FONTANILLA VS MALIAMAN

FACTS: A pick up owned by the National Irrigation Administration and driven officially by
its regular driver, Hugo Garcia, bumped a bicycle ridden by Francisco Fontanilla, which
resulted in the latter's death. The parents of Francisco filed a suit for damages against
Garcia and the NIA, as Garcia's employer. After trial, the court awarded actual, moral
and exemplary damages to Spouses Fontanilla. NIA appealed. The Solicitor General
contends that the NIA does not perform solely and primarily proprietary functions but is
an agency of the government tasked with governmental functions, and is therefore not
liable for the tortious act of its driver Hugo Garcia, who was not its special agent.
ISSUE:
May NIA, a government agency, be held liable for the damages caused by the negligent
act of its driver who was not its special agent?
HELD:
Yes. NIA is a government agency with a juridical personality separate and distinct from
the government. It is not a mere agency of the government but a corporate body
performingproprietary functions. Therefore, it may be held liable for the damages
caused by the negligent act of its driver who was not its special agent. (Fontanilla vs.
Maliaman, G.R.
Nos.
L-55963
&
61045,
February
27,
1991)
RATIO:
Section 1 of RA No. 3601 tells us that NIA is a government agency invested with a
corporate personality separate and distinct from the government, thus is governed by
the Corporation Law. Section 2, subsection f of PD 552 provides that NIA also has its
own assets and liabilities and has corporate powers to be exercised by a Board of
Directors. Section 2, subsection b of PD 552 provides that NIA may sue and be sued in
court.
Of equal importance is the case of National Waterworks and Sewerage Authority
(NAWASA) vs. NWSA Consolidated Unions, 11 SCRA 766, which propounds the thesis
that "the NAWASA is not an agency performing governmental functions; rather it

performs proprietary functions . . . ." The functions of providing water supply and
sewerage service are regarded as mere optional functions of government even though
the service rendered caters to the community as a whole and the goal is for the general
interest
of
society.
Like the NAWASA, the National Irrigation Administration was not created for purposes of
local government. While it may be true that the NIA was essentially a service agency of
the government aimed at promoting public interest and public welfare, such fact does
not make the NIA essentially and purely a "government-function" corporation. NIA was
created for the purpose of "constructing, improving, rehabilitating, and administering all
national irrigation systems in the Philippines, including all communal and pump irrigation
projects." Certainly, the state and the community as a whole are largely benefited by the
services the agency renders, but these functions are only incidental to the principal aim
of
the
agency,
which
is
the
irrigation
of
lands.
NOTES:

The
liability
of
the
State
has
two
aspects.
namely:
1. Its public or governmental aspects where it is liable for the tortious acts of special
agentsonly.
2. Its private or business aspects (as when it engages in private enterprises) where it
becomes liable as an ordinary employer. Fontanilla vs. Maliaman, G.R. Nos. L-55963 &
61045, December 1, 1989)