Hagonoy v. Dumdum
REITERATIONFacts
The Antecedents: Respondent Emily Rose Go Ko Lim Chao, doing business as KD Surplus, filed a complaint against the Municipality of Hagonoy, Bulacan, represented by its Mayor Felix V. Ople, for collection of a sum of money and damages. Respondent alleged that she delivered 21 motor vehicles worth P5,820,000.00 to the municipality based on Mayor Ople's representation that funds were allocated. Respondent claimed that despite deliveries, payment was not made, and the total obligation reached P10,026,060.13, exclusive of penalties and damages. Procedural History: The trial court issued a Writ of Preliminary Attachment upon respondent's prayer. Petitioners filed a Motion to Dismiss, invoking the Statute of Frauds and alleging no written contract, lack of public bidding, and absence of municipal council approval. They also filed a Motion to Dissolve/Discharge the Writ of Preliminary Attachment, citing immunity from suit, unenforceability of the contract, and failure to substantiate fraud. The trial court denied both motions. Petitioners elevated the matter to the Court of Appeals via a petition for certiorari, alleging grave abuse of discretion. The Court of Appeals affirmed the trial court's denial of the motion to dismiss but denied reconsideration, stating it was filed by an unauthorized counsel. The Petition: Petitioners filed a petition for review with the Supreme Court, assailing the Court of Appeals' dismissal of their challenge against the trial court's orders. They argued that the complaint should have been dismissed due to unenforceability under the Statute of Frauds and that the motion to dissolve the preliminary attachment should have been granted.
Issue(s)
Whether the trial court committed grave abuse of discretion in denying the motion to dismiss based on the Statute of Frauds. Whether the trial court committed grave abuse of discretion in denying the motion to discharge/dissolve the writ of preliminary attachment. Whether the Court of Appeals erred in denying the motion for reconsideration on the ground that it was filed by an unauthorized counsel.
Ruling
The Supreme Court granted the petition in part. It affirmed the Court of Appeals' decision insofar as it upheld the denial of the motion to dismiss. However, it reversed the Court of Appeals' decision insofar as it affirmed the denial of the motion to discharge the writ of preliminary attachment, ordering the writ to be lifted.
Ratio Decidendi
On the Motion to Dismiss and the Statute of Frauds: The Court held that the Statute of Frauds requires certain contracts to be in writing for enforceability but does not invalidate them if not in writing, provided essential requisites for validity are present. The Statute of Frauds only lays down the method of proof. The effect of noncompliance is that no action can be enforced, warranting dismissal unless there has been total or partial performance. In this case, respondent's claim of delivery, substantiated by bills of lading naming the municipality as consignee, constituted an indication of performance. The Court reiterated that when a motion to dismiss is filed, material allegations of the complaint are deemed hypothetically admitted. Therefore, the existence of performance excluded the case from dismissal based on unenforceability under the Statute of Frauds. The Court also noted that by invoking the Statute of Frauds, petitioners implicitly acknowledged the existence of a contract, making the issue of enforceability a matter of evidence to be ventilated at trial. On the Motion to Discharge the Writ of Preliminary Attachment: The Court ruled that while municipal corporations have the power to sue and be sued under Section 22 of the Local Government Code, this does not mean their properties are automatically subject to execution and garnishment. The general rule is that government funds and properties may not be seized under writs of execution or garnishment to satisfy judgments, as disbursements must be covered by appropriations. The Court cited Traders Royal Bank v. Intermediate Appellate Court and Commissioner of Public Highways v. San Diego to emphasize that consent to be sued is limited to the completion of proceedings anterior to the stage of execution. Therefore, the writ of preliminary attachment against the municipality's properties was deemed useless and unnecessary because, even if respondent's claim were validated, the municipality's property could not be subjected to execution or garnishment without a corresponding appropriation. The Court concluded that the writ should not have been issued in the first place. On the Denial of the Motion for Reconsideration: The Court found the Court of Appeals mistaken in treating the motion for reconsideration as a mere scrap of paper filed by an unauthorized counsel. The Court noted that the municipal legal officer's Manifestation with Entry of Appearance clearly indicated an intent to adopt all subsequent pleadings, including the motion for reconsideration, for both the municipality and the Mayor in his official capacity. However, the Court also stated that even if the motion were considered, it would still warrant denial because it raised no new matters not previously addressed in the assailed decision or proceedings below.
Main Doctrine
While a municipal corporation may be sued and be subject to suit, its properties may not be subjected to writs of execution and garnishment unless there has been a corresponding appropriation provided by law. Consequently, a writ of preliminary attachment against a municipal corporation's properties should not have been issued in the first place, as it would prove useless and unnecessary.