Vilas vs. City of Manila
The petitioners were creditors of the City of Manila when it was still under Spanish
sovereignty and are now trying to collect on their claims from the city which has
since been reincorporated (in 1901), following the cession of the Philippines to the
United States under the Treaty of Paris. [During this era, decisions by the
Philippine Supreme Court were reviewable by the US Supreme Court if the dispute
involved a United States Treaty.] Respondents argue that the liability of the city
was effectively extinguished by the change of sovereignty
Liability not extinguished. In view of the dual character of municipal corporations,
there is no reason for presuming their total dissolution as a mere consequence of
military occupation or territorial cession. A municipal corporation is both
governmental and proprietary. In the latter character, the corporation is deemed a
corporate legal individual existing for private purposes. While there arises a total
abrogation of the political relations with the former sovereign, but that body of
municipal law which regulates private and domestic rights continues in force until
abrogated or hanged by the new ruler.