Verisimo Vasquez Vilas v. City of Manila No 53 Esperanza Otero Trigas v. City of Manila No 54 Ricardo Aguado v. City of Manila No 207 207

Decision Date03 April 1911
Docket Number54,Nos. 53,s. 53
PartiesVERISIMO VASQUEZ VILAS, Plff. in Err. and Appt., v. CITY OF MANILA. NO 53. ESPERANZA OTERO TRIGAS et al., Plffs. in Err. and Appts., v. CITY OF MANILA. NO 54. RICARDO AGUADO, Appt., v. CITY OF MANILA. NO 207. , and 207
CourtU.S. Supreme Court

Messrs. Frederic R. Coudert, Howard Thayer Kingsbury, Paul Fuller, and Harry Weston Van Dyke for plaintiffs in error and appellants.

[Argument of Counsel from pages 346-349 intentionally omitted] Messrs. Paul Charlton andIsaac Adams for appellee.

[Argument of Counsel from pages 349-351 intentionally omitted] Mr. Justice Lurton delivered the opinion of the court:

The plaintiffs in error, who were plaintiffs below, are creditors of the city of Manila as it existed before the cession of the Philippine Islands to the United States by the treaty of Paris, December 10, 1898 [30 Stat. at L. 1754]. Upon the theory that the city, under its present charter from the government of the Philippine Islands, is the same juristic person and liable upon the obligations of the old city, these actions were brought against it. The supreme court of the Philippine Islands denied relief, holding that the present municipality is a totally different corporate entity, and in no way liable for the debts of the Spanish municipality.

The fundamental question is whether, notwithstanding the cession of the Philippine Islands to the United States, followed by a reincorporation of the city, the present municipality is liable for the obligations of the city incurred prior to the cession to the United States.

We shall confine ourselves to the question whether the plaintiffs in error are entitled to judgments against the city upon their several claims. Whether there is a remedy adequate to the collection when reduced to judgment is not presented by the record. But whether there is or is not a remedy affords no reason why the plaintiffs in error may not reduce their claims to judgment. Mt. Pleasant v. Beckwith, 100 U. S. 514, 530, 25 L. ed. 699, 703. The city confessedly may be sued under its existing charter, and that implies at least a right to judgment if they establish their demands.

The city as now incorporated has succeeded to all of the property rights of the old city and to the right to enforce all of its causes of action. There is identity of purpose between the Spanish and American charters and substantial identity of municipal powers. The area and the inhabitants incorporated are substantially the same. But for the change of sovereignty which has occurred under the treaty of Paris, the question of the liability of the city under its new charter for the debts of the old city would seem to be of easy solution. The principal question would therefore seem to be the legal consequence of the cession referred to upon the property rights and civil obligations of the city incurred before the cession. And so the question was made to turn in the court below upon the consequence of a change in sovereignty and a reincorporation of the city by the substituted sovereignty.

This disposes of the question of the jurisdiction of this court, grounded upon the absence from the petition of the plaintiffs of any distinct claim under the treaty of Paris, since, under § 10 of the Philippine organic act of July 1, 1902 [32 Stat. at L. 695, chap. 1369, U. S. Comp. Stat. Supp. 1909, p. 226], this court is given jurisdiction to review any final decree or judgment of the supreme court of the Philippine Islands where any treaty of the United States 'is involved.' That treaty was necessarily 'involved,' since neither the court below nor this court can determine the continuity of the municipality nor the liability of the city as it now exists for the obligation of the old city, without considering the effect of the change of sovereignty resulting from that treaty. See Reavis v. Fianza, 215 U. S. 16, 22, 54 L. ed. 72, 75, 30 Sup. Ct. rep. 1.

The historical continuity of a municipality embracing the inhabitants of the territory now occupied by the city of Manila is impressive. Before the conquest of the Philippine Islands by Spain, Manila existed. The Spaniards found on the spot now occupied a populous and fortified community of Moros. In 1571 they occupied what was then and is now known as Manila, and established it as a municipal corporation. In 1574 there was conferred upon it the title of 'Illustrious and ever loyal city of Manila.' From time to time there occurred amendments, and, on January 19, 1894, there was a reorganization of the city government under a royal decree of that date. Under that charter there was power to incur debts for municipal purposes and power to sue and be sued. The obligations here in suit were incurred under the charter referred to, and are obviously obligations strictly within the provision of the municipal power. To pay judgments upon such debts it was the duty of the ayuntamiento of Manila, which was the corporate name of the old city, to make provision in its budget.

The contention that the liability of the city upon such obligations was destroyed by a mere change of sovereignty is obviously one which is without a shadow of moral force, and, if true, must result from settled principles of rigid law. While the contracts from which the claims in suit resulted were in progress, war between the United States and Spain ensued. On August 13, 1898, the city was occupied by the forces of this government, and its affairs conducted by military authority. On July 31, 1901, the present incorporating act was passed, and the city since that time has been an autonomous municipality. The charter in force is act 183 of the Philippine Commission, and now may be found as chapters 68 to 75 of the compiled acts of the Philippine Commission. The 1st section of the charter of 1901 reads as follows:

'The inhabitants of the city of Manila, residing within the territory described in § 2 of this act, are hereby constituted a municipality, which shall be known as the city of Manila, and by that name shall have perpetual succession, and shall possess all the rights of property herein granted or heretofore enjoyed and possessed by the city of Manila as organized under Spanish sovereignty.'

The boundaries described in § 2 include substantially the area and inhabitants which had theretofore constituted the old city.

By § 4 of the same act, the government of the city was invested in a municipal board.

Section 16 grants certain legislative powers to the board, and provides that it shall 'take possession of all lands, buildings, offices, books, papers, records, moneys, credits, securities, assets, accounts, or other property or rights belonging to the former city of Manila, or pertaining to the business or interests thereof, and, subject to the provisions herein set forth, shall have control of all its property except the building known as the ayuntamiento, provision for the occupation and control of which is made in § 15 of this act; shall collect taxes and other revenues, and apply the same in accordance with appropriations, as hereinbefore provided, to the payment of the municipal expenses; shall supervise and control the discharge of official duties by subordinates; shall institute judicial proceedings to recover property and funds of the city wherever found, or otherwise to protect the interests of the city, and shall defend all suits against the city,' etc.

Section 69 of the charter expressly preserved 'all city ordinances and orders in force at the time of the passage of this act, and not inconsistent herewith,' until modified or repealed by ordinances passed under this act.

Section 72 is the repealing clause, and provides for the repeal of 'all acts, orders, and regulations' which are inconsistent with the provisions of the act.

The charter contains no reference to the obligations or contracts of the old city.

If we understand the argument against the liability here asserted, it proceeds mainly upon the theory that inasmuch as the predecessor of the present city, the ayuntamiento of Manila, was a corporate entity created by the Spanish government, when the sovereignty of Spain in the islands was terminated by the treaty of cession, if not by the capitulation of August 13, 1898, the municipality ipso facto disappeared for all purposes. This conclusion is reached upon the supposed analogy to the doctrine of principal and agent, the death of the principal ending the agency. So complete is the supposed death and annihilation of a municipal entity by extinction of sovereignty of the creating state that it was said in one of the opinions below that all of the public property of Manila passed to the United States, 'for a consideration, which was paid,' and that the United States was therefore justified in creating an absolutely new municipality, and endowing it with all of the assets of the defunct city, free from any obligation to the creditors of that city. And so the matter was dismissed in the Trigas Case by the court of first instance, by the suggestion that 'the plaintiff may have a claim against the Crown of Spain, which has received from the United States payment for that done by the plaintiff.'

We are unable to agree with the argument. It loses sight of the dual character of municipal corporations. They exercise powers which are governmental and powers which are of a private or business character. In the one character a municipal corporation is a governmental subdivision, and for that purpose exercises by delegation a part of the sovereignty of the state. In the other character it is a mere legal entity or juristic person. In the latter character it stands for the community in the administration of local affairs wholly beyond the sphere of the public purposes for which its governmental powers are conferred.

The distinction is observed in South Carolina v. United States, 199 U. S. 437, 461, 50 L. ed. 261, 269, 26...

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