G.R. No. L-26522 - Favis vs. Municipality of Sabangan

Plaintiffs-appellants, Antonio Favis and Corazon Favis (doing business as "Union Grocery and Hardware"), originally instituted a collection action on February 4, 1965, in the City Court of Baguio City seeking the recovery of P1,115.00 for GI pipes supplied for municipal waterworks, along with 12% interest and 25% attorney’s fees and costs.
The City Court of Baguio City rendered judgment in favor of the plaintiffs, determining that the municipality was liable for the presented charge invoice value.

The defendant, Municipality of Sabangan, via its mayor Agustin Velasco, filed an answer contending that the municipal mayor lacked authority to contract or procure on credit the various sizes of GI pipes; accordingly, the municipality could not be bound by such unauthorized acts.
The municipality subsequently appealed the City Court decision to the Court of First Instance of Baguio City. However, it failed to deposit the required docket fee and file an appeal bond as mandated by Rule 40, Section 2 of the Rules of Court.

Plaintiffs-appellants moved the Court a quo for the dismissal of the appeal on grounds of non-perfection, arguing that under Section 16 of Rule 141 of the Rules of Court only the Republic of the Philippines (i.e., the National Government) is exempt from such fee requirements.
The Court a quo denied the motion, holding that the exemption applied to the municipality as a branch of the government under the Revised Administrative Code, thereby permitting the appeal despite the non-deposit of fees.

The case further involved the factual inquiry into whether the municipality, being allegedly benefited by the installation of the GI pipes, was legally bound to pay despite the municipal officer’s lack of authority and failure to comply with requisites for binding municipal contracts.
The transaction was clouded by the understanding that the payment was expected not from the municipal funds but from funds to be released by former President Garcia, adding a layer of ambiguity regarding the source of payment.

Whether the exemption from paying legal fees as provided under Section 16 applies solely to the Republic of the Philippines (i.e., the National Government) or extends to local government units such as municipalities.
Whether the non-payment of the appellate docket fee and the failure to post an appeal bond should render the appeal null and void, thereby affecting the jurisdiction of the Court of First Instance to decide the case on its merits.

Whether a contract entered into by the municipal officer, in the absence of proper authority and non-compliance with the requisites of municipal contracting (including public bidding requirements), can legally bind the municipality.
Whether the doctrine of estoppel can be applied to validate unauthorized municipal contracts, particularly in cases where the benefits of such contracts have been accepted and partially executed.