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 O…

Salas versus Estrella

The Case

This is a petition for review of a decision of the Court of First Instance of Manila declaring a statute unconstitutional. The City of Manila, through its mayor, sued the Executive Secretary, the Governor of the Land Authority, and the Register of Deeds of Manila to stop the implementation of Republic Act No. 4118 and to annul the transfer of a parcel of city land to the national government. The case matters because it fixes the boundary between two powers: the power of Congress over lands held by a municipality in trust for the State, and the constitutional guarantee that no person shall be deprived of property without due process and just compensation. It tells the Bar candidate when a legislative transfer of municipal land is an act of sovereign disposal and when it becomes a taking.

Procedural History

The City of Manila filed an action for injunction and prohibition, with a prayer for preliminary injunction, before the Court of First Instance of Manila, seeking to restrain the Governor of the Land Authority and the Register of Deeds from further implementing Republic Act No. 4118 and asking that the Act be declared unconstitutional. The parties submitted a partial stipulation of facts, waived further evidence, and submitted the case for decision. The trial court rendered judgment declaring Republic Act No. 4118 unconstitutional and invalid, restraining the respondents from implementing it, and ordering the Register of Deeds to cancel the transfer certificate of title issued in the name of the Land Tenure Administration and to reinstate, if feasible, the title in the name of the City of Manila, or to issue a new one. The respondents elevated the matter to the Supreme Court by petition for review.

Facts

In February 1919 a land registration court declared the City of Manila the owner in fee simple of a parcel of land in Malate, Manila, and in August 1920 the Register of Deeds issued Original Certificate of Title No. 4329 in the City's name. The City later sold portions of the land to Pura Villanueva, and when the last sale was made in August 1924, the residue of 7,490.10 square meters was covered by Transfer Certificate of Title No. 22547 in the name of the City of Manila.

In September 1960 the Municipal Board of Manila adopted a resolution requesting the President to consider declaring the property a patrimonial property of the City for the purpose of reselling it to the actual occupants. Bills were then filed in the House of Representatives to convert the land into disposable or alienable land of the State, and the bill was approved by the Senate, signed by the President in June 1964, and became Republic Act No. 4118. The Act converted the lot into disposable or alienable land of the State, placed it under the Land Tenure Administration, and directed that it be subdivided into small lots and sold on installment to tenants and bona fide occupants.

To implement the Act, the Land Authority furnished the City Mayor with the proposed subdivision plan, and the City Mayor's office interposed no objection provided the law be strictly complied with. The City surrendered the owner's duplicate of its title, the Register of Deeds cancelled it, and a new title was issued in the name of the Land Tenure Administration. Then the City made a complete turn-about. In December 1966 the City Mayor, in his capacity as mayor and on behalf of the City as a public corporation, brought the action that led to this case.

Issues

• Whether or not the land involved is private or patrimonial property of the City of Manila.
• Whether or not Republic Act No. 4118 is valid and not repugnant to the Constitution.

Applicable Provisions

Article 423 of the Civil Code provides:

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

This provision supplies the classification by which the Court tests whether the land is held for public use or in the City's private capacity.

Article 424 of the Civil Code provides:

Article 424. Property for public use, in the provinces, cities, and municipalities, consist 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.

The Court applies this provision to determine that all property of the City not falling under the public use enumeration is patrimonial.

Ruling

On the first issue, the Court held that the land is patrimonial property of the City of Manila. The Torrens title declared the City owner in fee simple, and nothing on its face showed the land to be communal. The Court stressed one outstanding factor: the City had not shown by any shred of evidence in what manner it acquired the land as its private or patrimonial property. In the absence of a title deed showing acquisition with private or corporate funds, the presumption is that the land came from the State upon the creation of the municipality. Communal lands, the Court explained, arose when a town was established under the Spanish laws, and the municipality held only a usufruct, with ultimate title remaining in the sovereign. Tested by Articles 423 and 424 of the Civil Code, the land is patrimonial.

On the second issue, the Court upheld the validity of Republic Act No. 4118. The Court laid down the governing rule: 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 for governmental or proprietary purposes. The municipality holds such lands subject to the paramount power of the legislature to dispose of them, because the municipality owes its creation to the legislature as an agent for the performance of part of its public work. The legal situation is the same as if the State itself holds the property and puts it to a different use. The Court added that legislative control over a municipal corporation is not absolute even over 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. Here, the City had consented to the implementation, and the Act merely transferred the land from one class of public land to another for the benefit of its occupants.

Doctrine

Municipal property is divided into property for public use and patrimonial property under Article 423 of the Civil Code, and under Article 424 all property of a city not devoted to public use is patrimonial. But even patrimonial land in the possession of a municipality is presumed to have come from the State upon the creation of the municipality, unless the municipality shows it was acquired with its own private or corporate funds. Land so held is held in trust for the State and is subject to the paramount power of the legislature to dispose of it, the municipality being a mere instrumentality of the State for local administration. The exception is land acquired by the municipality with its own funds in its private or corporate capacity, which the legislature cannot take without due process and just compensation.

Disposition

The Supreme Court reversed the judgment of the trial court, sustained the validity of Republic Act No. 4118, and upheld the transfer of the land to the Land Authority.

Remember This

Memorize the rule: municipal land is presumed to come from the State and is held in trust for the State, subject to the legislature's paramount power to dispose of it, unless the municipality proves it bought the land with its own funds. Examiners use this case to test the public use and patrimonial distinction under Articles 423 and 424 of the Civil Code, and to test when a legislative transfer of municipal property is a valid exercise of sovereign disposal rather than a taking without due process.