G.R. No. L-41351 October 28, 1977
Republic of the Philippines, petitioner, vs. Hon. Luis Lardizabal, as Mayor of Baguio City, Pedro Z. Claravall, Bert Floresca, Antonio S. Romero, Teofisto Rondez, Clemente Calputora and Leonidez Bautista, as councilors of Baguio City and Times Transportation Co., Inc., Dacanay Express, Inc., and Anastacio Imson, respondents.

FACTS

By Executive Proclamation No. 312 dated April 23, 1930, a parcel of land in Baguio City known as the Slaughterhouse Compound was reserved as a sanitary camp and livestock yard and placed under the administration of the City of Baguio. Subsequently, the City Council passed Resolutions Nos. 12-70, 355-71, and 535-71, authorizing the lease of substantial portions of this reservation to private respondents Times Transportation Co., Inc., Dacanay Express, Inc., and Anastacio Imson for a period of twenty-five years, renewable for another twenty-five years at the option of both parties. Contracts of lease were executed accordingly, with the leased areas being used as bus terminals and for hotel construction.
The Republic of the Philippines filed a petition for prohibition in the Court of First Instance, seeking to annul these resolutions and leases. The petitioner argued that the leases constituted acts of dominion, which the City, as a mere administrator of the reserved land, had no authority to perform. The City Health Officer and the City Legal Officer also objected, citing public health dangers and the invalidity of the leases. The trial court dismissed the petition, upholding the leases as valid exercises of governmental and police powers within the intendment of Proclamation No. 312.

ISSUE

Whether the City Council of Baguio, acting as administrator of the Slaughterhouse Compound reservation under Proclamation No. 312, validly executed the long-term leases in favor of the private respondents.

RULING

The Supreme Court reversed the trial court’s decision and declared the resolutions and leases null and void. The Court drew a clear legal distinction between acts of administration and acts of dominion. An administrator, such as the City of Baguio under the proclamation, is vested only with powers necessary for the care and preservation of the property for its designated public purpose—here, as a sanitary camp and livestock yard. Acts of administration are those of a temporary character for the upkeep of the property.
In contrast, acts of dominion involve the permanent disposition of the property or its use in a manner that substantially deprives the owner of its beneficial enjoyment for an extended period. The Court ruled that a lease for twenty-five years, renewable for another twenty-five years, is not a mere act of administration. Such a long-term lease effectively alienates the use of the property, preventing its utilization for its reserved public purpose for decades. This constitutes an act of dominion, which is beyond the authority of a mere administrator. The City’s own act of requesting the President to lift a portion of the reservation for transfer of ownership confirmed its recognition of this lack of authority. Consequently, the resolutions and the leases executed pursuant thereto were declared invalid for being ultra vires acts.