Vilas v. Manila

Vilas v. Manila

220 U.S. 345 April 3, 1911

Lurton, J.

Facts:

                The plaintiffs in error 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. 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.

Issue:

                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

Held:

                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.

                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 first section of the charter of 1901 reads as follows:

“The inhabitants of the City of Manila, residing within the territory described in section 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,”

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.

                Municipal corporations 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.

In view of the dual character of municipal corporations, there is no public reason for presuming their total dissolution as a mere consequence of military occupation or territorial cession. The suspension of such governmental functions as are obviously incompatible with the new political relations thus brought about may be presumed.

Were corporate identity and corporate liability extinguished as a necessary legal result of the new charter granted in 1901 by the Philippine Commission? The inhabitants of the old city are the incorporators of the new. There is substantially identity of area. There are some changes in the form of government and some changes in corporate powers and methods of administration. The new corporation is endowed with all of the property and property rights of the old. It has the same power to sue and be sued which the former corporation had. There is not the slightest suggestion that the new corporation shall not succeed to the contracts and obligations of the old corporation. Laying out of view any question of the constitutional guaranty against impairment of the obligation of contracts, there is, in the absence of express legislative declaration of a contrary purpose, no reason for supposing that the reincorporation of an old municipality is intended to permit an escape from the obligations of the old, to whose property and rights it has succeeded. The juristic identity of the corporation has been in no wise affected, and, in law, the present city is, in every legal sense, the successor of the old. As such, it is entitled to the property and property rights of the predecessor corporation, and is, in law, subject to all of its liabilities.