Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 171705 July 29, 2010

EDUARDO VARELA, Petitioner,

vs.
MA. DAISY REVALEZ, RAMON BORROMEO, YOLANDA BARCENILLA, ERNA LOCSIN, GRACE BARUC,
VICENTE MIJARES, JR., LOIDA TAJONERA, NIRMLA AGNES MARTINEZ, ANALYN MAYPA, LEMUEL
MAYPA, BERDITH GANCETA, ROGER RAMOS, SUZETTE DE LOS SANTOS, JUDE JAROPILLO, JOCELYN
AZUCENA, VILMA PABALAN, CHANNIBAL BERJA, JERNEY BARZO, BRIGIDA MANGUINO, SOL GRACE
GUSTILO, MARILOU AREVALO, LUCILLE ARGONOSO, MARCOS BACOMO, MELVIN BACOMO, JR.,
MERIAM BULLAG, ZOSIMA DESUYO, MARLENE BACOMO, EUGENE BALASA, ROY DE ASIS, LOLITA
RUBEN, JOSE DIEZ, MILA DIEZ, JESUS DIEZ, DONNABEL ALFON, FRANCISCO DERIADA,
ALEJANDRIA PORDIOS, LIGAYA MAGBANUA, DAISY GORECHO, ANARIEL BACOMO, FRED DELOTINA,
STEPHEN DIPLOMA, MARITES BACABAC, ARACELI MAHINAY, JULIO OLVIDO, ANTONIO REBOTON,
NENETTE JUMUAD, ROSEMARIE ALICANTE, AGUSTIN JAVIER, JR., LEODY JAVA, NAZARITO PIDO,
NENITA BERMEO, DELILAH FERNANDEZ, WILDABETH LACSON, CYNTHIA DAZA, ROMMEL DELGADO,
FLORITA GELACIO, ROSALLY LEAL, AILEEN VILLANUEVA, NINFA BENIGAY, ROSIE PALMA,
FERNANDO DELGADO, ROMULO BARCENILLA, ROBERTO APIADO, MARIO OLVIDO, BETTY DELA CRUZ,
MARTIN APILADAS, SOLEDAD MAGBANUA, NIDA VISTAL, FRANCISCO DE LARA, ANTHONY ROCH
ACEVEDO, FELIX RAFOLS, YOLANDA FERNANDEZ, ERNISTINA ALARCON, EMIE ABANID, LOURY
TOMPONG, MA. FE RAFOLS SIA, YOLANDA OLVIDO, FIDEL ARROYO, VITALIANO POBLACION,
ZALDY TERENCIO, ROVIC ESCOBA, JENNIFER CABAHUG, HELEN PAGAY, ARTURO SALVE, AIDA
GOMEZ, and CITY OF CADIZ, Respondents.

R E S O L U T I O N

CARPIO, J.:

The Case

This is a petition for review on certiorari under Rule 45 of the Rules of Court.
The petition challenges the 17 August 2005 Decision1 and 27 February 2006
Resolution2 of the Court of Appeals in CA-G.R. CV No. 73212. The Court of Appeals
affirmed with modification the 20 June 2001 Decision3 of the Regional Trial Court
(RTC), Negros Occidental, Judicial Region 6, Branch 60, Cadiz City in Civil Case
No. 547-C.

The Facts

Petitioner Eduardo G. Varela (Varela) was the mayor of Cadiz City. He created a
reorganization committee. On 22 September 1998, he submitted to the Sangguniang
Panlungsod of Cadiz City the committee�s "Proposed Reorganizational Structure and
Staffing Pattern of Cadiz City." On the same day, 22 September 1998, the
Sangguniang Panlungsod approved without modification and without hearing the
proposal. The Sangguniang Panlungsod passed Resolution No. 98-112 authorizing and
appropriating funds for the reorganization of the city government. Resolution No.
98-112 declared all positions in the city government vacant, except elective
positions and positions in the city and assistant city treasurer. On 15 October
1998, Varela signed Resolution No. 98-112.

On 10 November 1998, Varela gave notices of termination to the city government

employees, informing them that their employment would end at the close of business
hours on 31 December 1998. The employees opposed and questioned the legality of
Resolution No. 98-112. Varela ignored them.
Varela created a placement committee with City Administrator Philip G. Zamora,
"Delina, Negosa, Jimmy Navarro, Jerry Batislaon and Napud" as members. The
committee allegedly met three times.

On 31 December 1998, Varela again gave notices of termination to the city

government employees, informing them that their employment would end at the close
of business hours on 31 December 1998. On 4 January 1999, the employees tried to
report for work but were barred from entering their offices.

Among those laid off was Community Affairs Officer IV Ramon Borromeo (Borromeo).
His department, the special services department, was replaced by the community and
barangay affairs division. The head of the community and barangay affairs division
performed the same functions as the head of the special services department. Three
new positions were created in the community and barangay affairs division. The
three new positions were given to Oscar Magbanua (Magbanua), Moises Se�oren
(Se�oren), and Santos Ortega (Ortega). Magbanua, Se�oren and Ortega were political
supporters of Varela and defeated barangay captain candidates.

Around half of the 101 employees of the city health department were laid off. Those
laid off were the same ones who filed a case, involving the magna carta for health
workers, against Varela. They were also perceived not to have voted for Varela as
mayor.

On 12 January 1999, Ma. Daisy G. Revalez and 40 other city government employees
filed with the RTC a complaint4 against Varela for the declaration of nullity of
Resolution No. 98-112 and for damages. In a motion5 dated 29 January 1999, 47 other
city government employees intervened. In the complaint, the employees stated that,
"due to the illegal acts of the Defendant, Plaintiffs suffered mental torture and
anguish, sleepless nights, wounded feelings, besmirched reputation and social
humiliation."6

The RTC�s Ruling

In its 20 June 2001 Decision, the RTC declared Resolution No. 98-112 void and
ordered Varela to pay the government employees ?10,000 each for moral damages, ?
200,000 attorney�s fees, ?20,000 litigation expenses, and court appearance fees
at ?3,000 per hearing. The RTC found that Varela acted in bad faith. The Court
held:

There is no question that the Sangguniang Panlungsod of Cadiz City is the

legislative arm of the local government unit and as such it possesses the power to
enact the questioned resolution. Plaintiffs however challenge the manner Res. 98-
112 was enacted, and the "indecent haste" that accompanied its passage. The
proposal emanated from the office of defendant mayor and in a short time after its
submission the measure was passed. The requisite deliberations, if at all there was
one, could hardly be considered adequate and could best be described as
perfunctory. The minutes of the SP say it all. The deliberations reflected a
lackluster effort and a wimpish attempt by the members of the Sangguniang
Panlungsod to justify the grant to the mayor of legislative authority to carry out
the reorganization. There absolutely was no public hearing. The proposal coming as
it did from the mayor, was a fait accompli, a done deal in a manner of speaking. x
x x

x x x x

Careful examination of the evidence submitted by the defendant, however, would

reveal a systematic effort to purge the city government of personnel who opposed
the mayor politically, or disagreed with him in his policies. Furthermore, perusal
of the minutes of the deliberations of the Sangguniang Panlungsod reveals that the
City of Cadiz was not in dire financial straits necessitating radical measures like
mass lay-off of personnel. x x x

x x x The City of Cadiz as of 1998, was not in financial extremis. It had the
money, the resources to fund the salaries of personnel. x x x [Varela] even ignored
the concern of a city councilor who said that at that time (1998) the City already
lacked the required personnel, and so why abolish certain positions? The defendant
mayor simply gave the assurance that they can create any position when the need
arises and the city has the money. This statement betrayed the real intentions of
the defendant insofar as the reorganization is concerned.

x x x The Mayor did not even explain what basic services would be affected. As a
matter of fact, the office hardest hit and greatly affected by the mass layoff was
the health services department where 50 or so of the 101 personnel complement were
laid off. Does it mean that the delivery of health services is the least of the
priorities of Cadiz City? Or does it mean that health service from the point of
view of the defendant city mayor is not a basic service? The truth of the matter is
that the health workers of Cadiz filed a case against the mayor for his refusal to
implement provisions of the Magna Carta for Health Workers. Talk of vindictiveness.
The poor health workers laid off were on the receiving end of the ire of the
defendant mayor. There seemed to be no rhyme or reason to the reorganization
scheme.

x x x x

Was the reorganization of the Cadiz City government under Res. 98-112, done in good
faith? The testimony of Ramon Borromeo, which is uncontradicted, will show the true
intent of the reorganization, and whether or not it was done in good faith:

"Q (Atty. Lobrido) � What about your position, Mr. Witness?

A My position as Community Affairs Officer was abolished but instead an Executive

Assistant IV was made under the Division Head of the Community and Barangay Affairs
Division.

Q What is the function of the Community and Barangay Affairs Unit?

A It performs the same function as that of the Community Affairs Unit of which I am
the Division Head as Community Affairs Officer IV.

Q Considering that you were laid off who took over your function?

A The Executive Assistant IV, but considering that the position is coterminous with
that of the mayor, the appointment of Executive Assistant IV was disapproved by the
Civil Service Commission as head of the Community Affairs Unit and the present
situation as of now is that the community Affairs and Barangay Unit is without a
division head and that three new positions were created.

Q Who were appointed to the three new positions you mentioned a while ago?

A Those appointed are Oscar Magbanua, Moises Se�oren, and Santos Ortega.

Q Why do you know these three persons?

A Because they are supporters of the defendant city mayor and also because they are
barangay captains who were defeated in the last barangay elections. (TSN-Cerbo, pp.
8-10, May 3, 2000).
From the afore-quoted testimony it is clear that the abolition of the office of Mr.
Borromeo in the guise of reorganization was not done in good faith. The abolition
was done for "political reasons," (Arao vs. Luspo, L-23982, July 21, 1967, 20 SCRA
722). As stated in Urgello, if the abolition merely resulted in placing another
person or appointee with a different designation or name but substantially the same
duties, then it will be considered a device to unseat the incumbent. Clearly the
reorganization is not genuine and it is nothing but a ruse to defeat the
constitutionally protected right of security of tenure.

x x x x

Since all the offices of the personnel of Cadiz City were declared vacant, and
notices of initial termination sent on November 10, 1998, the placement Committee
barely had twenty (20) days to submit a final report to defendant mayor. With 741
personnel to be reevaluated and screened, plus other new applicants, the committee
did not have enough time to do their work as envisioned. The Committee had to
screen and evaluate all applications to about 649 positions included in the new
plantilla. Notwithstanding time constraints, the Committee did not meet until
November 17, barely two (2) weeks from their deadline. Subsequently they met three
(3) times. On their first meeting, the report states, the placement Committee
merely agreed to ask the defendant mayor to turn over to the Committee all the
application letters. Nothing by way of screening or evaluation was done that day.
On the second meeting November 18, the applications were "lumped" in bundles or
files, and segregated by department. Then they suggested to borrow the
qualification standards from the Human Resource Management Office. Due to time
constraints, it was suggested that the screening should start immediately, and they
agreed to meet November 19, 1998. As of the second meeting the screening and
evaluation had barely began. On November 19, 1998 the committee met with Mr. Zamora
suggesting that qualification standards be used mainly eligibility performance
rating, education and attainment, experience and awards and training received. Mr.
Napud suggested that the department heads be interviewed. As of November 19, the
committee had not started its deliberations and screening, but lo and behold Mr.
Zamora came up with a complete list in time for the last meeting. On November 29,
1998, Mr. Zamora presented to the members of the committee the list of employees
selected by the Placement Committee. Then the list was submitted to the mayor.
These were reflected in Minutes of the meeting of the Placement Committee.

On the other hand, what did Mr. Zamora say about the deliberations of the Placement
Committee in his capacity as chairman. His testimony is very instructive.

Q (Atty. Lobrido) And when was the first meeting?

A I think November 17, 1998.

Q What transpired during the first meeting?

A I cannot remember.

xxx xxx

Q After November 18, 1998 meeting, was there other meeting of the placement
committee?

A Yes, sir.

Q When was that?

A On November 19, 1998.

Q And what transpired during that meeting on November 19, 1998?

A I cannot remember.

It seems incredulous that Mr. Philip Zamora, designated to represent defendant

mayor, would not be able to recall what transpired during the deliberations of the
placement committee. Unless it is shown that Mr. Zamora suffered severe bouts of
amnesia, it would be the height of tomfoolery to accept that he would not be able
to recall the significant highlights of the meetings. Which can only lead this
Court to the inescapable conclusion that the minutes (Exhibits 15 to 15-C) were
fabricated and contrived, and done after the fact. x x x

x x x Why would Philip Zamora present a list of employees selected to members of

the Placement Committee and tell them this is the result of their evaluation? Were
not the members of the committee the ones who evaluated and selected the employees?
The logical manner that should have taken place would be that the committee members
themselves would submit the list to the chairman telling him that this was the
result of their evaluation and screening and they were ready to submit the list to
the mayor. As it appears the list was a done deal, a fait accompli, and the members
were merely told to put their imprimatur to it. The truth of matter however, as can
be gleaned from Mr. Zamora�s testimony, is that no meetings were ever conducted by
the placement committee. Which explains Mr. Zamora�s memory lapses. Nothing of the
sort happened. What happened was that the minutes were hastily produced as an
afterthought and later passed on as the real thing. The entire proceedings was
[sic] a sham, a rigmarole intended to put a stamp of legitimacy to what otherwise
was a well calculated, well planned scheme to rid Cadiz City of employees who were
the political opponents of the defendant mayor. The ploy was to use the law as a
subterfuge to defeat the security of tenure clause of the constitution. On top of
this masquerade, the defendant city mayor did not show any compunction or any
hesitation to ram the reorganization down the throats of plaintiffs who resisted
the move and they actually complained. He did not give them the benefit of the
doubt, nor listened to their plea for justice. He simply ran roughshod over all of
them discarding any pretense to uphold due process of law. It was shocking no less
to the 166 plaintiffs who become [sic] sacrificial lambs in the altar of political
convenience and expediency. This is anathema in a democratic system where the rule
of law reigns supreme.7 (Emphasis supplied)

Cadiz City Chief Executive Salvador G. Escalante, Jr., through the Office of the
City Legal Officer, filed with the RTC a motion8 to clarify who between Varela, in
his personal capacity, and Cadiz City was liable for the payment of moral damages,
attorney�s fees, litigation expenses and court appearance fees. In its 26 July 2001
Order,9 the RTC held that, "it is the municipal corporation which is liable for the
acts of its officers committed while in the performance of official duties."10

Cadiz City, through the Office of the City Legal Officer, appealed to the Court of
Appeals.

The Court of Appeals� Ruling

In its 17 August 2005 Decision, the Court of Appeals affirmed with modification the
RTC�s 20 June 2001 Decision. The Court of Appeals held that Varela was personally
liable for the payment of moral damages, attorney�s fees, litigation expenses and
court appearance fees. It reduced the amounts of attorney�s fees and litigation
expenses from ?200,000 to ?100,000 and from ?20,000 to ?10,000, respectively, and
deleted the award of court appearance fees. The Court of Appeals held that:

OUR jurisprudence is replete with cases involving the issue of whether or not a
public officer may be held liable for damages in the performance of their [sic]
duties, to quote:
"A public official is by law not immune from damages in his personal capacity for
acts done in bad faith which, being outside the scope of his authority, are no
longer protected by the mantle of immunity for official actions."

"Settled is the principle that a public official may be liable in his personal
capacity for whatever damage he may have caused by his act done with malice and in
bad faith or beyond the scope of his authority or jurisdiction."

In addition, Book I, Chapter 9 of the Administrative Code of 1987 provides, to

quote:

"Section 38. Liability of Superior Officers. � (1) A public officer shall not be
civilly liable for acts done in the performance of his official duties, unless
there is a clear showing of bad faith, malice or gross negligence. x x x"

In the case at bar, the court a quo found that bad faith attended the performance
of the official acts of the original defendant, Eduardo G. Varela. x x x

WE find no reason to disturb the finding of bad faith by the court a quo
considering that the same was amply supported by evidence.11

Hence, the present petition.

The Issue

Varela raises as issue that, "THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THE
PETITIONER PERSONALLY LIABLE FOR THE PAYMENT OF DAMAGES, ATTORNEY�S FEES AND
LITIGATION EXPENSES AS THE PETITIONER WAS SUED IN HIS OFFICIAL, AND NOT IN HIS
PERSONAL CAPACITY."12 Varela states that:

All the proceedings in the lower court show beyond question that the petitioner was
charged in his official capacity as then mayor of the real party-defendant, the
respondent City of Capiz.1awphil

This is expressly shown by the very title, caption and allegations of private
respondents� complaint dated January 12, 1999. The fact that petitioner was sued in
his representative and official capacity was not contested, and, in fact, admitted
by the parties.13

The Court�s Ruling

The petition is unmeritorious.

Varela was sued in his personal capacity, not in his official capacity. In the
complaint, the employees stated that, "due to the illegal acts of the Defendant,
Plaintiffs suffered mental torture and anguish, sleepless nights, wounded feelings,
besmirched reputation and social humiliation." The State can never be the author of
illegal acts.

The complaint merely identified Varela as the mayor of Cadiz City. It did not
categorically state that Varela was being sued in his official capacity. The
identification and mention of Varela as the mayor of Cadiz City did not
automatically transform the action into one against Varela in his official
capacity. The allegations in the complaint determine the nature of the cause of
action.

In Pascual v. Beltran,14 the Court held that:

[I]n the case at bar, petitioner is actually sued in his personal capacity inasmuch
as his principal, the State, can never be the author of any wrongful act. The
Complaint filed by the private respondent with the RTC merely identified petitioner
as Director of the Telecommunications Office, but did not categorically state that
he was being sued in his official capacity. The mere mention in the Complaint of
the petitioner�s position as Regional Director of the Telecommunications Office
does not transform the action into one against petitioner in his official capacity.
What is determinative of the nature of the cause of action are the allegations in
the complaint. It is settled that the nature of a cause of action is determined by
the facts alleged in the complaint as constituting the cause of action. The purpose
of an action or suit and the law to govern it is to be determined not by the claim
of the party filling [sic] the action, made in his argument or brief, but rather by
the complaint itself, its allegations and prayer for relief.15 (Emphasis supplied)

WHEREFORE, the Court DENIES the petition. The Court AFFIRMS the 17 August 2005
Decision and 27 February 2006 Resolution of the Court of Appeals in CA-G.R. CV No.
73212.

SO ORDERED.

ANTONIO T. CARPIO
Associate Justice

WE CONCUR:

ANTONIO EDUARDO B. NACHURA

Associate Justice

DIOSDADO M. PERALTA
Associate Justice ROBERTO A. ABAD
Associate Justice
JOSE C. MENDOZA
Associate Justice

A T T E S T A T I O N

I attest that the conclusions in the above Resolution had been reached in
consultation before the case was assigned to the writer of the opinion of the
Court�s Division.

ANTONIO T. CARPIO
Associate Justice
Chairperson

C E R T I F I C A T I O N

Pursuant to Section 13, Article VIII of the Constitution, and the Division
Chairperson�s Attestation, I certify that the conclusions in the above Resolution
had been reached in consultation before the case was assigned to the writer of the
opinion of the Court�s Division.

RENATO C. CORONA
Chief Justice

Footnotes

1 Rollo, pp. 97-106. Penned by Associate Justice Arsenio J. Magpale, with Associate
Justices Sesinando E. Villon and Enrico A. Lanzanas concurring.
2 Id. at 119-120.

3 Id. at 61-77. Penned by Judge Pepito B. Gellada.

4 Id. at 38-44.

5 Id. at 45-49.

6 Id. at 42.

7 Id. at 67-75.

8 Id. at 78-80.

9 Id. at 95.

10 Id.

11 Id. at 101-104.

12 Id. at 17.

13 Id. at 18.

14 G.R. No. 129318, 27 October 2006, 505 SCRA 545.

15 Id. at 559.