Baguio Citizens Action Inc. vs. City Council of Baguio

A city ordinance that purports to transfer or encumber public lands, including the award of such lands to squatters through direct sale, is ultra vires and void, because the disposition, administration, and alienation of lands of the public domain are exclusively vested in the national government, principally in the Director of Lands, absent prior legislative authority. Squatting is inherently unlawful, and no amount of municipal legislation or official acquiescence can convert it into a lawful entitlement.

Baguio City’s local legislative body enacted Ordinance No. 386 on February 23, 1967. The ordinance aimed to address the situation of landless residents who had occupied public lands—watersheds, reservations, and other portions of the public domain within the Baguio townsite—by treating them as bona-fide occupants and making the occupied areas part of a city government housing project. The measure provided for the issuance of building permits, dismissal of pending criminal cases against squatters, protection from public bidding requirements, and the eventual award of the lots to the occupants through direct sale at minimum cost. Its explanatory note invoked humanitarian considerations, asserting that the squatters acted out of necessity rather than criminal intent and deserved pity and understanding rather than prosecution.

The Ordinance: On February 23, 1967, the City Council of Baguio enacted Ordinance No. 386. Its stated design was “to extend a helping hand to the numerous landless city residents and the so-called ‘Squatters’ within the Baguio Townsite.” Section 1 declared that all public lands within the Baguio townsite occupied by squatters duly registered as such at the time of promulgation, and not designated for public use, “shall be considered as embraced and comprising a City Government Housing Project.” Section 2 deemed building permits issued to such squatters and gave them five years to comply with building specifications and pay permit fees. Section 3 directed that all pending court cases against squatters be dropped. Section 4 mandated city protection “against the stringent provisions of the Public Land Act, particularly on public bidding,” and that the lots be awarded to the occupants by direct sale through a Presidential Proclamation. Section 5 provided that the city would not profit and that lot costs be appraised at minimum square-meter rates, payable over ten years. Section 6 allowed the minimum lot-area requirement to be disregarded in congested areas and gave preference to squatters in transfer to resettlement projects. Section 7 appropriated ₱20,000 for lot surveys, and Section 8 assigned administration to a three-man committee previously created under another ordinance.

Petition for Declaratory Relief: Petitioner civic organizations sought a judgment declaring the ordinance void ab initio. They contended, in essence, that the City Council lacked the power to dispose of public domain and that squatting could not be legalized by municipal fiat.

The Trial Court’s Ruling: The Court of First Instance of Baguio, Branch II, dismissed the petition without reaching the merits. The dismissal rested on three points: (1) a decision of Branch I of the same court in a criminal case for illegal construction had upheld the city’s power to “pardon” the violation through Sections 2 and 3 of the ordinance, and under judicial comity Branch II should not review that judgment; (2) the squatters who stood to benefit from the ordinance were not joined as parties, which the trial court considered a jurisdictional defect under Section 2, Rule 64 of the Rules of Court; and (3) even if jurisdiction existed, the court could decline to make a declaration where it would not terminate the controversy, because the absent squatters might relitigate the identical issue.

• Lack of Legislative Authority: Petitioners maintained that the City Council had no power to enact Ordinance No. 386 because the disposition, administration, and alienation of lands of the public domain are exclusively vested in the national government and the Director of Lands, requiring prior legislative authorization.

• Squatting Cannot Be Legalized: Petitioners argued that squatting on public land is inherently unlawful and that any municipal ordinance purporting to confer legality upon such occupation is void as against public policy, citing the Court’s pronouncements in City of Manila v. Garcia that official tolerance cannot convert illegal acts into lawful entitlements.

• Prior Adjudication: Respondents contended that the Court of First Instance of Baguio, Branch I, had already passed upon the validity of the ordinance in a criminal case and upheld the council’s power to enact it, and that the doctrine of judicial stability precluded Branch II from revisiting the issue in a declaratory relief proceeding.

• Non-Joinder of Indispensable Parties: Respondents argued that the squatters who would be directly affected by any declaration of invalidity were necessary parties under Section 2, Rule 64, and that the failure to implead them deprived the court of jurisdiction to render a binding declaration.

• Impropriety of Declaratory Relief: Respondents asserted that even if jurisdiction existed, the court properly exercised its discretion under Section 5, Rule 64, to refuse a declaration because the omitted squatters would not be bound and could raise the same question anew, rendering the proceeding futile.

• Res Judicata / Judicial Comity: Whether the prior decision of Branch I of the Court of First Instance of Baguio, in the criminal case for illegal construction, barred the declaratory relief action.

• Necessary Parties: Whether the non-joinder of the squatter-beneficiaries was a jurisdictional defect that warranted dismissal of the petition.

• Validity of Ordinance 386: Whether the City Council of Baguio possessed the authority to enact Ordinance No. 386, which sought to legalize the occupation of public lands by squatters and provide for their disposition by direct sale to the occupants.

• Res Judicata / Judicial Comity: The prior criminal ruling did not preclude the declaratory relief suit. Branch I had confined itself to Sections 2 and 3 of the ordinance, addressing only whether the city could “pardon” the violation of building-permit requirements; it expressly cautioned that had the issue been the legalization of illegal occupation of public land, the ordinance would have been ultra vires and unconstitutional. No definitive determination of the ordinance’s validity regarding public-land disposition had been made, and Branch II was thus not asked to review a judgment of the first branch.

• Necessary Parties: The non-joinder of the squatters was not a jurisdictional defect. Section 2, Rule 64 merely states that the declaration shall not prejudice persons not parties to the action. Unlike Degala v. Reyes, where the omitted party was the Roman Catholic Church, the entity most vitally affected by a declaration of nullity of a will, the squatters in this case held no protectable right under a void ordinance. The real party in interest to defend the measure was the enacting body—the City Council, which was properly impleaded together with the City Mayor. Joinder of the squatters was not necessary to terminate the controversy, because a declaration of nullity would bind them and leave them with no legal interest to relitigate.

• Validity of Ordinance 386: Ordinance No. 386 was a patent nullity. The lands occupied by the squatters were indisputably public lands—portions of watersheds, reservations, and scattered parcels of the public domain within the Baguio townsite. The City of Baguio could not dispose of such lands without prior legislative authority, the power of exclusive control, administration, disposition, and alienation of public domain being vested by law in the Director of Lands. The ordinance’s attempt to award the lots by direct sale, to disregard public bidding, and to treat illegal occupants as lawful possessors exceeded the city’s corporate powers and invaded the plenary authority of the state. The explanatory note’s humanitarian justification could not supply the absent authority. Squatting is a vice and a blight; official toleration cannot elevate it into a lawful act, as emphatically laid down in City of Manila v. Garcia. The policy against favoring usurpers and squatters was underscored, and the government’s militant stance against squatting, as reflected in Letter of Instruction No. 19, was noted.

• Plenary Control over Public Domain — The state possesses plenary power to determine the recipients of lands of the public domain and the terms under which they may be conveyed. The Director of Lands, by statutory mandate, exercises exclusive control, administration, disposition, and alienation of public lands, including survey, classification, lease, sale, and all other forms of concession. A municipal corporation has no inherent authority to dispose of or alienate public lands; any such act requires prior legislative authorization.

• Non-Legalizability of Squatting — Squatting is inherently unlawful. No amount of official acquiescence or municipal legislation can convert an illegal entry upon public land into a lawful occupancy. Official approval of squatting does not serve social justice, fosters moral decadence, abets disrespect for law, and is an “infected bargain.” The government may not, under the guise of social adjustment, lay aside moral standards and favor usurpers and intruders unmindful of the lawful or unlawful character of their occupancy (City of Manila v. Garcia; Astudillo v. Board of Directors of PHHC).

• Joinder in Declaratory Relief Actions — Under Section 2, Rule 64, the joinder of all persons who have or claim an interest that would be affected by the declaration is directed, but the failure to join them does not automatically deprive the court of jurisdiction. The action may be dismissed under Section 5 only when the absence of a necessary party would prevent the declaration from terminating the uncertainty or controversy. Where the parties omitted have no legal right to assert under a void enactment and the entity principally interested in defending the legal measure is already a party, the declaration may properly ensue.

• “Squatting is unlawful and no amount of acquiescence on the part of the city officials will elevate it into a lawful act. … Official approval of squatting should not, therefore, be permitted to obtain in this country where there is an orderly form of government.” (City of Manila v. Garcia, quoted with approval)

• “In carrying out its social re-adjustment policies, the government could not simply lay aside moral standards, and aim to favor usurpers, squatters, and intruders, unmindful of the lawful and unlawful origin and character of their occupancy. Such a policy would perpetuate conflicts instead of attaining their just solution.” (Astudillo v. Board of Directors of PHHC, quoted with approval)

• “Being unquestionably a public land, no disposition thereof could be made by the City of Baguio without prior legislative authority. It is the fundamental principle that the state possesses plenary power in law to determine who shall be favored recipients of public domain, as well as under what terms such privilege may be granted not excluding the placing of obstacles in the way of exercising what otherwise would be ordinary acts of ownership. And the law has laid in the Director of Lands the power of exclusive control, administrations, disposition and alienation of public land….”

• City of Manila v. Garcia, 19 SCRA 413 (1967) — Followed. The Court reaffirmed the principle that squatting is an unlawful vice and that official permits granting stay to squatters are void; the moral and legal repudiation of squatting was directly applied to invalidate the Baguio ordinance.

• Astudillo v. Board of Directors of PHHC, 73 SCRA 15 (1976) — Followed. The pronouncement that government social readjustment policies cannot favor usurpers and squatters at the expense of lawful origins of occupancy was invoked to underscore the invalidity of the housing project scheme.

• Degala v. Reyes, 87 Phil. 649 (1950) — Distinguished. In that case, the Roman Catholic Church, which had a vital interest in the validity of a will, was not joined; the declaration would have been futile because the church could relitigate. Here, the squatters had no valid interest to assert and the City Council was the proper adverse party, so the absence of the squatters did not defeat the action.

• Francisco v. Rodriguez, 67 SCRA 212 (1975) — Cited for the statutory rule vesting exclusive control, administration, disposition, and alienation of public lands in the Director of Lands.

• Section 2, Rule 64, Rules of Court — Requires all persons with an interest that would be affected by a declaratory relief judgment to be made parties, and provides that no declaration shall prejudice non-parties. The provision was interpreted as not automatically jurisdictional; the absence of the squatters did not deprive the court of power to rule because they had no protectable interest under a void ordinance and the real adverse party—the City Council—was impleaded.

• Section 5, Rule 64, Rules of Court — Allows a court to refuse to exercise jurisdiction to declare rights where the declaration would not terminate the uncertainty or controversy or is not necessary and proper under the circumstances. The refusal was held an abuse of discretion here, as a declaration of nullity would fully settle the question of the city’s authority to enact such an ordinance.

• Commonwealth Act No. 141 (Public Land Act) — The decision indirectly invokes the framework of the Public Land Act, which vests in the Director of Lands exclusive control over the survey, classification, lease, sale, and other forms of disposition and administration of public lands. The ordinance’s scheme of direct sale and exemption from public bidding contravened this statutory allocation.

Fernando, C.J., Makasiar, Concepcion Jr., Guerrero, Abad Santos, Melencio-Herrera, Plana, Escolin, Vasquez, Relova, and Gutierrez, JJ., concurred. Teehankee, J., took no part. Aquino, J., was on leave.