortious damage.

• State Liability Under Article 1903: Whether the State is liable for damages caused by the negligence of ECA officers in storing gasoline in a government warehouse, given that such officers were not "special agents" within the meaning of Article 1903 of the Civil Code.
• Applicability of Marine Trading: Whether Marine Trading vs. Government supports petitioner's claim for damages against the government.

• State Liability Under Article 1903: No. The government is not responsible because the ECA officers did not act as special agents of the government within the meaning of Article 1903 of the Civil Code in storing gasoline in the ECA warehouse.
• Applicability of Marine Trading: No. Marine Trading vs. Government is inapplicable because recovery in that case was based on special provisions of the Code of Commerce and Philippine Marine Regulations regarding collision of vessels, not on Article 1903 of the Civil Code.

• State Liability Under Article 1903: Article 1903 of the Civil Code provides that the State is liable when it acts through a "special agent," but not when the damage is caused by an official to whom it properly pertained to do the act performed. A "special agent," as defined by the Supreme Court of Spain and adopted in Merritt vs. Government of the Philippine Islands, is one who receives a definite and fixed order or commission, foreign to the exercise of the duties of his office, so that in representation of the State he executes the trust confided to him. This concept does not apply to any executive agent who is an employee of the active administration and who, on his own responsibility, performs functions inherent in and naturally pertaining to his office. The ECA officers who stored gasoline in the ECA warehouse were performing functions pertaining to their office; they were not acting pursuant to a definite and fixed commission foreign to their official duties. Accordingly, whatever negligence may be imputed to the ECA or its officers was not done by a special agent, and the government is not responsible for the resulting damages.
• Applicability of Marine Trading: The case of Marine Trading vs. Government was decided under the special provisions of Articles 862, 827, 828, and 830 of the Code of Commerce and the Philippine Marine Regulations of the Collector of Customs, regarding collision of vessels. It was not decided on the ground of tort in general under Article 1903 of the Civil Code, and therefore provides no basis for petitioner's claim. Additionally, Act No. 327, in authorizing the filing of claims against the Government with the Insular Auditor and appeals to the Supreme Court, does not render all claims allowable or make the government responsible for every claim filed.

• Special Agent Doctrine under Article 1903 of the Civil Code — The State is liable for damages only when it acts through a "special agent," defined as one who receives a definite and fixed order or commission, foreign to the exercise of the duties of his office, so that in representation of the State and being bound to act as an agent thereof, he executes the trust confided to him. The concept does not apply to any executive agent who is an employee of the active administration and who, on his own responsibility, performs functions which are inherent in and naturally pertain to his office and which are regulated by law and the regulations. Where the damage is caused by an official to whom it properly pertained to do the act performed, the provisions of the preceding article (Article 1902) — imposing liability on the individual official — apply, not State liability under Article 1903. The Court applied this doctrine to hold that ECA officers storing gasoline in the ECA warehouse were performing functions inherent in their office, not acting as special agents, and therefore the State was not liable.

• "The state is liable in the scene when it acts through a special agent, but not when the damage should have been caused by the official to whom it properly pertained to do the act performed, in which case the provisions of the preceding article shall be applicable." — This is the text of Article 1903, paragraph 5, of the Civil Code as quoted in the decision, and forms the statutory basis for distinguishing State liability (through a special agent) from individual official liability.

• "A special agent, in the sense in which these words are employed, is one who receives a definite and fixed order or commission, foreign to the exercise of the duties of his office if he is a special official, so that in representation of the state and being bound to act as an agent thereof, he executes the trust confided to him." — This passage, drawn from the Supreme Court of Spain and adopted in Merritt vs. Government of the Philippine Islands, provides the canonical definition of "special agent" that the Court used to determine whether State liability attaches.

• "There being no showing that whatever negligence may be imputed to the Emergency Control Administration or its officers, was done by an special agent, because the officers of the Emergency Control Administration did not act as special agents of the government within the above defined meaning of that word in article 1903 of the Civil Code in storing gasoline in warehouse of the ECA, the government is not responsible for the damages caused through such negligence." — This is the Court's application of the special agent doctrine to the facts, constituting the ratio decidendi of the case.

• Merritt vs. Government of the Philippine Islands, 34 Phil. 311 — Controlling precedent. The Court relied on this case for the definition of "special agent" under Article 1903 of the Civil Code, as articulated through quotations from the Supreme Court of Spain. The definition distinguishes a special agent (who receives a definite commission foreign to his office) from a regular official performing inherent duties, and was applied to bar State liability in this case.
• Marine Trading vs. Government, 39 Phil. 29 — Distinguished. Petitioner cited this case to support recovery against the government, but the Court held it inapplicable because recovery there was based on special provisions of the Code of Commerce and Philippine Marine Regulations regarding vessel collisions, not on Article 1903 of the Civil Code.

• Article 1903, Civil Code (old) — Provides that the State is liable when it acts through a special agent, but not when the damage is caused by an official to whom it properly pertained to do the act performed, in which case the provisions of the preceding article (Article 1902) apply. The Court applied this provision to determine that ECA officers were not special agents, and therefore the State was not liable.
• Article 1902, Civil Code (old) — Provides that any person who by an act or omission causes damage to another by his fault or negligence shall be liable for the damage so done. Referenced as the provision applicable when the damage is caused by an official performing duties pertaining to his office, making the individual official — not the State — liable.
• Commonwealth Act No. 327 — Authorizes the filing of claims against the Government with the Insular Auditor and appeals from the Auditor's decision to the Supreme Court. The Court clarified that this Act does not make all claims against the Government allowable or render the government responsible for every claim filed.
• Acts 649, 650, 651, Revised Ordinances of Manila, and Ordinance No. 1985 — Require licenses and permits for the storage of gasoline and other combustible and inflammable substances in the City of Manila. The ECA's failure to secure such permits formed the factual basis of petitioner's negligence claim, though the Court did not reach the factual merits.

Paras, Actg. C.J., Pablo, Bengzon, Briones, Padilla, and Tuason, JJ., concurred.

• Perfecto, J. — The dissent argued that the ECA was a "special agent" within the meaning of Article 1903 of the Civil Code, because it was not a regular branch or office of the government such as the legislative bodies, executive offices, or tribunals, but an agency set up for specific purposes not attainable through the official functions entrusted by law to the government or its branches. The dissent characterized the ECA as belonging to the class of special agents created by the government for activities ordinarily ungovernmental in character, similar to the Philippine National Bank, the National Development Company, the National Coconut Corporation, and the National Tobacco Corporation. The dissent further argued that the adjective "special" in "special agent" was used to distinguish such agents from regular or ordinary agents of government — all officers and employees in the public service. The dissent would have set aside the Auditor General's decision and ordered the Auditor General to grant the claim in the amount supported by evidence, after giving the claimant an opportunity to present such evidence. The dissent characterized the majority decision as based on a "gratuitous assumption, unsupported by fact and by law," and premised on a "totalitarian philosophy of the State's immunity for whatever wrong it may perpetrate."