G.R. No. L-26522, February 27, 1969
ANTONIO FAVIS and CORAZON FAVIS doing business under the trade name “UNION GROCERY & HARDWARE”, plaintiffs-appellants, vs. MUNICIPALITY OF SABANGAN, BONTOC, MOUNTAIN PROVINCE, defendant-appellee.

FACTS

Plaintiffs-appellants Antonio Favis and Corazon Favis, doing business as Union Grocery and Hardware, filed an action in the City Court of Baguio City to recover from defendant-appellee Municipality of Sabangan the sum of P1,115.00, representing the invoice value of G.I. pipes supplied for the municipality’s waterworks construction, plus interest and attorney’s fees. The municipality, through its mayor, answered that the mayor was never authorized to contract or buy on credit from the plaintiffs, and thus the municipality could not be legally bound. The City Court ruled in favor of the plaintiffs. The municipality appealed to the Court of First Instance of Baguio but did not pay the docket fee or file an appeal bond as required by Rule 40, Section 2 of the Rules of Court. The plaintiffs moved to dismiss the appeal, arguing that only the Republic of the Philippines is exempt from such requirements under Rule 141, Section 16. The Court of First Instance denied the motion, holding that the municipality, as a branch of the government, was exempt. After trial, the Court of First Instance dismissed the complaint on the ground that the municipality lacked legal liability. The plaintiffs directly appealed to the Supreme Court on questions of law.

ISSUE

1. Whether the Municipality of Sabangan, as a local government unit, is exempt from paying legal fees and posting an appeal bond under Rule 141, Section 16 of the Rules of Court, which exempts only the “Republic of the Philippines.”
2. Whether the Court of First Instance acquired jurisdiction over the appeal despite the municipality’s non-payment of docket fees and non-filing of an appeal bond.
3. Whether the municipality is legally liable for the G.I. pipes purchased by its mayor without compliance with statutory requisites for municipal contracts.

RULING

1. On the exemption from legal fees: The Supreme Court held that the exemption in Rule 141, Section 16 applies only to the Republic of the Philippines (the national government) and not to local governments like municipalities. The Court cited the definition in the Revised Administrative Code distinguishing the national government from local governments and prior jurisprudence (Palanca vs. City of Manila) that costs may be imposed on municipal corporations.
2. On jurisdiction despite non-payment of fees: The Court ruled that the Court of First Instance did not commit a fatal error of jurisdiction. Citing National Waterworks & Sewerage Authority vs. Secretary of Public Works, it held that failure to pay docketing fees in appealed cases does not automatically dismiss the appeal or affect the court’s jurisdiction; dismissal is discretionary. Thus, the Court of First Instance properly exercised its appellate jurisdiction.
3. On municipal liability: The Supreme Court affirmed the dismissal of the complaint. The purchase of the G.I. pipes by the mayor did not bind the municipality because it was not made in accordance with Republic Act No. 2264 , which requires purchases to be made by public bidding and awarded by a Municipal Committee on Award. The Court applied the doctrine from San Diego vs. Municipality of Naujan that estoppel cannot validate a contract a municipality has no power to make or which violates prescribed conditions, such as public bidding requirements. The fact that the municipality benefited from the pipes did not create liability. Additionally, the mayor had indicated payment would come from funds to be released by the national government, not municipal funds.
DISPOSITIVE PORTION:
The decision of the Court of First Instance was affirmed, with the modification that defendant-appellee Municipality of Sabangan is required to pay the legal fees due from it to the Court of First Instance for its appeal. No costs were awarded.