THE CITY OF MANILA, PETITIONER, VS. JUAN POSADAS, JR., COLLECTOR OF INTERNAL REVENUE, BEN F. WRIGHT, INSULAR AUDITOR, AND THE METROPOLITAN WATER DISTRICT, RESPONDENTS.

This is an original petition for mandamus, in which it
is alleged:

“I. That the petitioner is a municipal corporation organized under the provisions of Chapter 60, Title X, of Act
No. 2711 of the Philippine Legislature, known as the Administrative Code, and is empowered to sue and be sued.

“II. That the respondent Juan Posadas, jr., is, and during the period
of time mentioned in this petition was, the Collector of Internal
Revenue of the Government of the Philippine Islands; the respondents
Ben F. Wright and Vicente Carmona are, and during the same period were,
the Insular Auditor and Insular Treasurer, respectively, of the
Philippine Islands, and the respondent Metropolitan Water District is a
public corporation created by Act No. 2832, with powers to sue and be
sued.

“III. That the petitioner is entitled to a part and portion,
determined by law, of the internal revenue collected by the
respondent, the Collector of Internal Revenue (see sec, 488,
Adm. Code), as well as to a certain per cent of the one and
one-half per cent tax imposed on merchants, manufacturers
and commission merchants (see sec. 3, Act No. 3065), and
that petitioner’s share of said internal revenue and one
and one-half per cent tax does not constitute a credit or
debt owing by, and due from, the Insular Government to
the petitioner, but is a property of the petitioner, belonging
and appertaining to it both as a province and as a
municipality of the Philippine Islands (see sec. 495, par.
2, Adm. Code), used and to be used by the petitioner for
the purpose of defraying the expenses necessary for its
existence and operation.

“IV. That the respondent, the Collector of Internal Revenue, in
compliance with his ministerial duty imposed upon him by section 497 of
the Administrative Code to pay quarterly to the petitioner, the
allotments of said internal revenue and percentage tax belonging to it,
has been in the past drawing warrants for said allotments payable to
the petitioner; but that from and after the month of January, 1922, the
said respondent has ceased to make such payments to the petitioner, and
has drawn warrants for such internal revenue and percentage tax
allotments belonging to the petitioner, payable to the Metropolitan
Water District, a water corporation created by Act No. 2832 of the
Philippine Legislature.

“V. That the petitioner is informed, ana1, therefore, alleges, that the transfer and payment of said allotments of
the internal revenue and percentage tax, belonging to the
petitioner, to the said Metropolitan Water District has been
made by the respondent Collector of Internal Revenue by
and under certain instruction of the respondent Insular
Auditor, dated January 5, 1922, a certified copy of which is
attached hereto and made a part hereof, marked as Exhibit
A.

“VI. That the petitioner is also informed, and, therefore, alleges,
that the respondent Insular Auditor has instructed his co-respondent
Collector of Internal Revenue to pay the said allotments of internal
revenue and percentage tax aforementioned, belonging to the petitioner,
to the said Metropolitan Water District, instead of the petitioner, for
the purpose of setting-off certain alleged debts of the petitioner for
alleged water services rendered it by the said Metropolitan Water
District.”

It is then alleged that upon receipt of such information,
the city notified the Collector of Internal Revenue that such
proceedings were illegal and void, and that in the future
payments should be made to the City of Manila, in accord
with the provisions of section 497 of the Administrative
Code.

“VIII.
That in spite of the letter or communication sent by the petitioner,
through its attorney, to the respondent Collector of Internal Revenue,
the latter, following instructions of the other respondent, Insular
Auditor, informed the petitioner by a communication bearing date of
January 5, 1925, which is hereto attached and made a part hereof as
Exhibit C, that he would continue making payments of the share
belonging to the petitioner of the internal revenue and of the especial
tax imposed by Act No. 3065, including that corresponding to the last
quarter of the year 1924, in favor of the respondent Metropolitan Water
District, and the petitioner believes, and, therefore, alleges that
said respondent Collector of Internal Revenue will carry out such
threats unless timely prevented from so doing by this Honorable Court.

“IX. That there does not exist between the Metropolitan
Water District, which is neither a governmental entity, nor
office, nor branch of the Insular Government (see
sec. 1, Act No. 2832), and the petitioner City of Manila, any account
the settlement of which the respondent Insular Auditor could legally
authorize and enforce.

“X. That the petitioner does not owe anything to the
Metropolitan Water District by way of alleged water service rendered by said District to said petitioner; and that
the latter has up to the present time been questioning the
power of said District to render and collect any bill for
water supplied to the petitioner.

“XI. That Act No. 2832 does not empower the Metropolitan Water District, either expressly or impliedly or
in general terms, to charge for water consumed by the
petitioner, from the water system of the City of Manila.

* * * * * * *

“XIX.
That the said Act No. 2832 did not have more object, and in fact, did
not do more than to transfer, from the petitioner to the Metropolitan
Water District, the possession, administration, control and management
of the sewer and water supply systems of the City of Manila, and, to
this effect, has provided, in its section 8 that the said District
receive and assume all assets and liabilities together with the bonds
sinking funds of said systems, the same as if it were a mere receiver
or judicial depositary.

* * * * * * *

“XXI.
That as one of the liabilities of the water supply system of the City
of Manila, and among the charges, obligations and responsibilities
going with said system which constitutes a part of said liabilities, is
that of furnishing water free of charge to the petitioner, in its
aforesaid capacities as owner and fiduciary, for all its uses and
needs.

* * * * * * *

“XXV.
That even supposing that the respondent Insular Auditor is empowered to
settle accounts outstanding between the petitioner and the Metropolitan
Water District, the said petitioner has up to the present time
contested the bills of the latter for alleged water services rendered
the petitioner for the reason that the same are not authorized by law,
and that said Insular Auditor is not authorized to settle or adjust
accounts which, not being based upon any provision of law, are only
made so by an erroneous interpretation of the law by said Auditor, by
disposing in favor of said District of funds clearly belonging to the
petitioner, such as its share in the collections obtained by the
enforcement of the internal revenue laws and, of Act No. 3065.

“XXVI. That it is
a ministerial duty on the part of the respondent Collector of Internal
Revenue to make in favor of the petitioner quarterly allotments of the
share of internal revenue collected by him, corresponding to said
petitioner, and of its portion of the tax imposed by Act No. 3065.
(Sec. 497, Adm. Code.)

“XXVII.
That there is no law authorizing the respondent Insular Auditor to
prevent his co-respondent Collector of Internal Revenue from complying
with his ministerial duty referred to in the next preceding paragraph
hereof, or to give the latter instructions to the effect that the
abovementioned allotments which, by clear and express provision of law,
ought to be made in favor of the petitioner, should be made and paid in
the name and in favor of the Metropolitan Water District; nor is said
respondent Insular Auditor also authorized by any law to constitute
himself a judge and arbiter of disputes regarding the interpretation of
laws arising between a municipal corporation and a public corporation
which does not belong to the Insular Government or any executive branch
of the Government of the Philippine Islands.

* * * * * * *

“XXX. That the respondent Ben F. Wright, Insular
Auditor, is without authority of law to issue a warrant
by himself, much less a warrant covering amounts payable
and chargeable against the apportionment of the City of
Manila in the internal revenue collections and special
assessment imposed by Act No. 3065.

“XXXI. That the respondent Vicente Carmona, Insular
Treasurer, is likewise without any authority of law to
honor, cash or otherwise pay out of the funds belonging
to the petitioner as aforesaid, any check, warrant or order
of payment issued by the respondent Ben F. Wright, Insular Auditor, or by any other officer, except only after
judicial determination of the present controversy.

“XXXII.
That to permit such an open violation of the Jaw by the herein
respondents, the aforesaid warrants corresponding to the allotments of
funds of internal revenue pertaining to the petitioner, collected
during the last quarter of 1924, as well as those which may thereafter
be collected and may be payable to said petitioner, would be issued and
made payable to the Metropolitan Water District, in violation of the
law, and to the serious detriment of the petitioner’s interests in
particular and of the public interests in general.

“XXXIII.
That as a result of the acts of the respondents above related, the
petitioner has suffered and will suffer irreparable damages and has
encountered and will encounter serious and considerable embarrassments
and obstacles in the discharge of its corporate and governmental
functions, unless said respondents are immediately restrained and
enjoined from such acts by this Honorable Tribunal.”

The Metropolitan Water District is made a party defendant, for the reason that it claims to have interests which
are adverse to those of the petitioner.

It is then alleged that the city does not have any plain,
speedy or adequate remedy in the ordinary course of law.

Under our view of the case, the foregoing allegations
are the only ones which are material to this opinion. The
complaint, which is quite voluminous, also purports to give
a history of the water system of the City of Manila, and
alleges in substance that any title to such water system
which the Metropolitan Water District may have is held
by it in trust and for the use and benefit of the city.

To this petition, a demurrer was filed by the defendants
upon the ground that it did not state facts sufficient to
constitute a cause of action.

After arguments were heard, and the respective briefs
of opposing counsel were submitted, the demurrer of the
defendants was overruled, and an answer was filed, in which
they deny all of the material allegations of the petition,
and as a special defense allege:

“1.
That when the water and sewerage system referred to in the petition was
under the administration of the sewer and waterworks division of the
engineering and public works department of the City of Manila, the
other departments of the city paid for water and other services
furnished to them by said division;

“2. That the Metropolitan Water District since its organization in the
year 1919 up to the present has been furnishing water and rendering
water services to the government of the City of Manila;

“3. That the government of the City of Manila has been
voluntarily paying to the Metropolitan Water District for
some of the water and water services above mentioned in
the amounts, for the purposes, and for the period specified
in the statement marked Exhibit A attached to this answer
and made a part thereof;

“4. That on January 28, 1924, a supposed majority of the Board of
Directors of the Metropolitan Water District passed a resolution
exempting the government of the City of Manila from fees for the water
consumed by the fire and public hydrants installed in said City; but
upon appeal duly taken by the minority of said Board to the
Governor-General, through the Secretary of the Interior, under the
provisions of section 4 of Act No. 2832, as amended by section 2 of Act
No. 3109, the Governor-General in an indorsement dated September 18,
1924, reversed the above resolution of the alleged majority of the
Board and decided ‘that the City of Manila shall pay for all services
rendered by the Metropolitan Water District.’ A copy of the
correspondence in regard to the above resolution, appeal, and decision,
marked Exhibit B is hereto attached and made a part hereof;

“5. That on August 11,
1924, a majority of the Board of Directors of the Metropolitan Water
District approved a resolution to the effect that the Secretary of the
Interior be ‘requested to recommend to the Legislature the amendment of
the Organic Act-of the Metropolitan Water District in such a way as to
relieve the City of Manila from payment for fire hydrant rentals, and
for water and service maintenance charges of public hydrants;’ but the
minority members of the Board duly appealed from this resolution to the
Governor-General, through the Secretary of the Interior, under the
provisions of section 4 of Act No. 2832, as amended by section 2 of Act
No. 3109, and the Governor-General rendered the same decision mentioned
in the next preceding paragraph. A copy of the correspondence referring
to this matter, marked Exhibit C, is hereto attached and made a part
hereof;”

It is then alleged that on November 17, 1924, the Board.
of Directors of the Metropolitan Water District unanimously
approved Resolution No. 21, entitled “A resolution to fix
charges, and the rates thereof, for all services rendered by
the Metropolitan Water District,” in and by which all consumers of water were to be charged uniform rates.

“7.
That the Metropolitan Water District has been sending bills to the
government of the City of Manila for the collection of the value of the
water and water services which it had been furnishing to said city; but
while said government has been paying some of those bills it has
refused to pay others;

“8. That the
Metropolitan Water District advised the Insular Auditor of the refusal
of the government of the City of Manila to pay the above-mentioned
bills, requesting the latter to enforce the adjustment and settlement
of said outstanding accounts under the provisions of section 588 of the
Administrative Code, as amended by Act No. 3066;

“9. That the Insular Auditor, after due study of the above claim of the
Metropolitan Water District against the City of Manila, taking into
consideration the conflicting contentions of both parties, reached the
conclusion that said claim was just, legal, and proper;

“10. That the Insular Auditor then made demand on the
City of Manila for the payment and settlement of said
claim, advising said city that, upon failure of payment, he
would exercise the power vested in him by section 588 of
the Administrative Code, as amended by section 1 of Act
No. 3066, but the city refused to comply with said demand;

“11.
That thereupon the Insular Auditor instructed the Collector of Internal
Revenue that thereafter and until further notice, all warrants covering
the internal revenue collections allotted to the City of Manila be
drawn by said Collector in favor of the Metropolitan Water District
instead of said city as theretofore;

“12. That by virtue of an arrangement between the Insular Auditor and the Collector of Internal Revenue for
the purpose of putting the present question to a test, the
latter officer issued warrant No. 636, dated December 9,
1924, for the sum of P21,880.57 and warrant No. 638, dated
December 23, 1924, for the sum of P3,856.04, both covering
the internal revenue allotment of the City of Manila, in
favor of said city instead of the Metropolitan Water District,
and the Insular Auditor, pursuant to the same arrangement,
refused to countersign said warrants and returned them,
unsigned by him, to the Collector of Internal Revenue;

“13. That on January 5, 1925, the Collector of Internal Revenue, in
answer to a communication from the City Fiscal, advised the latter that
pursuant to subsequent instructions from the Insular Auditor, he would,
within ten days from said date, proceed to issue the warrants for the
abovementioned sums, in favor of the Metropolitan Water District, but
due to the preliminary injunction issued in the present case the
Collector of Internal Revenue was prevented from doing so.”

To this answer, the petitioner filed a demurrer upon the
ground, first, that the answer does not state facts sufficient
to constitute a defense, and, second, that the answer is
ambiguous, unintelligible and uncertain.

Hence, the only question now before this court is whether
or not the facts alleged in the special defense constitute a
defense to plaintiff’s cause of action.

JOHNS, J.:

Section 2427 of the Administrative Code says:

“This chapter shall be known as the Charter of the City
of Manila.”

Section 2428 provides:

“The City of Manila constitutes a political body corporate
and as such is endowed with the attribute of perpetual
succession and possessed of the powers which pertain to
a municipal corporation, to be exercised in conformity with
the provisions of this charter.”

Section 2429 provides:

“The
city may have a common seal, and alter the same at pleasure, and may
take, purchase, receive, hold, lease, convey, and dispose of real and
personal property for the general interests of the city, condemn
private property for public use, contract and be contracted with, sue
and be sued, and prosecute and defend to final judgment and execution,
and exercise all the powers hereinafter conferred.”

Section 2434, as amended by Act No. 2774, provides:

“The
Mayor shall be the chief executive of the city, and as such, shall have
immediate control over the executive functions of the different
departments, subject to the authority and supervision of the Secretary
of the Interior.

“The Mayor shall be appointed by the Governor-General
with the consent of the Senate, shall hold office for three
years unless sooner removed, * * *.”

Section 2439 provides:

“The
Municipal Board shall be the legislative body of the city, and shall
consist of ten elective members who shall hold office for four years or
until their successors are elected and qualified. The members of the
Board shall elect each year from among their number a president, who
for one year shall preside at all meetings of the Board at which he is
present. In his absence, the Board shall elect one of its members as
temporary presiding officer. The president shall sign all ordinances,
and all resolutions and motions directing the payment of money or
creating liability, enacted or adopted by the board.”

This was amended so as to make the terms of office of the
members of the Board for a period of three years.

Section 2440 provides:

“The members of the Municipal Board shall be elected
at large from the entire city, and each of them at the time
of his election shall be a resident for at least one year, and
a qualified elector, of his assembly district, and not less than
twenty-three years of age. * * *”

Section 2442 provides:

“The Board shall make all appropriations for the expenses of the government of the city. * * *”

Section 2444, as amended by Act No. 2774, specifies and
defines the “General powers and duties of the Board,” which
are very broad and comprehensive, and covers all matters
which are necessary and material to the administration of
a government by the city.

Subsection (u) of that section provides:

“For the laying out, construction, and improvement, and
to regulate the use, of streets, avenues, alleys, sidewalks,
wharves, piers, parks, cemeteries, and other public
places; * * *” and subsection, (x) provides:

“For the maintenance of waterworks for the purpose of
supplying water to the inhabitants of the city, and for the
purification of the source of supply and the places through
which the same passes, and to regulate the consumption
arid use of the water; to fix and provide for the collection
of rents therefore; and to regulate the construction, repair,
and use of hydrants, pumps, cisterns, and reservoirs.”

Section 2465, as amended by Acts Nos. 3043 and 3169,
provides:

“The law department shall consist of the fiscal of the city
and of seven assistants, who shall discharge their duties
under the general supervision of the Attorney-General. The
fiscal of the city shall be the chief legal adviser of the city
and all offices and departments thereof; shall represent the
city in all civil cases wherein the city or any officer thereof
in his official capacity is a party; * * *.”

Section 2468 provides:

“The municipal court shall have territorial jurisdiction
embracing the entire police jurisdiction of the city,
* * *.”

It will thus be seen that under the terms and provisions
of its charter, the City of Manila has both executive, legislative and judicial powers, and that all of such powers
are vested and conferred by an Act of the Legislature of
the Philippine Islands.

Section 3 of the Organic Act or what is known as the
Jones Law says:

“That no law shall be enacted in said Islands which shall
deprive any person of life, liberty, or property without
due process of law, or deny to any person therein the equal
protection of the laws. * * *

“That no money shall be paid out of the treasury except
in pursuance of an appropriation by law.

* * * * * * *

“That all money collected on any tax levied or assessed
for a special purpose shall be treated as a special fund in
the treasury and paid out for such purpose only.”

Section 8 provides:

“That general legislative power, except as otherwise
herein provided, is hereby granted to the Philippine Legislature, authorized by this Act.”

Section 490 of the Administrative Code says:

“Disposition of internal revenue in general.—Internal
revenue collected under the laws of the Philippine Islands
and not applied as hereinabove provided or otherwise
specially disposed of by law shall accrue to the Insular
Treasury and shall be available for the general purposes
of the Government, with the exception of the amounts set
apart by way of allotment under the next succeeding section.”

Section 491 provides:

“Allotments of internal revenue for special purposes.—Of
the internal revenue accruing to the Insular Treasury under the
preceding section there shall be set apart ten per centum as a
provincial allotment, ten per centum as a road and bridge allotment,
and twenty per centum as a municipal allotment; but the amounts
allotted to said several purposes during any year shall not be greater
than the amount allotted for the same purposes during the fiscal year
nineteen hundred and nine.”

Section 492 provides:

“Apportionment and use of provincial allotment.—The
provincial allotment shall be apportioned to the treasuries
of the several respective provinces and shall there accrue
to their general funds, respectively.”

Section 494 provides:

“Apportionment and use of municipal allotment.—The

municipal allotment shall be for the benefit of the inhabitants of the
Islands in the purview of their community requirements, being available
for municipal or other use as hereinbelow provided.”

Section 495 provides:

*******

“The City of Manila shall receive the shares which it
would receive if it were both a municipality and a regularly
organized province, and for the purposes hereof shall be
deemed to be both the one and the other.”

Section 497 provides:

“Warrants for quarterly payment of allotments.—The
payment of the internal-revenue allotments shall be made
from the Insular Treasury quarterly, upon warrants drawn
by the Collector of Internal Revenue.”

It appears from the answer of the defendants that under
the terms and provisions of said section 497, the Collector
of Internal Revenue: “Issued warrant No. 636, dated December 9, 1924, for the sum of P21,880.57 and warrant
No. 638, dated December 23, 1924, for the sum of P3,856.04,
both covering the internal revenue allotment of the City
of Manila, in favor of said City instead of the Metropolitan
Water District, and the Insular Auditor, pursuant to the
same arrangement, refused to countersign said warrants
and returned them, unsigned by him, to the Collector of
Internal Revenue.”

That is to say, such warrants represent the amount which
the city should receive as its allotment from and out of
the “internal revenues collected under the laws of the Philippine
Islands,” and that fact is admitted by defendants’ answer. This money
is to be paid to the city from and out of the public revenues of the
Government, and it is public money, which has been assessed, levied and
collected by the Government for governmental purposes, and the law says
that the City of Manila shall have and receive twenty per centum of
such money as a municipal allotment, and it also says that it shall
receive that money quarterly “upon warrants drawn by the Collector of
Internal Revenue.” When the money was assessed, levied and collected,
in so far as the City of Manila is concerned, it was assessed, levied
and collected for a specific purpose, and for such reason, it should
“be treated as a special fund in the treasury and paid out for such
purpose only.” The money was public money in the Treasury of the
Government, and it was there held in trust for the sole use and benefit
of the city.

The Jones Law further provides:

“That
no money shall be paid out of the Treasury except in pursuance of an
appropriation by law.” (Sec. 3.) And in this instance, an appropriation
could only be made by the Legislature of the Philippine Islands or the
legislative body of the City of Manila.

There is no claim or pretense that any appropriation
has ever been made out of the public funds to pay the claim
of the Metropolitan Water District against the City of Manila, and yet in legal effect the defendants seek to take
money out of the Treasury of the Philippine Islands which
belongs to the Treasury of the City of Manila, and to
pay the private debt which the Metropolitan Water District claims to have against the City of Manila. The City
of Manila has no authority to pay any debt against it, “except in pursuance of an appropriation by law.” Neither
has any person any authority to take money out of the
Treasury of the Government for any purpose, “except in
pursuance of an appropriation by law,” and there is no
claim or pretense that any appropriation was ever made by
the Government or the City of Manila to pay the claim of
the Metropolitan Water District against the City of Manila.

In the case of Reeside vs. Walker, Secretary of the Treasury of the United States (52 U. S., 271), the Supreme
Court of the United States says:

“Where
the United States were the plaintiffs, and a verdict was rendered that
they were indebted to the defendant, and an application was made for a
mandamus to compel the Secretary of the Treasury to credit the
defendant upon the books of the Treasury with the amount of the
verdict, and to pay the same, the mandamus was properly refused by the
Circuit Court. For a mandamus will only lie against a ministerial
officer to do some ministerial act where the laws require him to do it
and he improperly refuses to do so.

“Besides,
there was no appropriation made by law, and no officer of the
government can pay a debt due by the United States without an
appropriation by Congress.” And on page 290, the opinion says:

“No
officer, however high, not even the President, much less a Secretary of
the Treasury, or Treasurer, is empowered to pay debts of the United
States generally, when presented to them. If, therefore, the petition
in this case was allowed so far as to order the verdict against the
United States to be entered on the books of the Treasury Department,
the plaintiff would be as far from having a claim on the Secretary or
Treasurer to pay it as now. The difficulty in the way is the want of
any appropriation by Congress to pay this claim. It is a well-known
constitutional pro- vision, that no money can be taken or drawn from
the Treasury except under an appropriation by Congress. (See Constitution, art. 1, sec. 9 [1 Stat. at L., 15].)

“However
much money may be in the Treasury at any one time, not a dollar of it
can be used in the payment of anything not thus previously sanctioned.
Any other course would give to the fiscal officers a most dangerous
discretion.”

As stated, the City of Manila is a municipal corporation
with broad and general legislative powers given to it by
the Legislature.

The Metropolitan Water District was also created by Act
No. 2832 of the Legislature, and is entitled:

“An
Act creating a public corporation denominated the Metropolitan Water
District, prescribing its functions and activities, and for other
purposes.”

Section 2 provides:

“Powers and general functions of the District.—The

powers, functions, and activities of the Metropolitan Water District of
Manila shall be the following:

“(a) To have continuous succession under its corporate
name until otherwise provided by law;

“(b) To prescribe its by-laws;

“(c) To adopt and use a seal and alter it at its pleasure;

“(d) To sue and be sued in any court;

“(e)
To construct, maintain, and operate mains, pipes, water reservoirs,
machinery, and other waterworks for the purpose of supplying water to
the inhabitants of the District, both for domestic and other purposes;
to purify the source of supply, regulate the control and use, and
prevent the waste of water; and to fix and provide for the collections
of rents therefor; etc.”

Section 3 provides (as amended by Act No. 3109):

“District Board; its members, reports to the Department
of the Interior.—Unless
otherwise provided by law, all corporative powers of the Metropolitan
Water District shall be exercised, its business managed, and its
property kept and preserved, by a Board to be composed of the Mayor of
the City of Manila, the President of the Municipal Board of the City of
Manila, the governor of the Province of Rizal, the Director of Public
Works or his representative, the engineer of the City of Manila, the
city treasurer, and a taxpayer of the district, being a resident of the
City of Manila, appointed by the Governor-General, with the consent of
the Senate.”

Section 8 provides:

“Assets and liabilities of the Manila water and sewer system; their transfer to the District; sinking fund and
Government guaranty.—The
District Board is hereby authorized and directed to receive and assume
on behalf of the Metropolitan Water District all assets and liabilities
pertaining to the sewerage and waterworks system of the City of Manila,
together with the sewerage and waterworks bonds sinking funds, and of
all the indebtedness in general of the present sewer and water system
of the City of Manila, and in turn to pledge such assets as security
for the payment of the sewerage and waterworks bonded debt thus
acquired.”

Section 10 provides:

“Powers reserved to the Legislature.—This
Act or any part thereof may be amended or repealed at any date by
legislative authority, and the Metropolitan Water District may be
reorganized or dissolved by legislative provision.”

That is to say, the City of Manila is a municipal corporation, deriving all of its powers from the legislature, and
the Metropolitan Water District is a public corporation, as
distinguished from a municipal corporation, and derives all
of its powers from the Legislature. The City of Manila
derives all of its revenues from public funds in the nature
of fines, licenses and taxes assessed, levied and collected for
its maintenance. The Metropolitan Water District derives
all of its revenues from private sources and monies which
it collects from consumers of its waters.

Under the facts alleged in the answer, the defendants undertook to take
the money out of the Government Treasury which belongs to the city and
use it to pay a disputed claim of a public corporation against the city
over the vigorous protest of the city.

Assuming all of such facts to be true, the answer alleges
as a defense:

“8.
That the Metropolitan Water District advised the Insular Auditor of the
refusal of the government of the City of Manila to pay the
above-mentioned bills, requesting the latter to enforce the adjustment
and settlement of said outstanding accounts under the provisions of
section 588 of the Administrative Code, as amended by Act No. 3066.”

Section 588 of the Administrative Code, as amended by
Act No. 3066, provides:

“Authority of auditor in adjustment of accounts between
offices.—The
Insular Auditor shall have the power, subject to such regulations as
may be prescribed therefor, to authorize and enforce the settlement of
accounts subsisting between the different bureaus or offices of the
Insular service; between any such bureau or office and any provincial,
municipal, or city government; between provincial governments; between
municipal or city governments; and between any such provincial and
municipal or city governments.”

Act No. 3066 is entitled “An Act to amend certain sections of the
Administrative Code, and for other purposes.”

Section 584 of the Administrative Code, as amended by
Act No. 3066, provides:

“General jurisdiction of Bureau of Audits.—The
authority and powers of the Bureau of Audits extend to and comprehend
all matters relating to accounting procedure, including the keeping of
the accounts of the Government, the preservation of vouchers, the
methods of accounting, the examination and inspection of the books,
records, and papers relating to such accounts, and to the audit and
settlement of the accounts of all persons respecting funds or property
received or held by them in an accountable capacity, as well as to the
examination and audit of all debts and claims of any sort due from or
owing to the Government of the Philippine Islands in any of its
branches. The said jurisdiction .shall also extend to all corporations
established and organized in accordance with the laws of the Philippine
Islands wherein the Government of the said Islands or any of its
branches owns the majority of the stock. * * *.”

Section 593, as amended by the same Act, provides:

“Auditing districts; assignment and compensation of district auditors.—The
provinces of the Philippine Islands, the chartered cities and the
Metropolitan Water District, which shall be regarded as provinces, are
hereby divided into twenty-two regular and one special auditing
districts, * * *.” These twenty-three districts are grouped into four
divisions.

There is nothing in any of these provisions which would
authorize or justify the Insular Auditor to compel a municipal corporation to pay a claim to a public corporation
where the city disputes the claim.

The question involved between the city and the Metropolitan Water
District is not one of an accounting. There is no pretense that the
City of Manila has any claim of any kind against the Metropolitan Water
District, and the only claim which the Metropolitan Water District has
against the city is for the use of water, and the city disputes the
validity of the claim.

Hence, the question involved between the city and the
Metropolitan Water District is one of legal liability, and
of legal liability only.

The answer further alleges as a defense:

“9.
That the Insular Auditor, after due study of the above claim of the
Metropolitan Water District against the City of Manila, taking into
consideration the conflicting contentions of both parties, reached the
conclusion that said claim was just, legal, and proper.”

That defense is based on the assumption that the Auditor
has judicial powers, and yet there is no claim or pretense
that any hearing was ever had or that any process was
ever served on the city, or that it ever had any previous
notice of the proceeding, or that it was given an opportunity to defend, and yet the record shows that the Auditor
knew that the city denied any liability.

In defining what is “due process of law,” Words and
Phrases, vol. 3, says:

Page 2227:

“The
principle that no man shall be deprived of his liberty or property
except by the ‘law of the land,’ or its synonym, ‘due process of law,’
is older than written constitutions—older even than Runnymede—and
breathes so palpably of exact justice that it needs no formulation in
the organic law. * * *”

Page 2230:

”
‘Due process of law’ is not confined to judicial proceedings, but
extends to every case which may deprive a citizen of life, liberty, or
property, whether the process be judicial or administrative or
executive in its nature.

”
‘Due process of law,’ in its constitutional meaning, includes
administrative process of the customary sort, as well as judicial
process.”

Page 2238:

”
‘To give the clause of the Constitution which guaranties that “no
person shall be deprived of life, liberty, or property without due
process of law,” therefore, any value, it must be understood to mean
that no person shall be deprived by any form of legislation or
governmental action of either life, liberty, or property, except as the
consequence of some judicial proceeding, appropriately and legally
conducted. It shows that a law which by its own inherent force
extinguishes rights of property, or compels their extinction, without
any legal process whatever, comes directly in conflict with the
Constitution.’ “

Page 2243:

‘”Due process of law’ implies that whenever, in a judicial proceeding,
a judgment is rendered by a court of justice affecting the liberty or
condemning the property of another person, he is entitled to have
reasonable notice of such procedure, trial, or contest.”

In other words, “due process of law” is a fundamental, constitutional
right given to every person, which it is the sworn duty of the courts
to honor and protect.

Giving to Act No. 3066 its broadest possible construction, we are clearly of the opinion that, as between the
City of Manila and the Metropolitan Water District, the
Insular Auditor is not vested with judicial powers. By
their respective charters, one is a public corporation, and
the other is a municipal corporation.

The United States is under a Republican form of government in which all
powers are vested in the executive, legislative and judiciary, and
their respective limits are clearly specified and denned, and as to the
question here involved, those principles are embodied in and made a
part of the Jones Law, known as the Organic Act of the Philippine
Islands, and of section 17 of the Administrative Code.

The answer further alleges that on January 28, 1924,
an alleged majority of the Board of Directors of the Metropolitan Water
District passed a resolution, exempting
the City of Manila from the payment of water consumed
by fire and the public hydrants of the city. That an appeal
was taken by the minority of the Board to the Governor-General, who
reversed the action of the Board, and decided “that the City of Manila
shall pay for all services rendered by the Metropolitan Water District.”

It will be noted that the City of Manila was not a party
to that proceeding, and that the only thing which the
Board of Directors undertook to do was to exempt the city
from the payment of water, and that the action of the
Board was reversed by the Governor-General. That was
the only question presented on the appeal.

It is further alleged that on August 11, 1924, a majority of the Board
of Directors of the Water District passed a resolution that the
Secretary of the Interior be requested to recommend to the Legislature
to amend the Organic Act of the Water District, so as to relieve the
City of Manila from such payment, and that upon appeal by the minority
of the Board, this action of the Board also was reversed by the
Governor-General. That is to say, the Board of Directors of the
Metropolitan Water District passed a resolution to have the law amended
so as to relieve the city from the payment of water, and the action of
the Board was reversed by the Governor-General. No other question was
presented to or considered by the Governor-General, and it is not
claimed that the city was a party to that proceeding. The
Governor-General did nothing more than to say that the Metropolitan
Water District had a claim against the city for water which the city
ought to pay, and that it ought not to be exempted from liability.

No one questions the power or authority of the Governor-General to make either one of those decisions. They were
both executive acts. But the question as to whether money
may be unlawfully taken out of the government treasury,
which belongs to the city, and given to and applied by a
public corporation upon the payment of an alleged claim,
which it has against the city, and upon which the city denies
all liability, or as to whether the city is legally liable, or
has a valid defense or counterclaim, is another and a very
different question, and one upon which the city has a legal
right to be heard and to defend itself.

In the final analysis, we have this situation. An attempt was made to
take money out of the government treasury, which belongs to the City of
Manila, a municipal corporation, and apply it to the payment of a debt
which a public corporation claims to have against the city. That
proceeding was in direct conflict with three of the express provisions
of section 3 of the Jones Law.

First, it violates that portion of the section which says
that no law shall be enacted “which shall deprive any person of life, liberty, or property without due process of
law.”

The answer does not claim or allege that the city was
ever served with any process or that it had notice or was
given an opportunity to defend itself before the Insular
Auditor rendered his decision.

Second, it violates that portion of the section which says:

“That
no money shall be paid out of the treasury except in pursuance of an
appropriation by law.”

It is not claimed that any appropriation was made by
the Government of the city to pay the claim of the Metropolitan Water District against the city, and yet over the
vigorous protest and objection of the city, defendants propose to take money out of the government treasury, which
belongs to the city, and pay an alleged debt of the Metropolitan Water District against the city. No money can be
taken out of the government treasury for any purpose
without an appropriation having first been made for that
specific purpose. In legal effect that was the decision of
this court in Gotamco vs.
Wright, decided November 5, 1924, and published in 46 Phil., 467, where
in an opinion written by Justice Ostrand, it is said:

“.*
* * Section 3 of the Organic Act expressly provides that ‘no money
shall be paid out of the Treasury except in pursuance of an
appropriation by law.’ Neither the Insular Collector of Customs nor any
other official of the Government is authorized to order the expenditure
of unappropriated funds, * * *.”

And third, the other provision which says:

“That
all money collected on any tax levied or assessed for a special purpose
shall be treated as a special fund in the treasury and paid out for
such purpose only.”

Here, the defendants propose to take public money from
and out of the government treasury, which is in a special
fund, and which was assessed, levied and collected for a
special purpose, and pay it over to a public corporation.
In other words, to take money out of the government
treasury, which was assessed, levied and collected for the
exclusive use and benefit of the City of Manila, a municipal corporation, and pay it to the Metropolitan Water
District, which is a public corporation.

No authority has been cited, and none will ever be found to legalize
such a proceeding.

In the recent decision of this court in the case of Ynchausti & Co. vs.
Wright (47 Phil., 866), it was held that. the decisions of the Insular
Auditor are final and conclusive only upon the “executive branches of
the government.”

Accepting that as the law of this court, the defendants
vigorously contend that the City of Manila is an executive
branch of the government. That position is not tenable.
It is true that by the terms of the charter, the Mayor of the
City of Manila is the executive officer of the city, and that
the Mayor is appointed by the Governor-General. It is
also true that by the terms of the charter, the Municipal
Board is the legislative body of the city, which consists of
ten members, who are elected by a direct vote of the people,
and that it is the duty of the Board to elect a president
from one of its own members, and that “the president shall sign all
ordinances, and all resolutions and motions directing the payment of
money or creating liability, enacted or adopted by the Board.” That is
to say, in the first instance, the power to allow or disallow a claim
against the city, like the one in question, is vested in the Municipal
Board, and it is elected by a direct vote of the people, and the
charter of the City of Manila was granted by the Legislature of the
Philippine Islands, and approved by the then Governor-General.

If, in the first instance, the power to allow or disallow
a claim, like the one in question, was vested in the Mayor,
there might be some merit in the Contention, that it would
then be an executive act. But that authority is vested in
the council, and in such cases, the only power which the
Mayor has is that of veto, and the council has the power
to overrule his veto. Under the terms and provisions of the
charter, the allowance or disallowance of a claim against
the city, subject only to a veto, is vested exclusively in the
legislative body of the city, which is elected by a direct vote
of the people, and, outside of his power of veto, is a matter over which the Mayor has no control.

It must follow that under the provisions of the charter of the City of
Manila, the allowance or disallowance by the Municipal Board of a claim
like the one in question is a legislative act, and that in the doing of
such an act, the city would be exercising its legislative powers, and
for such reason, and, if it is in any case, in that particular at
least, the city is not an executive branch of the government.

The city claims and alleges that any title which the Metropolitan Water
District may have in or to the water system is held by the Water
District in trust and for the use
and benefit of the city. That would be an equitable defense and one
upon which the city has the right to be heard
and to have judicially determined.

This is a mandamus
proceeding, and it is fundamental that title to property cannot be
litigated in this kind of an action. It also appears that any claim
which the Water District may have against the city is founded upon a
contract express or implied for which mandamus will not lie.

Ruling Case Law, vol. 18, p. 129, says:

“43. Contract Rights.—Obligations
which rest solely upon contract will not be, enforced by mandamus where
there is no question of trust or of official duty; it is not the
appropriate remedy for the enforcement of private contract rights, * *
*.”

On legal principle, the decision of this court in the case
of Quiogue vs.
Romualdez (46 Phil,, 337), is in point. Although the question there
presented was “to enforce the performance of a private contract,” the
opinion written by Justice Street says that mandamus:

”
‘* * * never lies where the party aggrieved has adequate remedy at law,
and its aid is only to be invoked to prevent an absolute failure of
justice in cases where ordinary legal processes furnish no relief. * *
*’ ” And quotes with approval from the decision in State ex rel.
Bohannon vs.
Howard County (39 Mo., 375), where the court says that it would not:

”
‘Undertake by writ of mandamus to enforce simple common law rights
between individuals, such as payment , of money, or where there is
another adequate legal remedy. * * *'” And the opinion of Justice
Street says:

“The
authorities, almost without exception, support the doctrine stated in
the foregoing cases,” citing a number of authorities.

It follows that the question as to whether or not the
Metropolitan Water District has a valid claim against the
City of Manila cannot be litigated in this kind of a proceeding, but assuming that its claim was valid, it would
not be a defense to plaintiff’s petition. The same thing
is true as to the allegation in the petition, that the Metropolitan Water District holds the title to the water system
in trust and for the use and benefit of the city. That
question cannot be litigated in this action.

Hence, the only question now before this court is as to whether the
city has a legal right to have the warrants in question issued to and
in its favor, and as to whether the acts of the Collector of Internal
Revenue and the Insular Auditor, in seeking to pay over the money in
question to the Metropolitan Water District are null and void.

Based upon the statutory provisions and the admitted
facts, we are clearly of the opinion that the warrants in
question should be drawn to and in favor of the city, and
that it is legally entitled to the possession of the funds,
and that the decision of the Insular Auditor to divert the
funds to the Metropolitan Water District is null and void
and of no legal force and effect.

Under their respective charters, both the Metropolitan Water District
and the city can sue and be sued. If the Metropolitan Water District
has a valid claim against the city, that fact can legally be
ascertained and determined in a judicial proceeding for that purpose,
and in the same manner as any other disputed claim. If the Water
District holds the title to the water system in trust and for the use
and benefit of the city, that fact can also be determined in the same
way, and the whole question settled. But neither of such questions can
be judicially determined in a mandamus proceeding. Both of those
questions will have to he determined in another arid a different
proceeding, upon proper pleadings, and decided upon the merits, and
about which at this time and upon this record, we do not have or
express any opinion.

Suffice it to say that the City of Manila is solvent and
can be made to pay any debt that it legally owes, and
that as to the title of the property, the city has ample
redress against the Metropolitan Water District.

It will be noted that in the answer of the defendants:

“They
deny, all and singular, the allegations contained in the other
paragraphs of the petition, except those that in the following special
defense are specifically admitted.” That is to say, the answer is in
the nature of a general denial, except as to those questions which are
alleged and admitted in the “special defense,” which is in the nature
of a plea of “confession and avoidance.” In legal effect, the special
defense admits the doing of the things of which the petitioner
complains, and in justification alleges how and by whom they were done
and the reasons why they were done.

The demurrer of the petitioner is upon the ground that
the answer does not state facts sufficient to constitute a
defense.

In its argument on the demurrer, the city says nothing whatever about
the general denial in the answer, and confines itself to the matters
set forth and alleged in the special defense, from which it is very
apparent that it was the purpose and intent of the city to limit its
demurrer to the special defense alleged in the answer, and that it
should be so construed.

Based upon the allegations made in the petition and those
made in the special answer, it is the judgment of the court
that the demurrer, in so far as it alleges that the answer
does not allege facts sufficient to constitute a defense, be
sustained as to the special defense plead in the answer,
and unless the defendants shall within ten days amend
their answer, so as to cure the defects pointed out in this
decision, the petition prayed for shall issue as follows:

First, that a writ of mandamus shall issue “ordering the respondent
Collector of Internal Revenue to issue in favor of the petitioner, and
not to the Metropolitan Water District, all the warrants which he ought
to issue for the share of the petitioner in the internal revenue
collections and in whatever other fiscal collections to which said
petitioner is, by law, entitled.”

Second, that a writ of mandamus shall issue “ordering the respondent
Ben F. Wright, Insular Auditor, his deputies, agents, employees or
other persons acting in his stead, to countersign and approve any
check, warrant or order of payment which the respondent Collector of
Internal Revenue may issue in favor of the petitioner for such sum of
money as represent its share or allotment in the internal revenue
collections and in the special tax imposed by Act. No. 3065.”

That the temporary injunction heretofore issued by the
vacation Justice shall be, and is hereby, made permanent,
and in all other respects, the prayer of the petitioner is
denied. Neither party to recover costs. So ordered.

Avanceña, C. J., Malcolm, Villamor, and Romualdez, JJ.,
concur.

Johnson and Villa-Real, JJ., took no part in the consideration of this case.

---

 

CONCURRING IN THE RESULT

STREET, J.:

As a matter of practice I should have preferred to overrule the demurrer to the answer, requiring the parties
to submit the cause on an agreed statements of fact or upon
such proof as they might have seen fit to adduce before
our commissioner. The majority, however, find sufficient
admissions in the answer to define the issues; and as the
parties may be supposed to be desirous of having the case
settled speedily on the merits, I waive my views on this
point.

Confining myself to the principal features of the case, I
will say that the so-called “special defense” contained in
the answer and the accompanying exhibits show in my
opinion that the City of Manila is liable for the value of
the water supplied to it by the Metropolitan Water District
for use in fighting fires and sprinkling streets. All administrative officials, whether supporters of the city in the
present contention or not, have so assumed; and this is in
conformity with justice and the letter of the law. I am
further of the opinion that the administrative authority
of the Auditor over the Metropolitan Water District is
coextensive with his authority over the city and other
branches of the public service; and he has the same power
to enforce the settlement of accounts with respect to this
entity as he has with respect to provinces and chartered
cities. It seems to me, however,—and upon this decisive
point I concur with the majority,—that the power to enforce the settlement of accounts does not include the power
to divert funds from the city treasury in the manner now
threatened. The Insular Auditor certainly does not have
the power to put his hands into the city treasury and take
out money to pay its debts however meritorious the obligation; and if he does not have this power he cannot intercept
and divert funds in course of transmission to the city.
Lastly, it is my opinion that the provision of section 3 of
the Jones Law which declares that the money collected on
any tax levied or assessed for a special purpose shall be
treated as a special fund in the treasury and paid out for
such purpose only is not pertinent to the case, since the
money with which we are now dealing was not levied or
assessed for a special purpose. The revenue allotments
are taken from the general fund in the Insular Treasury,
collected under general laws; and said allotments accrue
to the general funds of the city, except as to one-half of
the municipal allotment, which is applied by law to the
school fund of the city. (See secs. 490, 492, 494, Admin,
Code.) Of course this part of the allotment to the city
could not in any event be diverted by the Insular Auditor
to the payment of the city’s indebtedness to the Metropolitan Water District.

---

 

DISSENTING

OSTRAND, J.:

I dissent. In my humble judgment the court has exceeded
its jurisdiction in ordering the issuance of the writ of mandamus to the Insular Auditor upon the facts shown by
the pleadings.

The Organic Act (Act of Congress of August 29, 1916, the so-called
Jones Law) gives the Insular Auditor extensive powers, some of them of
a judicial character. Section 24 of the Act provides that he “shall
examine, audit and settle all accounts pertaining to revenues and receipts” of
the Philippine Government and of the provincial and municipal governments. Section 588 of the Administrative
Code, as amended by Act No. 3066, provides that he shall
have the power to enforce the settlement of
“accounts subsisting between the different bureaus or offices of the
Insular service; between any such bureau or office and any provincial,
municipal, or city governments; between provincial governments; between
municipal or city governments; and between any such provincial and
municipal or city governments.”

Section 24 of the Organic Act also empowers the Auditor
to summon “witnesses, administer oaths, and to take evidence, and, in the pursuance of these provisions may issue
subpoenas and enforce the attendance of witnesses.” The
same section, in connection with section 25 of the Act, provides that the Auditor’s decisions “shall be final and conclusive
upon the executive branches of the Government” subject to an appeal to
the Governor-General. (The difference in language between this
provision and the corresponding statutory provisions with reference to
the powers of Auditors in the United States, is not without
significance: here, the statute speaks of the decisions of the Auditor; there, it is provided that the balances which may from
time to time be certified by Auditors * * * shall be
final and conclusive upon the executive branch of the Government * * *.)

It must be borne in mind that the jurisdiction of territorial courts is
not specifically determined by the United States Constitution and that
Congress, therefore, in the exercise of its plenary power to provide
for the government of territories, may lawfully impose limitations upon
the jurisdiction of the Philippine judiciary and if it so sees fit, may
invest executive officers with judicial functions and place
corresponding limitations on the jurisdiction of the ordinary courts.
This being true, there can, of course, be no question as to the
constitutionality of the provision last quoted from the Organic Act and
that it must be given full force and effect. It is so clear and
positive as to admit of no special interpretation and must be taken to
mean exactly what it says, namely, that the Insular Auditor is vested
with final and conclusive jurisdiction over questions of accounting
between two or more executive branches of the Government, subject only
to the right of appeal to the Governor-General. It follows that once
the Insular Auditor has taken jurisdiction over a matter of that
character, the ordinary courts cannot interfere, at least not until the
remedy by appeal to the Governor-General is exhausted.

It is suggested in the decision of the court (1) that
neither the City of Manila nor the Metropolitan Water
District are executive branches of the Government, and (2)
that the subject matter of the controversy is not an account
within the meaning of section 24 of the Organic Act and
the Accounting Act by the Philippine Islands. Neither
one of these contentions can, in my opinion, be sustained.
It is true that the City of Manila, as a chartered city,
has certain delegated legislative powers, but so have the
ordinary municipal and provincial governments and there
can be no question that the handling of funds and matters
of accounting are executive functions, and that in regard
to such matters the city, as an agency of the Government,
must be considered a branch of the Executive Department.
Moreover, for administrative purposes the city is under the
direct supervision of one of the executive departments, the
Department of the Interior. It is further, to be noted
that both the City of Manila and the Metropolitan Water
District are, in their relation to the Insular Auditor, made
executive branches of the Government by the provision of
section 593 of the Administrative Code, as amended by Act
No. 3066.

It is true that in its charter, the Metropolitan Water
District is styled a public corporation and in a certain
sense so it is. But it is more than an ordinary public
corporation; it is also an agency of the Government and
vested with governmental powers. In common with a municipal corporation it has no stock and it is the successor
of the City of Manila in the administration of the water and
sewer system by the same right as that which made the
chartered City of Manila the successor of the old Ayuntamiento. Section 3 of Act No. 2832 as amended provides
that certain officers of the Insular Government and of the
City of Manila, together with a resident tax payer to be
appointed by the Governor-General, shall compose the District Board, the governing body. All this indicates that
the corporation is a branch of the Government. By section
2 (f) of Act No. 2832 it is empowered “to construct, maintain, and operate such systems of sanitary sewers as may
be necessary for the proper sanitation of the District;” this
must be considered a governmental function. It is also
empowered to enact such regulations as may be necessary
for the sanitary protection of the watershed, reservoirs
and water mains, and for the proper operation of the sanitary sewers, and to fix penalties for the violation of
the regulations thus enacted (section 2 [Z] of Act No.
2832). Certainly the power to enact coersive regulations
and to provide and impose penalties is a governmental
function and a prerogative or attribute of the State.

It is further to be noted that the corporation is by law
placed under the control, direction and general supervision
of the Secretary of the Interior; that its employees are all
under the civil service regulations; and that all of its accounts are audited by the Insular Auditor. As already
stated, in its relations to the Insular Auditor it is also
made an executive branch of the Government by section
593 of the Administrative Code as amended. In these circumstances it can hardly be seriously contended that it is
not a branch of the Government or a governmental agency.

Neither will the assertion that the claim of the Metropolitan Water District against the city is not an account
survive an examination. In its ordinary acceptation the
word “account” denotes a statement of debits and credits.
The number of items in the statement does not affect its
character as an account. Bouvier, citing authorities, says:

“An open account is one in which some term of the contract is not settled by the parties, whether the account
consists of one item or many.”

The fact that all the credit items are in favor of the
party who presents the statements is immaterial; accounts
need not necessarily be mutual. In the language of the
court in the case of Donley vs. Bailey (48 Colo., 373):

“The
word ‘account’ has various meanings and is used in a variety of ways
and senses * * *. An account arises out of contract or some fiduciary
relation. Its ordinary commercial usage is to refer to a claim or
demand growing out of the sale of goods, performance of services and
the like. When used alone, without words of limitation, extension,
qualification or explanation, it is sometimes equivalent to the word
‘claim’ or ‘demand,’ when referring to an indebtedness arising but of
contract or some fiduciary relation”. (Citing Morrisette vs. Wood, 128 Ala.,
505; Southern Kan. Ry. Co. vs. Gould, 44 Kan., 68.)

In this case we have the following situation: The Metropolitan Water District has rendered certain services to
the city for the benefit of its inhabitants; the city has
accepted the services and its liability, if any, to pay for
them is necessarily founded upon an implied contract.
The Water District has from time to time presented its
statements of the services and charges to the city and for
auditing purposes these statements, arising, as they do,
out of an implied contract, are, accounts. It is to be observed that the city does not dispute the correctness of the
statements, but simply denies in toto its liability to pay for
services received. But the fact that the party to whom
an account is rendered denies his liability for items arising
out of a contract express or implied, does not affect the
character of the account as such; it is precisely in regard
to disputed items that the judicial or quasi-judicial functions of the Insular Auditor are exercised. I am not here
speaking of items involving claims for damages or other
matters arising ex delicto.

As far as I can see there can therefore be no question
that for accounting purposes the Insular Auditor had original and the Governor-General appellate jurisdiction over
the matter here in controversy. By holding that the courts
may intervene before the Governor-General has had an
opportunity to pass upon the decision or ruling of the
Auditor, this court virtually deprives him of his appellate
jurisdiction and it seems to me that the principle announced
by the United States Supreme Court in the case of Baltimore & Ohio Railroad Company vs.
United States of America ex rel. Pitcairn Coal Co. (215 U. S., 481), is
fully applicable to the present case. That case involved a question of
alleged unjust discrimination in the distribution of coal cars by the
railroad company, a matter within the administrative jurisdiction of
the Interstate Commerce Commission. Instead of going to the Interstate
Commerce Commission, the complainant, the Pitcairn Coal Co., filed a
petition in mandamus in the United States Circuit Court for the
District of Maryland. That court granted the petition and ordered the
issuance of the writ in reliance on section 10 of Act of Congress of
March 2, 1889, which reads as follows:

“Sec.
10. That the circuit and district courts of the United States shall
have jurisdiction, upon the relation of any person or persons, firm or
corporation, alleging such violation by a common carrier of any of the
provisions of the act of which this is a supplement,, and all acts
amendatory thereof, as prevents the relator from having interstate
traffic moved by said common carrier at the same rates as are charged,
or upon terms or conditions as favorable as those given, by said common
carrier for like traffic under similar conditions to any other shipper,
to issue a writ or writs of mandamus against said common carrier,
commanding such common carrier to move and transport the traffic, or to
furnish cars or other facilities for transportation for the party
applying for the writ: Provided, That if
any question of fact as to the proper compensation to the
common carrier for the service to be enforced by the writ
is raised by the pleadings, the writ of peremptory mandamus may issue, notwithstanding such question of fact is
undetermined, upon such terms as to security, payment of
money into the court, or otherwise, as the court may think
proper, pending the determination of the question of fact:
Provided, That the remedy hereby given by writ of mandamus shall be cumulative, and shall not be held to exclude
or interfere with other remedies provided by this act or
the act to which it is a supplement.”

Upon appeal, the Supreme Court reversed the decision
of the Circuit Court and held that the courts could not interfere by writ of mandamus until after the matter in
controversy had been acted on by the Interstate Commerce
Commission. Speaking through Chief Justice White, the
Court said:

“*
* * When the situation is thus defined we see no escape from the
conclusion that the grievances complained of were primarily within the
administrative competency of the Interstate Commerce Commission, arid
not subject to be judicially enforced; at least, until that body,
clothed by the statute with authority on the subject, had been
afforded, by a complaint made to it, the opportunity to exert its
administrative functions.”

The practical considerations informing the decision in the
Pitcairn Coal Co. case exist to an equal extent in the present case. It is further to be observed that in the former
case the courts were expressly authorized by law to issue
writs of mandamus to common carriers in matters falling
within the administrative jurisdiction of the Interstate Commerce Commission; here, the Insular Auditor and the
Governor-General are by Act of Congress expressly given
exclusive and conclusive jurisdiction over accounts between
the various branches of the Government, which, as we have
seen, includes the Metropolitan Water District as well as
the City of Manila. In this respect, at least, this case is
more favorable to the respondents.

The object of Congress in conferring exclusive jurisdiction over such
accounts upon administrative or executive officials is sufficiently
obvious: it can manifestly serve no useful purpose to have the various
executive branches of the Government waste energy, money and time in
more or less futile litigation in regard to matters of accounting; they
are all agencies of the same Government and in the last analysis
subsisting on Government funds. The Governor-General is vested with
“the supreme executive power” (Organic Act, section 21) and by himself
and through his subordinates, is ordinarily in a better position than
are the ordinary courts to adjust differences between such agencies as
to disposition of funds and the accounting therefor.

If this court can by mandamus interfere with the exercise by the Chief
Executive of his constitutional prerogatives, the Courts of First
Instance can do likewise. That
this will not make for efficiency in administration, but will
cause confusion and, in cases such as the present, tend to
disrupt the government accounting system can hardly be
doubted. Congress in the exercise of its plenary powers
over territorial governments has deemed the appeal to the
Governor-General an adequate mode of testing the validity
of the decisions of the Insular Auditor and has made the
remedy exclusive, and its views should be respected by the
courts.

The majority opinion contains various statements
which may create erroneous impressions. It is thus asserted that the
ruling of the Auditor in this case was not delivered upon due process
of law. In regard to this it may be observed that the point is not
raised by the petitioner and that the presumption is that the
proceedings were regular. In these circumstances the burden is not on
the respondents to show affirmatively that there was due process of
law. As far as the record shows the process may have been sufficient.
The answer alleges that the Insular Auditor, “after due study of the
claim of the Metropolitan Water District against the City of Manila,
taking into consideration the conflicting contentions of both parties,
reached the conclusion that the claim was just, legal and proper,” and
that he thereupon
“made demand upon the City of Manila for the payment and settlement of
the claim, advising the city that upon failure of payment, he would
exercise the power vested in him by section 588 of the Administrative
Code as amended by section 1 of Act No. 3066, but the city refused to
comply with said demand.” This would seem to indicate that the parties
were heard before the ruling was made. There is nothing to the contrary
in the pleadings. Summary processes are not necessarily unjust or
unconstitutional or open to the objection that they deprive persons of
their property without due process of law (McMillen vs. Anderson, 95 U. S., 37).

The statement that the money claimed by the city “was
assessed, levied and collected for a specific purpose and for
such reason it should ‘be treated as a special fund in the
treasury and paid out for such purpose only’ ” is likely
to be misunderstood. The money consists of so-called
provincial and municipal allotments. Two-thirds of the
city’s allotments accrues to its general funds and may be
made available for the payment of the account of the Metropolitan Water District (sections 491, 492, 494 and 495
of the Administrative Code).

The money is now in the Insular Treasury as a credit
in favor of the city and there is some merit in the contention that the Auditor has no power to order it paid directly
from the Treasury to the Metropolitan Water District with
out a previous appropriation by the Municipal Board, and
if this court had jurisdiction of the case, it would no doubt
have the power to issue a writ of injunction to the Insular
Treasurer restraining him from making such payment.
But that does not necessarily mean that the Insular Auditor may not decline to countersign a warrant for the
transfer of credits from the Insular Treasury to a Government agency who fails or refuses to meet its financial
obligations to another Government agency; that is another
and entirely different matter.

By section 588 of the Administrative Code, as amended
by Act No. 3066, the Insular Auditor is empowered to
enforce the settlement of accounts subsisting between the
various Government agencies. He cannot issue writs of
mandamus or injunctions and, as far as I can see, the only
means within his reach for enforcing settlement of such
accounts by a recalcitrant Government agency, is to prevent
the transfer to it of credits in the Government treasury
which might otherwise be made available for the payment
of the accounts. A debt to an agency of the Government
may be said to be in effect a debt to the Government itself
and it seems reasonable to require that before the debtor
can demand payment of his credits from the Government,
he must make provisions for paying the debt. In these
circumstances, can the Insular Auditor be compelled by
mandamus to lend his cooperation to the transfer of such
credits to a defaulting debtor and thus incur the risk of
having them dissipated for other purposes before any attempt is made to pay the debts? I do not think that such
a state of affairs can have been contemplated either by
Congress or by the Legislature.

I may say further that unless Act No. 2832, the charter
of the Metropolitan Water District, is unconstitutional—and I do not
think it will be so held—the excuse offered by the city for not
settling the account here in Question is to my mind nothing but a
flimsy pretext. If the city upon such pretexts can prevent the Insular
Auditor from exercising his functions, other Government agencies may do
the same, and the result can be nothing but confusion and delay in the
settlement of Government accounts. An Act of the Legislature is
presumed to be valid and until it is shown to be otherwise, the Auditor
is justified in following its provisions. If the city desires to test
the constitutionality of the statute in question, it should be required
to do so by an action at law before being permitted to use the alleged
unconstitutionally as an excuse for the non-payment of its debt.

Much more might be said in regard to the merits of the
case, and the temptation to do so is strong, but for the
sake of brevity I shall refrain from further discussion.
Suffice it to say that the errors alleged to have been committed by the Insular Auditor might have been corrected
by an appeal such as provided for in the Organic Act.
We have no right to presume that the Governor-General
would not have given due consideration to the petitioner’s
claims if they had been properly brought to his attention
upon such appeal.

By way of recapitulation, my conclusions are that this court has no
jurisdiction to entertain a petition such as that in the present case
before the remedy of appeal to the Governor-General has been exhausted;
that while the Insular Auditor may not have the power to order that the
funds here in question be paid to the Metropolitan Water District
without a previous appropriation by the Municipal Board of Manila, he
may nevertheless in the exercise of his power to enforce settlement of
a disputed account decline to countersign a warrant for the transfer of
the funds from the Insular Treasury to the city; that assuming without
conceding that the court has jurisdiction over the case, it can only
enjoin the Insular Treasurer from paying the funds to the Metropolitan
Water District without previous appropriation, but has no power to
compel the Insular Auditor to countersign a warrant for the transfer of
the funds to the city; and that the court in assuming jurisdiction over
the case has in effect undertaken to deprive the Chief Executive of
jurisdiction expressly conferred upon him by constitutional statutes
and has to that extent committed an encroachment upon the domain of a
coordinate department of the Government, and has arrogated to itself
powers not conferred on it by law. I do not maintain that a decision of
the Insular Auditor or of the Governor-General would be conclusive as
to the title to the property
in dispute between the city and the Water District.