Province of Zamboanga v.

City of
Zamboanga [ G.R. No. L-24440,
March 28, 1968 ]
131 Phil. 446

[ 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.

DECISION

BENGZON, J.P., J.:

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 building
constructed thereon, located in the City of Zamboanga and covered individually by Tor-
rens certificates of title in the name of Zamboanga Province.  As far as can be gleaned
from the records,[1] (Links to an external site.) said properties were being utilized as
follows ?
No. of Lots                       Use1  ……………    Capitol Site3  ……………    School
Site3  ……………    Hospital
Site3  ……………    Leprosarium1  ……………    Curuan School1  ……………    Trade
School2  ……………    Burleigh School2  ……………    High School
Playground9  ……………    Burleighs1  ……………    Hydro-Electric Site
(Magay)1  ……………    San Roque23 ……………   vacant
It appears that in 1945, the2capital of Zamboanga Province was transferred to Dipolog.
[2]
 (Links to an external site.) Subsequently, or on June 16, 1948, Republic Act 286 was
approved creating the municipality of Molave and making it the capital of Zambo-
anga 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 P1,294,2411.00.[3] (Links to an external
site.)
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 obliga-
tions 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] (Links to an external site.) 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 rights and obligations under said law be declared; (c) The Secretary of
Finance and the Internal Revenue Commissioner be enjoined from reimbursing the sum
of P57,373.46 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 P704,220.05 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 title (Exhibits 'A' to 'A-49') upon
payment by the latter of the aforesaid sum of P704,220.05 in full; dismissing the
counterclaim of defendant City of Zamboanga; and declaring permanent the preliminary
mandatory injunction issued on June 8, 1962, pursuant to the order of the Court dated
June 4, 1962.  No costs are assessed against the defendants."It is SO ORDERED."
Subsequently, but prior to the perfection of defendants' appeal, plaintiff province filed 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 plaintiffprovince's 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] (Links to an
external site.) 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] (Links to an external site.)
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 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." (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] (Links to an external site.)  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 Municipalityof Catbalogan v. Director of
Lands,[8] (Links to an external site.) and in Municipality of Tacloban v. Director of Lands,
[9]
 (Links to an external site.) 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] (Links to an
external site.)
Supporting jurisprudence are found in e following cases: (1) HINUNANGAN v.
DIRECTOR OF LANDS,[11] (Links to an external site.) where it was stated that
"x x x  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.  x x x” (2)
VIUDA DE TANTOCO v. MUNICIPAL COUNCIL OF ILOILO [12] (Links to an external
site.) 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] (Links to
an external site.) 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                                U s e
2200 ………….. 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
5583 ………….. 167 ………….. High School
Playground
6181 (O.C.T)   ………….. CuruanSchool
11942 ………….. 926 ………….. Leprosarium
11943 ………….. 927 ………….. Leprosarium
11944 ………….. 925 ………….. Leprosarium
5557 ………….. 170 ………….. BurleighSchool
5562 ………….. 180 ………….. BurleighSchool
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 describe are adjoining each other and in
turn are between the two lots wherein the Burleigh schools are 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 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] (Links to an external site.) 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, though 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                                U s e
5577 ………….. 177 ………….. Mydro, Magay
13198 ………….. 127-D ………….. SanRoque
Burleigh[15] (Links
5569 ………….. 169 ………….. to an external
site.)
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] (Links to an external site.)
We are more inclined to uphold this latter view.  The controversy here is more along the
domains of the Law of Municipal Corporations - State vs. 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 "x x x 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 distinctly
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, Zamboangadel 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 743,030.11
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 complaint16 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.