G.R. No. 234680 , June 10, 2024
CITY OF MUNTINLUPA, METRO MANILA, PETITIONER, VS. N.C. TAVU AND ASSOCIATES CORPORATION, RESPONDENT.

FACTS

Sometime in 2005, respondent N.C. Tavu and Associates Corporation (NCTAC) submitted a proposal to petitioner City of Muntinlupa for the construction of the “Muntinlupa Skywalk Project” under a build-operate-transfer (BOT) agreement. After obtaining necessary endorsements and approvals, including from the Sangguniang Panlungsod and the National Economic and Development Authority-Investment Coordinating Committee (NEDA-ICC), and with no other bidders, the project was awarded to NCTAC. On December 5, 2006, the parties executed a BOT agreement. NCTAC incurred expenses but could not immediately mobilize due to repairs at the project site. In May 2007, Aldrin L. San Pedro was elected Mayor. On November 18, 2007, Mayor San Pedro recommended to the Sanggunian the nullification of the award to NCTAC. Subsequently, on December 7, 2007, the Sanggunian passed Resolution No. 07-055, authorizing Mayor San Pedro to cause the construction of a similar project and to enter into a contract with any qualified contractor. NCTAC was not formally notified of any cancellation of the BOT agreement. NCTAC filed a Petition for Prohibition and Mandamus before the Regional Trial Court (RTC). During trial, the Metro Manila Development Authority (MMDA) built a pedestrian overpass on the project site, rendering NCTAC’s project unfeasible. The RTC declared Resolution No. 07-055 void and unconstitutional, upheld the BOT agreement, and ordered the City of Muntinlupa, Mayor San Pedro, Engr. Roberto M. Bunyi, and the Sanggunian to pay NCTAC actual damages and attorney’s fees. The City of Muntinlupa moved for partial reconsideration, contending that Mayor San Pedro et al. should be held personally liable. The RTC denied this. The Court of Appeals affirmed the RTC ruling. The City of Muntinlupa filed the present Petition.

ISSUE

Whether the Court of Appeals erred in affirming the Regional Trial Court ruling finding the City of Muntinlupa liable for damages and attorney’s fees, instead of Mayor San Pedro et al. in their personal capacities.

RULING

The Supreme Court denied the Petition and affirmed the assailed Court of Appeals Decision and Resolution. The Court held that the City of Muntinlupa’s liability was correctly adjudged. The Project was a governmental function, but Republic Act No. 6957 , as amended (the BOT law), expressly allows the government to be sued and held liable in such agreements. The City of Muntinlupa cannot invoke immunity from suit. Regarding the personal liability of Mayor San Pedro et al., the Court ruled that they were sued in their official capacities. The City of Muntinlupa failed to substantiate its claim that these officials acted with bad faith, malice, or gross negligence, which is required under the Administrative Code to hold a public officer personally liable. Furthermore, holding them personally liable would deprive them of due process, as the relief sought by the City of Muntinlupa in its motion before the RTC was in the nature of a cross-claim, which was not pleaded in the answer and was thus barred. The City of Muntinlupa may pursue other legal remedies against the officials separately.