THE PROVINCE OF ZAMBOANGA DEL NORTE, PLAINTIFF-APPELLEE, VS. CITY OF ZAMBOANGA, SECRETARY OF FINANCE AND COMMISSIONER OF INTERNAL REVENUE, DEFENDANTS-APPELLANTS.

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 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, the2capital 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 P1,294,2411.00.^[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 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 plain­tiff
province’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]
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
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]  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 e following cases: (1)
HINUNANGAN v. DIRECTOR OF LANDS,^[11]
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]
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:

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]
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:

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 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, 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 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.

Reyes, Acting C.J., Dizon, Makalintal, Zaldivar, Sanchez,
Ruiz Castro, Angeles, and Fernando, JJ., concur.

Concepcion, C.J., on leave.

^[1]
See Record on Appeal, pp. 4-6.

^[2]
See Exhibit C.

^[3]
The Committee report itself was not submitted as evidence.

^[4]
Exhibit C.

^[5]
Rule 62, Sec. 6, Rules of Court.

^[6] 2
McQuillin, Municipal Corporations, 3rd. ed., 191-196;
Martin, Public Corporations, 5th ed., 31-32; Gonzales, Law on Public
Corporations, 1962 ed., 29-30, Municipality of Naguilian
v. NWSA L-18452, Nov. 29, 1963.

^[7] Cebu City
v. NWSA, G.R. No. L-12892, Apr.
30, 1962.

^[8]
17 Phil. 216.

^[9]
17 Phil. 426.

^[10]
Martin, op. cit., supra; Gonzales, op. cit.,
supra.; 62 C. J.S, 437-349.

^[11]
24 Phil. 124.

^[12]
49 Phil. 52.

^[13]
91 Phil. 514.

^[14]
It was only in Republic Act 2264, Sec. 3, last pa­ragraph, that provinces,
cities and municipali­ties were “x x x  authorized to
undertake and carry out any public works projects, financed by the
provincial, city and municipal funds or any other fund borrowed from
or advanced by pri­vate third parties  x x x  without the inter­vention of the Department
of Public Works and Communications.” (Stressed for emphasis) This law was
approved and took effect of June 19,
1959.

^[15]
This could not be considered as forming part of the appurtenant grounds of the
Burleigh school sites since the records here and in the Bureau of Lands show
that this lot is set apart from the other Burleigh lots.

^[16]
Republic v. Sioson, G.R. No. L-13687, Nov. 29, 1963; Hodges v. City
of Iloilo, G.R. No. L-17573, June 30, 1962.

17 Record on Appeal, pp. 8-9, 13.