GR L 3282; (January, 1908) (Digest)
G.R. No. L-3282
RICARDO AGUADO, plaintiff-appellee, vs. THE CITY OF MANILA, as administrator of the water supply and Carriedo funds, defendant-appellant.
January 9, 1908
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FACTS:
Ricardo Aguado, as assignee of Tomas Luna Muñoz, filed an action against the present City of Manila to recover P5,621.40. This claim arose from contracts made by Luna Muñoz with the Ayuntamiento de Manila (the municipal corporation existing under Spanish sovereignty). The sum claimed consisted of:
1. P3,116.40 for coal sold and delivered to the Ayuntamiento de Manila between April 1 and April 30, 1898.
2. P1,920 deposited with the Ayuntamiento de Manila as a guaranty for the fulfillment of the contract. (A third cause of action for P585 was also alleged but not elaborated in the stipulation).
The Ayuntamiento de Manila was suspended on August 13, 1898, due to the conquest and occupation of Manila by US forces. The Military Government of the United States acted as its successor until August 6, 1901. The present City of Manila was organized on July 31, 1901, and became the acting successor in municipal functions on August 6, 1901.
Demands for payment were made to the Ayuntamiento, the Military Government, and subsequently to the present City of Manila, but payment was consistently refused. The Court of First Instance ruled in favor of Aguado. The City of Manila appealed.
ISSUE:
Is the present City of Manila, organized under American sovereignty, the legal successor of the Ayuntamiento de Manila (the former municipal corporation under Spanish rule) and thus liable for its contractual obligations?
RULING:
No. The Supreme Court reversed the decision of the lower court, holding that the present City of Manila is not the legal successor of the Ayuntamiento de Manila and is therefore not liable for the latter’s contractual obligations.
The Court explained that a municipal corporation is a mere agent of the state, deriving its existence and powers from the sovereign. It has no vested right to exist. When the sovereign power (the Spanish Government in the Philippine Islands) ceased to exercise control over the territory (at least by April 11, 1899, upon the Treaty of Paris), all its agents, including the Ayuntamiento de Manila, also ceased to exist as agents.
The present City of Manila is an entirely new organization, an agent of a new principal (the US Government in the Philippines). It possesses only such authority, powers, obligations, and responsibilities as its new principal has granted and imposed through its new charter. The Court found nothing in the Charter of Manila (organized under US laws) that would make the present City of Manila liable for the obligations contracted by the Ayuntamiento de Manila.
The Court clarified that this conclusion does not amount to a denial or refusal to comply with obligations, but simply that the obligations upon which the plaintiff sought to recover were never incurred by the present City of Manila. No contract obligation, with reference to the plaintiff’s claim, ever existed between the plaintiff and the present City of Manila.