FACTS: Vivencio Sto. Domingo, Sr. deceased husband of plaintiff Irene Sto.

Domingo and father of the litigating minors, died on une !, "#$" and buried on une %, "#$" in &ot. 'o. "(#, )loc* 'o. "#! of the 'orth Cemeter+ ,hich lot ,as leased b+ the cit+ to irene Sto. Domingo for the period from une %, "#$" to une %, -.-". Full pa+ment of the rental therefor of /(.... is evidenced b+ a receipt ,hich appears to be regular on its face. The burial record for )loc* 'o. "!# of 0anila 'orth Cemeter+ in ,hich sub1ect &ot. "(# is situated does not reflect the term of duration of the lease thereover in favor of the St. Domingo. 2n anuar+ -(, "#$3, the sub1ect &ot 'o. "(# of )loc* "#! in ,hich the mortal remains of the late Vivencio Sto. Domingo ,ere laid to rest ,as made read+ for e4humation in accordance ,ith Administrative 2rder 'o. (, Series of "#$(, dated 0arch %, "#$(. 2n the basis of such certification, the authorities of the 'orth Cemeter+ then headed b+ defendant oseph 5elmuth authori6ed the e4humation and removal from sub1ect burial lot the remains of the late Vivencio Sto. Domingo., placed the bones and s*ull in a bag or sac* and *ept the same in the depositor+ or bodega of the cemeter+. Subse7uentl+, the same lot in 7uestion ,as rented out to another lessee so ,hen the Sto. Domingos ,ent to said lot on All Souls Da+ the+ ,ere shoc*ed and disma+ed that the resting place of their dear departed did not an+more bear the stone mar*er ,hich the+ lovingl+ placed on the tomb. Irene Sto. Domingo ,as told about the lease of the lot to another lessee and that she can loo* for the bones of her deceased husband in the ,arehouse of the cemeter+ ,here the e4humed remains from the different burial lots of the 'orth Cemeter+ are being *ept until the+ are retrieved b+ interested parties. 8hat she ,as advised to do ,as simpl+ unacceptable9 hence, the bereaved ,ido, came to court for relief even before she could formall+ present her claims and demands to the cit+ government and to the other defendants named in the present complaint. The :TC rendered its Decision in favor of the complainants. The decision ,as appealed to the CA ,hich rendered a decision modif+ing the decision appealed from. /etitioners alleged in their petition that the 'orth Cemeter+ is e4clusivel+ devoted for public use or purpose as stated in Sec. ;"% of the Compilation of the 2rdinances of the Cit+ of 0anila. The+ conclude that since the Cit+ is a political subdivision in the performance of its governmental function, it is immune from tort liabilit+ ,hich ma+ be caused b+ its public officers and subordinate emplo+ees. Further Section !, Article I of the :evised Charter of 0anila e4empts the cit+ from liabilit+ for damages or in1uries to persons or propert+ arising from the failure of the 0a+or, the 0unicipal )oard, or an+ other cit+ officer, to enforce the provision of its charter or an+ other la,s, or ordinance, or from negligence of said 0a+or, 0unicipal )oard or an+ other

officers ,hile enforcing or attempting to enforce said provisions. The+ allege that the :evised Charter of 0anila being a special la, cannot be defeated b+ the 5uman :elations provisions of the Civil Code being a general la,. /rivate respondents on the other hand maintain that the Cit+ of 0anila entered into a contract of lease ,hich involve the e4ercise of proprietar+ functions ,ith private respondent Irene Sto. Domingo. The cit+ and its officers therefore can be sued for an+<violation of the contract of lease.

ISSUE: 82' the operations and functions of a public cemeter+ are a governmental, or a corporate or proprietar+ function of the Cit+ of 0anila.

HELD: /rivate respondents= are right. >nder /hilippine la,s, the Cit+ of 0anila is a political bod+ corporate and as such endo,ed ,ith the faculties of municipal corporations to be e4ercised b+ and through its cit+ government in conformit+ ,ith la,, and in its proper corporate name. It ma+ sue and be sued, and contract and be contracted ,ith. Its po,ers are t,ofold in character<public, governmental or political on the one hand, and corporate, private and proprietar+ on the other.

Governmental powers are those exercised in administering the powers of the state and promoting the public welfare and the include the legislative! "udicial! public and political# $unicipal powers on the one hand are exercised for the special benefit and advantage of the communit and include those which are ministerial! private and corporate# In 0c?uillin on 0unicipal
Corporation, the rule is stated thus: @A municipal corporation proper has ... a public character as regards the state at large insofar as it is its agent in government, and private Aso calledB insofar as it is to promote local necessities and conveniences for its o,n communit+. In connection ,ith the po,ers of a municipal corporation, it ma+ ac7uire propert+ in its public or governmental capacit+, and private or proprietar+ capacit+. The 'e, Civil Code divides such properties into propert+ for public use and patrimonial properties AArticle !-;B, and further enumerates the properties for public use as provincial roads, cit+ streets, municipal streets, the s7uares, fountains, public ,aters, promenades, and public ,or*s for public service paid for b+ said provisions, cities or municipalities, all other propert+ is patrimonial ,ithout pre1udice to the provisions of special la,s. Thus in Torio v. Fontanilla, supra, the Court declared that ,ith respect to proprietar+ functions the settled rule is that a municipal corporation can be

held liable to third persons e4 contractu or e4 delicto. The Court further stressed that 0unicipal corporations are sub1ect to be sued upon contracts and in tort.... The rule of la, is a general one, that the superior or emplo+er must ans,er civill+ for the negligence or ,ant of s*ill of its agent or servant in the course or line of his emplo+ment, b+ ,hich another ,ho is free from contributor+ fault, is in1ured. 0unicipal corporations under the conditions herein stated, fall ,ithin tile operation of this rule of la,, and are liable accordingl+, to civil actions for damages ,hen the re7uisite elements of liabilit+ co<e4ist. ... The court added that ,hile the follo,ing are corporate or proprietar+ in character, vi6: municipal ,ater,or*s, slaughter houses, mar*ets, stables, bathing establishments, ,harves, ferries and fisheries. 0aintenance of par*s, golf courses, cemeteries and airports among others, are also recogni6ed as municipal or cit+ activities of a proprietar+ character. >nder the foregoing considerations and in the absence of a special la,, the %orth &emeter

is a patrimonial propert of the &it of $anila which was created b resolution of the $unicipal 'oard of (ugust )*! +,-. and /anuar *! +,-0# The administration and government of the
cemeter+ are under the Cit+ 5ealth 2fficer, the order and police of the cemeter+ , the opening of graves, niches, or tombs, the e4huming of remains, and the purification of the same are under the charge and responsibilit+ of the superintendent of the cemeter+. The Cit+ of 0anila furthermore prescribes the procedure and guidelines for the use and dispositions of burial lots and plots ,ithin the 'orth Cemeter+ through Administrative 2rder 'o. (, s. "#$(. 8ith the acts of dominion, there is, therefore no doubt that the 'orth Cemeter+ is ,ithin the class of propert+ ,hich the Cit+ of 0anila o,ns in its proprietar+ or private character. Furthermore, there is no dispute that the burial lot ,as leased in favor of the private respondents. 5ence, obligations arising from contracts have the force of la, bet,een the contracting parties. Thus a lease contract e4ecuted b+ the lessor and lessee remains as the la, bet,een them. Therefore, a breach of contractual provision entitles the other part+ to damages even if no penalt+ for such breach is prescribed in the contract.

As regards the issue of the validit+ of the contract of lease of grave lot 'o. "(#, )loc* 'o. "#( of the 'orth Cemeter+ for (. +ears beginning from une %, "#$" to une %, -.-" as clearl+ stated in the receipt dul+ signed b+ the deput+ treasurer of the Cit+ of 0anila and sealed b+ the cit+ government, there is nothing in the record that 1ustifies the reversal of the conclusion of both the trial court and the Intermediate Appellate Court to the effect that the receipt is in itself a contract of lease.

>nder the doctrine of respondent superior, ATorio v. Fontanilla, supraB, petitioner Cit+ of 0anila is liable for the tortious act committed b+ its agents ,ho failed to verif+ and chec* the duration of the contract of lease. The contention of the petitioner<cit+ that the lease is covered b+ Administrative 2rder 'o. (, series of "#$( dated 0arch %, "#$( of the Cit+ of 0anila for five A(B +ears onl+ beginning from une %, "#$" is not meritorious for the said administrative order covers ne, leases. 8hen sub1ect lot ,as certified on anuar+ -(, "#$3 as read+ for e4humation, the lease contract for fift+ A(.B +ears ,as still in full force and effect. The decision of the IAC is hereb+ AFFI:0CD.