Tuzon vs. Court of Appeals

A public officer is not personally liable for damages resulting from acts performed within the scope of official authority and in line of official duty, provided the act was not tainted with malice, bad faith, or inexcusable negligence; an erroneous interpretation of an ordinance does not amount to bad faith.

Domingo Tuzon served as Mayor and Lope Mapagu as Municipal Treasurer of Camalaniugan, Cagayan. Saturnino Jurado operated a palay-threshing business within the municipality. On March 14, 1977, the Sangguniang Bayan of Camalaniugan unanimously adopted Resolution No. 9, authorizing the municipal treasurer to require thresher operators applying for a permit to "donate" 1% of all palay threshed, ostensibly to finance the construction of a Sports and Nutrition Center. An implementing agreement was prepared for signature by all thresher-owner-operators as a prerequisite to obtaining a mayor's permit.

On March 14, 1977, the Sangguniang Bayan of Camalaniugan, Cagayan, unanimously adopted Resolution No. 9, authorizing the municipal treasurer to enter into an agreement with all thresher-owner-operators applying for a permit to thresh palay within the municipality, requiring them to "donate" 1% of all palay threshed to help finance the construction of a Sports and Nutrition Center. To implement the resolution, Municipal Treasurer Lope Mapagu prepared a form agreement for signature by all thresher-owner-operators applying for a mayor's permit, stipulating that the signatory voluntarily agreed to donate the 1% share and to report weekly the total palay threshed and turn over the corresponding amount.

Soon thereafter, Saturnino Jurado, a thresher operator, sent his agent to the municipal treasurer's office to pay the license fee of P285.00. Mapagu refused to accept the payment and required Jurado to first secure a mayor's permit. Mayor Domingo Tuzon, for his part, stated that Jurado should first comply with Resolution No. 9 and sign the agreement before the permit could be issued. Jurado ignored the requirement and instead sent the P285.00 license fee by postal money order to the municipal treasurer's office, but the amount was returned on the ground that he had failed to comply with Resolution No. 9.

On April 4, 1977, Jurado filed with the Court of First Instance of Cagayan a special civil action for mandamus with actual and moral damages to compel the issuance of the mayor's permit and license. On May 31, 1977, he filed a second petition for declaratory judgment, assailing Resolution No. 9 and the implementing agreement as illegal either as a donation or as a tax measure. In a joint decision dated March 31, 1982, the trial court upheld the challenged measure but dismissed both parties' claims for damages for lack of evidence. Jurado appealed to the Court of Appeals, which on August 31, 1989 affirmed the validity of Resolution No. 9 but found Tuzon and Mapagu to have acted maliciously and in bad faith, ordering them to pay jointly and severally P20,000.00 as actual damages, P5,000.00 as moral damages, and P3,000.00 as attorney's fees.

The petitioners elevated the case to the Supreme Court, contending that the Court of Appeals gravely abused its discretion in finding bad faith and awarding damages, given that they were acting in their official capacity in enforcing a resolution that had been declared valid by both the trial court and the appellate court, and that the trial court had expressly found no malice or bad faith on their part.

• Grave Abuse of Discretion in Finding Bad Faith: Petitioners argued that the Court of Appeals gravely abused its discretion in concluding that their refusal to issue the mayor's permit and license was unjustified and constituted bad faith, when they were merely enforcing a duly adopted resolution.
• Inconsistency in the CA's Ruling: Petitioners maintained that the Court of Appeals contradicted itself by upholding the validity of Resolution No. 9 while simultaneously ruling that compliance with it was not mandatory.
• Contradiction of Trial Court's Factual Findings: Petitioners argued that the Court of Appeals erred in awarding damages contrary to the trial court's factual finding that they were not guilty of bad faith and malice, and that no evidence supported such an award.
• Immunity from Personal Liability: Petitioners stressed that they were acting in their official capacity when they enforced the resolution, which had been duly adopted by the Sangguniang Bayan and declared valid by both lower courts, and therefore could not be held personally liable in damages absent bad faith or malice.

• Signing Not a Condition Sine Qua Non: Respondent countered that signing the implementing agreement was not a condition sine qua non to the issuance of a permit and license, and that the petitioners' unwarranted refusal to issue the permit despite his offer to pay the required fee constituted bad faith.
• Invalidity of the Measure: Respondent assailed Resolution No. 9 and the implementing agreement for compelling the thresher to donate something he does not yet own, and claimed the measure contravened the limitations on the taxing powers of local government units under Section 5 of the Local Tax Code.
• Entitlement to Damages: Respondent argued that he was entitled to actual and moral damages under Article 27 of the Civil Code, and to attorney's fees, for the petitioners' refusal or neglect, without just cause, to perform their official duties.

• Liability for Damages: Whether the petitioners, as mayor and municipal treasurer, are liable in damages to the private respondent for withholding the mayor's permit and license because of his refusal to comply with Resolution No. 9.

• Liability for Damages: No. The petitioners acted in good faith within the scope of their official authority in enforcing a presumptively valid ordinance; an erroneous interpretation of an ordinance does not constitute bad faith entitling an aggrieved party to damages.

• Liability for Damages: The private respondent anchored his claim on Article 27 of the Civil Code, which allows an action for damages against a public servant who refuses or neglects, without just cause, to perform his official duty. The provision presupposes that the refusal or omission is attributable to malice or inexcusable negligence, as held in Philippine Match Co. Ltd. vs. City of Cebu. In the present case, it was not even alleged that the mayor's refusal was an attempt to extort a bribe, nor that the petitioners were motivated by personal spite or gross negligence. No evidence showed that the petitioners singled out Jurado for persecution, stood to gain personally, or intended to favor his competitors. The resolution was uniformly applied to all threshers without discrimination. The petitioners acted within the scope of their authority and in consonance with their honest interpretation of the resolution; as executive officials, they had the duty to enforce it so long as it had not been repealed or annulled, and its legality was presumed — indeed, both lower courts had sustained it. A public officer is not personally liable for acts performed within the scope of official authority and in the line of official duty, and an erroneous interpretation of an ordinance does not amount to bad faith. Furthermore, Jurado could have signed the agreement under protest and later challenged it in court, continuing to operate pendente lite and thereby avoiding the lost profits he attributed to the petitioners' conduct.

• Immunity of Public Officers from Personal Liability — A public officer, whether judicial, quasi-judicial, or executive, is not personally liable to one injured in consequence of an act performed within the scope of his official authority and in the line of his official duty, provided the act is not tainted with malice, bad faith, or inexcusable negligence. The Court applied this doctrine by finding that the mayor and municipal treasurer were enforcing a presumptively valid resolution uniformly applied to all threshers, without personal gain, discriminatory intent, or malicious motive.
• Erroneous Interpretation of Ordinance Does Not Constitute Bad Faith — An erroneous interpretation of an ordinance does not constitute nor amount to bad faith that would entitle an aggrieved party to an award for damages. The Court relied on this principle, drawn from Philippine Match Co. Ltd. vs. City of Cebu, to absolve the petitioners who honestly interpreted Resolution No. 9 as requiring compliance before a permit could issue.
• Presumption of Validity of Ordinances — In the absence of a judicial decision declaring an ordinance invalid, its legality is presumed, and executive officials have the duty to enforce it until it is repealed by the sanggunian or annulled by the courts. The Court noted that both the trial court and the Court of Appeals had sustained Resolution No. 9, reinforcing the petitioners' duty to enforce it.
• Nature of Donation as Act of Liberality — A donation is an act of liberality and is never obligatory. The Court observed that while the resolution's wording merely "solicited" the 1% contribution, the implementing agreement appeared to make the donation obligatory and a condition precedent to the issuance of the permit, which goes against the nature of a donation under Article 725 of the Civil Code.

• "As a rule, a public officer, whether judicial, quasi-judicial or executive, is not personally liable to one injured in consequence of an act performed within the scope of his official authority, and in line of his official duty." — This passage states the controlling doctrine on public officer immunity that formed the basis for absolving the petitioners from liability.

• "It has been held that an erroneous interpretation of an ordinance does not constitute nor does it amount to bad faith, that would entitle an aggrieved party to an award of damages." — This formulation, cited from Philippine Match Co. Ltd. vs. City of Cebu, establishes that good-faith enforcement of a presumptively valid ordinance, even if based on a mistaken interpretation, does not give rise to personal liability.

• "In the absence of a judicial decision declaring it invalid, its legality would have to be presumed (in fact, both the trial court and the appellate court said there was nothing wrong with it). As executive officials of the municipality, they had the duty to enforce it as long as it had not been repealed by the Sangguniang Bayan or annulled by the courts." — This passage articulates the duty of executive officials to enforce ordinances presumed valid, reinforcing the good-faith defense.

• Philippine Match Co. Ltd. vs. City of Cebu, 81 SCRA 99 — Followed as controlling authority for two propositions: (1) Article 27 of the Civil Code presupposes that the refusal or omission of a public official to perform his duty is attributable to malice or inexcusable negligence; and (2) an erroneous interpretation of an ordinance does not constitute bad faith entitling an aggrieved party to damages.

• Article 27, Civil Code of the Philippines — Provides that any person suffering material or moral loss because a public servant or employee refuses or neglects, without just cause, to perform his official duty may file an action for damages. The Court interpreted this provision as requiring malice or inexcusable negligence, neither of which was present in the petitioners' conduct.
• Article 725, Civil Code of the Philippines — Defines donation as an act of liberality. The Court cited this provision to observe that the implementing agreement's apparent mandatory character conflicted with the voluntary nature of a donation.
• Article XI, Section 5, 1973 Constitution — Provided that each local government unit shall have the power to create its own sources of revenue and levy taxes, subject to limitations as may be provided by law. The Court of Appeals relied on this provision in sustaining Resolution No. 9, though the Supreme Court noted the appellate court's reasoning was an over-simplification.
• Section 29, Article 4, Presidential Decree No. 231 (Local Tax Code) — Authorized barrio councils to solicit monies, materials, and contributions from private agencies and individuals. The Court of Appeals cited this provision to sustain the resolution, though the Supreme Court observed that the validity question was not squarely before it.
• Sections 49 and 50, Local Tax Code — Required the holding of a public hearing for tax ordinances. The Court noted these requirements would apply if Resolution No. 9 were considered a tax ordinance.
• Section 11, Local Government Code (then in force) — Required publication of ordinances. The Court noted this as one of the requisites that would need to be satisfied if the measure were treated as a tax ordinance.

Grino-Aquino, J., and Bellosillo, J., concurred. Medialdea, J., took no part.