Province of Zamboanga del Norte vs. City of Zamboanga

Properties of municipal corporations (provinces, cities, municipalities) devoted to governmental or public service purposes are public properties subject to absolute legislative control and may be transferred without compensation, whereas properties held in a proprietary or private capacity are patrimonial and cannot be taken without due process and just compensation.

Prior to its incorporation as a chartered city, Zamboanga was the provincial capital of Zamboanga Province. Commonwealth Act 39 (1936) converted the municipality into Zamboanga City and mandated that the City acquire provincial properties abandoned upon the transfer of the capital, with payment to be fixed by the Auditor General. In 1945, the provincial capital moved to Dipolog, then to Molave in 1948. In 1952, Republic Act 711 divided the province into Zamboanga del Norte and Zamboanga del Sur.

• Filed in the Court of First Instance (CFI) of Zamboanga del Norte on March 5, 1962 as "Declaratory Relief with Preliminary Mandatory Injunction"
• CFI issued preliminary injunction on June 4, 1962
• CFI rendered judgment on August 12, 1963 declaring Republic Act 3039 unconstitutional and ordering payment of P704,220.05 with 25% quarterly deductions from the City's internal revenue allotments
• CFI granted plaintiff's motion for reconsideration ordering lump sum payment with 6% interest
• Elevated to SC on appeal by defendants

• The Province of Zamboanga owned 50 lots with buildings in Zamboanga City, covered by Torrens titles, used for various purposes: capitol site, school sites, hospital, leprosarium, playgrounds, and vacant lots
• In 1949, the Auditor General's Appraisal Committee fixed the value of these properties at P1,294,241.00
• In 1955, the Auditor General apportioned the assets: 54.39% to Zamboanga del Norte (P704,220.05) and 45.61% to Zamboanga del Sur
• In 1959, the Executive Secretary ruled that Zamboanga del Norte had vested rights as co-owner and authorized deductions from the City's internal revenue allotments; P57,373.46 was paid to the Province
• On June 17, 1961, Republic Act 3039 amended Commonwealth Act 39, transferring all 50 lots and buildings to the City of Zamboanga "free of charge"
• The Secretary of Finance ordered the return of the P57,373.46 to the City; P43,030.11 was actually returned
• Zamboanga del Norte filed suit to declare RA 3039 unconstitutional and to enjoin reimbursement

• Republic Act 3039 is unconstitutional for depriving the province of property without due process and just compensation
• The province acquired vested rights to payment under Section 50 of Commonwealth Act 39 when the Auditor General fixed the valuation in 1949
• The properties are patrimonial, not public, and thus protected from taking without compensation
• Prayed for declaration of rights and continuation of quarterly payments from the City's internal revenue allotments

• Republic Act 3039 is a valid exercise of legislative power over municipal corporations
• The properties are public properties subject to absolute legislative control, not patrimonial
• Claimed that Zamboanga del Norte and its predecessors are guilty of laches for delaying enforcement of their rights

• Procedural Issues: Whether the action for declaratory relief was proper where the law had already been violated and coercive effect was sought
• Substantive Issues:
  • Whether Republic Act 3039 is constitutional in transferring the 50 lots and buildings to the City without compensation
  • Whether the properties in question are public (governmental) or patrimonial (proprietary) in nature
  • Whether the plaintiff is guilty of laches

• Procedural: Assuming arguendo that declaratory relief was improper because the law had already been violated and coercive relief was sought, the Rules of Court authorize the conversion of such proceedings to an ordinary action; thus, the SC proceeded to decide the case on the merits
• Substantive:
  • Republic Act 3039 is valid as to the 24 lots devoted to governmental purposes (capitol site, school sites, hospital, leprosarium, playgrounds, and appurtenant grounds) because these are public properties subject to absolute congressional control
  • Republic Act 3039 is unconstitutional as to the 26 remaining lots (vacant lots, hydro-electric site, San Roque, and one Burleigh lot) because these are patrimonial properties, and their transfer without just compensation violates due process
  • No laches: The cause of action arose only in 1949 when the Auditor General fixed the valuation; reconsideration of the 1951 Cabinet Resolution was seasonably sought; partial payments were made; and suit was filed promptly in 1962 after RA 3039 was passed in 1961
  • Payment terms: The P43,030.11 already returned to the City must be returned to the Province in lump sum (as RA 3039 cannot retroactively affect completed acts); the remaining balance of the Province's 54.39% share in the 26 patrimonial properties shall be paid in quarterly installments from the City's internal revenue allotments, not in lump sum; Article 1169 of the Civil Code on reciprocal obligations is inapplicable as there has been no complete delivery of the lots

• Classification of Municipal Property — Municipal corporations hold property either in a governmental (public) capacity or in a proprietary (private) capacity. The classification depends on the use to which the property is intended and devoted.
• Public/Governmental Property: Properties held and devoted to governmental purposes (local administration, public education, public health). These are subject to absolute legislative control, cannot be levied upon or attached, and cannot be acquired by adverse possession.
• Patrimonial/Proprietary Property: Properties not devoted to public service. Governed by the Civil Code. Cannot be taken without due process and payment of just compensation.
• Ejusdem Generis Rule (Article 424, Civil Code) — The phrase "public works for public service" must be interpreted in light of the preceding enumeration (roads, streets, squares, fountains, public waters, promenades), meaning such works must be for free and indiscriminate use by anyone to be considered public.
• Special Laws Exception — Article 424's classification of non-public use properties as patrimonial is "without prejudice to the provisions of special laws." The principles of the Law of Municipal Corporations constitute special laws for this purpose and prevail over the Civil Code classification when determining the nature of municipal property devoted to governmental purposes.
• Registration of Public Property — Registration under the Torrens system cannot convert public property into private property.

• "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."
• "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."

• Municipality of Catbalogan v. Director of Lands (17 Phil. 216) and Municipality of Tacloban v. Director of Lands (17 Phil. 426) — Cited by the lower court for the proposition that capitol and school sites are patrimonial; the SC distinguished these cases as applying the Civil Code norm rather than the Municipal Corporations law norm
• Hinunangan v. Director of Lands (24 Phil. 124) — Presumption of grant from the State for municipal lands occupied distinctly for public purposes (court house, school, market)
• Viuda de Tantoco v. Municipal Council of Iloilo (49 Phil. 52) — Municipal properties necessary for governmental purposes (police stations, markets, equipment) are public and exempt from execution
• Municipality of Batangas v. Cantos (91 Phil. 514) — Municipal lot devoted to school purposes is dedicated to public use and not patrimonial
• Cebu City v. NWSA (G.R. No. L-12892) — Application of the ejusdem generis rule to Article 424 of the Civil Code

• Commonwealth Act 39, Section 50 — Required the City of Zamboanga to acquire and pay for provincial properties abandoned upon the transfer of the capital
• Republic Act 3039 — Amended CA 39, Sec. 50, transferring all properties to the City free of charge; held valid only as to public properties
• Republic Act 711, Section 6 — Mandated division of assets between the two new provinces upon the dissolution of Zamboanga Province
• Civil Code, Article 423 — Division of provincial, city, and municipal property into property for public use and patrimonial property
• Civil Code, Article 424 — Definition of property for public use (roads, streets, squares, etc.) and provision that all other property is patrimonial "without prejudice to special laws"
• Civil Code, Article 1169 — Reciprocal obligations and delay; held inapplicable because no complete delivery of the lots had occurred
• Rule 62, Section 6, Rules of Court — Conversion of declaratory relief proceedings to ordinary action