G.R. No.

L-24950 March 25, 1926

VIUDA DE TAN TOCO, plaintiII-appellant,
vs.
THE MUNICIPAL COUNCIL OF ILOILO, deIendant-appellee.
Arroyo & Evangelista for appellant.
Provincial Fiscal Borromeo Jeloso for appelle.
VILLAMOR,
It appears Irom the record that the widow oI Tan Toco had sued the municipal council oI
Iloilo Ior the amount oI P42,966.40, being the purchase price oI two strips oI land, one on
Calle J. M. Basa consisting oI 592 square meters, and the other on Calle Aldiguer
consisting oI 59 square meters, which the municipality oI Iloilo had appropriated Ior
widening said street. The Court oI First Instance oI Iloilo sentenced the said municipality
to pay the plaintiII the amount so claimed, plus the interest, and the said judgment was on
appeal aIIirmed by this court.
1

On account oI lack oI Iunds the municipality oI Iloilo was unable to pay the said judgment,
whereIore plaintiII had a writ oI execution issue against the property oI the said
municipality, by virtue oI which the sheriII attached two auto trucks used Ior street
sprinkling, one police patrol automobile, the police stations on Mabini street, and in Molo
and Mandurriao and the concrete structures, with the corresponding lots, used as markets
by Iloilo, Molo, and Mandurriao.
AIter notice oI the sale oI said property had been made, and a Iew days beIore the sale, the
provincial Iiscal oI Iloilo Iiled a motion which the Court oI First Instance praying that the
attachment on the said property be dissolved, that the said attachment be declared null and
void as being illegal and violative oI the rights oI the deIendant municipality.
PlaintiIIs counsel objected o the Iiscal's motion but the court, by order oI August 12, 1925,
declared the attachment levied upon the aIorementioned property oI the deIendant
municipality null and void, thereby dissolving the said attachment.
From this order the plaintiII has appealed by bill oI exceptions. The Iundamental question
raised by appellant in her Iour assignments oI error is whether or not the property levied
upon is exempt Irom execution.
The municipal law, section 2165 oI the Administrative Code, provides that:
Municipalities are political bodies corporate, and as such are endowed with the
Iaculties oI municipal corporations, to be exercised by and through their respective
municipal government in conIormity with law.
It shall be competent Ior them, in their proper corporate name, to sue and be sued,
to contract and be contracted with, to acquire and hold real and personal property
Ior municipal purposes, and generally to exercise the powers hereinaIter speciIied
or otherwise conIerred upon them by law.
For the purposes oI the matter here in question, the Administrative Code does not speciIy
the kind oI property that a municipality may acquire. However, article 343 oI the Civil
Code divides the property oI provinces and towns (municipalities) into property Ior public
use and patrimonial property. According to article 344 oI the same Code, provincial roads
and Ioot-path, squares, streets, Iountains and public waters, drives and public
improvements oI general beneIit built at the expense oI the said towns or provinces, are
property Ior public use.
All other property possessed by the said towns and provinces is patrimonial and shall be
subject to the provisions oI the Civil Code except as provided by special laws.
Commenting upon article 344, Mr. Manresa says that "In accordance with administrative
legislation" (Spanish) we must distinguish, as to the patrimonial property oI the towns,
"between that a common beneIit and that which is private property oI the town. The Iirst
diIIers Irom property Ior public use in that generally its enjoyment is less, as it is limited to
neighbors or to a group or class thereoI; and, Iurthermore, such use, more or less general,
is not intrinsic with this kind oI property, Ior by its very nature it may be enjoyed as though
it were private property. The third group, that is, private property, is used in the name oI
the town or province by the entities representing it and, like and private property, giving a
source oI revenue."
Such distinction, however, is oI little practical importance in this jurisdiction in view oI the
diIIerent principles underlying the Iunctions oI a municipality under the American rule.
Notwithstanding this, we believe that the principle governing property oI the public
domain oI the State is applicable to property Ior public use oI the municipalities as said
municipal is similar in character. The principle is that the property Ior public use oI the
State is not within the commerce oI man and, consequently, is inalienable and not subject
to prescription. Likewise, property Ior public oI the municipality is not within the
commerce oI man so long as it is used by the public and, consequently, said property is
also inalienable.
The American Law is more explicit about this matter as expounded by Mcquilin in
Municipal Corporations, volume 3, paragraph 1160, where he says that:
States statutes oIten provide the court houses, jails and other buildings owned by
municipalities and the lots on which they stand shall be exempt Irom attachment
and execution. But independent oI express statutory exemption, as a general
proposition, property, real and personal, held by municipal corporations, in trust Ior
the beneIit oI their inhabitants, and used Ior public purposes, is exempt.
For example, public buildings, school houses, streets, squares, parks, wharves,
engines and engine houses, and the like, are not subject to execution. So city
waterworks, and a stock oI liquors carried in a town dispensary, are exempt. The
reason Ior the exemption is obvious. Municipal corporations are created Ior public
purposes and Ior the good oI the citizens in their aggregate or public capacity. That
they may properly discharge such public Iunctions corporate property and revenues
are essential, and to deny them these means the very purpose oI their creation
would be materially impeded, and in some instances practically destroy it.
Respecting this subject the Supreme Court oI Louisiana remarked: "On the Iirst
view oI this question there is something very repugnant to the moral sense in the
idea that a municipal corporation should contract debts, and that, having no
resources but the taxes which are due to it, these should not be subjected by legal
process to the satisIaction oI its creditors. This consideration, deduced Irom the
principles oI moral equity has only given way to the more enlarged contemplation
oI the great and paramount interests oI public order and the principles oI
government."
It is generally held that property owned by a municipality, where not used Ior a
public purpose but Ior quasi private purposes, is subject to execution on a judgment
against the municipality, and may be sold. This rule applies to shares oI stock
owned by a municipal corporation, and the like. But the mere Iact that corporate
property held Ior public uses is being temporarily used Ior private purposes does
not make it subject execution.
II municipal property exempt Irom execution is destroyed, the insurance money
stands in lieu thereoI and is also exempt.
The members or inhabitants oI a municipal corporation proper are not personally
liable Ior the debts oI the municipality, except that in the New England States the
individual liability oI the inhabitant is generally maintained.
In Corpus Juris, vol 23, page 355, the Iollowing is Iound:
Where property oI a municipal or other public corporation is sough to be subjected
to execution to satisIy judgments recovered against such corporation, the question
as to whether such property is leviable or not is to be determined by the usage and
purposes Ior which it is held. The rule is that property held Ior public uses, such as
public buildings, streets, squares parks, promenades, wharves, landing places Iire
engines, hose and hose carriages, engine houses, public markets, hospitals,
cemeteries, and generally everything held Ior governmental purposes, is not subject
to levy and sale under execution against such corporation. The rule also applies to
Iunds in the hands oI a public oIIicer. Likewise it has been held that taxes due to a
municipal corporation or country cannot be seized under execution by a creditor oI
such corporation. But where a municipal corporation or country owns in its
proprietary, as distinguished Irom its public or governmental capacity, property not
useIul or used Ior a public purpose but Ior 6:asi private purposes, the general rule
is that such property may be seized and sold under execution against the
corporation, precisely as similar property oI individuals is seized and sold. But
property held Ior public purposes is not subject to execution merely because it is
temporarily used Ior private purposes, although iI the public use is wholly
abandoned it becomes subject to execution. Whether or not property held as public
property is necessary Ior the public use is a political, rather than a judicial question.
In the case oI City of New Orleans vs. Lo:isiana Constr:ction Co., Ltd. (140 U. S., 654; 35
Law. ed., 556), it was held that a wharI Ior unloading sugar and molasses, open to the
public, was property Ior the public use oI the City oI New Orleans and was not subject to
attachment Ior the payment oI the debts oI the said city.
In that case it was proven that the said wharI was a parcel oI land adjacent to the
Mississippi River where all shipments oI sugar and molasses taken to New Orleans were
unloaded.
That city leased the said wharI to the Louisiana Construction Company, Ltd., in order that
it might erect warehouses so that the merchandise upon discharge might not be spoiled by
the elements. The said company was given the privilege oI charging certain Iees Ior storing
merchandise in the said warehouses and the public in general had the right to unload sugar
and molasses there by paying the required Iees, 10 per cent oI which was turned over to the
city treasury.
The United States Supreme Court on an appeal held that the wharI was public property,
that it never ceased to be such in order to become private property oI the city; whereIore
the company could not levy execution upon the wharI in order to collect the amount oI the
judgment rendered in Iavor thereoI.
In the case oI lein vs. City of New Orleans (98 U. S., 149; 25 Law. ed., 430), the Supreme
Court oI the United States that a public wharI on the banks oI the Mississippi River was
public property and not subject to execution Ior the payment oI a debt oI the City oI New
Orleans where said wharI was located.
In this case a parcel oI land adjacent to the Mississippi River, which Iormerly was the
shore oI the river and which later enlarged itselI by accession, was converted into a wharI
by the city Ior public use, who charged a certain Iee Ior its use.
It was held that the land was public property as necessary as a public street and was not
subject to execution on account oI the debts oI the city. It was Iurther held that the Iees
collected where also exempt Irom execution because they were a part oI the income oI the
city.
In the case oI T:fexis vs. Olag:era and M:nicipal Co:ncil of G:inobatan (32 Phil., 654),
the question raised was whether Ior the payment oI a debt to a third person by the
concessionaire oI a public market, the said public market could be attached and sold at
public auction. The Supreme Court held that:
Even though a creditor is unquestionably entitled to recover out oI his debtor's
property, yet when among such property there is included the special right granted
by the Government oI usuIruct in a building intended Ior a public service, and
when this privilege is closely related to a service oI a public character, such right oI
the creditor to the collection oI a debt owed him by the debtor who enjoys the said
special privilege oI usuIruct in a public market is not absolute and may be
exercised only through the action oI court oI justice with respect to the proIits or
revenue obtained under the special right oI usuIruct enjoyed by debtor.
The special concession oI the right oI usuIruct in a public market cannot be
attached like any ordinary right, because that would be to permit a person who has
contracted with the state or with the administrative oIIicials thereoI to conduct and
manage a service oI a public character, to be substituted, without the knowledge
and consent oI the administrative authorities, by one who took no part in the
contract, thus giving rise to the possibility oI the regular course oI a public service
being disturbed by the more or less legal action oI a grantee, to the prejudice oI the
state and the public interests.
The privilege or Iranchise granted to a private person to enjoy the usuIruct oI a
public market cannot lawIully be attached and sold, and a creditor oI such person
can recover his debt only out oI the income or revenue obtained by the debtor Irom
the enjoyment or usuIruct oI the said privilege, in the same manner that the rights
oI such creditors oI a railroad company can be exercised and their credit collected
only out oI the gross receipts remaining aIter deduction has been made thereIrom oI
the operating expenses oI the road. (Law oI November 12, 1896, extended to the
overseas provinces by the royal order oI August 3, 1886.)
For the reasons contained in the authorities above quoted we believe that this court would
have reached the same conclusion iI the debtor had been municipality oI Guinobatan and
the public market had been levied upon by virtue oI the execution.
It is evident that the movable and immovable property oI a municipality, necessary Ior
governmental purpose, may not be attached and sold Ior the payment oI a judgment against
the municipality. The supreme reason Ior this rule is the character oI the public use to
which such kind oI property is devoted. The necessity Ior government service justiIies that
the property oI public oI the municipality be exempt Irom execution just as it is necessary
to exempt certain property oI private individuals in accordance with section 452 oI the
Code oI Civil Procedure.
Even the municipal income, according to the above quoted authorities, is exempt Irom levy
and execution. In volume 1, page 467, Municipal Corporations by Dillon we Iind that:
Municipal corporations are instituted by the supreme authority oI a state Ior the
public good. They exercise, by delegation Irom the legislature, a portion oI the
sovereign power. The main object oI their creation is to act as administrative
agencies Ior the state, and to provide Ior the police and local government oI certain
designated civil divisions oI its territory. To this end they are invested with certain
governmental powers and charged with civil, political, and municipal duties. To
enable them beneIicially to exercise these powers and discharge these duties, they
are clothed with the authority to raise revenues, chieIly by taxation, and
subordinately by other modes as by licenses, Iines, and penalties. The revenue oI
the public corporation is the essential means by which it is enabled to perIorm its
appointed work. Deprived oI its regular and adequate supply oI revenue, such a
corporation is practically destroyed and the ends oI its erection thwarted. Based
upon considerations oI this character, it is the settled doctrine oI the law that only
the public property but also the taxes and public revenues oI such corporations
cannot be seized under execution against them, either in the treasury or when in
transit to it. Judgments rendered Ior taxes, and the proceeds oI such judgments in
the hands oI oIIicers oI the law, are not subject to execution unless so declared by
statute. The doctrine oI the inviolability oI the public revenues by the creditor is
maintained, although the corporation is in debt, and has no means oI payment but
the taxes which it is authorized to collect.
Another error assigned by counsel Ior appellant is the holding oI the court a 6:o that the
proper remedy Ior collecting the judgment in Iavor oI the plaintiII was by way or
mandamus.
While this question is not necessarily included in the one which is the subject oI this
appeal, yet we believe that the holding oI the court, assigned as error by appellant's
counsel, is true when, aIter a judgment is rendered against a municipality, it has no
property subject to execution. This doctrine is maintained by Dillon (Municipal
Corporations, vol. 4, par. 1507, 5th ed.) based upon the decisions oI several States oI the
Union upholding the same principle and which are cited on page 2679 oI the aIoresaid
work. In this sense this assignment oI error, we believe, is groundless.
By virtue oI all the Ioregoing, the judgment appealed Irom should be and is hereby
aIIirmed with costs against the appellant. So ordered.