G.R. No. L-3485 - Municipality of Paoay, Ilocos Norte vs. Manaois

Case Summary (G.R. No. L-3485)

Factual Background

For many years the Municipality of Paoay leased fishery lots in its municipal waters, parceling those waters into lots and letting them by public bidding, generally for one year. On April 4, 1937 the municipality contracted with Francisco V. Duque for lots numbered 3 through 8 at an annual rental of P1,218.79 for a four-year term from January 1, 1937 to December 31, 1940. The Municipal Council purportedly confiscated those six lots in 1938 for Duque’s alleged breach and advertised them for lease. By resolution of December 1, 1938 the council awarded those lots to Teodoro Manaois, who paid P2,025 for the year 1939. When Manaois attempted to take possession, Duque and his men remained on the lots and resisted ejection. Manaois sued the Municipality in Civil Case No. 8026 before the Court of First Instance of Pangasinan and obtained judgment in June, 1940, a judgment that became final.

Execution and Attachment

To enforce the final judgment the Provincial Sheriff of Ilocos Norte executed a writ of execution against the Municipality. The Sheriff levied upon and attached (1) the sum of P1,712.01 in the municipal treasury representing rental paid by Demetrio Tabije for a fishery lot, and (2) about forty fishery lots then leased to thirty-five different persons. The Provincial Fiscal, representing the municipality, filed a petition in the Court of First Instance of Pangasinan on July 26, 1949 seeking dissolution of the levy and attachment. Judge De Guzman denied the petition by order of October 6, 1949, and denied a motion for reconsideration. The Municipality then filed the present petition for certiorari with writ of preliminary injunction asking this Court to reverse the October 6, 1949 order and dissolve the attachment.

The Parties' Contentions

The petitioner Municipality contended that the properties attached by the Sheriff were properties for public use and therefore exempt from levy and execution. The attachment included the usufruct or right to fishery over municipal waters parceled into lots and leased for rental. The respondent judgment creditor, Manaois, relied upon his final judgment and the consequent writ of execution to enforce collection from municipal assets and revenues that were not claimed to be immune from execution. The Court of First Instance had previously concluded that Manaois’ claim against the Municipality was valid and enforceable.

Legal Issues Presented

The principal legal questions were whether (1) the usufruct or right of fishery over municipal waters and the fishery lots into which those waters were parceled are subject to levy and execution to satisfy a judgment against a municipality; and (2) the cash rental in the municipal treasury and other amounts due from lessees of those fishery lots are subject to levy and execution. Ancillary issues concerned the classification of municipal assets as public-use property or patrimonial property and the applicability of statutory grants of fishery rights to execution law.

Ruling of the Court

The Court reversed the order of the respondent Judge insofar as it refused to dissolve the attachment of the approximately forty fishery lots, and it affirmed the order in all other respects. The Court held that the fishery lots or the right of fishery over municipal waters are not subject to execution, but that the sum of P1,712.01 in the municipal treasury representing rental for a fishery lot is a proper subject of levy and that other amounts due from lessees of the attached lots may likewise be garnished or attached to satisfy the judgment. No pronouncement as to costs was made.

Legal Basis and Reasoning

The Court began from the established principle that properties held by municipal corporations for public use and public revenues intended for municipal expenditures are exempt from execution, citing prior authority including Viuda de Tantoco vs . Municipal Council of Iloilo (49 Phil. 52) and standard municipal corporation doctrine. The Court distinguished those assets from patrimonial municipal property, which municipal corporations hold in a proprietary capacity and which is subject to levy and execution. The Court observed that the municipal fishery or municipal waters themselves do not belong to the municipality but to the State; the municipality holds only a statutory usufruct or right to conduct fisheries under Section 2321 of the Revised Administrative Code. That statutory grant is not a permanent vested proprietary title; it is revocable or subject to legislative modification. The Court reasoned that subjecting that usufruct to execution and sale would produce an anomalous and improper result: a private purchaser at execution sale would step into the shoes of the municipality and conduct public bidding for fishery lots over State waters, appropriating rentals for private use, contrary to the legislative scheme that reserves the conduct of such rentals to the municipality in the manner prescribed by law (see Sec. 2323 in connection with Sec. 2319). The Court therefore held that the visual and practical effect of permitting execution on the usufruct would be to transfer a public trust into private hands and to deprive the municipality of a source expressly assigned it by statute.

Distinction Between Fishery Rights and Fishery Revenues

The Court drew a firm distinction between the right or usufruct over municipal waters and the income derived from letting fishery lots. It held that revenues from taxation, municipal licenses, and market fees are intended by law to finance governmental activities and are therefore generally exempt from execution. By contrast, income from renting municipal waters for f

Case Syllabus (G.R. No. L-3485)

Parties and Procedural Posture

THE MUNICIPALITY OF PAOAY, ILOCOS NORTE filed a petition for certiorari with writ of preliminary injunction seeking reversal of an order of October 6, 1949, denying dissolution of an attachment.
Teodoro Manaois obtained a final judgment against the Municipality in Civil Case No. 8026 of the Court of First Instance of Pangasinan and sought execution thereon.
Eulogio F. De Guzman, Judge of the Court of First Instance of Pangasinan issued the order refusing to dissolve the attachment and denied a motion for reconsideration.
The Provincial Sheriff of Ilocos Norte levied upon and attached P1,712.01 in the municipal treasury and about forty fishery lots leased to thirty-five persons to satisfy Manaois's judgment.
The Provincial Fiscal of Ilocos Norte filed a petition in the Court of First Instance of Pangasinan on July 26, 1949 to dissolve the attachment on behalf of the Municipality.

Key Facts

In 1937 the Municipality had leased fishery lots to Francisco V. Duque under a four-year contract for lots 3 to 8 at P1,218.79 per annum.
The Municipal Council confiscated the six lots in 1938 for alleged breach by Duque and thereafter advertised the lots for public bidding.
On December 1, 1938 the Municipal Council awarded lots 3 to 8 to Teodoro Manaois as highest bidder, and Manaois paid P2,025 for the year 1939.
Manaois was prevented from taking possession by Duque, sued the Municipality, and obtained final judgment in June 1940 in Civil Case No. 8026.
The Sheriff’s levy to enforce that judgment attached (1) P1,712.01 in the municipal treasury representing a rental paid by Demetrio Tabije and (2) about forty fishery lots let by the Municipality to various lessees.

Statutory Framework

Sec. 2321 of the Revised Administrative Code authorized municipal councils to grant exclusive privileges of fishery for profit within municipal waters.
Sec. 2321 of the Revised Administrative Code defined "municipal waters" to include streams, lakes, tidal waters not privately owned, and certain marine waters extending to three marine leagues seaward.
The opinion referred to Sec. 2323 in connection with Sec. 2319 of the Administrative Code concerning the manner of letting fishery privileges after public bidding.
The Court cited Sec. 2165, Rev. Adm. Code to recall that municipal corporations are authorized by law to sue and be sued.

Issues Presented

Whether the usufruct or right of fishery and the parceled fishery lots held or administered by the Municipality were subject to levy and execution.
Whether municipal funds or revenues derived from the leasing of fishery lots were subject to levy and execution to satisfy a judgment against the Municipality.

Contentions

THE MUNICIPALITY OF PAOAY, ILOCOS NORTE contend