Farolan v. Solmac Marketing Corporation
REITERATIONFacts
1. The Antecedents: Solmac Marketing Corporation (Solmac) was the assignee of a shipment of 202,204 kilograms of polypropylene film, valued at US$69,250.05, which arrived in December 1981. Solmac declared the shipment as polypropylene film scrap (OPP film waste/scrap), a less valuable commodity. However, an examination by the National Institute of Science and Technology (NIST) revealed the material was oriented polypropylene (OPP), a restricted import under Letter of Instructions (LOI) No. 658-B. This discrepancy led to the withholding of the shipment's release by the Bureau of Customs, specifically by Acting Commissioner Ramon Farolan and Chief of Customs Intelligence and Investigation Division Guillermo Parayno. 2. Procedural History: Solmac filed a petition for mandamus and injunction with the Regional Trial Court (RTC) of Manila, seeking the release of the importation and damages. The RTC ordered the release of the importation without drilling of holes, making the preliminary injunction permanent, but denied Solmac's claim for damages. Solmac appealed to the Court of Appeals (CA) solely on the issue of damages. The CA initially awarded Solmac P100,000.00 in temperate damages, P100,000.00 in exemplary damages, and P50,000.00 in attorney's fees. Upon reconsideration, the CA modified its resolution, reducing the exemplary damages to P50,000.00 and attorney's fees to P25,000.00, while maintaining the P100,000.00 in temperate damages. The CA held Farolan and Parayno personally liable for these damages. 3. The Petition: The Solicitor General, on behalf of Farolan and Parayno, filed a petition for review on certiorari with the Supreme Court. The petition argues that the CA erred in disregarding the RTC's finding of good faith and in adjudging the petitioners liable for damages. The core issue presented to the Supreme Court is whether the petitioners acted in good faith in withholding the release of the importation, and thus, whether they can be held personally liable for damages. The petitioners contend that the conflicting policies and lack of clear guidelines from the Board of Investments (BOI) regarding OPP importations justified their cautious approach, and that any mistake made was an honest error in judgment, not indicative of malice or bad faith.
Issue(s)
Whether the petitioners, as public officers, acted in good faith in withholding the release of the importation. Whether the petitioners can be held personally liable for damages to the private respondent.
Ruling
The petition is GRANTED. The assailed Resolution of the Court of Appeals dated May 25, 1988, is SET ASIDE and ANNULLED. No costs.
Ratio Decidendi
On the issue of good faith: The Supreme Court ruled in favor of the petitioners, holding that they acted in good faith in withholding the release of the importation. The Court emphasized that good faith is presumed and the burden of proof lies with the party alleging bad faith. The Court found no clear and convincing proof of bad faith on the part of the petitioners. The NIST report indicated that the importation was not OPP film scraps as declared but oriented polypropylene, which was restricted under LOI 658-B. The petitioners' repeated requests for clarification from the BOI regarding the disposition of such importations demonstrated their prudence and diligence in performing their duties. The conflicting recommendations from BOI officials themselves further contributed to the confusion and justified the delay in releasing the shipment. On the issue of personal liability for damages: The Court reiterated that mistakes committed by public officers in the performance of their duties are not actionable unless motivated by malice or gross negligence amounting to bad faith. The acts of the petitioners were protected by the presumption of good faith and the presumption that official duty was regularly performed. Therefore, they could not be held personally liable for damages for an honest mistake or an erroneous interpretation of the law or policies, which would be considered damnum absque injuria.
Main Doctrine
Public officers cannot be held personally liable for damages arising from honest mistakes committed in the performance of their duties, provided there is no malice or gross negligence amounting to bad faith. The presumption of good faith in favor of public officers must be overcome by clear and convincing evidence.