G.R. No. L-3282 - Aguado vs. City of Manila

Ricardo Aguado, acting as assignee of claims originally held by Tomas Luna Munoz, commenced an action against the City of Manila.
The action sought recovery from the city in the amount of P5,621.40 – comprising sums due for coal delivered and a deposit made as guaranty under a contract with the predecessor municipal government.

On or about June 11, 1897, Tomas Luna Munoz entered into a contract with the Ayuntamiento de Manila (the old city government) regarding the sale and delivery of coal.
Under the contract:

Prior to April 1, 1898, Munoz delivered 1,340.30 tons of coal for which he received 16,083.60 pesos (Mexican currency).
Between April 1 and April 30, 1898, he delivered an additional 259.70 tons of coal valued at 3,116.40 pesos (Mexican currency).

Munoz also deposited 1,920 pesos (Mexican currency) with the Ayuntamiento as a guaranty to secure the completion of the contract.
Subsequent to the delivery of coal, Munoz made a due demand for payment of 3,116.40 pesos on or about July 26, 1898, which was not paid.

On or about August 13, 1898, the Ayuntamiento de Manila was suspended due to the U.S. military conquest and occupation of Manila.
From August 13, 1898, until August 6, 1901, the Military Government of the United States of America acted as the successor in occupation and assumed control over the funds and functions previously managed by the Ayuntamiento.
On or about August 6, 1901, the present City of Manila became the acting successor, assuming the municipal functions formerly exercised by the Ayuntamiento de Manila.

On or about February 1, 1899, Munoz assigned his rights to recover the unpaid sum of 3,116.40 pesos to the plaintiff, making Aguado the sole owner of this credit.
Additionally, on or about February 10, 1899, Munoz assigned his right to the deposit of 1,920 pesos to the plaintiff.
The plaintiff subsequently made due demand for the unpaid amounts on multiple occasions from the Ayuntamiento, the Military Government, and after 1901 from the City of Manila without success.

The Ayuntamiento had administered the Carriedo waterworks along with related properties, which included:

The waterworks system itself.
Lands belonging to and pertaining to the waterworks.
94 shares of the capital stock of the Spanish-Filipino Bank, components of what was known as the Carriedo funds.

A stipulation in the pleadings detailed that these funds had been kept distinct up to August 13, 1898, and later were merged with the general funds under the Military Government and subsequently the City of Manila after its organization.
Various exhibits and documentary evidence (including publications, depositions, and other documents) were referenced to support these facts.

On March 27, 1906, the Court of First Instance rendered a judgment in favor of the plaintiff against the City of Manila for the total sum of P7,982.38 (including interest and costs).
The judgment ordered execution against the property of the Carriedo fund, namely the waterworks, the lands thereto belonging, and the 94 shares of stock.

The City of Manila, as appellant, raised multiple assignments of error challenging:

The characterization of the contract as being made with reference to trust funds or in a trustee capacity.
The determination that the City of Manila held the Carriedo funds as trustee rather than as proprietor.
The imposition of contract obligations on the present city based on the contracts executed by the defunct Ayuntamiento de Manila.
The appropriateness of execution against the property (the waterworks, lands, and bank shares).

Whether the present City of Manila is liable under the contracts entered into by the old Ayuntamiento.
If liability exists, whether execution against its property is permissible.

Is the present City of Manila responsible for the obligations under the contracts made by the old Ayuntamiento de Manila with Tomas Luna Munoz?
Can such obligations be imputed to the new City given the change in governmental authority and the absence of a fiduciary relationship in the contracts?

If the City of Manila were found liable, is it proper to enforce a writ of execution against the property comprising the Carriedo waterworks, its lands, and the 94 shares of the Spanish-Filipino Bank?
Is the property in question constitutionally or legally susceptible to such execution given its status and the nature of municipal trust funds?