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G.R. No.

L-24950 March 25, 1926

VIUDA DE TAN TOCO, plaintiff-appellant,


vs.
THE MUNICIPAL COUNCIL OF ILOILO, defendant-appellee.

Arroyo & Evangelista for appellant.


Provincial Fiscal Borromeo Veloso for appelle.

VILLAMOR, J.:

It appears from the record that the widow of Tan Toco had sued the municipal council of Iloilo for the amount of
P42,966.40, being the purchase price of two strips of land, one on Calle J. M. Basa consisting of 592 square meters, and
the other on Calle Aldiguer consisting of 59 square meters, which the municipality of Iloilo had appropriated for widening
said street. The Court of First Instance of Iloilo sentenced the said municipality to pay the plaintiff the amount so claimed,
plus the interest, and the said judgment was on appeal affirmed by this court.1

On account of lack of funds the municipality of Iloilo was unable to pay the said judgment, wherefore plaintiff had a writ of
execution issue against the property of the said municipality, by virtue of which the sheriff attached two auto trucks used
for 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.

After notice of the sale of said property had been made, and a few days before the sale, the provincial fiscal of Iloilo filed a
motion which the Court of 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 of the rights of the defendant municipality.

Plaintiffs counsel objected o the fiscal's motion but the court, by order of August 12, 1925, declared the attachment levied
upon the aforementioned property of the defendant municipality null and void, thereby dissolving the said attachment.

From this order the plaintiff has appealed by bill of exceptions. The fundamental question raised by appellant in her four
assignments of error is whether or not the property levied upon is exempt from execution.

The municipal law, section 2165 of the Administrative Code, provides that:

Municipalities are political bodies corporate, and as such are endowed with the faculties of municipal
corporations, to be exercised by and through their respective municipal government in conformity with law.

It shall be competent for 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 for municipal purposes, and generally to exercise the powers
hereinafter specified or otherwise conferred upon them by law.

For the purposes of the matter here in question, the Administrative Code does not specify the kind of property that a
municipality may acquire. However, article 343 of the Civil Code divides the property of provinces and towns
(municipalities) into property for public use and patrimonial property. According to article 344 of the same Code, provincial
roads and foot-path, squares, streets, fountains and public waters, drives and public improvements of general benefit built
at the expense of the said towns or provinces, are property for public use.

All other property possessed by the said towns and provinces is patrimonial and shall be subject to the provisions of 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 of the towns, "between that a common benefit and that which is private property
of the town. The first differs from property for public use in that generally its enjoyment is less, as it is limited to neighbors
or to a group or class thereof; and, furthermore, such use, more or less general, is not intrinsic with this kind of property,
for 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 of the town or province by the entities representing it and, like and private property, giving a source of
revenue."

Such distinction, however, is of little practical importance in this jurisdiction in view of the different principles underlying the
functions of a municipality under the American rule. Notwithstanding this, we believe that the principle governing property
of the public domain of the State is applicable to property for public use of the municipalities as said municipal is similar in
character. The principle is that the property for public use of the State is not within the commerce of man and,
consequently, is inalienable and not subject to prescription. Likewise, property for public of the municipality is not within
the commerce of 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 often provide the court houses, jails and other buildings owned by municipalities and the lots on
which they stand shall be exempt from attachment and execution. But independent of express statutory
exemption, as a general proposition, property, real and personal, held by municipal corporations, in trust for the
benefit of their inhabitants, and used for 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 of liquors carried in a town dispensary, are
exempt. The reason for the exemption is obvious. Municipal corporations are created for public purposes and for
the good of the citizens in their aggregate or public capacity. That they may properly discharge such public
functions corporate property and revenues are essential, and to deny them these means the very purpose of their
creation would be materially impeded, and in some instances practically destroy it. Respecting this subject the
Supreme Court of Louisiana remarked: "On the first view of 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 satisfaction of its creditors. This
consideration, deduced from the principles of moral equity has only given way to the more enlarged contemplation
of the great and paramount interests of public order and the principles of government."

It is generally held that property owned by a municipality, where not used for a public purpose but for quasi private
purposes, is subject to execution on a judgment against the municipality, and may be sold. This rule applies to
shares of stock owned by a municipal corporation, and the like. But the mere fact that corporate property held for
public uses is being temporarily used for private purposes does not make it subject execution.

If municipal property exempt from execution is destroyed, the insurance money stands in lieu thereof and is also
exempt.

The members or inhabitants of a municipal corporation proper are not personally liable for the debts of the
municipality, except that in the New England States the individual liability of the inhabitant is generally maintained.

In Corpus Juris, vol 23, page 355, the following is found:

Where property of a municipal or other public corporation is sought to be subjected to execution to satisfy
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 for which it is held. The rule is that property held for public uses, such as
public buildings, streets, squares parks, promenades, wharves, landing places fire engines, hose and hose
carriages, engine houses, public markets, hospitals, cemeteries, and generally everything held for governmental
purposes, is not subject to levy and sale under execution against such corporation. The rule also applies to funds
in the hands of a public officer. Likewise it has been held that taxes due to a municipal corporation or country
cannot be seized under execution by a creditor of such corporation. But where a municipal corporation or country
owns in its proprietary, as distinguished from its public or governmental capacity, property not useful or used for a
public purpose but for quasi private purposes, the general rule is that such property may be seized and sold under
execution against the corporation, precisely as similar property of individuals is seized and sold. But property held
for public purposes is not subject to execution merely because it is temporarily used for private purposes,
although if the public use is wholly abandoned it becomes subject to execution. Whether or not property held as
public property is necessary for the public use is a political, rather than a judicial question.

In the case of City of New Orleans vs. Louisiana Construction Co., Ltd. (140 U. S., 654; 35 Law. ed., 556), it was held that
a wharf for unloading sugar and molasses, open to the public, was property for the public use of the City of New Orleans
and was not subject to attachment for the payment of the debts of the said city.

In that case it was proven that the said wharf was a parcel of land adjacent to the Mississippi River where all shipments of
sugar and molasses taken to New Orleans were unloaded.

That city leased the said wharf 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 of
charging certain fees for storing merchandise in the said warehouses and the public in general had the right to unload
sugar and molasses there by paying the required fees, 10 per cent of which was turned over to the city treasury.

The United States Supreme Court on an appeal held that the wharf was public property, that it never ceased to be such in
order to become private property of the city; wherefore the company could not levy execution upon the wharf in order to
collect the amount of the judgment rendered in favor thereof.

In the case of Klein vs. City of New Orleans (98 U. S., 149; 25 Law. ed., 430), the Supreme Court of the United States that
a public wharf on the banks of the Mississippi River was public property and not subject to execution for the payment of a
debt of the City of New Orleans where said wharf was located.

In this case a parcel of land adjacent to the Mississippi River, which formerly was the shore of the river and which later
enlarged itself by accession, was converted into a wharf by the city for public use, who charged a certain fee for 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
of the debts of the city. It was further held that the fees collected where also exempt from execution because they were a
part of the income of the city.
In the case of Tufexis vs. Olaguera and Municipal Council of Guinobatan (32 Phil., 654), the question raised was whether
for the payment of a debt to a third person by the concessionaire of 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 of his debtor's property, yet when among such
property there is included the special right granted by the Government of usufruct in a building intended for a
public service, and when this privilege is closely related to a service of a public character, such right of the
creditor to the collection of a debt owed him by the debtor who enjoys the said special privilege of usufruct in a
public market is not absolute and may be exercised only through the action of court of justice with respect to the
profits or revenue obtained under the special right of usufruct enjoyed by debtor.

The special concession of the right of usufruct 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 officials
thereof to conduct and manage a service of a public character, to be substituted, without the knowledge and
consent of the administrative authorities, by one who took no part in the contract, thus giving rise to the possibility
of the regular course of a public service being disturbed by the more or less legal action of a grantee, to the
prejudice of the state and the public interests.

The privilege or franchise granted to a private person to enjoy the usufruct of a public market cannot lawfully be
attached and sold, and a creditor of such person can recover his debt only out of the income or revenue obtained
by the debtor from the enjoyment or usufruct of the said privilege, in the same manner that the rights of such
creditors of a railroad company can be exercised and their credit collected only out of the gross receipts
remaining after deduction has been made therefrom of the operating expenses of the road. (Law of November 12,
1896, extended to the overseas provinces by the royal order of August 3, 1886.)

For the reasons contained in the authorities above quoted we believe that this court would have reached the same
conclusion if the debtor had been municipality of Guinobatan and the public market had been levied upon by virtue of the
execution.

It is evident that the movable and immovable property of a municipality, necessary for governmental purpose, may not be
attached and sold for the payment of a judgment against the municipality. The supreme reason for this rule is the
character of the public use to which such kind of property is devoted. The necessity for government service justifies that
the property of public of the municipality be exempt from execution just as it is necessary to exempt certain property of
private individuals in accordance with section 452 of the Code of Civil Procedure.

Even the municipal income, according to the above quoted authorities, is exempt from levy and execution. In volume 1,
page 467, Municipal Corporations by Dillon we find that:

Municipal corporations are instituted by the supreme authority of a state for the public good. They exercise, by
delegation from the legislature, a portion of the sovereign power. The main object of their creation is to act as
administrative agencies for the state, and to provide for the police and local government of certain designated civil
divisions of its territory. To this end they are invested with certain governmental powers and charged with civil,
political, and municipal duties. To enable them beneficially to exercise these powers and discharge these duties,
they are clothed with the authority to raise revenues, chiefly by taxation, and subordinately by other modes as by
licenses, fines, and penalties. The revenue of the public corporation is the essential means by which it is enabled
to perform its appointed work. Deprived of its regular and adequate supply of revenue, such a corporation is
practically destroyed and the ends of its erection thwarted. Based upon considerations of this character, it is the
settled doctrine of the law that only the public property but also the taxes and public revenues of such
corporations cannot be seized under execution against them, either in the treasury or when in transit to it.
Judgments rendered for taxes, and the proceeds of such judgments in the hands of officers of the law, are not
subject to execution unless so declared by statute. The doctrine of the inviolability of the public revenues by the
creditor is maintained, although the corporation is in debt, and has no means of payment but the taxes which it is
authorized to collect.

Another error assigned by counsel for appellant is the holding of the court a quo that the proper remedy for collecting the
judgment in favor of the plaintiff was by way or mandamus.

While this question is not necessarily included in the one which is the subject of this appeal, yet we believe that the
holding of the court, assigned as error by appellant's counsel, is true when, after 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 of several States of the Union upholding the same principle and which are
cited on page 2679 of the aforesaid work. In this sense this assignment of error, we believe, is groundless.

By virtue of all the foregoing, the judgment appealed from should be and is hereby affirmed with costs against the
appellant. So ordered.
[G.R. No. L-32162. September 28, 1984.]

THE PASAY CITY GOVERNMENT, THE CITY MAYOR OF DEFENDANT PASAY CITY
GOVERNMENT, THE MEMBERS OF THE MUNICIPAL BOARD OF PASAY CITY and THE CITY

TREASURER OF PASAY CITY GOVERNMENT, petitioners-appellants, vs. THE HONORABLE

COURT OF FIRST INSTANCE OF MANILA, BRANCH X and VICENTE DAVID ISIP (doing business
under the firm name V.D. ISIP SONS & ASSOCIATES), respondents-appellees.

Enrico R. Castro for petitioners-appellants.

Lorenzo D. Fuggan and F . V . Castillo for respondents-appellees.

SYLLABUS

1. CIVIL LAW; CONTRACTS; COMPROMISE AGREEMENT; NATURE. A compromise agreement not contrary to law,

public order, public policy, morals or good customs is a valid contract which is the law between the parties themselves
(Municipal Board of Cabanatuan City vs. Samahang Magsasaka, Inc., 62 SCRA 435). A judgment on a compromise is

final and executory (Samonte vs. Samonte, 64 SCRA 524). It is immediately executory (Pamintuan vs. Muoz, et al., L-

26331, 22 SCRA 1109 [March 15, 1968]) in the absence of a motion to set the same aside on the ground of fraud,
mistake or duress (Cadano vs. Cadano, L-34998, 49 SCRA 33 [January 11, 1973]).

2. ID.; ID.; ID.; PARTIES TO A COMPROMISE AGREEMENT CANNOT AVAIL OF BOTH OPTIONS PROVIDED IN ART.

2041, CIVIL CODE; CASE AT BAR. It is clear from the language of the law, specifically Article 2041 of the New Civil

Code that one of the parties to a compromise has two options: 1) to enforce the compromise; or 2) to rescind the same

and insist upon his original demand. The respondent-appellee in the case herein before Us wants to avail of both of these

options. This cannot be done. The respondent-appellee cannot ask for rescission of the compromise agreement after it

has already enjoyed the first option of enforcing the compromise by asking for a writ of execution resulting thereby in the
garnishment of the Pasay City funds deposited with the Philippine National Bank which eventually was delivered to the

respondent-appellee.

3. REMEDIAL LAW; CIVIL PROCEDURE; JUDGMENTS; COURTS LOSE JURISDICTION TO ALTER OR AMEND

DECISIONS UPON FINALITY THEREOF. Having established that the compromise agreement was final and

immediately executory, and in fact was already enforced, the respondent Court was in error when it still entertained the

supplemental complaint filed by the respondent-appellee for by then the respondent Court had no more jurisdiction over

the subject matter. When a decision has become final and executory, the court no longer has the power and jurisdiction to

alter, amend or revoke, and its only power thereof is to order its execution.

4. ID.; ID.; PLEADINGS AND PRACTICE; SUPPLEMENTAL PLEADINGS; PURPOSE THEREOF NEGATES FILING OF
SUPPLEMENTAL COMPLAINT IN CASE AT BAR. Moreover, supplemental pleadings are meant to supply deficiencies

in aid of original pleading, not to entirely substitute the latter (British Traders' Insurance Co., Ltd. vs. Commissioner of

Internal Revenue, L-20501, 13 SCRA 719, 728 [April 30, 1965]). Here, the respondent-appellee originally asked for

specific performance which was later settled through a compromise agreement. After this, the respondent-appellee asked

for rescission of both the contract and agreement and the compromise agreement using a supplemental complaint. It is

clear that the supplemental complaint We have before Us is not only to "supply deficiencies in aid of original pleading" but

is also meant as an entirely new "substitute" to the latter. A supplemental complaint must be consistent with and in aid of,
the cause of action set forth in the original complaint and a new and independent cause of action cannot be set up by

such complaint (Bishop vs. Taylor, 210 App. Div. 1, 205 NYS 653), especially where judgment has already been obtained

by him in the original action.

DECISION

MAKASIAR, J p:

This is a petition for review on certiorari of the order rendered by the Court of First Instance of Manila, Branch X, presided

by Honorable Judge Jose L. Moya on July 23, 1969, the dispositive portion of which is as follows:

"WHEREFORE, the motions for reconsideration, dated July 21 and July 22, 1969, are denied and it is

ordered once more that the writ of execution as well as of garnishment already issued be enforced by

taking possession of the amount of P613,096.00 from the deposits of the Pasay City government in the

branch of the Philippine National Bank in Pasay City and delivering them to the plaintiff.

"SO ORDERED" (p. 78, rec.).

on the ground, among others, that:

xxx xxx xxx

"It is further argued that under the compromise, the plaintiff is required to submit a performance bond

upon the approval thereof and that he has not yet done so. At the hearing of the motion of June 21, it

was in the amount of P60,000.00 which was thereafter increased to P100,000.00 to make it equal to

20% of the cost of the next stage of the construction to be undertaken by the plaintiff. This is a sufficient
compliance. Since the work is to be undertaken by stages, it would be unreasonable to compel the

plaintiff to submit a performance bond equal to the cost of the entire project, it not being known when

the City of Pasay shall have the funds for the completion thereof and it claims it does not even have
money to pay for the phase of the work finished years ago. Besides, there is nothing in the compromise

which makes the submission of the bond a condition precedent to the payment of P613,096.00 to the

plaintiff" (p. 76, rec.).

On August 12, 1964, respondent-appellee V.D. Isip, Sons & Associates represented by Vicente David Isip entered into a

contract with the City of Pasay represented by the then Mayor Pablo Cuneta. The contract entitled "Contract and

Agreement" was for the construction of a new Pasay City Hall at F.B. Harrison St., Pasay City. Pertinent provision of the

said contract is as follows:

xxx xxx xxx

"Whereas one of the conditions set forth in the proposal is that the Contractor shall start the

construction of the Pasay City Hall Building as per plans and specifications by stages advancing the

necessary amount needed for each stage of work and the Party of the First Part (Pasay City) to

reimburse the amount spent on the work accomplished by the Contractor before proceeding on the next

stage . . .

xxx xxx xxx


"2. That the work shall be done in stages to be determined by the City Engineer considering structural

and functional criteria and consistent with funds immediately available for the purpose; . . .

"3. That the Contractor shall advance the necessary amount needed for each stage of work; Provided

that the Contractor, shall before starting each stage of work, inform the First Party in writing as to the
amount necessary to be advanced by the former; . . .

"4. That the Party of the First Part shall reimburse the Contractor the cost of the work completed as

estimated by the City Engineer for each stage of work before the Contractor proceed to the next stage; .

. . " (pp. 33-34, rec.).

Pursuant to the aforesaid contract, the respondent-appellee proceeded with the construction of the new Pasay City Hall

building as per duly approved plans and specifications. The respondent-appellee accomplished under various stages of
construction the amount of work (including supplies and materials) equivalent to an estimated value of ONE MILLION

SEVEN HUNDRED THIRTEEN THOUSAND NINETY SIX PESOS (P1,713,096.00) of the total contract price of FOUR

MILLION NINE HUNDRED FOURTEEN THOUSAND FIVE HUNDRED 80/100 PESOS (P4,914,500.80).

The appellants paid only the total amount of ONE MILLION ONE HUNDRED THOUSAND PESOS (P1,100,000.00) to the
respondent-appellee leaving an amount of SIX HUNDRED THIRTEEN THOUSAND NINETY SIX PESOS (P613,096.00)

immediately due from the petitioner-appellants to the respondent-appellee.

Notwithstanding demands for payment thereof, the petitioner-appellants failed to remit the aforesaid amount of

P613,096.00 to the respondent-appellee.

On May 16, 1968, respondent appellee filed an action for specific performance with damages against herein petitioners-

appellants before the respondent Court.

On May 23, 1968, the appellants filed a motion for the amendment of the complaint and for bill of particulars (p. 9,

Appellant's Brief; p. 159, rec.). This was denied by the respondent Court. The appellants later filed a motion for
reconsideration. This was likewise denied. On August 10, 1968, the appellants filed their answer.

The parties arrived at a draft of amicable agreement which was submitted to the Municipal Board of Pasay City for its

consideration. Protracted pre-trial hearings and conferences were held where the respondent Court suggested and

advised that "under the principle of quantum meruit, the plaintiff is forthwith entitled to at least that which is due to him for

defendants under the contract and that public interest must perforce require the continuity of construction of a public work

project, instead of delaying its immediate completion by litigating upon technical grounds which would undoubtedly

redound to public detriment" (p. 40, rec.).

On February 25, 1969, the Municipal Board of Pasay enacted Ordinance No. 1012 which approved the Compromise

Agreement and also authorized and empowered the incumbent City Mayor Jovito Claudio to represent the appellant

Pasay City Government, subject to the final approval of the respondent Court herein.

On March 12, 1969, the respondent Court approved the said Compromise Agreement including a Manifestation and

Addendum thereto. Relevant provisions of the said compromise agreement are as follows:

"1. That the contract and agreement, Annex 'A' hereof, dated August 12, 1964 . . . is hereby formally

confirmed and officially approved by the parties hereto, subject to the following changes and/or

modification only:

xxx xxx xxx


"B. That immediately upon final approval hereof by this Honorable Court, the plaintiff contractor will

submit and file in favor of Pasay City Government anew performance bond in the amount required by

pertinent law, rules and regulations, in proportion to the remaining value or cost of the unfinished work

of the construction as per approved plans and specifications . . .

xxx xxx xxx

"D. That if and when warranted by the finances and income of the Pasay City Government and subject

to the pertinent and applicable government auditing and accounting rules and procedure, the plaintiff

contractor shall without delay finish and complete the construction as per attached plans and

specifications . . . within a period of one (1) year from the date of final approval of this compromise

agreement by this Honorable Court, provided, however that in any case or event the construction herein

contemplated shall not extend beyond one and a half (1 1/2) years from the date of the final approval

hereof by this Honorable Court;

xxx xxx xxx

"2. That within a reasonable period of time, at least ninety (90) days from the final approval of this

Compromise Agreement by this Honorable Court, the defendant Pasay City Government shall pay and

remit the amount of SIX HUNDRED THIRTEEN THOUSAND NINETY-SIX PESOS (P613,096.00) . . .

to the plaintiff contractor, who, in turn, immediately upon receipt thereof, shall be bound and obliged to

commence and start the construction work corresponding to the next stage thereof;

"3. That within a similar period, the defendant Pasay City Government shall pay and remit to plaintiff

contractor an amount equivalent to three (3%) per cent of the abovementioned amount of SIX
HUNDRED THIRTEEN THOUSAND NINETY-SIX PESOS (P613,096.00), for and as adverse attorney's

fees in this case;

"4. That any and all other claims of plaintiff contractor in its complaint relative to and arising out of the

contract, Annex 'A' hereof, are hereby waived and relinquished and the case against the defendants

City Mayor, Jovito O. Claudio, City Treasurer and Members of the Municipal Board of Pasay City, either
in their official or personal capacities, are hereby likewise waived, relinquished and dismissed with

prejudice;

"5. That any willful, gross, deliberate and wanton violation and/or avoidance of the terms and conditions

of this Compromise Agreement by either of the parties herein shall, with due notice, forthwith entitle the
aggrieved party to an immediate execution hereof and to the necessary and corresponding reliefs and

remedies therefor" (pp. 43-46, rec.).

On April 10, 1969, the appellants filed an urgent motion seeking a declaration of legality of the original contract and

agreement dated August 4, 1964 from the respondent Court. On May 10, 1969, the respondent Court issued an order

declaring that the original contract is legal and valid (p. 59, rec.).

On June 21, 1969, at the instance of the appellee, the respondent Court granted an order of execution pursuant to which
a writ of execution dated June 25, 1969 was issued.

On July 9, 1969, an application for and notice of garnishment were made and effected upon the funds of appellant Pasay
City Government with the Philippine National Bank (p. 61, rec.).
On July 11, 1969, the appellant filed an urgent motion to set aside the respondent Court's order of June 21, 1969 and to

quash the writ of execution issued pursuant thereto upon the following grounds: 1) that the execution sought was then still

premature, the period of 90 days stipulated not having elapsed as yet; 2) that the obligations of the parties under the

Compromise Agreement were reciprocal and the appellee not having put up a new performance bond in the sufficient

amount equivalent to 20% of the remaining cost of construction as per agreement, the appellants cannot be obliged to pay

the sum due appellee as yet; 3) that the Sheriff has no power or authority to levy or garnish on execution the general

funds, especially more so, the trust funds of the defendant Pasay City (pp. 63-66, rec.).

On July 19, 1969, the respondent Court issued an order stating that inasmuch as the defendant has not yet paid the

plaintiff as of this date then "the writ of execution and of garnishment are declared to be again in full force and effect . . . "

(p. 67, rec.).

On July 22, 1969, the appellants filed a motion for reconsideration on three grounds, to wit:

"1. That the same is not supported by the facts and pertinent law, rule and regulation on the matter;

"2. That the funds of the defendant Pasay City Government which were garnished by the City Sheriff

are by law exempt from execution and/or garnishment; and

"3. That plaintiff's claim may not as yet be enforceable by execution" (pp. 68-71, rec.).

On July 22, 1969, the respondent Court denied and rejected the appellants' motion for reconsideration. The respondent

Court ordered the enforcement of the garnishment already issued to the City Sheriff for Pasay by taking possession of the

amount of P613,096.00 from the deposits of appellant Pasay City Government with the Philippine National Bank, Pasay

City Branch and delivering the same to the plaintiff.

On July 23, 1969, the respondent Court issued an order, the pertinent provision of which is now being questioned by the

appellants in this petition for review on certiorari, to wit:

"It is further argued that under the compromise, the plaintiff is required to submit a performance bond

upon the approval thereof and that he has not yet done so. At the hearing of the motion of June 21, it
was shown that the plaintiff has submitted a performance bond in the amount of P60,000.00 which was

thereafter increased to P100,000.00 to make it equal to 20% of the cost of the next stage of the

construction to be undertaken by the plaintiff. This is a sufficient compliance. Since the work is to be
undertaken by stages, it would be unreasonable to compel the plaintiff to submit a performance bond

equal to the cost of the entire project, it not being known when the City of Pasay shall have the funds

for the completion thereof and it claims it does not even have money to pay for the phase of the work
finished years ago. Besides, there is nothing in the compromise which makes the submission of the

bond a condition precedent to the payment of P613,096.00 to the plaintiff" (p. 76, rec.).

On July 23, 1969, the appellants filed their notice of appeal from the orders of the respondent Court dated June 21, July

19 and July 23, 1969 (p. 2, rec.).

On July 24, 1969, the appellants filed their manifestation and petition to suspend the writ of execution and garnishment

(pp. 80-82 rec.).

On July 25, 1969, the appellants filed their manifestation and withdrawal of notice of appeal. On July 28, 1969 the

respondent Court approved said withdrawal (p. 85 rec.).


On August 22, 1969, the appellants filed an amended notice of appeal (pp. 86-87, rec.) and a record on appeal which

were duly approved as per order of the respondent Court dated January 7, 1970 and a notice of transmittal dated May 29,

1970 (p. 89 rec.).

On October 23, 1969 the plaintiff, Vicente David Isip, in the original complaint for specific performance filed an urgent
motion for permit to serve a supplemental complaint seeking rescission of the original contract titled Contract and

Agreement and of the Compromise Agreement and claiming damages in the sum of P672, 653.91 alleging the violations

of the defendants specially the Pasay City Government in complying with its obligations incumbent upon it in the
compromise agreement and in view of the rights granted to the plaintiff in paragraph 5 of the resolutory clause of the

compromise agreement.

On June 5, 1970, the Supreme Court resolved to require the petitioner-appellants to file a petition for review on certiorari

(p. 6 rec.).

On June 29, 1970, the defendants filed their cautionary answer to the supplemental complaint alleging that the Court has

no jurisdiction over the subject of the present supplemental complaint; that the cause of action is already barred by prior
judgment; that the principle of res judicata applies; that plaintiff's supplemental complaint states no cause of action and

that the present claim of plaintiff has been paid, waived abandoned and extinguished.

On July 14, 1970, the appellants filed their petition for review on certiorari (pp. 11-24, rec.). This was denied for lack of

merit by the Supreme Court.

On August 14, 1970, the respondent Court set for pre-trial the supplemental complaint.

On October 16, 1970, the Supreme Court granted the petitioner's motion for reconsideration and their petition for review

on certiorari was given due course (p. 102, rec.).

On July 21, 1971, the appellees filed their brief praying that the petition for review on certiorari be dismissed since the

issues involved in the supplemental complaint are prejudicial to the present petition for review (p. 179, rec.). On
December 6, 1971, the appellants filed their manifestation and petition alleging that the supplemental complaint is not

prejudicial to the present petition for review (p. 199-201, rec.).

The two purposes of a compromise agreement are enunciated in Article 2028 of the New Civil Code, to wit:

"A. 2028. A compromise is a contract whereby the parties, by making reciprocal concessions, avoid a

litigation or put an end to one already commenced."

The first purpose "to avoid a litigation" occurs when there is a threat of an impending litigation. At this point, no

case has yet reached the courts. The moment a case has been filed in court then the second purpose "to put an
end to one already commenced" applies.

In the herein case, We are concerned with the second purpose. The latter purpose is given effect in Article 2037 of the
New Civil Code which reads:

"Article 2037. A compromise has upon the parties the effect and authority of res judicata; but there shall

be no execution except in compliance with a judicial compromise."

A compromise agreement not contrary to law, public order, public policy, morals or good customs is a valid contract which

is the law between the parties themselves (Municipal Board of Cabanatuan City vs. Samahang Magsasaka, Inc., 62

SCRA 435). A judgment on a compromise is a final and executory (Samonte vs. Samonte, 64 SCRA 524). It is

immediately executory (Pamintuan vs. Muos, et al., L-26331, 22 SCRA 1109 [March 15, 1968]) in the absence of a
motion to set the same aside on the ground of fraud, mistake or duress (Cadano vs. Cadano, L-34998, 49 SCRA 33

[January 11, 1973]).

In fact in the herein case before Us, execution has already been issued. Considering this in the light of Article 2041 of the

New Civil Code, to wit:

"Art. 2041. If one of the parties fails or refuses to abide by the compromise, the other party may either

enforce the compromise or regard it as rescinded and insist upon his original demand."

it is obvious that the respondent-appellee did not only succeed in enforcing the compromise but said plaintiff-appellee

likewise wants to rescind the said compromise. It is clear from the language of the law, specifically Article 2041 of the

New Civil Code that one of the parties to a compromise has two options: 1) to enforce the compromise; or 2) to

rescind the same and insist upon his original demand. The respondent-appellee in the case herein before Us wants to
avail of both of these options. This cannot be done. The respondent-appellee cannot ask for rescission of the

compromise agreement after it has already enjoyed the first option of enforcing the compromise by asking for a writ of

execution resulting thereby in the garnishment of the Pasay City funds deposited with the Philippine National Bank
which eventually was delivered to the respondent-appellee.

Upon the issuance of the writ of execution, the petitioner-appellants moved for its quashal alleging among other things the
exemption of the government from execution. This move on the part of the petitioner-appellant is at first glance laudable

for "all government funds deposited with the Philippine National Bank by any agency or instrumentality of the government,

whether by way of general or special deposit, remain government funds and may not be subject to garnishment or levy

(Commissioner of Public Highways vs. San Diego, L-30098, 31 SCRA 616 [Feb. 18, 1970]). But, inasmuch as an

ordinance has already been enacted expressly appropriating the amount of P613,096.00 of payment to the respondent-

appellee, then the herein case is covered by the exception to the general rule statedy in the case of Republic vs. Palacio
(L-20322, 23 SCRA 899 [May 29, 1968]), to wit:

"Judgments against a State in cases where it has consented to be sued, generally operate merely to
liquidate and establish plaintiff's claim in the absence of express provision; otherwise they cannot be

enforced by processes of the law; and it is for the legislature to provide for the payment in such manner

as sees fit."

Hence, the respondent Court was correct in refusing to quash the writ of execution it has issued.

Having established that the compromise agreement was final and immediately executory, and in fact as already enforced,

the respondent court was in error where it still entertained the supplemental complaint filed by the respondent-appellee for
by then the respondent Court had no more jurisdiction over the subject matter. When a decision has become final and

executory, the court no longer has the power and jurisdiction to alter, amend or revoke, and its only power thereof is to

order its execution (Ocampo vs. Caluag, L-21113, 19 SCRA 791 [April 27, 1967]).

After the perfection of an appeal, the trial court loses jurisdiction over its judgment and cannot vacate the same (Alama vs.

Abbas, L-19616, 18 SCRA 679 [Nov. 29, 1966]; Commissioner of Immigration vs. Romero, L-19782, 10 SCRA 216 [Jan.

31, 1964]; Valdez vs. CFI, etc., L-3366 [April 27, 1951] cited in Cabungcal vs. Fernandez, L-16520, 10 SCRA 731 [April

30, 1964]; Government vs. Mendoza, 51 Phil. 403; Ayllon vs. Siojo, 26 Phil. 195).

Moreover, supplemental pleadings are meant to supply deficiencies in aid of original pleading, not to entirely substitute the

latter (British Trader's Insurance Co., Ltd. vs. Commissioner of Internal Revenue, L-20501, 13 SCRA 719, 728 [April 30,
1965]). Here, the respondent-appellee originally asked for specific performance which was latter settled through a

compromise agreement. After this, the respondent-appellee asked for rescission of both the contract and agreement and

the compromise agreement using a supplemental complaint. It is clear that the supplemental complaint We have before

Us is not only to "supply deficiencies in aid of original pleading" but is also meant as an entirely new "substitute" to the

latter. A supplemental complaint must be consistent with and in aid of, the cause of action set forth in the original

complaint and a new and independent cause of action cannot be set up by such complaint (Bishop vs. Taylor, 210 App.

Div. 1, 205 NYS 653), especially where judgment has already been obtained by him in the original action (Anadarko

National Bank vs. Anadarko First National Bank, 39 Okl. 225, 134 Phil. 866).

WE find no error in the order of the respondent Court dated July 23, 1969. From the reading of the premises and

provisions of the contract and agreement which was "formally confirmed and officially approved by the parties" in the
compromise agreement later entered into by the same parties, subject only to the enumerated changes and/or

modifications, it is obvious that the contracting parties envisioned a stage by stage construction (on the part of the

respondent-appellee) and payment (on the part of the defendant-appellant). This is manifested in the contract and
agreement, to quote:

xxx xxx xxx

"WHEREAS, one of the conditions set forth in the proposal is that the Contractor shall start the
construction of the Pasay City Hall building as per plans and specifications by stages advancing the

necessary amount needed for each stage of work and the Party of the First Part to reimburse the

amount spent on the work accomplished by the Contractor before proceeding on the next stage;

Provided, the First Party shall supply the cement needed;

xxx xxx xxx

"2. That the work shall be done in stages to be determined by the City Engineer considering structural

and functional criteria and consistent with funds immediately available for the purpose;

"3. That the Contractor shall advance the necessary amount needed for each stage of work; Provided
that the Contractor shall, before starting each stage of work, inform the First Party in writing as to the

amount necessary to be advanced by the former; . . .

"4. That the Party of the First Part shall reimburse the Contractor the cost of the work completed as

estimated by the City Engineer for each stage of work before the Contractor proceed to the next stage;"

(pp. 33-34, rec.).

And sub-paragraph H of paragraph 1 and paragraph 2 of the compromise agreement also reiterated the stage by
stage construction and payment as follows:

"H. That detailed, separate reports on the progress of the construction work during each stage shall
regularly be submitted to the City Engineer and the City Mayor;

xxx xxx xxx

"2. That within a reasonable period of time, at least ninety (90) days from the final approval of this

Compromise Agreement by this Honorable Court, the defendant Pasay City Government shall pay and

remit the amount of SIX HUNDRED THIRTEEN THOUSAND NINETY-SIX PESOS (P613,096.00) . . .

to the plaintiff contractor, who, in turn, immediately upon receipt thereof, shall be bound and obliged to

commence and start the construction work corresponding to the next stage thereof; . . . " (45, rec.).
Sub-paragraph B of paragraph 1 of the Compromise Agreement, to wit:

"B. That immediately upon final approval hereof by this Honorable Court, the plaintiff contractor will

submit and file in favor of Pasay City Government anew performance bond in the amount required by

pertinent law, rules and regulations, in proportion to the remaining value or cost of the unfinished work
of the construction as per approved plans and specifications . . ." (p. 4 rec.),

read together with the stage-by-stage construction and payment approach, would inevitably lead to the conclusion

that the parties to the compromise contemplated a divisible obligation necessitating therefore a performance bond "in

proportion to" the uncompleted work.

What is crucial in sub-paragraph B of paragraph 1 of the compromise agreement are the words "in proportion." If the

parties really intended the legal rate of 20% performance bond to refer to the whole unfinished work, then the provision
should have required the plaintiff contractor to submit and file a new performance bond to cover the remaining value/cost

of the unfinished work of the construction. Using the words in proportion then significantly changed the meaning of the

paragraph to ultimately mean a performance bond equal to 20% of the next stage of work to be done.

And, We note that in the Contract and Agreement, the respondent-appellee was allowed to file a performance bond of

P222,250.00 which is but 5% of the total bid of P4,914,500.80. A security bond was likewise filed with an amount of
P97,290.00. The sum total of bond then filed was P320,540.00 which is just 6.5% of the total bid. It is rather curious why

all of a sudden the petitioners-appellants are insisting on a 20% performance bond of the entire unfinished work when

they were quite content with a bond just 5% of the entire work. For Us to allow the petitioners-appellants to adamantly

stick to the 20% performance bond would be tantamount to allowing them to evade their obligation in the compromise

agreement. This cannot be allowed. The bond of a contractor for a public work should not be extended beyond the

reasonable intent as gathered from the purpose and language of the instrument construed in connection with the

proposals, plans and specifications, and contract (John L. Roper Lumber Co. vs. Lawson, 195 NC 840, 143 SE 847, 67

ALR 984).

The premium of the bond will be sizeable and will eat up the profit of the contractor, who is faced with the fluctuation of

prices of materials due to inflation and devaluation. Right now, many contractors cannot proceed with the implementation
of their contracts because of the extraordinary rise in cost of materials and labor. No contractor would be willing to bid for

public works contracts under the oppressive interpretation by petitioners-appellants.

Again, the respondent Court was correct in ruling that the submission of the bond was not a condition precedent to the

payment of P613,096.00 to the plaintiff. Nowhere in the Contact and Agreement nor in the Compromise Agreement could

be found the fact that payment by the petitioner-appellants of the amount of P613,096.00 was dependent upon the
submission by the respondent-appellee of the performance bond. It cannot be argued that reciprocal obligation was

created in the Compromise Agreement, for the obligation to pay on the part of the petitioners-appellants was established

several years ago when the respondents-appellee finished some of the stages of construction. And, this argument is
already moot and academic, for the amount of P613,096.00 has already been collected through execution and

garnishment upon the funds of Pasay City with the Philippine National Bank.

Inasmuch as the parties in the herein case have agreed in the Compromise Agreement, to wit:

"3. That within a similar period the defendant Pasay City Government shall pay and remit to plaintiff

contractor an amount equivalent to three (3%) percent of the above mentioned amount of SIX
HUNDRED THIRTEEN NINETY-SIX PESOS (P613,096.00), for and as adverse attorney's fees in this

case; . . . " (p. 45, rec.).

WE hereby grant the amount of P18,392.78 which is 3% of P613,096.00 as attorney's fees in favor of the respondent-

appellee.

WHEREFORE, THE ORDER OF THE RESPONDENT COURT DATED JULY 23, 1969 IS HEREBY AFFIRMED AND

THE PETITIONERS-APPELLANTS ARE HEREBY DIRECTED TO PAY ATTORNEY'S FEES IN THE AMOUNT OF
EIGHTEEN THOUSAND THREE HUNDRED NINETY-TWO AND 78/100 (P18,392.78) PESOS. COSTS AGAINST

PETITIONERS-APPELLANTS.

SO ORDERED.
||| (Pasay City Government v. Court of First Instance of Manila, Branch X, G.R. No. L-32162, [September 28, 1984], 217
PHIL 153-169)

EN BANC

[G.R. No. L-11014. January 21, 1958.]

VICTORIANA ESPIRITU, JORGE ROBLES, JOSEFINA DE VERA, FAUSTINO QINTIVES, LEONOR

BRIONES, EVANGELINA PATACSIL, TEOFILO ANCHETA and BRIGIDA MANGONON, petitioners-

appellants, vs. THE MUNICIPAL COUNCIL, MUNICIPAL MAYOR and THE

CHIEF OF POLICE OFPOZORRUBIO, PANGASINAN, respondents-appellees.

Teodulfo L. Reyes and Romulo M. Abarcar, for appellants.

SYLLABUS

PUBLIC PROPERTY; TOWN PLAZAS; OUTSIDE THE COMMERCE OF MEN; USE AND

OCCUPATION OF, DURING EMERGENCY. Town plazas are propertiesof public dominion, to be devoted to public

use and to be made available to the public in general. They are outside the commerce of man and cannot be
disposed of or even leased by the municipality to private parties. They cannot be used for the construction of market

stalls, specially of residences, and such structures constitute a nuisance subject to abatement according to law. While

in case of war or during an emegency, town plazas may be occupied temporarily by private individuals, when the
emergency has ceased, said temporary occupation or use must also cease, and the town officials should see to it that

the town plazas should ever be kept open to the public and free from encumbrances or illegal private constructions.

DECISION

MONTEMAYOR, J p:

This is an appeal from the decision of the Court of First Instance of Pangasinan of April 28, 1956, dismissing

the petition for prohibition filed by appellants, lifting the preliminary injunction against the appellees and ordering the
removal of appellants' stalls from the public plaza of appellee municipality, within ten days from notice. Pending

appeal, counsel for the appellees filed a Manifestation on September 16, 1957, copy of which was duly served on

appellants, that several months after the oral argument held before this Tribunal on January 25, 1957, appellants had

voluntarily vacated the public plaza of Pozorrubio by transferring and removing their buildings and merchandise

therefrom to private lots fronting the plaza; and that the municipality had already begun the construction of concrete

fences in the premises, formerly occupied by appellants, without any complaint whatsoever from them or their

counsel; and that consequently, the present case has become moot and academic, and asking that the present

appeal be dismissed. By resolution of this Court of October 21, 1957, appellants were required to comment on
this Manifestation and petition for dismissal, within ten days from notice. Despite noticeof this resolution, appellants

failed to file the required comment. For this reason, we could well summarily dismiss this appeal by resolution.

However, for the satisfaction of the parties and for possible guidance of town officials and residents, we have deemed

it convenient and necessary to decide the case by formal decision.

The facts are not disputed. In fact, no evidence was submitted at the hearing before the trial court, the parties
having petitioned that the case be decided on the pleadings. During the last world war, the market building of the

town of Pozorrubio was destroyed, and after Liberation, the market vendors began constructing temporary and make-

shift stalls, even small residences, on a portion of the town plaza. The Municipal Treasurer collected from these stall
owners fees at the rate of P.25 per square meter a month. In time, the whole municipal market was rehabilitated, but

the owners of the structures on the plaza failed and refused to transfer to said market place.

The Municipal Council of Pozorrubio received petitions from civic organizations like the Woman's Club and

the Puericulture Center, for the removal ofthe market stalls on the plaza, which were being used not only as stalls, but

also for residence purposes, said organizations desiring to convert said portion ofthe plaza into a children's park. The

Provincial Board of Pangasinan had also presented to the Council the petition of another civic

organization of Pozorrubio, asking for the removal of the stalls from the plaza, and the attention of the Council was

also called to the letter-circular of the Secretary of the Interior about the existence of these stalls on the public plaza,
said to be illegal.

As a result, the Municipal Council of Pozorrubio passed Resolution No. 209, Series of 1951, stating that the
public market had already been rehabilitated, and ordering the occupants and owners of the structures on the plaza to

remove their buildings within sixty days from receipt of the resolution. In answer to this resolution, eight of the market

stall building owners filed a petition for prohibition in the Court of First Instance of Pangasinan against
theMunicipal Council, the Municipal Mayor, and the Chief of Police of Pozorrubio. Pending hearing, the trial court

issued a writ of preliminary injunction.

The trial court found that the fee of P.25 per square meter collected by the Municipal Treasurer, was not for

the rent of the portion of the public plaza occupied by the market stalls, as claimed by appellants, but rather the

market stall fees charges on all market vendors in a public market; and that there was absolutely no contract or
agreement between the appellants on one side and the municipality on the other, about renting of the Plaza to the

former. There is reason to believe that the occupation of the plaza and the construction of temporary buildings thereon

by appellants mostly for market, even residence purposes, was merely tolerated by the municipality, because of the

destruction of the public market during the war, but the trouble is that appellants, even after the rehabilitation of the

old market, refused to transfer to said market place, perhaps to save the trouble and expense of transferring their

buildings, or possibly to continue enjoying the benefits from the strategic position of their stalls at the plaza. There is

absolutely no question that the town plaza cannot be used for the construction of market stalls,

specially of residences, and that such structures constitute a nuisance subject to abatement according to law. Town
plazas are properties of public dominion, to be devoted to public use and to be made available to the public in

general. They are outside the commerce ofman and cannot be disposed of or even leased by the municipality to
private parties. 1 While in case of war or during an emergency, town plazas may be occupied temporarily by private

individuals, as was done and as was tolerated by the Municipality of Pozorrubio, when the emergency has ceased,

said temporary occupation or use must also cease, and the town officials should see to it that the town plazas should

ever be kept open to the public and free from encumbrances or illegal private constructions.

Appellants must have realized the absolute lack of merit in their stand and the futility of their appeal because

they voluntarily removed their buildings on the plaza. As a matter of fact, after the filing of the prohibition with the trial

court, two out of the eight petitioners informed the trial court that they were included as petitioners without their

consent, and so asked that they be excluded from the case.


||| (Espiritu v. Municipal Council, G.R. No. L-11014, [January 21, 1958], 102 PHIL 866-870)

EN BANC

[G.R. No. L-24440. March 28, 1968.]

THE PROVINCE OF ZAMBOANGA DEL NORTE, plaintiff-appellee, vs. CITY OF ZAMBOANGA,


SECRETARY OF FINANCE AND COMMISSIONER OF INTERNAL REVENUE, defendants-

appellants.

Fortugaleza, Lood, Sarmiento, M .T . Yap & Associates for plaintiff-appellee.

Solicitor General for defendant-appellant.

SYLLABUS

1. SPECIAL CIVIL ACTIONS; DECLARATORY RELIEF; CONVERSION INTO AN ORDINARY ACTION. Assuming

that the law had already been violated and that plaintiff sought to give it coercive effect, sec. 6 of Rule 64 of the Rules of

Court authorizes the conversion of a petition for declaratory relief into an ordinary action.

2. MUNICIPAL CORPORATIONS; EXTENT OF CONGRESSIONAL CONTROL OVER MUNICIPAL PROPERTY. The

principle is this: If the property is owned by the municipal corporation or municipality in its public and governmental
capacity, the property is public and Congress has absolute control over it; if the property is owned in its private or

proprietary capacity, then it is patrimonial and Congress has no absolute control, in which case, the municipality cannot be

deprived of it without due process and payment of just compensation.

3. ID.; ID.; SUBJECT TO TWO NORMS PROVIDED BY THE CIVIL CODE AND THE LAW OF MUNICIPAL
CORPORATIONS. The capacity in which the property is held is dependent on the use to which it is intended and

devoted. There are two norms, i.e., of the Civil Code and of the law of Municipal Corporations in classifying whether

municipal properties are patrimonial or public.

4. ID.; ID.; UNDER CIVIL CODE, ALL MUNICIPAL PROPERTIES EXCEPT THOSE ENUMERATED IN ART. 424 ARE

PATRIMONIAL. The Civil Code classification is found in articles 423 and 424 of the same Code. Under Art. 424,
property for public, use, consists of provincial roads, city streets, municipal streets, the squares, fountains, public waters,

promenades and public works for public service paid for by said municipal corporations. All other property possessed by

any of them is patrimonial and is governed by the Code without prejudice to provisions of special laws. Under this

classification, all the properties in question save two lots used as High School playgrounds are patrimonial properties of

Zamboanga Province; this includes the capitol site, the hospital and leprosarium sites, and the school sites which are

patrimonial as they are not for public use. They fall outside the phrase "public works for public service" because under

the ejusdem generis rule, such public works must be for free and for the indiscriminate use by anyone.

5. ID.; ID.; CLASSIFICATION OF MUNICIPAL PROPERTIES UNDER MUNICIPAL CORPORATION LAW. Under the

norm provided for by the law of Municipal Corporations, all those properties which are devoted to public service are

deemed public; the rest remain patrimonial. Under this norm, to be considered public, it is enough that the property be
held and devoted for governmental purposes like local administration, public education, public health, etc.

6. ID.; ID.; BUILDINGS EXISTING ON LOTS PARTAKE OF NATURE OF THE LATTER. Although the records do not

show whether the buildings on the lots in question were constructed at the expense of the municipal corporation, since

said buildings were constructed even before the enactment of Commonwealth Act 39 in 1936 and the provinces then had
no power to authorize construction of buildings at their own expense, it is presumed that the buildings were erected by

national funds, In this case, Congress could dispose of said buildings in the same manner as it did with the lots in

question. And even assuming that provincial funds were used in their construction, the buildings are mere accessories to
the lands which are public, and so they follow the nature of the lands, i.e., public. Moreover, although located in the city,

the buildings are not for the exclusive use and benefit of city residents but also for provincial residents, wherefore the

province is not really deprived of its benefits.

7. ID.; ID.; MUNICIPAL PROPERTY HELD AND DEVOTED TO PUBLIC SERVICE IS NOT IN THE SAME CATEGORY

AS ORDINARY PRIVATE PROPERTY. The controversy is more along the domains of the law of Municipal
Corporations State vs. Province than along that of Civil Law. The Court is not inclined to hold that municipal property

held and devoted to public service is in the same category as ordinary private property. Else, the consequences are dire.

As ordinary private properties, they can be levied upon and attached, they can be acquired thru adverse possession - to
the detriment of the local community.

8. ID.; ID.; REGISTRATION CANNOT CONVERT PUBLIC PROPERTY INTO PRIVATE PROPERTY. The fact that the

lots used for government purposes are registered is of no significance since registration cannot convert public property to

private.

9. ID.; ID.; CLASSIFICATION OF PROPERTIES UNDER CIVIL CODE, WITHOUT PREJUDICE TO PROVISIONS OF

LAW ON MUNICIPAL CORPORATIONS. The classification of properties other than those for public use in the

municipalities as patrimonial under art. 424 of the Civil Code is without prejudice to provisions of special laws. For

purposes of this article, the law of Municipal Corporations is considered as "special laws." Hence, the classification of

municipal property devoted for distinctly governmental purposes as public should prevail over the Civil Code classification

in this particular case.

10. ID.; NO LACHES UNDER FACTS OF THE CASE. Under Commonwealth Act No. 39, sec. 50, the cause of action

in favor of the defunct province of Zamboanga arose only in 1948 when the Auditor General fixed the value of the

properties in issue. In 1951, when the Cabinet transferred the properties for free to Zamboanga City, a reconsideration

thereof was sought on time. In 1952, the old province was dissolved and as successor-in-interest to over half of the

properties, Zamboanga del Norte obtained a reconsideration of the cabinet resolution of 1959 and in fact partial payments
were later made. It was only after the enactment of Republic Act 3039 in 1961 that the present controversy arose and

since plaintiff brought suit in 1962 all these facts negative laches.

DECISION

BENGZON, J.P., J p:

Prior to its incorporation as a chartered city, the Municipality of Zamboanga used to be the provincial capital of the then

Zamboanga Province. On October 12, 1936, Commonwealth Act 39 was approved converting the Municipality of

Zamboanga into Zamboanga City. Sec. 50 of the Act also provided that

"Buildings and properties which the province shall abandon upon the transfer of the capital to another

place will be acquired and paid for by the City of Zamboanga at a price to be fixed by the Auditor

General."

The properties and buildings referred to consisted of 50 lots and some buildings constructed thereon, located in the City of

Zamboanga and covered individually by Torrens certificates of title in the name of Zamboanga Province. As far as can be
gleaned from the records 1 said properties were being utilized as follows

No. of Lots Use

1 Capitol Site

3 School Site

3 Hospital Site

3 Leprosarium

1 Curuan School

1 Trade School

2 Burleigh School

2 High School Playground

9 Burleighs

1 Hydro-Electric Site (Magay)

1 San Roque

23 vacant

It appears that in 1945, the capital of Zamboanga Province was transferred to Dipolog 2 Subsequently, or on

June 16, 1948, Republic Act 286 was approved creating the municipality of Molave and making it the capital of

Zamboanga Province.

On May 26, 1949, the Appraisal Committee formed by the Auditor General, pursuant to Commonwealth Act 39, fixed the

value of the properties and buildings in question left by Zamboanga Province in Zamboanga City at P1,294,244.00. 3
On June 6, 1952, Republic Act 711 was approved dividing the province of Zamboanga into two (2): Zamboanga del Norte

and Zamboanga del Sur. As to how the assets and obligations of the old province were to be divided between the two

new ones, Sec. 6 of the law provided:

"Upon the approval of this Act, the funds, assets and other properties and the obligations of the
province of Zamboanga shall be divided equitably between the Province of Zamboanga del Norte and

the Province of Zamboanga del Sur by the President of the Philippines, upon the recommendation of

the Auditor General."

Pursuant thereto, the Auditor General, on January 11, 1955, apportioned the assets and obligations of the defunct

Province of Zamboanga as follows: 54.39% for Zamboanga del Norte and 45.61% for Zamboanga del Sur,

Zamboanga del Norte therefore became entitled to 54,39% of P1,294,244.00, the total value of the lots and buildings

in question, or P704,220.05 payable by Zamboanga City.

On March 17, 1959, the Executive Secretary, by order of the President, issued a ruling 4 holding that Zamboanga del

Norte had a vested right as owner (should be co-owner pro-indiviso) of the properties mentioned in Sec. 50
of Commonwealth Act 39, and is entitled to the price thereof, payable by Zamboanga City. This ruling revoked the

previous Cabinet Resolution of July 13, 1951 conveying all the said 50 lots and buildings thereon to Zamboanga City for

P1.00, effective as of 1945, when the provincial capital of the then Zamboanga Province was transferred to Dipolog.

The Secretary of Finance then authorized the Commissioner of Internal Revenue to deduct an amount equal to 25% of

the regular internal revenue allotment for the City of Zamboanga for the quarter ending March 31, 1960, then for the

quarter ending June 30, 1960, and again for the first quarter of the fiscal year 1960-1961. The deductions, all aggregating

P57,373.46 was credited to the province of Zamboanga del Norte, in partial payment of the P704,220,05 due it.

However, on June 17, 1961, Republic Act 3039 was approved amending Sec. 50 of Commonwealth Act 39 by providing

that

"All buildings, properties and assets belonging to the former province of Zamboanga and located within

the City of Zamboanga are hereby transferred, free of charge, in favor of the said City of Zamboanga."

(Stressed for emphasis)

Consequently, the Secretary of Finance, on July 12, 1961, ordered the Commissioner of Internal Revenue to stop
from effecting further payments to Zamboanga del Norte and to return to Zamboanga City the sum of P57,373.46

taken from it out of the internal revenue allotment of Zamboanga del Norte. Zamboanga City admits that since the

enactment of Republic Act 3039, P43,030.11 of the P57,373.46 has already been returned to it.

This constrained plaintiff-appellee Zamboanga del Norte to file on March 5, 1962, a complaint entitled "Declaratory Relief

with Preliminary Mandatory Injunction" in the Court of First Instance of Zamboanga del Norte against defendants-

appellants Zamboanga City, the Secretary of Finance and the Commissioner of Internal Revenue. It was prayed that:

(a) Republic Act 3039 be declared unconstitutional for depriving plaintiff province of property without due process and just

compensation; (b) Plaintiff's nights and obligations under said law be declared; (c) The Secretary of Finance and the

Internal Revenue Commissioner be enjoined from reimbursing the sum of 57,373.46 to defendant City; and (d) The latter

be ordered to continue paying the balance of P704,220.05 in quarterly installments of 25% of its internal revenue

allotments.
On June 4, 1962, the lower court ordered the issuance of preliminary injunction as prayed for. After defendants filed their

respective answers, trial was held. On August 12, 1963, judgment was rendered, the dispositive portion of which reads:

"WHEREFORE, judgment is hereby rendered declaring Republic Act No. 3039 unconstitutional in so far

as it deprives plaintiff Zamboanga del Norte of its private properties, consisting of 50 parcels of land
and the improvements thereon under certificates of titles (Exhibits 'A' to 'A-49') in the name of the

defunct province of Zamboanga; ordering defendant City of Zamboanga to pay to the plaintiff the sum

of P704,220.05, payment thereof to be deducted from its regular quarterly internal revenue allotment
equivalent to 25% thereof every quarter until said amount shall have been fully paid; ordering defendant

Secretary of Finance to direct defendant Commissioner of Internal Revenue to deduct 25% from the

regular quarterly internal revenue allotment for defendant City of Zamboanga and to remit the same to
plaintiff Zamboanga del Norte until said sum of P704,220.00 shall have been fully paid; ordering plaintiff

Zamboanga del Norte to execute through its proper officials the corresponding public instrument

deeding to defendant City of Zamboanga the 50 parcels of land and the improvements thereon under
the certificates of tide (Exhibits 'A' to 'A-49') upon payment by the latter of the aforesaid sum of

P704,220.00 in full; dismissing the counterclaim of defendant City of Zamboanga; and declaring

permanent the preliminary mandatory injunction issued on June 8, 1967, pursuant to the order of the
Court dated June 47 1962. No costs are assessed against the defendant.

"It is SO ORDERED."

Subsequently, but prior to the perfection of defendants' appeal, plaintiff province fled a motion to reconsider praying that

Zamboanga City be ordered instead to pay the P704,220.05 in lump sum with 6% interest per annum. Over defendants'

opposition, the lower court granted plaintiff province motion.

The defendants then brought the case before Us on appeal.

Brushing aside the procedural point concerning the propriety of declaratory relief filed in the lower court on the assertion

that the law had already been violated and that plaintiff sought to give it coercive effect, since assuming the same to be

true, the Rules anyway authorize the conversion of the proceedings to an ordinary action, 5 We proceed to the more

important and principal question of the validity of Republic Act 3039.

The validity of the law ultimately depends on the nature of the 50 lots and buildings thereon in question. For, the matter

involved here is the extent of legislative control over the properties of a municipal corporation, of which a province is one.

The principle itself is simple: If the property is owned by the municipality (meaning municipal corporation) in its public and
governmental capacity, the property is public and Congress has absolute control over it. But if the property is owned in its

private or proprietary capacity, then it is patrimonial and Congress has no absolute control. The municipality cannot be
deprived of it without due process and payment of just compensation. 6

The capacity in which the property is held is, however, dependent on the use to which it is intended and devoted. Now,

which of two norms, i.e., that of the Civil Code or that obtaining under the law of Municipal Corporations, must be used in

classifying the properties in question?

The Civil Code classification is embodied in its Arts. 423 and 424 which provide.

"ART. 423. The property of provinces, cities and municipalities, is divided into property for public use

and patrimonial properly."


"ART. 424. Property for public use, in the provinces, cities, and municipalities, consists of the provincial

roads, city streets, municipal streets, the squares, fountains, public waters, promenades, and public

works for public service paid for by said provinces, cities, or municipalities.

"All other property possessed by any of them is patrimonial and shall be governed by this Code, without

prejudice to the provisions of special laws." (Stressed for emphasis)

Applying the above cited norm, all the properties in question, except the two (2) lots used as High School playgrounds,

could be considered as patrimonial properties of the former Zamboanga province. Even the capitol site, the hospital and

leprosarium sites, and the school sites will be considered patrimonial for they are not for public use. They would not fall
under the phrase "public works for public service" for it has been held that under the ejusdem generis rule, such public

works must be for free and indiscriminate use by anyone, just like the preceding enumerated properties in the first

paragraph of Art. 424. 7 The playgrounds, however, would fit into this category. This was the norm applied by the lower

court. And it cannot be said that its actuation was without jurisprudential precedent for in Municipality of Catbalogan v.

Director of Lands, 8 and in Municipality of Tacloban v. Director of Lands, 9 it was held that the capitol site and the school

sites in municipalities constitute their patrimonial properties. This result is understandable because, unlike in the
classification regarding State properties, properties for public service in the municipalities are not classified as public.

Assuming then the Civil Code classification to be the chosen norm, the lower court must be affirmed except with regard to

the two (2) lots used as playgrounds.

On the other hand, applying the norm obtaining under the principles constituting the law of Municipal Corporations, all

those of the 50 properties in question which are devoted to public service are deemed public; the rest remain patrimonial.

Under this norm, to be considered public, it is enough that the property be held and devoted for governmental purposes

like local administration, public education, public health, etc. 10

Supporting jurisprudence are found in the following cases: (1) Hinunangan v. Director of Lands, 11 where it was stated

that ". . . where the municipality has occupied lands distinctly for public purposes, such as for the municipal court house,

the public school, the public market, or other necessary municipal building, we will, in the absence of proof to the contrary,

presume a grant from the State in favor of the municipality; but, as indicated by the wording, that rule may be invoked only

as to property which is used distinctly for public purposes . . ." (2) Viuda de Tantoco v. Municipal Council of Iloilo 12 held

that municipal properties necessary for governmental purposes are public in nature. Thus, the auto trucks used by the

municipality for street sprinkling, the police patrol automobile, police stations and concrete structures with the

corresponding lots used as markets were declared exempt from execution and attachment since they were not patrimonial
properties. (3) Municipality of Batangas v. Cantos, 13 held squarely that a municipal lot which had always been devoted to

school purposes is one dedicated to public use and is not patrimonial property of a municipality.

Following this classification, Republic Act 3039 is valid insofar as it affects the lots used as capitol site, school sites and its

grounds, hospital and leprosarium sites and the high school playground sites a total of 24 lots since these were held

by the former Zamboanga province in its governmental capacity and therefore are subject to the absolute control of

Congress. Said lots considered as public property are the following:

TCT Number Lot Number Use

2220 4-B Capitol Site

2816 149 School Site

3281 1224 Hospital Site


3282 1226 Hospital Site

3283 1225 Hospital Site

3748 434-A-1 School Site

5406 171 School Site

5564 168 High School

Playground

5567 157 & 158 Trade School

15583 167 High School

Playground

6181 (O.C.T.) Curuan School

11942 926 Leprosarium

11943 927 Leprosarium

11944 925 Leprosarium

5557 170 Burleigh School

5562 180 Burleigh School

5565 172-B Burleigh

5570 171-A Burleigh

5571 172-C Burleigh

5572 174 Burleigh

5573 178 Burleigh

5585 171-B Burleigh

5586 173 Burleigh

5587 172-A Burleigh

We noticed that the eight Burleigh lots above described are adjoining each other and in turn are between the two lots

wherein the Burleigh schools arc built as per records appearing herein and in the Bureau of Lands. Hence. there is

sufficient basis for holding that said eight lots constitute-the the appurtenant grounds of the Burleigh schools and

partake of the nature of the same.

Regarding the several buildings existing on the lots above- mentioned, the records do not disclose whether they were

constructed at the expense of the former Province of Zamboanga, Considering however the fact that said buildings must

have been erected even before 1936 when Commonwealth Act 39 was enacted and the further fact that provinces then
had no power to authorize construction of buildings such as those in the case at bar at their own expense, 14 it can be

assumed that said buildings were erected by the National Government, using national funds. Hence, Congress could very

well dispose of said buildings in the same manner that it did with the lots in question.
But even assuming that provincial funds were used, still the buildings constitute mere accessories to the lands, which are

public in nature, and so, they follow the nature of said lands, i.e., public Moreover, said buildings, those located in the city,

will not be for the exclusive use and benefit of city residents for they could be availed of also by the provincial residents.
The province then and its successors-in-interest are not really deprived of the benefits thereof.

But Republic Act 3039 cannot be applied to deprive Zamboanga del Norte of its share in the value of the rest of the 26

remaining lots which are patrimonial properties since they are not being utilized for distinctly governmental purposes. Said

lots are:

TCT Number Lot Number Use

5577 177 Mydro, Magay

13198 127-D San Roque

5569 169 Burleigh 15

5558 175 Vacant

5559 188 "

5560 183 "

5561 186 "

5563 191 "

5566 176 "

5568 179 "

5574 196 "

5575 181-A "

5576 181-B "

5578 182 "

5579 197 "

5580 195 "

5581 159-B "

5582 194 "

5584 190 "

5588 184 "

5589 187 "

5590 189 "

5591 192 "


5592 193 "

5593 185 "

7379 4147 "

Moreover, the fact that these 26 lots are registered strengthens the proposition that they are truly private in nature. On

the other hand, that the 24 lots used for governmental purposes are also registered is of no significance since

registration cannot convert public property to private. 16

We are more inclined to uphold this latter view. The controversy here is more along the domains of the Law of Municipal

Corporations State v. Province than along that of Civil Law. Moreover, this Court is not inclined to hold that

municipal property held and devoted to public service is in the same category as ordinary private property. The
consequences are dire. As ordinary private properties, they can be levied upon and attached. They can even be acquired

thru adverse possession all these to the detriment of the local community. Lastly, the classification of properties other

than those for public use in the municipalities as patrimonial under Art. 424 of the Civil Code is ". . . without prejudice to
the provisions of special laws." For purposes of this article, the principles obtaining under the Law of Municipal

Corporations can be considered as "special laws". Hence, the classification of municipal property devoted for

governmental purposes as public should prevail over the Civil Code classification in this particular case.

Defendants' claim that plaintiff and its predecessor-in-interest are guilty of laches is without merit. Under Commonwealth
Act 39, Sec. 50, the cause of action in favor of the defunct Zamboanga Province arose only in 1949 after the Auditor

General fixed the value of the properties in question. While in 1951, the Cabinet resolved to transfer said properties

practically for free to Zamboanga City, a reconsideration thereof was seasonably sought. In 1952, the old province was

dissolved. As successor-in-interest to more than half of the properties involved, Zamboanga del Norte was able to get a

reconsideration of the Cabinet Resolution in 1959. In fact, partial payments were effected subsequently and it was only

after the passage of Republic Act 3039 in 1961 that the present controversy arose. Plaintiff brought suit in 1962. All the
foregoing, negative laches.

It results then that Zamboanga del Norte is still entitled to collect from the City of Zamboanga the former's 54.39% share
in the 26 properties which are patrimonial in nature, said share to be computed on the basis of the valuation of said 26

properties as contained in Resolution No. 7, dated March 26, 1949, of the Appraisal Committee formed by the Auditor

General.

Plaintiff's share, however, cannot be paid in lump sum, except as to the P43,030.11 already returned to defendant City.

The return of said amount to defendant was without legal basis. Republic Act 3039 took effect only on June 17, 1961 after

a partial payment of P57,373.46 had already been made. Since the law did not provide for retroactivity, it could not have

validly affected a completed act. Hence, the amount of P43,030.11 should be immediately returned by defendant City to
plaintiff province. The remaining balance, if any, in the amount of plaintiff's 54.39% share in the 26 lots should then be

paid by defendant City in the same manner originally adopted by the Secretary of Finance and the Commissioner of

Internal Revenue, and not in lump sum. Plaintiff's prayer, particularly pars. 5 and 6, read together with pars. 10 and 11 of
the first cause of action recited in the complaint 17 clearly shows that the relief sought was merely the continuance of the

quarterly payments from the internal revenue allotments of defendant City. Art. 1169 of the Civil Code on reciprocal

obligations invoked by plaintiff to justify lump sum payment is inapplicable since there has been so far in legal
contemplation no complete delivery of the lots in question. The titles to the registered lots are not yet in the name of

defendant Zamboanga City.

WHEREFORE, the decision appealed from is hereby set aside and another judgment is hereby entered as follows:.
(1) Defendant Zamboanga City is hereby ordered to return to plaintiff Zamboanga del Norte in lump sum the amount of

P43,030,11 which the former took back from the latter out of the sum of P57,373.46 previously paid to the latter, and

(2) Defendants are hereby ordered to effect payments in favor of plaintiff of whatever balance remains of plaintiff's 54.39%

share in the 26 patrimonial properties, after deducting therefrom the sum of P57,373.46, on the basis of Resolution No. 7
dated March 26, 1949 of the Appraisal Committee formed by the Auditor General, by way of quarterly payments from the

allotments of defendant City, in the manner originally adopted by the Secretary of Finance and the Commissioner of

Internal Revenue. No costs. So ordered.

Reyes, J.B.L., Actg. C . J ., Dizon, Makalintal, Zaldivar, Sanchez, Castro, Angeles and Fernando, JJ ., concur.

Concepcion, C . J ., is on leave.

Footnotes
||| (Province of Zamboanga del Norte v. City of Zamboanga, G.R. No. L-24440, [March 28, 1968], 131 PHIL 446-461)

FIRST DIVISION

[G.R. No. L-29788. August 30, 1972.]

RAFAEL S. SALAS, in his capacity as Executive Secretary; CONRADO F. ESTRELLA, in his

capacity as Governor of the Land Authority; and LORENZO GELLA, in his capacity as Register
of Deeds of Manila, petitioners-appellants, vs. HON. HILARION U. JARENCIO, as Presiding Judge

of Branch XXIII, Court of First Instance of Manila; ANTONIO J. VILLEGAS, in his capacity as

Mayor of the City of Manila; and the CITY OF MANILA, respondents-appellees.

Solicitor General Felix V. Makasiar, Assistant Solicitor General Antonio A. Torres, Solicitor Raul I. Goco and Magno B.

Pablo & Cipriano A. Tan, Legal Staff, Land Authority for petitioners-appellants.

Gregorio A. Ejercito and Felix C. Chavez for respondents-appellees.

SYLLABUS

1. POLITICAL LAW; MUNICIPAL CORPORATIONS; POWER OF THE CITY OF MANILA AS A MUNICIPAL

CORPORATION; ACQUISITION OF PROPERTY IN PRIVATE CAPACITY. The City of Manila could validly acquire
property in its corporate or private capacity, following the accepted doctrine on the dual character public and private

of a municipal corporation. And when it acquires property in its private capacity, it acts like an ordinary person capable of

entering into contracts or making transactions for the transmission of title or other real rights. When it comes to acquisition
of land, it must have done so under any of the modes established by law for the acquisition of ownership and other real

rights.

2. ID.; ID.; ID.; ID.; IF THERE IS NO SHOWING THAT LAND WAS ACQUIRED WITH PRIVATE FUNDS,

PRESUMPTION IS THAT STATE IS SOURCE. In the absence of a title deed to any land claimed by the City of Manila
as its own, showing that it was acquired with its private or corporate funds, the presumption is that such land came from

the State upon the creation of the municipality.


3. ID.; ID.; CLASSIFICATION OF PROPERTY IN ITS POSSESSION. Originally the municipality owned no patrimonial

property except those that were granted by the State not for its public but for private use. Other properties it owns are

acquired in the course of the exercise of its corporate powers as a juridical entity to which category a municipal

corporation pertains.

4. ID.; ID.; ID.; CONCEPT OF LEGUA COMUNAL EXPLAINED. Comunal lands or "legua comunal" came into

existence when a town or pueblo was established in this country under the laws of Spain. The municipalities of the

Philippines were not entitled, as a matter of right, to any part of the public domain for use as communal lands. The
Spanish law provided that the usufruct of a portion of the public domain adjoining municipal territory might be granted by

the Government for communal purposes, upon proper petition, but, until granted, no right therein passed to the

municipalities, and. in any event, the ultimate title remained in the Sovereign.

5. ID.; ID.; ID.; GENERAL RULE ON THE NATURE OF THE POSSESSION OF LAND BY THE MUNICIPAL

CORPORATION. It may be laid down as a general rule that regardless of the source or classification of land in the

possession of a municipality, excepting those acquired with its own funds in its private or corporate capacity, such

property is held in trust for the State for the benefit of its inhabitants, whether it be for governmental or proprietary
purposes. It holds such lands subject to the paramount power of the legislature to dispose of the same, for after all it owes

its creation to it as an agent for the performance of a part of its public work, the municipality being but a subdivision or

instrumentality thereof for purposes of local administration. Accordingly, the legal situation is the same as if the State itself
holds the property and puts it to a different use.

6. ID.; ID.; ID.; LEGISLATIVE CONTROL OVER PROPERTY OF MUNICIPAL CORPORATION; POWER OF

LEGISLATURE OVER LANDS HELD BY MUNICIPALITY IN TRUST FOR THE STATE. Legislative control over a

municipal corporation is not absolute even when it comes to its property devoted to public use, for such control must not

be exercised to the extent of depriving persons of their property or rights without due process of law, or in a manner
impairing the obligations of contracts. Nevertheless, when it comes to property of the municipality which it did not acquire

in its private or corporate capacity with its own funds, the legislature can transfer its administration and disposition to an

agency of the National Government to be disposed of according to its discretion. Here it did so in obedience to the
constitutional mandate of promoting social justice to insure the well-being and economic security of the people.

7. ID.; ID.; ID.; LEGISLATIVE HAS WIDE DISCRETIONARY POWERS IN CLASSIFYING STATE PROPERTY. The

act of classifying State property calls for the exercise of wide discretionary legislative power and it should not be interfered

with by the courts.

8. ID.; ID.; ID.; PROPERTY IN CASE AT BAR IS HELD IN TRUST FOR THE STATE. The property subject of the

litigation in the case at bar was shown not to have been acquired by the City of Manila with its own funds in its private or

proprietary capacity. That it has in its name a registered title is not questioned, but this title should be deemed to be held

in trust for the State as the land covered thereby was part of the territory of the City of Manila granted by the sovereign

upon its creation. That the National Government, through the Director of Lands, represented by the Solicitor General, in

the cadastral proceedings did not contest the claim of the City of Manila that the land is its property, does not detract from

its character as State property and in no way divests the legislature of its power to deal with it as such, the State not being

bound by the mistakes and/or negligence of its officers.

9. ID.; ID.; ID.; ALLEGED PATRIMONIAL CHARACTER OF LAND IN INSTANT CASE DISPROVED BY CITY'S

OFFICIAL ACT. The alleged patrimonial character of the land under the ownership of the City of Manila is totally belied

by the City's own official act, which is fatal to its claim since the Congress did not do as bidden. If it were its patrimonial
property why should the City of Manila be requesting the President to make representation to the legislature to declare it

as such so it can be disposed of in favor of the actual occupants? There could be no more blatant recognition of the fact

that said land belongs to the State and was simply granted in usufruct to the City of Manila for municipal purposes.

10. STATUTES; PRESUMPTION IS ALWAYS IN FAVOR OF CONSTITUTIONALITY OF A STATUTE. It is now well


established that the presumption is always in favor of the constitutionality of a law. To declare a law unconstitutional, the

repugnancy of that law to the Constitution must be clear and unequivocal for even if a law is aimed at the attainment of

some public good, no infringement of constitutional rights is allowed. To strike down a law there must be a clear showing
that what the fundamental law condemns or prohibits, the statute allows it to be done.

11. ID., REPUBLIC ACT 4118 DOES NOT OPERATE AS AN EXERCISE OF THE POWER OF EMINENT DOMAIN

WITHOUT JUST COMPENSATION. Republic Act 4118 which "seeks to convert one parcel of land in the district of

Malate, Manila, which is reserved as communal property into disposable or alienable property of the State and to provide

its subdivision and sale to bona fide occupants or tenants," was never intended to expropriate the property involved but

merely to confirm its character as communal land of the State and to make it available for disposition by the National

Government: And this was done at the instance or upon the request of the City of Manila itself. The subdivision of the land
and conveyance of the resulting subdivision lots to the occupants by Congressional authorization does not operate as an

exercise of the power of eminent domain without just compensation in violation of Section 1, subsection (2), Article 111 of

the Constitution, but simply as a manifestation of its right and power to deal with state property.

12. ID.; ID.; NO VIOLATION OF DUE PROCESS CLAUSE IN THE ENACTMENT OF THE STATUTE. It should be

emphasized that the law assailed was enacted upon formal written petition of the Municipal Board of Manila in the form of

a legally approved resolution. The certificate of title over the property in the name of the City of Manila was accordingly

cancelled and another issued to the Land Tenure Administration after the voluntary surrender of the City's duplicate

certificate of title by the City Treasurer with the knowledge and consent of the City Mayor. To implement the provisions
of Republic Act No. 4118, the then Deputy Governor of the Land Authority sent a letter, dated February 18, 1965, to the

City Mayor furnishing him with a copy of the "proposed subdivision plan of the said lot as prepared for the Republic of the

Philippines for subdivision and resale by the Land Authority to bona fide applicants". On March 2, 1965, the Mayor of
Manila through his Executive and Technical Adviser, acknowledged receipt of the subdivision plan and informed the Land

Authority that his Office "will interpose no objection to the implementation of said law provided that its provisions are

strictly complied with". The foregoing sequence of events clearly indicates a pattern of regularity and observance of due
process in the reversion of the property to the National Government. All such acts were done in recognition by the City of

Manila of the right and power of the Congress to dispose of the land involved.

DECISION

ESGUERRA, J p:

This is a petition for review of the decision of the Court of First Instance of Manila, Branch XXIII, in Civil Case No. 67946,

dated September 23, 1968, the dispositive portion of which is as follows:

"WHEREFORE, the Court renders judgment declaring Republic Act No.

4118 unconstitutional and invalid in that it deprived the City of Manila of its property without due

process and payment of just compensation. Respondent Executive Secretary and Governor of
the Land Authority are hereby restrained and enjoined from implementing the provisions of said

law. Respondent Register of Deeds of the City of Manila is ordered to cancel Transfer Certificate

of Title No. 80876 which he had issued in the name of the Land Tenure Administration and

reinstate Transfer Certificate of Title No. 22547 in the name of the City of Manila which he

cancelled, if that is feasible, or issue a new certificate of title for the same parcel of land in the
name of the City of Manila." 1

The facts necessary for a clear understanding of this case are as follows:

On February 24, 1919, the 4th Branch of the Court of First Instance of Manila, acting as a land registration court, rendered

judgment in Case No. 18, G.L.R.O. Record No. 111, declaring the City of Manila the owner in fee simple of a parcel of
land known as Lot No. 1, Block 557 of the Cadastral Survey of the City of Manila, containing an area of 9,689.8 square

meters, more or less. Pursuant to said judgment the Register of Deeds of Manila on August 21, 1920, issued in favor of

the City of Manila, Original Certificate of Title No. 4329 covering the aforementioned parcel of land. On various dates in
1924, the City of Manila sold portions of the aforementioned parcel of land in favor of Pura Villanueva. As a consequence

of the transactions Original Certificate of Title No. 4329 was cancelled and transfer certificates of title were issued in favor

of Pura Villanueva for the portions purchased by her. When the last sale to Pura Villanueva was effected on August 22,
1924, Transfer Certificate of Title No. 21974 in the name of the City of Manila was cancelled and in lieu thereof Transfer

Certificate of Title (T.C.T.) No. 22547 covering the residue thereof known as Lot 1-B-2-B of Block 557, with an area of

7,490.10 square meters, was issued in the name of the City of Manila.

On September 21, 1960, the Municipal Board of Manila, presided by then Vice-Mayor Antonio J. Villegas, adopted a

resolution requesting His Excellency, the President of the Philippines to consider the feasibility of declaring the City

property bounded by Florida, San Andres, and Nebraska Streets, under Transfer Certificate of Title Nos. 25545 and

22547, containing a total area of 7,450 square meters as a patrimonial property of the City of Manila for the purpose of

reselling these lots to the actual occupants thereof. 2

The said resolution of the Municipal Board of the City of Manila was officially transmitted to the President of the
Philippines by then Vice-Mayor Antonio J. Villegas on September 21, 1960, with the information that the same resolution

was, on the same date, transmitted to the Senate and House of Representatives of the Congress of the Philippines. 3

During the First Session of the Fifth Congress of the Philippines, House Bill No. 191 was filed in the House of

Representatives by then Congressman Bartolome Cabangbang seeking to declare the property in question as patrimonial

property of the City of Manila, and for other purposes. The explanatory note of the Bill gave the grounds for its enactment,

to wit:

"In the particular case of the property subject of this bill, the City of Manila does not seem

to have use thereof as a public communal property. As a matter of fact, a resolution was adopted

by the Municipal Board of Manila at its regular session held on September 21, 1960, to request

the feasibility of declaring the city property bounded by Florida, San Andres and Nebraska

Streets as a patrimonial property of the City of Manila for the purpose of reselling these lots to the

actual occupants thereof. Therefore, it will be to the best interest of society that the said property
be used in one way or another. Since this property has been occupied for a long time by the

present occupants thereof and since said occupants have expressed their willingness to buy the

said property, it is but proper that the same be sold to them." 4


Subsequently, a revised version of the Bill was introduced in the House of Representatives by Congressmen Manuel

Cases, Antonio Raquiza and Nicanor Yiguez as House Bill No. 1453, with the following explanatory note:

"The accompanying bill seeks to convert one (1) parcel of land in the district of
Malate, which is reserved as communal property into a disposable or alienable property of the

State and to provide its subdivision and sale to bona fide occupants or tenants.

"This parcel of land in question was originally an aggregate part of a piece of land with an

area of 9,689.8 square meters, more or less. . . . On September 21, 1960, the Municipal Board of

Manila in its regular session unanimously adopted a resolution requesting the President of the

Philippines and Congress of the Philippines the feasibility of declaring this property into

disposable or alienable property of the State. There is therefore a precedent that this parcel of

land could be subdivided and sold to bona fide occupants. This parcel of land will not serve any

useful public project because it is bounded on all sides by private properties which were formerly

parts of this lot in question.

"Approval of this bill will implement the policy of the Administration of land for the

landless and the Fifth Declaration of Principles of the Constitution, which states that the

promotion of Social Justice to insure the well-being and economic security of all people should be
the concern of the State. We are ready and willing to enact legislation promoting the social and

economic well-being of the people whenever an opportunity for enacting such kind of legislation

arises.

In view of the foregoing consideration and to insure fairness and justice to the present bona fide
occupants thereof, approval of this Bill is strongly urged." 5

The Bill having been passed by the House of Representatives, the same was thereafter sent to the Senate where it was
thoroughly discussed, as evidenced by the Congressional Records for May 20, 1964, pertinent portion of which is as

follows:

"SENATOR FERNANDEZ: Mr. President, it will be recalled that when the late Mayor

Lacson was still alive, we approved a similar bill. But afterwards, the late Mayor Lacson came
here and protested against the approval, and the approval was reconsidered. May I know

whether the defect in the bill which we approved, has already been eliminated in this present bill?

"SENATOR TOLENTINO: I understand Mr. President, that has already been eliminated,

and that is why the City of Manila has no more objection to this bill.

"SENATOR FERNANDEZ: Mr. President, in view of that manifestation and considering

that Mayor Villegas and Congressman Albert of the Fourth District of Manila are in favor of the
bill. I would not want to pretend to know more what is good for the City of Manila.

"SENATOR TOLENTINO: Mr. President, there being no objection, I move that we

approve this bill on second reading.

"PRESIDENT PRO-TEMPORE: The bill is approved on second reading after several

Senators said aye and nobody said nay."

The bill was passed by the Senate, approved by the President on June 20, 1964, and became Republic Act No. 4118. It

reads as follows:
Lot 1-B-2-B op Block 557 of the cadastral survey of the City of Manila, situated in the District of Malate.

City of Manila, which is reserved as communal property, is hereby converted into disposal or alienable

land of the State, to be placed under the disposal of the Land Tenure Administration. The Land Tenure

Administration shall subdivide the property into small lots, none of which shall exceed one hundred and

twenty square meters in area and sell the same on installment basis to the tenants or bona fide
occupants thereof and to individuals, in the order mentioned: Provided, That no down payment shall be

required of tenants or bona fide occupants who cannot afford to pay such down payment: Provided,

further, That no person can purchase more than one lot: Provided, furthermore, That if the tenant
or bona fide occupant of any given lot is not able to purchase the same, he shall be given a lease from

month to month until such time that he is able to purchase the lot: Provided, still further, That in the

event of lease the rentals which may be charged shall not exceed eight per cent per annum of the
assessed value of the property leased: And provided, finally, That in fixing the price of each lot, which

shall not exceed twenty pesos per square meter, the cost of subdivision and survey shall not be

included.

"Sec. 2. Upon approval of this Act no ejectment proceedings against any tenant or bona

fide occupant of the above lots shall be instituted and any ejectment proceedings pending in

court against any such tenant or bona fide occupant shall be dismissed upon motion of the

defendant: Provided, That any demolition order directed against any tenant or bona fide occupant

shall be lifted.

"Sec. 3. Upon approval of this Act, if the tenant or bona fide occupant is in arrears in the

payment of any rentals, the amount legally due shall be liquidated and shall be payable in twenty-

four equal monthly installments from the date of liquidation.

"Sec. 4. No property acquired by virtue of this Act shall be transferred, sold, mortgaged,

or otherwise disposed of within a period of five years from the date full ownership thereof has

been vested in the purchaser without the consent of the Land Tenure Administration.

"Sec. 5. In the event of the death of the purchaser prior to the complete payment of the
price of the lot purchased by him, his widow and children shall succeed in all his rights and

obligations with respect to his lot.

"Sec. 6. The Chairman of the Land Tenure Administration shall implement and issue

such rules and regulations as may be necessary to carry out the provisions of this Act.

"Sec. 7. The sum of one hundred fifty thousand pesos is appropriated out of any funds in

the National Treasury not otherwise appropriated, to carry out the purposes of this Act.

"Sec. 8. All laws or parts of laws inconsistent with this Act are repealed or modified

accordingly.

"Sec. 9. This Act shall take effect upon its approval.

"Approved, June 20, 1964."

To implement the provisions of Republic Act No. 4118, and pursuant to the request of the occupants of the property

involved, then Deputy Governor Jose V. Yap of the Land Authority (which succeeded the Land Tenure Administration)

addressed a letter, dated February 18, 1965, to Mayor Antonio Villegas, furnishing him with a copy of the proposed
subdivision plan of said lot as prepared for the Republic of the Philippines for resale of the subdivision lots by the Land

Authority to bona fide applicants. 6

On March 2, 1965, the City Mayor of Manila, through his Executive and Technical Adviser, acknowledged receipt of the

proposed subdivision plan of the property in question and informed the Land Authority that his office would interpose no
objection to the implementation of said law, provided that its provisions be strictly complied with. 7

With the above-mentioned written conformity of the City of Manila for the implementation of Republic Act No. 4118, the
Laud Authority, thru then Deputy Governor Jose V. Yap, requested the City Treasurer of Manila, thru the City Mayor, for

the surrender and delivery to the former of the owner's duplicate of Transfer Certificate of Title No. 22547 in order to

obtain title thereto in the name of the Land Authority. The request was duly granted with the knowledge and consent of the
Office of the City Mayor. 8

With the presentation of Transfer Certificate of Title No. 22547, which had been yielded as above stated by the City

authorities to the Land Authority, Transfer Certificate of Title (T.C.T. No. 22547) was cancelled by the Register of Deeds

of Manila and in lieu thereof Transfer Certificate of Title No. 80876 was issued in the name of the Land Tenure
Administration (now Land Authority) pursuant to the provisions of Republic Act No. 4118. 9

But due to reasons which do not appear in the record, the City of Manila made a complete turn-about, for on December
20, 1966, Antonio J. Villegas, in his capacity as the City Mayor of Manila and the City of Manila as a duly organized public

corporation, brought an action for injunction and/or prohibition with preliminary injunction to restrain, prohibit and enjoin

the herein appellants, particularly the Governor of the Land Authority and the Register of Deeds of Manila, from further

implementing Republic Act No. 4118, and praying for the declaration of Republic Act No. 4118 as unconstitutional.

With the foregoing antecedent facts, which are all contained in the partial stipulation of facts submitted to the trial court

and approved by respondent Judge, the parties waived the presentation of further evidence and submitted the case for

decision. On September 23, 1968, judgment was rendered by the trial court declaring Republic Act No.
4118 unconstitutional and invalid on the ground that it deprived the City of Manila of its property without due process of

law and payment of just compensation. The respondents were ordered to undo all that had been done to carry out the

provisions of said Act and were restrained from further implementing the same.

Two issues are presented for determination, on the resolution of which the decision in this case hinges, to wit:

I. Is the property involved private or patrimonial property of the City of Manila?

II. Is Republic Act No. 4118 valid and not repugnant to the Constitution?

As regards the first issue, appellants maintain that the land involved is a communal land or "legua comunal" which is a
portion of the public domain owned by the State; that it came into existence as such when the City of Manila, or any

pueblo or town in the Philippines for that matter, was founded under the laws of Spain, the former sovereign; that upon the

establishment of a pueblo, the administrative authority was required to allot and set aside portions of the public domain for

a public plaza, a church site, a site for public buildings, lands to serve as common pastures and for streets and roads; that

in assigning these lands some lots were earmarked for strictly public purposes, and ownership of these lots (for public

purposes) immediately passed to the new municipality; that in the case of common lands or "legua comunal", there was

no such immediate acquisition of ownership by the pueblo, and the land though administered thereby, did not

automatically become its property in the absence of an express grant from the Central Government, and that the reason
for this arrangement is that this class of land was not absolutely needed for the discharge of the municipality's

governmental functions.

It is argued that the parcel of land involved herein has not been used by the City of Manila for any public purpose and had

not been officially earmarked as a site for the erection of some public buildings; that this circumstance confirms the fact
that it was originally "communal" land alloted to the City of Manila by the Central Government not because it was needed

in connection with its organization as a municipality but simply for the common use of its inhabitants; that the present City

of Manila as successor of the Ayuntamiento de Manila under the former Spanish sovereign merely enjoys the usufruct
over said land, and its exercise of acts of ownership by selling parts thereof did not necessarily convert the land into a

patrimonial property of the City of Manila nor divest the State of its paramount title.

Appellants further argue that a municipal corporation, like a city is a governmental agent of the State with authority to

govern a limited portion of its territory or to administer purely local affairs in a given political subdivision, and the extent of

its authority is strictly delimited by the grant of power conferred by the State; that Congress has the exclusive power to

create, change or destroy municipal corporations; that even if We admit that legislative control over municipal corporations

is not absolute and even if it is true that the City of Manila has a registered title over the property in question, the mere
transfer of such land by an act of the legislature from one class of public land to another, without compensation, does not

invade the vested rights of the City.

Appellants finally argue that Republic Act No. 4118 has treated the land involved as one reserved for communal use, and

this classification is conclusive upon the courts; that if the City of Manila feels that this is wrong and its interests have

been thereby prejudiced, the matter should be brought to the attention of Congress for correction; and that since

Congress, in the exercise of its wide discretionary powers has seen fit to classify the land in question as communal, the

Courts certainly owe it to coordinate branch of the Government to respect such determination and should not interfere

with the enforcement of the law.

Upon the other hand, appellees argue by simply quoting portions of the appealed decision of the trial court, which read
thus:

"The respondents (petitioners-appellants herein) contend, among other defenses, that


the property in question is communal property. This contention is, however, disproved by Original

Certificate of Title No. 4329 issued on August 21, 1920 in favor of the City of Manila after the land

in question was registered in the City's favor. The Torrens Title expressly states that the City of
Manila was the owner in 'fee simple' of the said land. Under Sec. 38 of the Land Registration Act,

as amended, the decree of confirmation and registration in favor of the City of Manila . . . shall be

conclusive upon and against all persons including the Insular Government and all the branches

there . . . is nothing in the said certificate of title indicating that the land was 'communal' land as

contended by the respondents. The erroneous assumption by the Municipal Board of Manila that

the land in question was communal land did not make it so. The Municipal Board had no authority

to do that.

"The respondents, however, contend that Congress had the power and authority to

declare that the land in question was 'communal' land and the courts have no power or authority

to make a contrary finding. This contention is not entirely correct or accurate. Congress has the

power to classify 'land of the public domain', transfer them from one classification to another and
declare them disposable or not. Such power does not, however, extend to properties which are

owned by cities, provinces and municipalities in their 'patrimonial' capacity.

"Art. 324 of the Civil Code provides that properties of provinces, cities and municipalities

are divided into properties for public use and patrimonial property Art. 424 of the same code
provides that properties for public use consist of provincial roads, city streets, municipal streets,

the squares, fountains, public waters, promenades and public works for public service paid for by

said province, cities or municipalities. All other property possessed by any of them is patrimonial.
Tested by this criterion the Court finds and holds that the land in question is patrimonial property

of the City of Manila.

"Respondents contend that Congress has declared the land in question to be 'communal'

and, therefore, such designation is conclusive upon the courts. The Courts holds otherwise.

When a statute is assailed as unconstitutional the Courts have the power and authority to inquire

into the question and pass upon it. This has long ago been settled in Marbury vs. Madison, 2 L.

ed. 60, when the United States Supreme Court speaking thru Chief Justice Marshall held:

'. . . If an act of the legislature, repugnant to the constitution, is void, does it,

notwithstanding its validity, bind the courts, and oblige them to give effect? It is
emphatically the province and duty of the judicial department to say what the law is . . .

So if a law be in opposition to the constitution; if both the law and the constitution apply to

a particular case, so that the court must either decide that case conformable to the

constitution, disregarding the law, the court must determine which of these conflicting

rules governs the case. This is of the very essence of unconstitutional judicial duty.'"

Appellees finally concluded that when the courts declare a law unconstitutional it does not mean that the judicial power is

superior to the legislative power. It simply means that the power of the people is superior to both and that when the will of
the legislature, declared in statutes, stands in opposition to that of the people, declared in the Constitution, the judges

ought to be governed by the Constitution rather than by the statutes.

There is one outstanding factor that should be borne in mind in resolving the character of the land involved, and it is that

the City of Manila, although declared by the Cadastral Court as owner in fee simple, has not shown by any shred of

evidence in what manner it acquired said land as its private or patrimonial property. It is true that the City of Manila as well

as its predecessor, the Ayuntamiento de Manila, could validly acquire property in its corporate or private capacity,

following the accepted doctrine on the dual character public and private of a municipal corporation. And when it

acquires property in its private capacity, it acts like an ordinary person capable of entering into contracts or making
transactions for the transmission of title or other real rights. When it comes to acquisition of land, it must have done so

under any of the modes established by law for the acquisition of ownership and other real rights. In the absence of a title

deed to any land claimed by the City of Manila as its own, showing that it was acquired with its private or corporate funds,
the presumption is that such land came from the State upon the creation of the municipality (Unson vs. Lacson, et al., 100

Phil. 695). Originally the municipality owned no patrimonial property except those that were granted by the State not for its

public but for private use. Other properties it owns are acquired in the course of the exercise of its corporate powers as a

juridical entity to which category a municipal corporation pertains.


Communal lands or "legua comunal" came into existence when a town or pueblo was established in this country under the

laws of Spain (Law VII, Title III, Book VI, Recopilacion de las Leyes de Indios). The municipalities of the Philippines were

not entitled, as a matter of right, to any part of the public domain for use as communal lands. The Spanish law provided

that the usufruct of a portion of the public domain adjoining municipal territory might be granted by the Government for

communal purposes, upon proper petition, but, until granted, no rights therein passed to the municipalities, and, in any

event, the ultimate title remained in the sovereign (City of Manila vs. Insular Government, 10 Phil. 327).

"For the establishment, then, of new pueblos the administrative authority of the province,
in representation of the Governor General, designated the territory for their location and

extension and the metes and bounds of the same; and before alloting the lands among the new

settlers, a special demarcation was made of the places which were to serve as the public square
of the pueblo, for the erection of the church, and as cites for the public buildings, among others,

the municipal building or the case real, as well as of the lands which were to constitute the

common pastures, and propios of the municipality and the streets and roads which were to

intersect the new town were laid out, . . ." (Municipality of Catbalogan vs. Director of Lands, 17

Phil. 216, 220) (Emphasis supplied)

It may, therefore, be laid down as a general rule that regardless of the source or classification of land in the possession of

a municipality, excepting those acquired with its own funds in its private or corporate capacity, such property is held in
trust for the State for the benefit of its inhabitants, whether it be for governmental or proprietary purposes. It holds such

lands subject to the paramount power of the legislature to dispose of the same, for after all it owes its creation to it as an

agent for the performance of a part of its public work, the municipality being but a subdivision or instrumentality thereof for

purposes of local administration. Accordingly, the legal situation is the same as if the State itself holds the property and

puts it to a different use (2 Mc Quilin, Municipal Corporations, 3rd Ed., p. 197, citing Monagham vs. Armatage, 218 Minn.

27, 15 N.W. 2nd 241).

True it is that the legislative control over a municipal corporation is not absolute even when it comes to its property

devoted to public use, for such control must not be exercised to the extent of depriving persons of their property or lights
without due process of law, or in a manner impairing the obligations of contracts. Nevertheless, when it comes to property

of the municipality which it did not acquire in its private or corporate capacity with its own funds, the legislature can

transfer its administration and disposition to an agency of the National Government to be disposed of according to its
discretion. Here it did so in obedience to the constitutional mandate of promoting social justice to insure the well-being

and economic security of the people.

It has been held that a statute authorizing the transfer of a Municipal airport to an Airport Commission created by the

legislature, even without compensation to the city, was not violative of the due process clause of the American Federal
Constitution. The Supreme Court of Minnessota in Monagham vs. Armatage, supra, said:

". . . The case is controlled by the further rule that the legislature, having plenary control

of the local municipality, of its creation and of all its affairs, has the right to authorize or direct the

expenditures of money in its treasury, though raised, for a particular purpose, for any legitimate

municipal purpose, or to order and direct a distribution thereof upon a division of the territory into

separate municipalities . . . The local municipality has no such vested right in or to its public

funds, like that which the Constitution protects in the individual as precludes legislative

interferences. People vs. Power, 25 Ill. 187; State Board (of Education) vs. City, 56 Miss. 518. As
remarked by the supreme court of Maryland in Mayor vs. Sehner, 37 Md. 180: 'It is of the
essence of such a corporation, that the government has the sole right as trustee of the public

interest, at its own good will and pleasure, to inspect, regulate, control, and direct the corporation,

its funds, and franchises.'

"We therefore hold that c.500, in authorizing the transfer of the use and possession of the
municipal airport to the commission without compensation to the city or to the park board, does

not violate the Fourteenth Amendment to the Constitution of the United States."

The Congress has dealt with the land involved as one reserved for communal use (terreno comunal). The act of

classifying State property calls for the exercise of wide discretionary legislative power and it should not be interfered with

by the courts.

This brings Us to the second question as regards the validity of Republic Act No. 4118, viewed in the light of Article III,
Sections 1, subsection (1) and (2) of the Constitution which ordain that no person shall be deprived of his property without

due process of law and that no private property shall be taken for public use without just compensation.

II

The trial court declared Republic Act No. 4118 unconstitutional for allegedly depriving the City of Manila of its property

without due process of law and without payment of just compensation. It is now well established that the presumption is

always in favor of the constitutionality of a law (U. S. vs. Ten Yu, 24 Phil, 1; Go Ching, et al. vs. Dinglasan, et al., 45 O.G.
No. 2, pp. 703, 705). To declare a law unconstitutional, the repugnancy of that law to the Constitution must be clear and

unequivocal, for even if a law is aimed at the attainment of some public good, no infringement of constitutional rights is

allowed. To strike down a law there must be a clear showing that what the fundamental law condemns or prohibits, the

statute allows it to be done (Morfe vs. Mutuc, et al., G.R. No. L-20387, Jan. 31, 1968; 22 SCRA 424). That situation does

not obtain in this case as the law assailed does not in any manner trench upon the constitution as will hereafter be shown.

Republic Act No. 4118 was intended to implement the social justice policy of the Constitution and the Government

program of "Land for the Landless". The explanatory note of House Bill No. 1453 which became Republic Act No. 4118,

reads in part as follows:

"Approval of this bill will implement the policy of the administration of 'land for the
landless' and the Fifth Declaration of Principles of the Constitution which states that 'the

promotion of social justice to insure the well-being and economic security of all people should be

the concern of the State.' We are ready and willing to enact legislation promoting the social and

economic well-being of the people whenever an opportunity for enacting such kind of legislation

arises.'"

The respondent Court held that Republic Act No. 4118, "by converting the land in question which is the patrimonial

property of the City of Manila into disposable alienable land of the State and placing it under the disposal of the Land

Tenure Administration violates the provisions of Article III (Secs. 1 and 2) of the Constitution which ordain that "private

property shall not be taken for public use without just compensation, and that no person shall be deprived of life, liberty or

property without due process of law". In support thereof reliance is placed on the ruling in Province of Zamboanga del

Norte vs. City of Zamboanga, G.R. No. 2440, March 28, 1968; 22 SCRA 1334, which holds that Congress cannot deprive

a municipality of its private or patrimonial property without due process of law and without payment of just compensation

since it has no absolute control thereof. There is no quarrel over this rule if it is undisputed that the property sought to be

taken is in reality a private or patrimonial property of the municipality or city. But it would be simply begging the question to
classify the land in question as such. The property, as has been previously shown, was not acquired by the City of Manila
with its own funds in its private or proprietary capacity. That it has in its name a registered time is not questioned, but this

title should be deemed to be held in trust for the State as the land covered thereby was part of the territory of the City of

Manila granted by the sovereign upon its creation. That the National Government, through the Director of Lands,

represented by the Solicitor General, in the cadastral proceedings did not contest the claim of the City of Manila that the

land is its property does not detract from its character as State property and in no way divests the legislature of its power

to deal with it as such, the state not being bound by the mistakes and/or negligence of its officers.

One decisive fact that should be noted is that the City of Manila expressly recognized the paramount title of the State over

said land when by its resolution of September 20, 1960, the Municipal Board, presided by then Vice-Mayor Antonio

Villegas, requested "His Excellency the President of the Philippines to consider the feasibility of declaring the city property

bounded by Florida, San Andres and Nebraska Streets, under Transfer Certificate of Title Nos. 25545 and 25547,
containing an area of 7,450 square meters, as patrimonial property of the City of Manila for the purpose of reselling these

lots to the actual occupants thereof ." (See Annex E, Partial Stipulation of Facts, Civil Case No. 67945, CFI, Manila, p.

121, Record of the Case) [Emphasis Supplied]

The alleged patrimonial character of the land under the ownership of the City of Manila is totally belied by the City's own

official act, which is fatal to its claim since the Congress did not do as bidden. If it were its patrimonial property why should
the City of Manila be requesting the President to make representation to the legislature to declare it as such so it can be

disposed of in favor of the actual occupants? There could be no more blatant recognition of the fact that said land belongs

to the State and was simply granted in usufruct to the City of Manila for municipal purposes. But since the City did not

actually use said land for any recognized public purpose and allowed it to remain idle and unoccupied for a long time until

it was overrun by squatters, no presumption of State grant of ownership in favor of the City of Manila may be acquiesced

in to justify the claim that it is its own private or patrimonial property (Municipality of Tigbauan vs. Director of Lands, 35
Phil. 798; City of Manila vs. Insular Government, 10 Phil. 327; Municipality of Luzuriaga vs. Director of Lands, 24 Phil.

193). The conclusion of the respondent court that Republic Act No. 4118 converted a patrimonial property of the City of

Manila into a parcel of disposable land of the State and took it away from the City without compensation is, therefore,
unfounded. In the last analysis the land in question pertains to the State and the City of Manila merely acted as trustee for

the benefit of the people therein for whom the State can legislate in the exercise of its legitimate powers.

Republic Act No. 4118 was never intended to expropriate the property involved but merely to confirm its character as

communal land of the State and to make it available for disposition by the National Government: And this was done at the

instance or upon the request of the City of Manila itself. The subdivision of the land and conveyance of the resulting

subdivision lots to the occupants by Congressional authorization does not operate as an exercise of the power of eminent

domain without just compensation in violation of Section 1, subsection (2), Article III of the Constitution, but simply as a
manifestation of its right and power to deal with state property.

It should be emphasized that the law assailed was enacted upon formal written petition of the Municipal Board of Manila in

the form of a legally approved resolution. The certificate of title over the property in the name of the City of Manila was

accordingly cancelled and another issued to the Land Tenure Administration after the voluntary surrender of the City's

duplicate certificate of title by the City Treasurer with the knowledge and consent of the City Mayor. To implement the

provisions of Republic Act No. 4118, the then Deputy Governor of the Land Authority sent a letter, dated February 18,

1965, to the City Mayor furnishing him with a copy of the "proposed subdivision plan of the said lot as prepared for the

Republic of the Philippines for subdivision and resale by the Land Authority to bona fide applicants." On March 2, 1965,
the Mayor of Manila, through his Executive and Technical Adviser, acknowledged receipt of the subdivision plan and
informed the Land Authority that his Office "will interpose no objection to the implementation of said law provided that its

provisions are strictly complied with." The foregoing sequence of events, clearly indicate a pattern of regularity and

observance of due process in the reversion of the property to the National Government. All such acts were done in

recognition by the City of Manila of the right and power of the Congress to dispose of the land involved.

Consequently, the City of Manila was not deprived of anything it owns, either under the due process clause or under the

eminent domain provisions of the Constitution. If it failed to get from the Congress the concession it sought of having the

land involved given to it as its patrimonial property, the Courts possess no power to grant that relief. Republic Act No.
4118 does not, therefore, suffer from any constitutional infirmity.

WHEREFORE, the appealed decision is hereby reversed and petitioners shall proceed with the free and untrammeled

implementation of Republic Act No. 4118without any obstacle from the respondents. Without costs.

Concepcion, C.J., Makalintal, Zaldivar, Castro, Fernando, Teehankee and Antonio, JJ., concur.

Barredo and Makasiar, JJ., did not take part.

Footnotes
||| (Salas v. Jarencio, G.R. No. L-29788, [August 30, 1972], 150-B PHIL 670-694)

.R. No. L-41001. September 30, 1976.]

MANILA LODGE NO. 761, BENEVOLENT AND PROTECTIVE ORDER OF THE ELKS,

INC., petitioner, vs. THE HONORABLE COURT OF APPEALS, CITY OF MANILA, and TARLAC

DEVELOPMENT CORPORATION, respondents.

[G.R. No. L-41012. September 30, 1976.]

TARLAC DEVELOPMENT CORPORATION, petitioner, vs. HONORABLE COURT OF APPEALS,


CITY OF MANILA, LODGE NO. 761, BENEVOLENT AND PROTECTIVE ORDER OF ELKS,

INC., respondents.

Quasha, Asperilla, Zafra, Tayag & Ancheta, for Manila Lodge No. 761, Benevolent and Protective

Order of the ELKS, Inc.

Jose P. Bengzon, Villegas, Zarraga, Narciso & Cudala and Emmanuel G. Cochico, for Tarlac Development

Corporation.

S.M. Artiaga Jr. and Restituto R. Villanueva, Office of the City Legal Officer for City of Manila.

DECISION

CASTRO, J p:

STATEMENT OF THE CASE AND STATEMENT

OF THE FACTS
These two cases are petitions on certiorari to review the decision dated June 30, 1975 of the Court of Appeals in CA-

G.R. No. 51590-R entitled "Tarlac Development Corporation vs. City of Manila, and Manila Lodge No. 761, Benevolent

and Protective Order of Elks, Inc.," affirming the trial court's finding in Civil Case No. 83009 that the property subject of the

decision a quo is a "public park or plaza." LibLex

On June 26, 1905 the Philippine Commission enacted Act No. 1.360 which authorized the City of Manila to reclaim a

portion of Manila Bay. The reclaimed area was to form part of the Luneta extension. The Act provided that the reclaimed

area "shall be the property of the City of Manila" and that "the City of Manila is hereby authorized to set aside a tract of the
reclaimed land formed by the Luneta extension . . . at the north end not to exceed five hundred feet by six hundred feet in

size, for a hotel site, and to lease the same, with the approval of the Governor General, to a responsible person or

corporation for a term not to exceed ninety-ninety years."

Subsequently, the Philippine Commission passed on May 18, 1907 Act No. 1657, amending Act No. 1360, so as to

authorize the City of Manila either to lease or to sell the portion set aside as a hotel site.

The total area reclaimed was a little over 25 hectares. The City of Manila applied for the registration of the reclaimed area,
and on January 20, 1911, O.C.T. No. 1909 was issued in the name of the City of Manila. The title described the registered

land as "un terreno conocido con el nombre de Luneta Extension, situado en el distrito de la Ermita . . .." The registration

was "subject, however, to such of the incumbrances mentioned in Article 39 or said law (Land Registration Act) as may be
subsisting" and "sujeto a las disposiciones y condiciones impuestas en la Ley No. 1360; y sujeto tambien a los contratos

de venta. celebrados y otorgados por la Ciudad de Manila a favor del Army and Navy Club y la Manila Lodge No. 761,

Benevolent and Protective Order of Elks, fechados respectivamente, en 29 de Diciembre de 1908 y 16 de Enero de
1909." 1

On July 13, 1911 the City of Manila, affirming a prior sale dated January 16, 1909, conveyed 5,543.07 square

meters of the reclaimed area to the Manila LodgeNo. 761, Benevolent and Protective Order of Elks of the U.S.A. (BPOE,

for short) on the basis of which TCT No. 2195 2 was issued to the latter over the "parcela de terreno que es parte de la

Luneta Extension, Situada en el Distrito de la Ermita . . .." At the back of this title was annotated document 4608/T-1635,

which in part reads as follows: "que la citada Ciudad de Manila tendra derecho a su opcion, de recomprar la expresada

propiedad para fines publicos solamente, en cualquier tiempo despues de cincuenta anos desde el 13 de Julio de 1911,
previo pago a la entidad compradora, o a sus sucesores del precio de la venta de la misma propiedad, mas el valor que

entonces tengan las mejoras."

For the remainder of the Luneta Extension, that is, after segregating therefrom the portion sold to

the Manila Lodge No. 761, BPOE, a new Certificate of Title No. 2196 3 was issued on July 17, 1911 to the City of Manila.

Manila Lodge No. 761, BPOE, subsequently sold the said 5,543.07 square meters to the Elks Club, Inc., to which was
issued TCT No. 67488. 4 The registered owner, "The Elks Club, Inc.," was later changed by court order to

"Manila Lodge No. 761, Benevolent and Protective Order of Elks, Inc."

In January 1963 the BPOE petitioned the Court of First Instance of Manila, Branch IV, for the cancellation of the

right of the City of Manila to repurchase the property. This petition was granted on February 15, 1963.

On November 19, 1963 the BPOE sold for the sum of P4,700,000 the land together with all the improvements thereon to

the Tarlac Development Corporation (TDC, for short) which paid P1,700,000 as down payment and mortgaged to the
vendor the same realty to secure the payment of the balance to be paid in quarterly installments. 5 At the time of the sale,

there was no annotation of any subsisting lien on the title to the property. On December 12, 1963 TCT No. 73444 as
issued to TDC over the subject land still described as "UNA PARCELA DE TERRENO, que es parte de la Luneta

Extension, situada en el Distrito de Ermita . . .."

In June 1964 the City of Manila filed with the Court of First Instance of Manila a petition for the reannotation of its right to

repurchase; the court, after hearing, issued an order, dated November 19, 1964, directing the Register of Deeds of the
City of Manila to reannotate in toto the entry regarding the right of the City ofManila to repurchase the property after fifty

years. From this order TDC and BPOE appealed to this Court which on July 31, 1968 affirmed in G.R. Nos. L-24557 and

L-24469 the trial court's order of reannotation, but reserved to TDC the right to bring another action for the
clarification of its rights. LLphil

As a consequence of such reservation, TDC filed on April 28, 1971 against the City of Manila and

the Manila Lodge No. 761, BPOE, a complaint, docketed as Civil Case No. 83009 of the Court of First Instance of Manila,

containing three causes of action and praying

"a) On the first cause of action, that the plaintiff TDC be declared to have purchased the parcel of land

now in question with the buildings and improvements thereon from the defendant BPOE for value and
in good faith, and accordingly ordering the cancellation of Entry No. 4608/T-1635 on Transfer

Certificate of Title No. 73444 in the name of the Plaintiff.

"b) On the second cause of action, ordering the defendant of Manila to pay the plaintiff TDC damages in

the sum of not less than one hundred thousand pesos (P100,000.00);

"c) on the third cause of action, reserving to the plaintiff TDC the right to recover from the defendant

BPOE the amounts mentioned in par. XVI of the complaint in accordance with Art. 1555 of the Civil

Code, in the remote event that the final judgment in this case should be that the parcel of land now in

question is a public park; and

"d) For costs, and for such other and further relief as the Court may deem just and equitable." 6

Therein defendant City of Manila, in its answer dated May 19, 1971, admitted all the facts alleged in the first

cause of action except the allegation that TDC purchased said property "for value and in good faith," but denied for

lack of knowledge or information the allegations in the second and third causes of action. As special and affirmative
defense, the City of Manila claimed that TDC was not a purchaser in good faith for it had actual notice of the City's right to

repurchase which was annotated at the back of the title prior to its cancellation, and that, assuming arguendo that TDC

had no notice of the right to repurchase, it was, nevertheless, under obligation to investigate inasmuch as its title recites
that the property is a part of the Luneta extension. 7

The Manila Lodge No. 761, BPOE, in its answer dated June 7, 1971, admitted having sold the land together with the

improvements thereon for value to therein plaintiff which was in good faith, but denied for lack of knowledge as to their

veracity the allegations under the second cause of action. It furthermore admitted that TDC had paid the quarterly
installments until October 15, 1964 but claimed that the latter failed without justifiable cause to pay the subsequent

installments. It also asserted that it was a seller for value in good faith without having misrepresented or concealed facts

relative to the title on the property. As counterclaim, Manila Lodge No. 761 (BPOE) sought to recover the balance of the
purchase price plus interest and costs. 8

On June 15, 1971 TDC answered the aforesaid counterclaim, alleging that its refusal to make further payments was fully
justified. 9
After due trial the court a quo rendered on July 14, 1972 its decision finding the subject land to be part of the "public park

or plaza" and, therefore, part of the public domain. The court consequently declared that the sale of the subject land by

the City of Manila to Manila Lodge No. 761, BPOE, was null and void; that plaintiff TDC was a purchaser thereof in good

faith and for value from BPOE and can enforce its rights against the latter; and that BPOE is entitled to recover from the

City of Manila whatever consideration it had paid the latter. The dispositive part of the decision reads:

"WHEREFORE, the Court hereby declares that the parcel of land formerly covered by Transfer

Certificate of Title Nos. 2195 and 67488 in the name of BPOE and now by Transfer
Certificate of Title No. 73444 in the name of Tarlac Development Corporation is a public park or plaza,

and, consequently, instant complaint is dismissed, without pronouncement as to costs.

"In view of the reservation made by plaintiff Tarlac Development Corporation to recover from defendant

BPOE the amounts mentioned in paragraph XVI of the complaint in accordance with Article 1555 of the
Civil Code, the Court makes no pronouncement on this point." 10

From said decision the therein plaintiff TDC as well as the defendant Manila Lodge No. 761, BPOE, appealed to
the Court of Appeals.

In its appeal docketed as CA-G.R. No. 51590-R, the Manila Lodge No. 761, BPOE, avers that the trial court committed the
following errors, namely:

1. In holding that the property subject of the action is not patrimonial property of the City of Manila; and

2. In holding that the Tarlac Development Corporation may recover and enforce its right against the defendant BPOE. 11

The Tarlac Development Corporation, on the other hand, asserts that the trial court erred:

(1) In finding that the property in question is or was a public park and in consequently nullifying the sale thereof by the

City of Manila to BPOE;

(2) In applying the cases of Municipality of Cavite vs. Rojas, 30 Phil. 602, and Government vs. Cabangis, 53 Phil. 112, to

the case at bar; and

(3) In not holding that the plaintiff-appellant is entitled to recover damages from the defendant City of Manila. 12

Furthermore, TDC, as appellee regarding the second assignment of error raised by BPOE, maintained that it can recover
and enforce its right against BPOE in the event that the land in question is declared a public park or part thereof. 13

In its decision promulgated on June 30, 1975, the Court of Appeals concurred in the findings and conclusions of the

lower court upon the ground that they are supported by the evidence and are in accordance with law, and accordingly

affirmed the lower court's judgment.

Hence, the present petitions for review on certiorari.

G.R. No. L-41001

The Manila Lodge No. 761, BPOE, contends, in its petition for review on certiorari docketed as G.R. No. L-41001, that

the Court of Appeals erred in (1) disregarding the very enabling acts and/or statutes according to which the subject

property was, and still is, patrimonial property of the City of Manila and could therefore be sold and/or disposed of like any

other private property; and (2) in departing from the accepted and usual course of judicial proceedings when it simply
made a general affirmance of the court a quo's findings and conclusions without bothering to discuss or resolve several

vital points stressed by the BPOE in its assigned errors. 14

G.R. No. L-41012

The Tarlac Development Corporation, in its petition for review on certiorari docketed as G.R. No. L-41012, relies on the

following grounds for the allowance of its petition:

1. that the Court of Appeals did not correctly interpret Act No. 1360, as amended by Act No.

1657, of the Philippine Commission; and

2. that the Court of Appeals has departed from the accepted and usual course of judicial proceedings in
that it did not make its own findings but simply recited those of the lower court. 15

ISSUES AND ARGUMENTS

FIRST ISSUE

Upon the first issue, both petitioners claim that the property subject of the action, pursuant to the provisions of Act No.

1360, as amended by Act No. 1657, was patrimonial property of the City of Manila and not a park or plaza.

Arguments of Petitioners

In G.R. No. L-41001, the Manila Lodge No. 761, BPOE, admits that "there appears to be some logic in the
conclusion" of the Court of Appeals that "neither Act No. 1360 nor Act No. 1657 could have meant to supply the

City of Manila the authority to sell the subject property which is located at the south end not the north of the

reclaimed area." 16 It argues, however, that when Act No. 1360, as amended, authorized the City of Manila to undertake

the construction of the Luneta extension by reclaiming land from the Manila Bay, and declared that the reclaimed land

shall be the "property of the City of Manila," the State expressly granted the ownership thereof to the City of Manila which.

consequently, could enter into transactions involving it; that upon the issuance of O.C.T. No. 1909, there could
be no doubt that the reclaimed area owned by the City was its patrimonial property; 17 that the south end of the reclaimed

area could not be for public use for. as argued by TDC, a street, park or promenade can be property for public use

pursuant to Article 344 of the Spanish Civil Code only when it has already been so constructed or laid out, and the subject
land, at the time it was sold to the Elk's Club, was neither actually constructed as a street, park or promenade nor laid out

as a street, park or promenade; 18 that even assuming that the subject property was at the beginning property of public

dominion, it was subsequently converted into patrimonial property pursuant to Art. 422 of the Civil Code, inasmuch as
it had never been used, regarded, or utilized since it was reclaimed in 1905 for purposes other than that of an ordinary

real estate for sale or lease; that the subject property had never been intended for public use, is further shown by the fact

that it was neither included as a part of the Luneta Park under Plan No. 30 of the National Planning Commission nor

considered a part of the Luneta National Park (now Rizal Park) by Proclamation No. 234 dated December 19,

1955 of President Ramon Magsaysay or by Proclamation Order No. 274 dated October 4, 1967 of President Ferdinand E.
Marcos; 19 that, such being the case, there is no reason why the subject property should not be considered as having

been converted into patrimonial property, pursuant to the ruling in Municipality vs. Roa, 7 Phil. 20, inasmuch as the

City of Manila has considered it as its patrimonial property not only bringing it under the operation of the Land
Registration Act but also by disposing of it; 20 and that to consider now the subject property as a public plaza or park

would not only impair the obligations of the parties to the contract of sale dated July 13, 1911, but also authorize
deprivationof property without due process of law. 21

G.R. No. L-41012


In L-41012, the petitioner TDC stresses that the principal issue is the interpretation of Act No. 1360, as amended

by Act No. 1657 of the Philippine Commission,22 and avers that inasmuch as Section 6 of Act No. 1360, as amended

by Act 1657, provided that the reclamation of the Luneta extension was to be paid for outof the funds of the

City of Manila which was authorized to borrow P350,000 "to be expended in the construction of Luneta Extension," the

reclaimed area became "public land" belonging to the City of Manila that spent for the reclamation, conformably to the
holding in Cabangis, 23 and consequently, said land was subject to sale and other disposition; that the Insular

Government itself considered the reclaimed Luneta extension as patrimonial property subject to disposition as evidenced

by the fact that Sec. 3 of Act 1360 declared that "the land hereby reclaimed shall be the property of the City of Manila;"

that this property cannot be property for public use for, according to Article 344 of the Civil Code, the character of property

for public use can only attach to roads and squares that have already been constructed or at least laid out as such, which

conditions did not obtain regarding the subject land; that Sec. 5 of Act 1360 authorized the City of Manila to lease the

northern part of the reclaimed area for hotel purposes; that Act No. 1657 furthermore authorized the City of Manila to sell

the same; 24 that the express statutory authority to lease or sell the northern part of the reclaimed area cannot be

interpreted to mean that the remaining area could not be sold inasmuch as the purpose of the statute was not merely to
confer authority to sell the northern portion but rather to limit the city's powerof disposition thereof, to wit: to prevent

disposition of the northern portion for any purpose other than for a hotel site; 25 that the northern and southern endsof the

reclaimed area cannot be considered as extension of the Luneta for they lie beyond the-sides of the original Luneta when
extended in the direction of the sea, and that is the reason why the law authorized the sale of the northern portion for hotel

purposes, and, for the same reason, it is implied that the southern portion could likewise be disposed of. 26

TDC argues likewise that there are several items of uncontradicted circumstantial evidence which may serve as aids in

construing the legislative intent and which demonstrate that the subject property is patrimonial in nature, to wit: (1)

Exhibits "J" and "J-1", or Plan No. 30 of the National Planning Commission showing the Luneta and its vicinity, do not

include the subject property as part of the Luneta Park; (2) Exhibit "K", which is the plan of the subject property covered

by TCT No. 67488 of BPOE, prepared on November 11, 1963, indicates that said property is not a public park; (3) Exhibit

"T", which is a certified copy of Proclamation No. 234 issued on December 15, 1955 by President Magsaysay, and Exhibit
"U" which is Proclamation Order No. 273 issued on October 4, 1967 by President Marcos, do not include the subject

property in the Luneta Park; (4) Exhibit "W", which is the location plan of the Luneta National Park under

Proclamations Nos. 234 and 273, further confirms that the subject property is not a public park; and (5) Exhibit "y", which
is a copy of O.C.T. No. 7333 in the name of the United States ofAmerica covering the land now occupied by the American

Embassy, the boundaries of which were delineated by the Philippine Legislature, states that the said land is bounded on

the northwest by properties of the Army and Navy Club (Block No. 321) and the Elks Club (Block No. 321), and this

circumstance shows that even the Philippine Legislature recognized the subject property as private property of the Elks
Club. 27

TDC furthermore contends that the City of Manila is estopped from questioning the validity of the sale of the subject

property that it executed on July 13, 1911 to the Manila Lodge No. 761, BPOE, for several reasons, namely: (1) the City's
petition for the reannotation of Entry No. 4608/T-1635 was predicated on the validity of said sale; (2) when the property

was bought by the petitioner TDC it was not a public plaza or park as testified to by both Pedro Cojuangco,

treasurerof TDC, and the surveyor, Manuel Aonuevo; (4) the property was never used as a public park, for, since the

issuance of T.C.T. No. 2165 on July 17, 1911 in the name of the Manila Lodge NO. 761, the latter used it as private

property, and as early as January 16, 1909 the City of Manila had already executed a deed of sale over the property in

favor of the Manila Lodge No. 761; and (5) the City of Manila has not presented any evidence to show that the subject
property has ever been proclaimed or used as a public park. 28
TDC, moreover, contends that Sec. 60 of Com. Act No. 141 cannot apply to the subject land, for Com. Act No. 141 took

effect on December 1, 1936 and at that time the subject land was no longer part of the public domain. 29

TDC also stresses that its rights as a purchaser in good faith cannot be disregarded, for the mere mention in the

certificate of title that the lot it purchased was "part of the Luneta extension" was not a sufficient warning that the

title of the City of Manila was invalid; and that although the trial court, in its decision affirmed by the Court of Appeals,

found the TDC to have been an innocent purchaser for value, the court disregarded the petitioner's rights as such

purchaser that relied on a Torrens certificate of title. 30

The Court, continues the petitioner TDC, erred in not holding that the latter is entitled to recover from the

City of Manila damages in the amount of P100,000 caused by the City's petition for reannotation of its right to repurchase.

DISCUSSION AND RESOLUTION OF FIRST ISSUE

It is a cardinal rule of statutory construction that courts must give effect to the general legislative intent that can be
discovered from or is unraveled by the four corners of the statute, 31 and in order to discover said intent, the whole

statute, and not only a particular provision thereof, should be considered. 32 It is, therefore, necessary to analyze all the

provisions of Act No. 1360, as amended, in order to unravel the legislative intent.

Act No. 1360 which was enacted by the Philippine Commission on June 26, 1905, as amended by Act No. 1657 enacted

on May 18, 1907, authorized the "construction of such rock and timber bulkheads or sea walls as may be necessary for

the making of an extension to the Luneta" (Sec. 1[a]), and the placing ofthe material dredged from the

harbor of Manila "inside the bulkheads constructed to inclose the Luneta extension above referred to" (Sec. 1[c]). It

likewise provided that the plan of Architect D. H. Burnham as "a general outline for the extension and improvement of the

Luneta in the City of Manila" be adopted; that "the reclamation from the Bay of Manila of the land included in said
projected Luneta extension . . . is hereby authorized and the land thereby reclaimed shall be the property of the

City of Manila" (Sec. 3); that "the City of Manila is hereby authorized to set aside a tract of the reclaimed land formed by

the Luneta extension authorized by this Act at the north end of said tract, not to exceed five hundred feet by six hundred

feet in size, for a hotel site, and to lease the same with the approval of the Governor General, . . . for a term not exceeding

ninety-nine years;" that "should the Municipal Board . . . deem it advisable it is hereby authorized to advertise for sale to

sell said tract of land . . .;" "that said tract shall be used for hotel purposes as herein prescribed, and shall not be devoted

to any other purpose or object whatever;" "that should the grantee . . . fail to maintain on said tract a first-class hotel . . .

then the title to said tract of land sold, conveyed, and transferred to the grantee shall revert to the City of Manila, and said

City of Manila shall thereupon become entitled to the immediate possession of said tract ofland" (Sec. 3); that the
construction of the rock and timber bulkheads or sea wall "shall be paid for out of the funds of the City of Manila, but the

area to be reclaimed by said proposed Luneta extension shall be filled, without cost to the City of Manila, with material

dredged from Manila Bay at the expense of the Insular Government" (Sec. 6); and that "the City of Manila is hereby

authorized to borrow from the Insular Government . . . the sum of three hundred thousand pesos, to be expended in the

construction of the Luneta extension provided for by paragraph (a) of section one hereof" (Sec. 7).

The grant made by Act No. 1360 of the reclaimed land to the City of Manila is a grant of a "public" nature, the same
having been made to a local political subdivision. Such grants have always been strictly construed against the
grantee. 33 One compelling reason given for the strict interpretation of a public grant is that there is in such grant a

gratuitous donation of, public money or resources which results in an unfair advantage to the grantee and for that reason,
the grant should be narrowly restricted in favor of the public. 34 This reason for strict interpretation obtains relative to the
aforesaid grant for although the City of Manilawas to pay for the construction of such work and timber bulkheads or sea

walls as may be necessary for the making of the Luneta extension, the area to be reclaimed would be filled at the

expense of the Insular Government and without cost to the City of Manila, with material dredged from Manila Bay. Hence,

the letter of the statute should be narrowed to exclude matters which if included would defeat the policy of the

legislation. cdll

The reclaimed area, an extension to the Luneta, is declared to be property of the City of Manila. Property, however, is
either of public ownership or of private ownership. 35 What kind of property of the City is the reclaimed land? Is it of public

ownership (dominion) or of private ownership?

We hold that it is of public dominion, intended for public use.

Firstly, if the reclaimed area was granted to the City of Manila as its patrimonial property, the City could, by virtue of its

ownership, dispose of the whole reclaimed area without need of authorization to do so from the lawmaking body. Thus

Article 348 of the Civil Code of Spain provides that "ownership is the right to enjoy and dispose of a thing without further

limitations than those established by law." 36 The right to dispose ( jus disponendi) of one's property is an

attribute of ownership. Act No. 1360, as amended, however, provides by necessary implication, that the
City of Manila could not dispose of the reclaimed area without being authorized by the lawmaking body. Thus the statute

provides that "the City of Manila is hereby authorized to set aside a tract . . . at the north end, for a hotel site, and to lease

the same . . . should the municipal board . . . deem it advisable, it is hereby authorized . . . to sell said tract of land . . ."

(Sec. 5). If the reclaimed area were patrimonial property of the City, the latter could dispose of it without need of the

authorization provided by the statute, and the authorization to set aside . . . lease . . . or sell . . . given by the statute would

indeed be superfluous. To so construe the statute as to render the term "authorize," which is repeatedly used by the

statute, superfluous would violate the elementary rule of legal hermeneutics that effect must be given to every word,

clause, and sentence of the statute and that a statute should be so interpreted that no part thereof becomes inoperative or
superflous. 37 To authorize means to empower, to give a right to act. 38 Act No. 1360 furthermore qualifies the verb

"authorize" with the adverb "hereby," which means "by means of this statue or section." Hence without the authorization

expressly given by Act No. 1360, the City of Manila could not lease or sell even the northern portion; much less could it
dispose of the whole reclaimed area. Consequently, the reclaimed area was granted to the City of Manila, not as its

patrimonial property. At most, only the northern portion reserved as a hotel site could be said to be patrimonial property,

for, by express statutory provision it could be disposed of, and the titlethereto would revert to the City should the grantee

fail to comply with the terms provided by the statute. LLpr

TDC, however, contends that the purpose of the authorization provided in Act No. 1360 to lease or sell was really to limit

the City's power of disposition. To sustain such contention is to beg the question. If the purpose of the law was to limit the

City's power of disposition, then it is necessarily assumed that the City had already the power to dispose, for if such power
did not exist, how could it be limited? It was precisely Act 1360 that gave the City the power to dispose for it was

"hereby authorized" by lease or sale. Hence, the City of Manila had no power to dispose of the reclaimed land had

such power not been granted by ActNo. 1360, and the purpose of the authorization was to empower the city to sell or
lease the northern part and not, as TDC claims, to limit only the power to dispose. Moreover, it is presumed that when the

lawmaking body enacted the statute, it had full knowledge of prior and existing laws and legislation on the subject of the
statute and acted in accordance or with respect thereto. 39 If by another previous law, the City of Manila could already

dispose of the reclaimed area, which it could do if such area were given to it as its patrimonial property, would it then not

be a superfluity for Act No. 1360 to authorize the City to disposeof the reclaimed land? Neither has petitioner TDC pointed

to any other law that authorized the City to do so, nor have we come across any. What we do know is that if the reclaimed
land were patrimonial property, there would be no need of giving special authorization to the City to dispose of it. Said

authorization was given because the reclaimed land was not intended to be patrimonial property of the City of Manila, and

without the express authorization to dispose of the northern portion, the City could not dispose of even that part. LibLex

Secondly, the reclaimed area is an "extension to the Luneta in the City of Manila." 40 If the reclaimed area is an

extension of the Luneta, then it is of the same nature or character as the old Luneta. Anent this matter, it has been said

that a power to extend (or continue an act or business) cannot authorize a transaction that is totally distinct. 41 It is not

disputed that the old Luneta is a public park or plaza and it is so considered by Section 859 of the Revised
Ordinances of the Cityof Manila. 42 Hence the "extension to the Luneta" must be also a public park or plaza and for public

use.

TDC, however, contends that the subject property cannot be considered an extension of the old Luneta because it is

outside of the limits of the old Luneta when extended to the sea. This is a strained interpretation of the term "extension,"

for an "extension," it has been held, "signifies enlargement in any direction in length, breadth, or circumstance." 43

Thirdly, the reclaimed area was formerly a part of the Manila Bay. A by is nothing more than an inlet of the sea. Pursuant

to Article 1 of the Law of Waters of1866, bays, roadsteads, coast sea, inlets and shores are parts of the national domain

open to public use. These are also property of public ownership devoted to public use, according to Article 339 of the Civil

Code of Spain.

When the shore or part of the bay is reclaimed, it does not lose its character of being property for public use, according

to Government of the Philippine Islandsvs. Cabangis. 44 The predecessor of the claimants in this case was the owner of a

big tract of land including the lots is question. From 1896 said land began to wear away due to the action of the

water of Manila Bay. In 1901 the lots in question became completely submerged in water in ordinary tides. It remained in

such a state until 1912 when the Government undertook the dredging of the Vitas estuary and dumped the sand and silt
from estuary on the low lands completely submerged in water, thereby gradually forming the lots in question. Tomas

Cabangis took possession thereof as soon as they were reclaimed; hence, the claimants, his successors in interest,

claimed that the lots belonged to them. The trial court found for the claimants and the Government appealed.
This Court held that when the lots became a part of the shore. As they remained in that condition until reclaimed by the

filling done by the Government, they belonged to the public domain for public use. 45 Hence, a part of the shore, and for

that purpose, a part of the bay, did not lose its character of being for public use after it was reclaimed.

Fourthly, Act 1360, as amended, authorized the lease or sale of the northern portion of the reclaimed area as a hotel site.

The subject property is not that northern portion authorized to be leased or sold; the subject property is the southern

portion. Hence, applying the rule of expresio unius est exlusio alterius, the City of Manila was not authorized to sell the

subject property. The application of this principle of statutory construction becomes the more imperative in the case at bar
inasmuch as not only must the public grant of the reclaimed area to the City of Manila be, as above stated, strictly

construed against the City ofManila, but also because a grant of power to a municipal corporation, as happens in this case

where the city is authorized to lease or sell the northern portion ofthe Luneta extension, is strictly limited to such as are
expressly or impliedly authorized or necessarily incidental to the objectives of the corporation.

Fifthly, Article 344 of the Civil Code of Spain provides that "property of public use, in provinces and in towns, comprises

the provincial and town roads, the squares, streets, fountains, and public waters, the promenades, and public

works of general service paid for by such towns or provinces." A park or plaza, such as the extension to the Luneta, is

undoubtedly comprised in said article.


The petitioners, however, argue that, according to said Article 344, in order that the character of property for public use

may be so attached to a plaza, the latter must be actually constructed or at least laid out as such, and since the subject

property was not yet constructed as a plaza or at least laid out as a plaza when it was sold by the City, it could not be

property for public use. It should be noted, however, that properties of provinces and towns for public use are governed by

the same principles as properties of the same character belonging to the public domain. 46 In order to be
property of public domain an intention to devote it to public use is sufficient. 47 The petitioners' contention is refuted by

Manresa himself who said, in his comments 48 on Article 344, that:

"Las plazas, calles y paseos publicos corresponden, sin duda alguna, aldominio publico municipal,

porque se hallan establecidos sobre suelo municipal y estan destinadas al uso de todos. Laurent

presenta, tratando de las Plazas, una cuestion relativa a si deben conceptuarse como de dominio
publico los lugares vacios, libres, que se encuentran en los Municipios rurales. . . . Laurent opina contra

Proudhon, que toda vez que estan al servicio de todos esos lugares, deben considerarse publicos y de

dominio publico. Realmente, para decidir el punto, bastara siempre fijarse en el destino real y efectivo
de los citados lugares, y si este destino entraa un uso comun de todos, no hay duda que son de

dominio municipal si no patrimoniales."

It is not necessary, therefore, that a plaza be already construed or laid out as a plaza in order that it be considered

property for public use. It is sufficient that it be intended to be such. In the case at bar, it has been shown that the
intention of the lawmaking body in giving to the City of Manila the extension to the Luneta was not a grant to

it of patrimonial property but a grant for public use as a plaza.

We have demonstrated ad satietatem that the Luneta extension was intended to be property of the City of Manila for

public use. But, could not said property later on be converted, as the petitioners contend, to patrimonial property? It could

be. But this Court has already said, in Ignacio vs. The Director of Lands, 49 that it is only the executive and possibly the

legislative department that has the authority and the power to make the declaration that said property is no longer

required for public use, and until such declaration is made the property must continue to form part of the public domain. In

the case at bar, there has been nosuch explicit or unequivocal declaration. It should be noted, furthermore, anent this
matter, that courts are undoubtedly not primarily called upon, and are not in a position, to determine whether any public

land is still needed for the purposes specified in Article 4 of the Law of Waters. 50

Having disposed of the petitioners' principal arguments relative to the main issue, we now pass to the

items of circumstantial evidence which TDC claims may serve as aids in construing the legislative intent in the

enactment of Act No. 1360, as amended. It is noteworthy that all these items of alleged circumstantial evidence are acts

far removed in time from the date of the enactment of Act No. 1360 such that they cannot be considered

contemporaneous with its enactment. Moreover, it is not far-fetched that this mass of circumstantial evidence might have
been influenced by the antecedent series of invalid acts, to wit: the City's having obtained over the reclaimed area

OCT No. 1909 on January 20, 1911; the sale made by the City of the subject property to Manila Lodge No. 761; and the

issuance to the latter of T.C.T. No. 2195. It cannot be gainsaid that if the subsequent acts constituting the circumstantial
evidence have been based on, or at least influenced, by those antecedent invalid acts and Torrens titles, they can hardly

be indicative of the intent of the lawmaking body in enacting Act No. 1360 and its amendatory act. LexLib

TDC claims that Exhs. "J," "J-1," "K," "T," "U," "W" and "Y" show that the subject property is not a park.

Exhibits "J" and "J-1," the "Luneta and vicinity showing proposed development" dated May 14, 1949, were prepared by

the National Urban Planning Commissionof the Office of the President. It cannot be reasonably expected that this plan for
development of the Luneta should show that the subject property occupied by the Elks Club is a public park, for it was

made 38 years after the sale to the Elks, and after T.C.T. No. 2195 had been issued to Elks. It is to be assumed that the

Office of the President was cognizant of the Torrens title of BPOE. That the subject property was not included as a

part of the Luneta only indicates that the National Urban Planning Commission that made the plan knew that the subject

property was occupied by Elks and that Elks had a Torrens title thereto. But this in no way proves that the subject property

was originally intended to be patrimonial property of the City of Manila or that the sale to Elks or that the Torrens titleof the

latter is valid.

Exhibit "K" is the "Plan of land covered by T.C.T. No. ____, as prepared for Tarlac Development Company." It was made

on November 11, 1963 by Felipe F. Cruz, private land surveyor. This surveyor is admittedly a surveyor for TDC. 51 This

plan cannot be expected to show that the subject property is a part of the Luneta Park, for the plan was made to show the
lot that "was to be sold to petitioner " This plan must have also assumed the existence of a valid title to the land in

favorof Elks.

Exhibits "T" and "U" are copies of Presidential Proclamations No. 234 issued on November 15, 1955 and No. 273 issued

on October 4, 1967, respectively. The purpose of the said Proclamations was to reserve certain parcels of land situated in
the District of Ermita, City of Manila, for park site purposes. Assuming that the subject property is not within the

boundaries of the reservation, this cannot be interpreted to mean that the subject property was not originally intended to

be for public use or that it has ceased to be such. Conversely had the subject property been included in the reservation, it
would not mean, if it really were private property, that the rights of the owners thereof would be extinguished, for the

reservations was "subject to private rights, if any there be." That the subject property was not included in the reservation

only indicates that the President knew of the existence of the Torrens titles mentioned above. The failure ofthe

Proclamations to include the subject property in the reservation for park site could not change the character of the subject

property as originally for public use and to form part of the Luneta Park. What has been said here applies to Exhibits "V",

"V-1" to "V-3," and "W" which also refer to the area and location of the reservation for the Luneta Park. LLjur

Exhibit "Y" is a copy of O.C.T. No. 7333 dated November 13, 1935, covering the lot where now stands the American

Embassy [Chancery]. It states that the property is "bounded . . . on the Northwest by properties of Army and Navy Club
(Block No. 321) and Elks Club (Block No. 321)." Inasmuch as the said boundaries were delineated by the Philippine

Legislature in Act No. 4269, the petitioners contend that the Legislature "recognized and conceded the existence of the

Elks Club property as a private property (the property is question) and not as a public park or plaza. This argument is non

sequitur, plain and simple. Said Original Certificate of Title cannot be considered as an inconvertible declaration that the

Elks Club was in truth and in fact the owner of such boundary lot. Such mention as boundary owner is not a

means of acquiring title nor can it validate a title that is null and void.

TDC finally claims that the City of Manila is estopped from questioning the validity of the sale it executed on July 13, 1911

conveying the subject property to theManila Lodge No. 761, BPOE. This contention cannot be seriously defended in the

light of the doctrine repeatedly enunciated by this Court that the Government is never estopped by mistakes or errors on

the part. of its agents, and estoppel does not apply to a municipal corporation to validate a contract that is prohibited by

law or its against public policy, and the sale of July 13, 1911 executed by the city of Manila to Manila Lodge was certainly

a contract prohibited by law. Moreover, estoppel cannot be urged even if the City of Manila accepted the benefits of such

contract of sale and the Manila Lodge No. 761 had performed its part of the agreement, for to apply the

doctrine of estoppel against the City of Manila in this case would be tantamount to enabling it to do indirectly what it could
not do directly. 52
The sale of the subject property executed by the City of Manila to the Manila Lodge No. 761, BPOE, was void and

inexistent for lack of subject matter. 53 It suffered from an incurable defect that could not be ratified either by lapse of time

or by express ratification. The Manila Lodge No. 761 therefore acquired noright by virtue of the said sale. Hence to

consider now the contract inexistent as it always has been, cannot be, as claimed by the Manila Lodge No. 761, an

impairment of the obligations of contracts, for there was in contemplation of law, no contract at all. Cdpr

The inexistence of said sale can be set up against anyone who asserts a right arising from it, not only against the first

vendee, the Manila Lodge No. 761, BPOE, but also against all its successors, including, the TDC, which are not protected
by law. 54 The doctrine of bona fide purchaser without notice, being claimed by the TDC, does not apply where there is a

total absence of title in the vendor, and the good faith of the purchaser TDC cannot create title where none exists. 55

The so-called sale of the subject property having been executed, the restoration or restitution of what has been given is in

order. 56

SECOND ISSUE

The second ground alleged in support of the instant petitions for review on certiorari is that the Court of Appeals has

departed from the accepted and usual course of judicial proceedings as to call for an exercise of the power of supervision

TDC, in L-41012, argues that the respondent Court did not make its own findings but simply recited those of the
lower court and made a general affirmance, contrary to the requirements of the Constitution; that the

respondent Courtmade glaring and patent mistakes in recounting even the copied findings, palpably showing

lack of deliberate consideration of the matters involved, as, for example, when said court said that Act No.

1657 authorized the City of Manila to set aside a portion of the reclaimed land "formed by the Luneta Extension or to lease

or sell the same for park purposes;" and that respondent Court, furthermore, did not resolve or dispose of any of the

assigned errors contrary to the mandate of the Judiciary Act. 57

The Manila Lodge No. 761, in L-41001, likewise alleges, as one of the reasons warranting review, that
the Court of Appeals departed from the accepted and usual course of judicial proceedings by simply making a general

affirmance of the court a quo's findings without bothering to resolve several vital points mentioned by the BPOE in its

assigned errors. 58

COMMENTS ON SECOND ISSUE

We have shown in our discussion of the first issue that the decision of the trial court is fully in accordance with law. It

follows that when such decision was affirmed by the Court of Appeals, the affirmance was likewise in accordance with

law. Hence, no useful purpose will be served in further discussing the second issue.

CONCLUSION

ACCORDINGLY, the petitions in both G.R. Nos. L-41001 and L-41012 are denied for lack of merit, and the

decision of the Court of Appeals of June 30, 1975, is hereby affirmed, at petitioners' cost.

Makasiar, Muoz Palma and Martin, JJ., concur.

Teehankee, J., concurs in the result which is wholly consistent with the basic rulings and judgment of this Court in its

decision of July 31, 1968.


||| (Manila Lodge No. 761 v. Court of Appeals, G.R. No. L-41001, L-41012, [September 30, 1976], 165 PHIL 161-190)
Pasay City Government vs CFI
In 1964, Isip entered into a contract with the City of Pasay represented by then Mayor Pablo Cuneta for the construction of a new
Pasay City Hall for the contract price of P4.9 million. Isip proceeded with the construction and accomplished the amount of work
equivalent to P1.7 million. Pasay paid only the total amount of P1.1 million, leaving a balance of P613,000. Pasay failed to remit the
amount, so Isip filed a case for specific performance with damages before CFI Manila. The parties arrived at a draft amicable
agreement wherein it was stated that Pasay will remit P613,000 to Isip and that Isip will start the construction work corresponding
to the next stage. The Municipal Board enacted an ordinance which approved the Compromise Agreement. CFI approved the
compromise agreement and subsequently issued a writ of execution. An application for and notice of garnishment were made and
effected upon Pasay's funds with the PNB. Pasay filed a motion to quash the writ of execution, alleging that the Sheriff has no power
to levy or garnish on execution the general funds, specially the trust funds, of Pasay City. CFI denied the motion and ordered the
enforcement of garnishment. Hence, Pasay filed a petition for review before the SC.

Issue:

Are Pasay City funds deposited with PNB exempt from execution or garnishment?

Held:

All government funds deposited with the PNB by any agency or instrumentality of the government, whether by way of general or
special deposit, remain government funds and may not be subject to garnishment or levy. But, inasmuch as an ordinance has already
been enacted expressly appropriating the amount of P613,096.00 of payment to Isip, then the funds may be garnished.

G.R. No. L-24440 March 28, 1968

THE PROVINCE OF ZAMBOANGA DEL NORTE, plaintiff-appellee,


vs.
CITY OF ZAMBOANGA, SECRETARY OF FINANCE and COMMISSIONER OF INTERNAL REVENUE,defendants-
appellants.

Facts:

Prior to its incorporation as a chartered city, the Municipality of Zamboanga used to be the provincial capital of the then Zamboanga
Province. On October 12, 1936, Commonwealth Act 39 was approved converting the Municipality of Zamboanga into Zamboanga
City. Sec. 50 of the Act also provided that Buildings and properties which the province shall abandon upon the transfer of the
capital to another place will be acquired and paid for by the City of Zamboanga at a price to be fixed by the Auditor General.

Such properties include lots of capitol site, schools, hospitals, leprosarium, high school playgrounds, burleighs, and hydro-electric
sites.

On June 6, 1952, Republic Act 711 was approved dividing the province of Zamboanga into two (2): Zamboanga del Norte and
Zamboanga del Sur. As to how the assets and obligations of the old province were to be divided between the two new ones, Sec. 6
of that law provided Upon the approval of this Act, the funds, assets and other properties and the obligations of the province of
Zamboanga shall be divided equitably between the Province of Zamboanga del Norte and the Province of Zamboanga del Sur by the
President of the Philippines, upon the recommendation of the Auditor General.

However, on June 17, 1961, Republic Act 3039 was approved amending Sec. 50 of Commonwealth Act 39 by providing that, All
buildings, properties and assets belonging to the former province of Zamboanga and located within the City of Zamboanga are
hereby transferred, free of charge, in favor of the said City of Zamboanga.
This constrained Zamboanga del Norte to file on March 5, 1962, a complaint against defendants-appellants Zamboanga City; that,
among others, Republic Act 3039 be declared unconstitutional for depriving Zamboanga del Norte of property without due process
and just compensation.

Lower court declared RA 3039 unconstitutional as it deprives Zamboanga del Norte of its private properties.

Hence the appeal.

Issue:

Whether RA 3039 is unconstitutional on the grounds that it deprives Zamboanga del Norte of its private properties.

Held:

No. RA 3039 is valid. The properties petitioned by Zamboanga del Norte is a public property.

The validity of the law ultimately depends on the nature of the 50 lots and buildings thereon in question. For, the matter involved
here is the extent of legislative control over the properties of a municipal corporation, of which a province is one. The principle itself
is simple: If the property is owned by the municipality (meaning municipal corporation) in its public and governmental capacity, the
property is public and Congress has absolute control over it. But if the property is owned in its private or proprietary capacity, then it
is patrimonial and Congress has no absolute control. The municipality cannot be deprived of it without due process and payment of
just compensation.

The capacity in which the property is held is, however, dependent on the use to which it is intended and devoted. Now, which of two
norms, i.e., that of the Civil Code or that obtaining under the law of Municipal Corporations, must be used in classifying the
properties in question?

Civil Code

The Civil provide: ART. 423. The property of provinces, cities, and municipalities is divided into property for public use and
patrimonial property; ART. 424. Property for public use, in the provinces, cities, and municipalities, consists of the provincial roads,
city streets, municipal streets, the squares, fountains, public waters, promenades, and public works for public service paid for by said
provinces, cities, or municipalities. All other property possessed by any of them is patrimonial and shall be governed by this Code,
without prejudice to the provisions of special laws.

Applying the above cited norm, all the properties in question, except the two (2) lots used as High School playgrounds, could be
considered as patrimonial properties of the former Zamboanga province. Even the capital site, the hospital and leprosarium sites,
and the school sites will be considered patrimonial for they are not for public use. They would fall under the phrase public works for
public service for it has been held that under the ejusdem generis rule, such public works must be for free and indiscriminate use by
anyone, just like the preceding enumerated properties in the first paragraph of Art 424. The playgrounds, however, would fit into
this category.

Law of Municipal Corporations

On the other hand, applying the norm obtaining under the principles constituting the law of Municipal Corporations, all those of the
50 properties in question which are devoted to public service are deemed public; the rest remain patrimonial. Under this norm, to
be considered public, it is enough that the property be held and, devoted for governmental purposes like local administration, public
education, public health, etc.
Final Ruling

The controversy here is more along the domains of the Law of Municipal Corporations State vs. Province than along that of
Civil Law. If municipal property held and devoted to public service is in the same category as ordinary private property, then that
would mean they can be levied upon and attached; they can even be acquired thru adverse possession all these to the detriment
of the local community. It is wrong to consider those properties as ordinary private property.

Lastly, the classification of properties other than those for public use in the municipalities as patrimonial under Art. 424 of the Civil
Code is without prejudice to the provisions of special laws. For purpose of this article, the principles, obtaining under the Law
of Municipal Corporations can be considered as special laws. Hence, the classification of municipal property devoted for distinctly
governmental purposes as public should prevail over the Civil Code classification in this particular case.

WHEREFORE, the decision appealed from is hereby set aside and another judgment is hereby entered as follows:.

(1) Defendant Zamboanga City is hereby ordered to return to plaintiff Zamboanga del Norte in lump sum the amount of P43,030.11
which the former took back from the latter out of the sum of P57,373.46 previously paid to the latter; and

(2) Defendants are hereby ordered to effect payments in favor of plaintiff of whatever balance remains of plaintiffs 54.39% share in
the 26 patrimonial properties, after deducting therefrom the sum of P57,373.46, on the basis of Resolution No. 7 dated March 26,
1949 of the Appraisal Committee formed by the Auditor General, by way of quarterly payments from the allotments of defendant
City, in the manner originally adopted by the Secretary of Finance and the Commissioner of Internal Revenue. No costs. So ordered.

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