MENDOZA vs.
DE LEON the municipality (but for the benefit of the public at large), such acts of the agent
GR No. L-9596
February 11, 1916
FACTS:
 Francisco De Leon, et al are municipal councilors of the municipality of
Villasis, Pangasinan while petitioner Marcos Mendoza was a recipient of an
exclusive ferry privilege awarded by the municipal council under Act. N0.
1643
 After use of a little more than one year, Mendoza was forcibly ejected
pursuant to a resolution adopted by the municipal councilors.
 Thus an action for damages was filed against the individual members of the
municipal council in their personal capacity.
ISSUES:
WON the leasing of a municipal ferry Mendoza is a governmental or a
corporate function?
WON the individual municipal councilors are liable for the damages
sustained by Mendoza from the rescission of his contract of lease of the ferry
privilege?
RULING:
1. WON the leasing of a municipal ferry Mendoza is a governmental or a corporate
function? – CORPORATE FUNCTION
The leasing of a municipal ferry to the highest bidder for a specified period
of time is not a governmental but a CORPORATE FUNCTION. Such lease, when
validly entered into, constitutes a contract with the lessee which the municipality is
bound to respect.
As to the Dual Character of a Municipal Corporation
A distinction is made between the liability of a municipal corporation for the
acts of its officers in the exercise of powers which it possesses for public purpose and
which it holds as agent of the state, AND those powers which embrace private or
corporate duties and are exercised for the advantage of the municipality and its
inhabitants.
When the acts of its officers come within the powers which it has as agent of
the state, it is exempt from liability for its own acts and acts of its officers.
If the acts of the officer or agent of the city are for the special benefits of the
corporation in its private or corporate interest, such officer is deemed the agent of
the city. BUT where the act is not in relation to a private or corporate interest of
are deemed to be acts by public or state officers and for the public benefit.
MUNICIPALITY IS NOT LIABLE FOR THE ACTS OF ITS
OFFICERS/AGENTS IN THE PERFORMANCE OF ITS GOVERNMENTAL
FUNCTIONS. Governmental affairs do not lose their governmental character by
being delegated to the municipal governments. The State being immune for injuries
suffered by private individuals in the administration of strictly governmental functions,
SAME IMMUNITY IS ENJOYED BY THE MUNICIPALITY IN THE
PERFORMANCE OF THE SAME DUTIES as agents of the State in the exercise
of certain governmental powers, UNLESS IT IS EXPRESSLY MADE LIABLE BY
STATUTE. In essence, OFFICERS OR AGENTS OF THE GOVERNMENT
CHARGED WITH PERFORMANCE OF GOVERNMENTAL DUTIES are
NOT LIABLE for the consequences of their official acts, UNLESS IT BE
SHOWN THAT THEY ACT WILLFULLY AND MALICIOUSLY, and with the
express purpose of inflicting injury upon the plaintiff.
Conversely, a MUNICIPALITY IS NOT EXEMPT FROM LIABILITY
FOR THE NEGLIGENT PERFORMANCE OT IS
CORPORATE/PROPRIETARY FUNCTIONS. In the administration of its
patrimonial property, it is to be regarded as a private corporation or individual in so
far as its liability to third persons on contract or tort. Its contracts, validly entered
into, may be enforced and damages may be collected from it for the torts of its
officers within the scope of their employment in the same manner and same extent
as those of private corporations or individuals.
IN THE CASE AT BAR, under the provisions of the Municipal Code and
Act No. 1634, Mendoza had a vested right to the exclusive operation of the ferry in
questions for the period of his lease Where the municipality is a party to this action, it
would be patent that a judgment for damages against it for the rescission of the contract
would be proper.
2. WON the individual municipal councilors are liable for the damages sustained by
Mendoza from the rescission of his contract of lese of the ferry privilege?
Yes, the municipal councilors are liable for the damages sustained by
Mendoza from the rescission of his contract of lease of the ferry privilege.
As to the Personal Liability of the Municipal Councilors
In administering patrimonial property of the municipality, municipal
councilors occupy, for most purposes, the position of Board of Directors of a
private corporation. The rule of PERSONAL LIABILITY should be with
MUNICIPAL COUNCILORS in such matters as it is with the directors or managers
of an ordinary private corporation. While directors are not liable for mistakes of
judgment in cases of mismanagement of corporate affairs, they may still be held
liable as when it can be shown that their actions are so far opposed to the true
interests of the corporation and that they have acted with an intent to subserve
some outside purposes, in a manner inconsistent with its interests.

IN THE CASE AT BAR, there is not scintilla of evidence that there was any
justifiable reason for forcibly evicting Mendoza from the ferry which he had leased.
On the contrary, the defendant councilors attempted to justify their action on the
ground that the ferry which he was operating was not the one leased to him; in spite of
the fact that the vice-president had personally paced him in possession of if more than
a year before and that he had operated the ferry for over a year evidently with the
knowledge of the defendant councilors. Hence, IT CANNOT BE SAID THAT IN
RESCINDING THE CONTRACT WITH PLAINTIF, thereby making the
municipality liable to an action for damages for no valid reason at all,
DEFENDANT COUNCILORS WERE HONESTLY ACTING FOR THE
INTERESTS OF THE MUNICIPALITY.

VILAS v. CITY OF MANILA

220 US 345
FACTS:
Petitioners are creditors of the city of Manila before the cession of the
Philippine Islands to the United States. The Supreme Court of the
Philippine Islands denied relief, holding that the present municipality is a
totally different corporate identity from the previous one and is not liable
for the debts of the Spanish municipality.

ISSUE:
Is the present municipality liable for the obligations of the city incurred
prior to the cession to the United States?

HELD:
The contention that the liability of the city upon such obligations was
destroyed by a mere change of sovereignty is one which is without a
shadow of moral force. The city, acting as a corporation, possesses two
kinds of powers: governmental and public. In view of the dual character
of municipal corporations, there is no public reason for the presuming
their total dissolution as a consequence of military occupation or
territorial cession. The cession did not operate as an extinction or
dissolution of corporations. The present city is, in every legal sense, the
successor of the old. As such, it is entitled to the property and property
rights of the predecessor corporation, and is, in law, subject to all of its
liabilities. All three of plaintiffs in error are entitled to judgment.