FACTS: City of Manila is the owner of a parcel of land.

On various dates, the City of Manila sold

portions of the said land. When the last sale happened, TCT 22547 covering the residue of the
land 7490.10sqm. was issued in the name of City of Manila. Municipal Board of Manila then
adopted a resolution requesting the President to consider the feasibility of declaring the land as
patrimonial property of Manila for the purpose of selling these lots to the actual occupants
thereof. A bill was then passed by Congress and approved by President, and became RA 4118,
converting the land from communal property to disposable and alienable land of State. To
implement said RA, Land Authority requested Manila to deliver the TCT in order to obtain title
thereto in the name of Land Authority. The request was granted with the knowledge and
consent of City mayor, cancelling TCT 22547 and issuing TCT 80876 in the name of Land
Authority.

Manila, for some reasons, brought an action to restrain, prohibit, and enjoin Land Authority and
Register of Deeds from implementing RA 4118, and praying for the declaration of RA 4118 as
unconstitutional. Trial court declared RA 4118 to be unconstitutional and invalid on the ground
that it deprived City of its property without due process of law and payment of just
compensation.

Land Authority and Register of Deeds argued that the land is a communal land, or a portion of
public domain owned by State; that the land has not been used by Manila for any public
purpose; that it was originally a communal land not because it was needed in connection with its
organization as a municipality but rather for the common use of its inhabitants; that the City
mayor 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 City of Manila
nor divert the State of its paramount title.

ISSUE: WON the said land is a public property or a patrimonial property of the City of Manila?

RULING: The land is a public property.

According to the Court, as a general rule, regardless of the source or classification of the land in
the possession of municipality, excepting those which it acquired in its own funds in its private or
corporate capacity, such property is held for the State for the benefit of its inhabitants, whether it
be for governmental or proprietary purposes. The legal situation is the same if the State itself
holds the property and puts it to a different use. When it comes to property of municipality which
it did not acquire in its private or corporate capacity with its own funds (the land was originally
given to City by Spain), 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.

The property was not acquired by the City of Manila with its own funds in its private or
proprietary capacity. The land was part of the territory of City of Manila granted by sovereign in
its creation. Furthermore, City expressly recognized the paramount title of the State over its land
when it requested the President to consider the feasibility of declaring the lot as patrimonial
property for selling. It was proven that the said land had never been actually acquired by
the city of manila in its private capacity butrather it was merely held in trust by the city for
the state as theland was part of the territory of the city of manila upon its creation.