TABLE OF CONTENTS
CONSTITUTIONAL LAW II CASES - EMINENT DOMAIN
TENORIO vs MANILA RAILROAD COMPANY ......................................... 2
MODAY vs COURT OF APPEALS................................................................... 4
FILSTREAM vs. COURT OF APPEALS ......................................................... 7
REPUBLIC vs. PRIMO MENDOZA ...............................................................12
VISAYAS REFINING COMPANY vs CAMUS AND PAREDES .............14
CITY OF MANILA vs CHINESE COMMUNITY OF MANILA ...............18
HEIRS OF SUGUITAN vs CITY OF MANDALUYONG ...........................27
MUN. OF PARANAQUE vs VM REALTY ...................................................32
BELUSO vs MUNICIPALITY OF PANAY ...................................................36
REPUBLIC vs. VDA. DE CASTELLVI, ET AL., ..........................................39
AMIGABLE vs. CUENCA .................................................................................47
NAPOCOR vs COURT OF APPEALS............................................................49
MUN. OF LA CARLOTA vs. NAWASA ........................................................54
REPUBLIC vs PLDT ..........................................................................................55
TELEBAP vs COMELEC ..................................................................................59
NAPOCOR vs IBRAHIM ..................................................................................72
SUMULONG vs GUERRERO ..........................................................................75
MANOSCA vs COURT OF APPEALS ...........................................................78
MCIAA vs LOZADA ...........................................................................................81
EPZA vs DULAY .................................................................................................85
DE KNECHT vs COURT OF APPEALS ........................................................89
MIAA vs RODRIGUEZ ......................................................................................95
REPUBLIC vs LIM .............................................................................................98
LANDBANK vs HEIRS OF RADAZA......................................................... 103
HON. EUSEBIO vs LUIS, ET. AL ................................................................ 106
APO FRUITS CORPORATION vs LANDBANK ..................................... 109
LANDBANK vs RIVERA ............................................................................... 118
DPWH SECRETARY vs SPS TECSON ..................................................... 122
EPZA vs ESTATE OF SALUD JIMENEZ .................................................. 126
MUN. OF BIÑAN vs. Hon. JOSE MAR GARCIA..................................... 129
AGAN JR. et al vs PIATCO ........................................................................... 134
PEOPLE vs FAJARDO ................................................................................... 173
AGAN vs PIATCO 2004................................................................................ 175
FERNANDO vs ST SCHOLASTICA’S COLLEGE ................................... 183
1
TENORIO vs MANILA RAILROAD COMPANY
SECOND DIVISION
[G.R. No. 6690. March 29, 1912.]
SILVESTRA TENORIO Y VILLAMIL, plaintiff-appellee, vs. THE MANILA RAILROAD COMPANY,
defendant-appellant.
Jose Robles Lahesa and O'Brien & DeWitt, for appellant
A. B. Ritchey, for appellee.
SYLLABUS
1.RAILROAD CORPORATIONS; EMINENT DOMAIN; STATUTORY CONSTRUCTION. — A statute
authorizing a railroad company to exercise the power of eminent domain being in derogation of
general right, and conferring upon it exceptional privileges with regard to the property of others
of which it may have need, should be construed strictly in favor of land owners whose property is
affected by its terms; and before any right to take possession of land under such a statute can be
lawfully exercised its provisions must be "fully and fairly" complied with.
2.ID.; ID.; ACTION FOR DAMAGES. — The seizure and occupation of property by such a railroad
company without first serving process on the owners or occupants in the manner and form
prescribed by the statute authorizing condemnation proceedings, is so gross a violation of one of
the most essential conditions precedent prescribed by the statute, that no claim by the company
that it is acting or desires to act under the authority of its charter in taking possession of this
property, can be heard by way of defense to an action for damages for the unlawful trespass.
3.ID.; ID.; ID.; ERROR. — Judgment for damages against the defendant railroad company
sustained, notwithstanding the fact that there was error in excluding certain evidence offered by
the defendant, it appearing from a review of the whole record that the result would not have
been otherwise had this evidence been admitted.
4.ID.; ID.; ID.; MARKET VALUE OF LAND. — While evidence touching the assessed valuation of land
is by no means conclusive as to its actual market value, and is in general of but little value,
nevertheless evidence of this nature is competent and admissible for what it is worth, where the
question of damages for the unlawful taking of such land is at issue.
5.ID.; ID.; ID.; UNLAWFUL POSSESSION. — A railroad company having unlawfully taken possession
of a part of a tract of land, and by its operations thereon rendered the whole tract worthless to
the owner, the latter is entitled to abandon the entire tract and recover damages for its full value.
DECISION
CARSON, J p:
This is an action to recover damages for the alleged unlawful detention and occupation by
defendant of a small parcel of land, the property of the plaintiff, situated near the railroad station
in Dagupan in the Province of Pangasinan.
Plaintiff alleges that the land in question, some 1,219 square meters in extent, is worth P7,314.40;
that before it was entered upon by defendant, two small houses erected thereon brought her a
rental at the rate of P280 per annum of which she has been deprived by defendant since the
month of March, 1907; that the defendant company compelled her to move three buildings from
the land taken by it, whereby she had suffered damages in the sum of P400 and that as a result of
the unlawful occupation of this tract of land by the defendant company she had suffered further
damages to the extent of P250 from the accumulation of water on an adjoining parcel of land of
which she is the owner.
Defendant company answering, admits that it has taken and is now occupying a small part of the
land in question, 314 meters in extent; but alleges that it is now and always has been ready and
willing to pay the plaintiff a fair price for the land thus taken and all damages to the remainder of
her land resulting therefrom.
In explanation of the fact that it took possession of and continues to occupy this part of the land in
question with out the express consent of the plaintiff and without having made payment therefor,
defendant company alleges that the land taken is a part of certain lands described in
condemnation proceedings instituted in the Court of First Instance of the Province of Pangasinan,
whereby, by virtue of the authority lawfully conferred upon defendant company, it sought to have
the land in question, and other lands in that province, condemned for use as a roadbed; and while
the facts are not fully developed in the record, it does appear that condemnation proceedings
were regularly instituted for the purposes indicated, and there are indications in the record that
the land in question was included in the lands sought to be condemned therein, but that in those
proceedings it was described as the property of one Silvino Tenorio, although the name of the true
owner, the plaintiff in this action, is, as she alleges, Silvestra Tenorio.
The defendant company both by demurrer and answer, undertook in the court below to question
plaintiff s right to maintain this action (which is an ordinary action for damages for trespass on
plaintiff's land) on the ground that under the statutory provisions for the condemnation of lands
by virtue of which defendant company had already instituted proceedings looking to the
condemnation of the land in question, it was the duty of the plaintiff to seek redress in those
proceedings. But while we agree with counsel for defendant company that, had the defendant
company before entering upon and taking possession of the land in question, proceeded in
accordance with the provisions of law touching condemnation proceedings, by virtue of which it
claims to have been acting, in that event the plaintiff would not be entitled to bring a separate
action; we are of opinion that in the absence of proof of a substantial compliance with the
provisions of law touching such proceedings the plaintiff was clearly entitled to institute any
appropriate action to recover the damages which she may have suffered as a result of an
unauthorized and unlawful seizure and occupation of her property.
"The mode in which land may be condemned and the steps to be taken for that purpose are
prescribed either by the statute or charter conferring the right of eminent domain or by a general
law. The remedy so provided is exclusive, and as a general rule the steps prescribed by the statute
must be followed or the proceedings will be void. Since these statutes are in derogation of general
right and of common-law modes of procedure, they must be strictly construed in favor of the
landowner, and must be at least substantially or as sometimes said, 'fully and fairly' complied
with. Indeed the general rule in the absence of statutory provision to the contrary, is that they
must be strictly complied with. . . . Thus the statutes must be complied with as to filing and
contents of petition or application, . . . notice to the landowner and other persons interested in
the property, . . . and all other conditions precedent prescribed by the statute." (Cyclopedia of Law
and Procedure, vol. 15, pp. 815-817, and cases cited. See also American and English Encyclopedia
of Law, vol. 10, p. 1054, and cases cited.)
The mode in which the defendant company was authorized to exercise the power of eminent
domain is to be found in various Acts of the Commission of which the following are pertinent
citations:
"The Government of the Philippine Islands, or of any province or department thereof, or of any
municipality, and any person, or public or private corporation having by law the right to condemn
private property for public use, shall exercise that right in the manner hereinafter prescribed."
(Act No. 190 of the Philippine Commission, sec. 241.)
"The complaint in condemnation proceedings shall state with certainty the right of condemnation,
and describe the property sought to be condemned, showing the interest of each defendant
separately." (Act No. 190, sec. 242.)
"In addition to the method of procedure authorized for the exercise of the power of eminent
domain by sections two hundred and forty-one to two hundred and fifty-three, inclusive, of Act
Numbered One hundred and ninety, entitled 'An Act providing a Code of Procedure in civil actions
and special proceedings in the Philippine Islands,' the procedure in this Act provided may be
adopted whenever a railroad corporation seeks to appropriate land for the construction,
extension, or operation of its railroad line." (Act No. 1258, sec. 1.)
"Whenever a railroad corporation is authorized by its charter, or by general law, to exercise the
power of eminent domain in the city of Manila or in any province, and has not obtained by
agreement with the owners thereof the lands necessary for its purposes as authorized by law, it
may in its complaint, . . . in the Court of First Instance of the province where the land is situated,
2
Join as defendants all persons owning or claiming to own, or occupying, any of the lands sought to
be condemned, or any interest therein, within the city or province, respectively, showing, so far as
practicable, the interest of each defendant and stating with certainty the right of condemnation,
and describing the property sought to be condemned. Process requiring the defendants to appear
in answer to the complaint shall be served upon all occupants of the land sought to be
condemned, and upon the owners and all persons claiming interest therein, so far as known. If the
title to any lands sought to be condemned appears to be in the Insular Government, although the
lands are occupied by private individuals, or if it is uncertain whether the title is in the Insular
Government or in private individuals, or if the title is otherwise so obscure or doubtful that the
company can not with accuracy or certainty specify who are the real owners, averment may be
made by the company in its complaint to that effect. Process shall be served upon residents and
nonresidents in the same manner as provided therefor in Act Numbered One hundred and ninety,
. . .." (Act No. 1258, sec. 3.)
". . . The provisions . . . as to persons not notified of the condemnation proceedings, shall be such
as are defined in sections 248 to 253, inclusive, of Act No. 190." (Act No. 1258, sec. 5, last five lines
)
"Nothing herein contained shall be construed so as to injure, prejudice, defeat, or destroy the
estate, right, or title of any person claiming land or any part thereof, or any interest therein, who
was not made a party defendant to the condemnation proceeding and did not have actual or
constructive notice of the proceeding in such manner as the law requires." (Act No. 190, sec. 253.)
The record wholly fails to disclose that process requiring the plaintiff to appear and answer the
complaint filed in the condemnation proceedings was served upon her, or upon any of the
occupants of the land; and this, notwithstanding the fact, as found by the trial court and
practically conceded by counsel for defendant, that she was the known owner of the land in
question.
The statute authorizing the defendant company to exercise the power of eminent domain, being
in derogation of general right and conferring upon it exceptional privileges with regard to the
property of others of which it may have need, should be construed strictly in favor of landowners
whose property is affected by its terms. Hence before any right to take possession of land under
this statute could have been lawfully exercised by the company, the provisions of the statute must
have been "fully and fairly" complied with. Manifestly, the seizure and occupation of property
without first serving process on the owners or occupants is so gross a violation of one of the most
essential conditions precedent prescribed by the statute, that no claim by the company that it is
acting or desires to act under the authority of its charter in taking possession of this property can
be heard by way of defense to an action for damages for the unlawful trespass. The right to take
such land, over the objection of the owner, and to have a fair valuation placed thereon in special
proceedings prescribed by law for that purpose is made to depend upon the compliance by the
company with certain conditions precedent, and of course no rights can or do arise unless such
conditions are fully and fairly complied with. Not only did the defendant company fail to prove in
the lower court that it had served process on the owner and the occupants of the land, but it did
not even claim to have done so when its counsel undertook to introduce in evidence the record in
the pending condemnation proceedings. And, indeed, no such claim has at any time been made
on its behalf.
Plaintiff's evidence as to the value of the land appropriated is not wholly satisfactory but in the
absence of any evidence whatever, worthy of the name, to put in doubt the testimony of her
witnesses, we do not think that we would be justified in reversing the findings of fact by the trial
judge who arrived at his conclusions after seeing and hearing these witnesses testify.
Counsel for defendant company assigns among other errors the action of the trial judge in
excluding certain testimony and insists that the exclusion of these witnesses justifies and requires
the reversal of the judgment of the court below and the return of the record for a new trial. But
while we agree with counsel that the trial judge erred in excluding certain evidence offered by the
defendant, we are satisfied upon a review of the whole record that the result would not have
been otherwise had this evidence been admitted, and we do not think that a reversal should be
granted for error of this character.
We think that the evidence of defendant, including the map, whereby counsel undertook to show
the exact amount of the land of the plaintiff occupied by the roadbed of the railroad; as also the
evidence offered touching the assessed valuation of the land of the plaintiff should have been
admitted for what it was worth. But we do not think that had this evidence been admitted, and
granting that it would have been to the effect claimed for it by counsel for the defendant, that the
result would have been different.
The conclusion of the trial judge from the evidence before him was that the entire tract
mentioned in his judgment had been rendered substantially worthless to the plaintiff by the
unauthorized occupation of a part of it by the defendant company, and we do not think that the
evidence on which he based this conclusion would be affected by proof that only a part of the
tract was actually occupied and retained in possession. The theory on which the trial judge
correctly proceeded was that defendant company having unlawfully taken possession of a part of
the tract of land in question, and- by its operations thereon rendered the whole tract worthless to
the plaintiff, plaintiff is entitled to abandon the entire tract, and recover damages for its full value.
So also proof of the assessed valuation of the land in question, while proper and competent
evidence in a case of this character, is at best of but very little value in a judicial inquiry as to its
actual market value. We do not believe that the weight to be given the practically undisputed
testimony of the witnesses for the plaintiff as to the actual market value of the land in question
would have been materially affected by proof that this land was assessed at a valuation greatly
less than that placed upon it by the trial judge.
The judgment appealed from should be and is hereby affirmed with the costs of this instance
against the appellant.
Torres, Mapa, Johnson, and Moreland, JJ., concur.
3
MODAY vs COURT OF APPEALS
SECOND DIVISION
[G.R. No. 107916. February 20, 1997.]
PERCIVAL MODAY, ZOTICO MODAY (deceased) and LEONORA MODAY, petitioners, vs. COURT OF
APPEALS, JUDGE EVANGELINE S. YUIPCO OF BRANCH 6, REGIONAL TRIAL COURT, AGUSAN DEL
SUR AND MUNICIPALITY OF BUNAWAN, respondents.
Roldan L. Torralba, for petitioners.
Estanislao G. Ebarle, Jr. for public respondent Municipality of Bunawan.
SYLLABUS
POLITICAL LAW; LOCAL GOVERNMENT CODE (B.P. 337); POWER OF THE SANGGUNIANG
PANLALAWIGAN TO REVIEW ORDINANCES, RESOLUTIONS AND EXECUTIVE ORDERS
PROMULGATED BY THE MUNICIPAL MAYOR; DECLARATION OF INVALIDITY MUST BE ON THE SOLE
GROUND THAT IT IS BEYOND THE POWER OF THE SANGGUNIAN BAYAN OR MAYOR TO ISSUE THE
RESOLUTION, ORDINANCE OR ORDER UNDER REVIEW. — The Sangguniang Panlalawigan's
disapproval of Municipal Resolution No. 43-89 is an infirm action which does not render said
resolution null and void. The law, as expressed in Section 153 of B.P. BLG. 337, grants the
Sangguniang Panlalawigan the power to declare a municipal resolution invalid on the sole ground
that it is beyond the power of the Sangguniang Bayan or the Mayor to issue. Although pertaining
to a similar provision of law but different factual milieu then obtaining, the Court's
pronouncements in Velazco vs.Blas, where we cited significant early jurisprudence, are applicable
to the case at bar. "The only ground upon which a provincial board may declare any municipal
resolution, ordinance, or order invalid is when such resolution, ordinance, or order is 'beyond the
powers conferred upon the council or president making the same.' Absolutely no other ground is
recognized by the law. A strictly legal question is before the provincial board in its consideration of
a municipal resolution, ordinance, or order. The provincial (board's) disapproval of any resolution,
ordinance, or order must be premised specifically upon the fact that such resolution, ordinance, or
order is outside the scope of the legal powers conferred by law. If a provincial board passes these
limits, it usurps the legislative functions of the municipal council or president. Such has been the
consistent course of executive authority." Thus, the Sangguniang Panlalawigan was without the
authority to disapprove Municipal Resolution No. 43-89 for the Municipality of Bunawan clearly
has the power to exercise the right of eminent domain and its Sangguniang Bayan the capacity to
promulgate said resolution, pursuant to the earlier-quoted Section 9 of B.P. Blg. 337. Perforce, it
follows that Resolution No. 43-89 is valid and binding and could be used as lawful authority to
petition for the condemnation of petitioners' property.
DECISION
ROMERO, J p:
The main issue presented in this case is whether a municipality may expropriate private property
by virtue of a municipal resolution which was disapproved by the Sangguniang Panlalawigan.
Petitioner seeks the reversal of the Court of Appeals decision and resolution, promulgated on July
15, 1992 and October 22, 1992 respectively, 1 and a declaration that Municipal Resolution No. 4389 of the Bunawan Sangguniang Bayan is null and void.
On July 23, 1989, the Sangguniang Bayan of the Municipality of Bunawan in Agusan del Sur passed
Resolution No. 43-89, "Authorizing the Municipal Mayor to Initiate the Petition for Expropriation
of a One (1) Hectare Portion of Lot No. 6138-Pls-4 Along the National Highway Owned by Percival
Moday for the Site of Bunawan Farmers Center and Other Government Sports Facilities." 2
In due time, Resolution No. 43-89 was approved by then Municipal Mayor Anuncio C. Bustillo and
transmitted to the Sangguniang Panlalawigan for its approval On September 11, 1989, the
Sangguniang Panlalawigan disapproved said Resolution and returned it with the comment that
"expropriation is unnecessary considering that there are still available lots in Bunawan for the
establishment of the government center." 3
The Municipality of Bunawan, herein public respondent, subsequently filed a Petition for Eminent
Domain against petitioner Percival Moday before the Regional TrialCourt at Prosperidad, Agusan
del Sur. 4 The complaint was later amended to include the registered owners, Percival Moday's
parents, Zotico and Leonora Moday, as party defendants.
On March 6, 1991, public respondent municipality filed a Motion to Take or Enter Upon the
Possession of Subject Matter of This Case stating that it had already deposited with the municipal
treasurer the necessary amount in accordance with Section 2, Rule 67 of the Revised Rules of
Court and that it would be in the government's best interest for public respondent to be allowed
to take possession of the property.
Despite petitioners' opposition and after a hearing on the merits, the Regional Trial Court granted
respondent municipality's motion to take possession of the land. The lower court held that the
Sangguniang Panlalawigan's failure to declare the resolution invalid leaves it effective. It added
that the duty of the Sangguniang Panlalawigan is merely to review the ordinances and resolutions
passed by the Sangguniang Bayan under Section 208 (1) of B.P. Blg. 337, old Local Government
Code and that the exercise of eminent domain is not one of the two acts enumerated in Section
19 thereof requiring the approval of the Sangguniang Panlalawigan. 5The dispositive portion of
the lower court's Order dated July 2, 1991 reads:
"WHEREFORE, it appearing that the amount of P632.39 had been deposited as per Official Receipt
No. 5379647 on December 12, 1989 which this Court now determines as the provisional value of
the land, the Motion to Take or Enter Upon the Possession of the Property filed by petitioner
through counsel is hereby GRANTED. The Sheriff of this Court is ordered to forthwith place the
plaintiff in possession of the property involved.
Let the hearing be set on August 9, 1991 at 8:30 o'clock in the morning for the purpose of
ascertaining the just compensation or fair market value of the property sought to be taken, with
notice to all the parties concerned.
SO ORDERED." 6
Petitioners' motion for reconsideration was denied by the trial court on October 31, 1991.
Petitioners elevated the case in a petition for certiorari alleging grave abuse of discretion on the
part of the trial court but the same was dismissed by respondent appellate court on July 15, 1992.
7 The Court of Appeals held that the public purpose for the expropriation is clear from Resolution
No. 43-89 and that since the Sangguniang Panlalawigan of Agusan del Sur did not declare
Resolution No. 43-89 invalid, expropriation of petitioners' property could proceed. cdasia
Respondent appellate court also denied petitioners' motion for reconsideration on October 22,
1992. 8
Meanwhile, the Municipality of Bunawan had erected three buildings on the subject property: the
Association of Barangay Councils (ABC) Hall, the Municipal Motorpool, both wooden structures,
and the Bunawan Municipal Gymnasium, which is made of concrete.
In the instant petition for review filed on November 23, 1992, petitioner seeks the reversal of the
decision and resolution of the Court of Appeals and a declaration that Resolution No. 43-89 of the
Municipality of Bunawan is null and void.
On December 8, 1993, the Court issued a temporary restraining order enjoining and restraining
public respondent Judge Evangeline Yuipco from enforcing her July 2, 1991 Order and respondent
municipality from using and occupying all the buildings constructed and from further constructing
any building on the land subject of this petition. 9
Acting on petitioners' Omnibus Motion for Enforcement of Restraining Order and for Contempt,
the Court issued a Resolution on March 15, 1995, citing incumbent municipal mayor Anuncio C.
Bustillo for contempt, ordering him to pay the fine and to demolish the "blocktiendas" which were
built in violation of the restraining order. 10
Former Mayor Anuncio C. Bustillo paid the fine and manifested that he lost in the May 8, 1995
election. 11 The incumbent Mayor Leonardo Barrios, filed a Manifestation, Motion to Resolve
"Urgent Motion for Immediate Dissolution of the Temporary Restraining Order" and
Memorandum on June 11, 1996 for the Municipality of Bunawan. 12
4
Petitioners contend that the Court of Appeals erred in upholding the legality of the condemnation
proceedings initiated by the municipality. According to petitioners, the expropriation was
politically motivated and Resolution No. 43-89 was correctly disapproved by the Sangguniang
Panlalawigan, there being other municipal properties available for the purpose. Petitioners also
pray that the former Mayor Anuncio C. Bustillo be ordered to pay damages for insisting on the
enforcement of a void municipal resolution.
The Court of Appeals declared that the Sangguniang Panlalawigan's reason for disapproving the
resolution "could be baseless, because it failed to point out which and where are 'those available
lots."' Respondent court also concluded that since the Sangguniang Panlalawigan did not declare
the municipal board's resolution as invalid, expropriation of petitioners' property could proceed.
13
The Court finds no merit in the petition and affirms the decision of the Court of Appeals.
Eminent domain, the power which the Municipality of Bunawan exercised in the instant case, is a
fundamental State power that is inseparable from sovereignty. 14 It is government's right to
appropriate, in the nature of a compulsory sale to the State, private property for public use or
purpose. 15 Inherently possessed by the national legislature the power of eminent domain may be
validly delegated to local governments, other public entities and public utilities. 16 For the taking
of private property by the government to be valid, the taking must be for public use and there
must be just compensation. 17
The Municipality of Bunawan's power to exercise the right of eminent domain is not disputed as it
is expressly provided for in Batas Pambansa Blg. 337, the Local Government Code 18 in force at
the time expropriation proceedings were initiated. Section 9 of said law states:
"Section 9.Eminent Domain. — A local government unit may, through its head and acting pursuant
to a resolution of its sanggunian, exercise the right of eminent domain and institute condemnation
proceedings for public use or purpose."
What petitioners question is the lack of authority of the municipality to exercise this right since
the Sangguniang Panlalawigan disapproved Resolution No. 43-89.
Section 153 of B.P. Blg. 337 provides:
"Sec. 153.Sangguniang Panlalawigan Review. — (1) Within thirty days after receiving copies of
approved ordinances, resolutions and executive orders promulgated by the municipal mayor, the
sangguniang panlalawigan shall examine the documents or transmit them to the provincial
attorney, or if there be none, to the .provincial fiscal, who shall examine them promptly and
inform the sangguniang panlalawigan in writing of any defect or impropriety which he may
discover therein and make such comments or recommendations as shall appear to him proper.
(2)If the sangguniang panlalawigan shall find that any municipal ordinance, resolution or executive
order is beyond the power conferred upon the sangguniang bayan or the mayor, it shall declare
such ordinance, resolution or executive order invalid in whole or in part, entering its actions upon
the minutes and advising the proper municipal authorities thereof. The effect of such an action
shall be to annul the ordinance, resolution or executive order in question in whole or in part. The
action of the sangguniang panlalawigan shall be final.
xxx xxx xxx." (Emphasis supplied.)
The Sangguniang Panlalawigan's disapproval of Municipal Resolution No. 43-89 is an infirm action
which does not render said resolution null and void. The law, as expressed in Section 153 of B.P.
Blg. 337, grants the Sangguniang Panlalawigan the power to declare a municipal resolution invalid
on the sole ground that it is beyond the power of the Sangguniang Bayan or the Mayor to issue.
Although pertaining to a similar provision of law but different factual milieu then obtaining,
theCourt's pronouncements in Velazco v. Blas, 19 where we cited significant early jurisprudence,
are applicable to the case at bar.
"The only ground upon which a provincial board may declare any municipal resolution, ordinance,
or order invalid is when such resolution, ordinance, or order is 'beyond the powers conferred
upon the council or president making the same.' Absolutely no other ground is recognized by the
law. A strictly legal question is before the provincial board in its consideration of a municipal
resolution, ordinance, or order. The provincial (board's) disapproval of any resolution, ordinance,
or order must be premised specifically upon the fact that such resolution, ordinance, or order is
outside the scope of the legal powers conferred by law. If a provincial board passes these limits, it
usurps the legislative functions of the municipal council or president. Such has been the consistent
course of executive authority." 20
Thus, the Sangguniang Panlalawigan was without the authority to disapprove Municipal
Resolution No. 43-89 for the Municipality of Bunawan clearly has the power to exercise the right
of eminent domain and its Sangguniang Bayan the capacity to promulgate said resolution,
pursuant to the earlier-quoted Section 9 of B.P. Blg. 337. Perforce; it follows that Resolution No.
43-89 is valid and binding and could be used. as lawful authority to petition for the condemnation
of petitioners' property.
As regards the accusation of political oppression, it is alleged that Percival Moday incurred the ire
of then Mayor Anuncio C. Bustillo when he refused to support the latter's candidacy for mayor in
previous elections. Petitioners claim that then incumbent Mayor C. Bustillo used the expropriation
to retaliate by expropriating their land even if there were other properties belonging to the
municipality and available for the purpose. Specifically, they allege that the municipality owns a
vacant seven-hectare property adjacent to petitioners' land, evidenced by a sketch plan. 21
The limitations on the power of eminent domain are that the use must be public, compensation
must be made and due process of law must be observed. 22 The Supreme Court, taking
cognizance of such issues as the adequacy of compensation, necessity of the taking and the public
use character or the purpose of the taking,23 has ruled that the necessity of exercising eminent
domain must be genuine and of a public character. 24 Government may not capriciously choose
what private property should be taken.
After a careful study of the records of the case, however, we find no evidentiary support for
petitioners' allegations. The uncertified photocopy of the sketch plan does not conclusively prove
that the municipality does own vacant land adjacent to petitioners' property suited to the purpose
of the expropriation. In the questioned decision, respondent appellate court similarly held that the
pleadings and documents on record have not pointed out any of respondent municipality's "other
available properties available for the same purpose." 25 The accusations of political reprisal are
likewise unsupported by competent evidence. Consequently, the Court holds that petitioners'
demand that the former municipal mayor be personally liable for damages is without basis.
WHEREFORE, the instant petition is hereby DENIED. The questioned Decision and Resolution of
the Court of Appeals in the case of "Percival Moday, et al. v.Municipality of Bunawan, et al." (CA
G.R. SP No. 26712) are AFFIRMED. The Temporary Restraining Order issued by the Court on
December 8, 1993 is LIFTED.
SO ORDERED.
Regalado, Puno, Mendoza and Torres, Jr., JJ., concur.
Footnotes
1."Percival Moday v. Municipality of Bunawan, et al." CA G.R. SP No. 26712, penned by Justice
Artemon D. Luna, with Justices Jose A.R. Melo (now a member of thisCourt) and Segundino G.
Chua, concurring, Rollo, p. 21, 36.
2.The lot is part of 5.6610 hectares covered by Transfer Certificate of Title No. T-3132 in the name
of Zotico Moday, married to Leonora Moday. The assessed value of the entire lot in 1989 was
P3,580.00 while the assessed value of one hectare is about P632.39.
3.Excerpts From the Minutes of the Regular Session of the Sangguniang Panlalawigan of Agusan
del Sur Held at the Session Hall, Training Center, Prosperidad, on September 11, 1989. Rollo, p. 85.
4."Municipality of Bunawan, Agusan del Sur v. Percival Moday, et al.," Special Civil Case No. 719,
Judge Evangeline S. Yuipco, presiding.
5."Sec. 19.Certain Acts of the Sangguniang Bayan Requiring Approval of the Sangguniang
Panlalawigan. — The following acts of the sangguniang bayan shall be subject to the approval of
the sangguniang panlalawigan:
(1)Permanent closure of a public road, street, alley, park or square; and
(2)Donation of municipal funds or property."
5
6.Rollo, p. 75.
7."Percival Moday, et al. v. Municipality of Bunawan, et al.," CA G.R. SP No. 26712, Rollo, pp. 2125.
8.Rollo, p. 36.
9.Rollo, p. 104.
10.Rollo, pp. 242-245.
11.Rollo, pp. 248-249.
12.Rollo, p. 286.
13.Rollo, p. 24.
14.V. SINCO, PHILIPPINE POLITICAL LAW: PRINCIPLES AND CONCEPTS 592 (10th ed., 1954) citing
Kohl v. US, 91 U.S. 371. A. PIMENTEL, THE LOCAL GOVERNMENT CODE OF 1991: THE KEY TO
NATIONAL DEVELOPMENT 106 (1993). Visayan Refining Co. v. Camus, 40 Phil. 550.
15.BLACK'S LAW DICTIONARY 616 (4th ed.) cited in I. CRUZ, CONSTITUTIONAL LAW 59 (1991 ed.);
J. BERNAS, THE 1987 PHILIPPINE CONSTITUTION, A REVIEWER-PRIMER 92 (2nd ed., 1992) citing
Charles River Bridge v. Warren Bridge, 11 Pet. 420, 641 (US 1837).
16.BERNAS, op. cit. at 93; CRUZ, op. cit. at 59-60; Province of Camarines Sur v. CA, G.R. No.
103125, May 11, 1993, 222 SCRA 173.
17.Article III, Section 9 of the 1987 Constitution states that "(p)rivate property shall not be taken
for public use without just compensation."
18.Approved on February 10, 1983, the Code was published in 79 O.G. No. 7. The Local
Government Code of 1991 (Republic Act No. 7160) took effect on January 1, 1992, Evardone v.
Comelec, G.R. No. 94010, December 2, 1991, 204 SCRA 464.
19.G.R. No. L-30456, July 30, 1982, 115 SCRA 540, 544-545. The law then in force, Section 2233 of
the Revised Administrative Code, also provided that "(i)f the board should in any case find that any
resolution, ordinance, or order, as aforesaid, is beyond the powers conferred upon the council or
mayor making the same, it shall declare such resolution, ordinance, or order invalid, entering its
action upon the minutes and advising the proper municipal authorities thereof. The effect of such
action shall be to annul the resolution, ordinance, or order in question, subject to action by the
Secretary of the Interior as hereinafter provided."
20.At pages 544-545, citing Gabriel v. Provincial Board of Pampanga, 50 Phil. 686, 692-693; Cariño
v. Jamoralne, 56 Phil. 188, Manantan v. Municipality of Luna, 82 Phil. 844, which cite the Opinions
Attorney-General Wilfley (1905), II Op. Atty.-Gen., 557, 642, Opinion Attorney-General Villareal,
November 22, 1922; Opinion Attorney-General Jaranilla, August 9, 1926; Provincial Circular
Executive Bureau, September 16, 1918.
21.Rollo, p. 88.
22.V. SINCO, op. cit. citing Visayan Refining Company v. Camus, supra. and In re Fowler, 53 N.Y. 60.
23.Municipality of Meycauayan v. IAC, G.R. No. L-72126, January 29, 1988, 157 SCRA 690; J.M.
Tuason v. Land Tenure Administration, 31 SCRA 413; National Power Corporation v. Jocson, 206
SCRA 520; Republic v. IAC, 185 SCRA 572.
24.City of Manila v. Chinese Community of Manila, 40 Phil. 349 citing Morrison v. Indianapolis, 166
Ind. 511; Stearns v. Barre, 73 Vt. 281; Wheeling v. Toledo, 72 Ohio St. 368.
25.Rollo, p. 23.
6
FILSTREAM vs. COURT OF APPEALS
THIRD DIVISION
[G.R. No. 125218. January 23, 1998.]
FILSTREAM INTERNATIONAL INCORPORATED, petitioner, vs. COURT OF APPEALS, JUDGE FELIPE S.
TONGCO and THE CITY OF MANILA, respondents.
[G.R. No. 128077. January 23, 1998.]
FILSTREAM INTERNATIONAL INCORPORATED, petitioner, vs. COURT OF APPEALS, ORLANDO
MALIT, ANTONIO CAGUIAT, ALICIA CABRERA, ARMANDO LACHICA, JACINTO CAGUIAT, GLORIA
ANTONIO, ELIZALDE NAVARRA, DOLORES FUENTES, SUSANA ROY, ANTONIO IBAÑEZ, BENIGNO
BASILIO, LUCERIA DEMATULAC, FLORENCIA GOMEZ, LAZARO GOMEZ, JOSE GOMEZ, VENANCIO
MANALOTO, CRISTINO UMALI, DEMETRIA GATUS, PRISCILLA MALONG, DOMINGO AGUILA,
RAMON SAN AGUSTIN, JULIAN FERRER, JR., FRANCISCO GALANG, FLORENTINO MALIWAT,
SEVERINA VILLAR, TRINIDAD NAGUIT, JOSE NAGUIT, FORTUNATO AGUSTIN CABRERA, GAUDENCIO
INTAL, DANILO DAVID, ENRIQUE DAVID, VICENTE DE GUZMAN, POLICARPIO LUMBA, BELEN
PALMA, ELEN SOMVILLO, LEONARDO MANICAD, OPRENG MICLAT, BENITA MATA, GREGORIO
LOPEZ, MARCELINA SAPNO, JESUS MERCADO and CALIXTO GOMEZ, respondents.
Siruelo, Muyco & Associates Law Office for petitioner in G.R. Nos. 125218 & 128077.
Lucky M. Damasen for private respondent in G.R. No. 128077.
SYNOPSIS
Petitioner, Filstream International, Inc., obtained a favorable judgment in an ejectment case it
filed before the Metropolitan Trial Court of Manila. Said judgment became final and executory.
However, during the pendency of the ejectment proceedings, the City of Manila passed an
ordinance authorizing Mayor Lim to expropriate the subject properties of petitioner then occupied
by private respondents. Pursuant to the complaint for eminent domain filed by the City of Manila,
the trial court issued a Writ of Possession. On appeal, the Court of Appeals likewise finds for the
condemnation of the property and further issuing a TRO and Writ of Preliminary Injunction against
the order issued by the trial court for the imposition of its ruling in the ejectment case which has
became final and executory.
Petitioner Filstream went to the Supreme Court objecting to the issuance of the TRO and the
preliminary injunction enjoining the execution of the writ of demolition issued in the ejectment
suit.
There is no dispute as to the existence of a final and executory judgment in favor of petitioner
Filstream ordering the ejectment of private respondents from the properties subject of the
dispute. However, it must also be conceded that the City of Manila has an undeniable right to
exercise its power of eminent domain within its jurisdiction. More specifically, the City of Manila
has the power to expropriate private property in the pursuit of its urban land reform and housing
program as explicitly laid out in the Revised Charter of the City of Manila.
In fact, the City of Manila's right to exercise these prerogatives notwithstanding the existence of a
final and executory judgment over the property to be expropriated has been upheld by this Court
in the case of Philippine Columbian Association vs. Panis.
Nevertheless, despite the existence of a serious dilemma, local government units are not given an
unbridled authority when exercising their power of eminent domain in pursuit of solutions to
these problems. The basic rules shall have to be followed. The exercise by local government units
of the power of eminent domain is not without limitations.
Private lands rank last in the order of priority for purposes of socialized housing. In the same vein,
expropriation proceedings are to be resorted to only when the other modes of acquisition have
been exhausted. Compliance with these conditions must be deemed mandatory because these are
the only safeguards in securing the right of owners of private property to due process when their
property is expropriated for public use.
Petitioner Filstream's properties were expropriated and ordered condemned in favor of the City of
Manila sans any showing that resort to the acquisition of other lands listed under Sec. 9 of RA
7279 have proved futile. Evidently, there was a violation of petitioner Filstream's right to due
process which must accordingly be rectified. EDaHAT
SYLLABUS
1.ADMINISTRATIVE LAW; 1991 LOCAL GOVERNMENT CODE; LOCAL GOVERNMENT; CITY OF
MANILA HAS THE RIGHT TO EXERCISE ITS POWER OF EMINENT DOMAIN. — The City of Manila has
an undeniable right to exercise its power of eminent domain within its jurisdiction. The right to
expropriate private property for public use is expressly granted to it under Section 19 of the 1991
Local Government Code. More specifically, the City of Manila has the power to expropriate private
property in the pursuit of its urban land reform and housing program as explicitly laid out in the
Revised Charter of the City of Manila (R A. No. 409). In fact, the City of Manila's right to exercise
these prerogatives notwithstanding the existence of a final and executory judgment over the
property to be expropriated has been upheld by this Court in the case of Philippine Columbian
Association vs. Panis, G.R. No. 106528, December 21, 1993.
2.ID.; ID.; ID.; EXERCISE OF POWER OF EMINENT DOMAIN IS SUBJECT TO LIMITATIONS. — Local
government units are not given an unbridled authority when exercising their power of eminent
domain in pursuit of solutions to these problems. The basic rules still have to be followed, which
are as follows: "no person shall be deprived of life, liberty, or property without due process of law,
nor shall any person be denied the equal protection of the laws (Art. 3, Sec. 1, 1987 Constitution);
private property shall not be taken for public use without just compensation (Art. 3, Section 9,
1987 Constitution)." Thus, the exercise by local government units of the power of eminent domain
is not without limitations. Even Section 19 of the 1991 Local Government Code is very explicit that
it must comply with the provisions of the Constitution and pertinent laws. The governing law that
deals with the subject of expropriation for purposes of urban land reform and housing is Sections
9 and 10, Republic Act 7279 (Urban Development and Housing Act of 1992). Very clear from the
abovequoted provisions are the limitations with respect to the order of priority in acquiring
private lands and in resorting to expropriation proceedings as a means to acquire the same.
Private lands rank last in the order of priority for purposes of socialized housing. In the same vein,
expropriation proceedings are to be resorted to only when the other modes of acquisition have
been exhausted. Compliance with these conditions must be deemed mandatory because these are
the only safeguards in securing the right of owners of private property to due process when their
property is expropriated for public use.
3.ID.; ID.; ID.; ID.; VIOLATION OF RIGHT TO DUE PROCESS MANIFEST IN CASE AT BAR. — We have
carefully scrutinized the records of this case and found nothing that would indicate that
respondent City of Manila complied with Sec. 9 and Sec. 10 of R.A. 7279. Petitioner Filstream's
properties were expropriated and ordered condemned in favor of the City of Manila sans any
showing that resort to the acquisition of other lands listed under Sec. 9 of R.A. 7279 have proved
futile. Evidently, there was a violation of petitioner Filstream's right to due process which must
accordingly be rectified. Indeed, it must be emphasized that the State has a paramount interest in
exercising its power of eminent domain for the general good considering that the right of the
State to expropriate private property as long as it is for public use always takes precedence over
the interest of private property owners. However we must not lose sight of the fact that the
individual rights affected by the exercise of such right are also entitled to protection, bearing in
mind that the exercise of this superior right cannot override the guarantee of due process
extended by the law to owners of the property to be expropriated. In this regard, vigilance over
compliance with the due process requirements is in order.
DECISION
FRANCISCO, J p:
In resolving the instant petitions, the Court is tasked to strike a balance between the contending
interests when the state exercises its power of eminent domain. On one side, we have the owners
of the property to be expropriated who must be duly compensated for the loss of their property,
while on the other is the State which must take the property for public use. prLL
Petitioner, Filstream International, Inc., is the registered owner of the properties subject of this
dispute consisting of adjacent parcels of land situated in Antonio Rivera Street, Tondo II, Manila,
7
with a total area of 3,571.10 square meters and covered by T.C.T. Nos. 203937, 203936, 169198,
169199, 169200 and 169202 of the Register of Deeds of Manila.
On January 7, 1993, petitioner filed an ejectment suit before the Metropolitan Trial Court of
Manila (Branch 15) docketed as Civil Case No. 140817-CV against the occupants of the above
mentioned parcels of land (herein private respondents in G. R. No. 128077) on the grounds of
termination of the lease contract and non-payment of rentals. Judgment was rendered by the
MTC on September 14, 1993 ordering private respondents to vacate the premises and pay back
rentals to petitioner. 1
Not satisfied, private respondents appealed the decision to the Regional Trial Court of Manila,
Branch 4 (Civil Case No. 93-68130) which in turn affirmed the decision of the MTC in its decision
dated February 22, 1994. Still not content, private respondents proceeded to the Court of Appeals
via a petition for review (CA-G. R. SP No. 33714). The result however remained the same as the CA
affirmed the decision of the RTC in its decision dated August 25, 1994. 2 Thereafter, no further
action was taken by the private respondents, as a result of which the decision in the ejectment
suit became final and executory.
However, it appeared that during the pendency of the ejectment proceedings private respondents
filed on May 25, 1993, a complaint for Annulment of Deed of Exchange against petitioner
Filstream which was docketed in Civil Case No. 93-66059 before the RTC of Manila, Branch 43. It
was at this stage that respondent City of Manila came into the picture when the city government
approved Ordinance No. 7813 3 on November 5, 1993, authorizing Mayor Alfredo S. Lim to initiate
the acquisition by negotiation, expropriation, purchase, or other legal means certain parcels of
land registered under T.C.T. Nos. 169193, 169198, 169190, 169200, 169202 and 169192 of the
Registry of Deeds of Manila which formed part of the properties of petitioner then occupied by
private respondents. Subsequently, the City of Manila approved Ordinance No. 7855 4 declaring
the expropriation of certain parcels of land situated along Antonio Rivera and Fernando Ma.
Guerrero streets in Tondo, Manila which were owned by Mr. Enrique Quijano Gutierrez,
petitioner's predecessor-in-interest. The said properties were to be sold and distributed to
qualified tenants of the area pursuant to the Land Use Development Program of the City of
Manila.
On May 23, 1994, respondent City of Manila filed a complaint for eminent domain (Civil Case No.
94-70560) before the RTC of Manila, Branch 42, 5 seeking to expropriate the aforecited parcels of
land owned by petitioner Filstream which are situated at Antonio Rivera Street, Tondo II, Manila. 6
Pursuant to the complaint filed by respondent City of Manila, the trial court issued a Writ of
Possession 7 in favor of the former which ordered the transfer of possession over the disputed
premises to the City of Manila.
At this juncture, petitioner Filstream filed a motion to dismiss the complaint for eminent domain
as well as a motion to quash the writ of possession. The motion to dismiss was premised on the
following grounds: no valid cause of action; the petition does not satisfy the requirements of
public use and a mere clandestine maneuver to circumvent the writ of execution issued by the
RTC of Manila, Branch 4 in the ejectment suit; violation of the constitutional guarantee against
non-impairment of obligations and contracts; price offered was too low hence violative of the just
compensation provision of the constitution and the said amount is without the certification of the
City Treasurer for availability of funds. 8 With respect to the motion to quash the writ of
possession, petitioner raised the following objections: failure to comply with Section 2 of Rule 67
of the Rules of Court, Ordinance No. 7813 is a void enactment for it was approved without a public
hearing and violative of the constitutional guarantee against impairment of obligations and
contracts; the price is too low and unconscionable violating the just compensation provision of the
constitution, and the said writ is tainted with infirmity considering the absence of a certification
from the City of Manila that there is an immediately available fund for the subject expropriation. 9
Respondent City of Manila filed its opposition 10 to petitioner Filstream's two motions and to
which petitioner accordingly filed a reply. 11 On September 30, 1994, the RTC of Manila, Branch
42, issued an order denying petitioner Filstream's motion to dismiss and the motion to quash the
Writ of Possession and declared as follows:
"IN FINE, the defendant's motion to dismiss and motion to quash writ of possession are both
without merit and are hereby DENIED and the subject parcels of lands covered by TCT Nos.
203937, 203936, 169198, 169199, 169200 and 169202 (of the Register of Deeds of Manila) located
at Antonio Rivera Street, Tondo II, Manila with a total area of 3,571.10 square meters are hereby
declared CONDEMNED in favor of the City of Manila for distribution and resale to all poor and
landless qualified residents/tenants in the said area under the city's 'land-for-the landless'
program upon payment of just compensation which is yet to be determined by this Court." 12
Petitioner filed a motion for reconsideration 13 as well as a supplemental motion for
reconsideration 14 seeking the reversal of the above-quoted order but the same were denied. 15
Still, petitioner filed a subsequent motion to be allowed to file a second motion for
reconsideration but it was also denied.
Aggrieved, petitioner filed on March 31, 1996, a Petition for Certiorari with the Court of Appeals
(CA-G.R. SP No. 36904) seeking to set aside the September 30, 1994 order of the RTC of Manila,
Branch 42. However, on March 18, 1996, respondent CA issued a resolution dismissing the
petition in this wise:
"It appearing that the above-entitled petition is insufficient in form and substance — it does not
comply with Section 2(a), Rule 6 of the Revised Internal Rules of the Court of Appeals which
requires that the 'petition shall be . . . accompanied by . . . other pertinent documents and papers,'
aside from the fact that copies of the pleadings attached to the petition are blurred and
unreadable — this Court resolved to summarily DISMISS the same (petition). 16
Petitioner filed a motion for reconsideration and attached clearer copies of the pertinent
documents and papers pursuant to Section 2(a), Rule 6 of the Revised Internal Rules of the Court
of Appeals. But on May 20, 1996 respondent CA issued a resolution denying the motion as
petitioner failed to submit clearer and readable copies of the pleadings. 17 This prompted
petitioner to proceed to this Court giving rise to the instant petition for review on certiorari under
Rule 45 and docketed herein as G.R. No. 125218, assailing the dismissal of its petition by the CA in
its resolution dated March 18, 1996 as well as that of its motion for reconsideration in the
resolution dated May 20, 1996.
Meanwhile, owing to the finality of the decision in the ejectment suit (Civil Case No. 140817-CV),
the MTC of Manila, Branch 15, upon motion of petitioner Filstream, issued a Writ of Execution as
well as a Notice to Vacate the disputed premises. 18 Private respondents filed a Motion to
Recall/Quash the Writ of Execution and Notice to Vacate 19 alleging the existence of a
supervening event in that the properties subject of the dispute have already been ordered
condemned in an expropriation proceeding in favor of the City of Manila for the benefit of the
qualified occupants thereof, thus execution shall be stayed. Petitioner opposed the motion,
reiterating that the decision in the ejectment case is already final and executory and disputed
private respondents' right to interpose the expropriation proceedings as a defense because the
latter were not parties to the same.
For its part, the City of Manila filed on March 13, 1996, a motion for intervention with prayer to
stay/quash the writ of execution on the ground that it is the present possessor of the property
subject of execution.
In its order dated March 14, 1996, the MTC of Manila, Branch 14, denied private respondents'
motion as it found the allegations therein bereft of merit and upheld the issuance of the Writ of
Execution and Notice to Vacate in petitioner's favor. 20 Subsequently, the trial court also denied
the motion filed by the City of Manila.
On April 22, 1996, the trial court issued an order commanding the demolition of the structure
erected on the disputed premises. To avert the demolition, private respondents filed before the
RTC of Manila, Branch 14, a Petition for Certiorari and Prohibition with prayer for the issuance of a
temporary restraining order and preliminary injunction (docketed as Civil Case No. 96-78098). On
April 29, 1996, the RTC of Manila, Branch 33, issued a TRO enjoining the execution of the writ
8
issued in Civil Case No. 140817-CV by the MTC of Manila, Branch 14. 21 Subsequently the RTC
issued a writ of preliminary injunction on May 14, 1996. 22
On May 15, 1996, the City of Manila filed its Petition for Certiorari and Prohibition with prayer for
the issuance of a temporary restraining order and preliminary injunction which was raffled to
Branch 23 of the RTC of Manila (docketed as Civil Case No. 96-78382), seeking the reversal of the
orders issued by the MTC of Manila, Branch 14, which denied its motion to intervene and quash
the writ of execution in Civil Case No. 140817-CV.
Thereafter, upon motion filed by the City of Manila, an order was issued by the RTC of Manila,
Branch 10, ordering the consolidation of Civil Case No. 96-78382 with Civil Case No. 96-78098
pending before Branch 14 of the RTC of Manila. 23 On May 21, 1996, the RTC of Manila, Branch
14, issued an injunction in Civil Case No. 96-78098 enjoining the implementation of the writ of
execution until further orders from the court. 24 Petitioner Filstream filed a Motion to Dissolve
the Writ of Preliminary Injunction and to be allowed to post a counter-bond but the trial court
denied the same. Filstream then filed a motion for reconsideration from the order of denial but
pending resolution of this motion, it filed a motion for voluntary inhibition of the presiding judge
of the RTC of Manila, Branch 14. The motion for inhibition was granted 25 and as a result, the
consolidated cases (Civil Case No. 96-78382 and 96-78098) were re-raffled to the RTC of Manila,
Branch 33. cdasia
During the proceedings before the RTC of Manila, Branch 33, petitioner Filstream moved for the
dismissal of the consolidated cases (Civil Case No. 96-78382 and No. 96-78098) for violation of
Supreme Court Circular No. 04-94 (forum shopping) because the same parties, causes of action
and subject matter involved therein have already been disposed of in the decision in the
ejectment case (Civil Case No. 140817) which has already become final and executory prior to the
filing of these consolidated cases.
On December 9, 1996, an order was issued by the RTC of Manila, Branch 33, ordering the dismissal
of Civil Case Nos. 96-78382 and 96-78098 for violation of Supreme Court Circular No. 04-94. 26
Immediately thereafter, petitioner Filstream filed an Ex-parte Motion for Issuance of an Alias Writ
of Demolition and Ejectment and a supplemental motion to the same dated January 10 and 13,
1997, respectively, 27 before the MTC of Manila, Branch 15, which promulgated the decision in
the ejectment suit (Civil Case No. 140817-CV). On January 23, 1997, the court granted the motion
and issued the corresponding writ of demolition.
As a consequence of the dismissal of the consolidated cases, herein private respondents filed a
Petition for Certiorari and Prohibition with prayer for the issuance of a temporary restraining
order and preliminary injunction before the Court of Appeals (docketed as CA-G.R. SP No. 43101)
28 assailing the above-mentioned order of dismissal by the RTC of Manila, Branch 33, as having
been issued with grave abuse of discretion tantamount to lack or in excess of jurisdiction.
In a resolution dated January 28, 1997, the Court of Appeals granted herein private respondents
prayer for the issuance of a temporary restraining order and directed the MTC of Manila, Branch
15, to desist from implementing the order of demolition dated January 23, 1997, unless otherwise
directed. 29
At the conclusion of the hearing for the issuance of a writ of preliminary injunction, the Court of
Appeals, in its resolution dated February 18, 1997, found merit in private respondents' allegations
in support of their application of the issuance of the writ and granted the same, to wit:
"Finding that the enforcement or implementation of the writ of execution and notice to vacate
issued in Civil Case No. 140817-CV, the ejectment case before respondent Judge Jiro, during the
pendency of the instant petition, would probably be in violation of petitioners' right, and would
tend to render the judgment in the instant case ineffectual, and probably work injustice to the
petitioners, the application for the issuance of a writ of preliminary injunction is hereby GRANTED.
"WHEREFORE, upon the filing of a bond in the amount of P150,000.00, let a writ of preliminary
injunction be issued enjoining respondents, their employees, agents, representatives and anyone
acting in their behalf from enforcing or executing the writ of execution and notice to vacate issued
in Civil Case No. 140817-CV of the court of respondent Judge Jiro, or otherwise disturbing the
status quo, until further orders of this Court." 30
In turn, petitioner Filstream is now before this Court via a Petition for Certiorari under Rule 65
(G.R. No. 128077), seeking to nullify the Resolutions of the Court ofAppeals dated January 28,
1997 and February 18, 1997 which granted herein private respondents' prayer for a TRO and Writ
of Preliminary Injunction, the same being null and void for having been issued in grave abuse of
discretion.
Upon motion filed by petitioner Filstream, in order to avoid any conflicting decisions on the legal
issues raised in the petitions, the Court ordered that the later petition, G.R. No. 128077 be
consolidated with G.R. No. 128077 in the resolution of March 5, 1997. 31
The issue raised in G.R. No. 125218 is purely a procedural and technical matter. Petitioner takes
exception to the resolutions of respondent CA dated March 18, 1996 and May 20, 1996 which
ordered the dismissal of its Petition for Certiorari for non-compliance with Sec. 2(a) of Rule 6 of
the Revised Internal Rules of the Court ofAppeals by failing to attach to its petition other pertinent
documents and papers and for attaching copies of pleadings which are blurred and unreadable.
Petitioner argues that respondent appellate court seriously erred in giving more premium to form
rather than substance.
We agree with the petitioner. A strict adherence to the technical and procedural rules in this case
would defeat rather than meet the ends of justice as it would result in the violation of the
substantial rights of petitioner. At stake in the appeal filed by petitioner before the CA is the
exercise of their property rights over the disputed premises which have been expropriated and
have in fact been ordered condemned in favor of the City of Manila. In effect, the dismissal of
their appeal in the expropriation proceedings based on the aforementioned grounds is
tantamount to a deprivation of property without due process of law as it would automatically
validate the expropriation proceedings which the petitioner is still disputing. It must be
emphasized that where substantial rights are affected, as in this case, the stringent application of
procedural rules may be relaxed if only to meet the ends of substantial justice.
In these instances, respondent CA can exercise its discretion to suspend its internal rules and allow
the parties to present and litigate their causes of action so that the Court can make an actual and
complete disposition of the issues presented in the case. Rather than simply dismissing the
petition summarily for non-compliance with respondent court's internal rules, respondent CA
should have instead entertained petitioner Filstream's petition for review on certiorari, and
ordered petitioner to submit the corresponding pleadings which it deems relevant and replace
those which are unreadable. This leniency could not have caused any prejudice to the rights of the
other parties.
With regard to the other petition, G.R. No. 128077, petitioner Filstream objects to the issuance by
respondent CA of the restraining order and the preliminary injunction enjoining the execution of
the writ of demolition issued in the ejectment suit (Civil Case No. 140817-CV) as an incident to
private respondents' pending petition assailing the dismissal by the RTC of Manila, Branch 33, of
the consolidated petitions for certiorari filed by private respondents and the City of Manila on the
ground of forum shopping.
The propriety of the issuance of the restraining order and the writ of preliminary injunction is but
a mere incident to the actual controversy which is rooted in the assertion of the conflicting rights
of the parties in this case over the disputed premises. In order to determine whether private
respondents are entitled to the injunctive reliefs granted by respondent CA, we deemed it proper
to extract the source of discord.
Petitioner Filstream anchors its claim by virtue of its ownership over the properties and the
existence of a final and executory judgment against private respondents ordering the latter's
ejectment from the premises (Civil Case No. 140817-CV).
Private respondents' claim on the other hand hinges on an alleged supervening event which has
rendered the enforcement of petitioner's rights moot, that is, the expropriation proceedings (Civil
Case No. 94-70560) undertaken by the City of Manila over the disputed premises for the benefit of
9
herein private respondents. For its part, the City of Manila is merely exercising its power of
eminent domain within its jurisdiction by expropriating petitioner's properties for public use.
There is no dispute as to the existence of a final and executory judgment in favor of petitioner
Filstream ordering the ejectment of private respondents from the properties subject of this
dispute. The judgment in the ejectment suit became final and executory after private respondents
failed to interpose any appeal from the adverse decision of the Court of Appeals dated August 25,
1994 in CA-G.R. SP No. 33714. Thus, petitioner has every right to assert the execution of this
decision as it had already become final and executory.
However, it must also be conceded that the City of Manila has an undeniable right to exercise its
power of eminent domain within its jurisdiction. The right to expropriate private property for
public use is expressly granted to it under Section 19 of the 1991 Local Government Code, to wit:
"SEC. 19.Eminent Domain. — A local government unit may, through its chief executive and acting
pursuant to an ordinance, exercise the power of eminent domain for public use, or purpose, or
welfare for the benefit of the poor and the landless, upon payment of just compensation,
pursuant to the provisions of the Constitution and pertinent laws: Provided, however, That the
power of eminent domain may not be exercised unless a valid and definite offer has been
previously made to the owner, and such offer was not accepted; Provided, further, That the local
government unit may immediately take possession of the property upon the filing of the
expropriation proceedings and upon making a deposit with the proper court of at least fifteen
(15%) of the fair market value of the property based on the current tax declaration of the property
to be expropriated: Provided, finally, That, the amount to be paid for the expropriated property
shall be determined by the proper court, based on the fair market value at the time of the taking
of the property." (Emphasis supplied)
More specifically, the City of Manila has the power to expropriate private property in the pursuit
of its urban land reform and housing program as explicitly laid out in the Revised Charter of the
City of Manila (R.A. No. 409) as follows:
"General powers. — The city may have a common seal and alter the same at pleasure, and may
take, purchase, receive, hold, lease, convey, and dispose of real and personal property for the
general interest of the city, condemn private property for public use, contract and be contracted
with, sue and be sued, and prosecute and defend to final judgment and execution, and exercise all
the powers hereinafter conferred." (R.A. 409, Sec. 3; Emphasis supplied).
xxx xxx xxx
"Sec. 100.The City of Manila is authorized to acquire private lands in the city and to subdivide the
same into home lots for sale on easy terms to city residents, giving first priority to the bona fide
tenants or occupants of said lands, and second priority to laborers and low-salaried employees.
For the purpose of this section, the city may raise the necessary funds by appropriations of
general funds, by securing loans or by issuing bonds, and, if necessary, may acquire the lands
through expropriation proceedings in accordance with law, with the approval of the President . .
.". (Emphasis supplied).
In fact, the City of Manila's right to exercise these prerogatives notwithstanding the existence of a
final and executory judgment aver the property to be expropriated has been upheld by this Court
in the case of Philippine Columbian Association vs. Panis, G.R. No. 106528, December 21, 1993. 32
Relying on the aforementioned provisions of the Revised Charter of the City of Manila, the Court
declared that:
"The City of Manila, acting through its legislative branch, has the express power to acquire private
lands in the city and subdivide these lands into home lots for sale to bona fide tenants or
occupants thereof, and to laborers and low-salaried employees of the city. llcd
That only a few could actually benefit from the expropriation of the property does not diminish its
public use character. It is simply not possible to provide all at once land and shelter for all who
need them (Sumulong v. Guerrero, 154 SCRA 461 [1987]).
Corollary to the expanded notion of public use, expropriation is not anymore confined to vast
tracts of land and landed estates (Province of Camarines Sur v.Court of Appeals, G. R. No. 103125,
May 17, 1993; J. M. Tuason and Co., Inc. v. Land Tenure Administration, 31 SCRA 413 [1970]). It is
therefore of no moment that the land sought to be expropriated in this case is less than half a
hectare only (Pulido v. Court of Appeals, 122 SCRA 63 [1983]).
Through the years, the public use requirement in eminent domain has evolved into a flexible
concept, influenced by changing conditions (Sumulong v. Guerrero, supra; Manotok v. National
Housing Authority, 150 SCRA 89 [1987]; Heirs of Juancho Ardona v. Reyes, 125 SCRA 220 [1983]).
Public use now includes the broader notion of indirect public benefit or advantage, including in
particular, urban land reform and housing." 33
We take judicial notice of the fact that urban land reform has become a paramount task in view of
the acute shortage of decent housing in urban areas particularly in Metro Manila. Nevertheless,
despite the existence of a serious dilemma, local government units are not given an unbridled
authority when exercising their power of eminent domain in pursuit of solutions to these
problems. The basic rules still have to be followed, which are as follows: "no person shall be
deprived of life, liberty, or property without due process of law, nor shall any person be denied
the equal protection of the laws (Art. 3, Sec. 1, 1987 Constitution); private property shall not be
taken for public use without just compensation (Art. 3, Section 9, 1987 Constitution)". Thus, the
exercise by local government units of the power of eminent domain is not without limitations.
Even Section 19 of the 1991 Local Government Code is very explicit that it must comply with the
provisions of the Constitution and pertinent laws, to wit:
"SEC. 19.Eminent Domain. — A local government unit may, through its chief executive and acting
pursuant to an ordinance, exercise the power of eminent domain for public use, or purpose, or
welfare for the benefit of the poor and the landless, upon payment of just compensation,
pursuant to the provisions of the Constitution and pertinent laws: . . . (Emphasis supplied).
The governing law that deals with the subject of expropriation for purposes of urban land reform
and housing is Republic Act No. 7279 (Urban Development and Housing Act of 1992) and Sections
9 and 10 of which specifically provide as follows:
"Sec. 9.Priorities in the acquisition of Land. — Lands for socialized housing shall be acquired in the
following order:
(a)Those owned by the Government or any of its sub-divisions, instrumentalities, or agencies,
including government-owned or -controlled corporations and their subsidiaries;
(b)Alienable lands of the public domain;
(c)Unregistered or abandoned and idle lands;
(d)Those within the declared Areas for Priority Development, Zonal Improvement sites, and Slum
Improvement and Resettlement Program sites which have not yet been acquired;
(e)Bagong Lipunan Improvement of Sites and Services or BLISS sites which have not yet been
acquired; and
(f)Privately-owned lands.
Where on-site development is found more practicable and advantageous to the beneficiaries, the
priorities mentioned in this section shall not apply. The local government units shall give
budgetary priority to on-site development of government lands.
"Sec. 10.Modes of Land Acquisition. — The modes of acquiring lands for purposes of this Act shall
include, among others, community mortgage, land swapping, land assembly or consolidation, land
banking, donation to the Government, joint-venture agreement, negotiated purchase, and
expropriation:Provided, however, That expropriation shall be resorted to only when other modes
of acquisition have been exhausted: Provided further, That where expropriation is resorted to,
parcels of land owned by small property owners shall be exempted for purposes of this Act:
Provided, finally, That abandoned property, as herein defined, shall be reverted and escheated to
the State in a proceeding analogous to the procedure laid down in Rule 91 of the Rules ofCourt.
For the purpose of socialized housing, government-owned and foreclosed properties shall be
acquired by the local government units, or by the National Housing Authority primarily through
negotiated purchase: Provided, That qualified beneficiaries who are actual occupants of the land
shall be given the right of first refusal." (Emphasis supplied).
10
Very clear from the abovequoted provisions are the limitations with respect to the order of
priority in acquiring private lands and in resorting to expropriation proceedings as a means to
acquire the same. Private lands rank last in the order of priority for purposes of socialized housing.
In the same vein, expropriation proceedings are to be resorted to only when the other modes of
acquisition have been exhausted. Compliance with these conditions must be deemed mandatory
because these are the only safeguards in securing the right of owners of private property to due
process when their property is expropriated for public use.
Proceeding from the parameters laid out in the above disquisitions, we now pose the crucial
question: Did the City of Manila comply with the above mentioned conditions when it
expropriated petitioner Filstream's properties? We have carefully scrutinized the records of this
case and found nothing that would indicate that respondent City of Manila complied with Sec. 9
and Sec. 10 of R.A. 7279. Petitioner Filstream's properties were expropriated and ordered
condemned in favor of the City of Manila sans any showing that resort to the acquisition of other
lands listed under Sec. 9 of RA 7279 have proved futile. Evidently, there was a violation of
petitioner Filstream's right to due process which must accordingly be rectified.
Indeed, it must be emphasized that the State has a paramount interest in exercising its power of
eminent domain for the general good considering that the right of the State to expropriate private
property as long as it is for public use always takes precedence over the interest of private
property owners. However we must not lose sight of the fact that the individual rights affected by
the exercise of such right are also entitled to protection, bearing in mind that the exercise of this
superior right cannot override the guarantee of due process extended by the law to owners of the
property to be expropriated. In this regard, vigilance over compliance with the due process
requirements is in order.
WHEREFORE, the petitions are hereby GRANTED. In G.R. 125218, the resolutions of the Court of
Appeals in CA-G.R. SP NO. 36904 dated March 18, 1996 and May 20, 1996 are hereby REVERSED
and SET ASIDE. In G.R. No. 128077, the resolution of the Court of Appeals in CA-G.R. SP No. 43101
dated January 28, 1997 and February 18, 1997 are REVERSED and SET ASIDE.
SO ORDERED.
Narvasa, C .J ., Romero, Melo and Panganiban, JJ ., concur.
Footnotes
1.Annex C, G.R. No. 128077, Rollo, pp. 72-79.
2.G.R. No. 128077, Rollo, pp. 204-211.
3.Annex E, G.R. No. 128077, Rollo, p. 86.
4.Annex F, G.R. No. 128077, Rollo, p. 88.
5.G.R. No. 125218, Rollo, p. 44.
6.Covered by T.C.T. Nos. 203937, 203936, 169198, 169199, 169200 and 199202 of the Registry of
Deeds of Manila.
7.G.R. No. 125218, Rollo, p. 62.
8.G.R. No. 125218, Rollo, pp. 50-51.
9.G.R. No. 125218, Rollo, pp. 68-70.
10.G.R. No. 125218, Rollo, pp. 71, 76.
11.G.R. No. 125218, Rollo, pp. 79.
12.G.R. No. 125218, Rollo, p. 85.
13.G.R. No. 125218, Rollo, p. 86.
14.G.R. No. 125218, Rollo, p. 90.
15.G.R. No. 125218, Rollo, p. 95.
16.G.R. No. 125218, Rollo, p. 41.
17.G.R. No. 125218, Rollo, p. 43.
18.G.R. No. 128077, Rollo, pp. 106, 107.
19.G.R. No. 128077, Rollo, p. 108.
20.G.R. No. 125218, Rollo, p. 119.
21.G.R. No. 125218, Rollo, p. 137.
22.G.R. No. 125218, Rollo, p. 138.
23.G.R. No. 125218, Rollo, p. 157.
24.G.R. No. 125218, Rollo, p. 159.
25.G.R. No. 128077, Rollo, p. 181.
26.G.R. No. 125218, Rollo, p. 194.
27.G.R. No. 125218, Rollo, pp. 190-191.
28.G.R. No. 125218, Rollo, p. 42.
29.G.R. No. 125218, Rollo, p. 32.
30.G.R. No. 125218, Rollo, pp. 40-41.
31.G.R. No. 125218, Rollo, p. 427.
32.228 SCRA 668.
33.228 SCRA 668, 673.
11
REPUBLIC vs. PRIMO MENDOZA
SECOND DIVISION
[G.R. No. 185091. August 9, 2010.]
2:45 P.M.
REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE DEPARTMENT OF EDUCATION DIVISION OF
LIPA CITY (FOR PANINSINGIN PRIMARY SCHOOL), petitioner, vs. PRIMO MENDOZA and MARIA
LUCERO, respondents.
DECISION
ABAD, J p:
This case is about the propriety of filing an ejectment suit against the Government for its failure to
acquire ownership of a privately owned property that it had long used as a school site and to pay
just compensation for it.
The Facts and the Case
Paninsingin Primary School (PPS) is a public school operated by petitioner Republic of the
Philippines (the Republic) through the Department of Education. PPS has been using 1,149 square
meters of land in Lipa City, Batangas since 1957 for its school. But the property, a portion of Lots
1923 and 1925, were registered in the name of respondents Primo and Maria Mendoza (the
Mendozas) under Transfer Certificate of Title (TCT) T-11410. 1
On March 27, 1962 the Mendozas caused Lots 1923 and 1925 to be consolidated and subdivided
into four lots, as follows:
Lot 1 — 292 square meters in favor of Claudia Dimayuga;
Lot 2 — 292 square meters in favor of the Mendozas;
Lot 3 — 543 square meters in favor of Gervacio Ronquillo; and
Lot 4 — 1,149 square meters in favor of the City Government of Lipa. 2
As a result of subdivision, the Register of Deeds partially cancelled TCT T-11410 and issued new
titles for Lots 1 and 3 in favor of Dimayuga and Ronquillo, respectively. Lot 2 remained in the
name of the Mendozas but no new title was issued in the name of the City Government of Lipa for
Lot 4. 3 Meantime, PPS remained in possession of the property. IaESCH
The Republic claimed that, while no title was issued in the name of the City Government of Lipa,
the Mendozas had relinquished to it their right over the school lot as evidenced by the
consolidation and subdivision plan. Further, the property had long been tax-declared in the name
of the City Government and PPS built significant, permanent improvements on the same. These
improvements had also been tax-declared. 4
The Mendozas claim, on the other hand, that although PPS sought permission from them to use
the property as a school site, they never relinquished their right to it. They allowed PPS to occupy
the property since they had no need for it at that time. Thus, it has remained registered in their
name under the original title, TCT T-11410, which had only been partially cancelled.
On November 6, 1998 the Mendozas wrote PPS, demanding that it vacate the disputed property. 5
When PPS declined to do so, on January 12, 1999 the Mendozas filed a complaint with the
Municipal Trial Court in Cities (MTCC) of Lipa City in Civil Case 0002-99 against PPS for unlawful
detainer with application for temporary restraining order and writ of preliminary injunction. 6
On July 13, 1999 the MTCC rendered a decision, dismissing the complaint on ground of the
Republic's immunity from suit. 7 The Mendozas appealed to the Regional Trial Court (RTC) of Lipa
City which ruled that the Republic's consent was not necessary since the action before the MTCC
was not against it. 8
In light of the RTC's decision, the Mendozas filed with the MTCC a motion to render judgment in
the case before it. 9 The MTCC denied the motion, however, saying that jurisdiction over the case
had passed to the RTC upon appeal. 10 Later, the RTC remanded the case back to the MTCC, 11
which then dismissed the case for insufficiency of evidence. 12 Consequently, the Mendozas once
again appealed to the RTC in Civil Case 2001-0236.
On June 27, 2006 the RTC found in favor of the Mendozas and ordered PPS to vacate the property.
It held that the Mendozas had the better right of possession since they were its registered owners.
PPS, on the other hand, could not produce any document to prove the transfer of ownership of
the land in its favor. 13 PPS moved for reconsideration, but the RTC denied it.
The Republic, through the Office of the Solicitor General (OSG), appealed the RTC decision to the
Court of Appeals (CA) in CA-G.R. SP 96604 on the grounds that: (1) the Mendozas were barred by
laches from recovering possession of the school lot; (2) sufficient evidence showed that the
Mendozas relinquished ownership of the subject lot to the City Government of Lipa City for use as
school; and (3) Lot 4, Pcs-5019 has long been declared in the name of the City Government since
1957 for taxation purposes. 14
In a decision dated February 26, 2008, the CA affirmed the RTC decision. 15 Upholding the Torrens
system, it emphasized the indefeasibility of the Mendozas' registered title and the imprescriptible
nature of their right to eject any person occupying the property. The CA held that, this being the
case, the Republic'spossession of the property through PPS should be deemed merely a tolerated
one that could not ripen into ownership. DIEcHa
The CA also rejected the Republic's claim of ownership since it presented no documentary
evidence to prove the transfer of the property in favor of the government. Moreover, even
assuming that the Mendozas relinquished their right to the property in 1957 in the government's
favor, the latter never took steps to have the title to the property issued in its name or have its
right as owner annotated on the Mendozas' title. The CA held that, by its omissions, the Republic
may be held in estoppel to claim that the Mendozas were barred by laches from bringing its
action.
With the denial of its motion for reconsideration, the Republic has taken recourse to this Court via
petition for review on certiorari under Rule 45.
The Issue Presented
The issue in this case is whether or not the CA erred in holding that the Mendozas were entitled to
evict the Republic from the subject property that it had used for a public school.
The Court's Ruling
A decree of registration is conclusive upon all persons, including the Government of the Republic
and all its branches, whether or not mentioned by name in the application for registration or its
notice. 16 Indeed, title to the land, once registered, is imprescriptible. 17 No one may acquire it
from the registered owner by adverse, open, and notorious possession. 18 Thus, to a registered
owner under the Torrens system, the right to recover possession of the registered property is
equally imprescriptible since possession is a mere consequence of ownership.
Here, the existence and genuineness of the Mendozas' title over the property has not been
disputed. While the consolidation and subdivision plan of Lots 1923 and 1925 shows that a 1,149
square meter lot had been designated to the City Government, the Republic itself admits that no
new title was issued to it or to any of its subdivisions for the portion that PPS had been occupying
since 1957. 19
That the City Government of Lipa tax-declared the property and its improvements in its name
cannot defeat the Mendozas' title. This Court has allowed tax declarations to stand as proof of
ownership only in the absence of a certificate of title. 20 Otherwise, they have little evidentiary
weight as proof of ownership. 21
The CA erred, however, in ordering the eviction of PPS from the property that it had held as
government school site for more than 50 years. The evidence on record shows that the Mendozas
intended to cede the property to the City Government of Lipa permanently. In fact, they allowed
the city to declare the property in its name for tax purposes. And when they sought in 1962 to
have the bigger lot subdivided into four, the Mendozas earmarked Lot 4, containing 1,149 square
meters, for the City Government of Lipa. Under the circumstances, it may be assumed that the
Mendozas agreed to transfer ownership of the land to the government, whether to the City
Government of Lipa or to the Republic, way back but never got around to do so and the Republic
itself altogether forgot about it. Consequently, the Republic should be deemed entitled to
12
possession pending the Mendozas' formal transfer of ownership to it upon payment of just
compensation. aHICDc
The Court holds that, where the owner agrees voluntarily to the taking of his property by the
government for public use, he thereby waives his right to the institution of a formal expropriation
proceeding covering such property. Further, as the Court also held in Eusebio v. Luis, 22 the failure
for a long time of the owner to question the lack of expropriation proceedings covering a property
that the government had taken constitutes a waiver of his right to gain back possession. The
Mendozas' remedy is an action for the payment of just compensation, not ejectment.
In Republic of the Philippines v. Court of Appeals, 23 the Court affirmed the RTC's power to award
just compensation even in the absence of a proper expropriation proceeding. It held that the RTC
can determine just compensation based on the evidence presented before it in an ordinary civil
action for recovery of possession of property or its value and damages. As to the time when just
compensation should be fixed, it is settled that where property was taken without the benefit of
expropriation proceedings and its owner filed an action for recovery of possession before the
commencement of expropriation proceedings, it is the value of the property at the time of taking
that is controlling. 24
Since the MTCC did not have jurisdiction either to evict the Republic from the land it had taken for
public use or to hear and adjudicate the Mendozas' right to just compensation for it, the CA
should have ordered the complaint for unlawful detainer dismissed without prejudice to their
filing a proper action for recovery of such compensation.
WHEREFORE, the Court partially GRANTS the petition, REVERSES the February 26, 2008 decision
and the October 20, 2008 resolution of the Court of Appeals in CA-G.R. 96604, and ORDERS the
dismissal of respondents Primo and Maria Mendoza's action for eviction before the Municipal Trial
Court in Cities of Lipa City in Civil Case 0002-99 without prejudice to their filing an action for
payment of just compensation against the Republic of the Philippines or, when appropriate,
against the City of Lipa.
SO ORDERED.
Carpio, Villarama, Jr., * Perez ** and Mendoza, JJ., concur.
Footnotes
1.Rollo, p. 46.
2.Id. at 48.
3.Id. at 46-48.
4.Id. at 49-50; Tax Declaration (TD) 00491 issued in 1989, cancelled by TD 01914 (for the lot) and
TD 0915 (for the buildings), and further cancelled by TD 00748 issued in 1995.
5.Id. at 53.
6.Id. at 52-56.
7.Id. at 57-59.
8.Id. at 60-67.
9.CA rollo, pp. 74-77.
10.Id. at 49-51.
11.Rollo, pp. 68-70.
12.Id. at 71-74.
13.CA rollo, pp. 58-63. Penned by Judge Jane Aurora C. Lantion.
14.Id. at 2-21.
15.Rollo, pp. 24-36. Penned by Associate Justice Bienvenido L. Reyes and concurred in by
Associate Justices Arcangelita Romilla-Lontok and Apolinario D. Bruselas, Jr.
16.Amending and Codifying the Laws Relative to Registration of Property and for Other Purposes,
Presidential Decree No. 1529, [P.D. No. 1529], § 31, ¶ 2.
17.Section 47 of P.D. 1529 or the Property Registration Decree.
18.Id. at § 47.
19.Rollo, p. 11.
20.Republic of the Philippines v. Catarroja, G.R. No. 171774, February 12, 2010. In this case, the
tax declaration could stand as evidence of ownership because the certificate of title was never
reconstituted after its loss and no proof that it had ever been issued by a valid land registration
court; and in Aguirre v. Heirs of Lucas Villanueva, G.R. No. 169898, October 27, 2006, 505 SCRA
855, 861-862, only tax declarations were presented to prove ownership along with actual
possession.
21.Arbias v. Republic of the Philippines, G.R. No. 173808, September 17, 2008, 565 SCRA 582, 593594.
22.G.R. No. 162474, October 13, 2009, 603 SCRA 576, 584.
23.494 Phil. 494 (2005).
24.Supra note 22, at 586.
*Designated as additional member in lieu of Associate Justice Antonio Eduardo B. Nachura, per
raffle dated July 28, 2010.
**Designated as additional member in lieu of Associate Justice Diosdado M. Peralta, per raffle
dated July 28, 2010.
13
VISAYAS REFINING COMPANY vs CAMUS AND PAREDES
FIRST DIVISION
[G.R. No. 15870. December 3, 1919.]
VISAYAN REFINING COMPANY, DEAN C. WORCESTER, and FRED A. LEAS, petitioners, vs. HON.
MANUEL CAMUS, Judge of the Court of First Instance of the Province of Rizal and HON. QUINTIN
PAREDES, Attorney-General of the Philippine Islands, respondents.
Kincaid & Perkins for petitioner
Assistant Attorney-General Reyes for respondents.
SYLLABUS
1.EMINENT DOMAIN; PUBLIC USE; MILITARY AND AVIATION PURPOSES. — The use of land by the
Government for military and aviation purposes is a public use within the meaning of the provisions
of law authorizing the Government of the Philippine Islands to acquire real estate for public uses
by the exercise of the right of eminent domain.
2.ID.; JUDICIAL PROCEEDINGS; AUTHORITY OF GOVERNOR-GENERAL TO DIRECT INSTITUTION OF
PROCEEDINGS. — Judicial proceedings for the condemnation of land for public use can be
maintained in the name of the Government of the Philippine Islands pursuant to the directions of
the Governor-General, without any other special legislative authority than that expressed in
subsection (h) of section 64 of the Administrative Code, in relation with section 3 of the Jones Act.
3.ID.; ID.; LEGISLATIVE APPROPRIATION. — The existence of a legislative appropriation especially
destined to pay for land to be acquired by the Government through the exercise of the power of
eminent domain is not an essential prerequisite to the institution and maintenance of judicial
proceedings for the expropriation of such land. All that can be required of the Government is that
it should comply with the conditions laid down by law as and when those conditions arise.
4.ID.; RIGHT TO EXERCISE POWER; INHERENT IN SOVEREIGNTY. — The power of eminent domain
is inseparable from sovereignty, being essential to the existence of the State and inherent in
government even in its most primitive forms. No law, therefore, is ever necessary to confer this
right upon sovereignty or upon any Government exercising sovereign or quasi-sovereign powers.
5.ID.; ID.; DUE PROCESS OF LAW JUST COMPENSATION. — The power of eminent domain, with
respect to the conditions under which the property is taken, must be exercised in subjection to
the restraints imposed by constitutional or organic law, and in these Islands especially with
reference to section 3 of the Jones Act which declares that no law shall be enacted which shall
deprive any person of property without due process of law and that private property shall not be
taken for public use without just compensation.
6.ID.; ID.; METHOD OF EXPROPRIATION. — If the Legislature prescribes a method of expropriation
which provides for the payment of just compensation and such method is so conceived and
adapted as to fulfill the constitutional requisite of due process of law, any expropriation
accomplished in conformity with that method is valid.
7.ID.; ID.; ID.; PAYMENT OF COMPENSATION. — There is no organic or constitutional provision in
force in these Islands requiring that compensation shall actually be paid prior to the judgment of
condemnation.
8.ID.; ID.; ID.; PAYMENT OF COMPENSATION AS PREREQUISITE TO ACQUISITION OF PROPERTY. —
The system of expropriation prescribed by laws in force in these Islands affords absolute
assurance that no piece of land can be finally and irrevocably taken from an unwilling owner until
compensation is paid. In this connection our courts are directed to make such final order and
judgment as shall secure just compensation for the land taken, and the right of the expropriator is
finally made absolutely dependent upon the payment of compensation by him.
9.ID.; ID.; GIVING OF PROVISIONAL POSSESSION TO GOVERNMENT; OFFICE OF PRELIMINARY
DEPOSIT. — Where provisional possession is given to the Government in an expropriation
proceeding, upon the making of the deposit required by Act No. 2826 of the Philippine Legislature,
the owner of the land is fully protected from any loss that might result from the temporary
occupation of the land by the Government in the event that the Legislature should finally fail to
appropriate any additional amount necessary to satisfy the award of the court; for such
preliminary deposit serves the double purpose of prepayment upon the value of the property, if
finally expropriated, and as an indemnity against damage in the eventuality that the proceeding
should fail of consummation.
DECISION
STREET, J p:
This is an original petition, directed to the Supreme Court, containing an alternative prayer for a
writ of certiorari or prohibition, as the facts may warrant, to stop certain condemnation
proceedings instituted by the Government of the Philippine Islands, and now pending in the Court
of First Instance of the Province of Rizal. The respondents have interposed what is called an
answer, but which is in legal effect merely a demurrer, challenging the sufficiency of the
allegations of the petition. The matter having been submitted upon oral argument, the cause is
now before us for the decision of the question thus presented.
It appears that upon September 13, 1919, the Governor-General directed the Attorney-General to
cause condemnation proceedings to be begun for the purpose of expropriating a tract of land of
an area of about 1,100,463 square meters, commonly known as the site of Camp Tomas Claudio.
Said land is located in the municipality of Parañaque, Province of Rizal, and lies along the water
front of Manila Bay, a few miles south of the city of Manila. It is stated in communication of the
Governor-General that the property in question is desired by the Government of the Philippine
Islands for military and aviation purposes.
In conformity with the instructions of the Governor-General, condemnation proceedings were
begun by the Attorney-General on September 15, 1919, by filing a complaint in the name of the
Government of the Philippine Islands in the Court of First Instance of the Province of Rizal.
Numerous persons are named in the complaint as defendants because of their supposed
ownership of portions of the property intended to be expropriated. In the list of persons thus
impleaded appear the names of the three petitioners herein, namely, the Visayan Refining Co.,
Dean C. Worcester, and Fred A. Leas, who are severally owners of different portions of the
property in question.
In the communication of the Governor-General, the Attorney-General was directed immediately
upon filing the complaint to ask the court to give the Government the possession of the land to be
expropriated, after the necessary deposit should be made as provided by law. Accordingly in the
complaint itself the Attorney-General prayed the court promptly and provisionally to fix the sum
of P600,000 as the total value of the property and to put the Government in immediate
possession when said sum should be placed at the disposition of the court. An order was
accordingly made on September 15, 1919, by the Honorable Judge Manuel Camus, of the Court of
First Instance of the Province of Rizal, fixing the value of the property provisionally at the amount
stated and ordering that the plaintiff be placed in possession, it being made to appear that a
certificate of deposit for the amount stated had been delivered to the provincial treasurer.
At this stage of the proceedings in the Court of First Instance the three respondents already
mentioned, to wit, the Visayan Refining Co., Dean C. Worcester, and Fred A. Leas, interposed a
demurrer, questioning the validity of the proceedings on the ground that there is no Act of the
Philippine Legislature authorizing the exercise of the power of eminent domain to acquire land for
military or aviation purposes.
Contemporaneously with the filing of their demurrer, the same parties moved the Court of First
Instance to revoke its order of September 15, giving the plaintiff provisional possession. This
motion is based substantially on the same ground as the demurrer, that is, the lack of legislative
authority for the proposed expropriation, but it contains one additional allegation to the effect
that the deposit in court of the sum of P600,000, had been made without authority of law. In
support of this contention it was shown, by means of an informal communication from the Insular
Auditor, that the money in question had been taken from the unexpended balance of the funds
appropriated by Acts Nos. 2784 and 2785 of the Philippine Legislature for the use of the Militia
Commission. This appropriation showed, upon the date said deposit of P600,000 was made, an
unexpended balance of P1,144,672.83
14
On October 3, 1919, the Judge of the Court of First Instance overruled the demurrer interposed by
the three parties mentioned and denied their motion to vacate the order granting possession to
the Government. The present proceeding was thereupon instituted in this Court in the manner
and for the purpose already stated.
General authority to exercise the power of eminent domain is expressly conferred on the
Government of the Philippine Islands, as now constituted, by section 63 of the Philippine Bill,
which reads as follows:
"That the Government of the Philippine Islands is hereby authorized, subject to the limitation and
conditions prescribed in this Act to acquire, receive, hold, maintain, and convey title to real and
personal property, and may acquire real estate for public uses by the exercise of the right of
eminent domain." (Act of Congress of July 1, 1902.)
Section 3 of the Jones Act contains the further provision that "private property shall not be taken
for public use without just compensation." In addition to this there is found in the same section
the familiar provision, already expressed in section 5 of the Philippine Bill, that no law shall be
enacted which shall deprive any person of property without due process of law, or deny any
person the equal protection of the laws. (Act of Congress of August 29, 1916, sec. 3.)
Section 64 of the Administrative Code of the Philippine Islands (Act No. 2711) expressly confers on
the Governor-General the power, among others:
"To determine when it is necessary or advantageous to exercise the right of eminent domain in
behalf of the Government of the Philippine Islands; and to direct the Attorney-General, where
such act is deemed advisable, to cause the condemnation proceedings to be begun in the court
having proper jurisdiction."
The procedural provisions relative to the conduct of expropriation proceedings are contained in
sections 241 to 253, inclusive, of the Code of Civil Procedure, supplemented as they are by various
later Acts of the Legislature. Among the salient features of the scheme of expropriation thus
created are these: (1) If the court is of the opinion that the right of expropriation exists, three
commissioners are appointed to hear the parties, view the premises, and assess the damages to
be paid for the condemnation (sec. 243 Code Civ. Proc.); (2) after hearing the evidence submitted
by the parties and assessing the damages in the manner prescribed by law (sec. 244), the
commissioners make their report to the court, setting forth all their proceedings; and it is
expressly declared that "none of their proceedings shall be effectual to bind the property or the
parties until the court shall have accepted their report and rendered judgment in accordance with
its recommendations" (sec. 245); (3) the court then acts upon the report, accepting the same in
whole or in part, or rejecting, recommitting, or setting aside the same, as it sees fit (sec. 246). It is
further declared in section 246 that —
"The court . . . may make such final order and judgment as shall secure to the plaintiff the
property essential to the exercise of his rights under the law, and to the defendant just
compensation for the land so taken; and the judgment shall require payment of the sum awarded
as provided in the next section (i. e., sec. 247) before the plaintiff can enter upon the ground and
appropriate it to the public use."
Sections 247 and 251 of the same Code are of sufficient importance in this connection to warrant
quotation in their entirety. They are as follows:
"SEC. 247.Rights of Plaintiff After the Judgment. — Upon payment by the plaintiff to the
defendant of compensation as fixed by the judgment, or after tender to him of the amount so
fixed and payment of the costs, the plaintiff shall have the right to enter in and upon the land so
condemned, to appropriate the same to the public use defined in the judgment. In case the
defendant and his attorney absent themselves from the court or decline to receive the same,
payment may be made to the clerk of the court for him, and such officer shall be responsible on
his bond therefor and shall be compelled to receive it."
"SEC. 251.Final Judgment, Its Record and Effect. — The record of the final judgment in such action
shall state definitely by metes and bounds and adequate description. the particular land or
interest in land condemned to the public use, and the nature of the public use. A certified copy of
the record of the judgment shall be recorded in the office of the registrar of deeds for the
province in which the estate is situated, and its effect shall be to vest in the plaintiff for the public
use stated the land and estate so described."
The provisions which deal with the giving of immediate possession when the Government of the
Philippine Islands is the plaintiff are found in Act No. 2826, which is in part as follows:
"SEC. 2.When condemnation proceedings are instituted by or in favor of the Insular Government .
. . in any competent court of the Philippines, the plaintiff shall be entitled to enter immediately
upon the land covered by such proceedings, after depositing with the provincial treasurer the
value of said land in cash, as previously and promptly determined and fixed by the competent
court, which money the provincial treasurer shall retain subject to the order and final decision of
the court: Provided, however, That the court may permit that in lieu of cash, there may be
deposited with the provincial treasurer a certificate of deposit of any depository of the
Government of the Philippine Islands, payable to the provincial treasurer on sight, for the sum
ordered deposited by the court. The certificate and the sums represented by it shall be subject to
the order and final decision of the court, and the court shall have authority to place said plaintiff
in possession of the land, upon such deposit being made, by the proper orders and a mandate, if
necessary.
"SEC. 3. . . . Upon the payment by the plaintiff to the defendants of the compensation awarded by
the sentence, or after the tender of said sum to the defendants, and the payment of the costs, or
in case the court orders the price to be paid into court, the plaintiff shall be entitled to appropriate
the land so condemned to the public use specified in the sentence. In case payment is made to the
court, the clerk of the same shall be liable on his bond for the sum so paid and shall be obliged to
receive the same."
In connection with the foregoing provisions found in laws enacted under the American regime is
to be considered the following provision of the Civil Code:
"ART. 349No one may be deprived of his property unless it be by competent authority for some
purpose of proven public utility and after payment of the proper compensation.
"Unless this requisite has been complied with, it shall be the duty of the court to protect the
owner of such property in its possession or to restore its possession to him, as the case may be."
Taken together the laws mentioned supply a very complete scheme of judicial expropriation,
deducing the authority from its ultimate source in sovereignty, providing in detail for the manner
of its exercise, and making the right of the expropriator finally dependent upon payment of the
amount awarded by the court.
As has already been indicated the petition before us proceeds on the idea that the expropriation
proceedings in question cannot be maintained by the Philippine Government in the absence of a
statute authorizing the exercise of the power of eminent domain for military and aviation
purposes; and while it is not urged that a special legislative Act must be passed every time any
particular parcel of property is to be expropriated, it is claimed — and this really amounts to the
same thing — that the Government cannot institute and prosecute expropriation proceedings
unless there is already in existence a legislative appropriation especially destined to pay for the
land to be taken.
We are of the opinion that the contentions of the petitioners, in whatever way they may be
understood or expressed, are not well founded. There is one point at least on which all must
agree, namely, that if land can be taken by the Government for a public use at all, the use
intended to be made of the land now in question, that is, for military and aviation purposes, is a
public use. It is undeniable that a military establishment is essential to the maintenance of
organized society, and the courts will take judicial notice of the recent progress of the military and
naval arts resulting from the development of aeronautics.
The question as to the abstract authority of the Government to maintain expropriation
proceedings upon the initiative of the Governor-General should not be confused with that which
has reference to the necessity for a legislative appropriation. They really involve different
problems and will be separately considered.
15
Upon the first, we are of the opinion that in this jurisdiction at least expropriation proceedings
may be maintained upon the exclusive initiative of the Governor-General, without the aid of any
special legislative authority other than that already on the statute books. Furthermore if the
Government complies with the requirements of law relative to the making of a deposit in court,
provisional possession of the property may be at once given to it, just as is permitted in the case
of any other person or entity authorized by law to exercise the power of eminent domain Special
legislative authority for the buying of a piece of land by the Government is no more necessary
than for buying a paper of pins; and in the case of a forced taking of property against the will of
the owner, all that can be required of the government is that it should be able to comply with the
conditions laid down by law as and when those conditions arise.
The contention that the authority to maintain such a proceeding cannot be delegated by the
Legislature to the Chief Executive, is in our opinion wholly erroneous and apparently has its basis
in a misconception of fundamentals It is recognized by all writers that the power of eminent
domain is inseparable from sovereignty being essential to the existence of the State and inherent
in government even in its most primitive forms. Philosophers and legists may differ as to the
grounds upon which the exercise of this high power is to be justified, but no one can question its
existence. No law, therefore, is ever necessary to confer this right upon sovereignty or upon any
government exercising sovereign or quasi-sovereign powers.
As is well said by the author of the article on Eminent Domain in the encyclopaedic treatise Ruling
Case Law.
"The power of eminent domain does not depend for its existence on a specific grant in the
constitution. It is inherent in sovereignty and exists in a sovereign state without any recognition of
it in the constitution. The provisions found in most of the state constitutions relating to the taking
of property for the public use do not by implication grant the power to the government of the
state, but limit a power which would otherwise be without limit." (10, R. C. L., pp. 11, 12.)
In other words, the provisions now generally found in the modern laws or constitutions of civilized
countries to the effect that private property shall not be taken for public use without
compensation have their origin in the recognition of a necessity for restraining the sovereign and
protecting the individual. Moreover, as will be at once apparent, the performance of the
administrative acts necessary to the exercise of the power of eminent domain in behalf of the
state is lodged by tradition in the Sovereign or other Chief Executive. Therefore, when the
Philippine Legislature declared in section 64 of the Administrative Code, that the GovernorGeneral, who exercises supreme executive power in these Islands (sec. 21, Jones Act), should be
the person to direct the initiation of expropriation proceedings, it placed the authority exactly
where one would expect to find it, and we can conceive of no ground upon which the efficacy of
the statute can reasonably be questioned.
We would not of course pretend that, under our modern system of Government, in which the
Legislature plays so important a role, the executive department could, without the authority of
some statute, proceed to condemn property for its own uses; because the traditional prerogatives
of the sovereign are not often recognized nowadays as a valid source of power, at least in
countries organized under republican forms of government. Nevertheless it may be observed that
the real check which the modern Legislature exerts over the Executive Department, in such a
matter as this, lies not so much in the extinction of the prerogative as in the fact that the hands of
the Executive can always be paralyzed by lack of money — something which is ordinarily supplied
only by the Legislature.
At any rate the conclusion is irresistible that where the Legislature has expressly conferred the
authority to maintain expropriation proceedings upon the Chief Executive, the right of the latter
to proceed therein is clear. As is said by the author of the article from which we have already
quoted, "Once authority is given to exercise the power of eminent domain, the matter ceases to
be wholly legislative. The executive authorities may then decide whether the power will be
invoked and to what extent." (10 R. C. L., p. 14.)
The power of eminent domain, with respect to the conditions under which the property is taken,
must of course be exercised in subjection to all the restraints imposed by constitutional or organic
law. The two provisions by which the exercise of this power is chiefly limited in this jurisdiction are
found in the third section of the Jones Act, already mentioned, which among other things declares
(1) that no law shall be enacted which shall deprive any person of property without due process of
law and (2) that private property shall not be taken for public use without just compensation. The
latter of these provisions is directly aimed at the taking of property under the exercise of the
power of eminent domain; and as this requirement, in connection with the statutes enacted to
make sure the payment of compensation, usually affords all the protection that the owner of
property can claim, it results that the due process clause is rarely invoked by the owner in
expropriation proceedings.
Nevertheless it should be noted that the whole problem of expropriation is resolvable in its
ultimate analysis into a constitutional question of due process of law. The specific provisions that
just compensation shall be made is merely in the nature of a superadded requirement to be taken
into account by the Legislature in prescribing the method of expropriation. Even were there no
organic or constitutional provision in force requiring compensation to be paid, the seizure of one's
property without payment, even though intended for a public use, would undoubtedly be held to
be a taking without due process of law and a denial of the equal protection of the laws.
This point is not merely an academic one, as might superficially seem. On the contrary it has a
practical bearing on the problem before us, which may be expressed by saying that, if the
Legislature has prescribed a method of expropriation which provides for the payment of just
compensation, and such method is so conceived and adapted as to fulfill the constitutional
requisite of due process of law, any proceeding conducted in conformity with that method must
be valid.
These considerations are especially important to be borne in mind in connection with the second
contention made by counsel for the petitioners, namely, that land cannot be expropriated by the
Government in the absence of a legislative appropriation especially destined to pay for the land to
be taken. To this question we now address ourselves; and while we bear in mind the cardinal fact
that just compensation must be made, the further fact must not be overlooked that there is no
organic or constitutional provision in force in these Islands requiring that compensation shall
actually be paid prior to the judgment of condemnation.
If the laws which we have exhibited or cited in the preceding discussion are attentively examined
it will be apparent that the method of expropriation adopted in this jurisdiction is such as to afford
absolute assurance that no piece of land can be finally and irrevocably taken from an unwilling
owner until compensation is paid. It is true that in rare instances the proceedings may be
voluntarily abandoned before the expropriation is complete or the proceedings may fail because
the expropriator becomes insolvent, in either of which cases the owner retains the property; and
if possession has been prematurely obtained by the plaintiff in the proceedings, it must be
restored. It will be noted that the title does not actually pass to the expropriator until a certified
copy of the record of the judgment is recorded in the office of the register of deeds (sec. 251,
Code Civ. Proc.). Before this stage of the proceedings is reached the compensation is supposed to
have been paid; and the court is plainly directed to make such final order and judgment as shall
secure to the defendant just compensation for the land taken. (Sec. 246, Code Civ. Proc.) .
Furthermore, the right of the expropriator is finally made dependent absolutely upon the payment
of compensation by him. (Sec. 3, Act No. 2826; sec. 247, Code Civ. Proc.).
It will be observed that the scheme of expropriation exemplified in our statutes does not primarily
contemplate the giving of a personal judgment for the amount of the award against the
expropriator: the idea is rather to protect the owner by requiring payment as a condition
precedent to the acquisition of the property by the other party. The power of the court to enter a
judgment for the money and to issue execution thereon against the plaintiff is, however,
unquestioned; and the court can without doubt proceed in either way. But whatever course be
pursued the owner is completely protected from the possibility of losing his property without
compensation.
16
When the Government is plaintiff the judgment will naturally take the form of an order merely
requiring the payment of the award as a condition precedent to the transfer of the title, as a
personal judgment against the Government could not be realized upon execution. It is presumed
that by appearing as plaintiff in condemnation proceedings, the Government submits itself to the
jurisdiction of the court and thereby waives its immunity from suit. As a consequence it would be
theoretically subject to the same liability as any other expropriator. Nevertheless, the entering of
a personal judgment against it would be an unnecessary, as well as profitless formality.
In the face of the elaborate safeguards provided in our procedure, it is frivolous to speculate upon
the possibility that the Legislature may finally refuse to appropriate any additional amount, over
and above the provisional deposit, that may be necessary to pay the award. That it may do. But
the Government can not keep the land and dishonor the judgment. Moreover, in the eventuality
that the expropriation shall not be consummated, the owners will be protected by the deposit
from any danger of loss resulting from the temporary occupation of the land by the Government;
for it is obvious that this preliminary deposit serves the double purpose of a prepayment upon the
value of the property, if finally expropriated, and as an indemnity against damage in the
eventuality that the proceedings should fail of consummation.
It appears that the money represented by the certificate of deposit which was placed at the
disposal of the lower court, pursuant to the requirements of section 2 of Act No. 2826, was taken
from certain appropriations under the control of the Militia Commission, a body created by
section 29 of Act No. 2715, for the purpose, among others, of advising the Governor-General upon
measures relative to the organization, equipment, and government of the National Guard and
reserve militia. Counsel for the petitioners say that money appropriated for the purposes of the
Militia Commission cannot be lawfully used to acquire the land which is now the subject of
expropriation, because no authority for the exercise of the power of eminent domain is to be
found in any of the Acts appropriating money for said Commission; from whence it is argued that
the certificate of deposit affords no protection to the owners of property.
The point appears to be one of little general importance, and we will not multiply words over it.
Suffice it to say that in our opinion the Insular Auditor was acting within his authority when he let
this money out of the Insular Treasury; and being now within the control of the lower court, it will
doubtless in due time be applied to the purpose for which the deposit was made.
From the foregoing discussion it is apparent that the action taken by the lower court in the
condemnation proceedings aforesaid was in all respects regular and within the jurisdiction of the
court. The writ prayed for in the petition before us, therefore, can not be issued. The application
is accordingly denied, with costs against ,the petitioners.
Arellano, C. J., Torres, Araullo and Avanceña, JJ., concur.
Johnson, J., reserves the right to prepare a separate opinion.
Separate Opinions
MALCOLM, J., concurring:
I agree with the conclusion arrived at in the majority decision. I am clearly of the opinion that the
alternative application for a writ of certiorari or prohibition should not be granted. An analysis into
their simplest elements of the various questions presented may easily be made as follows: 1. The
power of the Philippine Government in eminent domain; 2. The constitutional prohibition that (A)
private property (E) shall not be taken for public use (C) without just compensation; and 3. The
constitutional prohibition that no money shall be paid out of the treasury except in pursuance of
an appropriation by law.
in view of the previous attitude assumed by the Judiciary with relation to similar delegations of
power, and in view of the undeniable fact that the Governor-General is a part of the same
Government of the Philippine Islands to which was transferred the right of eminent domain by the
Congress of the United States. (See Government of the Philippine Islands vs. Municipality of
Binangonan [1916], 34 Phil. 518.) When; therefore, the Governor-General directed the AttorneyGeneral to cause condemnation proceedings to be begun in the Court of First Instance of Rizal
with the object of having the Government obtain title to the site commonly known as "Camp
Tomas Claudio," the Governor-General was merely acting as a mouthpiece of American
sovereignty, pursuant to a delegated power transmitted by the Congress of the United States to
the Government of the Philippine Islands and lodged by this latter Government in the Chief
Executive. Any other holding would mean that section 64 (h) of the Administrative Code is invalid,
a result to be avoided.
2.In the existing Philippine Bill of Rights (last sentence, paragraph 1, section 3, Act of Congress of
August 29, 1916) is a provision that "private property shall not be taken for public use without just
compensation." It seems undeniable (A) that Camp Claudio was "private property," and (B) that it
was being "taken for public use," namely, for military and aviation purposes. The only remaining
point concerns "just compensation," which can better be discussed under our division 3.
3.Another provision of the Philippine Bill of Rights (paragraph 15, section 3, Act of Congress of
August 29, 1916) is, "that no money shall be paid out of the treasury except in pursuance of an
appropriation by law." The same Organic Act provides (paragraph 1, section 24) for an Auditor
who shall "audit, in accordance with law and administrative regulations, all expenditure of funds
or property pertaining to, or hela in trust, by the Government." His administrative jurisdiction is
made "exclusive." The Philippine Legislature could, of course, have specifically appropriated an
amount for the purchase of the Camp Claudio site just as it could have specifically enacted a law
for the condemnation of such site, but instead it preferred to include in the general Appropriation
Acts, under the heads of The Philippine National Guard or Philippine Militia, a large amount to be
expended in the discretion of the Militia Commission, which may "use the funds appropriated for
other purposes, as the efficiency of the service may require." This transfer of power to the Militia
Commission, like the delegation of some of the general legislative power to the Governor-General,
raises no constitutional bar. The Insular Auditor has stated that there is in the treasury over a
million pesos available for the condemnation of Camp Claudio, and this decision for present
purposes must be taken as final and conclusive. The six hundred thousand pesos deposit is merely
the provisional determination of the value of the land by the competent court, and in no way
jeopardizes the financial interests of the owners of the property. No additional security is required
since the sovereign power has waived its right to be sued, has pledged the public faith, and cannot
obtain title until the owners receive just compensation for their property. (See Sweet vs. Rechel
[1895], 159 U. S., 380.)
In resume, therefore, the Governor-General of the Philippine Islands had the right to authorize the
condemnation of this land for military and aviation purposes, and no constitutional provision has
been violated. The Court of First Instance of Rizal has merely acted in strict accord with law, and
its action should, consequently, be sustained.
1.The power of eminent domain is expressly vested in the Government of the Philippine Islands by
section 63 of the Act of Congress of July 1, 1902, commonly known as the Philippine Bill. The
Philippine Legislature has, in turn by section 64 (h) of the Administrative Code of 1917, expressly
delegated to the Governor-General the specific power and duty to determine when it is necessary
or advantageous to exercise the right of eminent domain in behalf of the Government of the
Philippine Islands. This delegation of legislative power to the Governor-General was authorized in
view of the nature of eminent domain, which necessitates administrative agents for its execution,
17
CITY OF MANILA vs CHINESE COMMUNITY OF MANILA
FIRST DIVISION
[G.R. No. 14355. October 31, 1919.]
THE CITY OF MANILA, plaintiff-appellant, vs. CHINESE COMMUNITY OF MANILA ET AL.,
defendants-appellees.
City Fiscal Diaz for appellant.
Crossfield & O'Brien, Williams, Ferrier & Sycip, Delgado & Delgado, Filemon Sotto, and Ramon
Salinas for appellees.
SYLLABUS
1.EMINENT DOMAIN; EXPROPRIATION OF PRIVATE PROPERTY, RIGHT OF COURTS TO INQUIRE
INTO NECESSITY OF. — When a municipal corporation attempts to expropriate private property
and an objection is made thereto by the owner, the courts have ample authority, in this
jurisdiction, to make inquiry, and to hear proof upon an-issue properly presented, concerning the
question whether or not the purpose of the appropriation is, in fact, for some public use. The right
of expropriation is not inherent power in a municipal corporation and before it can exercise the
right some law must exist conferring the power upon it. A municipal corporation in this jurisdiction
cannot expropriate public property. The land to be expropriated must be private, and the purpose
of the expropriation must be public. If the court. upon trial, finds that neither of said condition
exists, or that either one of them fails, the right to expropriate does not exist. If the property is
taken in the ostensible behalf of a public improvement which it can never by any possibility serve,
it is being taken for a use not public, and the owner's constitutional rights call for protection by
the courts.
2.ID.; ID. — Upon the other hand, the Legislature may directly determine the necessity for
appropriating private property for a particular improvement for public use, and it may select the
exact location of the improvement. In such a case, it is well settled that the utility of the proposed
improvement, the existence of the public necessity for its construction, the expediency of
constructing it, the suitableness of the location selected, and the consequent necessity of taking
the lands selected, are all questions exclusively for the legislature to determine, and the courts
have no power to interfere or to substitute their own views for those of the representatives of the
people.
3.ID.; ID. — But when the law does not designate the property to be taken, nor how much may be
taken, then the necessity of taking private property is a question for the courts.
4.ID.; ID. — There is a wide distinction between a legislative declaration that a municipality is
given authority to exercise the right of eminent domain and a decision by the municipality that
there exists a necessity for the exercise of that right in a particular case.
5.ID.; ID. — Whether or not it was wise, advisable, or necessary to confer upon a municipality the
power to exercise the right of eminent domain, is a question with which the courts are not
concerned. But whenever that right or authority is exercised for the purpose of depriving citizens
of their property, the courts are authorized, in this jurisdiction, to make inquiry and to hear proof
upon the necessity in a particular case, and not the general authority.
6.ID.; ID. — In the absence of some constitutional or statutory provision to the contrary, the
necessity and expediency of exercising the right of eminent domain are questions essentially
political and not judicial in their character.
7.ID.; ID. — The taking of private property for any use which is not required by the necessities or
convenience of the inhabitants of a state, is an unreasonable exercise of the right of eminent
domain
8.ID.; ID. — That government can scarcely be deemed free where the rights of property are left
solely dependent on the legislative body without restraint. The fundamental maxims of free
government seem to require that the rights of personal liberty and private property should be
held sacred. At least no court of justice would be warranted in assuming that the power to violate
and disregard them lurks in any general grant of legislative authority or ought to be implied from
any general expression of the people. The people ought not to be presumed to part with rights so
vital to their security and well-being without a very strong and direct expression of such intention.
9.ID.; ID. — The exercise of the right of eminent domain is necessarily in derogation of private
rights, and the rule in that case is that the authority must be strictly construed. No species of
property is held by individuals with greater tenacity and none is guarded by the constitution and
laws more sedulously, than the right to the freehold of inhabitants. When the legislature
interferes with that right, the plain meaning of the law should not be enlarged by doubtful
interpretation.
10.ID.; ID. — The very foundation of the right to exercise eminent domain is a genuine necessity,
and that necessity must be of a public character. The ascertainment of the necessity must
precede, and not follow, the taking of the property. The general power to exercise the right of
eminent domain must not be confused with the right to exercise it in a particular case.
11.ID.; CEMETERIES, EXPROPRIATION OF. — Where a cemetery is open to the public, it is a public
use and no part of the ground can be taken for other public uses under a general authority.
12.ID.; ID. — The city of Manila is not authorized to expropriate public property.
Per MALCOLM, J., concurring:
13.EMINENT DOMAIN; POWER OF THE GOVERNMENT OF THE PHILIPPINE ISLANDS. — The
Government of the Philippine Islands is authorized by the Philippine Bill to acquire real estate for
public use by the exercise of the right of eminent domain.
14.ID.; ID.; CITY OF MANILA. — The city of Manila is authorized by the Philippine Legislature to
condemn private property for public use.
16.ID.; ID.; ID.; PRIVATE PROPERTY; PUBLIC USE. — The Legislature has the power to authorize the
taking of land already applied to one public use and devote it to another.
16.ID.; ID.; ID., ID.; ID. — When the power to take land already applied to one public use and
devote it to another is granted to municipal or private corporations in express words, no question
can arise.
17.ID.; ID.; ID.; ID.; ID. — Land already devoted to a public use cannot be taken by the public for
another use which is inconsistent with the first without special authority from the Legislature or
authority granted by necessary and reasonable implication.
18.ID.; ID.; ID.; ID.; ID. — Land applied to one use should not be taken for another except in cases
of necessity.
19.ID.; ID.; ID.; ID.; ID.; CEMETERIES; CLASSES. — Cemeteries are of two classes: public and private.
20.ID.; ID.; ID.; ID.; ID.; ID.; ID.; PUBLIC CEMETERY. — A public cemetery is one used by the general
community, or neighborhood, or church .
21.ID.; ID.; ID.; ID.; ID.; ID.; ID.; PRIVATE CEMETERY. — A private cemetery is one used only by a
family, or a small portion of a community.
22.ID.; ID.; ID.; ID.; ID.; ID.; ID.; CHINESE CEMETERY, CITY OF MANILA. — The Chinese Cemetery in
the city of Manila is a public cemetery.
23.ID.; ID.; ID.; ID.; ID.; ID.; ID.; ID. — Cemeteries, while still devoted to pious uses, are sacred, and
it cannot be supposed that the Legislature has intended that they should be violated in the
absence of special provisions on the subject authorizing such invasion.
24.ID.; ID.; ID.; ID.; ID.; ID.; ID.; ID. — Held: That since the city of Manila is only permitted to
condemn private property for public use and since theChinese Cemetery in the city of Manila is a
public cemetery already devoted to a public use, the city of Manila cannot condemn a portion of
the cemetery for a public street.
DECISION
JOHNSON, J p:
The important question presented by this appeal is: In expropriation proceedings by the city of
Manila, may the courts inquire into, and hear proof upon, the necessity of the expropriation?
That question arose in the following manner:
On the 11th day of December, 1916, the city of Manila presented a petition in the Court of First
Instance of said city, praying that certain lands, therein particularly described, be expropriated for
18
the purpose of constructing a public improvement. The petitioner, in the second paragraph of the
petition, alleged:
"That for the purpose of constructing a public improvement, namely, the extension of Rizal
Avenue, Manila, it is necessary for the plaintiff to acquire ownership in fee simple of certain
parcels of land situated in the district of Binondo of said city within Block 83 of said district, and
within the jurisdiction of this court."
The defendant, the Comunidad de Chinos de Manila [Chinese Community of Manila], answering
the petition of the plaintiff, alleged that it was a corporation organized and existing under and by
virtue of the laws of the Philippine Islands, having for its purpose the benefit and general welfare
of the Chinese Communityof the City of Manila; that it was the owner of parcels one and two of
the land described in paragraph 2 of the complaint; that it denied that it was either necessary or
expedient that the said parcels be expropriated for street purposes; that existing street and roads
furnished ample means of communication for the public in the district covered by such proposed
expropriation; that if the construction of the street or road should be considered a public
necessity, other routes were available, which would fully satisfy the plaintiff's purposes, at much
less expense and without disturbing the resting places of the dead; that it had a Torrens title for
the lands in question; that the lands in question had been used by the defendant for cemetery
purposes; that a great number of Chinese were buried in said cemetery; that if said expropriation
be carried into effect, it would disturb the resting places of the dead, would require the
expenditure of a large sum of money in the transfer or removal of the bodies to some other place
or site and in the purchase of such new sites, would involve the destruction of existing
monuments and the erection of new monuments in their stead, and would create irreparable loss
and injury to the defendant and to all those persons owning and interested in the graves and
monuments which would have to be destroyed; that the plaintiff was without right or authority to
expropriate said cemetery or any part or portion thereof for street purposes; and that the
expropriation, in fact, was not necessary as a public improvement.
The defendant Ildefonso Tambunting, answering the petition, denied each and every allegation of
the complaint, and alleged that said expropriation was not a public improvement; that it was not
necessary for the plaintiff to acquire the parcels of land in question; that a portion of the lands in
question was used as a cemetery in which were the graves of his ancestors; that monuments and
tomb-stones of great value were found thereon; that the land had become quasi-public property
of a benevolent association, dedicated and used for the burial of the dead and that many dead
were buried there; that if the plaintiff deemed it necessary to extend Rizal Avenue, he had offered
and still offers to grant a right of way for the said extension over other land, without cost to the
plaintiff, in order that the sepulchers, chapels and graves of his ancestors may not be disturbed;
that the land so ordered, free of charge, would answer every public necessity on the part of the
plaintiff.
The defendant Feliza Concepcion de Delgado, with her husband, Jose Maria Delgado, and each of
the other defendants, answering separately, presented substantially the same defense as that
presented by the Comunidad de Chinos de Manila and Ildefonso Tambunting above referred to.
The foregoing parts of the defense presented by the defendants have been inserted in order to
show the general character of the defenses presented by each of the defendants. The plaintiff
alleged that the expropriation was necessary. The defendants each alleged (a) that no necessity
existed for said expropriation and (b) that the land in question was a cemetery, which had been
used as such for many years, and was covered with sepulchers and monuments, and that the
same should not be converted into a street for public purposes.
Upon the issue thus presented by the petition and the various answers, the Honorable Simplicio
del Rosario, judge, in a very elucidated opinion, with very clear and explicit reasons, supported by
abundance of authorities, decided that there was no necessity for the expropriation of the
particular-strip of land in question, and absolved each and all of the defendants from all liability
under the complaint, without any finding as to costs.
From that judgment the plaintiff appealed and presented the above question as its principal
ground of appeal.
The theory of the plaintiff is, that once it has established the fact, under the law, that it has
authority to expropriate land, it may expropriate any land it may desire; that the only function of
the court in such proceedings is to ascertain the value of the land in question; that neither the
court nor the owners of the land can inquire into the advisable purpose of the expropriation or ask
any questions concerning the necessities therefor; that the courts are mere appraisers of the land
involved in expropriation proceedings, and, when the value of the land is fixed by the method
adopted by the law, to render a judgment in favor of the defendant for its value.
That the city of Manila has authority to expropriate private lands for public purposes, is not
denied. Section 2429 of Act No. 2711 (Charter of the city ofManila) provides that "the city (Manila)
. . . may condemn private property for public use."
The Charter of the city of Manila contains no procedure by which the said authority may be
carried into effect. We are driven, therefore, to the procedure marked out by Act No. 190 to
ascertain how the said authority may be exercised. From an examination of Act No. 190, in its
section 241, we find how the right of eminent domain may be exercised. Said section 241 provides
that, "The Government of the Philippine Islands, or of any province or department thereof, or of
anymunicipality, and any person, or public or private corporation having, by law, the right to
condemn private property for public use, shall exercise that right in the manner hereinafter
prescribed."
Section 242 provides that a complaint in expropriation proceeding shall be presented; that the
complaint shall state with certainty the right of condemnation, with a description of the property
sought to be condemned together with the interest of each defendant separately
Section 243 provides that if the court shall find upon trial that the right to expropriate the land in
question exists, it shall then appoint commissioners.
Sections 244, 245 and 246 provide the method of procedure and duty of the commissioners.
Section 248 provides for an appeal from the judgment of the Court of First Instance to the
Supreme Court. Said section 248 gives the Supreme Court authority to inquire into the right of
expropriation on the part of the plaintiff. If the Supreme Court on appeal shall determine that no
right of expropriation existed, it shall remand the cause to the Court of First Instance with a
mandate that the defendant be replaced in the possession of the property and that he recover
whatever damages he may have sustained by reason of the possession of the plaintiff.
It is contended on the part of the plaintiff that the phrase in said section, "and if the court shall
find that the right to expropriate exists," means simply that, if the court finds that there is some
law authorizing the plaintiff to expropriate, then the courts have no other function than to
authorize the expropriation and to proceed to ascertain the value of the land involved; that the
necessity for the expropriation is a legislative and not a judicial question.
Upon the question whether expropriation is a legislative function exclusively, and that the courts
cannot intervene except for the purpose of determining the value of the land in question, there is
much legal literature. Much has been written upon both sides of that question. A careful
examination of the discussionspro and con will disclose the fact that the decisions depend largely
upon particular constitutional or statutory provisions. It cannot be denied, if the legislature under
proper authority should grant the expropriation of a certain or particular parcel of land for some
specified public purpose, that the courts would be without jurisdiction to inquire into the purpose
of that legislation.
If, upon the other hand, however, the Legislature should grant general authority to a municipal
corporation to expropriate private land for public purposes, we think the courts have ample
authority in this jurisdiction, under the provisions above quoted, to make inquiry and to hear
proof, upon an issue properly presented, concerning whether or not the lands were private and
whether the purpose was, in fact, public. In other words, have not the courts in this jurisdiction
the right, inasmuch as the questions relating to expropriation must be referred to them (sec. 241,
Act No. 190) for final decision, to ask whether or not the law has been complied with ? Suppose, in
a particular case, it should be denied that the property is not private property but public, may not
19
the courts hear proof upon that question? Or, suppose the defense is, that the purpose of the
expropriation is not public but private, or that there exists no public purpose at all, may not the
courts make inquiry and hear proof upon that question?
The city of Manila is given authority to expropriate private lands for public purposes. Can it be
possible that said authority confers the right to determine for itself that the land is private and
that the purpose is public, and that the people of the city of Manila who pay the taxes for its
support, especially those who are directly affected, may not question one or the other, or both, of
these questions? Can it be successfully contended that the phrase used in Act No. 190, "and if the
court upon trial shall find that such right exists," means simply that the court shall examine the
statutes simply for the purpose of ascertaining whether a law exists authorizing the petitioner to
exercise the right of eminent domain ? Or, when the case arrives in the Supreme Court, can it be
possible that the phrase, "if the Supreme Court shall determine that no right of expropriation
exists," that that simply means that the Supreme Court shall also examine the enactments of the
legislature for the purpose of determining whether or not a law exists permitting the plaintiff to
expropriate?
We are of the opinion that the power of the court is not limited to that question. The right of
expropriation is not an inherent power in a municipal corporation, and before it can exercise the
right some law must exist conferring the power upon it. When the courts come to determine the
question, they must not only find (a) that a law or authority exists for the exercise of the right of
eminent domain, but (b) also that the right or authority is being exercised in accordance with the
law. In the present case there are two conditions imposed upon the authority conceded to the
City of Manila: First, the land must be private; and, second, the purpose must be public. If the
court, upon trial, finds that neither of these conditions exists or that either one of them fails,
certainly it cannot be contended that the right is being exercised in accordance with law
Whether the purpose for the exercise of the right of eminent domain is public, is a question of
fact. Whether the land is public or private is also a question of fact; and, in our opinion, when the
legislature conferred upon the courts of the Philippine Islands the right to ascertain upon trial
whether the right exists for the exercise of eminent domain, it intended that the courts should
inquire into, and hear proof upon, those questions. Is it possible that the owner of valuable land in
this jurisdiction is compelled to stand mute while his land is being expropriated for a use not
public, with the right simply to beg the city of Manila to pay him the value of his land? Does the
law in this jurisdiction permit municipalities to expropriate lands, without question, simply for the
purpose of satisfying the aesthetic sense of those who happen for the time being to be in
authority ? Expropriation of lands usually calls for public expense. The taxpayers are called upon
to pay the costs. Cannot the owners of land question the public use or the public necessity?
As was said above, there is a wide divergence of opinion upon the authority of the court to
question the necessity or advisability of the exercise of the right of eminent domain. The
divergence is usually found to depend upon particular statutory or constitutional provisions.
It has been contended — and many cases are cited in support of that contention, and section 158
of volume 10 of Ruling Case Law is cited as conclusive — that the necessity for taking property
under the right of eminent domain is not a judicial question. But those who cited said section
evidently overlooked the section immediately following (sec. 159), which adds: "But it is obvious
that if the property is taken in the ostensible behalf of a public improvement which it can never by
any possibility serve, it is being taken for a use not public, and the owner's constitutional rights
call for protection by the courts. While many courts have used sweeping expression in the
decisions in which they have disclaimed the power of supervising the selection of the sites of
public improvements, it may be safely said that the courts of the various states would feel bound
to interfere to prevent an abuse of the discretion delegated by the legislature, by an attempted
appropriation of land in utter disregard of the possible necessity of its use, or when the alleged
purpose was a cloak to some sinister scheme." Norwich City vs. Johnson, 86 Conn., 151; Bell vs.
Mattoon Waterworks, etc. Co., 245 Ill., 544; Wheeling, etc. R. R. Co. vs. Toledo Ry. etc. Co., 72
Ohio St., 368; State vs. Stewart, 74 Wis., 620.)
Said section 158 (10 R. C. L., 183) which is cited as conclusive authority in support of the
contention of the appellant, says:
"The legislature, in providing for the exercise of the power of eminent domain, may directly
determine the necessity for appropriating private property for a particular improvement for public
use, and it may select the exact location of the improvement. In such a case, it is well settled that
the utility of the proposed improvement, the extent of the public necessity for its construction,
the expediency of constructing it, the suitableness of the location selected and the consequent
necessity of taking the land selected for its site, are all questions exclusively for the legislature to
determine and the courts have no power to interfere, or to substitute their own views for those of
the representatives of the people."
Practically every case cited in support of the above doctrine has been examined, and we are
justified in making the statement that in each case the legislature directly determined the
necessity for the exercise of the right of eminent domain in the particular case. It is not denied
that if the necessity for the exercise of the right of eminent domain is presented to the legislative
department of the government and that department decides that there exists a necessity for the
exercise of the right in a particular case, that then and in that case, the courts will not go behind
the action of the legislature and make inquiry concerning the necessity. But in the case of
Wheeling, etc. R. R. Co. vs. Toledo, Ry., etc. Co. (72 Ohio St., 368 [106 Am. St. Rep., 622, 628] ),
which is cited in support of the doctrine laid down in section 158 above quoted, the court said:
"But when the statute does not designate the property to be taken nor how much may be taken,
then the necessity of taking particular property is a question for the courts Where the application
to condemn or appropriate is made directly to the court, the question (of necessity) should be
raised and decided in limine."
The legislative department of the government very rarely undertakes to designate the precise
property which should be taken for public use. It has generally, like in the present case, merely
conferred general authority to take land for public use when a necessity exists therefor. We
believe that it can be confidently asserted that, under such statute, the allegation of the necessity
for the appropriation is an issuable allegation which it is competent for the courts to decide.
(Lynch vs. Forbes, 161 Mass., 302 [42 Am. St. Rep., 402, 407].)
There is a wide distinction between a legislative declaration that a municipality is given authority
to exercise the right of eminent domain, and a decision by the municipality that there exists a
necessity for the exercise of that right in a particular case. The first is a declaration simply that
there exist reasons why the right should be conferred upon municipal corporation, while the
second is the application of the right to a particular case. Certainly, the legislative declaration
relating to the advisability of granting the power cannot be converted into a declaration that a
necessity exists for its exercise in a particular case, and especially so when, perhaps, the land in
question was not within the territorial jurisdiction of the municipality at the time the legislative
authority was granted.
Whether it was wise, advisable, or necessary to confer upon a municipality the power to exercise
the right of eminent domain, is a question with which the courts are not concerned. But when that
right or authority is exercised for the purpose of depriving citizens of their property, the courts are
authorized, in this jurisdiction, to make inquiry and to hear proof upon the necessity in the
particular case, and not the general authority.
Volume 15 of the Cyclopedia of Law and Procedure (Cyc.), page 629, is cited as a further
conclusive authority upon the question that the necessity for the exercise of the right of eminent
domain is a legislative and not a judicial question. Cyclopedia, at the page stated, says:
"In the absence of some constitutional or statutory provision to the contrary, the necessity and
expediency of exercising the right of eminent domain are questions essentially political and not
judicial in their character. The determination of those questions (the necessity and the
expediency) belongs to the sovereign power; the legislative department is final and conclusive,
and the courts have no power to review it (the necessity and the expediency) . . . . It (the
legislature) may designate the particular property to be condemned, and its determination in this
respect cannot be reviewed by the courts."
20
The volume of Cyclopedia, above referred to, cites many cases in support of the doctrine quoted.
While time has not permitted an examination of all of said citations, many of them have been
examined, and it can be confidently asserted that said cases which are cited in support of the
assertion that, "the necessity and expediency of exercising the right of eminent domain are
questions essentially political and not judicial," show clearly and invariably that in each case the
legislature itself usually, by a special law, designated the particular case in which the right of
eminent domain might be exercised by the particular municipal corporation or entity within the
state. (Eastern R. Co. vs. Boston, etc., R. Co., 11 Mass., 125 [15 Am. Rep., 13]; Brooklyn Park
Com'rs. vs. Armstrong, 45 N. Y., 234 [6 Am. Rep., 70]; Hairston vs. Danville, etc. Ry. Co., 208 U. S.
598; Cincinnati vs. Louisville, etc. Ry. Co., 223 U. S. 390; U. S. vs. Chandler-Dunbar Water Power
Co., 229 U. S., 53; U. S. vs. Gettysburg, etc. Co., 160 U. S., 668; Traction Co. vs. Mining Co., 196 U.
S., 239; Sears vs. City of Akron, 246 U. S., 351 [erroneously cited as 242 U. S.].)
In the case of Traction Co. vs. Mining Co. (196 U. S., 239), the Supreme Court of the United States
said: "It is erroneous to suppose that the legislature is beyond the control of the courts in
exercising the power of eminent domain, either as to the nature of the use or the necessity to the
use of any particular property. For if the use be not public or no necessity for the taking exists, the
legislature cannot authorize the taking of private property against the will of the owner,
notwithstanding compensation may be required."
In the case of School Board of Carolina vs. Saldaña (14 Porto Rico, 339, 356), we find the Supreme
Court of Porto Rico, speaking through Justice MacLeary, quoting approvingly the following, upon
the question which we are discussing: "It is well settled that although the legislature must
necessarily determine in the first instance whether the use for which they (municipalities, etc.)
attempt to exercise the power is a public one or not, their (municipalities, etc.) determination is
not final, but is subject to correction by the courts, who may undoubtedly declare the statute
unconstitutional, if it shall clearly appear that the use for which it is proposed to authorize the
taking of private property is in reality not public but private." Many cases are cited in support of
that doctrine.
Later, in the same decision, we find the Supreme Court of Porto Rico says: "At any rate, the rule is
quite well settled that in the cases under consideration the determination of the necessity of
taking a particular piece or a certain amount of land rests ultimately with the courts." (Spring
Valley etc. Co. vs. San Mateo, etc. Co., 64 Cal., 123.) In the case of Board of Water Com'rs., etc. vs.
Johnson (86 Conn., 571 [41 L. R. A., N. S., 1024] ), the Supreme Court of Connecticut approvingly
quoted the following doctrine from Lewis on Eminent Domain (3d ed.), section 599: "In all such
cases the necessity of public utility of the proposed work or improvement is a judicial question. In
all such cases, where the authority is to take property necessary for the purpose, the necessity of
taking particular property for a particular purpose is a judicial one, upon which the owner is
entitled to be heard." Riley vs. Charleston, etc. Co., 71 S. C., 457, 489 [110 Am. St. Rep., 579];
Henderson vs. Lexington 132 Ky., 390, 403.)
The taking of private property for any use which is not required by the necessities or convenience
of the inhabitants of the state, is an unreasonable exercise of the right of eminent domain, and
beyond the power of the legislature to delegate. (Bennett vs. Marion, 106 Iowa, 628, 633; Wilson
vs. Pittsburg, etc. Co., 222 Pa. St., 541, 545; Greasy, etc. Co. vs. Ely, etc. Co., 132 Ky., 692, 697.)
In the case of New Central Coal Co. vs. George's, etc. Co. (37 Md., 537, 564), the Supreme Court of
the State of Maryland, discussing the question before us, said: "To justify the exercise of this
extreme power ,(eminent domain) where the legislature has left it to depend upon the necessity
that may be found to exist, in order to accomplish the purposes of the incorporation, as in this
case, the party claiming the right to the exercise of the power should be required to show at least
a reasonable degree of necessity for its exercise. Any rule less strict than this, with the large and
almost indiscriminate delegation of the right to corporations, would likely lead to oppression and
the sacrifice of private right to corporate power."
In the case of Dewey vs. Chicago, etc. Co. (184 Ill., 426, 433), the court said: "Its right to condemn
property is not a general power of condemnation, but is limited to cases where a necessity for
resort to private property is shown to exist. Such necessity must appear upon the face of the
petition to condemn. If the necessity is denied the burden is upon the company (municipality) to
establish it." (Highland, etc. Co. vs. Strickley, 116 Fed., 852, 856; Kiney vs. Citizens' Water & Light
Co., 173 Ind., 252, 257; Bell vs Mattoon Waterworks, etc. Co., 245 Ill., 544 [137 Am St. Rep., 388].)
It is true that many decisions may be found asserting that what is a public use is a legislative
question, and many other decisions declaring with equal emphasis that it is a judicial question.
But, as long as there is a constitutional or statutory provision denying the right to take land for any
use other than a public use, it occurs to us that the question whether any particular use is a public
one or not is ultimately, at least, a judicial question. The legislature may, it is true, in effect declare
certain uses to be public, and, under the operation of the well-known rule that a statute will not
be declared to be unconstitutional except in a case free, or comparatively free, from doubt, the
courts will certainly sustain the action of the legislature, unless it appears that the particular use is
clearly not of a public nature. The decisions must be understood with this limitation; for, certainly,
no court of last resort will be willing to declare that any and every purpose which the legislature
might happen to designate as a public use shall be conclusively held to be so, irrespective of the
purpose in question and of its manifestly private character. Blackstone in his Commentaries on the
English Law remarks that, so great is the regard of the law for private property that it will not
authorize the least violation of it, even for the public good, unless there exists a very great
necessity therefor.
In the case of Wilkinson vs. Leland (2 Fet. [U. S.], 657), the Supreme Court of the United States
said: "That government can scarcely be deemed free where the rights of property are left solely
dependent on the legislative body, without restraint. The fundamental maxims of free
government seem to require that the rights of personal liberty and private property should be
held sacred. At least no court of justice in this country would be warranted in assuming that the
power to violate and disregard them — a power so repugnant to the common principles of justice
and civil liberty — lurked in any general grant of legislative authority, or ought to be implied from
any general expression of the people. The people ought not to be presumed to part with rights so
vital to their security and well-being without very strong and direct expression of such intention."
(Lewis on Eminent Domain, sec. 603; Lecoul vs. Police Jury, 20 La. Ann., 308; Jefferson vs. Jazem, 7
La. Ann., 182.)
Blackstone, in his Commentaries on the English Law, said that the right to own and possess land —
a place to live separate and apart from others — to retain it as a home for the family in a way not
to be molested by others — is one of the most sacred rights that men are heirs to. That right has
been written into the organic law of every civilized nation. The Acts of Congress of July 1, 1902,
and of August 29, 1916, which provide that "no law shall be enacted in the Philippine Islands
which shall deprive any person of his property without due process of law," are but a restatement
of the time-honored protection of the absolute right of the individual to his property. Neither did
said Acts of Congress add anything to the law already existing in the Philippine Islands. The
Spaniard fully recognized the principle and adequately protected the inhabitants of the Philippine
Islands against the encroachment upon the private property of the individual. Article 349 of the
Civil Code provides that: "No one may be deprived of his property unless it be by competent
authority, for some purpose of provenpublic utility, and after payment of the proper
compensation. Unless this requisite (proven public utility and payment) has been complied with, it
shall be the duty of the courts to protect the owner of such property in its possession or to restore
its possession to him, as the case may be."
The exercise of the right of eminent domain, whether directly by the State, or by its authorized
agents, is necessarily in derogation of private rights, and the rule in that case is that the authority
must be strictly construed. No species of property is held by individuals with greater tenacity, and
none is guarded by the constitution and laws more sedulously, than the right to the freehold of
inhabitants. When the legislature interferes with that right, and, for greater public purposes,
appropriates the land of an individual without his consent, the plain meaning of the law should
not be enlarged by doubtly interpretation. (Bensley vs. Mountain lake Water Co., 13 Cal., 306 and
cases cited [73 Am. Dec., 576].)
21
The statutory power of taking property from the owner without his consent is one of the most
delicate exercise of governmental authority. It is to be watched with jealous scrutiny. Important as
the power may be to the government, the inviolable sanctity which all free constitutions attach to
the right of property of the citizens, constrains the strict observance of the substantial provisions
of the law which are prescribed as modes of the exercise of the power, and to protect it from
abuse. Not only must the authority of municipal corporations to take property be expressly
conferred and the use for which it is taken specified, but the power, with all constitutional
limitation and directions for its exercise, must be strictly pursued. (Dillon on Municipal
Corporations [5th Ed.], sec. 1040, and cases cited; Tenorio vs. Manila Railroad Co., 22 Phil., 411.)
It can scarcely be contended that a municipality would be permitted to take property for some
public use unless some public necessity existed therefor. The right to take private property for
public use originates in the necessity, and the taking must be limited by such necessity. The
appellant contends that inasmuch as the legislature has given it general authority to take private
property for public use, that the legislature has, therefore, settled the question of the necessity in
every case and that the courts are closed to the owners of the property upon that question. Can it
be imagined, when the legislature adopted section 2429 of Act No. 2711, that it thereby declared
that it was necessary to appropriate the property of Juan de la Cruz, whose property, perhaps,
was not within thecity limits at the time the law was adopted ? The legislature, then, not having
declared the necessity, can it be contemplated that it intended that a municipality should be the
sole judge of the necessity in every case, and that the courts, in the face of the provision that "if
upon trial they shall find that a right exists," cannot in that trial inquire into and hear proof upon
the necessity for the appropriation in a particular case ?
The Charter of the city of Manila authorizes the taking of private property for public use. Suppose
the owner of the property denies and successfully proves that the taking of his property serves no
public use: Would the courts not be justified in inquiring into that question and in finally denying
the petition if no public purpose was proved ? Can it be denied that the courts have a right to
inquire into that question? If the courts can ask questions and decide, upon an issue properly
presented, whether the use is public or not, is not that tantamount to permitting the courts to
inquire into the necessity of the appropriation? If there is no public use, then there is no necessity,
and if there is no necessity, it is difficult to understand how a public use can necessarily exist. If
the courts can inquire into the question whether a public use exists or not, then it seems that it
must follow that they can examine into the question of the necessity.
The very foundation of the right to exercise eminent domain is a genuine necessity, and that
necessity must be of a public character. The ascertainment of the necessity must precede or
accompany, and not follow, the taking of the land. (Morrison vs. Indianapolis, etc. Ry. Co., 166
Ind., 611; Stearns vs. Barre, 73 Vt., 281; Wheeling, etc. R. R. Co. vs. Toledo, Ry. etc. Co., 72 Ohio
St., 368.)
The general power to exercise the right of eminent domain must not be confused with the right to
exercise it in a particular case. The power of the legislature to confer, upon municipal corporations
and other entities within the State, general authority to exercise the right of eminent domain
cannot be questioned by the courts, but that general authority of municipalities or entities must
not be confused with the right to exercise it in particular instances. The moment the municipal
corporation or entity attempts to exercise the authority conferred, it must comply with the
conditions accompanying the authority. The necessity for conferring the authority upon a
municipal corporation to exercise the right of eminent domain is admittedly within the power of
the legislature. But whether or not the municipal corporation or entity is exercising the right in a
particular case under the conditions imposed by the general authority, is a question which the
courts have the right to inquire into.
The conflict in the authorities upon the question whether the necessity for the exercise of the
right of eminent domain is purely legislative and not judicial,arises generally in the wisdom and
propriety of the legislature in authorizing the exercise of the right of eminent domain instead of in
the question of the right to exercise it in a particular case. (Creston Waterworks Co. vs. McGrath,
89 Iowa, 502.)
By the weight of authorities, the courts have the power of restricting the exercise of eminent
domain to the actual reasonable necessities of the case and for the purposes designated by the
law. (Fairchild vs. City of St. Paul. 48 Minn.. 540.)
And, moreover, the record does not show conclusively that the plaintiff has definitely decided that
their exists a necessity for the appropriation of the particular land described in the complaint.
Exhibits 4, 5, 7, and E clearly indicate that the municipal board believed at one time that other
land might be used for the proposed improvement, thereby avoiding the necessity of disturbing
the quiet resting place of the dead.
Aside from insisting that there exists no necessity for the alleged improvement, the defendants
further contend that the street in question should not be opened through the cemetery. One of
the defendants alleges that said cemetery is public property. If that allegations is true, then, of
course, the city of Manila cannot appropriate it for public use. The city of Manila can only
expropriate private property.
It is a well known fact that cemeteries may be public or private. The former is a cemetery used by
the general community, or neighborhood, or church, while the latter is used only by a family, or a
small portion of the community or neighborhood. (11 C. J., 50.)
Where a cemetery is open to the public, it is a public use and no part of the ground can be taken
for other public uses under a general authority. And this immunity extends to the unimproved and
unoccupied parts which are held in good faith for future use. (Lewis on Eminent Domain, sec. 434,
and cases cited.)
The cemetery in question seems to have been established under governmental authority. The
Spanish Governor-General, in an order creating the same, used the following language:
"The cemetery and general hospital for indigent Chinese having been founded and maintained by
the spontaneous and fraternal contribution of their protector, merchants and industrials,
benefactors of mankind, in consideration of their services to the Government of the Islands its
internal administration, government and regime must necessarily be adjusted to the taste and
traditional practices of those born and educated in China in order that the sentiments which
animated the founders may be perpetually effectuated."
It is alleged, and not denied, that the cemetery in question may be used by the general community
of Chinese, which fact, in the general acceptation of the definition of a public cemetery, would
make the cemetery in question public property. If that is true, then, of course, the petition of the
plaintiff must be denied, for the reason that the city of Manila has no authority or right under the
law to expropriate public property.
But, whether or not the cemetery is public or private property, its appropriation for the uses of a
public street, especially during the lifetime of those specially interested in its maintenance as a
cemetery, should be a question of great concern, and its appropriation should not be made for
such purposes until it is fully established that the greatest necessity exists therefor.
While we do not contend that the dead must not give place to the living, and while it is a matter of
public knowledge that in the process of time sepulchers may become the seat of cities and
cemeteries traversed by streets and daily trod by the feet oœ millions of men, yet, nevertheless
such sacrifices and such uses of the places of the dead should not be made unless and until it is
fully established that there exists an eminent necessity therefor. While cemeteries and sepulchers
and the places of the burial of the dead are still within the memory and command of the active
care of the living; while they are still devoted to pious uses and sacred regard, it is difficult to
believe that even the legislature would adopt a law expressly providing that such places, under
such circumstances, should be violated.
In such an appropriation, what, we may ask, would be the measure of damages at law, for the
wounded sensibilities of the living, in having the graves of kindred and loved ones blotted out and
desecrated by a common highway or street for public travel ? The impossibility of measuring the
damage and inadequacy of a remedy at law is too apparent to admit of argument. To disturb the
mortal remains of those endeared to us in life sometimes becomes the sad duty of the living; but,
22
except in cases of necessity, or for laudable purposes, the sanctity of the grave, the last resting
place of our friends, should be maintained, and the preventative aid of the courts should be
invoked for that object. (Railroad Company vs. Cemetery Co., 116 Tenn., 400; Evergreen Cemetery
Association vs. TheCity of New Haven, 43 Conn., 234; Anderson vs. Acheson, 132 Iowa, 744; Beatty
vs. Kurtz, 2 Peters, 566.)
In the present case, even granting that a necessity exists for the opening of the street in question,
the record contains no proof of the necessity of opening the same through the cemetery. The
record shows that adjoining and adjacent lands have been offered to the city free of charge, which
will answer every purpose of the plaintiff.
For all of the foregoing, we are fully persuaded that the judgment of the lower court should be
and is hereby affirmed, with costs against the appellant. So ordered.
Arellano, C. J., Torres, Araullo and Avanceña, JJ., concur.
Separate Opinions
MALCOLM, J., concurring:
The Government of the Philippine Islands is authorized by the Philippine Bill to acquire real estate
for public use by the exercise of the right of eminent domain. (Act of Congress of July 1, 1902, sec
63.) A portion of this power has been delegated by the Philippine Legislature to the city of Manila,
which is permitted to "condemn private property for public use." (Administrative Code of 1917,
sec. 2429.) The Code of Civil Procedure, in prescribing how the right of eminent domain may be
exercised, also limits the condemnation to "private property for public use.' (Sec. 241.) As under
the facts actually presented, there can be no question that a public street constitutes a public use,
the only remaining question is whether or not the Chinese Cemetery and the other property here
sought to be taken by the exercise 'of the right of eminent domain is private property."
As narrowing our inquiry still further, let it be noted that cemeteries are of two classes, public and
private. A public cemetery is one used by the generalcommunity, or neighborhood, or church;
while a private cemetery is one used only by a family, or a small portion of a community (Lay vs.
State, 12 Ind. App., 362; Cemetery Association vs Meninger [1875], 14 Kan., 312.) Our specific
question, then, is, whether the Chinese Cemetery in the city of Manila is a public, or a private
graveyard. If it be found to be the former, it is not subject to condemnation by the city of Manila;
if it be found to be the latter, it is subject to condemnation.
The Chinese Cemetery of Manila was established during the Spanish administration in the
Philippines by public spirited Chinese. The order of the Governor-General giving governmental
recognition to the cemetery reads as follows: "The cemetery and general hospital for indigent
Chinese having been founded and maintained by the spontaneous and fraternal contribution of
their protectors, merchants and industrials, benefactors of mankind, in consideration of their
services to the Government of the Islands, its internal administration, government and regime,
must necessarily be adjusted to the taste and traditional practices of those born and educated in
China in order that the sentiments which animated the founders may be perpetually effectuated."
Sometimes after the inauguration of the new regime in the Philippines) a corporation was
organized to control the cemetery, and a Torrens title for the lands in question was obtained.
From the time of its creation until the present the cemetery has been used by the Chinese
community for the burial of their dead. It is said that not less than four hundred graves, many of
them with handsome monuments, would be destroyed by the proposed street. This desecration is
attempted as to the last resting places of the dead of a people who, because of their peculiar and
ingrained ancestral worship, retain more than the usual reverence for the departed. These facts
lead us straight to the conclusion that the Chinese Cemetery is not used by a family or a small
portion of a community but by a particular race long existing in the country and of considerable
numbers. The case, then, is one of where the city of Manila, under a general authority permitting
it to condemn private property for public use, is attempting to convert a property already
dedicated to a public use to an entirely different public use; and this, not directly pursuant to
legislative authority, but primarily through the sole advice of the consulting architect.
Two well considered decisions coming from the American state courts on almost identical facts
are worthy of our consideration. The first is the case of The Evergreen Cemetery Association vs.
The City of New Haven ( [1875], 43 Conn., 234), oft cited by other courts. Here the City of New
Haven, Connecticut, under the general power conferred upon it to lay out, construct, and
maintain all necessary highways within its limits, proceeded to widen and straighten one of its
streets, and in so doing took a small piece of land belonging to the Evergreen Cemetery
Association. This association was incorporated under the general statute. The city had no special
power to take any part of the cemetery for such purposes. It was found that the land taken was
needed for the purposes of the cemetery and was not needed for the purpose of widening and
straightening the avenue. The court said that it is unquestionable that the Legislature has the
power to authorize the taking of land already applied to one public use and devote it to another.
When the power is granted to municipal or private corporations in express words, no question can
arise. But, it was added, "The same land cannot properly be used for burial lots and for a public
highway at the same time. . . . Land therefore applied to one use should not be taken for the other
except in cases of necessity. . . . There is no difficulty in effecting the desired improvement by
taking land on the other side of the street. . . . The idea of running a public street, regardless of
graves, monuments, and the feelings of the living, through one of our public cemeteries, would be
shocking to the moral sense of the community, and would not be tolerated except upon the direct
necessity." It was then held that land already devoted to a public use cannot be taken by the
public for another use which is inconsistent With the first, without special authority from the
Legislature, or authority granted by necessary and reasonable implication.
The second decision is that Of Memphis State Line Railroad Company vs. forest Hill Cemetery Co.
([1906], 116 Tenn., 400.) Here the purpose of the proceeding was to condemn a right Of way for
the railway company through the forest Hill Cemetery. The railroad proposed to run through the
southeast corner of the Cemetery where no bodies were interred. The cemetery had been in use
for about eight years, and during this period thirteen hundred bodies had been buried therein.
The Cemetery was under the control of a corporation which, by its character, held itself out as
being willing to sell lots to any one who applies therefor and pays the price demanded, except to
members of the Negro race.
It was found that there were two other routes along which the railroad might be located without
touching the cemetery, while the present line might be pursued without interfering with Forest
Hill Cemetery by making a curve around it. In the court below the railroad was granted the right of
condemnation through the cemetery and damages were assessed. On appeal, the certiorari
applied for was granted, and the supersedeas awarded. The court, in effect, found that the land of
the Cemeter Company was devoted to a public purpose, and that under the general language of
the Tenessee statute of eminent domain it could not be taken from another public purpose. The
court said that in process of time the sepulcheres of the dead "are made the seats of cities, and
are traverse by streets, and daily trodden by the feet of man. This is inevitable i the course of ages.
But while these places are yet within the memory and under the active care of the living, while
they are still devoted to pious uses, they are sacred, and we cannot suppose that the legislature
intended that they should be violated, in the absence of special provisions upon the subject
authorizing such invasion, and indicating a method for the disinterment, removal, and reinterment
of the bodies buried, and directing how the expense thereof shall be borne." Two members of the
court, delivering a separate concurring opinion, concluded with this significant and eloquent
sentence: "The wheels of commerce must stop at the grave."
For the foregoing reasons, and for others which are stated in the principal decision, I am of the
opinion that the judgment of the lower court should be affirmed.
STREET, J., dissenting:
It may be admitted that, upon the evidence before us, the projected condemnation of the Chinese
Cemetery is unnecessary and perhaps ill-considered. Nevertheless I concur with Justice Moir in the
view that the authorities of the City of Manila are the proper judges of the propriety of the
condemnation and that this Court should have nothing to do with the questions of the necessity
of the taking.
MOIR, J., dissenting:
23
I dissent from the majority opinion in this case , which has not yet been written, and because of
the importance of the question involved, present my dissent for the record.
This is an action by the city of Manila for the expropriation of lad for an extension of Rizal Avenue
north. The petition for condemnation was opposed by the "Comunidad de Chinos de Manila" and
Ildefonso Tambunting and various others who obtained permission of the trial court to intervene
in the case.
All of the defendants allege in their opposition that the proposed extension of Rizal Avenue cuts
through a part of the Chinese Cemetery, North of Manila, and necessitates the destruction of
many monuments and the removal of many graves.
The Court of First Instance of Manila, Honorable S. del Rosario, judge after the hearing the parties,
decided that there was no need for constructing the street as and where proposed by the city, and
dismissed the petition.
The plaintiff appealed and sets up the following errors:
1.The court erred in deciding that the determination of the necessity and convenience of the
expropriation of the lands of the defendants lies with the court and not with the Municipal Board
of the city of Manila.
2.The court erred in permitting the presentation of proofs over the objection and exception of the
plaintiff tending to demonstrate the lack of necessity of the projected street and the need of the
lands in question.
3.The court erred in declaring that the plaintiff had no right to expropriate the lands in question.
4.The court erred in dismissing the complaint.
The right of the plaintiff to expropriate property for public use cannot be denied. The "right of
eminent domain is inherent in all sovereignties and therefore would exist without any
constitutional recognition . . . The right of eminent domain antedates constitutions . . . The right
can only be denied or restricted byfundamental law and is right inherent in society." (15 Cyc., pp.
557-8.)
This general right was recognized in the Philippine Code of Civil Procedure effective October 1st,
1901, which prescribed the manner of exercising the right. (Section 241 et seq.)
It was further recognized in the Organic Act of July 1st, 1902, which provides in section 74 "that
the Government of the Philippine Islands may grantfranchises . . . including the authority to
exercise the right of eminent domain for the construction and operation of works of public utility
and service, and may authorize said works to be constructed and maintained over and across the
public property of the United States including . . . reservations." This provision is repeated in the
Jones Law of August, 1916.
The legislature of the Islands conferred the right on the city of Manila. (Section 2429,
Administrative Code of 1917; section 2402, Administrative Code of 1916.)
Clearly having the right of expropriation, the city of Manila selected the line of its street and asked
the court by proper order to place the plaintiff in possession of the land described in the
complaint, and to appoint Commissioners to inspect the property, appraise the value, and assess
the damages. Instead of doing so, the court entered upon the question of the right of the city to
take the property and the necessity for the taking.
The court says:
"The controversy relates to whether or not the Chinese Cemetery, where a great majority of this
race is buried and other persons belonging to other nationalities have been formerly inhumed, is
private or public; whether or not said cemetery, in case it is public, would be susceptible to
expropriation for the purpose of public improvements proposed by the city of Manila; whether or
not the latter is justified of the necessity and expediency of similar expropriation before its right to
the same would be upheld by the courts of justice; and whether or not the appreciation of said
necessity pertains to the legislative or the judicial department before which the expropriation
proceedings have been brought.
"Relative to the first point, it is not necessary for the court to pass upon its consideration, in view
of the conclusion it has arrived at the appreciation of the other points connected with each other.
"From the testimony of two reputable engineers produced by some of the defendants, it appears
that the land chosen by the plaintiff for the extension of Rizal Avenue to the municipality of
Caloocan is not the best or the less expensive, although upon it there may be constructed a
straight road, without curves or winding; but that in order to construct said road upon said land,
the city of Manila would have to remove and transfer to other places about four hundred graves
and monuments, make some grubbings, undergo some leveling and build some bridges — the
works thereon, together with the construction of the road and the value of the lands
expropriated, would mean an expenditure which will not be less than P180,000.
"Beside that considerable amount, the road would have a declivity of 3 per cent which, in order to
cover a distance of one kilometer, would require an energy equivalent to that which would be
expended in covering a distance of two and one-half kilometers upon a level road.
"On the other hand, if the road would be constructed with the deviation proposed by Ildefonso
Tambunting, one of the defendants, who even offered to donate gratuitously to the city of Manila
part of the land upon which said road will have to be constructed, the plaintiff entity would be
able to save more than hundreds of thousands of pesos, which can be invested in other
improvements of greater pressure and necessity for the benefit of the taxpayers; and it will not
have to employ more time and incur greater expenditures in the removal and transfer of the
remains buried in the land of the Chinese Community and of Sr. Tambunting, although with the
insignificant disadvantage that the road would be a little longer by a still more insignificant
extension of 426 meters and 55 centimeters, less than one-half kilometer, according to the plan
included in the records; but it would offer a better panorama to those who would use it, and who
would not have to traverse in their necessary or pleasure-making trips or walks any cemetery
which, on account of its nature, always deserves the respect of the travellers. It should be
observed that the proposed straight road over the cemetery, which the city of Manila is proposing
to expropriate, does not lead to any commercial, industrial, or agricultural center, and if with said
road it is endeavored to benefit some community or created interest, the same object may be
obtained by the proposed deviation of the road by the defendants. The road traced by the
plaintiffs has the disadvantage that the lands on both sides thereof would not serve for residential
purposes, for the reason that no one has the pleasure to construct buildings upon cemeteries
unless it be in very overcrowded cities, so exhausted of land that every inch thereof represents a
dwelling house."
And it is against this ruling, that it lies with the court to determine the necessity of the proposed
street and not with the municipal board, that the appellant directs its first assignment of error.
It is a right of the city government to determine whether or not it will construct streets and where,
and the courts sole duty was to see that the value of the property was paid the owners after
proper legal proceedings ascertaining the value.
The law gives the city the right to take private property for public use. It is assumed it is
unnecessary to argue that a public road is a public use.
But it is argued that plaintiff must show that it is necessary to take this land for a public
improvement. The law does not so read, and it is believed that the great weight of authority,
including the United States Supreme Court, is against the contention.
"The question of necessity is distinct from the question of public use, and the former question is
exclusively for the legislature, except that if the constitution or statute authorizes the taking of
property only in cases of necessity, then the necessity becomes a judicial question." (McQuillen
Municipal Corporations, Vol. IV, pp. 3090-091.)
"In the absence of some constitutional or statutory provision to the contrary, the necessity and
expediency of exercising the right of eminent domain are questions essentially political and not
judicial in their character. The determination of those questions belongs to the sovereign power;
the legislative determination is final and conclusive, and the courts have no power to review it. It
rests with the legislature not only to determine when the power of eminent domain may be
exercised, but also the character, quality, method, and extent of such exercise. And this power is
unqualified, other than by the necessity of providing that compensation shall be made.
24
Nevertheless, under the express provisions of the constitution of some statesthe question of
necessity is made a judicial one, to be determined by the courts and not by the legislature.
"While the legislature may itself exercise the right of determining the necessity for the exercise of
the power of eminent domain, it may, unless prohibited by the constitution, delegate this power
to public officers or to private corporations established to carry on enterprises in which the public
are interested, and their determination that a necessity for the exercise of the power exists is
conclusive. There is no restraint upon the power except that requiring compensation to be made.
And when the power has been so delegated it is a subject of legislative discretion to determine
what prudential regulations shall be established to secure a discreet and judicious exercise of the
authority. It has been held that in the absence of any statutory provision submitting the matter to
a court or jury the decision of the question of necessity lies with the body of individuals to whom
the state has delegated the authority to take, and the legislature may by express provision confer
this power on a corporation to whom the power of eminent domain is delegated unless prohibited
by the constitution. It is of course competent for the legislature to declare that the question shall
be a judicial one, in which case the court and not the corporation determines the question of
necessity." (15 Cyc., pp. 629-632.)
To the same effect is Lewis on Eminent Domain (3d Edition, section 597).
I quote from the notes to Vol. 5, Encyclopedia of United States Supreme Court Reports, p. 762, as
follows:
"Neither can it be said that there is any fundamental right secured by the constitution of the
United States to have the questions of compensation and necessity both passed upon by one and
the same jury. In many states the question of necessity is never submitted to the jury which
passes upon the question of compensation. It is either settled affirmatively by the legislature, or
left to the judgment of the corporation invested with the right to take property by condemnation.
The question of necessity is not one of a judicial character, but rather one for determination by
the lawmaking branch of the government. (Boom Co. vs. Patterson, 98 U. S., 403, 406 [25 L. ed.,
206]; United States vs. Jones, 109 U. S., 513 [27 L. ed., 1015]; Backus vs. Fort Street Union Depot
Co., 169 U. S., 557, 568 [42 L. ed., 853].)
"Speaking generally, it is for the state primarily and exclusively, to declare for what local public
purposes private property, within its limits, may be taken upon compensation to the owner, as
well as to prescribe a mode in which it may be condemned and taken. (Madisonville Tract. Co. vs.
St. Bernard Min. Co., 196 U. S., 239, 252 [49 L. ed., 462] .)
"Courts have no power to control the legislative authority in the exercise of their right to
determine when it is necessary or expedient to condemn a specific piece of property for public
purposes. (Adirondack R. Co. vs. New York States, 176 U. S., 335 [~4 L. ed., 492].)"
10 R. C. L. (p. 183), states the law as follows:
"158.Necessity for taking ordinarily not judicial question. — The legislature, in providing for the
exercise of the power of eminent domain, may directly determine the necessity for appropriating
private property for a particular improvement or public use, and it may select the exact location of
the improvement. In such a case, it is well settled that the utility of the proposed improvement,
the extent of the public necessity for its construction, the expediency of constructing it, the
suitableness of the location selected and the consequent necessity of taking the land selected for
its site, are all questions exclusively for the legislature to determine, and the courts have no power
to interfere, or to substitute their own views for these of the representatives of the people.
Similarly, when the legislature has delegated the power of eminent domain to municipal or public
service corporation or other tribunals or bodies, and has given them discretion as to when the
power is to be called into exercise and to what extent, the court will not inquire into the necessity
or propriety of the taking."
The United States Supreme Court recently said:
"The uses to which this land are to be put are undeniably public uses. When that is the case the
propriety or expediency of the appropriation cannot be called in question by any other authority."
(Cincinnati vs. S. & N. R. R. Co., 223 U. S., 390, quoting U. S. vs. Jones, 109, U. S., 519.)
And in Sears vs. City of Akron (246 U. S., 242), decided March 4th, 1918, it said:
"Plaintiff contends that the ordinance is void because the general statute which authorized the
appropriation violates both Article 1, paragraph 10, of the Federal Constitution, and the
Fourteenth Amendment, in that it authorizes the municipality to determine the necessity for the
taking of private propertywithout the owners having an opportunity to be heard as to such
necessity; that in fact no necessity existed for any taking which would interfere with the
company's project; since the city might have taken water from the Little Cuyahoga or the
Tuscarawas rivers; and furthermore, that it has taken ten times as much water as it can
legitimately use. It is well settled that while the question whether the purpose of a taking is a
public one is judicial (Hairston vs. Danville & W. R. Co., 208 U. S. 598 [52 L. ed., 637; 28 Sup. Ct.
Rep., 331; 13 Ann. Cas., 1008] ), the necessity and the proper extent of a taking is a legislative
question.(Shoemaker vs. United States, 147 U. S., 282, 298 [57 L. ed., 170, 184; 13 Sup. Ct. Rep.,
361]; United States vs. Gettysburg Electric R. Co., 160 U. S. 668, 685 [40 L. ed., 576, 582; 16 Sup.
Ct. Rep., 427]; United States vs. Chandler-Dunbar Water Power Co., 229 U. S., 53, 65 [57 L. ed.,
1063, 1076; 33 Sup. Ct. Rep., 667].)"
I think the case should be decided in accordance with foregoing citations, but one other point has
been argued so extensively that it ought to be considered.
It is contended for the defense that this Chinese Cemetery is a public cemetery and that it cannot
therefore be taken for public use. In its answer the "Comunidad de Chinos de Manila" says it is "a
corporation organized and existing under and by virtue of the laws of the Philippine Islands," and
that it owns the land which plaintiff seeks to acquire. The facts that it is a private corporation
owning land would seem of necessity to make the land it owns private land. The fact that it
belongs to the Chinese community deprives it of any public character.
But admitting that it is a public cemetery, although limited in its use to the Chinese Community of
the city of Manila, can it not be taken for public use? Must we let the reverence we feel for the
dead and the sanctity of their final resting-place obstruct the progress of the living? It will be
instructive to inquire what other jurisdictions have held on that point.
On the Application of Board of Street Openings of New York City to acquire St. Johns Cemetery
(133 N. Y., 329) the court of appeal said:
". . . The board instituted this proceeding under the act to acquire for park purposes the title to
land below One Hundred and Fifty-fifth street known as St. John's cemetery which belonged to a
religious corporation in the city of New York, commonly called Trinity Church. It was established as
a cemetery as early as 1801, and used for that purpose until 1839, during which time about ten
thousand human bodies had been buried therein. In 1839 an ordinance was passed by the city of
New York forbidding interments south of Eighty-sixth street, and since that time no interments
have been made in the cemetery, but Trinity Church has preserved and kept it in order and
prevented any disturbance thereof.
"It is contended on behalf of Trinity Church that under the general authority given by the statute
of 1887, this land which had been devoted to cemetery purposes could not be taken for a park.
The authority conferred upon the board by the act is broad and general. It is authorized to take for
park purposes any land south of One Hundred and Fifty-fifth street. . . .
"The fact that lands have previously been devoted to cemetery purposes does not place them
beyond the reach of the power of eminent domain. That is an absolute transcendent power
belonging to the sovereign which can be exercised for the public welfare whenever the sovereign
authority shall determine that a necessity for its exercise exists. By its existence the homes and
the dwellings of the living, and the resting places of the dead may be alike condemned.
"It seems always to have been recognized in the laws of this state, that under the general laws
streets and highways could be laid out through cemeteries, in the absence of special limitation or
prohibition. . . ."
In Re Opening of Twenty-second Street (102 Penn. State Reports, 108) the Supreme Court of the
State said:
"This was an action for the opening of a street through a cemetery in the City of Philadelphia. It
was contended for the United American Mechanics and United Daughters of America Cemetery
25
Association that by an act of the legislature of the State approved March 20th, 1849, they were
forever exempt from the taking of any their property for streets, roads or alleys and this Act was
formally accepted by the Cemetery Company on April 9th, 1849, and there was, therefore, a
contract between the Cemetery Company and the State of Pennsylvania, which would be violated
by the taking of any part of their property for street purposes. It was further contended that there
were 11,000 persons buried in the cemetery.
"The court held that property and contracts of all kinds must yield to the demand of the sovereign
and that under the power of eminent domain all properties could be taken, and that if there was a
contract between the State of Pennsylvania and the Cemetery Association, the contract itself
could be taken for public use, and ordered the opening of the street through the cemetery."
In Vol. 5, Encyclopedia of United States Supreme Court Reports (p. 759), it is said:
"Although it has been held, that where a state has delegated the power of eminent domain to a
person or corporation, and where by its exercise lands have been subject to a public use, they
cannot be applied to another public use without specific authority expressed or implied to that
effect yet, the general rule seems to be that the fact that property is already devoted to a public
use, does not exempt it from being appropriated under the right of eminent domain, but it may be
so taken for a use which is clearly superior or paramount to the one to which it is already
devoted." (Citing many United States Supreme Court decisions.)
A few cases have been cited where the courts refused to allow the opening of streets through
cemeteries, but in my opinion they are not as well considered as the cases and authorities relied
upon herein.
The holding of this court in this case reverses well settled principles of law of long standing and
almost universal acceptance.
The other assignments of error need not be considered as they are involved in the foregoing.
The decision should be reversed and the record returned to the Court of First Instance with
instructions to proceed with the case in accordance with this decision.
26
HEIRS OF SUGUITAN vs CITY OF MANDALUYONG
THIRD DIVISION
[G.R. No. 135087. March 14, 2000.]
HEIRS OF ALBERTO SUGUITAN, petitioner, vs. CITY OF MANDALUYONG, respondent.
Marious Corpus for petitioner.
Robert L. Lim for private respondent.
SYNOPSIS
On October 13, 1994, the Sangguniang Panglungsod of Mandaluyong City issued a resolution
authorizing Mayor Benjamin S. Abalos to institute expropriation proceeding over the property of
Alberto Suguitan located at Boni Avenue and Sto. Rosario Streets in Mandaluyong City for the
expansion of Mandaluyong Medical Center. On January 20, 1995, Mayor Abalos wrote Alberto
Suguitan offering to buy his property, but Suguitan refused to sell. Consequently, the City of
Mandaluyongfiled a complaint for expropriation with the Regional Trial Court of Pasig. Suguitan
filed a motion to dismiss. The trial court denied the said motion and subsequently, it allowed the
expropriation of the subject property. Aggrieved by the said order, the heirs of Suguitan asserted
that the City of Mandaluyong may only exercise its delegated power of eminent domain by means
of an ordinance as required by Section 19 of Republic Act No. 7160, and not by means of a mere
resolution.
The Court ruled that the basis for the exercise of the power of eminent domain by local
government units is Section 19 of RA 7160 which provides that: "A local government unit may,
through its chief executive and acting pursuant to an ordinance, exercise the power of eminent
domain for public use, purpose, or welfare for the benefits of the poor and the landless, upon
payment of just compensation, pursuant to the provisions of the Constitution and pertinent laws;
Provided, however,That the power of eminent domain may not be exercised unless a valid and
definite offer has been previously made to the owner, and such offer was not accepted;Provided,
further, That the local government unit may immediately take possession of the property upon
the filing of the expropriation proceedings and upon making a deposit with the proper court of at
least fifteen percent (15%) of the fair market value of the property based on the current tax
declaration of the property to be expropriated; Provided, finally, That the amount to be paid for
the expropriated property shall be determined by the proper court, based on the fair market value
at the time of the taking of the property. In the present case, the City of Mandaluyong sought to
exercise the power of eminent domain over petitioners' property by means of a resolution, in
contravention of the first requisite. The law in this case is clear and free from ambiguity. Section
19 of the Code requires an ordinance, not a resolution, for the exercise of the power of eminent
domain. Therefore, while the Court remains conscious of the constitutional policy of promoting
local autonomy, it cannot grant judicial sanction to a local government unit's exercise of its
delegated power of eminent domain in contravention of the very law giving it such power.SECATH
SYLLABUS
1.POLITICAL LAW; POWER OF EMINENT DOMAIN; ELUCIDATED. — Eminent domain is the right or
power of a sovereign state to appropriate private property to particular uses to promote public
welfare. It is an indispensable attribute of sovereignty; a power grounded in the primary duty of
government to serve the common need and advance the general welfare. Thus, the right of
eminent domain appertains to every independent government without the necessity for
constitutional recognition. The provisions found in modern constitutions of civilized countries
relating to the taking of property for the public use do not by implication grant the power to the
government, but limit a power which would otherwise be without limit. Thus, our own
Constitution provides that "[p]rivate property shall not be taken for public use without just
compensation." Furthermore, the due process and equal protection clauses act as additional
safeguards against the arbitrary exercise of this governmental power.
2.ID.; ID.; AUTHORITY FOR THE EXERCISE THEREOF MUST BE STRICTLY CONSTRUED. — Since the
exercise of the power of eminent domain affects an individual's right to private property, a
constitutionally-protected right necessary for the preservation and enhancement of personal
dignity and intimately connected with the rights to life and liberty, the need for its circumspect
operation cannot be overemphasized. In City of Manila vs. Chinese Community of Manila we said:
The exercise of the right of eminent domain, whether directly by the State, or by its authorized
agents, is necessarily in derogation of private rights, and the rule in that case is that the authority
must be strictly construed. No species of property is held by individuals with greater tenacity, and
none is guarded by the constitution and the laws more sedulously, than the right to the freehold
of inhabitants. When the legislature interferes with that right, and, for greater public purposes,
appropriates the land of an individual without his consent, the plain meaning of the law should
not be enlarged by doubt[ful] interpretation. (Bensley vs. Mountainlake Water Co., 13 Cal., 306
and cases cited [73 Am. Dec., 576].) The statutory power of taking from the owner without his
consent is one of the most delicate exercise of governmental authority. It is to be watched with
jealous scrutiny. Important as the power may be to the government, the inviolable sanctity which
all free constitutions attach to the right of property of the citizens, constrains the strict
observance of the substantial provisions of the law which are prescribed as modes of the exercise
of the power, and to protect it from abuse. . . . (Dillon on Municipal Corporations [5th Ed.], Sec.
1040, and cases cited; Tenorio vs. Manila Railroad Co., 22 Phil., 411.)
3.ID.; ID.; LEGISLATIVE IN NATURE; MAY BE VALIDLY DELEGATED TO LOCAL GOVERNMENT UNITS.
— The power of eminent domain is essentially legislative in nature. It is firmly settled, however,
that such power may be validly delegated to local government units, other public entities and
public utilities, although the scope of this delegated legislative power is necessarily narrower than
that of the delegating authority and may only be exercised in strict compliance with the terms of
the delegating law.
4.ID.; ID.; BASIS OF LOCAL GOVERNMENT UNITS FOR THE EXERCISE THEREOF. — The basis for the
exercise of the power of eminent domain by local government units is Section 19 of RA 7160
which provides that: A local government unit may, through its chief executive and acting pursuant
to an ordinance, exercise the power of eminent domain for public use, purpose, or welfare for the
benefits of the poor and the landless, upon payment of just compensation, pursuant to the
provisions of the Constitution and pertinent laws; Provided, however, That the power of eminent
domain may not be exercised unless a valid and definite offer has been previously made to the
owner, and such offer was not accepted; Provided, further, That the local government unit may
immediately take possession of the property upon the filing of the expropriation proceedings and
upon making a deposit with the proper court of at least fifteen percent (15%) of the fair market
value of the property based on the current tax declaration of the property to be expropriated;
Provided, finally, That the amount to be paid for the expropriated property shall be determined by
the proper court, based on the fair market value at the time of the taking of the property.
5.ID.; ID.; COURTS SHOULD DETERMINE WHETHER THE POWER OF EMINENT DOMAIN IS BEING
EXERCISED BY LOCAL GOVERNMENTS IN ACCORDANCE WITH THE DELEGATING LAW. — Despite
the existence of this legislative grant in favor of local governments, it is still the duty of the courts
to determine whether the power of eminent domain is being exercised in accordance with the
delegating law. In fact, the courts have adopted a more censorious attitude in resolving questions
involving the proper exercise of this delegated power by local bodies, as compared to instances
when it is directly exercised by the national legislature.
6.ID.; ID.; REQUISITES TO BE COMPLIED BY LOCAL GOVERNMENT UNITS. — The courts have the
obligation to determine whether the following requisites have been complied with by the local
government unit concerned: 1. An ordinance is enacted by the local legislative council authorizing
the local chief executive, in behalf of the local government unit, to exercise the power of eminent
domain or pursue expropriation proceedings over a particular private property. 2. The power of
eminent domain is exercised for public use, purpose or welfare, or for the benefit of the poor and
the landless. 3. There is payment of just compensation, as required under Section 9, Article III of
the Constitution, and other pertinent laws. 4. A valid and definite offer has been previously made
to the owner of the property sought to be expropriated, but said offer was not accepted.
27
7.ID.; ID.; SECTION 19 OF REPUBLIC ACT NO. 7160 REQUIRES AN ORDINANCE, NOT A RESOLUTION
FOR EXERCISE THEREOF. — The law in this case is clear and free from ambiguity. Section 19 of the
Code requires an ordinance, not a resolution, for the exercise of the power of eminent domain. . .
. We cannot uphold respondent's contention that an ordinance is needed only to appropriate
funds after the court has determined the amount of just compensation. An examination of the
applicable law will show that an ordinance is necessary to authorize the filing of a complaint with
the proper court since, beginning at this point, the power of eminent domain is already being
exercised.
8.ID.; ORDINANCE AND RESOLUTION; DIFFERENTIATED. — We reiterate our ruling in Municipality
of Parañaque v. V.M. Realty Corporation regarding the distinction between an ordinance and a
resolution. In that 1998 case we held that: We are not convinced by petitioner's insistence that
the terms "resolution" and "ordinance" are synonymous. A municipal ordinance is different from a
resolution. An ordinance is a law, but a resolution is merely a declaration of the sentiment or
opinion of a lawmaking body on a specific matter. An ordinance possesses a general and
permanent character, but a resolution is temporary in nature. Additionally, the two are enacted
differently — a third reading is necessary for an ordinance, but not for a resolution, unless decided
otherwise by a majority of all the Sanggunianmembers.
9.REMEDIAL LAW; SPECIAL CIVIL ACTION; EXPROPRIATION; STAGES OF PROCEEDINGS. — Rule 67
of the 1997 Revised Rules of Court reveals that expropriation proceedings are comprised of two
stages: (1) the first is concerned with the determination of the authority of the plaintiff to exercise
the power of eminent domain and the propriety of its exercise in the context of the facts involved
in the suit; it ends with an order, if not in a dismissal of the action, of condemnation declaring that
the plaintiff has a lawful right to take the property sought to be condemned, for the public use or
purpose described in the complaint, upon the payment of just compensation to be determined as
of the date of the filing of the complaint; (2) the second phase is concerned with the
determination by the court of the just compensation for the property sought to be taken; this is
done by the court with the assistance of not more than three (3) commissioners.
10.ID.; ID.; ID.; ID.; DETERMINATION AND AWARD OF JUST COMPENSATION IS IN LAST STAGE. —
Clearly, although the determination and award of just compensation to the defendant is
indispensable to the transfer of ownership in favor of the plaintiff, it is but the last stage of the
expropriation proceedings, which cannot be arrived at without an initial finding by the court that
the plaintiff has a lawful right to take the property sought to be expropriated, for the public use or
purpose described in the complaint. An order of condemnation or dismissal at this stage would be
final, resolving the question of whether or not the plaintiff has properly and legally exercised its
power of eminent domain.
11.POLITICAL LAW; EMINENT DOMAIN; LOCAL GOVERNMENT UNITS; ORDINANCE AUTHORIZING
LOCAL CHIEF EXECUTIVE TO EXERCISE POWER OF EMINENT DOMAIN IS NECESSARY PRIOR TO THE
FILING OF COMPLAINT. — Also, it is noted that as soon as the complaint is filed the plaintiff shall
already have the right to enter upon the possession of the real property involved upon depositing
with the court at least fifteen percent (15%) of the fair market value of the property based on the
current tax declaration of the property to be expropriated. Therefore, an ordinance promulgated
by the local legislative body authorizing its local chief executive to exercise the power of eminent
domain is necessary prior to the filing by the latter of the complaint with the proper court, and not
only after the court has determined the amount of just compensation to which the defendant is
entitled.
12.ID.; ID.; ID.; SECTION 19 OF REPUBLIC ACT NO. 7160 PREVAILS OVER IMPLEMENTING RULES
AND REGULATIONS. — Neither is respondent's position improved by its reliance upon Article 36
(a), Rule VI of the IRR which provides that: "If the LGU fails to acquire a private property for public
use, purpose, or welfare through purchase, LGU may expropriate said property through a
resolution of the sanggunian authorizing its chief executive to initiate expropriation proceedings."
The Court has already discussed this inconsistency between the Code and the IRR, which is more
apparent than real, in Municipality of Parañaque vs. V.M. Realty Corporation, which we quote
hereunder: "Petitioner relies on Article 36, Rule VI of the Implementing Rules, which requires only
a resolution to authorize an LGU to exercise eminent domain. This is clearly misplaced, because
Section 19 of RA 7160, the law itself, surely prevails over said rule which merely seeks to
implement it. It is axiomatic that the clear letter of the law is controlling and cannot be amended
by a mere administrative rule issued for its implementation. Besides, what the discrepancy seems
to indicate is a mere oversight in the wording of the implementing rules, since Article 32, Rule VI
thereof, also requires that, in exercising the power of eminent domain, the chief executive of the
LGU must act pursuant to an ordinance." IDASHa
13.ID.; ID.; CANNOT BE EXERCISED BY LOCAL GOVERNMENT UNITS IN CONTRAVENTION OF THE
VERY LAW GIVING IT. — While we remain conscious of the constitutional policy of promoting local
autonomy, we cannot grant judicial sanction to a local government unit's exercise of its delegated
power of eminent domain in contravention of the very law giving it such power.
14.REMEDIAL LAW; SPECIAL CIVIL ACTION; EXPROPRIATION; DISMISSED PETITION CAN BE
REINSTATED BY LOCAL GOVERNMENT UNITS AFTER IT COMPLIED WITH ALL THE LEGAL
REQUIREMENTS. — It should be noted, however, that our ruling in this case will not preclude the
City of Mandaluyong from enacting the necessary ordinance and thereafter reinstituting
expropriation proceedings, for so long as it has complied with all other legal requirements.
DECISION
GONZAGA-REYES, J p:
In this petition for review on certiorari under Rule 45, petitioners 1 pray for the reversal of the
Order dated July 28, 1998 issued by Branch 155 of the Regional Trial Court of Pasig in SCA No. 875
entitled "City of Mandaluyong v. Alberto S. Suguitan, the dispositive portion of which reads as
follows:
WHEREFORE, in view of the foregoing, the instant Motion to Dismiss is hereby DENIED and an
ORDER OF CONDEMNATION is hereby issued declaring that the plaintiff, City of Mandaluyong, has
a lawful right to take the subject parcel of land together with existing improvements thereon
more specifically covered by Transfer Certificate Of Title No. 56264 of the Registry of Deeds for
Metro Manila District II for the public use or purpose as stated in the Complaint, upon payment of
just compensation.
Accordingly, in order to ascertain the just compensation, the parties are hereby directed to submit
to the Court within fifteen (15) days from notice hereof, a list of independent appraisers from
which the Court will select three (3) to be appointed as Commissioners, pursuant to Section 5,
Rule 67, Rules of Court. prcd
SO ORDERED. 2
It is undisputed by the parties that on October 13, 1994, the Sangguniang Panlungsod of
Mandaluyong City issued Resolution No. 396, S-1994 3 authorizing then Mayor Benjamin S. Abalos
to institute expropriation proceedings over the property of Alberto Suguitan located at Boni
Avenue and Sto. Rosario streets inMandaluyong City with an area of 414 square meters and more
particularly described under Transfer Certificate of Title No. 56264 of the Registry of Deeds of
Metro Manila District II. The intended purpose of the expropriation was the expansion of the
Mandaluyong Medical Center.
Mayor Benjamin Abalos wrote Alberto Suguitan a letter dated January 20, 1995 offering to buy his
property, but Suguitan refused to sell. 4 Consequently, on March 13, 1995, the city of
Mandaluyong filed a complaint 5 for expropriation with the Regional Trial Court of Pasig. The case
was docketed as SCA No. 875.
Suguitan filed a motion to dismiss 6 the complaint based on the following grounds — (1) the
power of eminent domain is not being exercised in accordance with law; (2) there is no public
necessity to warrant expropriation of subject property; (3) the City of Mandaluyong seeks to
expropriate the said property without payment of just compensation; (4) the City of Mandaluyong
has no budget and appropriation for the payment of the property being expropriated; and (5)
expropriation ofSuguitan's property is but a ploy of Mayor Benjamin Abalos to acquire the same
for his personal use. Respondent filed its comment and opposition to the motion. On October 24,
1995, the trial court denied Suguitan's motion to dismiss. 7
28
On November 14, 1995, acting upon a motion filed by the respondent, the trial court issued an
order allowing the City of Mandaluyong to take immediate possession of Suguitan's property upon
the deposit of P621,000 representing 15% of the fair market value of the subject property based
upon the current tax declaration of such property. On December 15, 1995, the City of
Mandaluyong assumed possession of the subject property by virtue of a writ of possession issued
by the trial court on December 14, 1995. 8 On July 28, 1998, the court granted the assailed order
of expropriation.
Petitioners assert that the city of Mandaluyong may only exercise its delegated power of eminent
domain by means of an ordinance as required by Section 19 of Republic Act (RA) No. 7160, 9 and
not by means of a mere resolution. 10 Respondent contends, however, that it validly and legally
exercised its power of eminent domain; that pursuant to Article 36, Rule VI of the Implementing
Rules and Regulations (IRR) of RA 7160, a resolution is a sufficient antecedent for the filing of
expropriation proceedings with the Regional Trial Court. Respondent's position, which was upheld
by the trial court, was explained, thus: 11
. . . in the exercise of the respondent City of Mandaluyong's power of eminent domain, a
"resolution" empowering the City Mayor to initiate such expropriation proceedings and thereafter
when the court has already determine[d] with certainty the amount of just compensation to be
paid for the property expropriated, then follows an Ordinance of the Sanggunian Panlungsod
appropriating funds for the payment of the expropriated property. Admittedly, title to the
property expropriated shall pass from the owner to the expropriator only upon full payment of
the just compensation. 12
Petitioners refute respondent's contention that only a resolution is necessary upon the initiation
of expropriation proceedings and that an ordinance is required only in order to appropriate the
funds for the payment of just compensation, explaining that the resolution mentioned in Article
36 of the IRR is for purposes of granting administrative authority to the local chief executive to file
the expropriation case in court and to represent the local government unit in such case, but does
not dispense with the necessity of an ordinance for the exercise of the power of eminent domain
under Section 19 of the Code. 13
The petition is imbued with merit. LexLib
Eminent domain is the right or power of a sovereign state to appropriate private property to
particular uses to promote public welfare. 14 It is an indispensable attribute of sovereignty; a
power grounded in the primary duty of government to serve the common need and advance the
general welfare. 15 Thus, the right of eminent domain appertains to every independent
government without the necessity for constitutional recognition. 16 The provisions found in
modern constitutions of civilized countries relating to the taking of property for the public use do
not by implication grant the power to the government, but limit a power which would otherwise
be without limit. 17 Thus, our own Constitution provides that "[p]rivate property shall not be
taken for public use without just compensation." 18Furthermore, the due process and equal
protection clauses 19 act as additional safeguards against the arbitrary exercise of this
governmental power.
Since the exercise of the power of eminent domain affects an individual's right to private property,
a constitutionally-protected right necessary for the preservation and enhancement of personal
dignity and intimately connected with the rights to life and liberty, 20 the need for its circumspect
operation cannot be overemphasized. In City of Manila vs. Chinese Community of Manila we said:
21
The exercise of the right of eminent domain, whether directly by the State, or by its authorized
agents, is necessarily in derogation of private rights, and the rule in that case is that the authority
must be strictly construed. No species of property is held by individuals with greater tenacity, and
none is guarded by the constitution and the laws more sedulously, than the right to the freehold
of inhabitants. When the legislature interferes with that right, and, for greater public purposes,
appropriates the land of an individual without his consent, the plain meaning of the law should
not be enlarged by doubt[ful] interpretation. (Bensley vs. Mountainlake Water Co., 13 Cal., 306
and cases cited [73 Am. Dec., 576].)
The statutory power of taking property from the owner without his consent is one of the most
delicate exercise of governmental authority. It is to be watched with jealous scrutiny. Important as
the power may be to the government, the inviolable sanctity which all free constitutions attach to
the right of property of the citizens, constrains the strict observance of the substantial provisions
of the law which are prescribed as modes of the exercise of the power, and to protect it from
abuse. . . . (Dillon on Municipal Corporations [5th Ed.], Sec. 1040, and cases cited; Tenorio vs.
Manila Railroad Co., 22 Phil., 411.)
The power of eminent domain is essentially legislative in nature. It is firmly settled, however, that
such power may be validly delegated to local government units, other public entities and public
utilities, although the scope of this delegated legislative power is necessarily narrower than that of
the delegating authority and may only be exercised in strict compliance with the terms of the
delegating law. 22
The basis for the exercise of the power of eminent domain by local government units is Section 19
of RA 7160 which provides that:
A local government unit may, through its chief executive and acting pursuant to an ordinance,
exercise the power of eminent domain for public use, purpose, or welfare for the benefits of the
poor and the landless, upon payment of just compensation, pursuant to the provisions of the
Constitution and pertinent laws; Provided, however, That the power of eminent domain may not
be exercised unless a valid and definite offer has been previously made to the owner, and such
offer was not accepted; Provided, further, That the local government unit may immediately take
possession of the property upon the filing of the expropriation proceedings and upon making a
deposit with the proper court of at least fifteen percent (15%) of the fair market value of the
property based on the current tax declaration of the property to be expropriated; Provided,
finally, That the amount to be paid for the expropriated property shall be determined by the
proper court, based on the fair market value at the time of the taking of the property. cda
Despite the existence of this legislative grant in favor of local governments, it is still the duty of the
courts to determine whether the power of eminent domain is being exercised in accordance with
the delegating law. 23 In fact, the courts have adopted a more censorious attitude in resolving
questions involving the proper exercise of this delegated power by local bodies, as compared to
instances when it is directly exercised by the national legislature. 24
The courts have the obligation to determine whether the following requisites have been complied
with by the local government unit concerned:
1.An ordinance is enacted by the local legislative council authorizing the local chief executive, in
behalf of the local government unit, to exercise the power of eminent domain or pursue
expropriation proceedings over a particular private property.
2.The power of eminent domain is exercised for public use, purpose or welfare, or for the benefit
of the poor and the landless.
3.There is payment of just compensation, as required under Section 9, Article III of the
Constitution, and other pertinent laws.
4.A valid and definite offer has been previously made to the owner of the property sought to be
expropriated, but said offer was not accepted. 25
In the present case, the City of Mandaluyong seeks to exercise the power of eminent domain over
petitioners' property by means of a resolution, in contravention of the first requisite. The law in
this case is clear and free from ambiguity. Section 19 of the Code requires an ordinance, not a
resolution, for the exercise of the power of eminent domain. We reiterate our ruling in
Municipality of Parañaque v. V.M. Realty Corporation 26 regarding the distinction between an
ordinance and a resolution. In that 1998 case we held that:
We are not convinced by petitioner's insistence that the terms "resolution" and "ordinance" are
synonymous. A municipal ordinance is different from a resolution. An ordinance is a law, but a
resolution is merely a declaration of the sentiment or opinion of a lawmaking body on a specific
matter. An ordinance possesses a general and permanent character, but a resolution is temporary
29
in nature. Additionally, the two are enacted differently — a third reading is necessary for an
ordinance, but not for a resolution, unless decided otherwise by a majority of all the Sanggunian
members.
We cannot uphold respondent's contention that an ordinance is needed only to appropriate funds
after the court has determined the amount of just compensation. An examination of the
applicable law will show that an ordinance is necessary to authorize the filing of a complaint with
the proper court since, beginning at this point, the power of eminent domain is already being
exercised.
Rule 67 of the 1997 Revised Rules of Court reveals that expropriation proceedings are comprised
of two stages: llcd
(1)the first is concerned with the determination of the authority of the plaintiff to exercise the
power of eminent domain and the propriety of its exercise in the context of the facts involved in
the suit; it ends with an order, if not in a dismissal of the action, of condemnation declaring that
the plaintiff has a lawful right to take the property sought to be condemned, for the public use or
purpose described in the complaint, upon the payment of just compensation to be determined as
of the date of the filing of the complaint;
(2)the second phase is concerned with the determination by the court of the just compensation
for the property sought to be taken; this is done by the court with the assistance of not more than
three (3) commissioners. 27
Clearly, although the determination and award of just compensation to the defendant is
indispensable to the transfer of ownership in favor of the plaintiff, it is but the last stage of the
expropriation proceedings, which cannot be arrived at without an initial finding by the court that
the plaintiff has a lawful right to take the property sought to be expropriated, for the public use or
purpose described in the complaint. An order of condemnation or dismissal at this stage would be
final, resolving the question of whether or not the plaintiff has properly and legally exercised its
power of eminent domain.
Also, it is noted that as soon as the complaint is filed the plaintiff shall already have the right to
enter upon the possession of the real property involved upon depositing with the court at least
fifteen percent (15%) of the fair market value of the property based on the current tax declaration
of the property to be expropriated. 28 Therefore, an ordinance promulgated by the local
legislative body authorizing its local chief executive to exercise the power of eminent domain is
necessary prior to the filing by the latter of the complaint with the proper court, and not only after
the court has determined the amount of just compensation to which the defendant is entitled.
Neither is respondent's position improved by its reliance upon Article 36 (a), Rule VI of the IRR
which provides that:
If the LGU fails to acquire a private property for public use, purpose, or welfare through purchase,
LGU may expropriate said property through a resolution of the sanggunian authorizing its chief
executive to initiate expropriation proceedings.
The Court has already discussed this inconsistency between the Code and the IRR, which is more
apparent than real, in Municipality of Parañaque vs. V.M. Realty Corporation, 29 which we quote
hereunder:
Petitioner relies on Article 36, Rule VI of the Implementing Rules, which requires only a resolution
to authorize an LGU to exercise eminent domain. This is clearly misplaced, because Section 19 of
RA 7160, the law itself, surely prevails over said rule which merely seeks to implement it. It is
axiomatic that the clear letter of the law is controlling and cannot be amended by a mere
administrative rule issued for its implementation. Besides, what the discrepancy seems to indicate
is a mere oversight in the wording of the implementing rules, since Article 32, Rule VI thereof, also
requires that, in exercising the power of eminent domain, the chief executive of the LGU must act
pursuant to an ordinance.
Therefore, while we remain conscious of the constitutional policy of promoting local autonomy,
we cannot grant judicial sanction to a local government unit's exercise of its delegated power of
eminent domain in contravention of the very law giving it such power.
It should be noted, however, that our ruling in this case will not preclude the City of Mandaluyong
from enacting the necessary ordinance and thereafter reinstituting expropriation proceedings, for
so long as it has complied with all other legal requirements. 30
WHEREFORE, the petition is hereby GRANTED. The July 28, 1998 decision of Branch 155 of the
Regional Trial Court of Pasig in SCA No. 875 is hereby REVERSED and SET ASIDE. LLpr
SO ORDERED.
Melo, Vitug, Panganiban and Purisima, JJ., concur.
Footnotes
1.Alberto Suguitan passed away on October 2, 1998. On November 25, 1998 the Court allowed the
heirs of Alberto Saguitan to substitute the latter as petitioner.
2.Rollo, 17-18.
3.
REPUBLIKA NG PILIPINAS
SANGGUNIANG PANLUNGSOD
Lungsod Ng Mandaluyong
RESOLUTION NO. 396, S-1994
RESOLUTION AUTHORIZING MAYOR BENJAMIN S. ABALOS TO INITIATE AND INSTITUTE
APPROPRIATE STEPS TO EFFECT THE EXPROPRIATION OF THAT PARCEL OF LAND COVERED BY
TRANSFER CERTIFICATE OF TITLE NO. 56264.
BE IT APPROVED by the Sangguniang Panlungsod of the City of Mandaluyong in session
assembled:
WHEREAS, the daily influx of patients to the Mandaluyong Medical Center has considerably
increased to a point that it could not accommodate some more.
WHEREAS, as the Mandaluyong Medical Center is the only institution that delivers health and
medical services for free to the less fortunate residents of the City ofMandaluyong, it is imperative
that appropriate steps be undertaken in order that those that need its services may be
accommodated.
WHEREAS, adjacent to the Mandaluyong Medical Center is a two storey building erected on
aparcel of land covered by Transfer Certificate of Title No. 56264 of the Registry of Deeds for
Mandaluyong Branch.
WHEREAS, above structure and the land upon which the same is erected is very ideal for the
projected expansion of the Mandaluyong Medical Center in order that it may continue to serve a
greater number of less fortunate residents of the City.
WHEREAS, and it appearing that the owner of the above property is not desirous of selling the
same even under reasonable terms and conditions, there is a need that the power of eminent
domain be exercised by the City Government in order that public health and welfare may
continuously be served in a proper and suitable manner.
NOW, THEREFORE, upon motion duly seconded, the Sangguniang Panlungsod, RESOLVED, as it
hereby RESOLVES, to authorize, as Mayor Benjamin S. Abalos is hereby authorized, to initiate and
institute appropriate action for the expropriation of the property covered by Transfer Certificate
of Title No. 56264 of the Registry of Deeds for Mandaluyong Branch, including the improvements
erected thereon in order that the proposed expansion of the Mandaluyong Medical Center maybe
implemented.
ADOPTED on this 13th day of October, 1994, at the City of Mandaluyong.
I HEREBY CERTIFY THAT THE FOREGOING RESOLUTION WAS ADOPTED AND APPROVED BY THE
SANGGUNIANG PANLUNGSOD OFMANDALUYONG IN REGULAR SESSION HELD ON THE DATE AND
PLACE FIRST ABOVE GIVEN.
(sgd.)
WILLIARD S. WONG
Sanggunian Secretary
ATTESTED:APPROVED
(sgd.)(sgd.)
RAMON M. GUZMANBENJAMIN S. ABALOS
30
Vice-MayorMayor
Presiding OfficerOn: OCT 19 1994
4.Rollo, 59.
5.Ibid., 20-25.
6.Ibid., 26-37.
7.Ibid., 60; RTC Records, 86.
8.Ibid., 60-62.
9.Otherwise known as the "Local Government Code of 1991" (hereinafter, "[the] Code").
10.Rollo, 8.
11.Ibid., 15.
12.Ibid., 50-51.
13.Ibid., 10.
14.Jeffress v. Town of Greenville, 70 S.E. 919, 921,154 N.C. 490, cited in Words and Phrases, vol.
14, p. 469 (1952).
15.Ryan v. Housing Authority of City of Newark, 15 A.2d 647, 650, 125 N.J.L. 336.
16.Schrader v. Third Judicial Dist. Court in and for Eureka County, 73 P. 2d 493, 495, 58 Nev. 188.
17.Visayan Refining Co. v. Camus and Paredes, 40 Phil. 550 (1919).
18.Art. III, sec. 9.
19.1987 Constitution, Art. III, Sec. 1.
20.Joaquin G. Bernas, The Constitution of the Republic of the Philippines: A Commentary, vol. 1, p.
43 (1987).
21.40 Phil. 349 (1919).
22.City of Manila v. Chinese Community of Manila, id.; Moday v. Court of Appeals, 268 SCRA 586
(1997).
23.City of Manila v. Chinese Community of Manila, id.
24.Isagani A. Cruz, Constitutional Law, p. 62 (1991): See also Republic of the Philippines v. La
Orden de PO. Benedictinos de Filipinas, 1 SCRA 649 (1961); City of Manila v. Chinese Community
of Manila, id.
25.Municipality of Parañaque v. V.M. Realty Corporation, 292 SCRA 678.
26.Id.
27.National Power Corporation v. Jocson, 206 SCRA 520 (1992), citing Municipality of Biñan v.
Garcia, 180 SCRA 576 (1989).
28.Code, sec. 19.
29.Supra note 25.
30.Id.
31
MUNICIPALITY OF PARANAQUE vs VM REALTY
FIRST DIVISION
[G.R. No. 127820. July 20, 1998.]
MUNICIPALITY OF PARAÑAQUE, petitioner, vs. V.M. REALTY CORPORATION, respondent.
Leo Luis P. Mendoza for petitioner.
Robiso & Reyes for respondent.
SYNOPSIS
Pursuant to Sangguniang Bayan Resolution No. 93-95, Series of 1993, the Municipality of
Parañaque filed with the Regional Trial Court of Makati, Branch 134, on September 20, 1993 a
complaint for expropriation against private respondent over two parcels of land with a combined
area of about 10,000 square meters located at Wakas, San Dionisio, Parañaque, Metro Manila and
covered by Torrens Certificate of Title No. 48700. Allegedly, the complaint was filed for the
purpose of alleviating the living conditions of the underprivileged by providing homes for the
homeless through a socialized housing project.
In an Order dated February 4, 1994, the trial court authorized petitioner to take possession of the
subject property upon deposit with its clerk of court of an amount equivalent to 15 percent of its
fair market value based on its current tax declaration. Private respondent filed its answer alleging
in the main that the complaint failed to state a cause of action because it was filed pursuant to a
resolution and not to an ordinance as required by the Local Government Code. The trial court then
nullified its February 4, 1994 order and dismissed the case. On appeal, the Court of Appeals
affirmed the trial court's resolution. Hence, this petition.
The Supreme Court held that the petition is not meritorious. The power of eminent domain is
lodged in the legislative branch of government which may delegate the exercise thereof to local
government units, other public entities and public utilities. A local government unit may therefore
exercise the power to expropriate private property only when authorized by Congress and subject
to the latter's control and restraints, imposed through the law conferring the power or in other
legislations.AIDTHC
A local government unit, like the Municipality of Parañaque, cannot authorize an expropriation of
private property through a mere resolution of its lawmaking body. The Local Government Code
expressly and clearly requires an ordinance or a law for the purpose. A municipal ordinance is
different from a resolution. An ordinance is a law, but a resolution is merely a declaration of the
sentiment or opinion of a lawmaking body on a specific matter. The fact that there is no cause of
action is evident from the face of the complaint for expropriation which was based on a mere
resolution. The absence of an ordinance authorizing the same is equivalent to lack of cause of
action. On the other hand, the principle of res judicata does not bar subsequent proceedings for
the expropriation of the same property when all the legal requirements for its valid exercise are
complied with.
SYLLABUS
1.CONSTITUTIONAL LAW; EMINENT DOMAIN; EXERCISE OF THE POWER OF EMINENT DOMAIN BY
AN LGU; A MUNICIPALITY MAY EXERCISE THE POWER OF EMINENT DOMAIN PURSUANT ONLY TO
AN ORDINANCE AND NOT A MERE RESOLUTION. — Section 19 of RA 7160, which delegates to
LGUs the power of eminent domain, also lays down the parameters for its exercise. It provides as
follows: "Section 19. Eminent Domain. A local government unit may, through its chief executive
and acting pursuant to an ordinance, exercise the power of eminent domain for public use, or
purpose, or welfare for the benefit of the poor and the landless, upon payment of just
compensation, pursuant to the provisions of the Constitution and pertinent laws: . . . In the case at
bar, the local chief executive sought to exercise the power of eminent domain pursuant to a
resolution of the municipal council. Thus, there was no compliance with the first requisite that the
mayor be authorized through an ordinance. If Congress intended to allow LGUs to exercise
eminent domain through a mere resolution, it would have simply adopted the language of the
previous Local Government Code. But Congress did not. In a clear divergence from the previous
Local Government Code, Section 19 of RA 7160 categorically requires that the local chief executive
act pursuant to an ordinance.
2.REMEDIAL LAW; CIVIL PROCEDURE; CAUSE OF ACTION; PETITIONER'S COMPLAINT DOES NOT
STATE A CAUSE OF ACTION; REASON. — It is hornbook doctrine that ". . . in a motion to dismiss
based on the ground that the complaint fails to state a cause of action, the question submitted
before the court for determination is the sufficiency of the allegations in the complaint itself.
Whether those allegations are true or not is beside the point, for their truth is hypothetically
admitted by the motion. The issue rather is: admitting them to be true, may the court render a
valid judgment in accordance with the prayer of the complaint?" The fact that there is no cause of
action is evident from the face of the Complaint for expropriation which was based on a mere
resolution. The absence of an ordinance authorizing the same is equivalent to lack of cause of
action. Consequently, the Court of Appeals committed no reversible error in affirming the trial
court's Decision which dismissed the expropriation suit.
3.ID.; EMINENT DOMAIN NOT BARRED BY RES JUDICATA. — The Court holds that the principle of
res judicata, which finds application in generally all cases and proceedings, cannot bar the right of
the State or its agent to expropriate private property. The very nature of eminent domain, as an
inherent power of the State, dictates that the right to exercise the power be absolute and
unfettered even by a prior judgment or res judicata. The scope of eminent domain is plenary and,
like police power, can "reach every form of property which the State might need for public use."
All separate interests of individuals in property are held by the government under this tacit
agreement or implied reservation. Notwithstanding the grant to individuals, the eminent domain,
the highest and most exact idea of property, remains in the government, or in the aggregate body
of the people in their sovereign capacity; and they have the right to resume the possession of the
property whenever the public interest requires it." Thus, the State or its authorized agent cannot
be forever barred from exercising said right by reason alone of previous non-compliance with any
legal requirement.
DECISION
PANGANIBAN, J p:
A local government unit (LGU), like the Municipality of Parañaque cannot authorize an
expropriation of private property through a mere resolution of its lawmaking body. The Local
Government Code expressly and clearly requires an ordinance or a local law for the purpose. A
resolution that merely expresses the sentiment or opinion of the Municipal Council will not
suffice. On the other hand, the principle of res judicata does not bar subsequent proceedings for
the expropriation of the same property when all the legal requirements for its valid exercise are
complied with. LLphil
Statement of the Case
These principles are applied by this Court in resolving this petition for review on certiorari of the
July 22, 1996 Decision 1 of the Court of Appeals 2 in CA GR CV No. 48048, which affirmed in toto 3
the Regional Trial Court's August 9, 1994 Resolution. 4 The trial court dismissed the expropriation
suit as follows:
"The right of the plaintiff to exercise the power of eminent domain is not disputed. However, such
right may be exercised only pursuant to an Ordinance (Sec. 19, R.A. No. 7160). In the instant case,
there is no such ordinance passed by the Municipal Council of Parañaque enabling the
Municipality, thru its Chief Executive, to exercise the power of eminent domain. The complaint,
therefore, states no cause of action.
Assuming that plaintiff has a cause of action, the same is barred by a prior judgment. On
September 29, 1987, the plaintiff filed a complaint for expropriation involving the same parcels of
land which was docketed as Civil Case No. 17939 of this Court (page 26, record). Said case was
dismissed with prejudice on May 18, 1988 (page 39, record). The order of dismissal was not
appealed, hence, the same became final. The plaintiff can not be allowed to pursue the present
action without violating the principle of [r]es [j]udicata. While defendant in Civil Case No. 17939
was Limpan Investment Corporation, the doctrine of res judicata still applies because the
judgment in said case (C.C. No. 17939) is conclusive between the parties and their successors-in-
32
interest (Vda. de Buncio vs. Estate of the late Anita de Leon). The herein defendant is the
successor-in-interest of Limpan Investment Corporation as shown by the 'Deed of Assignment
Exchange' executed on June 13, 1990.
WHEREFORE, defendant's motion for reconsideration is hereby granted. The order dated February
4, 1994 is vacated and set aside.
This case is hereby dismissed. No pronouncement as to costs.
SO ORDERED." 5
Factual Antecedents
Pursuant to Sangguniang Bayan Resolution No. 93-95, Series of 1993, 6 the Municipality of
Parañaque filed on September 20, 1993, a Complaint for expropriation 7against Private
Respondent V.M. Realty Corporation, over two parcels of land (Lots 2-A-2 and 2-B-1 of Subdivision
Plan Psd-17917), with a combined area of about 10,000 square meters, located at Wakas, San
Dionisio, Parañaque, Metro Manila, and covered by Torrens Certificate of Title No. 48700.
Allegedly, the complaint was filed "for the purpose of alleviating the living conditions of the
underprivileged by providing homes for the homeless through a socialized housing project."
8Parenthetically, it was also for this stated purpose that petitioner, pursuant to its Sangguniang
Bayan Resolution No. 577, Series of 1991, 9 previously made an offer to enter into a negotiated
sale of the property with private respondent, which the latter did not accept. 10
Finding the Complaint sufficient in form and substance, the Regional Trial Court of Makati, Branch
134, issued an Order dated January 10, 1994, 11 giving it due course. Acting on petitioner's motion
said court issued an Order dated February 4, 1994, 12 authorizing petitioner to take possession of
the subject property upon deposit with its clerk of court of an amount equivalent to 15 percent of
its fair market value based on its current tax declaration.
On February 21, 1994, private respondent filed its Answer containing affirmative defenses and a
counterclaim, 13 alleging in the main that (a) the complaint failed to state a cause of action
because it was filed pursuant to a resolution and not to an ordinance as required by RA 7160 (the
Local Government Code); and (b) the cause of action, if any, was barred by a prior judgment or res
judicata. On private respondent's motion, its Answer was treated as a motion to dismiss. 14 On
March 24, 1994, 15 petitioner filed its opposition, stressing that the trial court's Order dated
February 4, 1994 was in accord with Section 19 of RA 7160, and that the principle of res judicata
was not applicable.
Thereafter, the trial court issued its August 9, 1994 Resolution 16 nullifying its February 4, 1994
Order and dismissing the case. Petitioner's motions for reconsideration and transfer of venue
were denied by the trial court in a Resolution dated December 2, 1994. 17 Petitioner then
appealed to Respondent Court, raising the following issues:
"1.Whether or not the Resolution of the Parañaque Municipal Council No. 93-95, Series of 1993 is
a substantial compliance of the statutory requirement of Section 19, R.A. 7180 [sic] in the exercise
of the power of eminent domain by the plaintiff-appellant.
2.Whether or not the complaint in this case states no cause of action.
3.Whether or not the strict adherence to the literal observance to the rule of procedure resulted
in technicality standing in the way of substantial justice.
4.Whether or not the principle of res judicata is applicable to the present case." 18
As previously mentioned, the Court of Appeals affirmed in toto the trial court's Decision.
Respondent Court, in its assailed Resolution promulgated on January 8, 1997, 19 denied
petitioner's Motion for Reconsideration for lack of merit.
Hence, this appeal. 20
The Issues
Before this Court, petitioner posits two issues, viz.:
"1.A resolution duly approved by the municipal council has the same force and effect of an
ordinance and will not deprive an expropriation case of a valid cause of action.
2.The principle of res judicata as a ground for dismissal of case is not applicable when public
interest is primarily involved." 21
The Court's Ruling
The petition is not meritorious.
First Issue:
Resolution Different from an Ordinance
Petitioner contends that a resolution approved by the municipal council for the purpose of
initiating an expropriation case "substantially complies with the requirements of the law" 22
because the terms "ordinance" and "resolution" are synonymous for "the purpose of bestowing
authority [on] the local government unit through its chief executive to initiate the expropriation
proceedings in court in the exercise of the power of eminent domain." 23 Petitioner seeks to
bolster this contention by citing Article 36, Rule VI of the Rules and Regulations Implementing the
Local Government Code, which provides: "If the LGU fails to acquire a private property for public
use, purpose, or welfare through purchase, the LGU may expropriate said property through a
resolution of the Sanggunian authorizing its chief executive to initiate expropriation proceedings."
24 (Emphasis supplied.)
The Court disagrees. The power of eminent domain is lodged in the legislative branch of
government, which may delegate the exercise thereof to LGUs, other public entities and public
utilities. 25 An LGU may therefore exercise the power to expropriate private property only when
authorized by Congress and subject to the latter's control and restraints imposed "through the law
conferring the power or in other legislations." 26 In this case, Section 19 of RA 7160, which
delegates to LGUs the power of eminent domain, also lays down the parameters for its exercise. It
provides as follows:
"Section 19.Eminent Domain. — A local government unit may, through its chief executive and
acting pursuant to an ordinance, exercise the power of eminent domain for public use, or
purpose, or welfare for the benefit of the poor and the landless, upon payment of just
compensation, pursuant to the provisions of the Constitution and pertinent laws. Provided,
however, That the power of eminent domain may not be exercised unless a valid and definite
offer has been previously made to the owner, and such offer was not accepted: Provided, further,
That the local government unit may immediately take possession of the property upon the filing of
the expropriation proceedings and upon making a deposit with the proper court of at least fifteen
percent (15%) of the fair market value of the property based on the current tax declaration of the
property to be expropriated: Provided, finally, That, the amount to be paid for the expropriated
.property shall be determined by the proper court, based on the fair market value at the time of
the taking of the property." (Emphasis supplied)
Thus, the following essential requisites must concur before an LGU can exercise the power of
eminent domain:
1.An ordinance is enacted by the local legislative council authorizing the local chief executive, in
behalf of the LGU, to exercise the power of eminent domain or pursue expropriation proceedings
over a particular private property. LexLib
2.The power of eminent domain is exercised for public use, purpose or welfare, or for the benefit
of the poor and the landless.
3.There is payment of just compensation, as required under Section 9, Article III of the
Constitution, and other pertinent laws.
4.A valid and definite offer has been previously made to the owner of the property sought to be
expropriated, but said offer was not accepted. 27
In the case at bar, the local chief executive sought to exercise the power of eminent domain
pursuant to a resolution of the municipal council. Thus, there was no compliance with the first
requisite that the mayor be authorized through an ordinance. Petitioner cites Camarines Sur vs.
Court of Appeals 28 to show that a resolution may suffice to support the exercise of eminent
domain by an LGU. 29 This case, however, is not in point because the applicable law at that time
was BP 337, 30 the previous Local Government Code, which had provided that a mere resolution
would enable an LGU to exercise eminent domain. In contrast, RA 7160, 31the present Local
Government Code which was already in force when the Complaint for expropriation was filed,
explicitly required an ordinance for this purpose.
33
We are not convinced by petitioner's insistence that the terms "resolution" and "ordinance" are
synonymous. A municipal ordinance is different from a resolution. An ordinance is a law, but a
resolution is merely a declaration of the sentiment or opinion of a lawmaking body on a specific
matter. 32 An ordinance possesses a general and permanent character, but a resolution is
temporary in nature. Additionally, the two are enacted differently — a third reading is necessary
for an ordinance, but not for a resolution, unless decided otherwise by a majority of all the
Sanggunian members. 33
If Congress intended to allow LGUs to exercise eminent domain through a mere resolution, it
would have simply adopted the language of the previous Local Government Code. But Congress
did not. In a clear divergence from the previous Local Government Code, Section 19 of RA 7160
categorically requires that the local chief executive act pursuant to an ordinance. Indeed,
"[l]egislative intent is determined principally from the language of a statute. Where the language
of a statute is clear and unambiguous, the law is applied according to its express terms, and
interpretation would be resorted to only where a literal interpretation would be either impossible
or absurd or would lead to an injustice." 34 In the instant case, there is no reason to depart from
this rule, since the law requiring an ordinance is not at all impossible, absurd, or unjust.
Moreover, the power of eminent domain necessarily involves a derogation of a fundamental or
private right of the people. 35 Accordingly, the manifest change in the legislative language — from
"resolution" under the BP 337 to "ordinance" under RA 7160 — demands a strict construction.
"No species of property is held by individuals with greater tenacity, and is guarded by the
Constitution and laws more sedulously, than the right to the freehold of inhabitants. When the
legislature interferes with that right and, for greater public purposes, appropriates the land of an
individual without his consent, the plain meaning of the law should not be enlarged by doubtful
interpretation." 36
Petitioner relies on Article 36, Rule VI of the Implementing Rules, which requires only a resolution
to authorize an LGU to exercise eminent domain. This is clearly misplaced, because Section 19 of
RA 7160, the law itself, surely prevails over said rule which merely seeks to implement it. 37 It is
axiomatic that the clear letter of the law is controlling and cannot be amended by a mere
administrative rule issued for its implementation. Besides, what the discrepancy seems to indicate
is a mere oversight in the wording of the implementing rules, since Article 32, Rule VI thereof, also
requires that, in exercising the power of eminent domain, the chief executive of the LGU must act
pursuant to an ordinance.
In this ruling, the Court does not diminish the policy embodied in Section 2, Article X of the
Constitution, which provides that "territorial and political subdivisions shall enjoy local
autonomy." It merely upholds the law as worded in RA 7160. We stress that an LGU is created by
law and all its powers and rights are sourced therefrom. It has therefore no power to amend or act
beyond the authority given and the limitations imposed on it by law. Strictly speaking, the power
of eminent domain delegated to an LGU is in reality not eminent but "inferior" domain, since it
must conform to the limits imposed by the delegation, and thus partakes only of a share in
eminent domain. 38 Indeed, "the national legislature is still the principal of the local government
units, which cannot defy its will or modify or violate it." 39
Complaint Does Not
State a Cause of Action
In its Brief filed before Respondent Court, petitioner argues that its Sanggunian Bayan passed an
ordinance on October 11, 1994 which reiterated its Resolution No. 93-35, Series of 1993, and
ratified all the acts of its mayor regarding the subject expropriation. 40
This argument is bereft of merit. In the first place, petitioner merely alleged the existence of such
an ordinance, but it did not present any certified true copy thereof. In the second place, petitioner
did not raise this point before this Court. In fact, it was mentioned by private respondent, and only
in passing. 41 In any event, this allegation does not cure the inherent defect of petitioner's
Complaint for expropriation filed on September 23, 1993. It is hornbook doctrine that
". . . in a motion to dismiss based on the ground that the complaint fails to state a cause of action,
the question submitted before the court for determination is the sufficiency of the allegations in
the complaint itself. Whether those allegations are true or not is beside the point, for their truth is
hypothetically admitted by the motion. The issue rather is: admitting them to be true, may the
court render a valid judgment in accordance with the prayer of the complaint?" 42
The fact that there is no cause of action is evident from the face of the Complaint for
expropriation which was based on a mere resolution. The absence of an ordinance authorizing the
same is equivalent to lack of cause of action. Consequently, the Court of Appeals committed no
reversible error in affirming the trial court's Decision which dismissed the expropriation suit.
Second Issue:
Eminent Domain Not Barred by Res Judicata
As correctly found by the Court of Appeals 43 and the trial court, 44 all the requisites for the
application of res judicata are present in this case. There is a previous final judgment on the merits
in a prior expropriation case involving identical interests, subject matter and cause of action,
which has been rendered by a court having jurisdiction over it.
Be that as it may, the Court holds that the principle of res judicata, which finds application in
generally all cases and proceedings, 45 cannot bar the right of the State or its agent to expropriate
private property. The very nature of eminent domain, as an inherent power of the State, dictates
that the right to exercise the power be absolute and unfettered even by a prior judgment or res
judicata. The scope of eminent domain is plenary and, like police power, can "reach every form of
property which the State might need for public use." 46 "All separate interests of individuals in
property are held of the government under this tacit agreement or implied reservation.
Notwithstanding the grant to individuals, the eminent domain, the highest and most exact idea of
property, remains in the government, or in the aggregate body of the people in their sovereign
capacity; and they have the right to resume the possession of the property whenever the public
interest requires it."47 Thus, the State or its authorized agent cannot be forever barred from
exercising said right by reason alone of previous non-compliance with any legal requirement.
While the principle of res judicata does not denigrate the right of the State to exercise eminent
domain, it does apply to specific issues decided in a previous case. For example, a final judgment
dismissing an expropriation suit on the ground that there was no prior offer precludes another suit
raising the same issue; it cannot, however, bar the State or its agent from thereafter complying
with this requirement, as prescribed by law, and subsequently exercising its power of eminent
domain over the same property. 48 By the same token, our ruling that petitioner cannot exercise
its delegated power of eminent domain through a mere resolution will not bar it from reinstituting
similar proceedings, once the said legal requirement and, for that matter, all others are properly
complied with. Parenthetically and by parity of reasoning, the same is also true of the principle of
"law of the case." In Republic vs De Knecht, 49 the Court ruled that the power of the State or its
agent to exercise eminent domain is not diminished by the mere fact that a prior final judgment
over the property to be expropriated has become the law of the case as to the parties. The State
or its authorized agent may still subsequently exercise its right to expropriate the same property,
once all legal requirements are complied with. To rule otherwise will not only improperly diminish
the power of eminent domain, but also clearly defeat social justice.
WHEREFORE, the petition is hereby DENIED without prejudice to petitioner's proper exercise of its
power of eminent domain over subject property. Costs against petitioner.
SO ORDERED. cdrep
Davide, Jr., Bellosillo, Vitug and Quisumbing, JJ ., concur.
Footnotes
1.Rollo, pp. 21-25.
2.Special Sixth Division, composed of J. Antonio M. Martinez (now an associate justice of the
Supreme Court), ponente and chairman; and JJ. Ricardo P. Galvez and Hilarion L. Aquino,
concurring.
3.See Rollo, p. 25.
4.Penned by acting Presiding Judge Paul T. Arcangel.
34
5.Resolution of the Regional Trial Court, p. 2; Rollo, p. 70.
6.Rollo, pp. 41-43.
7.Ibid., pp. 27-32.
8.Petitioner's Memorandum, p. 1; Rollo, p. 184.
9.Rollo, pp. 37-38.
10.Complaint, p. 3; Rollo, p. 29.
11.Rollo, p. 45.
12.Ibid., p. 47.
13.Ibid., pp. 48-51.
14.Private respondent's Memorandum, pp. 1-2; Rollo, pp. 197-198.
15.Rollo, pp. 66-68.
16.Ibid., pp. 69-70.
17.Ibid., pp. 71-72.
18.Ibid., pp. 78-79.
19.Ibid., p. 26.
20.The case was deemed submitted for resolution on March 13, 1998, when the Court received
private respondent's Memorandum.
21.Petitioner's Memorandum, p. 3; Rollo, p. 187.
22.Ibid., p. 4; Rollo, p. 188.
23.Ibid.
24.Paragraph A.
25.Moday vs. Court of Appeals, 268 SCRA 586, 592, February 20, 1997
26.Province of Camarines Sur vs. Court of Appeals, 222 SCRA 173, 179-180, May 17, 1993, per
Quiason, J.
27.Senator Aquilino Q. Pimentel, Jr., The Local Government Code of 1991: The Key To National
Development, 1993 ed., p. 110.
28.Supra.
29.Petitioner's Memorandum, p. 6; Rollo, p. 189.
30.Approved on February 10, 1983 and published in 79 O.G No. 7. See Moday vs. Court of Appeals,
supra, p. 593. Sec. 9 of BP 337 reads:
"SEC. 9. Eminent Domain. — A local government unit may, through its head and acting pursuant to
a resolution of its sanggunian, exercise the right of eminent domain and institute condemnation
proceedings for public use or purpose.
31.Effective January 1, 1992.
32.Mascuñana vs. Provincial Board of Negros Occidental, 79 SCRA 399, 405, October 18, 1977;
cited in private respondent's Memorandum, p. 5.
33.Article 107, pars. a and c, Implementing Rules and Regulations of RA 7160; cited in Pimentel,
Jr., supra, pp. 163-164.
34.Azarcon vs. Sandiganbayan, 268 SCRA 747, 762, February 26, 1997, per Panganiban, J.; citing
Ramirez vs. Court of Appeals, 248 SCRA 590, 596, September 28, 1995.
35.City of Manila vs. Chinese Community of Manila, 40 Phil 349, 366 (1919), and Arriete vs.
Director of Public Works, 58 Phil 507, 511 (1933). See also Bernas, Joaquin G., The 1987
Constitution of the Republic of the Philippines: A Commentary, 1996 ed., p. 348.
36.Justice Isagani A. Cruz, Constitutional Law, 1993 ed., p. 59.
37.See Villa vs. Llanes, Jr., 120 SCRA 81, 84, January 21, 1983, and Wise & Co. vs. Meer, 78 Phil
655, 676 (1947). See also Art. 7, Civil Code of the Philippines.
38.Bernas, supra, pp. 348-349.
39.Magtajas vs. Pryce Properties, Corp., Inc., 234 SCRA 255, 272-273, July 20, 1994, per Cruz, J.
40.Rollo, pp. 81-82.
41.See private respondent's Memorandum, pp. 5-6; Rollo, pp. 201-202.
42.Travel Wide Associated Sales (Phils.), Inc. vs. Court of Appeals, 199 SCRA 205, 210, July 15,
1991, per Cruz, J.; citing The Heirs of Juliana Clavano vs. Genato, 80 SCRA 217, 222, October 28,
1977.
43.Decision, p. 5; Rollo, p. 25.
44.Resolution of the Regional Trial Court, p. 2; Rollo, p. 70.
45.Republic vs. Director of Lands, 99 SCRA 651, 657, September 11, 1980.
46.Bernas, supra, p. 349.
47.Ibid.
48.See National Power Corporation vs. Court of Appeals, 254 SCRA 577, March 11, 1996.
49.182 SCRA 142, 147-148, February 12, 1990.
35
BELUSO vs MUNICIPALITY OF PANAY
FIRST DIVISION
[G.R. No. 153974. August 7, 2006.]
MIGUEL BELUSO, NATIVIDAD BELUSO, PEDRO BELUSO, ANGELITA BELUSO, RAMON BELUSO, and
AMADA DANIEL, substituted by her heirs represented by TERESITA ARROBANG, petitioner, vs. THE
MUNICIPALITY OF PANAY (CAPIZ), represented by its Mayor, VICENTE B. BERMEJO, respondent.
DECISION
AUSTRIA-MARTINEZ, J p:
Before this Court is a petition for review questioning the Decision 1 of the Court of Appeals (CA)
dated March 20, 2002 in CA-G.R. SP No. 47052, as well the Resolution 2 dated June 11, 2002
denying petitioners' Motion for Reconsideration thereof.
The facts are as follows:
Petitioners are owners of parcels of land with a total area of about 20,424 square meters, covered
by Free Patent Nos. 7265, 7266, 7267, 7268, 7269, and 7270. 3 On November 8, 1995, the
Sangguniang Bayan of the Municipality of Panay issued Resolution No. 95-29 authorizing the
municipal government through the mayor to initiate expropriation proceedings. 4 A petition for
expropriation was thereafter filed on April 14, 1997 by the Municipality of Panay (respondent)
before the Regional Trial Court (RTC), Branch 18 of Roxas City, docketed as Civil Case No. V-6958. 5
Petitioners filed a Motion to Dismiss alleging that the taking is not for public use but only for the
benefit of certain individuals; that it is politically motivated because petitioners voted against the
incumbent mayor and vice-mayor; and that some of the supposed beneficiaries of the land sought
to be expropriated have not actually signed a petition asking for the property but their signatures
were forged or they were misled into signing the same. 6
On July 31, 1997, the trial court denied petitioners' Motion to Dismiss and declared that the
expropriation in this case is for "public use" and the respondent has the lawful right to take the
property upon payment of just compensation. 7 cHCIDE
Petitioners filed an Answer on August 12, 1997 reasserting the issues they raised in their Motion
to Dismiss. 8
On October 1, 1997, the trial court issued an Order appointing three persons as Commissioners to
ascertain the amount of just compensation for the property. 9Petitioners filed a "Motion to Hold
in Abeyance the Hearing of the Court Appointed Commissioners to Determine Just Compensation
and for Clarification of the Court's Order dated October 1, 1997" which was denied by the trial
court on November 3, 1997. 10 Petitioners' Motion for Reconsideration was also denied on
December 9, 1997. 11
Petitioners then filed on March 2, 1998 a Petition for Certiorari before the CA claiming that they
were denied due process when the trial court declared that the taking was for public purpose
without receiving evidence on petitioners' claim that the Mayor of Panay was motivated by
politics in expropriating their property and in denying their Motion to Hold in Abeyance the
Hearing of the Court Appointed Commissioners; and that the trial court also committed grave
abuse of discretion when it disregarded the affidavits of persons denying that they signed a
petition addressed to the municipal government of Panay. 12 On January 17, 2001, petitioners
filed a Motion to Admit Attached Memorandum and the Memorandum itself where they argued
that based on the Petition for Expropriation filed by respondent, such expropriation was based
only on a resolution and not on an ordinance contrary to Sec. 19 of Republic Act (R.A.) No. 7160;
there was also no valid and definite offer to buy the property as the price offered by respondent
to the petitioners was very low. 13
On March 20, 2002, the CA rendered its Decision dismissing the Petition for Certiorari. It held that
the petitioners were not denied due process as they were able to file an answer to the complaint
and were able to adduce their defenses therein; and that the purpose of the taking in this case
constitutes "public use". 14Petitioners filed a Motion for Reconsideration which was denied on
June 11, 2002. 15
Thus, the present petition claiming that:
A.RESPONDENT IS WITHOUT, LACKS AND DOES NOT HAVE THE LAWFUL POWER TO ACQUIRE ANY
OR ALL OF THE SUBJECT PROPERTIES THROUGH EMINENT DOMAIN, IT BEING EXERCISED BY
MEANS OF A MERE RESOLUTION, AND NOT THROUGH AN ORDINANCE AS REQUIRED BY LAW AND
APPLICABLE JURISPRUDENCE;
B.RESPONDENT IS LIKEWISE WITHOUT, LACKS AND DOES NOT HAVE THE LAWFUL POWER TO
ACQUIRE ANY OR ALL OF THE SUBJECT PROPERTIES THROUGH EMINENT DOMAIN, ITS PREVIOUS
OFFER TO BUY THEM BEING NOT VALID; and aSACED
C.IT WAS A SERIOUS ERROR ON THE PART OF THE HONORABLE COURT OF APPEALS NOT TO
DISCUSS, MUCH LESS RULE ON, BOTH IN ITS QUESTIONED DECISION AND ITS RESOLUTION
PROMULGATED ON 11 JUNE 2002 PETITIONERS' ARGUMENTS THAT RESPONDENT IS WITHOUT,
LACKS AND DOES NOT HAVE THE LAWFUL POWER TO ACQUIRE ANY OR ALL OF THE SUBJECT
PROPERTIES THROUGH EMINENT DOMAIN, IT BEING EXERCISED BY MEANS OF A MERE
RESOLUTION, AND NOT THROUGH AN ORDINANCE AS REQUIRED BY LAW AND APPLICABLE
JURISPRUDENCE, AND ITS PREVIOUS OFFER TO BUY THEM BEING NOT VALID, DESPITE THE FACT
THAT THESE OBJECTIONS WERE PROPERLY PLEADED IN PETITIONERS' MEMORANDUM WHICH
WAS DULY ADMITTED IN ITS RESOLUTION PROMULGATED ON 29 JANUARY 2001; and
D.PETITIONERS WERE UTTERLY DENIED PROCEDURAL DUE PROCESS OF LAW BY THE COURT A
QUO, WHEN IT SIMPLY DECLARED IN ITS ORDER DATED 31 JULY 1997 THAT THE TAKING BY
RESPONDENT OF PETITIONERS' PROPERTIES IS PURPORTEDLY FOR PUBLIC PURPOSE WITHOUT
RECEIVING EVIDENCE ON THEIR ASSERTED CLAIM THAT RESPONDENT'S MUNICIPAL MAYOR WAS
POLITICALLY MOTIVATED IN SEEKING THE EXPROPRIATION OF THEIR PROPERTIES AND NOT FOR
PUBLIC PURPOSE. 16
Petitioners argue that: contrary to Sec. 19 of R.A. No. 7160 of the Local Government Code, which
provides that a local government may exercise the power of eminent domain only by "ordinance,"
respondent's expropriation in this case is based merely on a "resolution"; while objection on this
ground was neither raised by petitioners in their Motion to Dismiss nor in their Answer, such
objection may still be considered by this Court since the fact upon which it is based is apparent
from the petition for expropriation itself; a defense may be favorably considered even if not raised
in an appropriate pleading so long as the facts upon which it is based are undisputed; courts have
also adopted a more censorious attitude in resolving questions involving the proper exercise of
local bodies of the delegated power of expropriation, as compared to instances when it is directly
exercised by the national legislature; respondent failed to give, prior to the petition for
expropriation, a previous valid and definite offer to petitioners as the amount offered in this case
was only P10.00 per square meter, when the properties are residential in nature and command a
much higher price; the CA failed to discuss and rule upon the arguments raised by petitioners in
their Memorandum; attached to the Motion to Dismiss were affidavits and death certificates
showing that there were people whose names were in the supposed petition asking respondent
for land, but who did not actually sign the same, thus showing that the present expropriation was
not for a public purpose but was merely politically motivated; considering the conflicting claims
regarding the purpose for which the properties are being expropriated and inasmuch as said issue
may not be rightfully ruled upon merely on the basis of petitioners' Motion to Dismiss and Answer
as well as respondent's Petition for Expropriation, what should have been done was for the RTC to
conduct hearing where each party is given ample opportunity to prove its claim. 17
Respondent for its part contends that its power to acquire private property for public use upon
payment of just compensation was correctly upheld by the trial court; that the CA was correct in
finding that the petitioners were not denied due process, even though no hearing was conducted
in the trial court, as petitioners were still able to adduce their objections and defenses therein;
and that petitioners' arguments have been passed upon by both the trial court and the CA and
were all denied for lack of substantial merit. 18
Respondent filed a Memorandum quoting at length the decision of the CA to support its position.
19 Petitioners meanwhile opted to have the case resolved based on the pleadings already filed. 20
We find the petition to be impressed with merit. CTaIHE
36
Eminent domain, which is the power of a sovereign state to appropriate private property to
particular uses to promote public welfare, is essentially lodged in the legislature. 21 While such
power may be validly delegated to local government units (LGUs), other public entities and public
utilities the exercise of such power by the delegated entities is not absolute. 22 In fact, the scope
of delegated legislative power is narrower than that of the delegating authority and such entities
may exercise the power to expropriate private property only when authorized by Congress and
subject to its control and restraints imposed through the law conferring the power or in other
legislations. 23 Indeed, LGUs by themselves have no inherent power of eminent domain. 24 Thus,
strictly speaking, the power of eminent domain delegated to an LGU is in reality not eminent but
"inferior" since it must conform to the limits imposed by the delegation and thus partakes only of
a share in eminent domain. 25 The national legislature is still the principal of the LGUs and the
latter cannot go against the principal's will or modify the same. 26
The exercise of the power of eminent domain necessarily involves a derogation of a fundamental
right. 27 It greatly affects a landowner's right to private property which is a constitutionally
protected right necessary for the preservation and enhancement of personal dignity and is
intimately connected with the rights to life and liberty. 28 Thus, whether such power is exercised
directly by the State or by its authorized agents, the exercise of such power must undergo
painstaking scrutiny. 29
Indeed, despite the existence of legislative grant in favor of local governments, it is still the duty of
the courts to determine whether the power of eminent domain is being exercised in accordance
with the delegating law.
Sec. 19 of R.A. No. 7160, which delegates to LGUs the power of eminent domain expressly
provides:
SEC. 19.Eminent Domain. — A local government unit may, through its chief executive and acting
pursuant to an ordinance, exercise the power of eminent domain for public use, or purpose, or
welfare for the benefit of the poor and the landless, upon payment of just compensation,
pursuant to the provisions of the Constitution and pertinent laws: Provided, however, That the
power of eminent domain may not be exercised unless a valid and definite offer has been
previously made to the owner, and such offer was not accepted: Provided, further, That the local
government unit may immediately take possession of the property upon the filing of the
expropriation proceedings and upon making a deposit with the proper court of at least fifteen
percent (15%) of the fair market value of the property based on the current tax declaration of the
property to be expropriated: Provided, finally, That, the amount to be paid for the expropriated
property shall be determined by the proper court, based on the fair market value at the time of
the taking of the property. ATSIED
It is clear therefore that several requisites must concur before an LGU can exercise the power of
eminent domain, to wit:
1.An ordinance is enacted by the local legislative council authorizing the local chief executive, in
behalf of the local government unit, to exercise the power of eminent domain or pursue
expropriation proceedings over a particular private property.
2.The power of eminent domain is exercised for public use, purpose or welfare, or for the benefit
of the poor and the landless.
3.There is payment of just compensation, as required under Section 9, Article III of the
Constitution, and other pertinent laws.
4.A valid and definite offer has been previously made to the owner of the property sought to be
expropriated, but said offer was not accepted. 30
The Court in no uncertain terms have pronounced that a local government unit cannot authorize
an expropriation of private property through a mere resolution of its lawmaking body. 31 R.A. No.
7160 otherwise known as the Local Government Code expressly requires an ordinance for the
purpose and a resolution that merely expresses the sentiment of the municipal council will not
suffice. 32
A resolution will not suffice for an LGU to be able to expropriate private property; and the reason
for this is settled:
. . . A municipal ordinance is different from a resolution. An ordinance is a law, but a resolution is
merely a declaration of the sentiment or opinion of a lawmaking body on a specific matter. An
ordinance possesses a general and permanent character, but a resolution is temporary in nature.
Additionally, the two are enacted differently — a third reading is necessary for an ordinance, but
not for a resolution, unless decided otherwise by a majority of all theSanggunian members.
If Congress intended to allow LGUs to exercise eminent domain through a mere resolution, it
would have simply adopted the language of the previous Local Government Code. But Congress
did not. In a clear divergence from the previous Local Government Code, Sec. 19 of R.A. [No.] 7160
categorically requires that the local chief executive act pursuant to an ordinance. . . . 33
As respondent's expropriation in this case was based merely on a resolution, such expropriation is
clearly defective. While the Court is aware of the constitutional policy promoting local autonomy,
the court cannot grant judicial sanction to an LGU's exercise of its delegated power of eminent
domain in contravention of the very law giving it such power. 34
The Court notes that petitioners failed to raise this point at the earliest opportunity. Still, we are
not precluded from considering the same. This Court will not hesitate to consider matters even
those raised for the first time on appeal in clearly meritorious situations, 35 such as in this case.
aESIDH
Thus, the Court finds it unnecessary to resolve the other issues raised by petitioners.
It is well to mention however that despite our ruling in this case respondent is not barred from
instituting similar proceedings in the future, provided that it complies with all legal requirements.
36
WHEREFORE, the petition is GRANTED. The decision of the Court of Appeals in CA-G.R. SP No.
47052 is REVERSED and SET ASIDE. The Complaint in Civil Action No. V-6958 is DISMISSED without
prejudice.
No costs.
SO ORDERED.
Panganiban, C.J., Ynares-Santiago, Callejo, Sr. and Chico-Nazario, JJ., concur.
Footnotes
1.Penned by Associate Justice Teodoro P. Regino and concurred in by Associate Justices Eugenio S.
Labitoria and Rebecca De Guia-Salvador, rollo, pp. 139-145.
2.Id. at 158-159.
3.Id. at 140, CA Decision.
4.Records, pp. 9-10.
5.Id. at 1-7.
6.Id. at 54-55.
7.Id. at 75.
8.Id. at 81-85.
9.Id. at 92-93.
10.Id. at 111-112, 120.
11.Id. at 135.
12.CA rollo, pp. 7,11.
13.Id. at 136-138, 140-149.
14.Rollo, pp. 142-145.
15.Id. at 158-159.
16.Id. at 17-18.
17.Id. at 18-30.
18.Id. at 174.
19.Id. at 183-187.
20.Id. at 203.
37
21.Heirs of Suguitan v. City of Mandaluyong, 384 Phil. 676, 687 (2000); Municipality of Parañaque
v. V.M. Realty Corporation, 354 Phil. 684, 691 (1998); see alsoAntonio v. Geronimo, G.R. No.
124779, November 29, 2005, 476 SCRA 340, 350.
22.Heirs of Suguitan v. City of Mandaluyong, supra at 689; Municipality of Parañaque v. V.M.
Realty Corporation, supra at 691; Lagcao v. Labra, G.R. No. 155746, October 13, 2004, 440 SCRA
279, 284.
23.Heirs of Suguitan v. City of Mandaluyong, supra; Municipality of Paranaque v. V.M. Realty
Corporation, supra at 691.
24.Lagcao v. Labra, supra at 284.
25.Municipality of Parañaque v. V.M. Realty Corporation, supra at 695.
26.Id.
27.Municipality of Parañaque v. V.M. Realty Corporation, supra at 694.
28.Lagcao v. Labra, supra at 285.
29.Id.; see also Heirs of Suguitan v. City of Mandaluyong, supra at 688.
30.Antonio v. Geronimo, supra at 351; Municipality of Parañaque v. V.M. Realty Corporation,
supra at 692.
31.Municipality of Parañaque v. V.M. Realty Corporation, supra at 687; Heirs of Suguitan v. City of
Mandaluyong, supra; Antonio v. Geronimo, supra at 352.
32.Municipality of Parañaque v. V.M. Realty Corporation, supra at 687.
33.Id. at 693-694.
34.Heirs of Suguitan v. City of Mandaluyong, supra at 693.
35.Villanueva v. Court of Appeals, G.R. No 143286, April 14, 2004, 427 SCRA 439, 448.
36.Municipality of Parañaque v. V.M. Realty Corporation, supra at 697; Heirs of Suguitan v. City of
Mandaluyong, supra at 693.
38
REPUBLIC vs. VDA. DE CASTELLVI, ET AL.,
EN BANC
[G.R. No. L-20620. August 15, 1974.]
REPUBLIC OF THE PHILIPPINES, plaintiff-appellant, vs. CARMEN M. VDA. DE CASTELLVI, ET AL.,
defendants-appellees.
Office of the Solicitor General for plaintiff-appellant.
C .A. Mendoza & A.V . Raquiza and Alberto Cacnio & Associates for defendant-appellees.
DECISION
ZALDIVAR, J p:
Appeal from the decision of the Court of First Instance of Pampanga in its Civil Case No. 1623, an
expropriation proceeding.
Plaintiff-appellant, the Republic of the Philippines, (hereinafter referred to as the Republic) filed,
on June 26, 1959, a complaint for eminent domain against defendant-appellee, Carmen M. vda. de
Castellvi, judicial administratrix of the estate of the late Alfonso de Castellvi hereinafter referred
to as Castellvi), over a parcel of land situated in the barrio of San Jose, Floridablanca, Pampanga,
described as follows:
"A parcel of land, Lot No. 199-B Bureau of Lands Plan Swo-23666. Bounded on the NE by Maria
Nieves Toledo-Gozun; on the SE by national road; on the SW by AFP reservation, and on the NW
by AFP reservation. Containing an area of 759,299 square meters, more or less, and registered in
the name of AlfonsoCastellvi under TCT No. 13631 of the Register of Deeds of Pampanga . . .";
and against defendant-appellee Maria Nieves Toledo Gozun (hereinafter referred to as ToledoGozun), over two parcels of land described as follows:
"A parcel of land (Portion of Lot 1-B, Blk-1, Bureau of Lands Plan Psd, 26254. Bounded on the NE
by Lot 3, on the SE by Lot 3; on the SW by Lot 1-B, Blk. 2 (equivalent to Lot 199-B Swo 23666; on
the NW by AFP military reservation. Containing an area of 450,273 square meters, more or less,
and registered in the name of Maria Nieves Toledo-Gozun under TCT No. 8708 of the Register of
Deeds of Pampanga. . . .", and
"A parcel of land (Portion of Lot 3, Blk-1, Bureau of Lands Plan Psd 26254. Bounded on the NE by
Lot No. 3, on the SE by school lot and national road, on the SW by Lot 1-B Blk 2 (equivalent to Lot
199-B Swo 23666), on the NW by Lot 1-B, Blk-1. Containing an area of 88,772 square meters, more
or less, and registered in the name of Maria Nieves Toledo Gozun under TCT No. 8708 of the
Register of Deeds of Pampanga, . . ."
In its complaint, the Republic alleged, among other things, that the fair market value of the abovementioned lands, according to the Committee on Appraisal for the Province of Pampanga, was not
more than P2,000 per hectare, or a total market value of P259,669.10; and prayed, that the
provisional value of the lands be fixed at P259,669.10, that the court authorizes plaintiff to take
immediate possession of the lands upon deposit of that amount with the Provincial Treasurer of
Pampanga; that the court appoints three commissioners to ascertain and report to the court the
just compensation for the property sought to be expropriated, and that the court issues thereafter
a final order of condemnation.
On June 29, 1959 the trial court issued an order fixing the provisional value of the lands at
P259,669.10.
In her "motion to dismiss" filed on July 14, 1959, Castellvi alleged, among other things, that the
land under her administration, being a residential land, had a fair market value of P15.00 per
square meter, so it had a total market value of P11,389,485.00; that the Republic, through the
Armed Forces of the Philippines, particularly the Philippine Air Force, had been, despite repeated
demands, illegally occupying her property since July 1, 1956, thereby preventing her from using
and disposing of it, thus causing her damages by way of unrealized profits. This defendant prayed
that the complaint be dismissed, or that the Republic be ordered to pay her P15.00 per square
meter, or a total of P11,389,485.00, plus interest thereon at 6% per annum from July 1, 1956; that
the Republic be ordered to pay her P5,000,000.00 as unrealized profits, and the costs of the suit.
By order of the trial court, dated August, 1959, Amparo C. Diaz, Dolores G. viuda de Gil, Paloma
Castellvi, Carmen Castellvi, Rafael Castellvi, Luis Castellvi, NatividadCastellvi de Raquiza, Jose
Castellvi and Consuelo Castellvi were allowed to intervene as parties defendants. Subsequently,
Joaquin V. Gozun, Jr., husband of defendant Nieves Toledo Gozun, was also allowed by the court
to intervene as a party defendant.
After the Republic had deposited with the Provincial Treasurer of Pampanga the amount of
P259,669.10, the trial court ordered that the Republic be placed in possession of the lands. The
Republic was actually placed in possession of the lands on August 10, 1959. 1
In her "motion to dismiss", dated October 22, 1959, Toledo-Gozun alleged, among other things,
that her two parcels of land were residential lands, in fact a portion with an area of 343,303
square meters had already been subdivided into different lots for sale to the general public, and
the remaining portion had already been set aside for expansion sites of the already completed
subdivisions; that the fair market value of said lands was P15.00 per square meter, so they had a
total market value of P8,085,675.00; and she prayed that the complaint be dismissed, or that she
be paid the amount of P8,085,675.00, plus interest thereon at the rate of 6% per annum from
October 13, 1959, and attorney's fees in the amount of P50,000.00.
Intervenors Jose Castellvi and Consuelo Castellvi in their answer, filed on February 11, 1960, and
also intervenor Joaquin Gozun, Jr., husband of defendant Maria Nieves Toledo-Gozun, in his
motion to dismiss, dated May 27, 1960, all alleged that the value of the lands sought to be
expropriated was at the rate of P15.00 per square meter.
On November 4, 1959, the trial court authorized the Provincial Treasurer of Pampanga to pay
defendant Toledo-Gozun the sum of P107,609.00 as provisional value of her lands. 2 On May 16,
1960 the trial Court authorized the Provincial Treasurer of Pampanga to pay defendant Castellvi
the amount of P151,859.80 as provisional value of the land under her administration, and ordered
said defendant to deposit the amount with the Philippine National Bank under the supervision of
the Deputy Clerk of Court. In another order of May 16, 1960 the trial Court entered an order of
condemnation. 3
The trial Court appointed three commissioners: Atty. Amadeo Yuzon, Clerk of Court, as
commissioner for the court; Atty. Felicisimo G. Pamandanan, counsel of the Philippine National
Bank Branch at Floridablanca, for the plaintiff; and Atty. Leonardo F. Lansangan, Filipino legal
counsel at Clark Air Base, for the defendants. The Commissioners, after having qualified
themselves, proceeded to the performance of their duties.
On March 15, 1961 the Commissioners submitted their report and recommendation, wherein,
after having determined that the lands sought to be expropriated were residential lands, they
recommended unanimously that the lowest price that should be paid was P10.00 per square
meter, for both the lands of Castellvi and Toledo-Gozun; that an additional P5,000.00 be paid to
Toledo-Gozun for improvements found on her land; that legal interest on the compensation,
computed from August 10, 1959, be paid after deducting the amounts already paid to the owners,
and that no consequential damages be awarded. 4 The Commissioners' report was objected to by
all the parties in the case — by defendants Castellvi and Toledo-Gozun, who insisted that the fair
market value of their lands should be fixed at P15.00 per square meter; and by the Republic,
which insisted that the price to be paid for the lands should be fixed at P0.20 per square meter. 5
After the parties-defendants and intervenors had filed their respective memoranda, and the
Republic, after several extensions of time, had adopted as its memorandum its objections to the
report of the Commissioners, the trial court, on May 26, 1961, rendered its decision 6 the
dispositive portion of which reads as follows:
"WHEREFORE, taking into account all the foregoing circumstances, and that the lands are titled, . .
. the rising trend of land values,. . . and the lowered purchasing power of the Philippine peso, the
court finds that the unanimous recommendation of the commissioners of ten (P10.00) pesos per
square meter for the three lots of the defendants subject of this action is fair and just."
xxx xxx xxx
39
"The plaintiff will pay 6% interest per annum on the total value of the lands of defendant ToledoGozun since (sic) the amount deposited as provisional value from August 10, 1959 until full
payment is made to said defendant or deposit therefor is made in court.
"In respect to the defendant Castellvi, interest at 6% per annum will also be paid by the plaintiff to
defendant Castellvi from July 1, 1956 when plaintiff commenced its illegal possession of the
Castellvi land when the instant action had not yet been commenced to July 10, 1959 when the
provisional value thereof was actually deposited in court, on the total value of the said (Castellvi)
land as herein adjudged. The same rate of interest shall be paid from July 11, 1959 on the total
value of the land herein adjudged minus the amount deposited as provisional value, or
P151,859.80, such interest to run until full payment is made to said defendant or deposit therefor
is made in court. All the Intervenors having failed to produce evidence in support of their
respective interventions, said interventions are ordered dismissed.
"The costs shall be charged to the plaintiff."
On June 21, 1961 the Republic filed a motion for a new trial and/or reconsideration, upon the
grounds of newly-discovered evidence, that the decision was not supported by the evidence, and
that the decision was against the law, against which motion defendants Castellvi and ToledoGozun filed their respective oppositions. On July 8, 1961 when the motion of the Republic for new
trial and/or reconsideration was called for hearing, the Republic filed a supplemental motion for
new trial upon the ground of additional newly-discovered evidence. This motion for new trial
and/or reconsideration was denied by the court on July 12, 1961.
On July 17, 1961 the Republic gave notice of its intention to appeal from the decision of May 26,
1961 and the order of July 12, 1961. Defendant Castellvi also filed, on July 17, 1961, her notice of
appeal from the decision of the trial court.
The Republic filed various ex-parte motions for extension of time within which to file its record on
appeal. The Republic's record on appeal was finally submitted on December 6, 1961.
Defendants Castellvi and Toledo-Gozun filed not only a joint opposition to the approval of the
Republic's record on appeal, but also a joint memorandum in support of their opposition. The
Republic also filed a memorandum in support of its prayer for the approval of its record on appeal.
On December 27, 1961 the trial court issued an order declaring both the record on appeal filed by
the Republic, and the record on appeal filed by defendant Castellvi as having been filed out of
time, thereby dismissing both appeals.
On January 11, 1962 the Republic filed a "motion to strike out the order of December 27, 1961
and for reconsideration", and subsequently an amended record oil appeal, against which motion
the defendants Castellvi and Toledo-Gozun filed their opposition. On July 26, 1962 the trial court
issued an order, stating that "in the interest of expediency, the questions raised may be properly
and finally determined by the Supreme Court," and at the same time it ordered the Solicitor
General to submit a record on appeal containing copies of orders and pleadings specified therein.
In an order dated November 19, 1962, the trial court approved the Republic'srecord on appeal as
amended.
Defendant Castellvi did not insist on her appeal. Defendant Toledo-Gozun did not appeal.
The motion to dismiss the Republic's appeal was reiterated by appellees Castellvi and ToledoGozun before this Court, but this Court denied the motion.
In her motion of August 11, 1964, appellee Castellvi sought to increase the provisional value of her
land. The Republic, in its comment on Castellvi's motion, opposed the same. This Court denied
Castellvi's motion in a resolution dated October 2, 1964.
The motion of appellees, Castellvi and Toledo-Gozun, dated October 6, 1969, praying that they be
authorized to mortgage the lands subject of expropriation, was denied by this Court or October
14, 1969.
On February 14, 1972, Attys. Alberto Cacnio, and Associates, counsel for the estate of the late Don
Alfonso de Castellvi in the expropriation proceedings, filed a notice of attorney's lien, stating that
as per agreement with the administrator of the estate of Don Alfonso de Castellvi they shall
receive by way of attorney's fees, "the sum equivalent to ten per centum of whatever the court
may finally decide as the expropriated price of the property subject matter of the case."
Before this Court, the Republic contends that the lower court erred:
1.In finding the price of P10 per square meter of the lands subject of the instant proceedings as
just compensation;
2.In holding that the "taking" of the properties under expropriation commenced with the filing of
this action;
3.In ordering plaintiff-appellant to pay 6% interest on the adjudged value of the Castellvi property
to start from July of 1956;
4.In denying plaintiff-appellant's motion for new trial based on newly discovered evidence.
In its brief, the Republic discusses the second error assigned as the first issue to be considered. We
shall follow the sequence of the Republic's discussion.
1.In support of the assigned error that the lower court erred in holding that the "taking" of the
properties under expropriation commenced with the filing of the complaint in this case, the
Republic argues that the "taking" should be reckoned from the year 1947 when by virtue of a
special lease agreement between theRepublic and appellee Castellvi, the former was granted the
"right and privilege" to buy the property should the lessor wish to terminate the lease, and that in
the event of such sale, it was stipulated that the fair market value should be as of the time of
occupancy; and that the permanent improvements amounting to more than half a million pesos
constructed during a period of twelve years on the land, subject of expropriation, were indicative
of an agreed pattern of permanency and stability of occupancy by the Philippine Air Force in the
interest of national security. 7
Appellee Castellvi, on the other hand, maintains that the "taking" of property under the power of
eminent domain requires two essential elements, to wit: (1) entrance and occupation by
condemnor upon the private property for more than a momentary or limited period, and (2)
devoting it to a public use in such a way as to oust the owner and deprive him of all beneficial
enjoyment of the property. This appellee argues that in the instant case the first element is
wanting, for the contract of lease relied upon provides for a lease from year to year; that the
second element is also wanting, because the Republic was paying the lessor Castellvi a monthly
rental of P445.58; and that the contract of lease does not grant the Republic the "right and
privilege" to buy the premises "at the value at the time of occupancy." 8
Appellee Toledo-Gozun did not comment on the Republic's argument in support of the second
error assigned, because as far as she was concerned the Republic had not taken possession of her
lands prior to August 10, 1959. 9
In order to better comprehend the issues raised in the appeal, in so far as the Castellvi property is
concerned, it should be noted that the Castellvi property had been occupied by the Philippine Air
Force since 1947 under a contract of lease, typified by the contract marked Exh. 4-Castellvi, the
pertinent portions of which read:
"CONTRACT OF LEASE
"This AGREEMENT OF LEASE MADE AND ENTERED into by and between INTESTATE ESTATE OF
ALFONSO DE CASTELLVI, represented by CARMEN M. DECASTELLVI Judicial Administratrix x x x
hereinafter called the LESSOR and THE REPUBLIC OF THE PHILIPPINES represented by MAJ. GEN.
CALIXTO DUQUE, Chief of Staff of the ARMED FORCES OF THE PHILIPPINES, hereinafter called the
LESSEE,
"WITNESSETH:
"1.For and in consideration of the rentals hereinafter reserved and the mutual terms, covenants
and conditions of the parties, the LESSOR has, and by these presents does, lease and let unto the
LESSEE the following described land together with the improvements thereon and appurtenances
thereof, viz:
'Un Terreno, Lote No. 27 del Plano de subdivision Psu 34752, parte de la hacienda de Campauit,
situado en el Barrio de San Jose, Municipio deFloridablanca, Pampanga . . . midiendo una
extension superficial de cuatro milliones once mil cuatro cientos trienta y cinco (4,001,435) [sic]
metros cuadrados, mas o menos.
40
'Out of the above described property, 75.93 hectares thereof are actually occupied and covered
by this contract.
'Above lot is more particularly described in TCT No. 1016, province of Pampanga . . .
of which premises, the LESSOR warrants that he/she/they/is/are the registered owner(s) and with
full authority to execute a contract of this nature.
"2.The term of this lease shall be for the period beginning July 1, 1952 the date the premises were
occupied by the PHILIPPINE AIR FORCE, AFP until June 30, 1953, subject to renewal for another
year at the option of the LESSEE or unless sooner terminated by the LESSEE as hereinafter
provided.
"3.The LESSOR hereby warrants that the LESSEE shall have quiet, peaceful and undisturbed
possession of the demised premises throughout the full term or period of this lease and the
LESSOR undertakes without cost to the LESSEE to eject all trespassers, but should the LESSOR fail
to do so, the LESSEE at its option may proceed to do so at the expense of the LESSOR. The LESSOR
further agrees that should he/she/they sell or encumber all or any part of the herein described
premises during the period of this lease, any conveyance will be conditioned on the right of the
LESSEE hereunder.
"4.The LESSEE shall pay to the LESSOR as monthly rentals under this lease the sum of FOUR
HUNDRED FIFTY-FIVE PESOS & 58/100(P455.58) . . .
"5.The LESSEE may, at anytime prior to the termination of this lease, use the property for any
purpose or purposes and, at its own costs and expense make alteration, install facilities and
fixtures and erect additions . . . which facilities or fixtures . . . so placed in, upon or attached to the
said premises shall be and remain property of the LESSEE and may be removed therefrom by the
LESSEE prior to the termination of this lease. The LESSEE shall surrender possession of the
premises upon the expiration or termination of this lease and if so required by the LESSOR, shall
return the premises in substantially the same condition as that existing at the time same were first
occupied by the AFP, reasonable and ordinary wear and tear and damages by the elements or by
circumstances over which the LESSEE has no control excepted: PROVIDED, that if the LESSOR so
requires the return of the premises in such condition, the LESSOR shall give written notice thereof
to the LESSEE at least twenty (20) days before the termination of the lease and provided, further,
that should the LESSOR give notice within the time specified above, the LESSEE shall have the right
and privilege to compensate the LESSOR at the fair value or the equivalent, in lieu of performance
of its obligation, if any, to restore the premises. Fair value is to be determined as the value at the
time of occupancy less fair wear and tear and depreciation during the period of this lease.
"6.The LESSEE may terminate this lease at any time during the term hereof by giving written
notice to the LESSOR at least thirty (30) days in advance . . ."
"7.The LESSEE should not be responsible, except under special legislation for any damages to the
premises by reason of combat operations, acts of GOD, the elements or other acts and deeds not
due to the negligence on the part of the LESSEE.
"8.This LEASE AGREEMENT supersedes and voids any and all agreements and undertakings, oral or
written, previously entered into between the parties covering the property herein leased, the
same having been merged herein. This AGREEMENT may not be modified or altered except by
instrument in writing only duly signed by the parties." 10
It was stipulated by the parties, that "the foregoing contract of lease (Exh. 4, Castellvi) is 'similar in
terms and conditions, including the date', with the annual contracts entered into from year to year
between defendant Castellvi and the Republic of the Philippines (p. 17, t.s.n., Vol. III)". 11 It is
undisputed, therefore, that the Republic occupied Castellvi's land from July 1, 1947, by virtue of
the above-mentioned contract, on a year to year basis (from July 1 of each year to June 30 of the
succeeding year) under the terms and conditions therein stated.
Before the expiration of the contract of lease on June 30, 1956 the Republic sought to renew the
same but Castellvi refused. When the AFP refused to vacate the leased premises after the
termination of the contract, on July 11, 1956, Castellvi wrote to the Chief of Staff, AFP, informing
the latter that the heirs of the property had decided not to continue leasing the property in
question because they had decided to subdivide the land for sale to the general public, demanding
that the property be vacated within 30 days from receipt of the letter, and that the premises be
returned in substantially the same condition as before occupancy (Exh. 5 —Castellvi). A follow-up
letter was sent on January 12, 1957, demanding the delivery and return of the property within one
month from said date (Exh. 6 — Castellvi). On January 30, 1957, Lieutenant General Alfonso
Arellano, Chief of Staff, answered the letter of Castellvi, saying that it was difficult for the army to
vacate the premises in view of the permanent installations and other facilities worth almost
P500,000.00 that were erected and already established on the property, and that, there being no
other recourse, the acquisition of the property by means of expropriation proceedings would be
recommended to the President (Exhibit "7" —Castellvi).
Defendant Castellvi then brought suit in the Court of First Instance of Pampanga, in Civil Case No.
1458, to eject the Philippine Air Force from the land. While this ejectment case was pending, the
Republic instituted these expropriation proceedings, and, as stated earlier in this opinion, the
Republic was placed in possession of the lands on August 10, 1959. On November 21, 1959, the
Court of First Instance of Pampanga, dismissed Civil Case No. 1458, upon petition of the parties, in
an order which, in part, reads as follows:
"1.Plaintiff has agreed, as a matter of fact has already signed an agreement with defendants,
whereby she has agreed to receive the rent of the lands, subject matter of the instant case from
June 30, 1966 up to 1959 when the Philippine Air Force was placed in possession by virtue of an
order of the Court upon depositing the provisional amount as fixed by the Provincial Appraisal
Committee with the Provincial Treasurer of Pampanga;
"2.That because of the above-cited agreement wherein the administratrix decided to get the rent
corresponding to the rent from 1956 up to 1959 and considering that this action is one of illegal
detainer and/or to recover the possession of said land by virtue of nonpayment of rents, the
instant case now has become moot and academic and/or by virtue of the agreement signed by
plaintiff, she has waived her cause of action in the above-entitled case." 12
The Republic urges that the "taking " of Castellvi's property should be deemed as of the year 1947
by virtue of afore-quoted lease agreement. In American Jurisprudence, Vol. 26, 2nd edition,
Section 157, on the subject of "Eminent Domain, we read the definition of "taking" (in eminent
domain) as follows:
"'Taking' under the power of eminent domain may be defined generally as entering upon private
property for more than a momentary period, and, under the warrant or color of legal authority,
devoting it to a public use, or otherwise informally appropriating or injuriously affecting it in such
a way as substantially to oust the owner and deprive him of all beneficial enjoyment thereof." 13
Pursuant to the aforecited authority, a number of circumstances must be present in the "taking"
of property for purposes of eminent domain.
First, the expropriator must enter a private property. This circumstance is present in the instant
case, when by virtue of the lease agreement the Republic, through the AFP, took possession of the
property of Castellvi.
Second, the entrance into private property must be for more than a momentary period.
"Momentary" means, "lasting but a moment; of but a moment's duration" (The Oxford English
Dictionary, Volume VI, page 596); "lasting a very short time; transitory; having a very brief life;
operative or recurring at every moment" (Webster's Third International Dictionary, 1963 edition.)
The word "momentary" when applied to possession or occupancy of (real) property should be
construed to mean "a limited period" — not indefinite or permanent. The aforecited lease
contract was for a period of one year, renewable from year to year. The entry on the property,
under the lease, is temporary, and considered transitory. The fact that the Republic, through the
AFP, constructed some installations of a permanent nature does not alter the fact that the entry
into the land was transitory, or intended to last a year, although renewable from year to year by
consent of the owner of the land. By express provision of the lease agreement the Republic, as
lessee, undertook to return the premises in substantially the same condition as at the time the
property was first occupied by the AFP. It is claimed that the intention of the lessee was to occupy
the land permanently, as may be inferred from the construction of permanent improvements. But
41
this "intention" cannot prevail over the clear and express terms of the lease contract. Intent is to
be deduced from the language employed by the parties, and the terms of the contract, when
unambiguous, as in the instant case, are conclusive in the absence of averment and proof of
mistake or fraud — the question being not what the intention was, but what is expressed in the
language used. (City of Manila v. Rizal Park Co., Inc., 53 Phil. 515, 525); Magdalena Estate, Inc. v.
Myrick, 71 Phil. 344, 348). Moreover, in order to judge the intention of the contracting parties,
their contemporaneous and subsequent acts shall be principally considered (Art. 1371, Civil Code).
If the intention of the lessee (Republic) in 1947 was really to occupy permanently
Castellvi'sproperty, why was the contract of lease entered into on year to year basis? Why was the
lease agreement renewed from year to year? Why did not the Republicexpropriate this land of
Castellvi in 1949 when, according to the Republic itself, it expropriated the other parcels of land
that it occupied at the same time as theCastellvi land, for the purpose of converting them into a
jet air base?" 14 It might really have been the intention of the Republic to expropriate the lands in
question at some future time, but certainly mere notice — much less an implied notice — of such
intention on the part of the Republic to expropriate the lands in the future did not, and could not,
bind the landowner, nor bind the land itself. The expropriation must be actually commenced in
court (Republic vs. Baylosis, et al., 96 Phil. 461, 484).
Third, the entry into the property should be under warrant or color of legal authority. This
circumstance in the "taking" may be considered as present in the instant case, because the
Republic entered the Castellvi property as lessee.
Fourth, the property must be devoted to a public use or otherwise informally appropriated or
injuriously affected. It may be conceded that the circumstance of the property being devoted to
public use is present because the property was used by the air force of the AFP.
Fifth, the utilization of the property for public use must be in such a way as to oust the owner and
deprive him of all beneficial enjoyment of the property. In the instant case, the entry of the
Republic into the property and its utilization of the same for public use did not oust Castellvi and
deprive her of all beneficial enjoyment of the property. Castellvi remained as owner, and was
continuously recognized as owner by the Republic, as shown by the renewal of the lease contract
from year to year, and by the provision in the lease contract whereby the Republic undertook to
return the property to Castellvi when the lease was terminated. Neither wasCastellvi deprived of
all the beneficial enjoyment of the property, because the Republic was bound to pay, and had
been paying, Castellvi the agreed monthly rentals until the time when it filed the complaint for
eminent domain on June 26, 1959.
It is clear, therefore, that the "taking" of Castellvi's property for purposes of eminent domain
cannot be considered to have taken place in 1947 when the Republiccommenced to occupy the
property as lessee thereof. We find merit in the contention of Castellvi that two essential
elements in the "taking" of property under the power of eminent domain, namely: (1) that the
entrance and occupation by the condemnor must be for a permanent, or indefinite period, and (2)
that in devoting the property to public use the owner was ousted from the property and deprived
of its beneficial use, were not present when the Republic entered and occupied theCastellvi
property in 1947.
Untenable also is the Republic's contention that although the contract between the parties was
one of lease on a year to year basis, it was "in reality a more or less permanent right to occupy the
premises under the guise of lease with the 'right and privilege' to buy the property should the
lessor wish to terminate the lease," and "the right to buy the property is merged as an integral
part of the lease relationship . . . so much so that the fair market value has been agreed upon, not
as of the time of purchase, but as of the time of occupancy". 15 We cannot accept the Republic's
contention that a lease on a year to year basis can give rise to a permanent right to occupy, since
by express legal provision a lease made for a determinate time, as was the lease of Castellvi's land
in the instant case, ceases upon the day fixed, without need of a demand (Article 1669, Civil
Code). Neither can it be said that the right of eminent domain may be exercised by simply leasing
the premises to be expropriated (Rule 67, Section 1, Rules of Court). Nor can it be accepted that
the Republic would enter into a contract of lease where its real intention was to buy, or why the
Republic should enter into a simulated contract of lease ("under the guise of lease", as expressed
by counsel for the Republic) when all the time theRepublic had the right of eminent domain, and
could expropriate Castellvi's land if it wanted to without resorting to any guise whatsoever.
Neither can we see how a right to buy could be merged in a contract of lease in the absence of any
agreement between the parties to that effect. To sustain the contention of the Republic is to
sanction a practice whereby in order to secure a low price for a land which the government
intends to expropriate (or would eventually expropriate) it would first negotiate with the owner of
the land to lease the land (for say ten or twenty years) then expropriate the same when the lease
is about to terminate, then claim that the "taking" of the property for the purposes of the
expropriation be reckoned as of the date when the Government started to occupy the property
under the lease, and then assert that the value of the property being expropriated be reckoned as
of the start of the lease, in spite of the fact that the value of the property, for many good reasons,
had in the meantime increased during the period of the lease. This would be sanctioning what
obviously is a deceptive scheme, which would have the effect of depriving the owner of the
property of its true and fair market value at the time when the expropriation proceedings were
actually instituted in court. TheRepublic's claim that it had the "right and privilege" to buy the
property at the value that it had at the time when it first occupied the property as lessee nowhere
appears in the lease contract. What was agreed expressly in paragraph No. 5 of the lease
agreement was that, should the lessor require the lessee to return the premises in the same
condition as at the time the same was first occupied by the AFP, the lessee would have the "right
and privilege" (or option) of paying the lessor what it would fairly cost to put the premises in the
same condition as it was at the commencement of the lease, in lieu of the lessee's performance of
the undertaking to put the land in said condition. The "fair value" at the time of occupancy,
mentioned in the lease agreement, does not refer to the value of the property if bought by the
lessee, but refers to the cost of restoring the property in the same condition as of the time when
the lessee took possession of the property. Such fair value cannot refer to the purchase price, for
purchase was never intended by the parties to the lease contract. It is a rule in the interpretation
of contracts that "However general the terms of a contract may be, they shall not be understood
to comprehend things that are distinct and cases that are different from those upon which the
parties intended to agree" (Art. 1372, Civil Code)
We hold, therefore, that the "taking' of the Castellvi property should not be reckoned as of the
year 1947 when the Republic first occupied the same pursuant to the contract of lease, and that
the just compensation to be paid for the Castellvi property should not be determined on the basis
of the value of the property as of that year. The lower court did not commit an error when it held
that the "taking" of the property under expropriation commenced with the filing of the complaint
in this case.
Under Section 4 of Rule 67 of the Rules of Court, 16 the "just compensation" is to be determined
as of the date of the filing of the complaint. This Court has ruled that when the taking of the
property sought to be expropriated coincides with the commencement of the expropriation
proceedings, or takes place subsequent to the filing of the complaint for eminent domain, the just
compensation should be determined as of the date of the filing of the complaint. (Republic vs.
Philippine National Bank, L-14158, April 12, 1961, 1 SCRA 957, 961-962). In the instant case, it is
undisputed that the Republic was placed in possession of the Castellvi property, by authority of
the court, on August 10, 1959. The "taking" of the Castellvi property for the purposes of
determining the just compensation to be paid must, therefore, be reckoned as of June 26, 1959
when the complaint for eminent domain was filed.
Regarding the two parcels of land of Toledo-Gozun, also sought to be expropriated, which had
never been under lease to the Republic, the Republic was placed in possession of said lands, also
by authority of the court, on August 10, 1959. The taking of those lands, therefore, must also be
reckoned as of June 26, 1959, the date of the filing of the complaint for eminent domain.
2.Regarding the first assigned error — discussed as the second issue — the Republic maintains
that, even assuming that the value of the expropriated lands is to be determined as of June 26,
42
1959, the price of P10.00 per square meter fixed by the lower court "is not only exorbitant but
also unconscionable, and almost fantastic". On the other hand, both Castellvi and Toledo-Gozun
maintain that their lands are residential lands with a fair market value of not less than P15.00 per
square meter.
The lower court found, and declared, that the lands of Castellvi and Toledo-Gozun are residential
lands. The finding of the lower court is in consonance with the unanimous opinion of the three
commissioners who, in their report to the court, declared that the lands are residential lands.
The Republic assails the finding that the lands are residential, contending that the plans of the
appellees to convert the lands into subdivision for residential purposes were only on paper, there
being no overt acts on the part of the appellees which indicated that the subdivision project had
been commenced, so that any compensation to be awarded on the basis of the plans would be
speculative. The Republic's contention is not well taken. We find evidence showing that the lands
in question had ceased to be devoted to the production of agricultural crops, that they had
become adaptable for residential purposes, and that the appellees had actually taken steps to
convert their lands into residential subdivisions even before the Republic filed the complaint for
eminent domain.
In the case of City of Manila vs. Corrales (Phil. 82, 98) this Court laid down basic guidelines in
determining the value of the property expropriated for public purposes. This Court said:
"In determining the value of land appropriated for public purposes, the same consideration are to
be regarded as in a sale of property between private parties. The inquiry, in such cases, must be
what is the property worth in the market, viewed not merely with reference to the uses to which
it is at the time applied, but with reference to the uses to which it is plainly adapted, that is to say,
What is it worth from its availability for valuable uses?
"So many and varied are the circumstances to be taken into account in determining the value of
property condemned for public purposes, that it is practically impossible to formulate a rule to
govern its appraisement in all cases. Exceptional circumstances will modify the most carefully
guarded rule, but, as a general thing, we should say that the compensation of the owner is to be
estimated by reference to the use for which the property is suitable, having regard to the existing
business or wants of the community, or such as may be reasonably expected in the immediate
future. (Miss. and Rum River Boom Co. vs. Patterson, 98 U.S., 403)."
In expropriation proceedings, therefore, the owner of the land has the right to its value for the use
for which it would bring the most in the market. 17 The owner may thus show every advantage
that his property possesses, present and prospective, in order that the price it could be sold for in
the market may be satisfactorily determined. 18 The owner may also show that the property is
suitable for division into village or town lots. 19
The trial court, therefore, correctly considered, among other circumstances, the proposed
subdivision plans of the lands sought to be expropriated in finding that those lands are residential
lots. This finding of the lower court is supported not only by the unanimous opinion of the
commissioners, as embodied in their report, but also by the Provincial Appraisal Committee of the
province of Pampanga composed of the Provincial Treasurer, the Provincial Auditor and the
District Engineer. In the minutes of the meeting of the Provincial Appraisal Committee, held on
May 14, 1959 (Exh. 13-Castellvi) We read in its Resolution No. 10 the following:
"3.Since 1957 the land has been classified as residential in view of its proximity to the air base and
due to the fact that it was not being devoted to agriculture. In fact, there is a plan to convert it
into a subdivision for residential purposes. The taxes due on the property have been paid based
on its classification as residential land;"
The evidence shows that Castellvi broached the idea of subdividing her land into residential lots as
early as July 11, 1956 in her letter to the Chief of Staff of the Armed Forces of the Philippines. (Exh.
5-Castellvi) As a matter of fact, the layout of the subdivision plan was tentatively approved by the
National Planning Commission on September 7, 1956. (Exh. 8-Castellvi). The land of Castellvi had
not been devoted to agriculture since 1947 when it was leased to the Philippine Army. In 1957
said land was classified as residential, and taxes based on its classification as residential had been
paid since then (Exh. 13-Castellvi). The location of the Castellvi land justifies its suitability for a
residential subdivision. As found by the trial court, "It is at the left side of the entrance of the Basa
Air Base and bounded on two sides by roads (Exh. 13-Castellvi), paragraphs 1 and 2, Exh. 12Castellvi), the poblacion, (of Floridablanca) the municipal building, and the Pampanga Sugar Mills
are closed by. The barrio schoolhouse and chapel are also near (T.S.N. November 23, 1960, p. 68)".
20
The lands of Toledo-Gozun (Lot 1-B and Lot 3) are practically of the same condition as the land of
Castellvi. The lands of Toledo-Gozun adjoin the land of Castellvi. They are also contiguous to the
Basa Air Base, and are along the road. These lands are near the barrio schoolhouse, the barrio
chapel, the Pampanga Sugar Mills, and the poblacion of Floridablanca (Exhs. 1, 3 and 4-ToledoGozun). As a matter of fact, regarding lot 1-B it had already been surveyed and subdivided, and its
conversion into a residential subdivision was tentatively approved by the National Planning
Commission on July 8, 1959 (Exhs. 5 and 6 Toledo-Gozun). As early as June, 1958, no less than 32
man connected with the Philippine Air Force among them commissioned officers, non-commission
officers, and enlisted men had requested Mr. and Mrs. Joaquin D. Gozun to open a subdivision on
their lands in question (Exhs. 8, 8-A to 8-ZZ-Toledo-Gozun). 21
We agree with the findings, and the conclusions, of the lower court that the lands that are the
subject of expropriation in the present case, as of August 10, 1959 when the same were taken
possession of by the Republic, were residential lands and were adaptable for use as residential
subdivisions. Indeed, the owners of these lands have the right to their value for the use for which
they would bring the most in the market at the time the same were taken from them. The most
important issue to be resolved in the present case relates to the question of what is the just
compensation that should be paid to the appellees.
The Republic asserts that the fair market value of the lands of the appellees is P.20 per square
meter. The Republic cites the case of Republic vs. Narciso, et al., L-6594, which this Court decided
on May 18, 1956. The Narciso case involved lands that belonged to Castellvi and Toledo-Gozun,
and to one Donata Montemayor, which were expropriated by the Republic in 1949 and which are
now the site of the Basa Air Base. In the Narciso case this Court fixed the fair market value at P.20
per square meter. The lands that are sought to be expropriated in the present case being
contiguous to the lands involved in the Narciso case, it is the stand of theRepublic that the price
that should be fixed for the lands now in question should also be at P.20 per square meter.
We can not sustain the stand of the Republic. We find that the price of P.20 per square meter, as
fixed by this Court in the Narciso case, was based on the allegation of the defendants (owners) in
their answer to the complaint for eminent domain in that case that the price of their lands was
P2,000.00 per hectare and that was the price that they asked the court to pay them. This Court
said, then, that the owners of the land could not be given more than what they had asked,
notwithstanding the recommendation of the majority of the Commission on Appraisal — which
was adopted by the trial court — that the fair market value of the lands was P3,000.00 per
hectare. We also find that the price of P.20 per square meter in the Narciso case was considered
the fair market value of the lands as of the year 1949 when the expropriation proceedings were
instituted, and at that time the lands were classified as sugar lands, and assessed for taxation
purposes at around P400.00 per hectare, or P.04 per square meter. 22 While the lands involved in
the present case, like the lands involved in the Narciso case, might have a fair market value of P.20
per square meter in 1949, it can not be denied that ten years later, in 1959, when the present
proceedings were instituted, the value of those lands had increased considerably. The evidence
shows that since 1949 those lands were no longer cultivated as sugar lands, and in 1959 those
lands were already classified, and assessed for taxation purposes, as residential lands. In 1959 the
land of Castellvi was assessed at P1.00 per square meter. 23
The Republic also points out that the Provincial Appraisal Committee of Pampanga, in its
resolution No. 5 of February 15, 1957 (Exhibit D), recommended the sum of P.20 per square meter
as the fair valuation of the Castellvi property. We find that this resolution was made by the
Republic the basis in asking the court to fix the provisional value of the lands sought to be
expropriated at P259,669.10, which was approved by the court. 24 It must be considered,
43
however, that the amount fixed as the provisional value of the lands that are being expropriated
does not necessarily represent the true and correct value of the land. The value is only
"provisional" or "tentative", to serve as the basis for the immediate occupancy of the property
being expropriated by the condemnor. The records show that this resolution No. 5 was repealed
by the same Provincial Committee on Appraisal in its resolution No. 10 of May 14, 1959 (Exhibit
13-Castellvi). In that resolution No. 10, the appraisal committee stated that "The Committee has
observed that the value of the land in this locality has increased since 1957 . . .", and
recommended the price of P1.50 per square meter. It follows, therefore, that, contrary to the
stand of the Republic, that resolution No. 5 of the Provincial Appraisal Committee can not be
made the basis for fixing the fair market value of the lands of Castellvi and Toledo-Gozun.
The Republic further relied on the certification of the Acting Assistant Provincial Assessor of
Pampanga, dated February 8, 1961 (Exhibit K), to the effect that in 1950 the lands of ToledoGozun were classified partly as sugar land and partly as urban land, and that the sugar land was
assessed at P.40 per square meter, while part of the urban land was assessed at P.40 per square
meter and part at P.20 per square meter; and that in 1956 the Castellvi land was classified as
sugar land and was assessed at P450.00 per hectare, or P.045 per square meter. We can not also
consider this certification of the Acting Assistant Provincial Assessor as a basis for fixing the fair
market value of the lands of Castellvi and Toledo-Gozun because, as the evidence shows, the lands
in question, in 1957, were already classified and assessed for taxation purposes as residential
lands. The certification of the assessor refers to the year 1950 as far as the lands of Toledo-Gozun
are concerned, and to the year 1956 as far as the land of Castellvi is concerned. Moreover, this
Court has held that the valuation fixed for the purposes of the assessment of the land for taxation
purposes can not bind the landowner where the latter did not intervene in fixing it. 25
On the other hand, the Commissioners, appointed by the court to appraise the lands that were
being expropriated, recommended to the court that the price of P10.00 per square meter would
be the fair market value of the lands. The commissioners made their recommendation on the
basis of their observation after several ocular inspections of the lands, of their own personal
knowledge of land values in the province of Pampanga, of the testimonies of the owners of the
land, and other witnesses, and of documentary evidence presented by the appellees. Both
Castellvi and Toledo-Gozun testified that the fair market value of their respective land was at
P15.00 per square meter. The documentary evidence considered by the commissioners consisted
of deeds of sale of residential lands in the town of San Fernando and in Angeles City, in the
province of Pampanga, which were sold at prices ranging from P8.00 to P20.00 per square meter
(Exhibits 15, 16, 17, 18, 19, 20, 21, 22, 23-Castellvi). The commissioners also considered the
decision in Civil Case No. 1531 of the Court of First Instance of Pampanga, entitled Republic vs.
Sabina Tablante, which was an expropriation case filed on January 13, 1959, involving a parcel of
land adjacent to the Clark Air Base in Angeles City, where the court fixed the price at P18.00 per
square meter (Exhibit 14-Castellvi). In their report, the commissioners, among other things, said:
". . . This expropriation case is specially pointed out, because the circumstances and factors
involved therein are similar in many respects to the defendants' lands in this case. The land in Civil
Case No. 1531 of this Court and the lands in the present case (Civil Case No. 1623) are both near
the air bases, the Clark Air Base and the Basa Air Base respectively. There is a national road
fronting them and are situated in a first-class municipality. As added advantage it may be said that
the Basa Air Base land is very near the sugar mill at Del Carmen, Floridablanca, Pampanga, owned
by the Pampanga Sugar Mills. Also just stone's throw away from the same lands is a beautiful
vacation spot at Palacol, a sitio of the town of Floridablanca, which counts with a natural
swimming pool for vacationists on weekends. These advantages are not found in the case of the
Clark Air Base. The defendants' lands are nearer to the poblacion of Floridablanca then Clark Air
Base is nearer (sic) to the poblacion of Angeles, Pampanga.
"The deeds of absolute sale, according to the undersigned commissioners, as well as the land in
Civil Case No. 1531 are competent evidence, because they were executed during the year 1959
and before August 10 of the same year. More specifically so the land at Clark Air Base which
coincidentally is the subject matter in the complaint in said Civil Case No. 1531, it having been
filed on January 13, 1959 and the taking of the land involved therein was ordered by the Court of
First Instance of Pampanga on January 15, 1959, several months before the lands in this case were
taken by the plaintiffs. . .
"From the above and considering further that the lowest as well as the highest price per square
meter obtainable in the market of Pampanga relative to subdivision lots within its jurisdiction in
the year 1959 is very well known by the Commissioners, the Commission finds that the lowest
price that can be awarded to the lands in question is P10.00 per square meter." 26
The lower court did not altogether accept the findings of the Commissioners based on the
documentary evidence, but it considered the documentary evidence as basis for comparison in
determining land values. The lower court arrived at the conclusion that "the unanimous
recommendation of the commissioners of ten (P10.00) pesos per square meter for the three lots
of the defendants subject of this action is fair and just". 27 In arriving at its conclusion, the lower
court took into consideration, among other circumstances, that the lands are titled, that there is a
rising trend of land values, and the lowered purchasing power of the Philippine peso.
In the case of Manila Railroad Co. vs. Caligsihan, 40 Phil. 326, 328, this Court said:
"A court of first instance or, on appeal, the Supreme Court, may change or modify the report of
the commissioners by increasing or reducing the amount of the award if the facts of the case so
justify. While great weight is attached to the report of the commissioners, yet a court may
substitute therefor its estimate of the value of the property as gathered from the record in certain
cases, as, where the commissioners have applied illegal principles to the evidence submitted to
them, or where they have disregarded a clear preponderance of evidence, or where the amount
allowed is either palpably inadequate or excessive." 28
The report of the commissioners of appraisal in condemnation proceedings are not binding, but
merely advisory in character, as far as the court is concerned. 29 In our analysis of the report of
the commissioners, We find points that merit serious consideration in the determination of the
just compensation that should be paid toCastellvi and Toledo-Gozun for their lands. It should be
noted that the commissioners had made ocular inspections of the lands and had considered the
nature and similarities of said lands in relation to the lands in other places in the province of
Pampanga, like San Fernando and Angeles City. We cannot disregard the observations of the
commissioners regarding the circumstances that make the lands in question suited for residential
purposes — their location near the Basa Air Base, just like the lands in Angeles City that are near
the Clark Air Base, and the facilities that obtain because of their nearness to the big sugar central
of the Pampanga Sugar mills, and to the flourishing first class town of Floridablanca. It is true that
the lands in question are not in the territory of San Fernando and Angeles City, but, considering
the facilities of modern communications, the town of Floridablanca may be considered practically
adjacent to San Fernando and Angeles City. It is not out of place, therefore, to compare the land
values in Floridablanca to the land values in San Fernando and Angeles City, and form an idea of
the value of the lands in Floridablanca with reference to the land values in those two other
communities.
The important factor in expropriation proceeding is that the owner is awarded the just
compensation for his property. We have carefully studied the record, and the evidence, in this
case, and after considering the circumstances attending the lands in question. We have arrived at
the conclusion that the price of P10.00 per square meter, as recommended by the commissioners
and adopted by the lower court, is quite high. It is Our considered view that the price of P5.00 per
square meter would be a fair valuation of the lands in question and would constitute a just
compensation to the owners thereof. In arriving at this conclusion We have particularly taken into
consideration the resolution of the Provincial Committee on Appraisal of the province of
Pampanga informing, among others, that in the year 1959 the land of Castellvi could he sold for
from P3.00 to P4.00 per square meter, while the land of Toledo-Gozun could be sold for from
P2.50 to P3.00 per square meter. The Court has weighed all the circumstances relating to this
expropriations proceedings, and in fixing the price of the lands that are being expropriated the
Court arrived at a happy medium between the price as recommended by the commissioners and
approved by the court, and the price advocated by the Republic. This Court has also taken judicial
44
notice of the fact that the value of the Philippine peso has considerably gone down since the year
1959. 30 Considering that the lands of Castellvi and Toledo-Gozun are adjoining each other, and
are of the same nature, the Court has deemed it proper to fix the same price for all these lands.
3.The third issue raised by the Republic relates to the payment of interest. The Republic maintains
that the lower court erred when it ordered the Republic to pay Castellvi interest at the rate of 6%
per annum on the total amount adjudged as the value of the land of Castellvi, from July 1, 1956 to
July 10, 1959. We find merit in this assignment of error.
In ordering the Republic to pay 6% interest on the total value of the land of Castellvi from July 1,
1956 to July 10, 1959, the lower court held that the Republic had illegally possessed the land of
Castellvi from July 1, 1956, after its lease of the land had expired on June 30, 1956, until August
10, 1959 when the Republic was placed in possession of the land pursuant to the writ of
possession issued by the court. What really happened was that the Republic continued to occupy
the land ofCastellvi after the expiration of its lease on June 30, 1956, so much so that Castellvi
filed an ejectment case against the Republic in the Court of First Instance of Pampanga. 31
However, while that ejectment case was pending, the Republic filed the complaint for eminent
domain in the present case and was placed in possession of the land on August 10, 1959, and
because of the institution of the expropriation proceedings the ejectment case was later
dismissed. In the order dismissing the ejectment case, the Court of First Instance of Pampanga
said:
"Plaintiff has agreed, as a matter of fact has already signed an agreement with defendants,
whereby she had agreed to receive the rent of the lands, subject matter of the instant case from
June 30, 1956 up to 1959 when the Philippine Air Force was placed in possession by virtue of an
order of the Court upon depositing the provisional amount as fixed by the Provincial Appraisal
Committee with the Provincial Treasurer of Pampanga; . . ."
If Castellvi had agreed to receive the rentals from June 30, 1956 to August 10, 1959, she should be
considered as having allowed her land to be leased to theRepublic until August 10, 1959, and she
could not at the same time be entitled to the payment of interest during the same period on the
amount awarded her as the just compensation of her land. The Republic, therefore, should pay
Castellvi interest at the rate of 6% per annum on the value of her land, minus the provisional value
that was deposited, only from July 10, 1959 when it deposited in court the provisional value of the
land.
4.The fourth error assigned by the Republic relates to the denial by the lower court of its motion
for a new trial based on nearly discovered evidence. We do not find merit in this assignment of
error.
After the lower court had decided this case on May 26, 1961, the Republic filed a motion for a new
trial, supplemented by another motion, both based upon the ground of newly discovered
evidence. The alleged newly discovered evidence in the motion filed on June 21, 1961 was a deed
of absolute sale — executed on January 25, 1961, showing that a certain Serafin Francisco had
sold to Pablo L. Narciso a parcel of sugar land having an area of 100,000 square meters with a
sugar quota of 100 piculs, covered by P.A. No. 1701, situated in Barrio Fortuna, Floridablanca, for
P14,000, or P.14 per square meter.
In the supplemental motion, the alleged newly discovered evidence were: (1) a deed of sale of
some 35,000 square meters of land situated at Floridablanca for P7,500.00 (or about P.21 per
square meter) executed in July, 1959, by the spouses Evelyn D. Laird and Cornelio G. Laird in favor
of spouses Bienvenido S. Aguas and Josefina Q. Aguas; and (2) a deed of absolute sale of a parcel
of land having an area of 4,120,101 square meters, including the sugar quota covered by
Plantation Audit No. 16-1345, situated at Floridablanca, Pampanga, for P860.00 per hectare (a
little less than P.09 per square meter) executed on October 22, 1957 by Jesus Toledo y Mendoza in
favor of the Land Tenure Administration.
We find that the lower court acted correctly when it denied the motions for a new trial.
To warrant the granting of a new trial based on the ground of newly discovered evidence, it must
appear that the evidence was discovered after the trial; that even with the exercise of due
diligence, the evidence could not have been discovered and produced at the trial; and that the
evidence is of such a nature as to alter the result of the case if admitted. 32 The lower court
correctly ruled that these requisites were not complied with.
The lower court, in a well-reasoned order, found that the sales made by Serafin Francisco to Pablo
Narciso and that made by Jesus Toledo to the Land Tenure Administration were immaterial and
irrelevant, because those sales covered sugarlands with sugar quotas, while the lands sought to be
expropriated in the instant case are residential lands. The lower court also concluded that the land
sold by the spouses Laird to the spouses Aguas was a sugar land.
We agree with the trial court. In eminent domain proceedings, in order that evidence as to the
sale price of other lands may be admitted in evidence to prove the fair market value of the land
sought to be expropriated, the lands must, among other things, be shown to be similar.
But even assuming, gratia argumenti, that the lands mentioned in those deeds of sale were
residential, the evidence would still not warrant the grant of a new trial, for said evidence could
have been discovered and produced at the trial, and they cannot be considered newly discovered
evidence as contemplated in Section 1(b) of Rule 37 of the Rules of Court. Regarding this point,
the trial court said:
"The Court will now show that there was no reasonable diligence employed.
"The land described in the deed of sale executed by Serafin Francisco, copy of which is attached to
the original motion, is covered by a Certificate of Title issued by the Office of the Register of Deeds
of Pampanga. There is no question in the mind of the court but this document passed through the
Office of the Register of Deeds for the purpose of transferring the title or annotating the sale on
the certificate of title. It is true that Fiscal Lagman went to the Office of the Register of Deeds to
check conveyances which may be presented in the evidence in this case as it is now sought to be
done by virtue of the motions at bar, Fiscal Lagman, one of the lawyers of the plaintiff, did not
exercise reasonable diligence as required by the rules. The assertion that he only went to the
office of the Register of Deeds 'now and then' to check the records in that office only shows the
half-hazard [sic] manner by which the plaintiff looked for evidence to be presented during the
hearing before the Commissioners, if it is at all true that Fiscal Lagman did what he is supposed to
have done according to Solicitor Padua. It would have been the easiest matter for plaintiff to
move for the issuance of a subpoena duces tecum directing the Register of Deeds of Pampanga to
come to testify and to bring with him all documents found in his office pertaining to sales of land
in Floridablanca adjacent to or near the lands in question executed or recorded from 1958 to the
present. Even this elementary precaution was not done by plaintiff's numerous attorneys.
"The same can be said of the deeds of sale attached to the supplementary motion. They refer to
lands covered by certificate of title issued by the Register of Deeds of Pampanga. For the same
reason they could have been easily discovered if reasonable diligence has been exerted by the
numerous lawyers of the plaintiff in this case. It is noteworthy that all these deeds of sale could be
found in several government offices, namely, in the Office of the Register of Deeds of Pampanga,
the Office of the Provincial Assessor of Pampanga, the Office of the Clerk of Court as a part of
notarial reports of notaries public that acknowledged these documents, or in the archives of the
National Library. In respect to Annex 'B' of the supplementary motion copy of the document could
also be found in the Office of the Land Tenure Administration, another government entity. Any
lawyer with a modicum of ability handling this expropriation case would have right away though
[sic] of digging up documents diligently showing conveyances of lands near or around the parcels
of land sought to be expropriated in this case in the offices that would have naturally come to his
mind such as the offices mentioned above, and had counsel for the movant really exercised the
reasonable diligence required by the Rule' undoubtedly they would have been able to find these
documents and/or caused the issuance of subpoena duces tecum. . . .
"It is also recalled that during the hearing before the Court of the Report and Recommendation of
the Commissioners and objection thereto, Solicitor Padua made the observation:
'I understand, Your Honor, that there was a sale that took place in this place of land recently
where the land was sold for P0.20 which is contiguous to this land.'
45
"The Court gave him permission to submit said document subject to the approval of the Court. . .
This was before the decision was rendered, and later promulgated on May 26, 1961 or more than
one month after Solicitor Padua made the above observation. He could have, therefore, checked
up the alleged sale and moved for a reopening to adduce further evidence. He did not do so. He
forgot to present the evidence at a more propitious time. Now, he seeks to introduce said
evidence under the guise of newly-discovered evidence. Unfortunately, the Court cannot classify it
as newly-discovered evidence, because under the circumstances, the correct qualification that can
be given is 'forgotten evidence'. Forgotten evidence, however, is not newly-discovered evidence."
33
The granting or denial of a motion for new trial is, as a general rule, discretionary with the trial
court, whose judgment should not be disturbed unless there is a clear showing of abuse of
discretion. 34 We do not see any abuse of discretion on the part of the lower court when it denied
the motions for a new trial.
WHEREFORE, the decision appealed from is modified, as follows:
(a)the lands of appellees Carmen vda. de Castellvi and Maria Nieves Toledo-Gozun, as described in
the complaint, are declared expropriated for public use;
(b)the fair market value of the lands of the appellees is fixed at P5.00 per square meter;
(c)the Republic must pay appellee Castellvi the sum of P3,796,495.00 as just compensation for her
one parcel of land that has an area of 759,299 square meters, minus the sum of P151,859.80 that
she withdrew out of the amount that was deposited in court as the provisional value of the land,
with interest at the rate of 6% per annum from July 10, 1959 until the day full payment is made or
deposited in court;
(d)the Republic must pay appellee Toledo-Gozun the sum of P2,695,225.00 as the just
compensation for her two parcels of land that have a total area of 539,045 square meters, minus
the sum of P107,809.00 that she withdrew out of the amount that was deposited in court as the
provisional value of her lands, with interest at the rate of 6%, per annum from July 10, 1959 until
the day full payment is made or deposited in court;
(e)the attorney's lien of Atty. Alberto Cacnio is enforced; and
(f)the costs should be paid by appellant Republic of the Philippines, as provided in Section 12, Rule
67, and in Section 13 Rule 141, of the Rules of Court.
IT IS SO ORDERED.
Makalintal, C . J ., Barredo, Antonio, Esguerra, Fernandez, Muñoz Palma and Aquino, JJ ., concur.
Castro, Fernando, Teehankee and Makasiar, J J ., did not take part.
Footnotes
1.Record on Appeal, Vol. I, pp. 53-56.
2.Record on Appeal, Vol. I, pp. 53-56.
3.Record on Appeal, Vol. I, pp. 121-124.
4.Record on Appeal, Vol. I, pp. 235-261.
5.Record on Appeal, Vol. I, pp. 264-270, 284-297 and 297-299.
6.Record on Appeal, Vol. I, pp. 387-456.
7.Appellant's brief, pp. 18-30; citing the case of Penn. vs. Carolina Virginia Estate Corp., 57 SE 2d
817.
8.Appellee Castellvi's brief, pp. 21-26.
9.Appellee Toledo-Gozun's brief, pp. 7-9. The issue raised in the second error assigned should
really refer only to the land of Castellvi. We find that the lands of Toledo-Gozun, unlike the land of
Castellvi, were never leased to the Republic.
10.Appellant's brief, pp. 6-12.
11.Appellant's brief, p. 12.
12.Record on Appeal, Vol. II, pp. 462-463.
13.Among the cases cited under this Section is that of Penn. vs. Carolina Virginia Coastal
Corporation, 57 SE 2d 817, which is cited by the Republic on p. 18 of its brief.
14.See Appellant's brief, p. 6.
15.See Appellant's brief, p. 22.
16.Similar to Section 5, Rule 69 of the old Rules of Court, the rule in force when the complaint in
this case was filed.
17.King vs. Mineapolis Union Railway Co., 32 Minn. 224.
18.Little Rock Junction Ry. vs. Woodruff, 49 Ark. 381, 5 SW 792.
19.27 Am. Jur. 2d pp. 344-345; Rothnam vs. Commonwealth, 406 Pa. 376; Wichita Falls and N.W.
Ry. Co. vs. Holloman, 28 Okla. 419, 114 P 700, 701. See alsoRepublic vs. Venturanza, et al., L20417, May 30, 1966, 17 SCRA 322, 331.
20.Decision of the lower court pp. 444-445, Record on Appeal, Vol. I.
21.Decision of the lower court, pp. 446-449, Record on Appeal, Vol. I.
22.Decision in the Narciso case, Exhibit H for the Republic.
23.See page 471, Record on Appeal, Vol. II, and page 41, Appellant's Brief.
24.Page 10-16, Record on Appeal, Vol. I.
25.Republic of the Philippines vs. Urtula, 110 Phil. 262-264.
26.Record on Appeal, Vol. I, pages 257-260.
27.Lower court's decision, p. 454, Record on Appeal, Vol. I.
28.See also Manila Railroad Company vs. Velasquez, 32 Phil. 286; and City of Manila vs. Estrada,
25 Phil. 208.
29.City of Cebu vs. Ledesma, 14 SCRA 666, 669.
30.In 1959 the money value of two pesos (P2.00), Philippine currency, was equal to one U.S. dollar
($1.00). As published in the "Daily Express" of August 6, 1974, the Philippine National Bank
announced that the inter-bank guiding rate was P6.735 to one U.S. dollar ($1.00).
31.Civil Case No. 1548.
32.Sec. 1 (b) of Rule 37 of the Rules of Court.
33.Record on Appeal, Vol. II, pp. 607-613.
34.Miranda vs. Legaspi, et al., 92 Phil. 290, 293-294.
46
AMIGABLE vs. CUENCA
FIRST DIVISION
[G.R. No. L-26400. February 29, 1972.]
VICTORIA AMIGABLE, plaintiff-appellant, vs. NICOLAS CUENCA, as Commissioner of Public
Highways and REPUBLIC OF THE PHILIPPINES, defendants-appellees.
Quirico del Mar, Domingo Antigua, Antonio Paulin and N. Capangpangan for plaintiff and
appellant.
Assistant Solicitor General Guillermo Torres and Solicitor Dominador L. Quiroz for defendants and
appellees.
SYLLABUS
1.POLITICAL LAW; EMINENT DOMAIN; PROJECT USED BY GOVERNMENT FOR ROAD PURPOSES;
RIGHTS OR REGISTERED OWNER TO DUE COMPENSATION ANYTIME. — Considering that no
annotation in favor of the government appears at the back of her certificate of title and that she
has not executed any deed of conveyance of any portion of her lot to the government, the
appellant remains the owner of the whole lot. As registered owner, she could bring an action to
recover possession of the portion of land in question at anytime because possession is one of the
attributes of ownership. However, since restoration of possession of said portion by the
government is neither convenient nor feasible at this time because it has been and is now being
used for road purposes, the only relief available is for the government to make due compensation
which it could and should have done years ago.
2.ID.; ID.; ID.; ID.; RIGHT TO DAMAGES. — The owner of the land is entitled to damages in the
form of legal interest on the price of the land from the time it was taken up to the time that
payment is made by the government. In addition, the government should pay for attorney's fees,
the amount of which should be fixed by the trial court after hearing.
3.ID.; ID.; BASIS FOR DUE COMPENSATION. — To determine the due compensation for the land
appropriated by the Government, the basis should be the price or value thereof at the time of the
taking.
DECISION
MAKALINTAL, J p:
This is an appeal from the decision of the Court of First Instance of Cebu in its Civil Case No. R5977, dismissing the plaintiff's complaint.
Victoria Amigable, the appellant herein, is the registered owner of Lot No. 639 of the Banilad
Estate in Cebu City as shown by Transfer Certificate of Title No. T-18060, which superseded
Transfer Certificate of Title No. RT-3272 (T-3435) issued to her by the Register of Deeds of Cebu on
February 1, 1924. No annotation in favor of the government of any right or interest in the
property appears at the back of the certificate. Without prior expropriation or negotiated sale, the
government used a portion of said lot, with an area of 6,167 square meters, for the construction
of the Mango and Gorordo Avenues.
It appears that said avenues were already existing in 1921 although "they were in bad condition
and very narrow, unlike the wide and beautiful avenues that they are now," and "that the tracing
of said roads was begun in 1924, and the formal construction in 1925." *
On March 27, 1958 Amigable's counsel wrote the President of the Philippines, requesting payment
of the portion of her lot which had been appropriated by the government. The claim was indorsed
to the Auditor General, who disallowed it in his 9th Indorsement dated December 9, 1958. A copy
of said indorsement was transmitted to Amigable's counsel by the Office of the President on
January 7, 1959.
On February 6, 1959 Amigable filed in the court a quo a complaint, which was later amended on
April 17, 1959 upon motion of the defendants, against the Republic of the Philippines and Nicolas
Cuenca, in his capacity as Commissioner of Public Highways for the recovery of ownership and
possession of the 6,167 square meters of land traversed by the Mango and Gorordo Avenues. She
also sought the payment of compensatory damages in the sum of P50,000.00 for the illegal
occupation of her land, moral damages in the sum of P25,000.00, attorney's fees in the sum of
P5,000.00 and the costs of the suit.
Within the reglementary period the defendants filed a joint answer denying the material
allegations of the complaint and interposing the following affirmative defenses, to wit: (1) that the
action was premature, the claim not having been filed first with the Office of the Auditor General;
(2) that the right of action for the recovery of any amount which might be due the plaintiff, if any,
had already prescribed; (3) that the action being a suit against the Government, the claim for
moral damages, attorney's fees and costs had no valid basis since as to these items the
Government had not given its consent to be sued; and (4) that inasmuch as it was the province of
Cebu that appropriated and used the area involved in the construction of Mango Avenue, plaintiff
had no cause of action against the defendants.
During the scheduled hearings nobody appeared for the defendants notwithstanding due notice,
so the trial court proceeded to receive the plaintiff's evidence ex parte. On July 29, 1959 said court
rendered its decision holding that it had no jurisdiction over the plaintiff's cause of action for the
recovery of possession and ownership of the portion of her lot in question on the ground that the
government cannot be sued without its consent; that it had neither original nor appellate
jurisdiction to hear, try and decide plaintiff's claim for compensatory damages in the sum of
P50,000.00, the same being a money claim against the government; and that the claim for moral
damages had long prescribed, nor did it have jurisdiction over said claim because the government
had not given its consent to be sued. Accordingly, the complaint was dismissed. Unable to secure
a reconsideration, the plaintiff appealed to the Court of Appeals, which subsequently certified the
case to Us, there being no question of fact involved.
The issue here is whether or not the appellant may properly sue the government under the facts
of the case.
In the case of Ministerio vs. Court of First Instance of Cebu, 1 involving a claim for payment of the
value of a portion of land used for the widening of the Gorordo Avenue in Cebu City, this Court,
through Mr. Justice Enrique M. Fernando, held that where the government takes away property
from a private landowner for public use without going through the legal process of expropriation
or negotiated sale, the aggrieved party may properly maintain a suit against the government
without thereby violating the doctrine of governmental immunity from suit without its consent.
We there said:
". . . If the constitutional mandate that the owner be compensated for property taken for public
use were to be respected, as it should, then a suit of this character should not be summarily
dismissed. The doctrine of governmental immunity from suit cannot serve as an instrument for
perpetrating an injustice on a citizen. Had the government followed the procedure indicated by
the governing law at the time, a complaint would have been filed by it, and only upon payment of
the compensation fixed by the judgment, or after tender to the party entitled to such payment of
the amount fixed, may it have the right to enter in and upon the land so condemned, to
appropriate the same to the public use defined in the judgment.' If there were an observance of
procedural regularity, petitioners would not be in the sad plaint they are now. It is unthinkable
then that precisely because there was a failure to abide by what the law requires, the government
would stand to benefit. It is just as important, if not more so, that there be fidelity to legal norms
on the part of officialdom if the rule of law were to be maintained. It is not too much to say that
when the government takes any property for public use, which is conditioned upon the payment
of just compensation, to be judicially ascertained, it makes manifest that it submits to the
jurisdiction of a court. There is no thought then that the doctrine of immunity from suit could still
be appropriately invoked."
Considering that no annotation in favor of the government appears at the back of her certificate
of title and that she has not executed any deed of conveyance of any portion of her lot to the
government, the appellant remains the owner of the whole lot. As registered owner, she could
bring an action to recover possession of the portion of land in question at anytime because
possession is one of the attributes of ownership. However, since restoration of possession of said
portion by the government is neither convenient nor feasible at this time because it is now and
47
has been used for road purposes, the only relief available is for the government to make due
compensation which it could and should have done years ago. To determine the due
compensation for the land, the basis should be the price or value thereof at the time of the taking.
2
As regards the claim for damages, the plaintiff is entitled thereto in the form of legal interest on
the price of the land from the time it was taken up to the time that payment is made by the
government. 3 In addition, the government should pay for attorney's fees, the amount of which
should be fixed by the trial court after hearing.
WHEREFORE, the decision appealed from is hereby set aside and the case remanded to the court a
quo for the determination of compensation, including attorney's fees, to which the appellant is
entitled as above indicated. No pronouncement as to costs.
Concepcion, C.J., Reyes, J.B.L., Zaldivar, Castro, Fernando, Teehankee, Barredo, Villamor and
Makasiar, JJ., concur.
Footnotes
*Decision, Record on Appeal, p. 12.
1.G.R. No. L-31635, August 31, 1971 (40 SCRA 464).
2.Alfonso vs. City of Pasay (106 Phil. 1017).
3.Alfonso vs. City of Pasay, supra.
48
NAPOCOR vs COURT OF APPEALS
THIRD DIVISION
[G.R. No. 113194. March 11, 1996.]
NATIONAL POWER CORPORATION, petitioner, vs. COURT OF APPEALS and MACAPANTON
MANGONDATO, respondents.
Jose G. Bruno, Wilfredo J. Collado and Rolando Gamalinda for petitioner.
Macapanton K. Mangondato in his own behalf.
SYLLABUS
1.POLITICAL LAW; EMINENT DOMAIN; JUST COMPENSATION; DETERMINATION THEREOF;
GENERAL RULE IS DATE OF FILING OF THE COMPLAINT. — The general rule in determining "just
compensation" in eminent domain is the value of the property as of the date of the filing of the
complaint. Normally, the time of the taking coincides with the filing of the complaint for
expropriation. Hence, many rulings of this Court have equated just compensation with the value
of the property as of the time of filing of the complaint consistent with the above provision of
Section 4, Rule 67 of the Revised Rules of Court. So too, where the institution of the action
precedes entry into the property, the just compensation is to be ascertained as of the time of the
filing of the complaint.
2.ID.; ID.; ID.; ID.; ID.; EXCEPTION IS WHERE THE COURT FIXED THE VALUE OF THE PROPERTY AS
OF THE DATE OF TAKING; NOT APPLICABLE IN CASE AT BAR. — The general rule admits of an
exception; where this Court fixed the value of the property as of the date it was taken and not at
the date of the commencement of the expropriation proceedings. This exception finds application
where the owner would be given undue incremental advantages arising from the use to which the
government devotes the property expropriated — as for instance, the extension of a main
thoroughfare as was the case in Caro de Araullo. In the instant case, however, it is difficult to
conceive of how there could have been an extra-ordinary increase in the value of the owner's land
arising from the expropriation, as indeed the records do not show any evidence that the valuation
of P1,000.00 reached in 1992 was due to increments directly caused by petitioner's use of the
land. Since the petitioner is claiming an exception to Rule 67, Section 4, it has the burden of
proving its claim that its occupancy and use — not ordinary inflation and increase in land values —
was the direct cause of the increase in valuation from 1978 to 1992.
3.ID.; ID.; "TAKING" THEREIN; ELEMENTS; WHEN SATISFIED IN CASE AT BAR. — This Court has
defined the elements of "taking" as the main ingredient in the exercise of power of eminent
domain, in the following words: "A number of circumstances must be present in the 'taking' of
property for purposes of eminent domain: (1) the expropriator must enter a private property; (2)
the entrance into private property must be for more than a momentary period; (3) the entry into
the property should be under warrant or color of legal authority; (4) the property must be
devoted to a public use or otherwise informally appropriated or injuriously affected; and (5) the
utilization of the property for public use must be in such a way to oust the owner and deprive him
of all beneficial enjoyment of the property." In this case, the petitioner's entrance in 1978 was
without intent to expropriate or was not made under warrant or color of legal authority, for it
believed the property was public land covered by Proclamation No. 1354 and flatly refused the
claim for compensation. Only in 1990, did the petitioner recognize private respondent's ownership
and negotiate for the voluntary purchase of the property. A Deed of Sale with provisional payment
and subject to negotiations for the correct price was then executed. This is not the intent nor the
expropriation contemplated by law. This is a simple attempt at a voluntary purchase and sale.
Petitioner neglected and/or refused to exercise the power of eminent domain. Only in 1992, did
petitioner manifest its intention to exercise the power of eminent domain.
4.ID.; ID.; JUST COMPENSATION; VALUATION OF COMMISSIONERS; FINDINGS OF FACTS OF THE
COURT OF APPEALS, RESPECTED. — In an expropriation case where the principal issue is the
determination of just compensation, as is the case here, a trial before Commissioners is
indispensable to allow the parties to present evidence on the issue of just compensation.
Inasmuch as the determination of just compensation in eminent domain cases is a judicial function
and factual findings of the Court of Appeals are conclusive on the parties and reviewable only
when the case falls within the recognized exceptions, which is not the situation obtaining in this
petition, we see no reason to disturb the factual findings as to valuation of the subject property.
As can be gleaned from the records, the court-and-the-parties-appointed commissioners did not
abuse their authority in evaluating the evidence submitted to them nor misappropriate the clear
preponderance of evidence. The amount fixed and agreed to by the respondent appellate Court is
not grossly exorbitant.
DECISION
PANGANIBAN, J p:
At what point in time should the value of the land subject of expropriation be computed: at the
date of the "taking" or the date of the filing of the complaint for eminent domain? This is the main
question posed by the parties in this petition for review on certiorari assailing the Decision 1 of
the Court of Appeals 2 which affirmed in toto the decision of the Regional Trial Court of Marawi
City. 3 The dispositive portion of the decision of the trial court reads: 4
"WHEREFORE, the prayer in the recovery case for Napocor's surrender of the property is denied
but Napocor is ordered to pay monthly rentals in the amount of P15,000.00 from 1978 up to July
1992 with 12% interest per annum from which sum the amount of P2,199,500.00 should be
deducted; and the property is condemned in favor of Napocor effective July 1992 upon payment
of the fair market value of the property at One Thousand (P1,000.00) Pesos per square meter or a
total of Twenty-One Million Nine Hundred Ninety-Five Thousand (P21,995,000.00) Pesos.
"SO ORDERED. Costs against NAPOCOR."
The Facts
The facts are undisputed by both the petitioner and the private respondent, 5 and are quoted
from the Decision of the respondent Court, 6 as follows:
"In 1978, National Power Corporation (NAPOCOR), took possession of a 21,995 square meter land
which is a portion of Lot 1 of the subdivision plan (LRC) Psd-116159 situated in Marawi City,
owned by Mangondato, and covered by Transfer Certificate of Title No. T-378-A, under the
mistaken belief that it forms part of the public land reserved for use by NAPOCOR for
hydroelectric power purposes under Proclamation No. 1354 of the President of the Philippines
dated December 3, 1974.
"NAPOCOR alleged that the subject land was until then possessed and administered by Marawi
City so that in exchange for the city's waiver and quitclaim of any right over the property,
NAPOCOR had paid the city a 'financial assistance' of P40.00 per square meter.
"In 1979, when NAPOCOR started building its Agus I HE (Hydroelectric Plant) Project, Mangondato
demanded compensation from NAPOCOR. NAPOCOR refused to compensate insisting that the
property is public land and that it had already paid 'financial assistance' to Marawi City in
exchange for the rights over the property.
"Mangondato claimed that the subject land is his duly registered private property covered by
Transfer Certificate of Title No. T-378-A in his name, and that he is not privy to any agreement
between NAPOCOR and Marawi City and that any payment made to said city cannot be
considered as payment to him.
"More than a decade later NAPOCOR acceded to the fact that the property belongs to
Mangondato.
"At the outset, in March, 1990, NAPOCOR's regional legal counsel, pursuant to Executive Order
No. 329 dated July 11, 1988 requested Marawi City's City Appraisal Committee to appraise the
market value of the property in Saduc, Marawi City affected by the infrastructure projects of
NAPOCOR without specifying any particular land-owner. The City Appraisal Committee in its
Minutes dated March 8, 1990, fixed the fair market value as follows: 7
'Land Fair Market Value Per Sq. M.
Price Per Sq. MPrice per Sq. M.
Along the CityNot in the City
National HighwayNational Highway
49
P150Residential LotP100
P250Commercial LotP180
P300Industrial LotP200
(Records, Civil Case No. 610-92, p. 20).
"On July 13, 1990, NAPOCOR's National Power Board (hereafter NAPOCOR's board) passed
Resolution No. 90-225 resolving to pay Mangondato P100.00 per square meter for only a 12,132
square meter portion of the subject property plus 12% interest per annum from 1978. However, in
the August 7, 1990 board meeting, confirmation of said resolution was deferred to allow
NAPOCOR's regional legal counsel to determine whether P100.00 per square meter is the fair
market value. (Records, Civil Case No. 605-92, p. 45).
"On August 14, 1990, NAPOCOR's board passed Resolution No. 90-316 resolving that Mangondato
be paid the base price of P40.00 per square meter for the 12,132 square meter portion
(P485,280.00) plus 12% interest per annum from 1978 (P698,808.00) pending the determination
whether P100.00 per square meter is the fair market value of the property (id.).
"Pursuant to the aforementioned resolution Mangondato was paid P1,184,088.00 (id., p. 58).
NAPOCOR's regional legal counsel's findings embodied in 2 memoranda to NAPOCOR's general
counsel (dated January 29, 1991 and February 19, 1991) state that Mangondato's property is
classified as industrial, that the market value of industrial lots in Marawi City when NAPOCOR took
possession is P300.00 for those along the national highway and P200.00 for those not along the
highway and that on the basis of recent Supreme Court decisions, NAPOCOR has to pay not less
than P300.00 per square meter. NAPOCOR's general counsel incorporated the foregoing findings
in his report to the board plus the data that the area possessed by NAPOCOR is 21,995 square
meters, and that the legal rate of interest per annum from the time of the taking of the property
alleged to be in 1978, is 12%, but recommended to the board that the fair market value of the
property is P100.00 per square meter; NAPOCOR's board on May 17, 1991 passed Resolution No.
91-247 resolving to pay Mangondato P100.00 per square meter for the property excluding 12%
interest per annum (id., pp. 50-52).
"In a letter dated December 17, 1991, Mangondato disagreed with the NAPOCOR board's
Resolution No. 91-247 pegging the compensation for his land at P100.00 per square meter
without interest from 1978. Mangondato submitted that the fair market value of his land is even
more than the P300.00 (per) square meter stated in the City Appraisal Report but that for
expediency, he is willing to settle for P300.00 per square meter plus 12% interest per annum from
1978 (id., pp. 53-59).
"In another letter dated February 4, 1992, Mangondato reiterated his disagreement to the
P100.00 per square meter compensation without interest. At the same time, to get partial
payment, he asked that he be paid in the meantime, P100.00 per square meter without prejudice
to pursuing his claim for the proper and just compensation plus interest thereon (id., p. 60).
"On February 12, 1992, NAPOCOR's general counsel filed a memorandum for its president finding
no legal impediment if they, in the meantime were to pay Mangondato P100.00 per square meter
without prejudice to the final determination of the proper and just compensation by the board
inasmuch as the regional counsel submitted to him (general counsel) 2 memoranda stating that
the appraisal of industrial lots in Marawi City when NAPOCOR took possession is P300.00 per
square meter for those along the national highway and P200.00 per square meter for those not
along the highway, and that NAPOCOR has to pay not less than P300.00 per square meter plus
12% interest on the basis of recent Supreme Court decisions. Further, the general counsel
submitted that since the board has already set the purchase price at P100.00 per square meter
(Resolution No. 91-247). NAPOCOR would not be prejudiced thereby (id., pp. 60-62).
"In March, 1992, the parties executed a Deed of Sale Of A Registered Property where NAPOCOR
acceded to Mangondato's request of provisional payment of P100.00 per square meter excluding
interest and without prejudice to Mangondato's pursuance of claims for just compensation and
interest. Mangondato was paid P1,015,412.00 in addition to the P1,184,088.00 earlier paid to him
by NAPOCOR which payments total P2,199,500.00 for the 12,995 square meter land (Records, Civil
Case No. 610-92, pp. 85-87).
"In his letter to NAPOCOR's president dated April 20, 1992, Mangondato asked for the payment of
P300.00 per square meter plus 12% interest per annum from 1978. NAPOCOR's president, in his
memorandum to the board dated April 24, 1992 recommended the approval of Mangondato's
request (Records, Civil Case No. 605-92, pp. 63-69).
"On May 25, 1992, NAPOCOR's board passed Resolution No. 92-121 granting its president the
authority to negotiate for the payment of P100.00 per square meter for the land plus 12% interest
per annum from 1978 less the payments already made to Mangondato and to Marawi City on the
portion of his land and with the provisos that said authorized payment shall be effected only after
Agus I HE Project has been placed in operation and that said payment shall be covered by a deed
of absolute sale with a quitclaim executed by Mangondato (id., pp. 70-71).
"On July 7, 1992, Mangondato filed before the lower court Civil Case No. 605-92 against NAPOCOR
seeking to recover the possession of the property described in the complaint as Lots 1 and 3 of the
subdivision plan (LRC) Psd-116159 against NAPOCOR, the payment of a monthly rent of
P15,000.00 from 1978 until the surrender of the property, attorney's fees and costs, and the
issuance of a temporary restraining order and a writ of preliminary mandatory injunction to
restrain NAPOCOR from proceeding with any construction and/or improvements on
Mangondato's land or from committing any act of dispossession (id., pp. 1-8).
"The temporary restraining order was issued by the lower court. Anent the prayer for the writ of
preliminary mandatory injunction, NAPOCOR filed its Opposition thereto on July 23, 1992 (id., pp.
17-20).
"Before the lower court could resolve the pending incident on the writ of preliminary mandatory
injunction, and instead of filing a motion to dismiss, NAPOCOR, on July 27, 1992, filed also before
the lower court, Civil Case No. 610-92 which is a Complaint for eminent domain against
Mangondato over the subject property (Records, Civil Case No. 610-92, pp. 1-3).
"On the same date Mangondato filed his Manifestation in Lieu of Answer contending that the
negotiations for payment made by NAPOCOR were 'virtual dictations' on a 'take it or leave it'
basis; that he was given the 'run-around' by NAPOCOR for 15 years; so that there was no
agreement reached as to payment because of NAPOCOR's insistence of its own determination of
the price; that he treats the P2,199.500.00 so far received by him as partial payment for the rent
for the use of his property. Mangondato prayed that he be compensated in damages for the
unauthorized taking and continued possession of his land from 1978 until the filing of the
Complaiant (sic) in the expropriation case; that should the lower court order the expropriation of
the subject property, that the just compensation for the land be reckoned from the time of the
filing of the expropriation case; that the expropriation case be consolidated with the recovery of
possession case; that the restraining order issued in the recovery of possession case be
maintained and a writ of preliminary injunction be at once issued against NAPOCOR; and that
NAPOCOR be ordered to deposit the value of the land as provisionally determined by the lower
court (id., pp. 4-5).
"Upon agreement of the parties, the 2 cases were ordered consolidated and the lower court
appointed the following commissioners: Atty. Saipal Alawi, representing the lower court; Atty.
Connie Doromal, representing NAPOCOR; and Mr. Alimbsar A. Ali, from the City Assessor's Office
to ascertain and report to the court the just compensation (id., pp. 6-7).
"The lower court ordered NAPOCOR to deposit with the Philippine National Bank the amount of
P10,997,500.00, provisionally fixing the value of the land at P500.00 per square meter P100.00
lower than the assessed value of the land appearing in Tax Declaration No. 0873 for 1992 which
was used as basis by the lower court (id., p. 8).
"In its Motion for Reconsideration of the Order For Provisional Deposit[,] NAPOCOR opposed the
provisional value quoted by the lower court saying that the basis of the provisional value of the
land should be the assessed value of the property as of the time of the taking which in this case is
1978 when the assessed value of the land under Tax Declaration No. 7394 was P100.00 per square
meter (id., pp. 28-32). In reply, Mangondato filed his Opposition To Motion For Reconsideration Of
50
the Order For Provisional Deposit (id., pp. 44-46). However, the lower court did not rule on the
provisional value to be deposited and chose to go right into the determination of just
compensation on the ground that the 'provisional valuation could not be decided without going
into the second phase of expropriation cases which is the determination by the court of the just
compensation for the property soguht (sic) to be taken (NPC vs. Jocson, supra)' (Decision, p. 5).
"On August 5, 1992, Mangondato filed a Motion To Dismiss in the expropriation case alleging that
NAPOCOR filed its Complaint for eminent domain not for the legitimate aim of pursuing
NAPOCOR's business and purpose but to legitimize a patently illegal possession and at the same
time continue dictating its own valuation of the property. Said motion was however, later
withdrawn by Mangondato (id., pp. 37-39 and 47).
"In the meanwhile, the commissioners filed their respective reports. On July 28, 1992,
Commissioner Doromal filed his report recommending a fair market value of P300.00 per square
meter as of November 23, 1978, (id., pp. 11-27). On August 6, 1992, Commissioners Alawi and Ali
filed their joint report recommending a fair market value of P1,000.00 per square meter as of
1992 (id., pp. 40-42).
"After the parties filed their respective comments to the commissioners' reports, on August 21,
1992, the lower court rendered its decision denying Mangondato recovery of possession of the
property but ordering NAPOCOR to pay a monthly rent of P15,000.00 from 1978 up to July 1992
with 12% interest per annum and condemning the property in favor of NAPOCOR effective July,
1992 upon the payment of P1,000.00 per square meter or a total of P21,995,000.00 as just
compensation.
"Mangondato filed a Motion For Partial Execution Pending Appeal which was granted by the lower
court in an Order dated September 15, 1992 (id., pp. 151-152 and 157-160). However, on appeal
by NAPOCOR via a Petition For Certiorari in CA-G.R. SP No. 28971 to this Court, said Order was
annulled and set aside (Rollo, pp. 30-37).
"NAPOCOR filed a Motion For Reconsideration of the decision alleging that the fair market value
of the property at the time it was taken allegedly in 1978 is P40.00 per square meter. After
Mangondato filed his Opposition To Motion For Reconsideration the lower court denied
NAPOCOR's motion for reconsideration in an Order dated September 15, 1992 (Records, Civil Case
No. 610-92, pp. 145-149).
"In the meanwhile, on August 7, 1992, Mangondato filed an Ex-Parte Manifestation To Correct
Clerical Error of Description of Property submitting that Lot 3 which does not form part of the
subject property was included in the Complaint because of a clerical error inadvertently
committed by the typist who continuously copied the description of the property covered by
Transfer Certificate of Title No. T-378-A, and thus praying that the position of the Complaint
describing Lot 3 be deleted (Records, Civil Case No. 605-92, p. 22).
"On August 12, 1992, the intervenors filed their Motion For Intervention and Intervention claiming
interest against each of the parties on the ground that Lot 3 which is included in the Complaint has
since been conveyed by Mangondato to their predecessors-in-interest and that they are entitled
to just compensation from NAPOCOR should the lower court decide that NAPOCOR is entitled to
expropriate the entire area described in the Complaint (id., pp. 23-34).
"In an Order dated August 19, 1992 the lower court granted intervenor's Motion For Intervention
(id., p. 72).
"On August 25, 1992, the lower court ordered the deletion of the portion in the Complaint
describing Lot 3 and declared that intervenors' Motion For Intervention has become moot (id., p.
82).
"On October 13, 1992 the intervenors filed their Motion To Reconsider The Order Of August 25,
1992 and The Decision Dated August 21, 1992 which was however denied by the lower court in an
Order dated November 26, 1992 (id., pp. 162-184)."
The Issues
Two errors were raised before this Court by the petitioner, thus: 8
"ASSIGNMENT OF ERRORS
THE RESPONDENT COURT ERRED IN AFFIRMING THAT THE JUST COMPENSATION FOR THE
PROPERTY IS ITS VALUE IN 1992, WHEN THE COMPLAINT WAS FILED, AND NOT ITS VALUE IN 1978,
WHEN THE PROPERTY WAS TAKEN BY PETITIONER.
THE COURT ERRED IN FIXING THE VALUE OF JUST COMPENSATION AT P1,000.00 PER SQUARE
METER INSTEAD OF P40.00 PER SQUARE METER."
The petitioner summarized the two issues it raised by asking "whether or not the respondent
court was justified in deviating from the well-settled doctrine that just compensation is the
equivalent of the value of the property taken for public use reckoned from the time of taking." 9
In his Comment, private respondent worded the issues as follows: 10
". . . As stated by the respondent court, Napocor, in its appeal —
'. . . avers that the taking of the proerty (sic) should not be reckoned as of the year 1992 when
NAPOCOR filed its Complaint for eminent domain but as of the year 1978 when it took possession
of the property, and that the just compensation, determined as it should be, on the basis of the
value of the property as of 1978, as P40.00 per square meter.' "
The petitioner, after failing to persuade both lower courts, reiterated before us its proposition
(with cited cases) "that when the taking of property precedes the filing of the judicial proceeding,
the value of the property at the time it was taken shall be the basis for the payment of just
compensation." 11
The First Issue: Date of Taking or Date of Suit?
The general rule in determining "just compensation" in eminent domain is the value of the
property as of the date of the filing of the complaint, as follows: 12
"Sec. 4.Order of Condemnation. When such a motion is overruled or when any party fails to
defend as required by this rule, the court may enter an order of condemnation declaring that the
plaintiff has a lawful right to take the property sought to be condemned, for the public use or
purpose described in the complaint, upon the payment of just compensation to be determined as
of the date of the filing of the complaint . . ." (Emphasis supplied).
Normally, the time of the taking coincides with the filing of the complaint for expropriation.
Hence, many rulings of this Court have equated just compensation with the value of the property
as of the time of filing of the complaint consistent with the above provision of the Rules. So too,
where the institution of the action precedes entry into the property, the just compensation is to
be ascertained as of the time of the filing of the complaint. 13
The general rule, however, admits of an exception: where this Court fixed the value of the
property as of the date it was taken and not at the date of the commencement of the
expropriation proceedings.
In the old case of Provincial Government of Rizal vs. Caro de Araullo, 14 the Court ruled that ". . .
the owners of the land have no right to recover damages for this unearned increment resulting
from the construction of the public improvement (lengthening of Taft Avenue from Manila to
Pasay) for which the land was taken. To permit them to do so would be to allow them to recover
more than the value of the land at the time when it was taken, which is the true measure of the
damages, or just compensation, and would discourage the construction of important public
improvements."
In subsequently cases, 15 the Court, following the above doctrine, invariably held that the time of
taking is the critical date in determining lawful or just compensation. Justifying this stance, Mr.
Justice (later Chief Justice) Enrique Fernando, speaking for the Court in Municipality of La Carlota
vs. The Spouses Felicidad Baltazar and Vicente Gan, 16 said, ". . . the owner as is the constitutional
intent, is paid what he is entitled to according to the value of the property so devoted to public
use as of the date of the taking. From that time, he had been deprived thereof. He had no choice
but to submit. He is not, however, to be despoiled of such a right. No less than the fundamental
law guarantees just compensation. It would be an injustice to him certainly if from such a period,
he could not recover the value of what was lost. There could be on the other hand, injustice to the
expropriator if by a delay in the collection, the increment in price would accrue to the owner. The
doctrine to which this Court has been committed is intended precisely to avoid either contingency
fraught with unfairness."
51
Simply stated, the exception finds application where the owner would be given undue incremental
advantages arising from the use to which the government devotes the property expropriated — as
for instance, the extension of a main thoroughfare as was the case in Caro de Araullo. In the
instant case, however, it is difficult to conceive of how there could have been an extra-ordinary
increase in the value of the owner's land arising from the expropriation, as indeed the records do
not show any evidence that the valuation of P1,000.00 reached in 1992 was due to increments
directly caused by petitioner's use of the land. Since the petitioner is claiming an exception to Rule
67, Section 4, 17 it has the burden of proving its claim that its occupancy and use — not ordinary
inflation and increase in land values — was the direct cause of the increase in valuation from 1978
to 1992.
Side Issue: When is There "Taking" of Property
But there is yet another cogent reason why this petition should be denied and why the
respondent Court should be sustained. An examination of the undisputed factual environment
would show that the "taking" was not really made in 1978.
This Court has defined the elements of "taking" as the main ingredient in the exercise of power of
eminent domain, 18 in the following words:
"A number of circumstances must be present in the 'taking' of property for purposes of eminent
domain: (1) the expropriator must enter a private property; (2) the entrance into private property
must be for more than a momentary period; (3) the entry into the property should be under
warrant or color of legal authority; (4) the property must be devoted to a public use or otherwise
informally appropriated or injuriously affected; and (5) the utilization of the property for public
use must be in such a way to oust the owner and deprive him of all beneficial enjoyment of the
property." (Emphasis supplied)
In this case, the petitioner's entrance in 1978 was without intent to expropriate or was not made
under warrant or color of legal authority, for it believed the property was public land covered by
Proclamation No. 1354. When the private respondent raised his claim of ownership sometime in
1979, the petitioner flatly refused the claim for compensation, nakedly insisted that the property
was public land and wrongly justified its possession by alleging it had already paid "financial
assistance" to Marawi City in exchange for the rights over the property. Only in 1990, after more
than a decade of beneficial use, did the petitioner recognize private respondent's ownership and
negotiate for the voluntary purchase of the property. A Deed of Sale with provisional payment and
subject to negotiations for the correct price was then executed. Clearly, this is not the intent nor
the expropriation contemplated by law. This is a simple attempt at a voluntary purchase and sale.
Obviously, the petitioner neglected and/or refused to exercise the power of eminent domain. cdll
Only in 1992, after the private respondent sued to recover possession and petitioner filed its
Complaint to expropriate, did petitioner manifest its intention to exercise the power of eminent
domain. Thus, the respondent Court correctly held: 19
"If We decree that the fair market value of the land be determined as of 1978, then We would be
sanctioning a deceptive scheme whereby NAPOCOR, for any reason other than for eminent
domain would occupy another's property and when later pressed for payment, first negotiate for
a low price and then conveniently expropriate the property when the land owner refuses to
accept its offer claiming that the taking of the property for the purpose of eminent domain should
be reckoned as of the date when it started to occupy the property and that the value of the
property should be computed as of the date of the taking despite the increase in the meantime in
the value of the property."
In Noble vs. City of Manila, 20 the City entered into a lease-purchase agreement of a building
constructed by the petitioner's predecessor-in-interest in accordance with the specifications of
the former. The Court held that being bound by the said contract, the City could not expropriate
the building. Expropriation could be resorted to "only when it is made necessary by the opposition
of the owner to the sale or by the lack of any agreement as to the price." Said the Court:
"The contract, therefore, in so far as it refers to the purchase of the building, as we have
interpreted it, is in force, not having been revoked by the parties or by judicial decision. This being
the case, the city being bound to buy the building at an agreed price, under a valid and subsisting
contract, and the plaintiff being agreeable to its sale, the expropriation thereof, as sought by the
defendant, is baseless. Expropriation lies only when it is made necessary by the opposition of the
owner to the sale or by the lack of any agreement as to the price. There being in the present case
a valid and subsisting contract, between the owner of the building and the city, for the purchase
thereof at an agreed price, there is no reason for the expropriation." (Emphasis supplied)
In the instant case, petitioner effectively repudiated the deed of sale it entered into with the
private respondent when it passed Resolution No. 92-121 on May 25, 1992 authorizing its
president to negotiate, inter alia, that payment "shall be affected only after Agus I HE project has
been placed in operation." It was only then that petitioner's intent to expropriate became
manifest as private respondent disagreed and, barely a month after, filed suit.
The Second Issue: Valuation
We now come to the issue of valuation.
The fair market value as held by the respondent Court, is the amount of P1,000.00 per square
meter. In an expropriation case where the principal issue in the determination of just
compensation, as is the case here, a trial before Commissioners is indispensable to allow the
parties to present evidence on the issue of just compensation. 21 Inasmuch as the determination
of just compensation in eminent domain cases is a judicial function 22 and factual findings of the
Court of Appeals are conclusive on the parties and reviewable only when the case falls within the
recognized exception, 23 which is not the situation obtaining in this petition, we see no reason to
disturb the factual findings as to valuation of the subject property. As can be gleaned from the
records, the court-and-the-parties-appointed commissioners did not abuse their authority in
evaluating the evidence submitted to them nor misappreciate the clear preponderance of
evidence. The amount fixed and agreed to by the respondent appellate Court is not grossly
exorbitant. 24 To quote: 25
"Commissioner Ali comes from the Office of the Register of Deeds who may well be considered an
expert, with a general knowledge of the appraisal of real estate and the prevailing prices of land in
the vicinity of the land in question so that his opinion on the valuation of the property cannot be
lightly brushed aside.
"The prevailing market value of the land is only one of the determinants used by the
commissioners' report the others being as herein shown:
xxx xxx xxx
"Commissioner Doromal's report, recommending P300.00 per square meter, differs from the 2
commissioners only because his report was based on the valuation as of 1978 by the City
Appraisal Committee as clarified by the latter's chairman in response to NAPOCOR's general
counsel's query (id., pp. 128-129)."
In sum, we agree with the Court of Appeals that petitioner has failed to show why it should be
granted an exemption from the general rule in determining just compensation provided under
Section 4 of Rule 67. On the contrary, private respondent has convinced us that, indeed, such
general rule should in fact be observed in this case.
WHEREFORE, the petition is hereby DISMISSED and the judgment appealed from AFFIRMED,
except as to the interest on the monthly rentals, which is hereby reduced from twelve percent
(12%) to the legal rate of six percent (6%) per annum. Costs against the petitioner.
SO ORDERED.
Narvasa, C.J., Davide, Jr., Melo and Francisco, JJ., concur.
Footnotes
1.Rollo, pp. 24-40.
2.CA-G.R. CV No. 39353, decided by the Fifth Division composed of J. Cezar D. Francisco, ponente,
and JJ. Manuel C. Herrera (chairman) and Buenaventura J. Guerrero.
3.12th Judicial Region, Branch VIII, Marawi City in two (2) consolidated cases: Civil Case No. 605-92
and Civil Case No. 610-92.
4.Rollo, p. 24-A.
5.Ibid., pp. 74 & 93.
52
6.Ibid., pp. 24-A-33.
7.Ibid., p. 75.
8.Ibid., p. 10.
9.Ibid., pp. 93-94.
10.Ibid., p. 50.
11.Ibid., p. 94.
12.Section 4, Rule 67 of the Revised Rules of Court.
13B. H. Berkenkotter & Co. vs. Court of Appeals, 216 SCRA 584, 587 (December 14, 1992);
Republic of the Philippines vs. Philippine National Bank, 1 SCRA 957 (April 21, 1961).
14.58 Phil. 308, 316 (August 16, 1933).
15.Provincial Government of Rizal vs. Caro de Araullo, supra, at p. 317; Republic of the Philippines
vs. Lara, et al., 96 Phil. 170 (November 29, 1954); Alfonso vs. Pasay City, 106 Phil. 1017 (January
30, 1960); Municipality of La Carlota vs. The Spouses Felicidad Baltazar and Vicente Gan, infra.
16.45 SCRA 235 (May 30, 1972).
17.Supra.
18.Republic vs. Vda. de Castellvi, 58 SCRA 336, 337 (August 15, 1974).
19.Rollo, p. 36.
20.67 Phil. 1 (December 24, 1938).
21.Manila Electric Company vs. Pineda, 206 SCRA 196 (February 13, 1992).
22.National Power Corporation vs. Jocson, 206 SCRA 520 (February 25, 1992).
23.Coca-Cola Bottlers Philippines, Inc. vs. Court of Appeals, 229 SCRA 533 (January 27, 1994).
24.Republic vs. Court of Appeals, 154 SCRA 428, 430 (September 30, 1987).
25.Rollo, pp. 36-38.
53
MUNICIPALITY OF LA CARLOTA vs. NAWASA
FIRST DIVISION
[G.R. No. L-20232. September 30, 1964.]
MUNICIPALITY OF LA CARLOTA, plaintiff-appellee, vs. NATIONAL WATERWORKS and SEWERAGE
AUTHORITY (NAWASA), defendant-appellant.
Rodolfo M. Uriarte, Rolando N. Medalla, Ernesto Ma. Uriarte and Abundio B. Huelar for plaintiffappellee.
Government Corporate Counsel for defendant-appellant.
SYLLABUS
1.CONSTITUTIONAL LAW; TRANSFER TO NAWASA OF JURISDICTION, SUPERVISION AND CONTROL
OF MUNICIPAL WATERWORKS IS UNCONSTITUTIONAL. — The contention of the NAWASA that
although ownership of municipal waterworks may not be validly transferred to the NAWASA
under Republic Act No. 1383, yet said law authorizes the NAWASA to "have jurisdiction,
supervision and control" over all government owned Municipal Waterworks, is held untenable
because it is hard to conceive how the jurisdiction, supervision and control of a municipality's
waterworks system may be vested in the NAWASA without destroying the integrity of the said
municipality's right of dominion. Ownership is nothing without the inherent rights of possession,
control and enjoyment. Where the owner is deprived of the ordinary and beneficial use of his
property or of its value by its being diverted to public use, there is taking within the constitutional
sense. (Tañada & Fernando, Constitution of the Philippines, 4th ed., Vol. I, 215-216).
DECISION
MAKALINTAL, J p:
The municipality of La Carlota was the owner of the waterworks system serving its inhabitants
until the enactment of Republic Act No. 1383 on June 28, 1955, when by virtue of its provisions
the National Waterworks and Sewerage Authority (NAWASA) assumed ownership and took over
the supervision, administration and control of the said system, including the collection of water
rentals from the consumers. On April 5, 1950 the municipality commenced this action in the Court
of First Instance of Negros Occidental against the NAWASA for recovery and accounting. On
September 27, 1961 judgment was rendered as follows:
"EN VIRTUD DE LO EXPUESTO, el Juzgado falla esta causa condenado a la demandada para que
restituya al demandante el dominio y titulo, asi como la posesion, supervision, administracion y
control del sistema de traida de aguas del Municipio de la Carlota.
"Se ordena, asimismo, a la demandada para que dentro del plazo de 30 dias a contar desde le
fecha en que esta decision quede firme y ejecutoria, rinda una cuenta detallada de todas las
cantidades cobradas por ella de los consumidores del sistema durante el periodo de itempo desde
que se hizo cargo del sistema hasta la fecha en que actualmente haya restituido al demandante
dicho sistema.
"Por falta de pruebas, se sobresee la reconvencion interpuesta por la demandada.
"Las costas del juicio se tasaran en contra de la demandada."
In the present appeal by the defendant it assigns one error in the judgment, namely, "in holding
that the possession, administration, supervision and maintenance of the La Carlota water system
is vested in the municipality of La Carlota . . . even on the assumption that ownership of said
system belongs to the municipality."
The appellant concedes, on the authority of City of Baguio vs. NAWASA, 57 O.G. No. 9, p. 1584,
and City of Cebu vs. NAWASA, G.R. No. L-12892, April 20, 1960, that in so far as Republic Act No.
1383 transfers ownership of the water system of the appellee to the appellant the said Act is
unconstitutional because it does not provide for the payment of just compensation as required by
the Constitution, the transfer being in the nature of expropriation of private (patrimonial)
property. However, it is contended that although ownership may not thus be transferred, the law
(Sec. 1) also authorizes the NAWASA to have jurisdiction, supervision and control over . . . all areas
now served by existing government owned waterworks and sewerage and drainage systems
within the boundaries of cities, municipalities, and municipal districts in the Philippines . . . "On
this ground the appellant prays that the judgment appealed from be reversed in part and that the
return to it of the "possession, supervision, administration and control of the La Carlota
waterworks system" be ordered.
In City of Cebu vs. NAWASA, supra, which was an action for declaratory relief, this Court did not
squarely pass upon the question of whether, apart from ownership, the defendant could exercise
"jurisdiction, supervision and control" over the Cebu waterworks system without paying just
compensation. It is true that the trial court upheld the exercise of such right in its decision, leaving
for future determination and question of what would constitute acts of ownership and what
would be considered as an exercise of jurisdiction, supervision and control, but this Court on
appeal did not treat the particular matter as an issue before it and neither passed upon it nor
rendered a ruling thereon. That case is therefore no authority for the position of the appellant
here as presented in its lone assignment of error. Neither may it find support in the statement in
our decision in City of Baguio vs. NAWASA, supra, that "unless this aspect of the law (concerning
payment of just compensation is clarified and appellee is given its due compensation, appellee
cannot be deprived of its property even if appellant desires to take over the administration in line
with the spirit of the law." This Court, in said decision, took note of the authorities cited by the
appellant therein to sustain its contention that Congress has the power, without impairing vested
rights, to transfer property of a municipal corporation from one government agency to another as
long as such property continues to be devoted to its original purpose. But the decision precisely
pointed out that those authorities are not in point, since the transfers involved therein were
merely for purposes of administration, the ownership of and benefits from the property being
retained by the municipal corporations concerned, whereas the clear intent of Republic Act No.
1383 'is to affect a real transfer of the ownership of the waterworks . . . and does not merely
encompass a transfer of administration."
It is hard to conceive how the jurisdiction, supervision and control of the appellee's waterworks
system may be vested in the appellant without destroying the integrity of the appellee's right of
dominion. Ownership is nothing without the inherent rights of possession, control and enjoyment.
Where the owner is deprived of the ordinary and beneficial use of his property or of its value by its
being diverted to public use, there is taking within the constitutional sense. Tañada & Fernando,
Constitution of the Philippines, 4th ed., Vol. 1, 215-216. Such deprivation would be the certain
consequence if, as prayed for by the appellant, it should be allowed to assume jurisdiction
supervision and control over the waterworks system of the appellee. That would be little less than
all assumption of ownership itself and not of mere administration.
The judgment appealed from is affirmed, with costs.
Bengzon, C.J., Bautista Angelo, Reyes, J.B.L., Paredes, Dizon, Regala, Bengzon, J.P. and Zaldivar, JJ.,
concur.
Concepcion and Barrera, JJ., took no part.
54
REPUBLIC vs PLDT
EN BANC
[G.R. No. L-18841. January 27, 1969.]
REPUBLIC OF THE PHILIPPINES, plaintiff-appellant, vs. PHILIPPINE LONG DISTANCE TELEPHONE
COMPANY, defendant-appellant.
Solicitor General Arturo A. Alafriz, Assistant Solicitor General Antonio A. Torres and Solicitor
Camilo D. Quiason for plaintiff- appellant.
Ponce Enrile, Siguion Reyna, Montecillo & Belo for defendant-appellant.
SYLLABUS
1.CONSTITUTIONAL LAW; EMINENT DOMAIN; EXPROPRIATION OF PUBLIC SERVICE UTILITIES;
PAYMENT OF JUST COMPENSATION LIKE EXPROPRIATION OF REAL PROPERTY. — Where the
Republic may not compel the PLDT to celebrate a contract with it, the Republic may, in the
exercise of the sovereign power of eminent domain, require the telephone company to permit
interconnection of the government telephone system and that of the PLDT, as the needs of the
government service may require, subject to the payment of just compensation to be determined
by the court. Normally, of course, the power of eminent domain results in the taking or
appropriation of title to, and possession of, the expropriated property; but no cogent reason
appears why the said power may not be availed of to impose only a burden upon the owner of
condemned property, without loss of title and possession. It is unquestionable that the real
property may, through expropriation, be subjected to an easement of right of way. The use of the
PLDT's lines and services to allow interservice connection between both telephone systems is not
much different. In either case private property is subjected to a burden for public use and benefit.
If, under Section 6, Article XIII, of the Constitution, the State may, in the interest of national
welfare, transfer utilities to public ownership upon payment of just compensation, there is no
reason why the State may not require a public utility to render services in the general interest,
provided just compensation is paid therefor.
2.ID.; ID.; ID.; DISMISSAL OF PETITION BY COURT A QUO NOT PROPER IN INSTANT CASE. — The
Republic's cause of action to compel the PLDT to execute a contract with the former, through the
Bureau, for the use of the facilities of defendant's telephone system throughout the Philippines
under such terms and conditions as the court might consider reasonable, is predicated upon the
radio telephonic isolation of Bureau's facilities from the outside World if the severance of the
interconnection were to be carried out by the PLDT, thereby preventing the Bureau of
Telecommunications from properly discharging its functions, to the prejudice of the general
public. Save for the prayer to compel the PLDT to enter into a contract (and the prayer is no
essential part of the pleading), the averments make out a case for compulsory rendering of interconnecting services by the telephone company upon such terms and conditions as the court may
determine to be just. And since the lower court found that both parties "are practically at one that
defendant (PLDT) is entitled to reasonable compensation from plaintiff for the reasonable use of
the former's telephone facilities" the lower court should have proceeded to treat the case as one
of condemnation of such services independently of contract and proceeded to determine the just
and reasonable compensation for the same, instead of dismissing the petition.
3.ID.; ID.; ID.; CFI AND NOT THE PSC HAS AUTHORITY TO EXERCISE JURISDICTION IN
EXPROPRIATION OF PUBLIC UTILITIES. — The plea that the court of first instance had no
jurisdiction to entertain the petition and that the proper forum for the action was the Public
Service Commission, under the law, the Public Service Commission has no authority to pass upon
actions for the taking of private property under the sovereign right of eminent domain.
Furthermore, while the defendant telephone company is a public utility corporation whose
franchise, equipment and other properties are under the jurisdiction, supervision and control of
the Public Service Commission, yet the plaintiff's telecommunications network is a public service
owned by the Republic and operated by an instrumentality of the National Government, hence,
exempt under Section 14 of the Public Service Act, from such jurisdiction, supervision and control.
The Bureau of Telecommunications was created in pursuance of a state policy reorganizing the
government offices and the determination of state policy is not vested in the Commission.
4.REMEDIAL LAW; ESTOPPEL; GOVERNMENT NOT ESTOPPED BY THE MISTAKE OF ITS AGENTS. —
Section 79, subsection (b), of Executive Order No. 94, Series of 1947 does not limit the Bureau of
Telecommunications to non-commercial activities or prevents it from serving the general public. It
may be that in its original prospectuses the Bureau officials had stated that the service would be
limited to government offices; but such limitations could not block future expansion of the
system, as authorized by the terms of the Executive Order, nor could the officials of the Bureau
bind the Government not to engage in services that are authorized by law. It is a well-known rule
that erroneous application and enforcement of the law by public officers do not block subsequent
correct application of the statute and that the Government is never estopped by mistake or error
on the part of its agents.
5.CIVIL LAW; CONTRACTS; FREEDOM TO STIPULATE TERMS AND CONDITIONS; PARTIES CAN NOT
BE COERCED. — Parties can not be coerced to enter into a contract where no agreement is had
between them as to the principal terms and conditions of the contract. Freedom to stipulate such
terms and condition is of the essence of our contractual system, and by express provision of the
statute, a contract may be annulled if tainted by violence, intimidation or undue influence (Articles
1306, 1336, 1337, Civil Code of the Philippines).
6.ID.; ID.; FRAUDULENT CONTRACT OR UNFAIR COMPETITION NOT PRESENT IN CASE AT BAR. —
The theses that the Bureau's commercial services constituted unfair competition, and that the
Bureau was guilty of fraud and abuse under its contract, are untenable: (1) the competition is
merely hypothetical, the demand for telephone service being very much more than the supposed
competitors can supply, (2) the PLDT franchise is non-exclusive, that it is well-known that
defendant PLDT is unable to adequately cope with the current demands for telephone service and
that its right to just compensation for the services rendered to the Government telephone system
and its users is herein recognized and preserved, and (3) when the Bureau of Telecommunications
subscribed to the trunk lines, defendant knew or should have known that their use by the
subscriber was more or less public and all embracing in nature and the acceptance by the
defendant of the payment of rentals, despite its knowledge that the plaintiff had extended the use
of the trunk lines to commercial purposes, implies assent by the defendant to such extended use.
To uphold the PLDT's contention is to subordinate the needs of the general public to the right of
the PLDT to derive profit from the future expansion of its services under its non-exclusive
franchise.
DECISION
REYES, J.B.L., J p:
Direct appeals, upon a joint record on appeal, by both the plaintiff and the defendant from the
dismissal, after hearing, by the Court of First Instance of Manila, in its Civil Case No. 35805, of their
respective complaint and counterclaims, but making permanent a preliminary mandatory
injunction therefore issued against the defendant on the inter-connection of telephone facilities
owned and operated by said parties.
The plaintiff, Republic of the Philippines, is a political entity exercising governmental powers
through its branches and instrumentalities, one of which is the Bureau of Telecommunications.
That office was created on 1 July 1947, under Executive Order No. 94, with the following powers
and duties, in addition to certain powers and duties formerly vested in the Director of Posts:
"SEC. 79.The Bureau of Telecommunications shall exercise the following powers and duties:
"(a)To operate and maintain existing wire-telegraph and radio- telegraph offices, stations, and
facilities, and those to be established to restore the pre-war telecommunication service under the
Bureau of Posts, as well as such additional offices or stations as may hereafter be established to
provide telecommunication service in places requiring such service;
"(b)To investigate, consolidate, negotiate for, operate and maintain wire-telephone or radio
telephone communication service throughout the Philippines by utilizing such existing facilities in
cities, towns, and provinces as may be found feasible and under such terms and conditions or
55
arrangements with the present owners or operators thereof as may be agreed upon to the
satisfaction of all concerned;
"(c)To prescribe, subject to approval by the Department Head, equitable rates of charges for
messages handled by the system and/or for timecalls and other services that may be rendered by
said system;
"(d)To establish and maintain coastal stations to serve ships at sea or aircrafts and, when public
interest so requires, to engage in the international telecommunication service in agreement with
other countries desiring to establish such service with the Republic of the Philippines; and
"(e)To abide by all existing rules and regulations prescribed by the International
Telecommunication Convention relative to the accounting, disposition and exchange of messages
handled in the international service, and those that may hereafter be promulgated by said
convention and adhered to by the Government of the Republic of the Philippines." 1
The defendant, Philippine Long Distance Telephone Company (PLDT for short), is a public service
corporation holding a legislative franchise, Act 3426, as amended by Commonwealth Act 407, to
install, operate and maintain a telephone system throughout the Philippines and to carry on the
business of electrical transmission of messages within the Philippines and between the Philippines
and the telephone systems of other countries. 2 The RCA Communications, Inc., (which is not a
party to the present case, but has contractual relations with the parties) is an American
corporation authorized to transact business in the Philippines and is the grantee, by assignment,
of a legislative franchise to operate a domestic station for the reception and transmission of long
distance wireless messages (Act 2178) and to operate broadcasting and radio-telephone and
radio-telegraphic communications services (Act 3180) 3
Sometime in 1933, the defendant, PLDT, and the RCA Communications, Inc., entered into an
agreement whereby telephone messages, coming from the United States and received by RCA's
domestic station, could automatically be transferred to the lines of PLDT; and vice-versa, for calls
collected by the PLDT for transmission from the Philippines to the United States. The contracting
parties agreed to divide the tolls, as follows: 25% to PLDT and 75% to RCA. The sharing was
amended in 1941 to 30% for PLDT and 70% for RCA, and again amended in 1947 to a 50-50 basis.
The arrangement was later extended to radio-telephone messages to and from European and
Asiatic countries. Their contract contained a stipulation that either party could terminate it on a
24-month notice to the other. 4On 2 February 1956, PLDT gave notice to RCA to terminate their
contract on 2 February 1956. 5
Soon after its creation in 1947, the Bureau of Telecommunications set up its own Government
Telephone System by utilizing its own appropriation and equipment and by renting trunk lines of
the PLDT to enable government offices to call private parties. 6 Its application for the use of these
trunk lines was in the usual form of applications for telephone service, containing a statement,
above the signature of the applicant, that the latter will abide by the rules and regulations of the
PLDTwhich are on file with the Public Service Commission. 7 One of the many rules prohibits the
public use of the service furnished the telephone subscriber for his private use. 8 The Bureau has
extended its services to the general public since 1948, 9 using the same trunk lines owned by, and
rented from, the PLDT, and prescribing its (the Bureau's) own schedule of rates. 10 Through these
trunk lines, a Government Telephone System (GTS) subscriber could make a call to a PLDT
subscriber in the same way that the latter could make a call to the former.
On 5 March 1958, the plaintiff, through the Director of Telecommunications, entered into an
agreement with RCA Communications, Inc., for a joint overseas telephone service whereby the
Bureau would convey radio-telephone overseas calls received by RCA's station to and from local
residents. 11 Actually, they inaugurated this joint operation on 2 February 1958, under a
"provisional" agreement. 12
On 7 April 1958, the defendant, Philippine Long Distance Telephone Company, complained to the
Bureau of Telecommunications that said bureau was violating the conditions under which their
Private Branch Exchange (PBX) is interconnected with the PLDT's facilities, referring to the rented
trunk lines, for the Bureau had used the trunk lines not only for the use of government offices but
even to serve private persons or the general public, in competition with the business of the PLDT;
and gave notice that if said violations were not stopped by midnight of 12 April 1958, the PLDT
would sever the telephone connections. 13 When the PLDT received no reply, it disconnected the
trunk lines being rented by the Bureau at midnight on 12 April 1958. 14 The result was the
isolation of the Philippines, on telephone services, from the rest of the world, except the United
States. 15
At that time, the Bureau was maintaining 5,000 telephones and had 5,000 pending applications
for telephone connection. 16 The PLDT was also maintaining 60,000 telephones and had also
20,000 pending applications. 17 Through the years, neither of them has been able to fill up the
demand for telephone service.
The Bureau of Telecommunications had proposed to the PLDT on 8 January 1958 that both enter
into an interconnecting agreement, with the government paying (on a call basis) for all calls
passing through the interconnecting facilities from the Government Telephone System to the
PLDT. 18 The PLDT replied that it was willing to enter into an agreement on overseas telephone
service to Europe and Asian countries provided that the Bureau would submit to the jurisdiction
and regulations of the Public Service Commission and in consideration of 37 1/2% of the gross
revenues. 19 In its memorandum in lieu of oral argument in this Court dated 9 February 1964, on
page 8, the defendant reduced its offer to 33 1/3% (1/3) as its share in the overseas telephone
service. The proposals were not accepted by either party.
On 12 April 1958, plaintiff Republic commenced suit against the defendant, Philippine Long
Distance Telephone Company, in the Court of First Instance of Manila (Civil Case No. 35805),
praying in its complaint for judgment commanding the PLDT to execute a contract with plaintiff,
through the Bureau, for the use of the facilities of defendant's telephone system throughout the
Philippines under such terms and conditions as the court might consider reasonable, and for a writ
of preliminary injunction against the defendant company to restrain the severance of the existing
telephone connections and/or restore those severed.
Acting on the application of the plaintiff, and on the ground that the severance of telephone
connections by the defendant company would isolate the Philippines from other countries, the
court a quo, on 14 April 1958, issued an order for the defendant:
"(1) to forthwith reconnect and restore the seventy-eight (78) trunk lines that it has disconnected
between the facilities of the Government Telephone System, including its overseas telephone
services, and the facilities of defendant; (2) to refrain from carrying into effect its threat to sever
the existing telephone communication between the Bureau of Telecommunications and
defendant, and not to make connection over its telephone system of telephone calls coming to
the Philippines from foreign countries through the said Bureau's telephone facilities and the radio
facilities Of RCA Communications, Inc.; and (3) to accept and connect through its telephone
system all such telephone calls coming to the Philippines from foreign countries — until further
order of this Court."
On 28 April 1958, the defendant company filed its answer, with counterclaims.
It denied any obligation on its part to execute a contract of services with the Bureau of
Telecommunications; contested the jurisdiction of the Court of First Instance to compel it to enter
into interconnecting agreements, and averred that it was justified to disconnect the trunk lines
heretofore leased to the Bureau of Telecommunications under the existing agreement because its
facilities were being used in fraud of its rights. The PLDT further claimed that the Bureau was
engaging in commercial telephone operations in excess of authority, in competition with, and to
the prejudice of, the PLDT, using defendant's own telephone poles, without proper accounting of
revenues.
After trial, the lower court rendered judgment that it could not compel the PLDT to enter into an
agreement with the Bureau because the parties were not in agreement; that under Executive
Order 94, establishing the Bureau of Telecommunications, said Bureau was not limited to servicing
government offices alone, nor was there any in the contract of lease of the trunk lines, since the
PLDT knew, or ought to have known, at the time that their use by the Bureau was to be public
throughout the Islands, hence the Bureau was neither guilty of fraud, abuse, or misuse of the
56
poles of the PLDT; and, in view of serious public prejudice that would result from the
disconnection of the trunk lines, declared the preliminary injunction permanent, although it
dismissed both the complaint and the counterclaims.
Both parties appealed.
Taking up first the appeal of the Republic, the latter complains of the action of the trial court in
dismissing the part of its complaint seeking to compel the defendant to enter into an
interconnecting contract with it, because the parties could not agree on the terms and conditions
of the interconnection, and of its refusal to fix the terms and conditions therefor.
We agree with the court below that parties can not be coerced to enter into a contract where no
agreement is had between them as to the principal terms and conditions of the contract. Freedom
to stipulate such terms and conditions is of the essence of our contractual system, and by express
provision of the statute, a contract may be annulled if tainted by violence, intimidation or undue
influence (Articles 1306, 1336, 1337, Civil Code of the Philippines). But the court a quo has
apparently overlooked that while the Republic may not compel the PLDT to celebrate a contract
with it, the Republic may, in the exercise of the sovereign power of eminent domain, require the
telephone company to permit interconnection of the government telephone system and that of
the PLDT, as the needs of the government service may require, subject to the payment of just
compensation to be determined by the court. Normally, of course, the power of eminent domain
results in the taking or appropriation of title to, and possession of, the expropriated property; but
no cogent reason appears why the said power may not be availed of to impose only a burden
upon the owner of condemned property, without loss of title and possession. It is unquestionable
that real property may, through expropriation, be subjected to an easement of right of way. The
use of the PLDT's lines and services to allow interservice connection between both telephone
systems is not much different. In either case private property is subjected to a burden for public
use and benefit. If under Section 6, Article XIII, of the Constitution, the State may, in the interest
of national welfare, transfer utilities to public ownership upon payment of just compensation,
there is no reason why the State may not require a public utility to render services in the general
interest, provided just compensation is paid therefor. Ultimately, the beneficiary of the
interconnecting service would be the users of both telephone systems, so that the condemnation
would be for public use.
The Bureau of Telecommunications, under Section 78(b) of Executive Order No. 94, may operate
and maintain wire telephone or radio telephone communications throughout the Philippines by
utilizing existing facilities in cities, towns, and provinces under such terms and conditions or
arrangement with present owners or operators as may be agreed upon to the satisfaction of all
concerned; but there is nothing in this Section that would exclude resort to condemnation
proceedings where unreasonable or unjust terms and conditions are exacted, to the extent of
crippling or seriously hampering the operations of said Bureau.
A perusal of the complaint shows that the Republic's cause of action is predicated upon the radio
telephonic isolation of the Bureau's facilities from the outside world if the severance of
interconnection were to be carried out by the PLDT, thereby preventing the Bureau of
Telecommunications from properly discharging its functions, to the prejudice of the general
public. Save for the prayer to compel the PLDT to enter into a contract (and the prayer is no
essential part of the pleading), the averments make out a case for compulsory rendering of interconnecting services by the telephone company upon such terms and conditions as the court may
determine to be just. And since the lower court found that both parties "are practically at one that
defendant (PLDT) is entitled to reasonable compensation from plaintiff for the reasonable use of
the former's telephone facilities" (Decision, Record on Appeal, page 224), the lower court should
have proceeded to treat the case as one of condemnation of such services independently of
contract and proceeded to determine the just and reasonable compensation for the same, instead
of dismissing the petition.
This view we have taken of the true nature of the Republic's petition necessarily results in
overruling the plea of defendant- appellant PLDT that the court of first instance had no jurisdiction
to entertain the petition and that the proper forum for the action was the Public Service
Commission. That body, under the law, has no authority to pass upon actions for the taking of
private property under the sovereign right of eminent domain. Furthermore, while the defendant
telephone company is a public utility corporation whose franchise, equipment and other
properties are under the jurisdiction, supervision and control of the Public Service Commission
(Sec. 13, Public Service Act), yet the plaintiff's telecommunications network is a public service
owned by the Republic and operated by an instrumentality of the National Government, hence
exempt, under Section 14 of the Public Service Act, from such jurisdiction, supervision and control.
The Bureau of Telecommunications was created in pursuance of a state policy reorganizing the
government offices —
"to meet the exigencies attendant upon the establishment of the free and independent
Government of the Republic of the Philippines, and for the purpose of promoting simplicity,
economy and efficiency in its operation" (Section 1, Republic Act No. 51)
and the determination of state policy is not vested in the Commission (Utilities Com. vs.
Bartonville Bus Line, 290 Ill. 574; 124 N.E. 373)
Defendant PLDT, as appellant, contends that the court below was in error in not holding that the
Bureau of Telecommunications was not empowered to engage in commercial telephone business,
and in ruling that said defendant was not justified in disconnecting the telephone trunk lines it had
previously leased to the Bureau. We find that the court a quo ruled correctly in rejecting both
assertions.
Executive Order No. 94, Series of 1947, reorganizing the Bureau of Telecommunications, expressly
empowered the latter in its Section 79, subsection (b), to "negotiate for, operate and maintain
wire telephone or radio telephone communication service throughout the Philippines," and, in
subsection (c), "to prescribe subject to approval by the Department Head, equitable rates of
charges for messages handled by the system and/or for time calls and other services that may be
rendered by the system." Nothing in these provisions limits the Bureau to non-commercial
activities or prevents it from serving the general public. It may be that in its original prospectuses
the Bureau officials had stated that the service would be limited to government offices: but such
limitations could not block future expansion of the system, as authorized by the terms of the
Executive Order, nor could the officials of the Bureau bind the Government not to engage in
services that are authorized by law. It is a well-known rule that erroneous application and
enforcement of the law by public officers do not block subsequent correct application of the
statute (PLDT vs. Collector of Internal Revenue, 90 Phil. 676), and that the Government is never
estopped by mistake or error on the part of its agents (Pineda vs. Court of First Instance of
Tayabas, 52 Phil. 803, 807; Benguet Consolidated Mining Co. vs. Pineda, 98 Phil. 711, 724)
The theses that the Bureau's commercial services constituted unfair competition, and that the
Bureau was guilty of fraud and abuse under its contract, are, likewise, untenable.
First, the competition is merely hypothetical, the demand for telephone service being very much
more than the supposed competitors can supply. As previously noted, the PLDT had 20,000
pending applications at the time, and the Bureau had another 5,000. The telephone company's
inability to meet the demands for service are notorious even now. Second, the charter of the
defendant expressly provides:
"Sec. 14.The rights herein granted shall not be exclusive, and the rights and power to grant to any
corporation, association or person other than the grantee franchise for the telephone or electrical
transmission of messages or signals shall not be impaired or affected by the granting of this
franchise: —" (Act 3436)
And third, as the trial court correctly stated, "when the Bureau of Telecommunications subscribed
to the trunk lines, defendant knew or should have known that their use by the subscriber was
more or less public and all embracing in nature, that is, throughout the Philippines, if not abroad"
(Decision, Record on Appeal, page 216)
The acceptance by the defendant of the payment of rentals, despite its knowledge that the
plaintiff had extended the use of the trunk lines to commercial purposes, continuously since 1948,
implies assent by the defendant to such extended use. Since this relationship has been maintained
57
for a long time and the public has patronized both telephone systems, and their interconnection is
to the public convenience, it is too late for the defendant to claim misuse of its facilities, and it is
not now at liberty to unilaterally sever the physical connection of the trunk lines.
". . ., but there is high authority for the position that, when such physical connection has been
voluntarily made, under a fair and workable arrangement and guaranteed by contract and the
continuous line has come to be patronized and established as a great public convenience, such
connection shall not in breach of the agreement be severed by one of the parties. In that case, the
public is held to have such an interest in the arrangement that its rights must receive due
consideration. This position finds approval in State ex rel. vs. Cadwaller, 172 Ind. 619, 636, 87 N.E.
650, and is stated in the elaborate and learned opinion of Chief Justice Myers as follows: `Such
physical connection cannot be required as of right, but if such connection is voluntarily made by
contract, as is here alleged to be the case, so that the public acquires an interest in its
continuance, the act of the parties in making such connection is equivalent to a declaration of a
purpose to waive the primary right of independence, and it imposes upon the property such a
public status that it may not be disregarded' — citing Mohan v. Mich. Tel. Co., 132 Mich, 242, 93
N.W. 629, and the reasons upon which it is in part made to rest are referred to in the same
opinion, as follows: `Where private property is by the consent of the owner invested with a public
interest or privilege for the benefit of the public, the owner can no longer deal with it as private
property only, but must hold it subject to the rights of the public in the exercise of that public
interest or privilege conferred for their benefit.' Allnut v. Inglis (1810) 12 East, 527. The doctrine of
this early case is the acknowledged law." (Clinton-Dunn Tel. Co. v. Carolina Tel. & Tel. Co., 74 S.E.
636, 638)
It is clear that the main reason for the objection of the PLDT lies in the fact that said appellant did
not expect that the Bureau's telephone system would expand with such rapidity as it has done;
but this expansion is no ground for the discontinuance of the service agreed upon.
The last issue urged by the PLDT as appellant is its right to compensation for the use of its poles
for bearing telephone wires of the Bureau of Telecommunications. Admitting that Section 19 of
the PLDT charter reserves to the Government —
"the privilege without compensation of using the poles of the grantee to attach one ten-pin crossarm, and to install, maintain and operate wires of its telegraph system thereon: Provided,
however, That the Bureau of Posts shall have the right to place additional cross-arms and wires on
the poles of the grantee by paying a compensation, the rate of which is to be agreed upon by the
Director of Posts and the grantee; —"
the defendant counterclaimed for P8,772.00 for the use of its poles by the plaintiff, contending
that what was allowed free use, under the aforequoted provision, was one ten-pin cross-arm
attachment and only for plaintiff's telegraph system, not for its telephone system; that said
Section could not refer to the plaintiff's telephone system, because it did not have such telephone
system when defendant acquired its franchise. The implication of the argument is that plaintiff has
to pay for the use of defendant's poles if such use is for plaintiff's telephone system and has to pay
also if it attaches more than one (1) ten-pin cross-arm for telegraphic purposes.
compensation for the services rendered to the Government telephone system and its users is
herein recognized and preserved, the objections of defendant-appellant are without merit. To
uphold the PLDT's contention is to subordinate the needs of the general public to the right of the
PLDT to derive profit from the future expansion of its services under its non-exclusive franchise.
WHEREFORE, the decision of the Court of First Instance, now under appeal, is affirmed, except in
so far as it dismisses the petition of the Republic of the Philippines to compel the Philippine Long
Distance Telephone Company to continue servicing the Government telephone system upon such
terms, and for a compensation, that the trial court may determine to be just, including the period
elapsed from the filing of the original complaint or petition. And for this purpose, the records are
ordered returned to the court of origin for further hearings and other proceedings not
inconsistent with this opinion. No costs.
Concepcion, C.J., Dizon, Makalintal, Zaldivar, Sanchez, Ruiz Castro, Fernando, Capistrano,
Teehankee and Barredo, JJ., concur.
Footnotes
1.Stipulated by parties (Record on Appeal, pages 70-72)
2.Stipulated by parties (Record on Appeal, pages 70-72)
3.Stipulated by parties (Record on Appeal, pages 70-72)
4.Exhibit "Q", folder of exhibits, pages 1-2, 11, 66-67, 69, 72-73, 82-83, 88.
5.T.s.n., 26 January 1959, page 11.
6.Exhibit "12-A".
7.Partial Stipulation of Facts and its Annex "D", record on appeal, pages 72, 138-139.
8.Exhibit "16", page 49.
9.T.s.n., 9 March 1960, page 9.
10.T.s.n., 9 March 1960, page 57.
11.Annex "M" to Partial Stipulation of Facts, record on appeal, pages 164-177.
12.T.s.n., 9 March 1960, pages 30-31.
13.Annex "P", record on appeal, pages 184-186.
14.Partial Stipulation of Facts, record on appeal, page 78.
15.Decision, record on appeal, pages 221-222.
16.Decision, record on appeal, page 211; Exhibit "3", record of exhibits, page 103; T.s.n., 9 March
1960, pages 56 and 59.
17.Decision, record on appeal, page 211; Exhibit "3", record on exhibits, page 103; T.s.n., 9 March
1960, pages 56 and 59.
18.Partial Stipulation of Facts, record on appeal, page 72.
19.Partial Stipulation of Facts, record on appeal, page 77.
As there is no proof that the telephone wires strain the poles of the PLDT more than the telegraph
wires, nor that they cause more damage than the wires of the telegraph system, or that the
Government has attached to the poles more than one ten-pin in cross-arm as permitted by the
PLDT charter, we see no point in this assignment of error. So long as the burden to be borne by
the PLDT poles is not increased, we see no reason why the reservation in favor of the telegraph
wires of the government should not be extended to its telephone line, any time that the
government decided to engage also in this kind of communication.
In the ultimate analysis, the true objection of the PLDT to continue the link between its network
and that of the Government is that the latter competes "politically" (sic) with its own telephone
services. Considering, however, that the PLDT franchise is non- exclusive; that it is well-known that
defendant PLDT is unable to adequately cope with the current demands for telephone service, as
shown by the number of pending applications therefor; and that the PLDT's right to just
58
TELEBAP vs COMELEC
EN BANC
[G.R. No. 132922. April 21, 1998.]
TELECOMMUNICATIONS AND BROADCAST ATTORNEYS OF THE PHILIPPINES, INC. and GMA
NETWORK, INC., petitioners, vs. THE COMMISSION ON ELECTIONS, respondent.
SYNOPSIS
Section 11 (b) of R.A. No. 6646 prohibits the sale or donation of print space or air time for political
ads, except to the Commission on Elections. Petitioners challenge the validity thereof on the
ground (1) that it takes property without due process of law and without just compensation; (2)
that it denies radio and television broadcast companies the equal protection of the laws; and (3)
that it is in excess of the power given to the COMELEC to supervise or regulate the operation of
media of communication or information during the period of election. AICHaS
Radio and television broadcasting companies do not own the airwaves and frequencies through
which they transmit broadcast signals and images. They are merely given the temporary privilege
of using them or franchise, the exercise of the which may reasonably be burdened with the
performance by the grantee of some form of public service, such as providing print space or air
time to Comelec. Section 92 of B.P. Blg. 881 must be deemed incorporated in R.A. No. 7252
granting GMA Network, Inc. a franchise and does not constitute denial of due process and that
B.P. Blg. 881, §92 is not an invalid amendment of petitioner's franchise but the enforcement of a
duty voluntarily assumed by petitioner in accepting a public grant of privilege.
An administrative agency cannot, in the exercise of lawmaking, amend a statute of Congress.
Therefore §2 of Resolution No. 2983-A of the Comelec providing for payment of just
compensation is invalid.
B.P. Blg. 881, §92 does not single out radio and television stations in providing free air time. There
are important differences in the characteristics of the broadcast media and the print media, which
justify their differential treatment for free speech purposes.
The freedom of television and radio broadcasting is somewhat lesser in scope than the freedom
accorded to newspaper and print media.
What the COMELEC is authorized to supervise or regulate by Art. IX-C, §4 of the Constitution,
among other things, is the use by media of information of their franchises or permits, while what
Congress (not the COMELEC) prohibits is the sale or donation of print space or air time for political
ads. In other words, the object of supervision or regulation is different from the object of the
prohibition.
SYLLABUS
1.REMEDIAL LAW; ACTIONS; PARTIES; LOCUS STANDI; LAWYERS OF RADIO AND TELEVISION
BROADCASTING COMPANIES WITHOUT STANDING TO QUESTION OPERATION OF SECTION 92 OF
B. P. BLG. 881 PROVIDING FREE COMELEC AIR TIME. — At the threshold of this suit is the question
of standing of petitioner Telecommunications and Broadcast Attorneys of the Philippines, Inc.
(TELEBAP). As already noted, its members assert an interest as lawyers of radio and television
broadcasting companies and as citizens, taxpayers, and registered voters. In those cases in which
citizens were authorized to sue, this Court upheld their standing in view of the "transcendental
importance" of the constitutional question raised which justified the granting of relief. In contrast,
in the case at bar, as will presently be shown, petitioners' substantive claim is without merit. To
the extent, therefore, that a party's standing is determined by the substantive merit of his case or
a preliminary estimate thereof, petitioner TELEBAP must be held to be without standing. Indeed, a
citizen will be allowed to raise a constitutional question only when he can show that he has
personally suffered some actual or threatened injury as a result of the allegedly illegal conduct of
the government; the injury is fairly traceable to the challenged action; and the injury is likely to be
redressed by a favorable action. Members of petitioner have not shown that they have suffered
harm as a result of the operation of §92 of B.P. Blg. 881. Nor do members of petitioner TELEBAP
have an interest as registered voters since this case does not concern their right of suffrage. Their
interest in §92 of B.P. Blg. 881 should be precisely in upholding its validity. Much less do they have
an interest as taxpayers since this case does not involve the exercise by Congress of its taxing or
spending power. A party suing as a taxpayer must specifically show that he has a sufficient interest
in preventing the illegal expenditure of money raised by taxation and that he will sustain a direct
injury as a result of the enforcement of the questioned statute. Nor indeed as a corporate entity
does TELEBAP have standing to assert the rights of radio and television broadcasting companies.
Standing jus tertii will be recognized only if it can be shown that the party suing has some
substantial relation to the third party, or that the third party cannot assert his constitutional right,
or that the right of the third party will be diluted unless the party in court is allowed to espouse
the third party's constitutional claim. None of these circumstances is here present. The mere fact
that TELEBAP is composed of lawyers in the broadcast industry does not entitle them to bring this
suit in their name as representatives of the affected companies.
2.ID.; ID.; ID.; ID.; OPERATOR OF RADIO AND TV BROADCAST STATIONS WITH STANDING TO
CHALLENGE RESOLUTION OF COMELEC PROVIDING FREE AIR TIME. — Nevertheless, we have
decided to take this case since the other petitioner, GMA Network, Inc., appears to have the
requisite standing to bring this constitutional challenge. Petitioner operates radio and television
broadcast stations in the Philippines affected by the enforcement of §92 of B.P. Blg. 881 requiring
radio and television broadcast companies to provide free air time to the COMELEC for the use of
candidates for campaign and other political purposes.
3.CONSTITUTIONAL LAW; LEGISLATIVE DEPARTMENT; FRANCHISE OF RADIO AND TV STATIONS;
SUBJECT TO AMENDMENT, ALTERATION OR REPEAL. — All broadcasting, whether by radio or by
television stations, is licensed by the government. Airwave frequencies have to be allocated as
there are more individuals who want to broadcast than there are frequencies to assign. A
franchise is thus a privilege subject, among other things, to amendment by Congress in
accordance with the constitutional provision that "any such franchise or right granted . . . shall be
subject to amendment, alteration or repeal by the Congress when the common good so requires."
4.ID.; ID.; ID.; COMELEC RESOLUTION PROVIDING FREE COMELEC TIME, AN AMENDMENT
THERETO; CASE AT BAR. — The idea that broadcast stations may be required to provide COMELEC
Time free of charge is not new. It goes back to the Election Code of 1971 (R.A. No. 6388). This
provision was carried over with slight modification by the 1978 Election Code (P.D. No. 1296).
Substantially the same provision is now embodied in §92 of B.P. Blg. 881. Indeed, provisions for
COMELEC Time have been made by amendment of the franchises of radio and television
broadcast stations and, until the present case was brought, such provisions had not been thought
of as taking property without just compensation. Art. XII, §11 of the Constitution authorizes the
amendment of franchises for "the common good." What better measure can be conceived for the
common good than one for free air time for the benefit not only of candidates but even more of
the public, particularly the voters, so that they will be fully informed of the issues in an election?
"[I]t is the right of the viewers and listeners, not the right of the broadcasters which is paramount.
Radio and television broadcasting companies, which are given franchises, do not own the airwaves
and frequencies through which they transmit broadcast signals and images. They are merely given
the temporary privilege of using them. Since a franchise is a mere privilege, the exercise of the
privilege may reasonably be burdened with the performance by the grantee of some form of
public service.
5.ID.; ID.; ID.; ID.; RADIO AND TV BROADCAST STATIONS DO NOT OWN THE AIRWAVES; NO
PROPERTY TAKEN WHERE THEY WERE REQUIRED TO PROVIDE FREE AIRTIME TO COMELEC. — As
held in Red Lion Broadcasting Co. v. F.C.C., which upheld the right of a party personally attacked to
reply, "licenses to broadcast do not confer ownership of designated frequencies, but only the
temporary privilege of using them." Consequently, "a license permits broadcasting, but the license
has no constitutional right to be the one who holds the license or to monopolize a radio frequency
to the exclusion of his fellow citizens. There is nothing in the First Amendment which prevents the
Government from requiring a licensee to share his frequency with others and to conduct himself
as a proxy or fiduciary with obligations to present those views and voices which are representative
of his community and which would otherwise, by necessity, be barred from the airwaves." As
59
radio and television broadcast stations do not own the airwaves, no private property is taken by
the requirement that they provide air time to the COMELEC.
6.ID.; ID.; ID.; SECTION 92 OF B.P. BLG. 881, A VALID AMENDMENT OF GMA'S FRANCHISE. — It is
noteworthy that §49 of R.A. No. 6388, from which §92 of B.P. Blg. 881 was taken, expressly
provided that the COMELEC Time should "be considered as part of the public service time said
stations are required to furnish the Government for the dissemination of public information and
education under their respective franchises or permits." There is no reason to suppose that §92 of
B.P. Blg. 881 considers the COMELEC Time therein provided to be otherwise than as a public
service which petitioner is required to render under §4 of its charter (R.A. No. 7252). In sum, B.P.
Blg. 881, §92 is not an invalid amendment of petitioner's franchise but the enforcement of a duty
voluntarily assumed by petitioner in accepting a public grant of privilege.
7.ADMINISTRATIVE LAW; ADMINISTRATIVE AGENCY; CANNOT IN THE EXERCISE OF LAWMAKING,
AMEND A STATUTE OF CONGRESS. — Thus far, we have confined the discussion to the provision of
§92 of B.P. Blg. 881 for free air time without taking into account COMELEC Resolution No. 2983-A,
§2. This is because the amendment providing for the payment of "just compensation" is invalid,
being in contravention of §92 of B.P. Blg. 881 that radio and television time given during the
period of the campaign shall be "free of charge." Indeed, Resolution No. 2983 originally provided
that the time allocated shall be "free of charge," just as §92 requires such time to be given "free of
charge." The amendment appears to be a reaction to petitioners' claim in this case that the
original provision was unconstitutional because it allegedly authorized the taking of property
without just compensation. The Solicitor General, relying on the amendment, claims that there
should be no more dispute because the payment of compensation is now provided for. It is basic,
however, that an administrative agency cannot, in the exercise of lawmaking, amend a statute of
Congress. Since §2 of Resolution No. 2983-A is invalid, it cannot be invoked by the parties.
8.CONSTITUTIONAL LAW; BILL OF RIGHTS; EQUAL PROTECTION OF THE LAWS; IMPORTANT
DIFFERENCES BETWEEN PRINT AND AIR MEDIA JUSTIFY DIFFERENTIAL TREATMENT FOR FREE
SPEECH PURPOSES. — Petitioners complain that B.P. Blg. 881, §92 singles out radio and television
stations to provide free air time. They contend that newspapers and magazines are not similarly
required as, in fact, in Philippine Press Institute v. COMELEC we upheld their right to the payment
of just compensation for the print space they may provide under §90. The argument will not bear
analysis. It rests on the fallacy that broadcast media are entitled to the same treatment under the
free speech guarantee of the Constitution as the print media. There are important differences in
the characteristics of the two media, however, which justify their differential treatment for free
speech purposes. Because of the physical limitations of the broadcast spectrum, the government
must, of necessity allocate broadcast frequencies to those wishing to use them. There is no similar
justification for government allocation and regulation of the print media. In the allocation of
limited resources, relevant conditions may validly be imposed on the grantees or licensees. The
reason for this is that, as already noted, the government spends public funds for the allocation
and regulation of the broadcast industry, which it does not do in the case of the print media. To
require the radio and television broadcast industry to provide free air time for the COMELEC Time
is a fair exchange for what the industry gets. From another point of view, this Court has also held
that because of the unique and pervasive influence of the broadcast media, "[n]ecessarily . . . the
freedom of television and radio broadcasting is somewhat lesser in scope than the freedom
accorded to newspaper and print media." Petitioners' assertion therefore that §92 of B.P. Blg 881
denies them the equal protection of the law has no basis.
9.ID.; COMMISSION ON ELECTIONS; POWER TO REGULATE; DIFFERENT FROM POWER OF
CONGRESS TO PROHIBIT. — It is argued that the power to supervise or regulate given to the
COMELEC under Art. IX-C, §4 of the Constitution does not include the power to prohibit. In the
first place, what the COMELEC is authorized to supervise or regulate by Art. IX-C, §4 of the
Constitution, among other things, is the use by media of information of their franchises or
permits, while what Congress (not the COMELEC) prohibits is the sale or donation of print space or
air time for political ads. In other words, the object of supervision or regulation is different from
the object of the prohibition. It is another fallacy for petitioners to contend that the power to
regulate does not include the power to prohibit. This may have force if the object of the power
were the same.
10.ID.; LEGISLATIVE DEPARTMENT; SEC. 92 OF B.P. BLG. 881 PROVIDING FREE COMELEC AIRTIME,
UPHOLDS THE PEOPLE'S RIGHT TO INFORMATION ON MATTERS OF PUBLIC CONCERN. — To affirm
the validity of §92 B.P. Blg. 881 is to hold public broadcasters to their obligation to see to it that
the variety and vigor of public debate on issues in an election is maintained. For while broadcast
media are not mere common carriers but entities with free speech rights, they are also public
trustees charged with the duty of ensuring that the people have access to the diversity of views on
political issues. This right of the people is paramount to the autonomy of broadcast media. To
affirm the validity of §92, therefore, is likewise to uphold the people's right to information on
matters of public concern. The use of property bears a social function and is subject to the state's
duty to intervene for the common good. Broadcast media can find their just and highest reward in
the fact that whatever altruistic service they may render in connection with the holding of
elections is for that common good.
ROMERO, J., dissenting opinion:
1.CONSTITUTIONAL LAW; EMINENT DOMAIN; CONSTRUED. — The power of eminent domain is a
power inherent in sovereignty and requires no constitutional provision to give it force. It is the
rightful authority which exists in every sovereignty, to control and regulate those rights of a public
nature which pertain to its citizens in common, and to appropriate and control individual property
for the public benefit as the public safety, necessity, convenience or welfare demand. The right to
appropriate private property to public use, however, lies dormant in the state until legislative
action is had, pointing out the occasions, the modes, the conditions and agencies for its
appropriation. AECacS
2.ID.; COMMISSION ON ELECTIONS; RESOLUTION GRANTING FREE COMELEC AIR TIME, AN
EXERCISE OF EMINENT DOMAIN WITHOUT PAYMENT OF JUST COMPENSATION. — Section 92 of
BP 881, insofar as it requires radio and television stations to provide Comelec with radio and
television time free of charge is a flagrant violation of the constitutional mandate that private
property shall not be taken for public use without just compensation. While it is inherent in the
State, the sovereign right to appropriate property has never been understood to include taking
property for public purposes without the duty and responsibility of ordering compensation to the
individual whose property has been sacrificed for the good of the community. There is, of course
no question that the taking of the property in the case at bar is for public use, i.e., to ensure that
air time is allocated equally among the candidates, however, there is no justification for the taking
without payment of just compensation. While Resolution No. 2983-A has provided that just
compensation shall be paid for the 30 minutes of prime time granted by the television stations to
respondent Comelec, we note that the resolution was passed pursuant to Section 92 of BP 881
which mandates that radio and television time be provided to respondent Comelec free of charge.
Since the legislative intent is the controlling element in determining the administrative powers
rights, privileges and immunities granted, respondent Comelec may, at any time, despite the
resolution passed, compel television and radio stations to provide it with airtime free of charge.
3.ID.; EMINENT DOMAIN; LIMITATIONS. — Section 9, Article III of the 1987 Constitution which
reads "No private property shall be taken for public use without just compensation," gives us two
limitations on the power of eminent domain: (1) the purpose of taking must be for public use and
(2) just compensation must be given to the owner of the private property.
4.ID.; ID.; DIFFERENTIATED FROM POLICE POWER. — Police power must be distinguished from the
power of eminent domain. In the exercise of police power, there is a restriction of property
interest to promote public welfare or interest which involves no compensable taking. When the
power of eminent domain, however, is exercised, property interest is appropriated and applied to
some public purpose necessitating compensation therefor. Traditional distinctions between police
power and the power of eminent domain precluded application of both powers at the same time
on the same subject. Property condemned under the exercise of police power, on the other hand,
is noxious or intended for noxious purpose and, consequently, is not compensable. Police power
60
proceeds from the principle that every holder of property, however absolute and unqualified may
be his title, holds it under the implied liability that his use of it shall not be injurious to the equal
enjoyment of others having an equal right to the enjoyment of their property, nor injurious to the
rights of the community. Rights of property, like all other social and conventional rights, are
subject to reasonable limitations in their enjoyment as shall prevent them from being injurious,
and to such reasonable restraints and regulations established by law as the legislature, under the
governing and controlling power vested in them by the constitution, may think necessary and
expedient.
5.ID.; POLICE POWER; RESTRICTION OF SALE OR DONATION OF AIRTIME DURING CAMPAIGN
PERIOD TO COMELEC, AN EXERCISE THEREOF; EXERCISE EXCEEDS LIMITATION. — The petition
before us is no different from the above-cited case. Insofar as Sec. 92 of BP 881 read in
conjunction with Sec. 11(b) of RA 6646 restricts the sale or donation of airtime by radio and
television stations during the campaign period to respondent Comelec, there is an exercise of
police power for the regulation of property in accordance with the Constitution. To the extent
however that Sec. 92 of BP 881 mandates that airtime be provided free of charge to respondent
Comelec to be allocated equally among all candidates, the regulation exceeds the limits of police
power and should be recognized as a taking. In the case of Pennsylvania Coal Co. v. Mahon, Justice
Holmes laid down the limits of police power in this wise, "The general rule is that while property
may be regulated to a certain extent, if the regulation goes too far, will be recognized as a taking."
6.ID.; EMINENT DOMAIN; ACQUISITION OF TITLE OR POSSESSION OF PROPERTY, NOT ESSENTIAL
TO TAKING. — While the power of eminent domain often results in the appropriation of title to or
possession of property, it need not always be the case. It is a settled rule that neither acquisition
nor total destruction of value is essential to taking and it is equally in cases where title remains
with the private owner that inquiry should be made to determine whether the impairment of a
property is merely regulated or amounts to a compensable taking. A regulation which deprives
any person profitable use of his property constitutes a taking and entitles him to compensation
unless the invasion of right is so slight as to permit the regulation to be justified under the police
power. Similarly, a police regulation which unreasonably restricts the right to use business
property for business purposes, amounts to taking of private property and the owner may recover
therefor. It is also settled jurisprudence that acquisition of right of way easement falls within the
purview of eminent domain. aTcSID
7.ID.; ID.; COMPENSABLE TAKING; MANIFEST IN LOSS OF EARNING. — While there is no taking or
appropriation of title to, and possession of the expropriated property in the case at bar, there is
compensable taking inasmuch as there is a loss of the earnings for the airtime which the
petitioner-intervenors are compelled to donate. It is a loss which, to paraphrase Philippine Press
Institute v. Comelec, could hardly be considered "de minimis" if we are to take into account the
monetary value of the compulsory donation measured by the current advertising rates of the
radio and television stations.
8.ID.; ID.; PRINT MEDIA NOT COMPELLED TO DONATE FREE SPACE. — In the case of Philippine
Press Institute v. Comelec, we had occasion to state that newspapers and other print media are
not compelled to donate free space to respondent Comelec inasmuch as this would be in violation
of the constitutional provision that no private property shall be taken for public use without just
compensation.
9.ID.; ID.; ID.; RULE APPLICABLE TO RADIO AND TV STATIONS; REASON. — We find no cogent
reason why radio and television stations should be treated any differently considering that their
operating expenses as compared to those of the newspaper and other print media publishers
involve; considerably greater amount of financial resources. The fact that one needs a franchise
from government to establish a radio and television station while no license is needed to start
newspaper should not be made a basis for treating broadcast media any differently from the print
media in compelling the former to "donate" airtime to respondent Comelec. While no franchises
and rights are granted except under the condition that it shall be subject to amendment,
alteration, or repeal by the Congress when the common good so requires, this provides no license
for government to disregard the cardinal rule that corporations with franchises are as much
entitled to due process and equal protection of laws guaranteed under the Constitution. SHaATC
VITUG, J., separate opinion:
1.CONSTITUTIONAL LAW; LEGISLATIVE DEPARTMENT; BATAS PAMBANSA BLG. 881; A LEGITIMATE
EXERCISE OF POLICE POWER. — I assent in most part to the well-considered opinion written by
Mr. Justice Vicente V. Mendoza in his ponencia particularly, in holding that petitioner TELEBAP
lacks locus standi in filing the instant petition and in declaring that Section 92 of Batas Pambansa
Blg. 881 is a legitimate exercise of police power of the State.
2.ID.; STATE; POLICE POWER; STANDARDS FOR LAWFUL EXERCISE. — In this case, the assailed law,
in my view, has not failed in meeting the standards set forth for its lawful exercise, i.e., (a) that its
utilization is demanded by the interests of the public, and (b) that the means employed are
reasonably necessary, and not unduly oppressive, for the accomplishment of the purpose and
objectives of the law.
3.ID.; LEGISLATIVE DEPARTMENT; FRANCHISE TO BROADCAST MEDIA; A PRIVILEGE BURDENED
WITH RESPONSIBILITIES. — The grant of franchise to broadcast media is a privilege burdened with
responsibilities. While it is, primordially, a business enterprise, it nevertheless, also addresses in
many ways certain imperatives of public service. In Stone vs. Mississippi (101, U.S. 814, cited in
Cruz, Constitutional Law, 1995 ed., p. 40), a case involving a franchise to sell lotteries which
petitioner claims to be a contract which may not be impaired, the United States Supreme Court
opined: ". . . (T)he Legislature cannot bargain away the police power of a State. Irrevocable grants
of property and franchises may be made if they do not impair the supreme authority to make laws
for the right government of the State; but no Legislature can curtail the power of its successors to
make such laws as they may deem proper in matters of police . . .
4.ID.; COMMISSION ON ELECTIONS; SECTION 2 OF RESOLUTION NO. 2983-A REQUIRING FREE
COMELEC AIR TIME, A VALID EXERCISE OF POLICE POWER. — I cannot consider COMELEC
Resolution No. 2983-A, particularly Section 2 thereof, as being in contravention of B.P. No. 881.
There is nothing in the law that prohibits the COMELEC from itself procuring airtime, perhaps
longer than that which can reasonably be allocated, if it believes that in so opting, it does so for
the public good. aHECST
PANGANIBAN, J., dissenting opinion:
1.POLITICAL LAW; EMINENT DOMAIN; PRINT MEDIA CANNOT BE REQUIRED TO DONATE
ADVERTISING SPACE TO COMELEC WITHOUT PAYMENT OF JUST COMPENSATION. — In Philippine
Press Institute Inc. (PPI) vs. Commission on Elections this Court ruled that print media companies
cannot be required to donate advertising space, free of charge to the Comelec for equal allocation
among candidates, on the ground that such compulsory seizure of print space is equivalent to a
proscribed taking of private property for public use without payment of just compensation.
2.CONSTITUTIONAL LAW; LEGISLATIVE DEPARTMENT; FRANCHISE; ONCE GRANTED BECOMES
PROPERTY OF THE GRANTEE WHICH CANNOT BE TAKEN WITHOUT PAYMENT OF JUST
COMPENSATION. — In stamping unbridled donations with its imprimatur, the majority overlooks
the twofold nature and purpose of a franchise: other than serving the public benefit which is
subject to government regulation, it must also be to the franchise holder's advantage. Once
granted, a franchise (not the air lanes) together with concomitant private rights, becomes
property of the grantee. It is regarded by law precisely as other property, and, as any other
property, it is safeguarded by the Constitution from arbitrary revocation or impairment. The rights
under a franchise can be neither taken nor curtailed for public use or purpose, even by the
government as the grantor, without payment of just compensation as guaranteed under our
fundamental law. The fact that the franchise relates to public use or purpose does not entitle the
state to abrogate or impair its use without just compensation.
3.STATUTORY CONSTRUCTION; STATUTES; CONSIDERED VAGUE AND INVALID IF THEY LEAVE LAW
ENFORCERS UNBRIDLED DISCRETION IN CARRYING OUT THEIR PROVISIONS. — As a rule, a statute
may be said to be vague and invalid if "it leaves law enforcers (in this case, the Comelec) unbridled
discretion in carrying out its provisions and becomes an arbitrary flexing of the government
muscle." (People vs. Nazario, 165 SCRA 186, 195, August 31, 1988) AScHCD
61
4.CONSTITUTIONAL LAW; LEGISLATIVE DEPARTMENT; LIMITATIONS ON LEGISLATIVE
REGULATIONS OF PUBLIC UTILITIES. — "[L]egislative regulation of public utilities must not have
the effect of depriving an owner of his property without due process of law, nor of confiscating or
appropriating private property without due process of law, nor of confiscating or appropriating
private property without just compensation, nor of limiting or prescribing irrevocably vested rights
or privileges lawfully acquired under a charter or franchise." The power to regulate is subject to
these constitutional limits. Consequently, "rights under a franchise cannot be taken or damaged
for a public use without the making of just compensation therefor." To do so is clearly beyond the
power of the legislature to regulate.
5.ID.; BILL OF RIGHTS; EQUAL PROTECTION OF LAWS; VIOLATION THEREOF MANIFEST WHERE
BROADCAST STATIONS WERE COMPELLED TO DONATE FREE TIME WHILE MAKING PAYMENT TO
PRINT MEDIA ADS. — Smacking of undisguised discrimination is the fact that in PPI vs. Comelec,
this Court has required payment of print media ads but, in this case, compels broadcast stations to
donate their end product on a massive scale. The simplistic distinction given — that radio and TV
stations are mere grantees of government franchises while newspaper companies are not — does
not justify the grand larceny of precious air time. This is a violation not only of private property,
but also of the constitutional right to equal protection itself. The proffered distinction between
print and broadcast media is too insignificant and too flimsy to be a valid justification for the
discrimination. The print and broadcast media are equal in the sense that both derive their
revenues principally from paid ads. They should thus be treated equally by the law in respect of
such ads. EHSAaD
DECISION
MENDOZA, J p:
In Osmeña v. COMELEC , G.R. No. 132231, decided March 31, 1998, 1 we upheld the validity of
§11(b) of R.A. No. 6646 which prohibits the sale or donation of print space or air time for political
ads, except to the Commission on Elections under §90, of B.P. No. 881, the Omnibus Election
Code, with respect to print media, and §92, with respect to broadcast media. In the present case,
we consider the validity of §92 of B.P. Blg. No. 881 against claims that the requirement that radio
and television time be given free takes property without due process of law; that it violates the
eminent domain clause of the Constitution which provides for the payment of just compensation;
that it denies broadcast media the equal protection of the laws; and that, in any event, it violates
the terms of the franchise of petitioner GMA Network, Inc. dctai
Petitioner Telecommunications and Broadcast Attorneys of the Philippines, Inc. is an organization
of lawyers of radio and television broadcasting companies. They are suing as citizens, taxpayers,
and registered voters. The other petitioner, GMA Network, Inc., operates radio and television
broadcasting stations throughout the Philippines under a franchise granted by Congress.
Petitioners challenge the validity of §92 on the ground (1) that it takes property without due
process of law and without just compensation; (2) that it denies radio and television broadcast
companies the equal protection of the laws; and (3) that it is in excess of the power given to the
COMELEC to supervise or regulate the operation of media of communication or information
during the period of election.
The Question of Standing
At the threshold of this suit is the question of standing of petitioner Telecommunications and
Broadcast Attorneys of the Philippines, Inc. (TELEBAP). As already noted, its members assert an
interest as lawyers of radio and television broadcasting companies and as citizens, taxpayers, and
registered voters.
In those cases 2 in which citizens were authorized to sue, this Court upheld their standing in view
of the "transcendental importance" of the constitutional question raised which justified the
granting of relief. In contrast, in the case at bar, as will presently be shown, petitioners'
substantive claim is without merit. To the extent, therefore, that a party's standing is determined
by the substantive merit of his case or a preliminary estimate thereof, petitioner TELEBAP must be
held to be without standing. Indeed, a citizen will be allowed to raise a constitutional question
only when he can show that he has personally suffered some actual or threatened injury as a
result of the allegedly illegal conduct of the government; the injury is fairly traceable to the
challenged action; and the injury is likely to be redressed by a favorable action. 3 Members of
petitioner have not shown that they have suffered harm as a result of the operation of §92 of B.P.
Blg. 881.
Nor do members of petitioner TELEBAP have an interest as registered voters since this case does
not concern their right of suffrage. Their interest in §92 of B.P. Blg. 881 should be precisely in
upholding its validity.
Much less do they have an interest as taxpayers since this case does not involve the exercise by
Congress of its taxing or spending power. 4 A party suing as a taxpayer must specifically show that
he has a sufficient interest in preventing the illegal expenditure of money raised by taxation and
that he will sustain a direct injury as a result of the enforcement of the questioned statute.
Nor indeed as a corporate entity does TELEBAP have standing to assert the rights of radio and
television broadcasting companies. Standing jus tertii will be recognized only if it can be shown
that the party suing has some substantial relation to the third party, or that the third party cannot
assert his constitutional right, or that the right of the third party will be diluted unless the party in
court is allowed to espouse the third party's constitutional claim. None of these circumstances is
here present. The mere fact that TELEBAP is composed of lawyers in the broadcast industry does
not entitle them to bring this suit in their name as representatives of the affected companies.
Nevertheless, we have decided to take this case since the other petitioner, GMA Network, Inc.,
appears to have the requisite standing to bring this constitutional challenge. Petitioner operates
radio and television broadcast stations in the Philippines affected by the enforcement of §92 of
B.P. Blg. 881 requiring radio and television broadcast companies to provide free air time to the
COMELEC for the use of candidates for campaign and other political purposes.
Petitioner claims that it suffered losses running to several million pesos in providing COMELEC
Time in connection with the 1992 presidential election and the 1995 senatorial election and that it
stands to suffer even more should it be required to do so again this year. Petitioner's allegation
that it will suffer losses again because it is required to provide free air time is sufficient to give it
standing to question the validity of §92. 5
Airing of COMELEC Time, a Reasonable Condition for Grant of Petitioner's Franchise
As pointed out in our decision in Osmeña v. COMELEC , §11(b) of R.A. No. 6646 and §90 and §92 of
B.P. Blg. 881 are part and parcel of a regulatory scheme designed to equalize the opportunity of
candidates in an election in regard to the use of mass media for political campaigns. These
statutory provisions state in relevant parts:
R.A. No. 6646
SEC. 11.Prohibited Forms of Election Propaganda. — In addition to the forms of election
propaganda prohibited under Section 85 of Batas Pambansa Blg. 881, it shall be unlawful:
xxx xxx xxx
(b)for any newspapers, radio broadcasting or television station, or other mass media, or any
person making use of the mass media to sell or to give free of charge print space or air time for
campaign or other political purposes except to the Commission as provided under Section 90 and
92 of Batas Pambansa Blg. 881. Any mass media columnist, commentator, announcer or
personality who is a candidate for any elective public office shall take a leave of absence from his
work as such during the campaign period.
B.P. Blg. 881, (Omnibus Election Code)
SEC. 90.Comelec space. — The Commission shall procure space in at least one newspaper of
general circulation in every province or city: Provided, however, That in the absence of said
newspaper, publication shall be done in any other magazine or periodical in said province or city,
which shall be known as "Comelec Space" wherein candidates can announce their candidacy. Said
space shall be allocated, free of charge, equally and impartially by the Commission among all
candidates within the area in which the newspaper is circulated. (Sec. 45. 1978 EC).
SEC. 92.Comelec time. — The Commission shall procure radio and television time to be known as
"Comelec Time" which shall be allocated equally and impartially among the candidates within the
62
area of coverage of all radio and television stations. For this purpose, the franchise of all radio
broadcasting and television stations are hereby amended so as to provide radio or television time,
free of charge, during the period of the campaign. (Sec. 46, 1978 EC)
Thus, the law prohibits mass media from selling or donating print space and air time to the
candidates and requires the COMELEC instead to procure print space and air time for allocation to
the candidates. It will be noted that while §90 of B.P. Blg. 881 requires the COMELEC to procure
print space which, as we have held, should be paid for, §92 states that air time shall be procured
by the COMELEC free of charge.
Petitioners contend that §92 of BP Blg. 881 violates the due process clause 6 and the eminent
domain provision 7 of the Constitution by taking air time from radio and television broadcasting
stations without payment of just compensation. Petitioners claim that the primary source of
revenue of the radio and television stations is the sale of air time to advertisers and that to
require these stations to provide free air time is to authorize a taking which is not "a de minimis
temporary limitation or restraint upon the use of private property." According to petitioners, in
1992, the GMA Network, Inc. lost P22,498,560.00 in providing free air time of one (1) hour every
morning from Mondays to Fridays and one (1) hour on Tuesdays and Thursdays from 7:00 to 8:00
p.m. (prime time) and, in this year's elections, it stands to lose P58,980,850.00 in view of
COMELEC's requirement that radio and television stations provide at least 30 minutes of prime
time daily for the COMELEC Time. 8
Petitioners' argument is without merit. All broadcasting, whether by radio or by television
stations, is licensed by the government. Airwave frequencies have to be allocated as there are
more individuals who want to broadcast than there are frequencies to assign. 9 A franchise is thus
a privilege subject, among other things, to amendment by Congress in accordance with the
constitutional provision that "any such franchise or right granted . . . shall be subject to
amendment, alteration or repeal by the Congress when the common good so requires." 10
The idea that broadcast stations may be required to provide COMELEC Time free of charge is not
new. It goes back to the Election Code of 1971 (R.A. No. 6388), which provided:
SEC. 49.Regulation of election propaganda through mass media. — (a) The franchises of all radio
broadcasting and television stations are hereby amended so as to require each such station to
furnish free of charge, upon request of the Commission [on Elections], during the period of sixty
days before the election not more than fifteen minutes of prime time once a week which shall be
known as "Comelec Time" and which shall be used exclusively by the Commission to disseminate
vital election information. Said "Comelec Time" shall be considered as part of the public service
time said stations are required to furnish the Government for the dissemination of public
information and education under their respective franchises or permits.
This provision was carried over with slight modification by the 1978 Election Code (P.D. No. 1296),
which provided:
SEC. 46.COMELEC Time. — The Commission [on Elections] shall procure radio and television time
to be known as "COMELEC Time" which shall be allocated equally and impartially among the
candidates within the area of coverage of said radio and television stations. For this purpose, the
franchises of all radio broadcasting and television stations are hereby amended so as to require
such stations to furnish the Commission radio or television time, free of charge, during the period
of the campaign, at least once but not oftener than every other day.
Substantially the same provision is now embodied in §92 of B.P. Blg. 881.
Indeed, provisions for COMELEC Time have been made by amendment of the franchises of radio
and television broadcast stations and, until the present case was brought, such provisions had not
been thought of as taking property without just compensation. Art. XII, §11 of the Constitution
authorizes the amendment of franchises for "the common good." What better measure can be
conceived for the common good than one for free air time for the benefit not only of candidates
but even more of the public, particularly the voters, so that they will be fully informed of the
issues in an election? "[I]t is the right of the viewers and listeners, not the right of the
broadcasters, which is paramount." 11
Nor indeed can there be any constitutional objection to the requirement that broadcast stations
give free air time. Even in the United States, there are responsible scholars who believe that
government controls on broadcast media can constitutionally be instituted to ensure diversity of
views and attention to public affairs to further the system of free expression. For this purpose,
broadcast stations may be required to give free air time to candidates in an election. 12 Thus,
Professor Cass R. Sunstein of the University of Chicago Law School, in urging reforms in regulations
affecting the broadcast industry, writes:
Elections. We could do a lot to improve coverage of electoral campaigns. Most important,
government should ensure free media time for candidates. Almost all European nations make
such provision; the United States does not. Perhaps government should pay for such time on its
own. Perhaps broadcasters should have to offer it as a condition for receiving a license. Perhaps a
commitment to provide free time would count in favor of the grant of a license in the first
instance. Steps of this sort would simultaneously promote attention to public affairs and greater
diversity of view. They would also help overcome the distorting effects of "soundbites" and the
corrosive financial pressures faced by candidates in seeking time on the media. 13
In truth, radio and television broadcasting companies, which are given franchises, do not own the
airwaves and frequencies through which they transmit broadcast signals and images. They are
merely given the temporary privilege of using them. Since a franchise is a mere privilege, the
exercise of the privilege may reasonably be burdened with the performance by the grantee of
some form of public service. Thus, in De Villata v. Stanley, 14 a regulation requiring interisland
vessels licensed to engage in the interisland trade to carry mail and, for this purpose, to give
advance notice to postal authorities of date and hour of sailings of vessels and of changes of
sailing hours to enable them to tender mail for transportation at the last practicable hour prior to
the vessel's departure, was held to be a reasonable condition for the state grant of license.
Although the question of compensation for the carriage of mail was not in issue, the Court
strongly implied that such service could be without compensation, as in fact under Spanish
sovereignty the mail was carried free. 15
In Philippine Long Distance Telephone Company v. NTC , 16 the Court ordered the PLDT to allow
the interconnection of its domestic telephone system with the international gateway facility of
Eastern Telecom. The Court cited (1) the provisions of the legislative franchise allowing such
interconnection; (2) the absence of any physical, technical, or economic basis for restricting the
linking up of two separate telephone systems; and (3) the possibility of increase in the volume of
international traffic and more efficient service, at more moderate cost, as a result of
interconnection.
Similarly, in the earlier case of PLDT v. NTC , 17 it was held:
Such regulation of the use and ownership of telecommunications systems is in the exercise of the
plenary police power of the State for the promotion of the general welfare. The 1987 Constitution
recognizes the existence of that power when it provides:
"Sec. 6.The use of property bears a social function, and all economic agents shall contribute to the
common good. Individuals and private groups, including corporations, cooperatives, and similar
collective organizations, shall have the right to own, establish, and operate economic enterprises,
subject to the duty of the State to promote distributive justice and to intervene when the
common good so demands" (Article XII).
The interconnection which has been required of PLDT is a form of "intervention" with property
rights dictated by "the objective of government to promote the rapid expansion of
telecommunications services in all areas of the Philippines, . . . to maximize the use of
telecommunications facilities available, . . . in recognition of the vital role of communications in
nation building . . . and to ensure that all users of the public telecommunications service have
access to all other users of the service wherever they may be within the Philippines at an
acceptable standard of service and at reasonable cost" (DOTC Circular No. 90-248). Undoubtedly,
the encompassing objective is the common good. The NTC, as the regulatory agency of the State,
merely exercised its delegated authority to regulate the use of telecommunications networks
when it decreed interconnection.
63
In the granting of the privilege to operate broadcast stations and thereafter supervising radio and
television stations, the state spends considerable public funds in licensing and supervising such
stations. 18 It would be strange if it cannot even require the licensees to render public service by
giving free air time.
Considerable effort is made in the dissent of Mr. Justice Panganiban to show that the production
of television programs involves large expenditure and requires the use of equipment for which
huge investments have to be made. The dissent cites the claim of GMA Network that the grant of
free air time to the COMELEC for the duration of the 1998 campaign period would cost the
company P52,380,000, representing revenue it would otherwise earn if the air time were sold to
advertisers, and the amount of P6,600,850, representing the cost of producing a program for the
COMELEC Time, or the total amount of P58,980,850.
The claim that petitioner would be losing P52,380,000 in unrealized revenue from advertising is
based on the assumption that air time is "finished product" which, it is said, become the property
of the company, like oil produced from refining or similar natural resources after undergoing a
process for their production. But air time is not owned by broadcast companies. As held in Red
Lion Broadcasting Co. v. F .C .C ., 19 which upheld the right of a party personally attacked to reply,
"licenses to broadcast do not confer ownership of designated frequencies, but only the temporary
privilege of using them." Consequently, "a license permits broadcasting, but the licensee has no
constitutional right to be the one who holds the license or to monopolize a radio frequency to the
exclusion of his fellow citizens. There is nothing in the First Amendment which prevents the
Government from requiring a licensee to share his frequency with others and to conduct himself
as a proxy or fiduciary with obligations to present those views and voices which are representative
of his community and which would otherwise, by necessity, be barred from the airwaves." 20As
radio and television broadcast stations do not own the airwaves, no private property is taken by
the requirement that they provide air time to the COMELEC.
Justice Panganiban's dissent quotes from Tolentino on the Civil Code which says that "the air lanes
themselves 'are not property because they cannot be appropriated for the benefit of any
individual.'" (p. 5) That means neither the State nor the stations own the air lanes. Yet the dissent
also says that "The franchise holders can recover their huge investments only by selling air time to
advertisers." (p. 13) If air lanes cannot be appropriated, how can they be used to produce air time
which the franchise holders can sell to recover their investment? There is a contradiction here.
As to the additional amount of P6,600,850, it is claimed that this is the cost of producing a
program and it is for such items as "sets and props," "video tapes," "miscellaneous (other rental,
supplies, transportation, etc.)," and "technical facilities (technical crew such as director and
cameraman as well as 'on air plugs')." There is no basis for this claim. Expenses for these items will
be for the account of the candidates. COMELEC Resolution No. 2983, §6(d) specifically provides in
this connection:
(d)Additional services such as tape-recording or video-taping of programs, the preparation of
visual aids, terms and condition thereof, and the consideration to be paid therefor may be
arranged by the candidates with the radio/television station concerned. However, no
radio/television station shall make any discrimination among candidates relative to charges,
terms, practices or facilities for in connection with the services rendered.
It is unfortunate that in the effort to show that there is taking of private property worth millions of
pesos, the unsubstantiated charge is made that by its decision the Court permits the "grand
larceny of precious time," and allows itself to become "the people's unwitting oppressor." The
charge is really unfortunate. In Jackman v.Rosenbaum Co., 21 Justice Holmes was so incensed by
the resistance of property owners to the erection of party walls that he was led to say in his
original draft, "a statute, which embodies the community's understanding of the reciprocal rights
and duties of neighboring landowners, does not need to invoke the petty larceny of the police
power in its justification." Holmes's brethren corrected his taste, and Holmes had to amend the
passage so that in the end it spoke only of invoking "the police power." 22 Justice Holmes spoke of
the "petty larceny" of the police power. Now we are being told of the "grand larceny [by means of
the police power] of precious air time."
Giving Free Air Time a Duty Assumed by Petitioner
Petitioners claim that §92 is an invalid amendment of R.A. No. 7252 which granted GMA Network,
Inc. a franchise for the operation of radio and television broadcasting stations. They argue that
although §5 of R.A. No. 7252 gives the government the power to temporarily use and operate the
stations of petitioner GMA Network or to authorize such use and operation, the exercise of this
right must be compensated.
The cited provision of R.A. No. 7252 states:
SEC. 5.Right of Government. — A special right is hereby reserved to the President of the
Philippines, in times of rebellion, public peril, calamity, emergency, disaster or disturbance of
peace and order, to temporarily take over and operate the stations of the grantee, to temporarily
suspend the operation of any station in the interest of public safety, security and public welfare,
or to authorize the temporary use and operation thereof by any agency of the Government, upon
due compensation to the grantee, for the use of said stations during the period when they shall be
so operated.
The basic flaw in petitioner's argument is that it assumes that the provision for COMELEC Time
constitutes the use and operation of the stations of the GMA Network, Inc. This is not so. Under
§92 of B.P. Blg. 881, the COMELEC does not take over the operation of radio and television
stations but only the allocation of air time to the candidates for the purpose of ensuring, among
other things, equal opportunity, time, and the right to reply as mandated by the Constitution. 23
Indeed, it is wrong to claim an amendment of petitioner's franchise for the reason that B.P. Blg.
881, which is said to have amended R.A. No. 7252, actually antedated it. 24 The provision of §92
of B.P. Blg. 881 must be deemed instead to be incorporated in R.A. No. 7252. And, indeed, §4 of
the latter statute does.
For the fact is that the duty imposed on the GMA Network, Inc. by its franchise to render
"adequate public service time" implements §92 of B.P. Blg. 881. Undoubtedly, its purpose is to
enable the government to communicate with the people on matters of public interest. Thus, R.A.
No. 7252 provides:
SEC. 4.Responsibility to the Public. — The grantee shall provide adequate public service time to
enable the Government, through the said broadcasting stations, to reach the population on
important public issues; provide at all times sound and balanced programming; promote public
participation such as in community programming; assist in the functions of public information and
education; conform to the ethics of honest enterprise; and not use its station for the broadcasting
of obscene and indecent language, speech, act or scene, or for the dissemination of deliberately
false information or willful misrepresentation, or to the detriment of the public interest, or to
incite, encourage, or assist in subversive or treasonable acts. (Emphasis added)
It is noteworthy that §49 of R.A. No. 6388, from which §92 of B.P. Blg. 881 was taken, expressly
provided that the COMELEC Time should "be considered as part of the public service time said
stations are required to furnish the Government for the dissemination of public information and
education under their respective franchises or permits." There is no reason to suppose that §92 of
B.P. Blg. 881 considers the COMELEC Time therein provided to be otherwise than as a public
service which petitioner is required to render under §4 of its charter (R.A. No. 7252). In sum, B.P.
Blg. 881, §92 is not an invalid amendment of petitioner's franchise but the enforcement of a duty
voluntarily assumed by petitioner in accepting a public grant of privilege.
Thus far, we have confined the discussion to the provision of §92 of B.P. Blg. 881 for free air time
without taking into account COMELEC Resolution No. 2983-A, §2 of which states:
SEC. 2.Grant of "Comelec Time". — Every radio broadcasting and television station operating
under franchise shall grant the Commission, upon payment of just compensation, at least thirty
(30) minutes of prime time daily, to be known as "Comelec Time", effective February 10, 1998 for
candidates for President, Vice-President and Senators, and effective March 27, 1998, for
candidates for local elective offices, until May 9, 1998. (Emphasis added)
This is because the amendment providing for the payment of "just compensation" is invalid, being
in contravention of §92 of B.P. Blg. 881 that radio and television time given during the period of
64
the campaign shall be "free of charge." Indeed, Resolution No. 2983 originally provided that the
time allocation shall be "free of charge," just as §92 requires such time to be given "free of
charge." The amendment appears to be a reaction to petitioners' claim in this case that the
original provision was unconstitutional because it allegedly authorized the taking of property
without just compensation.
The Solicitor General, relying on the amendment, claims that there should be no more dispute
because the payment of compensation is now provided for. It is basic, however, that an
administrative agency cannot, in the exercise of lawmaking, amend a statute of Congress. Since §2
of Resolution No. 2983-A is invalid, it cannot be invoked by the parties.
Law Allows Flextime for Programming by Stations, Not Confiscation of Air Time by COMELEC
It is claimed that there is no standard in the law to guide the COMELEC in procuring free air time
and that "theoretically the COMELEC can demand all of the air time of such stations." 25
Petitioners do not claim that COMELEC Resolution No. 2983-A arbitrarily sequesters radio and
television time. What they claim is that because of the breadth of the statutory language, the
provision in question is susceptible of "unbridled, arbitrary and oppressive exercise." 26
The contention has no basis. For one, the COMELEC is required to procure free air time for
candidates "within the area of coverage" of a particular radio or television broadcaster so that it
cannot, for example, procure such time for candidates outside that area. At what time of the day
and how much time the COMELEC may procure will have to be determined by it in relation to the
overall objective of informing the public about the candidates, their qualifications and their
programs of government. As stated in Osmeña v. COMELEC , the COMELEC Time provided for in
§92, as well as the COMELEC Space provided for in §90, is in lieu of paid ads which candidates are
prohibited to have under §11(b) of R.A. No. 6646. Accordingly, this objective must be kept in mind
in determining the details of the COMELEC Time as well as those of the COMELEC Space.
There would indeed be objection to the grant of power to the COMELEC if §92 were so detailed as
to leave no room for accommodation of the demands of radio and television programming. For
were that the case, there could be an intrusion into the editorial prerogatives of radio and
television stations.
Differential Treatment of Broadcast Media Justified
Petitioners complain that B.P. Blg. 881, §92 singles out radio and television stations to provide free
air time. They contend that newspapers and magazines are not similarly required as, in fact, in
Philippine Press Institute v. COMELEC 27 we upheld their right to the payment of just
compensation for the print space they may provide under §90.
The argument will not bear analysis. It rests on the fallacy that broadcast media are entitled to the
same treatment under the free speech guarantee of the Constitution as the print media. There are
important differences in the characteristics of the two media, however, which justify their
differential treatment for free speech purposes. Because of the physical limitations of the
broadcast spectrum, the government must, of necessity, allocate broadcast frequencies to those
wishing to use them. There is no similar justification for government allocation and regulation of
the print media. 28
In the allocation of limited resources, relevant conditions may validly be imposed on the grantees
or licensees. The reason for this is that, as already noted, the government spends public funds for
the allocation and regulation of the broadcast industry, which it does not do in the case of the
print media. To require the radio and television broadcast industry to provide free air time for the
COMELEC Time is a fair exchange for what the industry gets.
From another point of view, this Court has also held that because of the unique and pervasive
influence of the broadcast media, "[n]ecessarily . . . the freedom of television and radio
broadcasting is somewhat lesser in scope than the freedom accorded to newspaper and print
media." 29
The broadcast media have also established a uniquely pervasive presence in the lives of all
Filipinos. Newspapers and current books are found only in metropolitan areas and in the
poblaciones of municipalities accessible to fast and regular transportation. Even here, there are
low income masses who find the cost of books, newspapers, and magazines beyond their humble
means. Basic needs like food and shelter perforce enjoy high priorities.
On the other hand, the transistor radio is found everywhere. The television set is also becoming
universal. Their message may be simultaneously received by a national or regional audience of
listeners including the indifferent or unwilling who happen to be within reach of a blaring radio or
television set. The materials broadcast over the airwaves reach every person of every age, persons
of varying susceptibilities to persuasion, persons of different I.Q.s and mental capabilities, persons
whose reactions to inflammatory or offensive speech would be difficult to monitor or predict. The
impact of the vibrant speech is forceful and immediate. Unlike readers of the printed work, the
radio audience has lesser opportunity to cogitate, analyze, and reject the utterance. 30
Petitioners' assertion therefore that §92 of B.P. Blg. 881 denies them the equal protection of the
law has no basis. In addition, their plea that §92 (free air time) and §11(b) of R.A. No. 6646 (ban on
paid political ads) should be invalidated would pave the way for a return to the old regime where
moneyed candidates could monopolize media advertising to the disadvantage of candidates with
less resources. That is what Congress tried to reform in 1987 with the enactment of R.A. No. 6646.
We are not free to set aside the judgment of Congress, especially in light of the recent failure of
interested parties to have the law repealed or at least modified.
Requirement of COMELEC Time, a Reasonable Exercise of the State's Power to Regulate Use of
Franchises
Finally, it is argued that the power to supervise or regulate given to the COMELEC under Art. IX-C,
§4 of the Constitution does not include the power to prohibit. In the first place, what the
COMELEC is authorized to supervise or regulate by Art. IX-C, §4 of the Constitution, 31 among
other things, is the use by media of information of their franchises or permits, while what
Congress (not the COMELEC) prohibits is the sale or donation of print space or air time for political
ads. In other words, the object of supervision or regulation is different from the object of the
prohibition. It is another fallacy for petitioners to contend that the power to regulate does not
include the power to prohibit. This may have force if the object of the power were the same.
In the second place, the prohibition in §11(b) of R.A. No. 6646 is only half of the regulatory
provision in the statute. The other half is the mandate to the COMELEC to procure print space and
air time for allocation to candidates. As we said in Osmeña v. COMELEC .
The term political "ad ban," when used to describe §11(b) of R.A. No. 6646, is misleading, for even
as §11(b) prohibits the sale or donation of print space and air time to political candidates, it
mandates the COMELEC to procure and itself allocate to the candidates space and time in the
media. There is no suppression of political ads but only a regulation of the time and manner of
advertising.
xxx xxx xxx
. . . What is involved here is simply regulation of this nature. Instead of leaving candidates to
advertise freely in the mass media, the law provides for allocation, by the COMELEC of print space
and air time to give all candidates equal time and space for the purpose of ensuring "free, orderly,
honest, peaceful, and credible elections."
With the prohibition on media advertising by candidates themselves, the COMELEC Time and
COMELEC Space are about the only means through which candidates can advertise their
qualifications and program of government. More than merely depriving candidates of time for
their ads, the failure of broadcast stations to provide air time unless paid by the government
would clearly deprive the people of their right to know. Art. III, §7 of the Constitution provides
that "the right of the people to information on matters of public concern shall be recognized,"
while Art. XII, §6 states that "the use of property bears a social function [and] the right to own,
establish, and operate economic enterprises [is] subject to the duty of the State to promote
distributive justice and to intervene when the common good so demands."
To affirm the validity of §92 of B.P. Blg. 881 is to hold public broadcasters to their obligation to see
to it that the variety and vigor of public debate on issues in an election is maintained. For while
broadcast media are not mere common carriers but entities with free speech rights, they are also
65
public trustees charged with the duty of ensuring that the people have access to the diversity of
views on political issues. This right of the people is paramount to the autonomy of broadcast
media. To affirm the validity of §92, therefore, is likewise to uphold the people's right to
information on matters of public concern. The use of property bears a social function and is
subject to the state's duty to intervene for the common good. Broadcast media can find their just
and highest reward in the fact that whatever altruistic service they may render in connection with
the holding of elections is for that common good.
For the foregoing reasons, the petition is dismissed.
SO ORDERED. dctai
Narvasa, C .J ., Regalado, Davide, Jr., Bellosillo, Melo, Puno, Kapunan, Martinez and Quisumbing,
JJ., concur.
Separate Opinions
ROMERO, J ., dissenting:
Section 92 of BP 881 constitutes taking of private property without just compensation. The power
of eminent domain is a power inherent in sovereignty and requires no constitutional provision to
give it force. It is the rightful authority which exists in every sovereignty, to control and regulate
those rights of a public nature which pertain to its citizens in common, and to appropriate and
control individual property for the public benefit as the public safety, necessity, convenience or
welfare demand. 1 The right to appropriate private property to public use, however, lies dormant
in the state until legislative action is had, pointing out the occasions, the modes, the conditions
and agencies for its appropriation. 2
Section 92 of BP 881 states
Sec. 92.Comelec Time. — The Comelec shall procure radio and television time to be known as
"Comelec Time" which shall be allocated equally and impartially among the candidates within the
area of coverage of all radio and television stations. For this purpose, the franchise of all radio and
television stations are hereby amended so as to provide radio and television time free of charge
during the period of election campaign.
Pursuant to Section 92 of BP 881, respondent COMELEC on March 3, 1998 passed Resolution
2983-A the pertinent provision of which reads as follows: dctai
Sec. 2.Grant of "Comelec Time." — Every radio broadcasting and television station operating
under franchise shall grant the Commission, upon payment of just compensation, at least thirty
(30) minutes of prime time daily, to be known as "Comelec Time", effective February 10, 1998 for
candidates for President, Vice-President and Senators, and effective March 27, 1998, for
candidates for local elective offices, until May 9, 1998.
Section 92 of BP 881, insofar as it requires radio and television stations to provide Comelec with
radio and television time free of charge is a flagrant violation of the constitutional mandate that
private property shall not be taken for public use without just compensation. While it is inherent
in the State, the sovereign right to appropriate property has never been understood to include
taking property for public purposes without the duty and responsibility or ordering compensation
to the individual whose property has been sacrificed for the good of the community. Hence,
Section 9 Article III of the 1987 Constitution which reads "No private property shall be taken for
public use without just compensation," gives us two limitations on the power of eminent domain:
(1) the purpose of taking must be for public use and (2) just compensation must be given to the
owner of the private property.
There is, of course, no question that the taking of the property in the case at bar is for public use,
i.e. to ensure that air time is allocated equally among the candidates, however, there is no
justification for the taking without payment of just compensation. While Resolution No. 2983-A
has provided that just compensation shall be paid for the 30 minutes of prime time granted by the
television stations to respondent Comelec, we not that the resolution was passed pursuant to
Section 92 of BP 881 which mandates that radio and television time be provided to respondent
Comelec free of charge. Since the legislative intent is the controlling element in determining the
administrative powers, rights, privileges and immunities granted, 3 respondent Comelec may, at
any time, despite the resolution passed, compel television and radio stations to provide it with
airtime free of charge.
Apparently, Sec 92 of BP 881 justifies such taking under the guise of police power regulation which
cannot be validly done. Police power must be distinguished from the power of eminent domain. In
the exercise of police power, there is a restriction of property interest to promote public welfare
or interest which involves no compensable taking. When the power of eminent domain, however,
is exercised, property interest is appropriated and applied to some public purpose, necessitating
compensation therefor. Traditional distinctions between police power and the power of eminent
domain precluded application of both powers at the same time on the same subject. 4 Hence, in
the case of City of Baguio v. NAWASA, 5 the Court held that a law requiring the transfer of all
municipal waterworks systems to NAWASA in exchange for its assets of equivalent value involved
the exercise of eminent domain because the property involved was wholesome and intended for
public use. Property condemned under the exercise of police power, on the other hand, is noxious
or intended for noxious purpose and, consequently, is not compensable. Police power proceeds
from the principle that every holder of property, however absolute and unqualified may be his
title, holds it under the implied liability that his use of it shall not be injurious to the equal
enjoyment of others having an equal right to the enjoyment of their property, nor injurious to the
right of the community. Rights of property, like all other social and conventional rights, are subject
to reasonable limitations in their enjoyment as shall prevent them from being injurious, and to
such reasonable restraints and regulations established by law as the legislature, under the
governing and controlling power vested in them by the constitution, may think necessary and
expedient. 6
In the case of Small Landowners of the Philippines Inc. v. Secretary of Agrarian Reform, we found
occasion to note that recent trends show a mingling of the police power and the power of
eminent domain, with the latter being used as an implement of the former like the power of
taxation. Citing the cases of Berman v. Parker 7and Penn Central Transportation co. v. New York
City 8 where owners of the Grand Central Terminal who were not allowed to construct a multistory building to preserve a historic landmark were allowed certain compensatory rights to
mitigate the loss caused by the regulation, this Court in Small Landowners of the Philippines, Inc.
case held that measures prescribing retention limits for landowners under the Agrarian Reform
Law involved the exercise of police power for the regulation of private property in accordance
with the constitution. And, where to carry out the regulation, it became necessary to deprive
owners of whatever lands they may own in excess of the maximum area allowed, the Court held
that there was definitely a taking under the power of eminent domain for which payment of just
compensation was imperative.
The petition before us is no different from the above-cited case. Insofar as Sec 92 of BP 881 read
in conjunction with Sec 11(b) of RA 6646 restricts the sale or donation of airtime by radio and
television stations during the campaign period to respondent Comelec, there is an exercise of
police power for the regulation of property in accordance with the Constitution. To the extent
however that Sec 92 of BP 881 mandates that airtime be provided free of charge to respondent
Comelec to be allocated equally among all candidates, the regulation exceeds the limits of police
power and should be recognized as a taking. In the case of Pennsylvania Coal Co. v. Mahon, 9
Justice Holmes laid down the limits of police power in this wise," The general rule is that while
property may be regulated to a certain extent, if the regulation goes too far, it will be recognized
as a taking."
While the power of eminent domain often results in the appropriation of title to or possession of
property, it need not always be the case. It is a settled rule that neither acquisition of title nor
total destruction of value is essential to taking and it is usually in cases where title remains, with
the private owner that inquiry should be made to determine whether the impairment of a
property is merely regulated or amounts to a compensable taking. A regulation which deprives
any person of the profitable use of his property constitutes a taking and entitles him to
compensation unless the invasion of rights is so slight as to permit the regulation to be justified
66
under the police power. Similarly, a police regulation which unreasonably restricts the right to use
business property for business purposes, amounts to taking of private property and the owner
may recover therefor. 10 It is also settled jurisprudence that acquisition of right of way easement
falls within the purview of eminent domain. 11
While there is no taking or appropriation of title to, and possession of the expropriated property
in the case at bar, there is compensable taking inasmuch as there is a loss of the earnings for the
airtime which the petitioner-intervenors are compelled to donate. It is a loss which, to paraphrase
Philippine Press Institute v. Comelec,12 could hardly be considered "de minimis" if we are to take
into account the monetary value of the compulsory donation measured by the current advertising
rates of the radio and television stations.
In the case of Philippine Press Institute v. Comelec, 13 we had occasion to state that newspapers
and other print media are not compelled to donate free space to respondent Comelec inasmuch
as this would be in violation of the constitutional provision that no private property shall be taken
for public use without just compensation. We find no cogent reason why radio and television
stations should be treated any differently considering that their operating expenses as compared
to those of the newspaper and other print media publishers involve considerably greater amount
of financial resources.
The fact that one needs a franchise from government to establish a radio and television station
while no license is needed to start a newspaper should not be made a basis for treating broadcast
media any differently from the print media in compelling the former to "donate" airtime to
respondent Comelec. While no franchises and rights are granted except under the condition that it
shall be subject to amendment, alteration, or repeal by the Congress when the common good so
requires, 14 this provides no license for government to disregard the cardinal rule that
corporations with franchises are as much entitled to due process and equal protection of laws
guaranteed under the Constitution.
ACCORDINGLY, I vote to declare Section 92 of BP 881 insofar as it mandates that radio and
television time be provided to respondent Comelec free of charge UNCONSTITUTIONAL.
Purisima, J ., concurs.
VITUG, J ., concurring and dissenting:
I assent in most part to the well-considered opinion written by Mr. Justice Vicente V. Mendoza in
his ponencia, particularly, in holding that petitioner TELEBAP lackslocus standi in filing the instant
petition and in declaring that Section 92 of Batas Pambansa Blg. 881 is a legitimate exercise of
police power of the State.
The grant of franchise to broadcast media is a privilege burdened with responsibilities. While it is,
primordially, a business enterprise, it nevertheless, also addresses in many ways certain
imperatives of public service. In Stone vs. Mississippi (101, U.S. 814, cited in Cruz, Constitutional
Law, 1995 ed., p. 40.), a case involving a franchise to sell lotteries which petitioner claims to be a
contract which may not be impaired, the United States Supreme Court opined.
" . . . (T)he Legislature cannot bargain away the police power of a State. Irrevocable grants of
property and franchises may be made if they do not impair the supreme authority to make laws
for the right government of the State; but no Legislature can curtail the power of its successors to
make such laws as they may deem proper in matters of police. . . dctai
In this case, the assailed law, in my view, has not failed in meeting the standards set forth for its
lawful exercise, i.e., (a) that its utilization is demanded by the interests of the public, and (b) that
the means employed are reasonably necessary, and not unduly oppressive, for the
accomplishment of the purposes and objectives of the law.
I cannot consider COMELEC Resolution No. 2983-A, particularly Section 2 thereof, as being in
contravention of B.P. No. 881. There is nothing in the law that prohibits the COMELEC from itself
procuring airtime, perhaps longer than that which can reasonably be allocated, if it believes that in
so opting, it does so for the public good.
I vote to DISMISS the petition.
PANGANIBAN, J ., dissenting:
At issue in this case is the constitutionality of Section 92 of the Omnibus Election Code 1 which
compels all broadcast stations in the country "to provide radio and television time, free of charge,
during the period of the [election] campaigns," which the Commission on Elections shall allocate
"equally and impartially among the candidates . . ." Petitioners contend, and I agree, that this legal
provision is unconstitutional because it confiscates private property without due process of law
and without payment of just compensation, and denies broadcast media equal protection of the
law.
In Philippine Press Institute, Inc. (PPI) vs. Commission on Elections, 2 this Court ruled that print
media companies cannot be required to donate advertising space,free of charge, to the Comelec
for equal allocation among candidates, on the ground that such compulsory seizure of print space
is equivalent to a proscribed taking of private property for public use without payment of just
compensation. 3
The Court's majority in the present case, speaking through the distinguished Mr. Justice Vicente V.
Mendoza, holds, however, that the foregoing PPI doctrine appliesonly to print media, not to
broadcast (radio and TV ) networks, arguing that "radio and television broadcasting companies,
which are given franchises, do not own the airwaves and frequencies through which they transmit
broadcast signals and images. They are merely given the temporary privilege of using them. Since
a franchise is a mere privilege, the exercise of the privilege may reasonably be burdened with the
performance by the grantee of some form of public service." In other words, the majority
theorizes that the forced donation of air time to the Comelec is a means by which the State gets
compensation for the grant to the franchise and/or the use of the air lanes.
With all due respect, I disagree. The majority is relying on a theoretical distinction that does not
make any real difference. Theory must yield to reality. I respectfully submit the following
arguments to support my dissent:
1.The State does not own the airwaves and broadcast frequencies. It merely allocates, supervises
and regulates their proper use. Thus, other than collecting supervision or regulatory fees which it
already does, it cannot exact any onerous and unreasonable post facto burdens from the franchise
holders, without due process and just compensation. Moreover, the invocation of the "common
good" does not excuse the unbridled and clearly excessive taking to a franchisee's property.
2.Assuming arguendo that the State owns the air lanes, the broadcasting companies already pay
rental fees to the government for their use. Hence, the seizure of air time cannot be justified by
the theory of compensation.
3.Airwaves and frequencies alone, without the radio and television owners' humongous
investments amounting to billions of pesos, cannot be utilized for broadcasting purposes. Hence, a
forced donation of broadcast time is in actual facta taking of such investments without due
process and without payment of just compensation.
Let me explain further each of these arguments.
I
THE STATE DOES NOT OWN AIR LANES;
IT MERELY REGULATES THEIR PROPER USE;
"COMMON GOOD" DOES NOT EXCUSE UNBRIDLED TAKING.
Significantly, the majority does not claim that the State owns the air lanes. It merely contends that
"broadcasting, whether by radio or by television stations, is licensed by the government. Airwave
frequencies have to be allocated as there are more individuals who want to broadcast than there
are frequencies to assign. A franchise is thus a privilege subject among other things . . . to
amendment, alteration or repeal by the Congress when the common good so requires." 4 True
enough, a "franchise started out as a 'royal privilege or [a] branch of the King's prerogative,
subsisting in the hands of a subject.'" 5
Indeed, while the Constitution expressly provides that "[a]ll lands of the public domain, waters,
minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries, forests
or timber, wildlife, flora and fauna, and other natural resources are owned by the State," it is
silent as to the ownership of the airwaves and frequencies. It is then reasonable to say that no one
67
owns them. Like the air we breathe and the sunshine that sustains life, the air lanes themselves
"are not property because they cannot be appropriated for the benefit of any individual," 6 but
are to be used to the best advantage of all.
Because, as mentioned earlier, there are more prospective users than frequencies, the State — in
the exercise of its police power — allocates, supervises and regulates their use, so as to derive
maximum benefit for the general public. The franchise granted by the legislature to broadcasting
companies is essentially for the purpose of putting order in the use of the airwaves by assigning to
such companies their respective frequencies. The purpose is not to grant them the privilege of
using public property. For, as earlier stated, airwaves are not owned by the government.
Accordingly, the National Telecommunications Commission (NTC) was tasked by law to
institutionalize this regulation of the air lanes. To cover the administrative cost of supervision and
regulation, the NTC levies charges, which have been revised upwards in NTC Memorandum
Circular No. 14-8-94 dated August 26, 1994. In accordance with this Circular, Petitioner GMA
Network, Inc., for the year 1996, paid the NTC P2,880,591 of which P2,501,776.30 was NTC
"supervision and regulation fee," as borne out by its Audited Consolidated Financial Statements
for said year, on file with the Securities and Exchange Commission. In short, for its work of
allocation, supervision and regulation, the government is adequately compensated by the
broadcast media through the payment of fees unilaterally set by the former.
Franchisee's Property Cannot
Be Taken Without Just Compensation
In stamping unbridled donations with its imprimatur, the majority overlooks the twofold nature
and purpose of a franchise: other than service the public benefit which is subject to government
regulation, it must also be to the franchise holder's advantage. Once granted, a franchise (not the
air lanes) together with concomitant private rights, becomes property of the grantee. 7 It is
regarded by law precisely as other property and, as any other property, it is safeguarded by the
Constitution from arbitrary revocation or impairment. 8 The rights under a franchise can be
neither taken nor curtailed for public use or purpose, even by the government as the grantor,
without payment of just compensation 9 as guaranteed under our fundamental law. 10 The fact
that the franchise relates to public use or purpose does not entitle the state to abrogate or impair
its use without just compensation. 11
The majority further claims that, constitutionally, 12 franchises are always subject to alteration by
Congress, "when the common good so requires." The question then boils down to this: Does
Section 92 of the Omnibus Election Code constitute a franchise modification for the "common
good," or an "unlawful taking of private property"? To answer this question, I go back to Philippine
Press Institute, Inc. vs. Commission on Elections, where a unanimous Supreme Court held: 13
"To compel print media companies to donate 'Comelec space' of the dimensions specified in
Section 2 of Resolution No. 2772 (not less than one-half page), amounts to 'taking' of private
personal property for public use or purposes. Section 2 failed to specify the intended frequency of
such compulsory 'donation:' only once during the period from 6 March 1995 (or 21 March 1995)
until 12 May 1995? or everyday or once a week? or as often as Comelec may direct during the
same period? The extent of the taking or deprivation is not insubstantial; this is not a case of a de
minimis temporary limitation or restraint upon the use of private property. The monetary value of
the compulsory 'donation,' measured by the advertising rates ordinarily charged by newspaper
publishers whether in cities or in non-urban areas, may be very substantial indeed." (Emphasis in
original)
"Common Good" Does Not Justify Unbridled
Taking of Franchisee's Broadcast Time
Like the questioned resolution in PPI , Section 92 contains no limit as to the amount and
recurrence of the "donation" of air time that Comelec can demand from radio and TV stations.
There are no guidelines or standards provided as to the choice of stations, time and frequency of
airing, and programs to be aired. Theoretically, Comelec can compel the use of all the air time of a
station. The fact that Comelec has not exercised its granted power arbitrarily is immaterial
because the law, as worded, admits of unbridled exercise.
"A statute is considered void for overbreadth when 'it offends the constitutional principle that a
governmental purpose to control or prevent activities constitutionally subject to state regulations
may not be achieved by means which sweep unnecessarily broadly and thereby invade the area of
protected freedoms.' (Zwickler v. Koota, 19 L ed 2d 444 [1967]). In a series of decisions this Court
has held that, even though the governmental purpose be legitimate and substantial, that purpose
cannot be pursued by means that broadly stifle fundamental personal liberties when the end can
be more narrowly achieved. The breadth of legislative abridgment must be viewed in the light of
less drastic means for achieving the same basic purpose." 14
"In a 1968 opinion, the American Supreme Court made clear that the absence of such reasonable
and definite standards in a legislation of its character is fatal. Where, as in the case of the above
paragraphs, the majority of the Court could discern 'an overbreadth that makes possible
oppressive or capricious application' of the statutory provisions, the line dividing the valid from
the constitutionally infirm has been crossed. Such provisions offend the constitutional principle
that 'a governmental purpose to control or prevent activities constitutionally subject to state
regulation may not be achieved by means which sweep unnecessarily broadly and thereby invade
the area of protected freedoms.'
"It is undeniable, therefore, that even though the governmental purpose be legitimate and
substantial, they cannot be pursued by means that broadly stifle fundamental personal liberties
when the end can be more narrowly achieved. For precision of regulation is the touchstone in an
area so closely related to our most precious freedoms." 15
As a rule, a statute may be said to be vague and invalid if "it leaves law enforcers (in this case, the
Comelec) unbridled discretion in carrying our its provisions and becomes an arbitrary flexing of
the government muscle." 16
Moreover, the extent of the actual taking of air time is enormous, exorbitant and unreasonable. In
their Memorandum, 17 petitioners allege (and this has not been rebutted at all) that during the
1992 election period, GMA Network has been compelled to donate P22,498,560 worth of
advertising revenues; and for the current election period, GMA stands to lose a staggering
P58,980,850. Now, clearly and most obviously, these amounts are not inconsequential or de
minimis. They constitute arbitrary taking on a grand scale!
American jurisprudence is replete with citations showing that "[l]egislative regulation of public
utilities must not have the effect of depriving an owner of his property without due process of
law, nor of confiscating or appropriating private property without due process of law, nor of
confiscating or appropriating private property without just compensation, nor of limiting or
prescribing irrevocably vested rights or privileges lawfully acquired under a charter or franchise."
The power to regulate is subject to these constitutional limits. 18 Consequently, "rights under a
franchise cannot be taken or damaged for a public use without the making of just compensation
therefor." 19 To do so is clearly beyond the power of the legislature to regulate.
II
ASSUMING THAT THE STATE OWNS AIR LANES,
BROADCAST COMPANIES ALREADY PAY RENTAL THEREFOR.
Let me grant for the moment and for the sake of argument that the State owns the air lanes and
that, by its grant of a franchise, it should thus receive compensation for the use of said
frequencies. I say, however, that by remitting unreasonably high "annual fees and charges," which
as earlier stated amounts to millions of pesos yearly, television stations are in effect paying rental
fees for the use (not just the regulation) of said frequencies. Except for the annual inspection
conducted by the NTC, no other significant service is performed by the government in exchange
for the enormous fees charged the stations. Evidently, the sums collected by the NTC exceed the
cost of services performed by it, and are therefor more properly understood as rental fees for the
use of the frequencies granted them. 20
Since the use of the air frequencies is already paid for annually by the broadcast entities, there is
no basis for the government, through the Comelec, to compel unbridled donation of the air time
of said companies without due process and without payment of just compensation. dctai
68
In fact, even in the case of state-owned resources referred to earlier — like oil, minerals and coal
— once the license to exploit and develop them is granted to a private corporation, the
government can no longer arbitrarily confiscate or appropriate them gratis under the guise of
serving the common good. Crude oil, for instance, once explored, drilled, and refined is thereafter
considered the property of the authorized explorer (or refiner) which can sell it to the public and
even to the government itself. The State simply cannot demand free gasoline for the operation of
public facilities even if they benefit the people in general. It still has to pay compensation therefor.
III
AIRWAVES USELESS WITHOUT HUGE
INVESTMENT OF BROADCAST COMPANIES
Setting up and operating a credible broadcasting network requires billions of pesos in
investments. It is precisely the broadcast licensee's use of a state-granted franchise or privilege
which occasions its acquisition of private property in the form of broadcast facilities and its
production of air time. These properties are distinct from its franchise. 21 The 1996 Audited
Consolidated Balance Sheet of Petitioner GMA, on file with the SEC, shows that its "property and
equipment," which it uses in its broadcast function, amount to over one billion pesos or, to be
exact, P1,245,741,487. 22 This does not include the cost of producing the programs to be
broadcast, talent fees and other aspects of broadcasting. In their Memorandum, 23 petitioners
explain that the total cost for GMA to stay on the air (for television) at present is approximately
P136,100 per hour, which includes electricity, depreciation, repairs and maintenance, technical
facilities, salaries, and so on. The point is: The franchise holders can recover their huge
investments only by selling air time to advertisers. This is their "product," their valuable property
which Section 92 forcibly takes from them in massive amounts without payment of just
compensation.
It is too simplistic to say that because the Constitution allows Congress to alter franchises, ergo, an
unbridled taking of private property may be allowed. If such appropriation were only, to use the
words of PPI vs. Comelec, de minimis or insignificant — say, one hour once or twice a month —
perhaps, it can be justified by the promotion of the "common good." But a taking in the
gargantuan amount of over P58 million from Petitioner GMA for the 1998 election season alone is
an actual seizure of its private investment, and not at all a reasonable "compensation" or
"alteration" for the "common good." Certainly, this partakes of CONFISCATION of private
property.
What makes the taking of air time even more odious is its ex post facto nature. When the
broadcast companies acquired their franchises and set up their expensive facilities, they were not
informed of the immensity of the donations they are now compelled to give. dctai
Note should be made, too, of the fact that what Section 92 takes away is air time. Air time is the
"finished product" after a station uses its own broadcast facilities. The frequency is just the
specific "route" or "channel" by which this medium reaches the TV sets of the general public.
Technically, therefore, the wholesale alteration by Section 92 of all broadcast franchises would
appear unrelated to the compelled donations. While the express modification is in the franchise,
what Section 92 really does is that it takes away the end product of the facilities which were set up
through the use of the entrepreneurs' investments and the broadcasters' work.
EPILOGUE
By way of epilogue, I must point out that even Respondent Comelec expressly recognizes the need
for just compensation. Thus, Section 2 of its Resolution No. 2983-A states that "[e]very radio
broadcasting and television station operating under franchise shall grant the Commission, upon
payment of just compensation, at least thirty (30) minutes of prime time daily to be known as
'Comelec Time' . . ." And yet, even with such a judicious legal position taken by the very agency
tasked by the Constitution to administer elections, the majority still insists on an arbitrary seizure
of precious property produced and owned by private enterprise.
That Petitioner GMA is a viable, even profitable, enterprise 24 is no argument for seizing its
profits. The State cannot rob the rich to feed the poor in the guise of promoting the "common
good." Truly, the end never justifies the means.
It cannot be denied that the amount and the extent of the air time demanded from GMA is huge
and exorbitant, amounting, I repeat, to over P58 million for the 1998 election season alone. If the
air time required from "every radio and television station" in the country in the magnitude stated
in the aforesaid Comelec Resolution 2983-A is added up and costed, the total would indeed be
staggering — in several hundred million pesos.
Smacking of undisguised discrimination is the fact that in PPI vs. Comelec, this Court has required
payment of print media ads but, in this case, compels broadcast stations to donate their end
product on a massive scale. The simplistic distinction given — that radio and TV stations are mere
grantees of government franchises while newspaper companies are not — does not justify the
grand larceny of precious air time. This is a violation not only of private property, but also of the
constitutional right to equal protection itself. The proffered distinction between print and
broadcast media is too insignificant and too flimsy to be a valid justification for the discrimination.
The print and broadcast media are equal in the sense that both derive their revenues principally
from paid ads. They should thus be treated equally by the law in respect of such ads.
To sum up, the Bill of Rights of our Constitution expressly guarantees the following rights:
1.No person, whether rich or poor, shall be deprived of property without due process. 25
2.Such property shall not be taken by the government, even for the use of the general public,
without first paying just compensation to the owner.26
3.No one, regardless of social or financial status, shall be denied equal protection of the law. 27
The majority, however, peremptorily brushes aside all these sacred guarantees and prefers to rely
on the nebulous legal theory that broadcast stations are mere recipients of state-granted
franchises which can be altered or withdrawn anytime or otherwise burdened with post facto
elephantine yokes. By this short-circuited rationalization, the majority blithely ignores the private
entrepreneurs' billion-peso investments and the broadcast professionals' grit and toil in
transforming these invisible franchises into merchandisable property; and conveniently forgets
the grim reality that the taking of honestly earned media assets is unbridled, exorbitant and
arbitrary. Worse, the government, 28 against which these constitutional rights to property were in
the first place written, prudently agrees to respect them and to pay adequate compensation for
their taking. But ironically, the majority rejects the exemplary observance by the government of
the people's rights and insists on the confiscation of their private property.
I have always believed that the Supreme Court is the ever vigilant guardian of the constitutional
rights of the citizens and their ultimate protector against the tyrannies of their own government. I
am afraid that by this unfortunate Decision, the majority, in this instance, has instead converted
this honorable and majestic Court into the people's unwitting oppressor.
WHEREFORE, I vote to GRANT the petition and to declare Section 92 of the Omnibus Election Code
UNCONSTITUTIONAL and VOID.
Purisima, J., concurs.
Footnotes
1.Reiterated in Kapisanan ng mga Broadkaster sa Pilipinas (Negros Occidental Chapter) v.
COMELEC, (res.), G.R. No. 132749, April 2, 1998.
2.Emergency Powers Cases [Araneta v. Dinglasan], 84 Phil. 368 (1949), Iloilo Palay and Corn
Planters Ass'n v. Feliciano, 121 Phil. 358 (1965); Philconsa v. Gimenez, 122 Phil. 894 (1965); CLU v.
Executive Secretary, 194 SCRA 317 (1991).
3.Lawyers League for a Better Philippines v. Aquino, G.R. Nos. 73748, 73972 and 73990, May 22,
1986; In re Bermudez, 145 SCRA 160 (1986); Tatad v. Garcia, Jr., 243 SCRA 436, 473 (1995)
(Mendoza, J., concurring).
4.CONST., ART. VI, §§24-25 and 29.
5.In Valmonte v. Philippine Charity Sweepstakes Office, (res.), G.R. No. 78716, Sept. 22, 1987, we
held that the party bringing a suit challenging the constitutionality of a law must show "not only
that the law is invalid, but also that he has sustained or is in immediate danger of sustaining some
direct injury as a result of its enforcement, and not merely that he suffers thereby in some
indefinite way. It must appear that the person complaining has been or is about to be denied
69
some right or privilege to which he is lawfully entitled or that he is about to be subjected to some
burdens or penalties by reason of the statute complained of." (Emphasis added)
6.Art. III, §1 provides: "No person shall be deprived of life, liberty, or property without due process
of law, nor shall any person be denied the equal protection of the laws."
7.Id., §9 provides: "Private Property shall not be taken for public use without just compensation."
8.Memorandum for Petitioners, pp. 21-28.
9.Eastern Broadcasting Corp. (DYRE) v. Dans, Jr., 137 SCRA 628 (1985); Red Lion Broadcasting
Corp. Co. v. FCC, 395 U.S. 367, 23 L.Ed.2d. 371 (1969). See The Radio Act (Act No. 3846, as
amended), §3(c) & (d).
10.Art. XII, §11.
11.Red Lion Broadcasting Corp. v. FCC, 395 U.S. at 390, 23 L.Ed.2d at 389.
12.E.g., OWEN M. FISS, THE IRONY OF FREE SPEECH 2-3 (1996) ("Surely the state can be an
oppressor, but it may also be a source of freedom. . . In some instances, instrumentalities of the
state will try to stifle free and open debate, and the First Amendment is the tried-and-true
mechanism that stops or prevents such abuse of state power. In other instances, however, the
state may have to further the robustness of public debate. . . It may have to allocate public
resources. . . to those whose voices would not otherwise be heard in the public square."); CASS R.
SUNSTEIN, DEMOCRACY AND THE PROBLEM OF FREE SPEECH 50-51 (1993) ("The idea that threats
to speech stem from the government is undoubtedly correct, but as usually understood, it is far
too simple. Sometimes threats come from what seems to be the private sphere, and, much more
fundamentally, these threats could not be made without legal entitlements that enable some
private actors but not others to speak and to be heard. . . [Government regulation] may therefore
be necessary.")
13.CASS R. SUNSTEIN, id. at 85 (emphasis added).
14.32 Phil. 541 (1915).
15.The Court said:
Considerable expenditures of public money have been made in the past and continue to be made
annually for the purpose of securing the safety of vessels plying in Philippine waters. [Here the
Court enumerated many government facilities to make the coastwise transportation safe.] Can it
be fairly contended that a regulation is unreasonable which requires vessels licensed to engage in
the interisland trade, in whose behalf the public funds are so lavishly expended, to hold
themselves in readiness to carry the public mails when duly tendered for transportation, and to
give such reasonable notice of their sailing hours as will insure the prompt dispatch of all mails
ready for delivery at the hours thus designated? Id., at 552.
16.241 SCRA 486 (1995).
17.190 SCRA 717, 734 (1990) (italics by the Court).
18.For example, under the Radio Act (Act No. 3846, as amended), the government performs, inter
alia, the following functions:
SEC. 3.The Secretary of Public Works and Communications is hereby empowered, to regulate the
construction or manufacture, possession, control, sale and transfer of radio transmitters or
transceivers (combination transmitter-receiver) and the establishment, use, the operation of all
radio stations and of all form of radio communications and transmissions within the Philippines. In
addition to the above he shall have the following specific powers and duties:
xxx xxx xxx
(c)He shall assign call letters and assign frequencies for each station licensed by him and for each
station established by virtue of a franchise granted by the Congress of the Philippines and specify
the stations to which each of such frequencies may be used;
(d)He shall promulgate rules and regulations to prevent and eliminate interference between
stations and carry out the provisions of this Act and the provisions of the International Radio
Regulations: Provided, however, That changes in the frequencies or in the authorized power, or in
the character of emitted signals, or in the type of the power supply, or in the hours of operations
of any licensed stations, shall not be made without first giving the station licensee a hearing.
19.395 U.S. at 394, 23 L.Ed.2d at 391, quoting 47 U.S.C. §301.
20.395 U.S. at 389, 23 L.Ed.2d at 388-389.
21.260 U.S. 22, 67 L.Ed. 107 (1922).
22.260 U.S. at 31, 67 L.Ed. at 112. I HOLMES-LASKI LETTERS 457 (1953), quoted in P. FREUND, A.
SUTHERLAND, M. HOWE AND E. BROWN, CONSTITUTIONAL LAW, CASES AND OTHER PROBLEMS
1095 (1978).
23.Art. IX-C, §4.
24.B.P. Blg. 881 took effect on Dec. 3, 1985, whereas R.A. No. 7252 took effect on March 20, 1992.
25.Memorandum for Petitioners, p. 17.
26.Ibid.
27.244 SCRA 272 (1995).
28.In the United States, because of recognition of these differences in the characteristics of news
media, it has been held that broadcast stations may be required to give persons subjected to
personal attack during discussion of an important public issue the right to reply (Red Lion
Broadcasting Corp. v. FCC, 395 U.S. 367, 23 L.Ed.2d 371 (1969)), but a similar "right of reply" is
inapplicable to newspapers. It was pointed out that a statute providing for such right "operates as
a command in the same sense as a statute or regulation forbidding [the newspaper] to publish
specified matter. . . [It] exacts a penalty on the basis of the content of a newspaper. The first
phase of the penalty [is] exacted in terms of the cost in printing and in taking up space that could
be devoted to other material the newspaper may have preferred to print. . . [Faced with such a
penalty,] editors might well conclude that the safe course is to avoid controversy. . . [Thus, the
government-enforced] right of access inescapably 'dampens the vigor and limits the variety of
public debate.'" (Miami Herald Pub. Co. v. Tornillo, 418 U.S. 241, 4 L.Ed.2d 730 (1974))
29.Eastern Broadcasting (DYRE) Corporation v. Dans, Jr., 137 SCRA at 635.
30.Id. at 635-636.
31.This provision reads: "The Commission may, during the election period, supervise or regulate
the enjoyment or utilization of all franchises or permits for the operation of transportation and
other public utilities, media of communication or information, all grants, special privileges, or
concessions granted by the Government or any subdivision, agency, or instrumentality thereof,
including any government-owned or controlled corporation or its subsidiary. Such supervision or
regulation shall aim to ensure equal opportunity, time, and space, and the right to reply, including
reasonable, equal rates therefor, for public information campaigns and forums among candidates
in connection with the objective of holding free, orderly, honest, peaceful, and credible elections."
ROMERO, J., dissenting:
1.Cooley, Thomas. II A Treatise on Constitutional Limitations. pp. 1110. [1927].
2.Supra at p. 1119.
3.Horack, Frank, Sutherland Statutory Construction, p. 279 [1939].
4.Association of Small Landowners of the Philippines, Inc. vs. Secretary of Agrarian Reform, 175
SCRA 343 [1989].
5.106 Phil. 144.
6.See Cooley, Thomas. II Constitutional Limitations. 8th Ed, pp. 1224 [1927].
7.348 US 1954 [1954].
8.438 US 104.
9.260 US 393.
10.Cooley, Thomas. II Constitutional Limitations. pp. 1161 [1927].
11.Napocor v. CA, 129 SCRA 665 [1984]; Garcia v. CA, 102 SCRA 597 [1981]; Republic v. PLDT, 26
SCRA 620 [1969].
12.244 SCRA 272 [1995].
13.Supra.
14.See Section 11, Article XII of the 1987 Constitution.
PANGANIBAN, J., dissenting:
1.§92 of BP Blg. 881 (Omnibus Election Code) provides:
70
"Sec. 92.Comelec time. — The Commission shall procure radio and television time to be known as
"Comelec Time" which shall be allocated equally and impartially among the candidates within the
area of coverage of all radio and television stations. For this purpose, the franchise of all radio
broadcasting and television stations are hereby amended so as to provide radio or television time,
free of charge, during the period of the campaign."
2.244 SCRA 272, May 22, 1995, per Feliciano, J .
3.§9, Art. III of the Constitution provides:
"Sec. 9.Private property shall not be taken for public use without just compensation."
4.Pp. 6-7, Decision in GR 132922.
5.Finch, adopted by Blackstone in State v. Twin Village Water Co., 98 Me 214, 56 A 763 (1903),
cited in Radio Communication of the Philippines, Inc. vs. National Telecommunications
Commission, 150 SCRA 450, 457, May 29, 1987. Also in Lim vs. Pacquing, 240 SCRA 649, 678,
January 27, 1995.
6.Tolentino, Arturo M., Commentaries and Jurisprudence on the Civil Code of the Philippines, p. 2,
Vol. II, (1992); citing 3 Planiol & Ripert 59.
7.36 Am Jur 2d, §4 Franchises.
8.Ibid., §5.
9.Ibid., §8 citing Los Angeles v. Los Angeles Gas & Electric Corp., 251 US 32, 64 L ed. 121, 40 S Ct
76; United States v. Brooklyn Union Gas Co. (CA 2 NY) 168 F 2d 391; South California Gas Co. v. Los
Angeles, 50 Cal 2d 713, 329 P 2d 289. Also in Eight Ave. Coach Corp. v. New York, 286 NY 84, 35 NE
2d 907.
10.See footnote no. 3.
11.36 Am Jur 2d, §8 Franchises, citing Grand Turk Western R. Co. v. South Bend, 227 US 544, 57 L
ed. 633, 33 S Ct 303; Wilcox Consolidated Gas Co., 212 US 19, 53 L ed. 382, 29 S Ct 192;
Wilmington & W . R. Co. v. Reid, 13 Wall (US) 264, 20 L ed 568; Arkansas State Highway
Commission v. Arkansas Power & Light Co.,231 Ark 307, 330 SW 2d 77; and others.
12.§11, Art. XII of the Constitution provides:
"Sec. 11.No franchise, certificate, or any other form of authorization for the operation of a public
utility shall be granted except to citizens of the Philippines or to corporations or associations
organized under the laws of the Philippines at least sixty per centum of whose capital is owned by
such citizens, nor shall such franchise, certificate or authorization be exclusive in character or for a
longer period than fifty years. Neither shall any such franchise or right be granted except under
the condition that it shall be subject to amendment, alteration, or repeal by the Congress when
the common good so requires. The State shall encourage equity participation in public utilities by
the general public. The participation of foreign investors in the governing body of any public utility
enterprise shall be limited to their proportionate share in its capital, and all the executive and
managing officers of such corporation or association must be citizens of the Philippines.
13.244 SCRA at p. 279.
14.Blo Umpar Adiong v. Comelec, 207 SCRA 712, 719, March 31, 1992, per Gutierrez, J ., cited in
Memorandum for Petitioners, p. 15.
15.Gonzales vs. Comelec, 27 SCRA 835, 871, April 18, 1969, per Fernando, J .
16.People vs. Nazario, 165 SCRA 186, 195, August 31, 1988, per Sarmiento, J .
17.See pp. 20-27 for the detailed computation.
18.Agbayani, Aguedo F., Commentaries and Jurisprudence on the Commercial Laws of the
Philippines, p. 560, 1993 ed.; citing Fisher vs. Yangco Steamship Company,31 Phil 1, (1915),
referring to Chicago etc. R. Co. vs. Minnesota, 134 U.S. 418, Minneapolis Eastern R. Co. vs.
Minnesota, 134 U.S. 467, Chicago etc. R. Co. vs.Wellman, 143 U.S. 339, Smyth vs. Ames, 169 U.S.
466, 524, Henderson Bridge Co. vs. Henderson City, 173 U.S. 592, 614.
20.Apart from paying "supervision fees," broadcast media also pay normal taxes, imposts, fees,
assessments and other government charges.
21.36 Am Jur 2d pp. 724 and 727; citing Gordon v Appeal Tax Ct. 3 How (US) 133, 11 L ed. 529;
Bridgeport v New York & N . H . R. Co., 36 Conn 255; Consolidated Gas Co. v Baltimore, 101 Md
541, 61 A 532.
22.In the case of ABS-CBN Broadcasting Corporation, the amount is much larger: P3,196,912,000,
per its Audited Consolidated Financial Report as of December 31, 1996, on file with the SEC.
23.At p. 20. See also Annex B of said Memorandum.
24.This is not to say that all broadcast networks are profitable. A comparative study of their
Financial Statements on file with the SEC shows that a majority are not really profitable.
25.§1, Art. III of the Constitution.
26.§9, Art. III of the Constitution.
27.§1, Art. III of the Constitution.
28.As personified in this case by the Comelec.
19.36 Am Jur 2d 732; citing Los Angeles v Los Angles Gas & E. Corp. 251 US 32, 64 L ed 121, 40 S Ct
76; United States v Brooklyn Union Gas Co. (CA2 NY) 168 F2d 391; Southern California Gas Co v.
Los Angeles, 50 Cal 2d 713, 329 P2d 289, cert den 359 US 907, 3 L ed 2d 572, 79 S Ct 583.
71
NAPOCOR vs IBRAHIM
THIRD DIVISION
[G.R. No. 183297. December 23, 2009.]
NATIONAL POWER CORPORATION, petitioner, vs. OMAR G. MARUHOM, ELIAS G. MARUHOM,
BUCAY G. MARUHOM, MAMOD G. MARUHOM, FAROUK G. MARUHOM, HIDJARA G. MARUHOM,
ROCANIA G. MARUHOM, POTRISAM G. MARUHOM, LUMBA G. MARUHOM, SINAB G. MARUHOM,
ACMAD G. MARUHOM, SOLAYMAN G. MARUHOM, MOHAMAD M. IBRAHIM, CAIRORONESA M.
IBRAHIM, and LUCMAN IBRAHIM, represented by his heirs ADORA B. IBRAHIM, NASSER B.
IBRAHIM, JAMALODIN B. IBRAHIM, RAJID NABBEL B. IBRAHIM, AMEER B. IBRAHIM and SARAH
AIZAH B. IBRAHIM, * respondents.
DECISION
NACHURA, J p:
Petitioner National Power Corporation (NPC) filed this Petition for Review on Certiorari, seeking to
nullify the May 30, 2008 Decision 1 of the Court of Appeals (CA) in CA-G.R. SP No. 02065-MIN,
affirming the Order dated November 13, 2007 issued by Hon. Amer R. Ibrahim, which granted
respondents' motion for issuance of a writ of execution.
The antecedents.
Lucman G. Ibrahim and his co-heirs Omar G. Maruhom, Elias G. Maruhom, Bucay G. Maruhom,
Mamod G. Maruhom, Farouk G. Maruhom, Hidjara G. Maruhom, Rocania G. Maruhom, Potrisam
G. Maruhom, Lumba G. Maruhom, Sinab G. Maruhom, Acmad G. Maruhom, Solayman G.
Maruhom, Mohamad M. Ibrahim and Cairoronesa M. Ibrahim (respondents) are owners of a
70,000-square meter lot in Saduc, Marawi City. Sometime in 1978, NPC, without respondents'
knowledge and consent, took possession of the subterranean area of the land and constructed
therein underground tunnels. The tunnels were used by NPC in siphoning the water of Lake Lanao
and in the operation of NPC's Agus II, III, IV, V, VI, and VII projects located in Saguiran, Lanao del
Sur; Nangca and Balo-i in Lanao del Norte; and Ditucalan and Fuentes in Iligan City. Respondents
only discovered the existence of the tunnels sometime in July 1992. Thus, on October 7, 1992,
respondents demanded that NPC pay damages and vacate the subterranean portion of the land,
but the demand was not heeded.
Hence, on November 23, 1994, respondents instituted an action for recovery of possession of land
and damages against NPC with the Regional Trial Court (RTC) of Lanao del Sur, docketed as Civil
Case No. 1298-94.
After trial, the RTC rendered a decision, 2 the decretal portion of which reads: SEHaTC
WHEREFORE, judgment is hereby rendered:
1.Denying [respondents'] prayer for [NPC] to dismantle the underground tunnels constructed
beneath the lands of [respondents] in Lots 1, 2, and 3 of Survey Plan FP (VII-5) 2278;
2.Ordering [NPC] to pay to [respondents] the fair market value of said 70,000 square meters of
land covering Lots 1, 2, and 3 as described in Survey Plan FP (VII-5) 2278 less the area of 21,995
square meters at P1,000.00 per square meter or a total of P48,005,000.00 for the remaining
unpaid portion of 48,005 square meters; with 6% interest per annum from the filing of this case
until paid;
3.Ordering [NPC] to pay [respondents] a reasonable monthly rental of P0.68 per square meter of
the total area of 48,005 square meters effective from its occupancy of the foregoing area in 1978
or a total of P7,050,974.40.
4.Ordering [NPC] to pay [respondents] the sum of P200,000.00 as moral damages; and
5.Ordering [NPC] to pay the further sum of P200,000.00 as attorney's fees and the costs.
SO ORDERED. 3
Respondents then filed an Urgent Motion for Execution of Judgment Pending Appeal. On the
other hand, NPC filed a Notice of Appeal. Thereafter, it filed a vigorous opposition to the motion
for execution of judgment pending appeal with a motion for reconsideration of the RTC decision.
On August 26, 1996, NPC withdrew its Notice of Appeal to give way to the hearing of its motion for
reconsideration. On August 28, 1996, the RTC issued an Order granting execution pending appeal
and denying NPC's motion for reconsideration. The Decision of the RTC was executed pending
appeal and the funds of NPC were garnished by respondents.
On October 4, 1996, Lucman Ibrahim and respondents Omar G. Maruhom, Elias G. Maruhom,
Bucay G. Maruhom, Mamod G. Maruhom, Farouk G. Maruhom, Hidjara G. Maruhom, Potrisam G.
Maruhom and Lumba G. Maruhom filed a Petition for Relief from Judgment, 4 asserting as follows:
1.They did not file a motion to reconsider or appeal the decision within the reglementary period of
fifteen (15) days from receipt of judgment because they believed in good faith that the decision
was for damages and rentals and attorney's fees only as prayed for in the complaint;
2.It was only on August 26, 1996 that they learned that the amounts awarded to the respondents
represented not only rentals, damages and attorney's fees but the greatest portion of which was
payment of just compensation which, in effect, would make the petitioner NPC the owner of the
parcels of land involved in the case; CDScaT
3.When they learned of the nature of the judgment, the period of appeal had already expired;
4.They were prevented by fraud, mistake, accident, or excusable negligence from taking legal
steps to protect and preserve their rights over their parcels of land insofar as the part of the
decision decreeing just compensation for respondents' properties;
5.They would never have agreed to the alienation of their property in favor of anybody,
considering the fact that the parcels of land involved in this case were among the valuable
properties they inherited from their dear father and they would rather see their land crumble to
dust than sell it to anybody. 5
After due proceedings, the RTC granted the petition and rendered a modified judgment dated
September 8, 1997, thus:
WHEREFORE, a modified judgment is hereby rendered:
1.Reducing the judgment award of [respondents] for the fair market value of P48,005,000.00 by
[P]9,526,000.00 or for a difference [of] P38,479,000.00 and by the further sum of P33,603,500.00
subject of the execution pending appeal leaving a difference of [P]4,878,500.00 which may be the
subject of execution upon the finality of this modified judgment with 6% interest per annum from
the filing of the case until paid.
2.Awarding the sum of P1,476,911.00 to herein [respondents] Omar G. Maruhom, Elias G.
Maruhom, Bucay G. Maruhom, Mahmod G. Maruhom, Farouk G. Maruhom, Hidjara G. Maruhom,
Portrisam G. Maruhom and Lumba G. Maruhom as reasonable rental deductible from the awarded
sum of P7,050,974.40 pertaining to [respondents].
3.Ordering [NPC] embodied in the August 7, 1996 decision to pay [respondents] the sum of
P200,000.00 as moral damages; and further sum of P200,000.00 as attorney's fees and costs.
SO ORDERED. 6
Lucman Ibrahim and NPC then filed their separate appeals with the CA, docketed as CA-G.R. CV
No. 57792. On June 8, 2005, the CA rendered a Decision, 7 setting aside the modified judgment
and reinstating the original Decision, amending it further by deleting the award of moral damages
and reducing the amount of rentals and attorney's fees, thus:
WHEREFORE, premises considered, herein Appeals are hereby partially GRANTED, the Modified
Judgment is ordered SET ASIDE and rendered of no force and effect and the original Decision of
the court a quo dated 7 August 1996 is hereby RESTORED with the MODIFICATION that the award
of moral damages is DELETED and the amounts of rentals and attorney's fees are REDUCED to
P6,887,757.40 and P50,000.00, respectively. CETDHA
In this connection, the Clerk of Court of RTC Lanao del Sur is hereby directed to reassess and
determine the additional filing fee that should be paid by Plaintiff-Appellant IBRAHIM taking into
consideration the total amount of damages sought in the complaint vis-à-vis the actual amount of
damages awarded by this Court. Such additional filing fee shall constitute as a lien on the
judgment.
SO ORDERED 8
The above decision was affirmed by this Court on June 29, 2007 in G.R. No. 168732, viz.:
72
WHEREFORE, the petition is DENIED and the Decision of the Court of Appeals in C.A.-G.R. CV No.
57792 dated June 8, 2005 is AFFIRMED.
No costs.
SO ORDERED. 9
NPC moved for reconsideration of the Decision, but this Court denied it on August 29, 2007.
To satisfy the judgment, respondents filed with the RTC a motion for execution of its August 7,
1996 decision, as modified by the CA. On November 13, 2007, the RTC granted the motion, and
issued the corresponding writ of execution. Subsequently, a notice of garnishment was issued
upon NPC's depositary bank.
NPC then filed a Petition for Certiorari (with Urgent Prayer for the Immediate Issuance of a
Temporary Restraining Order and/or Writ of Preliminary Injunction) with the CA, docketed as CAG.R. SP No. 02065-MIN. It argued that the RTC gravely abused its discretion when it granted the
motion for execution without ordering respondents to transfer their title in favor of NPC. By
allowing the payment of just compensation for a parcel of land without the concomitant right of
NPC to get title thereto, the RTC clearly varied the terms of the judgment in G.R. No. 168732,
justifying the issuance of a writ of certiorari. NPC also prayed for the issuance of a temporary
restraining order (TRO) to enjoin the implementation of the writ of execution and notice of
garnishment. On November 29, 2007, the CA granted NPC's prayer and issued a TRO, enjoining the
implementation of the writ of execution and the notice of garnishment.
On May 30, 2008, the CA rendered the now assailed Decision, 10 dismissing NPC's petition for
certiorari. Rejecting NPC's argument, the CA declared that this Court's Decision in G.R. No. 168732
intended NPC to pay the full value of the property as compensation without ordering the transfer
of respondents' title to the land. According to the CA, in a plethora of cases involving lands
traversed by NPC's transmission lines, it had been consistently ruled that an easement is
compensable by the full value of the property despite the fact that NPC was only after a right-ofway easement, if by such easement it perpetually or indefinitely deprives the land owner of his
proprietary rights by imposing restrictions on the use of the property. The CA, therefore, ordered
NPC to pay its admitted obligation to respondents amounting to P36,219,887.20. 11 TEAICc
NPC is now before us faulting the CA for dismissing the former's petition for certiorari. It also
prayed for a TRO to enjoin respondents and all persons acting under their authority from
implementing the May 30, 2008 Decision of the CA. In its July 9, 2008 Resolution, 12 this Court
granted NPC's prayer, and issued a TRO enjoining the execution of the assailed CA Decision.
In the main, NPC insists that the payment of just compensation for the land carries with it the
correlative right to obtain title or ownership of the land taken. It stresses that this Court's Decision
in G.R. No. 168732 is replete with pronouncements that the just compensation awarded to
respondents corresponds to compensation for the entire land and not just for an easement or a
burden on the property, thereby necessitating a transfer of title and ownership to NPC upon
satisfaction of judgment. NPC added that by granting respondents' motion for execution, and
consequently issuing the writ of execution and notice of garnishment, the RTC and the CA allowed
respondents to retain title to the property even after the payment of full compensation. This,
according to NPC, was a clear case of unjust enrichment.
The petition lacks merit.
It is a fundamental legal axiom that a writ of execution must conform strictly to the dispositive
portion of the decision sought to be executed. A writ of execution may not vary from, or go
beyond, the terms of the judgment it seeks to enforce. When a writ of execution does not
conform strictly to a decision's dispositive portion, it is null and void. 13
Admittedly, the tenor of the dispositive portion of the August 7, 1996 RTC decision, as modified by
the CA and affirmed by this Court, did not order the transfer of ownership upon payment of the
adjudged compensation. Neither did such condition appear in the text of the RTC decision, and of
this Court's Decision in G.R. No. 168732.
As aptly pointed out by the CA in its assailed Decision:
[NPC], by its selective quotations from the Decision in G.R. No. 168732, would have Us suppose
that the High Court, in decreeing that [NPC] pay the full value of the property as just
compensation, implied that [NPC] was entitled to the entire land, including the surface area and
not just the subterranean portion. No such inference can be drawn from [the] reading of the
entirety of the High Court's Decision. On the contrary, a perusal of the subject Decision yields to
this Court the unmistakable sense that the High Court intended [NPC] to pay the full value of the
subject property as just compensation without ordering the transfer o[f] respondents' title to the
land. This is patent from the following language of the High Court as quoted by [NPC] itself:
In disregarding this procedure and failing to recognize respondents' ownership of the sub-terrain
portion, petitioner took a risk and exposed itself to greater liability with the passage of time. It
must be emphasized that the acquisition of the easement is not without expense. The
underground tunnels impose limitations on respondents' use of the property for an indefinite
period and deprive them of its ordinary use. Based upon the foregoing, respondents are clearly
entitled to the payment of just compensation. Notwithstanding the fact that [NPC] only occupies
the sub-terrain portion, it is liable to pay not merely an easement but rather the full compensation
for land. This is so because in this case, the nature of the easement practically deprives the
owners of its normal beneficial use. Respondents, as the owners of the property thus
expropriated, are entitled to a just compensation which should be neither more nor less,
whenever it is possible to make the assessment, than the money equivalent of said property. 14
DcCHTa
Clearly, the writ of execution issued by the RTC and affirmed by the CA does not vary, but is, in
fact, consistent with the final decision in this case. The assailed writ is, therefore, valid.
Indeed, expropriation is not limited to the acquisition of real property with a corresponding
transfer of title or possession. The right-of-way easement resulting in a restriction or limitation on
property rights over the land traversed by transmission lines also falls within the ambit of the term
expropriation. 15
As we explained in Camarines Norte Electric Cooperative, Inc. v. Court of Appeals: 16
The acquisition of an easement of a right-of-way falls within the purview of the power of eminent
domain. Such conclusion finds support in easements of right-of-way where the Supreme Court
sustained the award of just compensation for private property condemned for public use. The
Supreme Court, inRepublic v. PLDT thus held that:
"Normally, of course, the power of eminent domain results in the taking or appropriation of title
to, and possession of, the expropriated property; but no cogent reason appears why said power
may not be availed of to impose only a burden upon the owner of condemned property, without
loss of title and possession. It is unquestionable that real property may, through expropriation, be
subjected to an easement of right-of-way."
However, a simple right-of-way easement transmits no rights, except the easement. Vines Realty
retains full ownership and it is not totally deprived of the use of the land. It can continue doing
what it wants to do with the land, except those that would result in contact with the wires.
The acquisition of this easement, nevertheless, is not gratis. Considering the nature and effect of
the installation power lines, the limitations on the use of the land for an indefinite period deprives
private respondents of its ordinary use. For these reasons, Vines Realty is entitled to payment of
just compensation, which must be neither more nor less than the money equivalent of the
property. 17
It is, therefore, clear that NPC's acquisition of an easement of right-of-way on the lands of
respondents amounted to expropriation of the portions of the latter's property for which they are
entitled to a reasonable and just compensation.
The term just compensation had been defined as the full and fair equivalent of the property taken
from its owner by the expropriator. The measure is not the taker's gain, but the owner's loss. The
word just is used to intensify the meaning of the word compensation and to convey thereby the
idea that the equivalent to be rendered for the property to be taken shall be real, substantial, full,
and ample. 18 DTAIaH
In Camarines Norte Electric Cooperative, Inc. v. Court of Appeals 19 and National Power
Corporation v. Manubay Agro-Industrial Development Corporation, 20 this Court sustained the
award of just compensation equivalent to the fair and full value of the property even if petitioners
73
only sought the continuation of the exercise of their right-of-way easement and not the ownership
over the land. There is simply no basis for NPC to claim that the payment of fair market value
without the concomitant transfer of title constitutes an unjust enrichment.
In fine, the issuance by the RTC of a writ of execution and the notice of garnishment to satisfy the
judgment in favor of respondents could not be considered grave abuse of discretion. The term
grave abuse of discretion, in its juridical sense, connotes capricious, despotic, oppressive, or
whimsical exercise of judgment as is equivalent to lack of jurisdiction. The abuse must be of such
degree as to amount to an evasion of positive duty or a virtual refusal to perform a duty enjoined
by law, as where the power is exercised in an arbitrary and capricious manner by reason of
passion and hostility. The word capricious, usually used in tandem with the termarbitrary, conveys
the notion of willful and unreasoning action. Thus, when seeking the corrective hand of certiorari,
a clear showing of caprice and arbitrariness in the exercise of discretion is imperative. 21 In this
case, NPC utterly failed to demonstrate caprice or arbitrariness on the part of the RTC in granting
respondents' motion for execution. Accordingly, the CA committed no reversible error in
dismissing NPC's petition for certiorari.
It is almost trite to say that execution is the fruit and the end of the suit and is the life of the law. A
judgment, if left unexecuted, would be nothing but an empty victory for the prevailing party.
Litigation must end sometime and somewhere. An effective and efficient administration of justice
requires that once a judgment has become final, the winning party be not deprived of the fruits of
the verdict. Courts must, therefore, guard against any scheme calculated to bring about that
result. Constituted as they are to put an end to controversies, courts should frown upon any
attempt to prolong them. 22 We, therefore, write finis to this litigation.
WHEREFORE, the petition is DENIED. The assailed Decision of the Court of Appeals in CA-G.R. SP
No. 02065-MIN is AFFIRMED. The temporary restraining order issued by this Court on July 9, 2008
is LIFTED.
SO ORDERED.
Corona, Velasco, Jr., Peralta and Del Castillo, ** JJ., concur.
Footnotes
*The present petition impleaded Hon. Amer Ibrahim, Presiding Judge of the Regional Trial Court of
Lanao del Sur, Branch 9, Marawi City; Atty. Cairoding P. Maruhom, Clerk of Court VI; and Acmad C.
Aliponto, Sheriff IV, RTC-Branch 9, Marawi City, Lanao del Sur. However, Section 4, Rule 45 of the
Revised Rules of Court provides that the petition shall not implead the lower courts and judges
thereof as petitioners or respondents. Hence, the deletion of Hon. Ibrahim, Atty. Maruhom and
Aliponto from the title.
**Additional member per Special Order No. 805 dated December 4, 2009.
1.Penned by Associate Justice RomuloV. Borja, with Associate Justices Mario N. Lopez and Elihu A.
Ybañez, concurring; rollo, pp. 37-51.
2.Rollo, pp. 89-99.
3.Id. at 98-99.
4.Id. at 182-186.
5.Id. at 183-184.
6.Id. at 124-125.
7.Penned by Associate Justice Myrna Dimaranan-Vidal, with Associate Justices Teresita Dy-Liacco
Flores and Edgardo A. Camello, concurring; id. at 100-119.
8.Id. at 118-119.
9.Rollo, p. 138.
10.Supra note 1.
11.Rollo, pp. 147, 151.
12.Id. 53-54.
13.Development Bank of the Phils. v. Union Bank of the Phils., 464 Phil. 161 (2004).
14.Rollo, pp. 47-48.
15.National Power Corporation v. San Pedro, G.R. No. 170945, September 26, 2006, 503 SCRA 333,
353.
16.G.R. No. 109338, November 20, 2000, 345 SCRA 85.
17.Id. at 94-95.
18.National Power Corporation v. Vda. de Capin, G.R. No. 175176, October 17, 2008, 569 SCRA
648, 667.
19.Supra note 16.
20.G.R. No. 150936, August 18, 2004, 437 SCRA 60, 67.
21.Torres v. Abundo, Sr., G.R. No. 174263, January 24, 2007, 512 SCRA 556, 568-569.
22.La Campana Development Corporation v. Development Bank of the Philippines, G.R. No.
146157, February 13, 2009.
74
SUMULONG vs GUERRERO
EN BANC
[G.R. No. L-48685. September 30, 1987.]
LORENZO SUMULONG and EMILIA VIDANES-BALAOING, petitioners, vs. HON. BUENAVENTURA
GUERRERO and NATIONAL HOUSING AUTHORITY, respondents.
DECISION
CORTES, J p:
On December 5, 1977 the National Housing Authority (NHA) filed a complaint for expropriation of
parcels of land covering approximately twenty five (25) hectares, (in Antipolo Rizal) including the
lots of petitioners Lorenzo Sumulong and Emilia Vidanes-Balaoing with an area of 6,667 square
meters and 3,333 square meters respectively. The land sought to be expropriated were valued by
the NHA at one peso (P1.00) per square meter adopting the market value fixed by the provincial
assessor in accordance with presidential decrees prescribing the valuation of property in
expropriation proceedings. llcd
Together with the complaint was a motion for immediate possession of the properties. The NHA
deposited the amount of P158,980.00 with the Philippine National Bank, representing the "total
market value" of the subject twenty five hectares of land, pursuant to Presidential Decree No.
1224 which defines "the policy on the expropriation of private property for socialized housing
upon payment of just compensation."
On January 17, 1978, respondent Judge issued the following Order:
Plaintiff having deposited with the Philippine National Bank, Heart Center Extension Office,
Diliman, Quezon City, Metro Manila, the amount of P158,980.00 representing the total market
value of the subject parcels of land, let a writ of possession be issued."
SO ORDERED.
Pasig, Metro Manila, January 17, 1978.
(SGD) BUENAVENTURA S. GUERRERO
Judge
Petitioners filed a motion for reconsideration on the ground that they had been deprived of the
possession of their property without due process of law. This was however, denied.
Hence, this petition challenging the orders of respondent Judge and assailing the constitutionality
of Pres. Decree No. 1224, as amended. Petitioners argue that:
1)Respondent Judge acted without or in excess of his jurisdiction or with grave abuse of discretion
by issuing the Order of January 17, 1978 without notice and without hearing and in issuing the
Order dated June 28, 1978 denying the motion for reconsideration.
2)Pres. Decree 1224, as amended, is unconstitutional for being violative of the due process clause,
specifically:
a)The Decree would allow the taking of property regardless of size and no matter how small the
area to be expropriated;
b)"Socialized housing" for the purpose of condemnation proceeding, as defined in said Decree, is
not really for a public purpose;
c)The Decree violates procedural due process as it allows immediate taking of possession, control
and disposition of property without giving the owner his day in court;
d)The Decree would allow the taking of private property upon payment of unjust and unfair
valuations arbitrarily fixed by government assessors;
e)The Decree would deprive the courts of their judicial discretion to determine what would be the
"just compensation" in each and every case of expropriation.
Indeed, the exercise of the power of eminent domain is subject to certain limitations imposed by
the constitution, to wit:
Private property shall not be taken for public use without just compensation" (Art. IV, sec. 9);
No person shall be deprived of life, liberty, or property without due process of law, nor shall any
person be denied the equal protection of the laws" (Art. IV, sec. 1).
Nevertheless, a clear case of constitutional infirmity has to be established for this Court to nullify
legislative or executive measures adopted to implement specific constitutional provisions aimed at
promoting the general welfare.
Petitioners' objections to the taking of their property subsumed under the headings of public use,
just compensation, and due process have to be balanced against competing interests of the public
recognized and sought to be served under declared policies of the constitution as implemented by
legislation.
1.Public use
a)Socialized Housing
Petitioners contend that "socialized housing" as defined in Pres. Decree No. 1224, as amended, for
the purpose of condemnation proceedings is not "public use" since it will benefit only "a handful
of people, bereft of public character."
"Socialized housing" is defined as, "the construction of dwelling units for the middle and lower
class members of our society, including the construction of the supporting infrastructure and
other facilities" (Pres. Decree No. 1224, par. 1). This definition was later expanded to include
among others:
a)The construction and/or improvement of dwelling units for the middle and lower income groups
of the society, including the construction of the supporting infrastructure and other facilities;
b)Slum clearance, relocation and resettlement of squatters and slum dwellers as well as the
provision of related facilities and services;
c)Slum improvement which consists basically of allocating homelots to the dwellers in the area or
property involved, rearrangement and re-alignment of existing houses and other dwelling
structures and the construction and provision of basic community facilities and services, where
there are none, such as roads, footpaths, drainage, sewerage, water and power system, schools,
barangay centers, community centers, clinics, open spaces, parks, playgrounds and other
recreational facilities;
d)The provision of economic opportunities, including the development of commercial and
industrial estates and such other facilities to enhance the total community growth; and
e)Such other activities undertaken in pursuance of the objective to provide and maintain housing
for the greatest number of people under Presidential Decree No. 757. (Pres. Decree No. 1259, sec.
1)
The "public use" requirement for a valid exercise of the power of eminent domain is a flexible and
evolving concept influenced by changing conditions. In this jurisdiction, the statutory and judicial
trend has been summarized as follows:
The taking to be valid must be for public use. There was a time when it was felt that a literal
meaning should be attached to such a requirement. Whatever project is undertaken must be for
the public to enjoy, as in the case of streets or parks. Otherwise, expropriation is not allowable. It
is not anymore. As long as the purpose of the taking is public, then the power of eminent domain
comes into play. As just noted, the constitution in at least two cases. to remove any doubt,
determines what is public use. One is the expropriation of lands to be subdivided into small lots
for resale at cost to individuals. The other is in the transfer, through the exercise of this power, of
utilities and other private enterprise to the government. It is accurate to state then that at present
whatever may be beneficially employed for the general welfare satisfies the requirement of public
use [Heirs of Juancho Ardona v. Reyes, G.R. Nos. 60549, 60553-60555, October 26, 1983, 125 SCRA
220 (1983) at 234-5 quoting E. FERNANDO, THE CONSTITUTION OF THE PHILIPPINES 523-4, (2nd
e., 1977) Emphasis supplied]
The term "public use" has acquired a more comprehensive coverage. To the literal import of the
term signifying strict use or employment by the public has been added the broader notion of
indirect public benefit or advantage. As discussed in the above cited case of Heirs of Juancho
Ardona:
The restrictive view of public use may be appropriate for a nation which circumscribes the scope
of government activities and public concerns and which possesses big and correctly located public
lands that obviate the need to take private property for public purposes. Neither circumstance
75
applies to the Philippines. We have never been a laissez faire State. And the necessities which
impel the exertion of sovereign power are an too often found in areas of scarce public land or
limited government resources. (p. 231)
Specifically, urban renewal or redevelopment and the construction of low-cost housing is
recognized as a public purpose, not only because of the expanded concept of public use but also
because of specific provisions in the Constitution. The 1973 Constitution made it incumbent upon
the State to establish, maintain and ensure adequate social services including housing [Art. II, sec.
7]. The 1987 Constitution goes even further by providing that:
The State shall promote a just and dynamic social order that will ensure the prosperity and
independence of the nation and free the people from poverty through policies that provide
adequate social services, promote full employment, a rising standard of living and an improved
quality of life for all. [Art. II, sec. 9]
The state shall, by law, and for the common good, undertake, in cooperation with the private
sector, a continuing program of urban land reform and housing which will make available at
affordable cost decent housing and basic services to underprivileged and homeless citizens in
urban centers and resettlement areas. It shall also promote adequate employment opportunities
to such citizens. In the implementation of such program the State shall respect the rights of small
property owners. (Art. XIII, sec. 9, Emphasis supplied)
Housing is a basic human need. Shortage in housing is a matter of state concern since it directly
and significantly affects public health, safety, the environment and in sum, the general welfare.
The public character of housing measures does not change because units in housing projects
cannot be occupied by all but only by those who satisfy prescribed qualifications. A beginning has
to be made, for it is not possible to provide housing for all who need it, all at once. prLL
Population growth, the migration to urban areas and the mushrooming of crowded makeshift
dwellings is a worldwide development particularly in developing countries. So basic and urgent are
housing problems that the United Nations General Assembly proclaimed 1987 as the
"International Year of Shelter for the Homeless" "to focus the attention of the international
community on those problems". The General Assembly is "[s]eriously concerned that, despite the
efforts of Governments at the national and local levels and of international organizations, the
living conditions of the majority of the people in slums and squatter areas and rural settlements,
especially in developing countries, continue to deteriorate in both relative and absolute terms."
[G.A. Res. 37/221, Yearbook of the United Nations 1982, Vol. 36, p. 1043-4]
In the light of the foregoing, this Court is satisfied that "socialized housing" falls within the
confines of "public use". It is, particularly important to draw attention to paragraph (d) of Pres.
Dec. No. 1224 which should be construed in relation with the preceding three paragraphs.
Provisions on economic opportunities inextricably linked with low-cost housing, or slum clearance,
relocation and resettlement, or slum improvement emphasize the public purpose of the project.
In the case at bar, the use to which it is proposed to put the subject parcels of land meets the
requisites of "public use". The lands in question are being expropriated by the NHA for the
expansion of Bagong Nayon Housing Project to provide housing facilities to low-salaried
government employees. Quoting respondents:
1.The Bagong Nayong Project is a housing and community development undertaking of the
National Housing Authority. Phase I covers about 60 hectares of GSIS property in Antipolo, Rizal;
Phase II includes about 30 hectares for industrial development and the rest are for residential
housing development.
It is intended for low-salaried government employees and aims to provide housing and community
services for about 2,000 families in Phase 1 and about 4,000 families in Phase II.
It is situated on rugged terrain 7.5 kms. from Marikina Town proper; 22 Kms. east of Manila; and is
within the Lungsod Silangan Townsite Reservation (created by Presidential Proclamation No. 1637
on April 18, 1977).
The lands involved in the present petitions are parts of the expanded/additional areas for the
Bagong Nayon Project totalling 25.9725 hectares. They likewise include raw, rolling hills. (Rollo,
pp. 266-7)
The acute shortage of housing units in the country is of public knowledge. Official data indicate
that more than one third of the households nationwide do not own their dwelling places. A
significant number live in dwellings of unacceptable standards, such as shanties, natural shelters,
and structures intended for commercial, industrial, or agricultural purposes. Of these
unacceptable dwelling units, more than one third is located within the National Capital Region
(NCR) alone which lies proximate to and is expected to be the most benefited by the housing
project involved in the case at bar [See, National Census and Statistics Office, 1980 Census of
Population and Housing].
According to the National Economic and Development Authority at the time of the expropriation
in question, about "50 per cent of urban families, cannot afford adequate shelter even at reduced
rates and will need government support to provide them with social housing, subsidized either
partially or totally" [NEDA, FOUR YEAR DEVELOPMENT PLAN FY 1974-1977, p. 357]. Up to the
present, housing "still remains to be out of the reach of a sizable proportion of the population"
[NEDA, MEDIUM-TERM PHILIPPINE DEVELOPMENT PLAN 1987-1992, p. 240]. llcd
The mushrooming of squatter colonies in the Metropolitan Manila area as well as in other cities
and centers of population throughout the country, and, the efforts of the government to initiate
housing and other projects are matters of public knowledge [See NEDA, FOUR YEAR
DEVELOPMENT PLAN FY 1974-1977, pp. 357-361; NEDA, FIVE-YEAR PHILIPPINE DEVELOPMENT
PLAN 1978-1982, pp. 215-228; NEDA, FIVE YEAR PHILIPPINE DEVELOPMENT PLAN 1983-1987, pp.
109-117; NEDA, MEDIUM TERM PHILIPPINE DEVELOPMENT PLAN 1987-1992, pp. 240-254].
b)Size of Property
Petitioners further contend that Pres. Decree 1224, as amended, would allow the taking of "any
private land" regardless of the size and no matter how small the area of the land to be
expropriated. Petitioners claim that "there are vast areas of lands in Mayamot, Cupang, and San
Isidro, Antipolo, Rizal hundred of hectares of which are owned by a few landowners only. It is
surprising [therefore] why respondent National Housing Authority [would] include [their] two
small lots . . ."
In J.M. Tuason Co., Inc. v. Land Tenure Administration, [G.R. No. L-21064, February 18, 1970, 31
SCRA 413 (1970, at 428] this Court earlier ruled that expropriation is not confined to landed
estates. This Court, quoting the dissenting opinion of Justice J.B.L. Reyes in Republic v. Baylosis,
[96 Phil. 461 (1955)], held that:
The propriety of exercising the power of eminent domain under Article XIII, section 4 of our
Constitution cannot be determined on a purely quantitative or area basis. Not only does the
constitutional provision speak of lands instead of landed estates, but I see no cogent reason why
the government, in its quest for social justice and peace, should exclusively devote attention to
conflicts of large proportions, involving a considerable number of individuals, and eschew small
controversies and wait until they grow into a major problem before taking remedial action.
The said case of J.M. Tuason Co., Inc. departed from the ruling in Guido v. Rural Progress
Administration [84 Phil. 847 (1949)] which held that the test to be applied for a valid expropriation
of private lands was the area of the land and not the number of people who stood to be
benefited. Since then "there has evolved a clear pattern of adherence to the `number of people to
be benefited test'" [Mataas na Lupa Tenants Association, Inc. v. Dimayuga, G.R. No. 32049, June
25, 1984, 130 SCRA 30 (1984) at 39]. Thus, in Pulido v. Court of Appeals [G.R. No. 57625, May 3,
1983, 122 SCRA 63 (1983) at 73], this Court stated that, "[i]t is unfortunate that the petitioner
would be deprived of his landholdings, but his interest and that of his family should not stand in
the way of progress and the benefit of the greater majority of the inhabitants of the country."
The State acting through the NHA is vested with broad discretion to designate the particular
property/properties to be taken for socialized housing purposes and how much thereof may be
expropriated. Absent a clear showing of fraud, bad faith, or gross abuse of discretion, which
petitioners herein failed to demonstrate, the Court will give due weight to and leave undisturbed
76
the NHA's choice and the size of the site for the project. The property owner may not interpose
objections merely because in their judgment some other property would have been more
suitable, or just as suitable, for the purpose. The right to the use, enjoyment and disposal of
private property is tempered by and has to yield to the demands of the common good. The
Constitutional provisions on the subject are clear:
The state shall promote social justice in all phases of national development. (Art. II, sec. 10)
The Congress shall give highest priority to the enactment of measures that protect and enhance
the right of all the people to human dignity, reduce social, economic, and political inequalities, and
remove cultural unequities by equitably diffusing wealth and political power for the common
good. To this end, the State shall regulate the acquisition, ownership, use and disposition of
property and its increments. (Art. XIII, sec. 1)
Indeed, the foregoing provisions, which are restatements of the provisions in the 1935 and 1973
Constitutions, emphasize:
. . . the stewardship concept, under which private property is supposed to be held by the
individual only as a trustee for the people in general, who are its real owners. As a mere steward,
the individual must exercise his rights to the property not for his own exclusive and selfish benefit
but for the good of the entire community or nation [Mataas na Lupa Tenants Association, Inc.
supra at 42-3 citing I. CRUZ, PHILIPPINE POLITICAL LAW, 70 (1983 ed.)].
2.Just Compensation
Petitioners maintain that Pres. Decree No. 1224, as amended, would allow the taking of private
property upon payment of unjust and unfair valuations arbitrarily fixed by government assessors.
In addition, they assert that the Decree would deprive the courts of their judicial discretion to
determine what would be "just compensation".
The foregoing contentions have already been ruled upon by this Court in the case of Ignacio v.
Guerrero (G.R. No. L-49088, May 29, 1987) which, incidentally, arose from the same expropriation
complaint that led to this instant petition. The provisions on just compensation found in
Presidential Decree Nos. 1224, 1259 and 1313 are the same provisions found in Presidential
Decree Nos. 76, 464, 794 and 1533 which were declared unconstitutional in Export Processing
Zone Authority v. Dulay(G.R. No. 59603, April 29, 1987) for being encroachments on judicial
prerogatives.
This Court abandoned the ruling in National Housing Authority v. Reyes [G.R. No. 49439, June 29,
1983, 123 SCRA 245 (1983)] which upheld Pres. Decree No 464, as amended by Presidential
Decree Nos. 794, 1224 and 1259.
In said case of Export Processing Zone Authority, this Court pointed out that:
The basic unfairness of the decrees is readily apparent.
Just compensation means the value of the property at the time of the taking. It means a fair and
full equivalent for the loss sustained All the facts as to the condition of the property and its
surroundings, its improvements and capabilities, should be considered.
xxx xxx xxx
Various factors can come into play in the valuation of specific properties singled out for
expropriation. The values given by provincial assessors are usually uniform for very wide areas
covering several barrios or even an entire town with the exception of the poblacion. Individual
differences are never taken into account. The value of land is based on such generalities as its
possible cultivation for rice, corn, coconuts, or other crops. Very often land described as "cogonal"
has been cultivated for generations. Buildings are described in terms of only two or three classes
of building materials and estimates of areas are more often inaccurate than correct. Tax values
can serve as guides but cannot be absolute substitutes for just compensation.
To say that the owners are estopped to question the valuations made by assessors since they had
the opportunity to protest is illusory. The overwhelming mass of landowners accept
unquestioningly what is found in the tax declarations prepared by local assessors or municipal
clerks for them. They do not even look at, much less analyze, the statements. The idea of
expropriation simply never occurs until a demand is made or a case filed by an agency authorized
to do so. (pp. 12-3)
3.Due Process
Petitioners assert that Pres. Decree 1224, as amended, violates procedural due process as it allows
immediate taking of possession, control and disposition of property without giving the owner his
day in court. Respondent Judge ordered the issuance of a writ of possession without notice and
without hearing.
The constitutionality of this procedure has also been ruled upon in the Export Processing Zone
Authority case, viz:
It is violative of due process to deny to the owner the opportunity to prove that the valuation in
the tax documents is unfair or wrong. And it is repulsive to basic concepts of justice and fairness to
allow the haphazard work of minor bureaucrat or clerk to absolutely prevail over the judgment of
a court promulgated only after expert commissioners have actually viewed the property, after
evidence and arguments pro and con have been presented, and after all factors and
considerations essential to a fair and just determination have been judiciously evaluated. (p. 13)
On the matter of the issuance of a writ of possession, the ruling in the Ignacio case is reiterated,
thus:
[I]t is imperative that before a writ of possession is issued by the Court in expropriation
proceedings, the following requisites must be met: (1) There must be a Complaint for
expropriation sufficient inform and in substance; (2) A provisional determination of just
compensation for the properties sought to be expropriated must be made by the trial court on the
basis of judicial (not legislative or executive) discretion; and (3) The deposit requirement under
Section 2, Rule 67 must be complied with. (p. 14)
This Court holds that "socialized housing" defined in Pres. Decree No. 1224, as amended by Pres.
Decree Nos. 1259 and 1313, constitutes "public use" for purposes of expropriation. However, as
previously held by this Court, the provisions of such decrees on just compensation are
unconstitutional; and in the instant case the Court finds that the Orders issued pursuant to the
corollary provisions of those decrees authorizing immediate taking without notice and hearing are
violative of due process. cdll
WHEREFORE, the Orders of the lower court dated January 17, 1978 and June 28, 1978 issuing the
writ of possession on the basis of the market value appearing therein are annulled for having been
issued in excess of jurisdiction. Let this case be remanded to the court of origin for further
proceedings to determine the compensation the petitioners are entitled to be paid. No costs.
SO ORDERED.
Teehankee, (C.J.), Yap, Fernan, Narvasa Melencio-Herrera Gutierrez, Jr., Cruz, Paras, Feliciano,
Gancayco, Padilla Bidin and Sarmiento, JJ., concur.
77
MANOSCA vs COURT OF APPEALS
FIRST DIVISION
[G.R. No. 106440. January 29, 1996.]
ALEJANDRO MANOSCA, ASUNClON MANOSCA and LEONICA MANOSCA, petitioners, vs. HON.
COURT OF APPEALS, HON. BENJAMIN V. PELAYO, Presiding Judge, RTC-Pasig, Metro Manila,
Branch 168, HON. GRADUACION A. REYES CLARAVAL, Presiding Judge, RTC-Pasig, Metro Manila,
Branch 71, and REPUBLIC OF THE PHILIPPINES, respondents.
Melecio Virgilio Emata Law Office for petitioners.
The Solicitor General for respondents.
SYLLABUS
1.POLITICAL LAW; INHERENT POWER OF THE STATE; EMINENT DOMAIN; CONCEPT. — Eminent
domain, also often referred to as expropriation and, with less frequency, as condemnation, is, like
police power and taxation, an inherent power of sovereignty. It need not be clothed with any
constitutional gear to exist; instead, provisions in our Constitution on the subject are meant more
to regulate, rather than to grant, the exercise of the power. Eminent domain is generally so
described as "the highest and most exact idea of property remaining in the government" that may
be acquired for some public purpose through a method in the nature of a forced purchase by the
State. It is a right to take or reassert dominion over property within the state for public use or to
meet a public exigency. It is said to be an essential part of governance even in its most primitive
form and thus inseparable from sovereignty. The only direct constitutional qualification is that
"private property shall not be taken for public use without just compensation." This proscription is
intended to provide a safeguard against possible abuse and so to protect as well the individual
against whose property the power is sought to be enforced.
2.ID.; ID.; ID.; THE GUIDELINES SET BY THE SUPREME COURT IN GUIDO VS. RURAL PROGRESS
ADMINISTRATION WERE NOT MEANT TO BE PRECLUSIVE IN NATURE AND THE POWER OF
EMINENT DOMAIN SHOULD NOT BE UNDERSTOOD AS BEING CONFINED ONLY TO EXPROPRIATION
OF VAST TRACTS OF LAND AND LANDED ESTATES. — The court, in Guido, merely passed upon the
issue of the extent of the President's power under Commonwealth Act No. 539 to, specifically,
acquire private lands for subdivision into smaller home lots or farms for resale to bona fide
tenants or occupants. It was in this particular context of the statute that the Court had made the
pronouncement. The guidelines in Guido were not meant to be preclusive in nature and, most
certainly, the power of eminent domain should not now be understood as being confined only to
the expropriation of vast tracts of land and landed estates. cdasia
3.ID.; ID.; ID.; TRADITIONAL CONCEPT OF "PUBLIC USE" EXPANDED. — The validity of the exercise
of the power of eminent domain for traditional purposes is beyond question; it is not at all to be
said, however, that public use should thereby be restricted to such traditional uses. The idea that
"public use" is strictly limited to clear cases of "use by the public" has long been discarded.
4.ID.; ID.; ID.; SIGNIFICANT FACTOR TO BE CONSIDERED IN EMINENT DOMAIN IS THE PRINCIPAL
OBJECTIVE OF THE EXERCISE OF THE POWER AND NOT THE CASUAL CONSEQUENCES THAT MIGHT
FOLLOW FROM SUCH EXERCISE. — The attempt to give some religious perspective to the case
deserves little consideration, for what should be significant is the principal objective of, not the
casual consequences that might follow from the exercise of the power. The purpose in setting up
the marker is essentially to recognize the distinctive contribution of the late Felix Manalo to the
culture of the Philippines, rather than to commemorate his founding and leadership of the Iglesia
ni Cristo. The practical reality that greater benefit may be derived by members of the Iglesia ni
Cristo than by most others could well be true but such a peculiar advantage still remains to be
merely incidental and secondary in nature. Indeed, that only a few would actually benefit from the
expropriation of property does not necessarily diminish the essence and character of public use.
cdasia
DECISION
VITUG, J p:
In this appeal, via a petition for review on certiorari, from the decision 1 of the Court of Appeals,
dated 15 January 1992, in CA-G.R. SP No. 24969 (entitled "Alejandro Manosca, et al. v. Hon.
Benjamin V. Pelayo, et al."), this Court is asked to resolve whether or not the "public use"
requirement of Eminent Domain is extant in the attempted expropriation by the Republic of a
492-square-meter parcel of land so declared by the National Historical Institute ("NHI") as a
national historical landmark.
The facts of the case are not in dispute. llcd
Petitioners inherited a piece of land located at P. Burgos Street, Calzada, Taguig, Metro Manila,
with an area of about four hundred ninety-two (492) square meters. When the parcel was
ascertained by the NHI to have been the birthsite of Felix Y. Manalo, the founder of Iglesia Ni
Cristo, it passed Resolution No. 1, Series of 1986, pursuant to Section 4 2 of Presidential Decree
No. 260, declaring the land to be a national historical landmark. The resolution was, on 06 January
1986, approved by the Minister of Education, Culture and Sports. Later, the opinion of the
Secretary of Justice was asked on the legality of the measure. In his Opinion No. 133, Series of
1987, the Secretary of Justice replied in the affirmative; he explained:
"According to your guidelines, national landmarks are places or objects that are associated with an
event, achievement, characteristic, or modification that makes a turning point or stage in
Philippine history. Thus, the birthsite of the founder of the Iglesia ni Cristo, the late Felix Y.
Manalo, who, admittedly, had made contributions to Philippine history and culture has been
declared as a national landmark. It has been held that places invested with unusual historical
interest is a public use for which the power of eminent domain may be authorized. . . .
In view thereof, it is believed that the National Historical Institute as an agency of the Government
charged with the maintenance and care of national shrines, monuments and landmarks and the
development of historical sites that may be declared as national shrines, monuments and/or
landmarks, may initiate the institution of condemnation proceedings for the purpose of acquiring
the lot in question in accordance with the procedure provided for in Rule 67 of the Revised Rules
of Court. The proceedings should be instituted by the Office of the Solicitor General in behalf of
the Republic."
Accordingly, on 29 May 1989, the Republic, through the Office of the Solicitor-General, instituted
a complaint for expropriation 3 before the Regional Trial Court of Pasig for and in behalf of the
NHI alleging, inter alia, that:
"Pursuant to Section 4 of Presidential Decree No. 260, the National Historical Institute issued
Resolution No. 1, Series of 1986, which was approved on January, 1986 by the then Minister of
Education, Culture and Sports, declaring the above described parcel of land which is the birthsite
of Felix Y. Manalo, founder of the 'Iglesia ni Cristo,' as a National Historical Landmark. The plaintiff
perforce needs the land as such national historical landmark which is a public purpose."
At the same time, respondent Republic filed an urgent motion for the issuance of an order to
permit it to take immediate possession of the property. The motion was opposed by petitioners.
After a hearing, the trial court issued, on 03 August 1989, 4 an order fixing the provisional market
(P54,120.00) and assessed (P16,236.00) values of the property and authorizing the Republic to
take over the property once the required sum would have been deposited with the Municipal
Treasurer of Taguig, Metro Manila.
Petitioners moved to dismiss the complaint on the main thesis that the intended expropriation
was not for a public purpose and, incidentally, that the act would constitute an application of
public funds, directly or indirectly, for the use, benefit, or support of Iglesia ni Cristo, a religious
entity, contrary to the provision of Section 29(2), Article VI, of the 1987 Constitution. 5 Petitioners
sought, in the meanwhile, a suspension in the implementation of the 03rd August 1989 order of
the trial court.
On 15 February 1990, following the filing of respondent Republic of its reply to petitioners' motion
seeking the dismissal of the case, the trial court issued its denial of said motion to dismiss. 6 Five
(5) days later, or on 20 February 1990, 7 another order was issued by the trial court, declaring
moot and academic the motion for reconsideration and/or suspension of the order of 03 August
1989 with the rejection of petitioners' motion to dismiss. Petitioners' motion for the
78
reconsideration of the 20th February 1990 order was likewise denied by the trial court in its 16th
April 1991 order. 8
Petitioners then lodged a petition for certiorari and prohibition with the Court of Appeals. In its
now disputed 15th January1992 decision, the appellate courtdismissed the petition on the ground
that the remedy of appeal in the ordinary course of law was an adequate remedy and that the
petition itself, in any case, had failed to show any grave abuse of discretion or lack of jurisdictional
competence on the part of the trial court. A motion for the reconsideration of the decision was
denied in the 23rd July 1992 resolution of the appellate court. LexLib
We begin, in this present recourse of petitioners, with a few known postulates.
Eminent domain, also often referred to as expropriation and, with less frequency, as
condemnation, is, like police power and taxation, an inherent power of sovereignty. It need not be
clothed with any constitutional gear to exist; instead, provisions in our Constitution on the subject
are meant more to regulate, rather than to grant, the exercise of the power. Eminent domain is
generally so described as "the highest and most exact idea of property remaining in the
government" that may be acquired for some public purpose through a method in the nature of a
forced purchase by the State. 9 It is a right to take or reassert dominion over property within the
state for public use or to meet a public exigency. It is said to be an essential part of governance
even in its most primitive form and thus inseparable from sovereignty. 10 The only direct
constitutional qualification is that "private property shall not be taken for public use without just
compensation." 11This proscription is intended to provide a safeguard against possible abuse and
so to protect as well the individual against whose property the power is sought to be enforced.
Petitioners assert that the expropriation has failed to meet the guidelines set by this Court in the
case of Guido v. Rural Progress Administration, 12 to wit: (a) the size of the land expropriated; (b)
the large number of people benefited; and, (c) the extent of social and economic reform. 13
Petitioners suggest that we confine the concept of expropriation only to the following public uses,
14 i.e., the — cdasia
". . . taking of property for military posts, roads, streets, sidewalks, bridges, ferries, levees,
wharves, piers, public buildings including schoolhouses, parks, playgrounds, plazas, market places,
artesian wells, water supply and sewerage systems, cemeteries, crematories, and railroads."
This view of petitioners is much too limitative and restrictive.
The court, in Guido, merely passed upon the issue of the extent of the President's power under
Commonwealth Act No. 539 to, specifically, acquire private lands for subdivision into smaller
home lots or farms for resale to bona fide tenants or occupants. It was in this particular context of
the statute that the Court had made the pronouncement. The guidelines in Guido were not meant
to be preclusive in nature and, most certainly, the power of eminent domain should not now be
understood as being confined only to the expropriation of vast tracts of land and landed estates.
15
The term "public use," not having been otherwise defined by the constitution, must be considered
in its general concept of meeting a public need or a public exigency. 16 Black summarizes the
characterization given by various courts to the term; thus:
"Public Use. Eminent domain. The constitutional and statutory basis for taking property by
eminent domain. For condemnation purposes, 'public use' is one which confers some benefit or
advantage to the public; it is not confined to actual use by public. It is measured in terms of right
of public to use proposed facilities for which condemnation is sought and, as long as public has
right of use, whether exercised by one or many members of public, a 'public advantage' or 'public
benefit' accrues sufficient to constitute a public use. Montana Power Co. vs. Bokma, Mont. 457
P.2d 769, 772, 773.
"Public use, in constitutional provisions restricting the exercise of the right to take private
property in virtue of eminent domain, means a use concerning the whole community as
distinguished from particular individuals. But each and every member of society need not be
equally interested in such use, or be personally and directly affected by it; if the object is to satisfy
a great public want or exigency, that is sufficient. Rindge Co. vs. Los Angeles County, 262 U.S. 700,
43 S.Ct. 689, 692, 67 L. Ed. 1186. The term may be said to mean public usefulness, utility, or
advantage, or what is productive of general benefit. It may be limited to the inhabitants of a small
or restricted locality, but must be in common, and not for a particular individual. The use must be
a needful one for the public, which cannot be surrendered without obvious general loss and
inconvenience. A 'public use' for which land may be taken defies absolute definition for it changes
with varying conditions of society, new appliances in the sciences, changing conceptions of scope
and functions of government, and other differing circumstances brought about by an increase in
population and new modes of communication and transportation. Katz v. Brandon, 156 Conn.,
521, 245 A.2d 579,586." 17
The validity of the exercise of the power of eminent domain for traditional purposes is beyond
question; it is not at all to be said, however, that public use should thereby be restricted to such
traditional uses. The idea that "public use" is strictly limited to clear cases of "use by the public"
has long been discarded. ThisCourt in Heirs of Juancho Ardona v. Reyes, 18 quoting from Berman
v. Parker (348 U.S. 25; 99 L. ed. 27), held:
"We do not sit to determine whether a particular housing project is or is not desirable. The
concept of the public welfare is broad and inclusive. See DayBrite Lighting, Inc. v. Missouri, 342 US
421, 424, 96 L. Ed. 469, 472, 72 S Ct 405. The values it represents are spiritual as well as physical,
aesthetic as well as monetary. It is within the power of the legislature to determine that the
community should be beautiful as well as healthy, spacious as well as clean, well-balanced as well
as carefully patrolled. In the present case, the Congress and its authorized agencies have made
determinations that take into account a wide variety of values. It is not for us to reappraise them.
If those who govern the District of Columbia decide that the Nation's Capital should be beautiful
as well as sanitary, there is nothing in the Fifth Amendment that stands in the way. cdasia
"Once the object is within the authority of Congress, the right to realize it through the exercise of
eminent domain is clear. For the power of eminent domain is merely the means to the end. See
Luxton v. North River Bridge Co. 153 US 525, 529, 530, 38 L. ed. 808, 810, 14 S Ct 891; United
States v. Gettysburg Electric R. Co. 160 US 668, 679, 40 L. ed. 576, 580, 16 S Ct 427."
It has been explained as early as Seña v. Manila Railroad Co. 19 that:
". . . A historical research discloses the meaning of the term 'public use' to be one of constant
growth. As society advances, its demands upon the individual increase and each demand is a new
use to which the resources of the individual may be devoted. . . . for 'whatever is beneficially
employed for the community is a public use'."
Chief Justice Enrique M. Fernando states:
"The taking to be valid must be for public use. There was a time when it was felt that a literal
meaning should be attached to such a requirement. Whatever project is undertaken must be for
the public to enjoy, as in the case of streets or parks. Otherwise, expropriation is not allowable. It
is not so any more. As long as the purpose of the taking is public, then the power of eminent
domain comes into play. As just noted, the constitution in at least two cases, to remove any
doubt, determines what is public use. One is the expropriation of lands to be subdivided into small
lots for resale at cost to individuals. The other is the transfer, through the exercise of this power,
of utilities and other private enterprise to the government. It is accurate to state then that at
present whatever may be beneficially employed for the general welfare satisfies the requirement
of public use." 20
Chief Justice Fernando, writing the ponencia in J.M. Tuason & Co. vs. Land Tenure Administration,
21 has viewed the Constitution a dynamic instrument and one that "is not to be construed
narrowly or pedantically" so as to enable it "to meet adequately whatever problems the future
has in store". Fr. Joaquin Bernas, a noted constitutionalist himself, has aptly observed that what,
in fact, has ultimately emerged is a concept of public use which is just as broad as "public
welfare".22
Petitioners ask: But "(w)hat is the so-called unusual interest that the expropriation of (Felix
Manalo's) birthplace become so vital as to be a public use appropriate for the exercise of the
power of eminent domain" when only members of the Iglesia ni Cristo would benefit? This
attempt to give some religious perspective to the case deserves little consideration, for what
79
should be significant is the principal objective of, not the casual consequences that might follow
from, the exercise of the power. The purpose in setting up the marker is essentially to recognize
the distinctive contribution of the late Felix Manalo to the culture of the Philippines, rather than
to commemorate his founding and leadership of the Iglesia ni Cristo. The practical reality that
greater benefit may be derived by members of the Iglesia ni Cristo than by most others could well
be true but such a peculiar advantage still remains to be merely incidental and secondary in
nature. Indeed, that only a few would actually benefit from the expropriation of property does not
necessarily diminish the essence and character of public use. 23
Petitioners contend that they have been denied due process in the fixing of the provisional value
of their property. Petitioners need merely to be reminded that what the law prohibits is the lack
of opportunity to be heard; 24 contrary to petitioners' argument, the records of this case are
replete with pleadings 25 that could have dealt, directly or indirectly, with the provisional value of
the property.
Petitioners, finally, would fault respondent appellate court in sustaining the trial court's order
which considered inapplicable the case of Noble v. City of Manila. 26Both courts held correctly.
The Republic was not a party to the alleged contract of exchange between the Iglesia ni Cristo and
petitioners which (the contracting parties) alone, not the Republic, could properly be bound.
All considered, the Court finds the assailed decision to be in accord with law and jurisprudence.
WHEREFORE, the petition is DENIED. No costs. cdtai
SO ORDERED
Padilla, Bellosillo, Kapunan and Hermosisima, Jr., JJ, concur.
Footnotes
1.Penned by Justice Nathanael De Pano, Jr., with the concurrence of Justices Luis Victor and
Fortunato Vailoces.
2."The National Museum and the National Historical Commission are hereby vested with the right
to declare other such historical and cultural sites as National Shrines, Monuments, and/or
Landmarks, in accordance with the guidelines set forth in R.A. 4846 and the spirit of this Decree."
3.Rollo, pp. 77-82.
4.Rollo, pp. 66-67.
5.Sec. 29. . . .
(2)No public money or property shall be appropriated, applied, paid, or employed, directly or
indirectly, for the use, benefit, or support of any sect, church, denomination, sectarian institution,
or system of religion, or of any priest, preacher, minister, or other religious teacher, or dignitary as
such, except when such priest, preacher, minister or dignitary is assigned to the armed forces, or
to any penal institution, or government orphanage or leprosarium.
23.Philippine Columbian Association v. Panis, 228 SCRA 668.
24.Capuno v. Jaramillo, 234 SCRA 212.
25.Those pleadings include:
(a)An urgent motion that the hearing on the fixing of the property's provisional value and the
taking of possession by the Republic over the same be held in abeyance until after petitioners shall
have received a copy of the complaint and summons (Rollo, pp. 86-88);
(b)A motion to dismiss, dated 08 August 1989, seeking to dismiss the complaint instituted by the
Republic on the ground that the expropriation in question is not for a public purpose and contrary
to Section 29(a), Article VI, of the 1987 Constitution (Rollo, pp. 90-91);
(c)A motion for reconsideration and/or suspension of the implementation of the 03 August 1989
Order (Rollo, pp. 93-95); and
(d)A motion for reconsideration of the orders dated 15 and 20 February, 1990 (Rollo, pp. 103111).
26.The Noble case holds that where there is a valid and subsisting contract between the owners of
the property and the expropriating authority, there is no need or reason for expropriation (67 Phil.
1).
6.Rollo, pp. 68-69.
7.Rollo, p. 70. cdasia
8.Rollo, pp. 71-76.
9.Black's Law Dictionary, 6th ed., p. 523.
10.Visayan Refining Company vs. Camus, 40 Phil. 550.
11.Sec. 9, Art. III, 1987 Constitution.
12.84 Phil. 847.
13.Rollo, pp. 38-39.
14.Rollo, p. 42.
15.See Province of Camarines Sur v. Court of Appeals, 222 SCRA 173.
16.See U.S. vs. Toribio, 15 Phil. 85.
17.Black's Law Dictionary, p. 1232.
18.125 SCRA 220.
19.42 Phil. 102.
20.Enrique Fernando, The Constitution of the Philippines, 2nd ed., pp. 523-524.
21.31 SCRA 413.
22.Joaquin Bernas, The Constitution of the Republic of the Philippines, Vol. 1, 1987 ed., p. 282.
80
MCIAA vs LOZADA
EN BANC
[G.R. No. 176625. February 25, 2010.]
MACTAN-CEBU INTERNATIONAL AIRPORT AUTHORITY and AIR TRANSPORTATION OFFICE,
petitioners, vs. BERNARDO L. LOZADA, SR., and the HEIRS OF ROSARIO MERCADO, namely,
VICENTE LOZADA, MARIO M. LOZADA, MARCIA L. GODINEZ, VIRGINIA L. FLORES, BERNARDO
LOZADA, JR., DOLORES GACASAN, SOCORRO CAFARO and ROSARIO LOZADA, represented by
MARCIA LOZADA GODINEZ, respondents.
DECISION
NACHURA, J p:
This is a petition for review on certiorari under Rule 45 of the Rules of Court, seeking to reverse,
annul, and set aside the Decision 1 dated February 28, 2006 and the Resolution 2 dated February
7, 2007 of the Court of Appeals (CA) (Cebu City), Twentieth Division, in CA-G.R. CV No. 65796.
The antecedent facts and proceedings are as follows:
Subject of this case is Lot No. 88-SWO-25042 (Lot No. 88), with an area of 1,017 square meters,
more or less, located in Lahug, Cebu City. Its original owner was Anastacio Deiparine when the
same was subject to expropriation proceedings, initiated by the Republic of the Philippines
(Republic), represented by the then Civil Aeronautics Administration (CAA), for the expansion and
improvement of the Lahug Airport. The case was filed with the then Court of First Instance of
Cebu, Third Branch, and docketed as Civil Case No. R-1881.
As early as 1947, the lots were already occupied by the U.S. Army. They were turned over to the
Surplus Property Commission, the Bureau of Aeronautics, the National Airport Corporation and
then to the CAA. HSEcTC
During the pendency of the expropriation proceedings, respondent Bernardo L. Lozada, Sr.
acquired Lot No. 88 from Deiparine. Consequently, Transfer Certificate of Title (TCT) No. 9045 was
issued in Lozada's name.
On December 29, 1961, the trial court rendered judgment in favor of the Republic and ordered the
latter to pay Lozada the fair market value of Lot No. 88, adjudged at P3.00 per square meter, with
consequential damages by way of legal interest computed from November 16, 1947 — the time
when the lot was first occupied by the airport. Lozada received the amount of P3,018.00 by way of
payment.
The affected landowners appealed. Pending appeal, the Air Transportation Office (ATO), formerly
CAA, proposed a compromise settlement whereby the owners of the lots affected by the
expropriation proceedings would either not appeal or withdraw their respective appeals in
consideration of a commitment that the expropriated lots would be resold at the price they were
expropriated in the event that the ATO would abandon the Lahug Airport, pursuant to an
established policy involving similar cases. Because of this promise, Lozada did not pursue his
appeal. Thereafter, Lot No. 88 was transferred and registered in the name of the Republic under
TCT No. 25057.
The projected improvement and expansion plan of the old Lahug Airport, however, was not
pursued.
Lozada, with the other landowners, contacted then CAA Director Vicente Rivera, Jr., requesting to
repurchase the lots, as per previous agreement. The CAA replied that there might still be a need
for the Lahug Airport to be used as an emergency DC-3 airport. It reiterated, however, the
assurance that "should this Office dispose and resell the properties which may be found to be no
longer necessary as an airport, then the policy of this Office is to give priority to the former
owners subject to the approval of the President."
On November 29, 1989, then President Corazon C. Aquino issued a Memorandum to the
Department of Transportation, directing the transfer of general aviation operations of the Lahug
Airport to the Mactan International Airport before the end of 1990 and, upon such transfer, the
closure of the Lahug Airport. SATDEI
Sometime in 1990, the Congress of the Philippines passed Republic Act (R.A.) No. 6958, entitled
"An Act Creating the Mactan-Cebu International Airport Authority, Transferring Existing Assets of
the Mactan International Airport and the Lahug Airport to the Authority, Vesting the Authority
with Power to Administer and Operate the Mactan International Airport and the Lahug Airport,
and for Other Purposes."
From the date of the institution of the expropriation proceedings up to the present, the public
propose of the said expropriation (expansion of the airport) was never actually initiated, realized,
or implemented. Instead, the old airport was converted into a commercial complex. Lot No. 88
became the site of a jail known as Bagong Buhay Rehabilitation Complex, while a portion thereof
was occupied by squatters. 3 The old airport was converted into what is now known as the Ayala
I.T. Park, a commercial area.
Thus, on June 4, 1996, petitioners initiated a complaint for the recovery of possession and
reconveyance of ownership of Lot No. 88. The case was docketed as Civil Case No. CEB-18823 and
was raffled to the Regional Trial Court (RTC), Branch 57, Cebu City. The complaint substantially
alleged as follows:
(a)Spouses Bernardo and Rosario Lozada were the registered owners of Lot No. 88 covered by TCT
No. 9045;
(b)In the early 1960's, the Republic sought to acquire by expropriation Lot No. 88, among others,
in connection with its program for the improvement and expansion of the Lahug Airport;
(c)A decision was rendered by the Court of First Instance in favor of the Government and against
the land owners, among whom was Bernardo Lozada, Sr. appealed therefrom;
(d)During the pendency of the appeal, the parties entered into a compromise settlement to the
effect that the subject property would be resold to the original owner at the same price when it
was expropriated in the event that the Government abandons the Lahug Airport; HTCISE
(e)Title to Lot No. 88 was subsequently transferred to the Republic of the Philippines (TCT No.
25057);
(f)The projected expansion and improvement of the Lahug Airport did not materialize;
(g)Plaintiffs sought to repurchase their property from then CAA Director Vicente Rivera. The latter
replied by giving as assurance that priority would be given to the previous owners, subject to the
approval of the President, should CAA decide to dispose of the properties;
(h)On November 29, 1989, then President Corazon C. Aquino, through a Memorandum to the
Department of Transportation and Communications (DOTC), directed the transfer of general
aviation operations at the Lahug Airport to the Mactan-Cebu International Airport Authority;
(i)Since the public purpose for the expropriation no longer exists, the property must be returned
to the plaintiffs. 4 HSacEI
In their Answer, petitioners asked for the immediate dismissal of the complaint. They specifically
denied that the Government had made assurances to reconvey Lot No. 88 to respondents in the
event that the property would no longer be needed for airport operations. Petitioners instead
asserted that the judgment of condemnation was unconditional, and respondents were,
therefore, not entitled to recover the expropriated property notwithstanding non-use or
abandonment thereof.
After pretrial, but before trial on the merits, the parties stipulated on the following set of facts:
(1)The lot involved is Lot No. 88-SWO-25042 of the Banilad Estate, situated in the City of Cebu,
containing an area of One Thousand Seventeen (1,017) square meters, more or less;
(2)The property was expropriated among several other properties in Lahug in favor of the
Republic of the Philippines by virtue of a Decision dated December 29, 1961 of the CFI of Cebu in
Civil Case No. R-1881;
(3)The public purpose for which the property was expropriated was for the purpose of the Lahug
Airport; DCASEc
(4)After the expansion, the property was transferred in the name of MCIAA; [and]
(5)On November 29, 1989, then President Corazon C. Aquino directed the Department of
Transportation and Communication to transfer general aviation operations of the Lahug Airport to
81
the Mactan-Cebu International Airport Authority and to close the Lahug Airport after such
transfer[.] 5
During trial, respondents presented Bernardo Lozada, Sr. as their lone witness, while petitioners
presented their own witness, Mactan-Cebu International Airport Authority legal assistant Michael
Bacarisas.
On October 22, 1999, the RTC rendered its Decision, disposing as follows:
WHEREFORE, in the light of the foregoing, the Court hereby renders judgment in favor of the
plaintiffs, Bernardo L. Lozada, Sr., and the heirs of Rosario Mercado, namely, Vicente M. Lozada,
Marcia L. Godinez, Virginia L. Flores, Benardo M. Lozada, Jr., Dolores L. Gacasan, Socorro L. Cafaro
and Rosario M. Lozada, represented by their attorney-in-fact Marcia Lozada Godinez, and against
defendants Cebu-Mactan International Airport Authority (MCIAA) and Air Transportation Office
(ATO):
1.ordering MCIAA and ATO to restore to plaintiffs the possession and ownership of their land, Lot
No. 88 Psd-821 (SWO-23803), upon payment of the expropriation price to plaintiffs; and
2.ordering the Register of Deeds to effect the transfer of the Certificate of Title from defendant[s]
to plaintiffs on Lot No. [88], cancelling TCT No. 20357 in the name of defendant MCIAA and to
issue a new title on the same lot in the name of Bernardo L. Lozada, Sr. and the heirs of Rosario
Mercado, namely: Vicente M. Lozada, Mario M. Lozada, Marcia L. Godinez, Virginia L. Flores,
Bernardo M. Lozada, Jr., Dolores L. Gacasan, Socorro L. Cafaro and Rosario M. Lozada. cCTAIE
No pronouncement as to costs.
SO ORDERED. 6
Aggrieved, petitioners interposed an appeal to the CA. After the filing of the necessary appellate
briefs, the CA rendered its assailed Decision dated February 28, 2006, denying petitioners' appeal
and affirming in toto the Decision of the RTC, Branch 57, Cebu City. Petitioners' motion for
reconsideration was, likewise, denied in the questioned CA Resolution dated February 7, 2007.
Hence, this petition arguing that: (1) the respondents utterly failed to prove that there was a
repurchase agreement or compromise settlement between them and the Government; (2) the
judgment in Civil Case No. R-1881 was absolute and unconditional, giving title in fee simple to the
Republic; and (3) the respondents' claim of verbal assurances from government officials violates
the Statute of Frauds.
The petition should be denied.
Petitioners anchor their claim to the controverted property on the supposition that the Decision in
the pertinent expropriation proceedings did not provide for the condition that should the
intended use of Lot No. 88 for the expansion of the Lahug Airport be aborted or abandoned, the
property would revert to respondents, being its former owners. Petitioners cite, in support of this
position, Fery v. Municipality of Cabanatuan, 7 which declared that the Government acquires only
such rights in expropriated parcels of land as may be allowed by the character of its title over the
properties —
If . . . land is expropriated for a particular purpose, with the condition that when that purpose is
ended or abandoned the property shall return to its former owner, then, of course, when the
purpose is terminated or abandoned the former owner reacquires the property so expropriated. If
. . . land is expropriated for a public street and the expropriation is granted upon condition that
the city can only use it for a public street, then, of course, when the city abandons its use as a
public street, it returns to the former owner, unless there is some statutory provision to the
contrary. . . . . If, upon the contrary, however, the decree of expropriation gives to the entity a fee
simple title, then, of course, the land becomes the absolute property of the expropriator, whether
it be the State, a province, or municipality, and in that case the non-user does not have the effect
of defeating the title acquired by the expropriation proceedings. . . . . HECTaA
When land has been acquired for public use in fee simple, unconditionally, either by the exercise
of eminent domain or by purchase, the former owner retains no right in the land, and the public
use may be abandoned, or the land may be devoted to a different use, without any impairment of
the estate or title acquired, or any reversion to the former owner. . . . . 8
Contrary to the stance of petitioners, this Court had ruled otherwise in Heirs of Timoteo Moreno
and Maria Rotea v. Mactan-Cebu International Airport Authority, 9thus —
Moreover, respondent MCIAA has brought to our attention a significant and telling portion in the
Decision in Civil Case No. R-1881 validating our discernment that the expropriation by the
predecessors of respondent was ordered under the running impression that Lahug Airport would
continue in operation —
As for the public purpose of the expropriation proceeding, it cannot now be doubted. Although
Mactan Airport is being constructed, it does not take away the actual usefulness and importance
of the Lahug Airport: it is handling the air traffic both civilian and military. From it aircrafts fly to
Mindanao and Visayas and pass thru it on their flights to the North and Manila. Then, no evidence
was adduced to show how soon is the Mactan Airport to be placed in operation and whether the
Lahug Airport will be closed immediately thereafter. It is up to the other departments of the
Government to determine said matters. The Court cannot substitute its judgment for those of the
said departments or agencies. In the absence of such showing, the Court will presume that the
Lahug Airport will continue to be in operation (emphasis supplied).
While in the trial in Civil Case No. R-1881 [we] could have simply acknowledged the presence of
public purpose for the exercise of eminent domain regardless of the survival of Lahug Airport, the
trial court in its Decision chose not to do so but instead prefixed its finding of public purpose upon
its understanding that"Lahug Airport will continue to be in operation." Verily, these meaningful
statements in the body of the Decision warrant the conclusion that the expropriated properties
would remain to be so until it was confirmed that Lahug Airport was no longer "in operation." This
inference further implies two (2) things: (a) after the Lahug Airport ceased its undertaking as such
and the expropriated lots were not being used for any airport expansion project, the rights vis-àvis the expropriated Lots Nos. 916 and 920 as between the State and their former owners,
petitioners herein, must be equitably adjusted; and (b) the foregoing unmistakable declarations in
the body of the Decision should merge with and become an intrinsic part of the fallo thereof
which under the premises is clearly inadequate since the dispositive portion is not in accord with
the findings as contained in the body thereof. 10 caCEDA
Indeed, the Decision in Civil Case No. R-1881 should be read in its entirety, wherein it is apparent
that the acquisition by the Republic of the expropriated lots was subject to the condition that the
Lahug Airport would continue its operation. The condition not having materialized because the
airport had been abandoned, the former owner should then be allowed to reacquire the
expropriated property. 11
On this note, we take this opportunity to revisit our ruling in Fery, which involved an expropriation
suit commenced upon parcels of land to be used as a site for a public market. Instead of putting
up a public market, respondent Cabanatuan constructed residential houses for lease on the area.
Claiming that the municipality lost its right to the property taken since it did not pursue its public
purpose, petitioner Juan Fery, the former owner of the lots expropriated, sought to recover his
properties. However, as he had admitted that, in 1915, respondent Cabanatuan acquired a fee
simple title to the lands in question, judgment was rendered in favor of the municipality, following
American jurisprudence, particularly City of Fort Wayne v. Lake Shore & M.S. RY. Co., 12
McConihay v. Theodore Wright, 13 andReichling v. Covington Lumber Co., 14 all uniformly holding
that the transfer to a third party of the expropriated real property, which necessarily resulted in
the abandonment of the particular public purpose for which the property was taken, is not a
ground for the recovery of the same by its previous owner, the title of the expropriating agency
being one of fee simple.
Obviously, Fery was not decided pursuant to our now sacredly held constitutional right that
private property shall not be taken for public use without just compensation. 15 It is well settled
that the taking of private property by the Government's power of eminent domain is subject to
two mandatory requirements: (1) that it is for a particular public purpose; and (2) that just
compensation be paid to the property owner. These requirements partake of the nature of
implied conditions that should be complied with to enable the condemnor to keep the property
expropriated. 16 ECcTaS
82
More particularly, with respect to the element of public use, the expropriator should commit to
use the property pursuant to the purpose stated in the petition for expropriation filed, failing
which, it should file another petition for the new purpose. If not, it is then incumbent upon the
expropriator to return the said property to its private owner, if the latter desires to reacquire the
same. Otherwise, the judgment of expropriation suffers an intrinsic flaw, as it would lack one
indispensable element for the proper exercise of the power of eminent domain, namely, the
particular public purpose for which the property will be devoted. Accordingly, the private property
owner would be denied due process of law, and the judgment would violate the property owner's
right to justice, fairness, and equity.
In light of these premises, we now expressly hold that the taking of private property, consequent
to the Government's exercise of its power of eminent domain, is always subject to the condition
that the property be devoted to the specific public purpose for which it was taken. Corollarily, if
this particular purpose or intent is not initiated or not at all pursued, and is peremptorily
abandoned, then the former owners, if they so desire, may seek the reversion of the property,
subject to the return of the amount of just compensation received. In such a case, the exercise of
the power of eminent domain has become improper for lack of the required factual justification.
17
Even without the foregoing declaration, in the instant case, on the question of whether
respondents were able to establish the existence of an oral compromise agreement that entitled
them to repurchase Lot No. 88 should the operations of the Lahug Airport be abandoned, we rule
in the affirmative.
It bears stressing that both the RTC, Branch 57, Cebu and the CA have passed upon this factual
issue and have declared, in no uncertain terms, that a compromise agreement was, in fact,
entered into between the Government and respondents, with the former undertaking to resell Lot
No. 88 to the latter if the improvement and expansion of the Lahug Airport would not be pursued.
In affirming the factual finding of the RTC to this effect, the CA declared — EHSIcT
Lozada's testimony is cogent. An octogenarian widower-retiree and a resident of Moon Park,
California since 1974, he testified that government representatives verbally promised him and his
late wife while the expropriation proceedings were on-going that the government shall return the
property if the purpose for the expropriation no longer exists. This promise was made at the
premises of the airport. As far as he could remember, there were no expropriation proceedings
against his property in 1952 because the first notice of expropriation he received was in 1962.
Based on the promise, he did not hire a lawyer. Lozada was firm that he was promised that the lot
would be reverted to him once the public use of the lot ceases. He made it clear that the verbal
promise was made in Lahug with other lot owners before the 1961 decision was handed down,
though he could not name the government representatives who made the promise. It was just a
verbal promise; nevertheless, it is binding. The fact that he could not supply the necessary details
for the establishment of his assertions during cross-examination, but that "When it will not be
used as intended, it will be returned back, we just believed in the government," does not
dismantle the credibility and truthfulness of his allegation. This Court notes that he was 89 years
old when he testified in November 1997 for an incident which happened decades ago. Still, he is a
competent witness capable of perceiving and making his perception known. The minor lapses are
immaterial. The decision of the competency of a witness rests primarily with the trial judge and
must not be disturbed on appeal unless it is clear that it was erroneous. The objection to his
competency must be made before he has given any testimony or as soon as the incompetency
becomes apparent. Though Lozada is not part of the compromise agreement, 18 he nevertheless
adduced sufficient evidence to support his claim. 19
As correctly found by the CA, unlike in Mactan Cebu International Airport Authority v. Court of
Appeals, 20 cited by petitioners, where respondent therein offered testimonies which were
hearsay in nature, the testimony of Lozada was based on personal knowledge as the assurance
from the government was personally made to him. His testimony on cross-examination destroyed
neither his credibility as a witness nor the truthfulness of his words.
Verily, factual findings of the trial court, especially when affirmed by the CA, are binding and
conclusive on this Court and may not be reviewed. A petition forcertiorari under Rule 45 of the
Rules of Court contemplates only questions of law and not of fact. 21 Not one of the exceptions to
this rule is present in this case to warrant a reversal of such findings. AaCEDS
As regards the position of petitioners that respondents' testimonial evidence violates the Statute
of Frauds, suffice it to state that the Statute of Frauds operates only with respect to executory
contracts, and does not apply to contracts which have been completely or partially performed, the
rationale thereof being as follows:
In executory contracts there is a wide field for fraud because unless they be in writing there is no
palpable evidence of the intention of the contracting parties. The statute has precisely been
enacted to prevent fraud. However, if a contract has been totally or partially performed, the
exclusion of parol evidence would promote fraud or bad faith, for it would enable the defendant
to keep the benefits already delivered by him from the transaction in litigation, and, at the same
time, evade the obligations, responsibilities or liabilities assumed or contracted by him thereby. 22
In this case, the Statute of Frauds, invoked by petitioners to bar the claim of respondents for the
reacquisition of Lot No. 88, cannot apply, the oral compromise settlement having been partially
performed. By reason of such assurance made in their favor, respondents relied on the same by
not pursuing their appeal before the CA. Moreover, contrary to the claim of petitioners, the fact of
Lozada's eventual conformity to the appraisal of Lot No. 88 and his seeking the correction of a
clerical error in the judgment as to the true area of Lot No. 88 do not conclusively establish that
respondents absolutely parted with their property. To our mind, these acts were simply meant to
cooperate with the government, particularly because of the oral promise made to them.
The right of respondents to repurchase Lot No. 88 may be enforced based on a constructive trust
constituted on the property held by the government in favor of the former. On this note, our
ruling in Heirs of Timoteo Moreno is instructive, viz.: IcAaEH
Mactan-Cebu International Airport Authority is correct in stating that one would not find an
express statement in the Decision in Civil Case No. R-1881 to the effect that "the [condemned] lot
would return to [the landowner] or that [the landowner] had a right to repurchase the same if the
purpose for which it was expropriated is ended or abandoned or if the property was to be used
other than as the Lahug Airport." This omission notwithstanding, and while the inclusion of this
pronouncement in the judgment of condemnation would have been ideal, such precision is not
absolutely necessary nor is it fatal to the cause of petitioners herein. No doubt, the return or
repurchase of the condemned properties of petitioners could be readily justified as the manifest
legal effect or consequence of the trial court's underlying presumption that "Lahug Airport will
continue to be in operation" when it granted the complaint for eminent domain and the airport
discontinued its activities.
The predicament of petitioners involves a constructive trust, one that is akin to the implied trust
referred to in Art. 1454 of the Civil Code, "If an absolute conveyance of property is made in order
to secure the performance of an obligation of the grantor toward the grantee, a trust by virtue of
law is established. If the fulfillment of the obligation is offered by the grantor when it becomes
due, he may demand the reconveyance of the property to him." In the case at bar, petitioners
conveyed Lots No. 916 and 920 to the government with the latter obliging itself to use the realties
for the expansion of Lahug Airport; failing to keep its bargain, the government can be compelled
by petitioners to reconvey the parcels of land to them, otherwise, petitioners would be denied the
use of their properties upon a state of affairs that was not conceived nor contemplated when the
expropriation was authorized.
Although the symmetry between the instant case and the situation contemplated by Art. 1454 is
not perfect, the provision is undoubtedly applicable. For, as explained by an expert on the law of
trusts: "The only problem of great importance in the field of constructive trust is to decide
whether in the numerous and varying fact situations presented to the courts there is a wrongful
holding of property and hence a threatened unjust enrichment of the defendant."Constructive
trusts are fictions of equity which are bound by no unyielding formula when they are used by
83
courts as devices to remedy any situation in which the holder of legal title may not in good
conscience retain the beneficial interest. AICDSa
In constructive trusts, the arrangement is temporary and passive in which the trustee's sole duty is
to transfer the title and possession over the property to the plaintiff-beneficiary. Of course, the
"wronged party seeking the aid of a court of equity in establishing a constructive trust must
himself do equity."Accordingly, the court will exercise its discretion in deciding what acts are
required of the plaintiff-beneficiary as conditions precedent to obtaining such decree and has the
obligation to reimburse the trustee the consideration received from the latter just as the plaintiffbeneficiary would if he proceeded on the theory of rescission. In the good judgment of the court,
the trustee may also be paid the necessary expenses he may have incurred in sustaining the
property, his fixed costs for improvements thereon, and the monetary value of his services in
managing the property to the extent that plaintiff-beneficiary will secure a benefit from his acts.
The rights and obligations between the constructive trustee and the beneficiary, in this case,
respondent MCIAA and petitioners over Lots Nos. 916 and 920, are echoed in Art. 1190 of the Civil
Code, "When the conditions have for their purpose the extinguishment of an obligation to give,
the parties, upon the fulfillment of said conditions, shall return to each other what they have
received . . . . In case of the loss, deterioration or improvement of the thing, the provisions which,
with respect to the debtor, are laid down in the preceding article shall be applied to the party who
is bound to return . . . ." 23
On the matter of the repurchase price, while petitioners are obliged to reconvey Lot No. 88 to
respondents, the latter must return to the former what they received as just compensation for the
expropriation of the property, plus legal interest to be computed from default, which in this case
runs from the time petitioners comply with their obligation to respondents. cDTACE
Respondents must likewise pay petitioners the necessary expenses they may have incurred in
maintaining Lot No. 88, as well as the monetary value of their services in managing it to the extent
that respondents were benefited thereby.
Following Article 1187 24 of the Civil Code, petitioners may keep whatever income or fruits they
may have obtained from Lot No. 88, and respondents need not account for the interests that the
amounts they received as just compensation may have earned in the meantime.
In accordance with Article 1190 25 of the Civil Code vis-à-vis Article 1189, which provides that "(i)f
a thing is improved by its nature, or by time, the improvement shall inure to the benefit of the
creditor . . .," respondents, as creditors, do not have to pay, as part of the process of restitution,
the appreciation in value of Lot No. 88, which is a natural consequence of nature and time. 26
WHEREFORE, the petition is DENIED. The February 28, 2006 Decision of the Court of Appeals,
affirming the October 22, 1999 Decision of the Regional Trial Court, Branch 87, Cebu City, and its
February 7, 2007 Resolution are AFFIRMED with MODIFICATION as follows: SDIACc
1.Respondents are ORDERED to return to petitioners the just compensation they received for the
expropriation of Lot No. 88, plus legal interest, in the case of default, to be computed from the
time petitioners comply with their obligation to reconvey Lot No. 88 to them;
2.Respondents are ORDERED to pay petitioners the necessary expenses the latter incurred in
maintaining Lot No. 88, plus the monetary value of their services to the extent that respondents
were benefited thereby;
3.Petitioners are ENTITLED to keep whatever fruits and income they may have obtained from Lot
No. 88; and
4.Respondents are also ENTITLED to keep whatever interests the amounts they received as just
compensation may have earned in the meantime, as well as the appreciation in value of Lot No.
88, which is a natural consequence of nature and time;
In light of the foregoing modifications, the case is REMANDED to the Regional Trial Court, Branch
57, Cebu City, only for the purpose of receiving evidence on the amounts that respondents will
have to pay petitioners in accordance with this Court's decision. No costs. HTAIcD
SO ORDERED.
Puno, C.J., Carpio, Corona, Carpio Morales, Velasco, Jr., Leonardo-de Castro, Brion, Bersamin, Del
Castillo, Abad, Villarama, Jr., Perez and Mendoza, JJ., concur.
Peralta, J., is on official leave.
Footnotes
1.Penned by Associate Justice Enrico A. Lanzanas, with Associate Justices Pampio A. Abarintos and
Apolinario D. Bruselas, Jr., concurring; rollo, pp. 46-65.
2.Rollo, pp. 67-68.
3.TSN, June 25, 1998, p. 7.
4.Rollo, pp. 20-21.
5.Id. at 22-23.
6.Records, p. 178.
7.42 Phil. 28 (1921).
8.Id. at 29-30.
9.G.R. No. 156273, October 15, 2003, 413 SCRA 502.
10.Id. at 509-510.
11.Ruling on the Motion for Reconsideration affirming the Decision; Heirs of Timoteo Moreno and
Maria Rotea v. Mactan-Cebu International Airport Authority, G.R. No. 156273, August 9, 2005, 466
SCRA 288, 305.
12.132 Ind. 558, November 5, 1892.
13.121 U.S. 932, April 11, 1887.
14.57 Wash. 225, February 4, 1910.
15.CONSTITUTION, Art. III, Sec. 9.
16.Supra note 11, at 302; Vide Republic v. Lim, G.R. No. 161656, June 29, 2005, 462 SCRA 265.
17.Vide the Separate Concurring Opinion of Associate Justice Presbitero J. Velasco, Jr.
18.Petitioners' witness Michael Bacarisas testified that three other lot owners entered into a
written compromise agreement with the government but Lozada was not part of it.
19.Rollo, pp. 58-59.
20.G.R. No. 121506, October 30, 1996, 263 SCRA 736.
21.Caluag v. People, G.R. No. 171511, March 4, 2009, 580 SCRA 575, 583; Gregorio Araneta
University Foundation v. Regional Trial Court of Kalookan City, Br. 120,G.R. No. 139672, March 4,
2009, 580 SCRA 532, 544; Heirs of Jose T. Calo v. Calo, G.R. No. 156101, February 10, 2009, 578
SCRA 226, 232.
22.Mactan-Cebu International Airport Authority v. Tudtud, G.R. No. 174012, November 14, 2008,
571 SCRA 165, 175.
23.Supra note 9, at 512-514.
24.Art. 1187. The effects of a conditional obligation to give, once the condition has been fulfilled,
shall retroact to the day of the constitution of the obligation. Nevertheless, when the obligation
imposes reciprocal prestations upon the parties, the fruits and interests during the pendency of
the condition shall be deemed to have been mutually compensated. . . . .
25.Art. 1190. When the conditions have for their purpose the extinguishment of an obligation to
give, the parties, upon the fulfillment of said conditions, shall return to each other what they have
received.
In case of the loss, deterioration or improvement of the thing, the provisions which, with respect
to the debtor, are laid down in the preceding article (Article 1189) shall be applied to the party
who is bound to return.
26.Mactan-Cebu International Airport Authority v. Tudtud, supra note 22, at 177.
84
EPZA vs DULAY
EN BANC
[G.R. No. L-59603. April 29, 1987.]
EXPORT PROCESSING ZONE AUTHORITY, petitioner, vs. HON. CEFERINO E. DULAY, in his capacity
as the Presiding Judge, Court of First Instance of Cebu, Branch XVI, Lapu-Lapu City, and SAN
ANTONIO DEVELOPMENT CORPORATION, respondents.
Elena M. Cuevas for respondents.
SYLLABUS
1.CONSTITUTIONAL LAW; JUST COMPENSATION; PROVISIONS OF P.D. NOS. 76, 464, 794 AND 1533
CONSTITUTES IMPERMISSIBLE ENCROACHMENT ON JUDICIAL PREROGATIVES. — The method of
ascertaining just compensation under the aforecited decrees constitutes impermissible
encroachment on judicial prerogatives. It tends to render this Court initial in a matter which under
the Constitution is reserved to it for final determination. Thus, although in an expropriation
proceeding the court technically would still have the power to determine the just compensation
for the property, following the applicable decrees, its task would be relegated to simply stating the
lower value of the property as declared either by the owner or the assessor. As a necessary
consequence, it would be useless for the court to appoint commissioners under Rule 67 of the
Rules of Court. Moreover, the need to satisfy the due process clause in the taking of private
property is seemingly fulfilled since it cannot be said that a judicial proceeding was not had before
the actual taking. However, the strict application of the decrees during the proceedings would be
nothing short of a mere formality or charade as the court has only to choose between the
valuation of the owner and that of the assessor, and its choice is always limited to the lower of the
two. The court cannot exercise its discretion or independence in determining what is just or fair.
Even a grade school pupil could substitute for the judge insofar as the determination of
constitutional just compensation is concerned.
2.ID.; ID.; VALUATION IN THE DECREE MAY ONLY SERVE AS A GUIDING PRINCIPLE IN THE
DETERMINATION OF JUST COMPENSATION BUT MAY NOT SUBSTITUTE THE COURT'S OWN
JUDGMENT AS TO WHAT AMOUNT SHOULD BE AWARDED AND HOW TO ARRIVE AT SUCH
AMOUNT; DOCTRINE ENUNCIATED IN THE CASE OF NATIONAL HOUSING AUTHORITY V. REYES
(123 SCRA 245) ABANDONED. — We are convinced and so rule that the trial court correctly stated
that the valuation in the decree may only serve as a guiding principle or one of the factors in
determining just compensation but it may not substitute the court's own judgment as to what
amount should be awarded and how to arrive at such amount. A return to the earlier wellestablished doctrine, to our mind, is more in keeping with the principle that the judiciary should
live up to its mission "by vitalizing and not denigrating constitutional rights." (See Salonga v. Cruz
Paño, 134 SCRA 438, 462; citing Mercado v. Court of First Instance of Rizal, 116 SCRA 93.) The
doctrine we enunciated in National Housing Authority v. Reyes, supra, therefore, must necessarily
be abandoned if we are to uphold this Court's role as the guardian of the fundamental rights
guaranteed by the due process and equal protection clauses and as the final arbiter over
transgressions committed against constitutional rights.
3.ID.; ID.; DEFINITION OF JUST COMPENSATION; WHAT CONSTITUTES ARBITRARY AND
CONFISCATORY VALUATION. — Just compensation means the value of the property at the time of
the taking. It means a fair and full equivalent for the loss sustained. All the facts as to the
condition of the property and its surroundings, its improvements and capabilities, should be
considered. In this particular case, the tax declarations presented by the petitioner as basis for just
compensation were made by the Lapu-Lapu municipal, later city assessor long before martial law,
when land was not only much cheaper but when assessed values of properties were stated in
figures constituting only a fraction of their true market value. The private respondent was not
even the owner of the properties at the time. It purchased the lots for development purposes. To
peg the value of the lots on the basis of documents which are out of date and at prices below the
acquisition cost of present owners would be arbitrary and confiscatory.
4.ID.; ID.; FACTORS CONSIDERED IN THE VALUATION OF PROPERTIES FOR EXPROPRIATION. —
Various factors can come into play in the valuation of specific properties singled out for
expropriation. The values given by provincial assessors are usually uniform for very wide areas
covering several barrios or even an entire town with the exception of the poblacion. Individual
differences are never taken into account. The value of land is based on such generalities as its
possible cultivation for rice, corn, coconuts, or other crops. Very often land described as "cogonal"
has been cultivated for generations. Buildings are described in terms of only two or three classes
of building materials and estimates of areas are more often inaccurate than correct. Tax values
can serve as guides but cannot be absolute substitutes for just compensation.
5.ID.; ID.; DENIAL TO THE OWNER OF EXPROPRIATED PROPERTY OF THE OPPORTUNITY TO
QUESTION THE VALUATION IN THE TAX DOCUMENTS IS VIOLATIVE OF DUE PROCESS. — To say
that the owners are estopped to question the valuations made by assessors since they had the
opportunity to protest is illusory. The overwhelming mass of land owners accept unquestioningly
what is found in the tax declarations prepared by local assessors or municipal clerks for them.
They do not even look at, much less analyze, the statements. The idea of expropriation simply
never occurs until a demand is made or a case filed by an agency authorized to do so. It is violative
of due process to deny to the owner the opportunity to prove that the valuation in the tax
documents is unfair or wrong. And it is repulsive to basic concepts of justice and fairness to allow
the haphazard work of a minor bureaucrat or clerk to absolutely prevail over the judgment of a
court promulgated only after expert commissioners have actually viewed the property, after
evidence and arguments pro and con have been presented, and after all factors and
considerations essential to a fair and just determination have been judiciously evaluated.
6.ID.; ID.; ID.; DETERMINATION OF JUST COMPENSATION, A JUDICIAL FUNCTION. — The
determination of "just compensation" in eminent domain cases is a judicial function. The
executive department or the legislature may make the initial determinations but when a party
claims a violation of the guarantee in the Bill of Rights that private property may not be taken for
public use without just compensation, no statute, decree, or executive order can mandate that its
own determination shall prevail over the court's findings. Much less can the courts be precluded
from looking into the "just-ness" of the decreed compensation.
7.ID.; ID.; PRESIDENTIAL DECREE NO. 1533; DECLARED UNCONSTITUTIONAL AND VOID. — We,
hold that P.D. No. 1533, which eliminates the court's discretion to appoint commissioners
pursuant to Rule 67 of the Rules of Court, is unconstitutional and void. To hold otherwise would
be to undermine the very purpose why this Court exists in the first place.
DECISION
GUTIERREZ, JR., J p:
The question raised in this petition is whether or not Presidential Decrees Numbered 76, 464, 794
and 1533 have repealed and superseded Sections 5 to 8 of Rule 67 of the Revised Rules of Court,
such that in determining the just compensation of property in an expropriation case, the only
basis should be its market value as declared by the owner or as determined by the assessor,
whichever is lower. LibLex
On January 15, 1979, the President of the Philippines, issued Proclamation No. 1811, reserving a
certain parcel of land of the public domain situated in the City of Lapu-Lapu, Island of Mactan,
Cebu and covering a total area of 1,193,669 square meters, more or less, for the establishment of
an export processing zone by petitioner Export Processing Zone Authority (EPZA).
Not all the reserved area, however, was public land. The proclamation included, among others,
four (4) parcels of land with an aggregate area of 22,328 square meters owned and registered in
the name of the private respondent. The petitioner, therefore, offered to purchase the parcels of
land from the respondent in accordance with the valuation set forth in Section 92, Presidential
Decree (P.D.) No. 464, as amended. The parties failed to reach an agreement regarding the sale of
the property.
The petitioner filed with the then Court of First Instance of Cebu, Branch XVI, Lapu-Lapu City, a
complaint for expropriation with a prayer for the issuance of a writ of possession against the
private respondent, to expropriate the aforesaid parcels of land pursuant to P.D. No. 66, as
85
amended, which empowers the petitioner to acquire by condemnation proceedings any property
for the establishment of export processing zones, in relation to Proclamation No. 1811, for the
purpose of establishing the Mactan Export Processing Zone.
On October 21, 1980, the respondent judge issued a writ of possession authorizing the petitioner
to take immediate possession of the premises. On December 23, 1980, the private respondent
filed its answer.
At the pre-trial conference on February 13, 1981, the respondent judge issued an order stating
that the parties have agreed that the only issue to be resolved is the just compensation for the
properties and that the pre-trial is thereby terminated and the hearing on the merits is set on
April 2, 1981.
On February 17, 1981, the respondent judge issued the order of condemnation declaring the
petitioner as having the lawful right to take the properties sought to be condemned, upon the
payment of just compensation to be determined as of the filing of the complaint. The respondent
judge also issued a second order, subject of this petition, appointing certain persons as
commissioners to ascertain and report to the court the just compensation for the properties
sought to be expropriated.
On June 19, 1981, the three commissioners submitted their consolidated report recommending
the amount of P15.00 per square meter as the fair and reasonable value of just compensation for
the properties.
On July 29, 1981, the petitioner filed a Motion for Reconsideration of the order of February 19,
1981 and Objection to Commissioner's Report on the grounds that P.D. No. 1533 has superseded
Sections 5 to 8 of Rule 67 of the Rules of Court on the ascertainment of just compensation
through commissioners; and that the compensation must not exceed the maximum amount set by
P.D. No. 1533.
On November 14, 1981, the trial court denied the petitioner's motion for reconsideration and
gave the latter ten (10) days within which to file its objection to the Commissioner's Report.
On February 9, 1982, the petitioner filed this present petition for certiorari and mandamus with
preliminary restraining order, enjoining the trial court from enforcing the order dated February
17, 1981 and from further proceeding with the hearing of the expropriation case.
The only issue raised in this petition is whether or not Sections 5 to 8, Rule 67 of the Revised Rules
of Court had been repealed or deemed amended by P.D. No. 1533 insofar as the appointment of
commissioners to determine the just compensation is concerned. Stated in another way, is the
exclusive and mandatory mode of determining just compensation in P.D. No. 1533 valid and
constitutional?
The petitioner maintains that the respondent judge acted in excess of his jurisdiction and with
grave abuse of discretion in denying the petitioner's motion for reconsideration and in setting the
commissioner's report for hearing because under P.D. No. 1533, which is the applicable law
herein, the basis of just compensation shall be the fair and current market value declared by the
owner of the property sought to be expropriated or such market value as determined by the
assessor, whichever is lower. Therefore, there is no more need to appoint commissioners as
prescribed by Rule 67 of the Revised Rules of Court and for said commissioners to consider other
highly variable factors in order to determine just compensation. The petitioner further maintains
that P.D. No. 1533 has vested on the assessors and the property owners themselves the power or
duty to fix the market value of the properties and that said property owners are given the full
opportunity to be heard before the Local Board of Assessment Appeals and the Central Board of
Assessment Appeals. Thus, the vesting on the assessor or the property owner of the right to
determine the just compensation in expropriation proceedings, with appropriate procedure for
appeal to higher administrative boards, is valid and constitutional.
Prior to the promulgation of P.D. Nos. 76, 464, 794 and 1533, this Court has interpreted the
eminent domain provisions of the Constitution and established the meaning, under the
fundamental law, of just compensation and who has the power to determine it. Thus, in the
following cases, wherein the filing of the expropriation proceedings were all commenced prior to
the promulgation of the aforementioned decrees, we laid down the doctrine on just
compensation:
Municipality of Daet v. Court of Appeals (93 SCRA 503, 516),
xxx xxx xxx
". . . And in the case of J.M. Tuason & Co., Inc. v. Land Tenure Administration, 31 SCRA 413, the
Court, speaking thru now Chief Justice Fernando, reiterated the 'well-settled (rule) that just
compensation means the equivalent for the value of the property at the time of its taking.
Anything beyond that is more and anything short of that is less, than just compensation. It means
a fair and full equivalent for the loss sustained, which is the measure of the indemnity, not
whatever gain would accrue to the expropriating entity.' "
Garcia v. Court of Appeals (102 SCRA 597, 608),
xxx xxx xxx
". . . Hence, in estimating the market value, all the capabilities of the property and all the uses to
which it may be applied or for which it is adapted are to be considered and not merely the
condition it is in the time and the use to which it is then applied by the owner. All the facts as to
the condition of the property and its surroundings, its improvements and capabilities may be
shown and considered in estimating its value."
Republic v. Santos (141 SCRA 30, 35-36),
"According to section 8 of Rule 67, the court is not bound by the commissioners' report. It may
make such order or render such judgment as shall secure to the plaintiff the property essential to
the exercise of his right of condemnation, and to the defendant just compensation for the
property expropriated. This Court may substitute its own estimate of the value as gathered from
the record (Manila Railroad Company v. Velasquez, 32 Phil. 286).
However, the promulgation of the aforementioned decrees practically set aside the above and
many other precedents hammered out in the course of evidence-laden, well argued, fully heard,
studiously deliberated, and judiciously considered court proceedings. The decrees categorically
and peremptorily limited the definition of just compensation thus:
P.D. No. 76:
xxx xxx xxx
"For purposes of just compensation in cases of private property acquired by the government for
public use, the basis shall be the current and fair market value declared by the owner or
administrator, or such market value as determined by the Assessor, whichever is lower."
P.D. No. 464:
"Section 92.Basis for payment of just compensation in expropriation proceedings. — In
determining just compensation which private property is acquired by the government for public
use, the basis shall be the market value declared by the owner or administrator or anyone having
legal interest in the property, or such market value as determined by the assessor, whichever is
lower."
P.D. No. 794:
"Section 92.Basis for payment of just compensation in expropriation proceedings. — In
determining just compensation when private property is acquired by the government for public
use, the same shall not exceed the market value declared by the owner or administrator or
anyone having legal interest in the property, or such market value as determined by the assessor,
whichever is lower."
P.D. No. 1533:
"Section 1.In determining just compensation for private property acquired through eminent
domain proceedings, the compensation to be paid shall not exceed the value declared by the
owner or administrator or anyone having legal interest in the property or determined by the
assessor, pursuant to the Real Property Tax Code, whichever value is lower, prior to the
recommendation or decision of the appropriate Government office to acquire the property."
We are constrained to declare the provisions of the Decrees on just compensation
unconstitutional and void and accordingly dismiss the instant petition for lack of merit. cdtai
86
The method of ascertaining just compensation under the aforecited decrees constitutes
impermissible encroachment on judicial prerogatives. It tends to render this Court inutile in a
matter which under the Constitution is reserved to it for final determination.
Thus, although in an expropriation proceeding the court technically would still have the power to
determine the just compensation for the property, following the applicable decrees, its task would
be relegated to simply stating the lower value of the property as declared either by the owner or
the assessor. As a necessary consequence, it would be useless for the court to appoint
commissioners under Rule 67 of the Rules of Court. Moreover, the need to satisfy the due process
clause in the taking of private property is seemingly fulfilled since it cannot be said that a judicial
proceeding was not had before the actual taking. However, the strict application of the decrees
during the proceedings would be nothing short of a mere formality or charade as the court has
only to choose between the valuation of the owner and that of the assessor, and its choice is
always limited to the lower of the two. The court cannot exercise its discretion or independence in
determining what is just or fair. Even a grade school pupil could substitute for the judge insofar as
the determination of constitutional just compensation is concerned.
In the case of National Housing Authority v. Reyes (123 SCRA 245), this Court upheld P.D. No. 464,
as further amended by P.D. Nos. 794, 1224 and 1259. In this case, the petitioner National Housing
Authority contended that the owner's declaration at P1,400.00 which happened to be lower than
the assessor's assessment, is the just compensation for the respondent's property under section
92 of P.D. No. 464. On the other hand, the private respondent stressed that while there may be
basis for the allegation that the respondent judge did not follow the decree, the matter is still
subject to his final disposition, he having been vested with the original and competent authority to
exercise his judicial discretion in the light of the constitutional clauses on due process and equal
protection.
To these opposing arguments, this Court ruled that under the conceded facts, there should be a
recognition that the law as it stands must be applied; that the decree having spoken so clearly and
unequivocably calls for obedience; and that on a matter where the applicable law speaks in no
uncertain language, the Court has no choice except to yield to its command. We further stated
that "the courts should recognize that the rule introduced by P.D. No. 76 and reiterated in
subsequent decrees does not upset the established concepts of justice or the constitutional
provision on just compensation for, precisely, the owner is allowed to make his own valuation of
his property."
While the Court yielded to executive prerogative exercised in the form of absolute law-making
power, its members, nonetheless, remained uncomfortable with the implications of the decision
and the abuse and unfairness which might follow in its wake. For one thing, the President himself
did not seem assured or confident with his own enactment. It was not enough to lay down the law
on determination of just compensation in P.D. 76. It had to be repeated and reiterated in P.D. 464,
P.D. 794, and P.D. 1533. The provision is also found in P.D. 1224, P.D. 1259 and P.D. 1313. Inspite
of its effectivity as general law and the wide publicity given to it, the questioned provision or an
even stricter version had to be embodied in cases of specific expropriations by decree as in P.D.
1669 expropriating the Tambunting Estate and P.D. 1670 expropriating the Sunog Apog area in
Tondo, Manila.
In the present petition, we are once again confronted with the same question of whether the
courts under P.D. 1533, which contains the same provision on just compensation as its
predecessor decrees, still have the power and authority to determine just compensation,
independent of what is stated by the decree and to this effect, to appoint commissioners for such
purpose.
This time, we answer in the affirmative.
In overruling the petitioner's motion for reconsideration and objection to the commissioner's
report, the trial court said:
"Another consideration why the Court is empowered to appoint commissioners to assess the just
compensation of these properties under eminent domain proceedings, is the well-entrenched
ruling that 'the owner of property expropriated is entitled to recover from expropriating authority
the fair and full value of the lot, as of the time when possession thereof was actually taken by the
province, plus consequential damages — including attorney's fees — from which the
consequential benefits, if any should be deducted, with interest at the legal rate, on the aggregate
sum due to the owner from and after the date of actual taking.' (Capitol Subdivision, Inc. v.
Province of Negros Occidental, 7 SCRA 60). In fine, the decree only establishes a uniform basis for
determining just compensation which the Court may consider as one of the factors in arriving at
'just compensation,' as envisage in the Constitution. In the words of Justice Barredo, 'Respondent
court's invocation of General Order No. 3 of September 21, 1972 is nothing short of an
unwarranted abdication of judicial authority, which no judge duly imbued with the implications of
the paramount principle of independence of the judiciary should ever think of doing.' (Lina v.
Purisima, 82 SCRA 344, 361; Cf. Prov. of Pangasinan v. CFI Judge of Pangasinan, Br. VIII, 80 SCRA
117) Indeed, where this Court simply follows PD 1533, thereby limiting the determination of just
compensation on the value declared by the owner or administrator or as determined by the
Assessor, whichever is lower, it may result in the deprivation of the landowner's right of due
process to enable it to prove its claim to just compensation, as mandated by the Constitution. (Uy
v. Genato, 57 SCRA 123). The tax declaration under the Real Property Tax Code is, undoubtedly,
for purposes of taxation."
We are convinced and so rule that the trial court correctly stated that the valuation in the decree
may only serve as a guiding principle or one of the factors in determining just compensation but it
may not substitute the court's own judgment as to what amount should be awarded and how to
arrive at such amount. A return to the earlier well-established doctrine, to our mind, is more in
keeping with the principle that the judiciary should live up to its mission "by vitalizing and not
denigrating constitutional rights." (See Salonga v. Cruz Paño, 134 SCRA 438, 462; citing Mercado v.
Court of First Instance of Rizal, 116 SCRA 93.) The doctrine we enunciated in National Housing
Authority v. Reyes, supra, therefore, must necessarily be abandoned if we are to uphold this
Court's role as the guardian of the fundamental rights guaranteed by the due process and equal
protection clauses and as the final arbiter over transgressions committed against constitutional
rights.
The basic unfairness of the decrees is readily apparent.
Just compensation means the value of the property at the time of the taking. It means a fair and
full equivalent for the loss sustained. All the facts as to the condition of the property and its
surroundings, its improvements and capabilities, should be considered.
In this particular case, the tax declarations presented by the petitioner as basis for just
compensation were made by the Lapu-Lapu municipal, later city assessor long before martial law,
when land was not only much cheaper but when assessed values of properties were stated in
figures constituting only a fraction of their true market value. The private respondent was not
even the owner of the properties at the time. It purchased the lots for development purposes. To
peg the value of the lots on the basis of documents which are out of date and at prices below the
acquisition cost of present owners would be arbitrary and confiscatory.
Various factors can come into play in the valuation of specific properties singled out for
expropriation. The values given by provincial assessors are usually uniform for very wide areas
covering several barrios or even an entire town with the exception of the poblacion. Individual
differences are never taken into account. The value of land is based on such generalities as its
possible cultivation for rice, corn, coconuts, or other crops. Very often land described as "cogonal"
has been cultivated for generations. Buildings are described in terms of only two or three classes
of building materials and estimates of areas are more often inaccurate than correct. Tax values
can serve as guides but cannot be absolute substitutes for just compensation. LLjur
To say that the owners are estopped to question the valuations made by assessors since they had
the opportunity to protest is illusory. The overwhelming mass of land owners accept
unquestioningly what is found in the tax declarations prepared by local assessors or municipal
clerks for them. They do not even look at, much less analyze, the statements. The idea of
87
expropriation simply never occurs until a demand is made or a case filed by an agency authorized
to do so.
It is violative of due process to deny to the owner the opportunity to prove that the valuation in
the tax documents is unfair or wrong. And it is repulsive to basic concepts of justice and fairness to
allow the haphazard work of a minor bureaucrat or clerk to absolutely prevail over the judgment
of a court promulgated only after expert commissioners have actually viewed the property, after
evidence and arguments pro and con have been presented, and after all factors and
considerations essential to a fair and just determination have been judiciously evaluated.
As was held in the case of Gideon v. Wainwright (93 ALR 2d, 733, 742):
"In the light of these and many other prior decisions of this Court, it is not surprising that the Betts
Court, when faced with the contention that 'one charged with crime, who is unable to obtain
counsel' must be furnished counsel by the State,' conceded that '[E]xpressions in the opinions of
this court lend color to the argument . . .' 316 U.S., at 462, 463, 86 L ed. 1602, 62 S Ct. 1252. The
fact is that in deciding as it did - that 'appointment of counsel is not a fundamental right, essential
to a fair trial' — the Court in Betts v. Brady made an abrupt brake with its own well-considered
precedents. In returning to these old precedents, sounder we believe than the new, we but
restore constitutional principles established to achieve a fair system of justice. . . .'.
We return to older and more sound precedents. This Court has the duty to formulate guiding and
controlling constitutional principles, precepts, doctrines, or rules. (See Salonga v. Cruz Pano,
supra).
The determination of "just compensation" in eminent domain cases is a judicial function. The
executive department or the legislature may make the initial determinations but when a party
claims a violation of the guarantee in the Bill of Rights that private property may not be taken for
public use without just compensation, no statute, decree, or executive order can mandate that its
own determination shall prevail over the court's findings. Much less can the courts be precluded
from looking into the "just-ness" of the decreed compensation.
We, therefore, hold that P.D. No. 1533, which eliminates the court's discretion to appoint
commissioners pursuant to Rule 67 of the Rules of Court, is unconstitutional and void. To hold
otherwise would be to undermine the very purpose why this Court exists in the first place.
WHEREFORE, IN VIEW OF THE FOREGOING, the petition is hereby DISMISSED. The temporary
restraining order issued on February 16, 1982 is LIFTED and SET ASIDE.
SO ORDERED.
Fernan, Narvasa, Melencio-Herrera, Cruz, Paras, Feliciano, Gancayco, Padilla, Bidin, Sarmiento and
Cortes, JJ ., concur.
Teehankee, C .J ., concur in the result.
Yap, J ., is on leave.
88
DE KNECHT vs COURT OF APPEALS
SECOND DIVISION
[G.R. No. 108015. May 20, 1998.]
CRISTINA DE KNECHT and RENE KNECHT, petitioners, vs. HON. COURT OF APPEALS; HON. MANUEL
DUMATOL, as Judge, Regional TrialCourt, Branch 112, Pasay City; HON. CONCHITA C. MORALES, as
Judge, Regional Trial Court, Branch 110, Pasay City; HON. AURORA NAVARETTE-RECINA, as Judge,
Regional Trial Court, Branch 119, Pasay City; HON. SOFRONIO G. SAYO, as Judge, Regional
TrialCourt, Branch 111, Pasay City; REPUBLIC OF THE PHILIPPINES; SPS. MARIANO & ANACORETA
NOCOM; SALEM INVESTMENT CORPORATION; SPS. ANASTACIO & FELISA BABIERA; and SPS.
ALEJANDRO & FLOR SANGALANG, respondents.
[G.R. No. 109234. May 20, 1998.]
CRISTINA DE KNECHT and RENE KNECHT, petitioners, vs. HON. SOFRONIO SAYO, as Judge, Regional
Trial Court, Branch 111, Pasay City; REPUBLIC OF THE PHILIPPINES; PHILIPPINE NATIONAL BANK;
and MARIANO NOCOM, respondents.
Ramon A. Gonzales for petitioners.
Arturo S. Santos for private respondents.
Roland A. Niedo for Phil. National Bank.
SYNOPSIS
The instant case is an unending sequel to several suits commenced almost twenty years ago over
the same subject matter. This involves a parcel of land with an area of 8,102.68 square meters,
more or less, located at the corner of the south end of the EDSA and F.B. Harrison in Pasay City.
The land was owned by petitioners Cristinade Knecht and her son, under TCT No. 9032 issued in
their names by the Register of Deeds of Pasay City. On the land, the Knechts constructed eight
houses of strong materials, leased out the seven and occupied one of them as their residence. The
property would have been expropriated as early as 1979 were it not for the intervention of the
courts at the initiative of the Knechts. However, in 1982 the City Treasurer of Pasay discovered
that the Knechts failed to pay real estate taxes on the property from 1980 to 1982. Consequently,
the City Treasurer sold the property at public auction to the highest bidders, the Babieras and the
Sangalangs allegedly without notice to the Knechts. The petitioners failed to redeem the property
within one year from the date of sale. Thereafter, new titles were issued in the names of the
buyers Sangalang and Babiera and then to Salem Investment Corporation to which the land was
later sold. With the passage of B.P. Blg. 340 authorizing the national government to expropriate
certain properties in Pasay City for the EDSA extension, the property of the Knechts became part
of those expropriated under the said B.P. Blg. 340. In the meantime, the Knechts filed Civil Case
No. 2961-P praying for the reconveyance, annulment of the tax sale and the titles of the Babieras
and Sangalangs on the basis of absence of the required notices to the tax sale. The case, however,
was later dismissed by the court on the ground of apparent lack of interest of the plaintiffs to
prosecute the case. The Knechts appealed their case, but it was dismissed by the Court of Appeals
as well as the Supreme Court. Three months later, the Republic of the Philippines, through the
Solicitor General, filed before the RTC of Pasay City an action for the determination of just
compensation of the lands expropriated under B.P. Blg. 340, docketed as Civil Case No. 7327. After
the writ of possession was issued by the trial court, the government took possession of the
portion of land on which seven of the eight houses of the Knechts were demolished. Since the
Knechts refused to vacate their remaining house, Salem instituted against them a civil case for
unlawful detainer before the Municipal Trial Court of Pasay City. The court granted the complaint
and ordered the Knechts' ejectment. Meanwhile, Civil Case No. 7327 prospered and the court
issued an order fixing the compensation of all the lands sought to be expropriated by the
government. Here, the Knechts filed a "Motion for Intervention and to Implead Additional
Parties," which was denied by the court. The new owners of the land, therefore, prayed for and
were granted the release of the just compensation fixed by the court. The Knechts questioned the
release of the just compensation as well as the dismissal of their motion for intervention before
the Court of Appeals. The Court of Appeals dismissed their case, hence, the Knechts filed a
petitioner for annulment of judgment also before the Court of Appeals. Another action was filed
by the Knechts before the Court of Appeals which challenged the validity of the titles of the
Babieras and Sangalangs and prayed for the issuance of new titles in their names. The Court of
Appeals dismissed the petition. The Knechts then filed a petition before the SupremeCourt. The
new owners of the land in question moved for the consolidation of the two actions. Hence, these
cases before the Supreme Court.
The Court ruled against the petitioners. The claim of lack of notice of their tax delinquency is a
factual question. This Court is not a trier of facts. This factual question had been raised repeatedly
in all the previous cases filed by the Knechts. These cases have laid to rest the question of notice
and all the other factual issues they raised regarding the property. Res judicata had set in. The
Knechts lost whatever right or colorable title they had to the property after the Supreme Court
affirmed the order of the trial court dismissing the reconveyance case. The Knechts had no legal
interest in the property by the time the expropriation proceedings were instituted. They had no
right to intervene and the trial court did not err in denying their motion for intervention. AcHaTE
SYLLABUS
1.REMEDIAL LAW; ACTION; RES JUDICATA, AS A GROUND FOR DISMISSAL; CONSTRUED. — Res
judicata is a ground for dismissal of an action. It is a rule that precludes parties from relitigating
issues actually litigated and determined by a prior and final judgment. It pervades every wellregulated system of jurisprudence, and is based upon two grounds embodied in various maxims of
the common law — one, public policy and necessity, that there should be a limit to litigation; and
another, the individual should not be vexed twice for the same cause. When a right of fact has
been judicially tried and determined by a court of competent jurisdiction, or an opportunity for
such trial has been given, the judgment of the court, so long as it remains unreversed, should be
conclusive upon the parties and those in privity with them in law or estate. To follow a contrary
doctrine would subject the public peace and quiet to the will and neglect of individuals and prefer
the gratification of the litigious disposition of the parties to the preservation of the public
tranquility.
2.ID.; ID.; ID.; ELEMENTS. — Res judicata applies when: (1) the former judgment or order is final;
(2) the judgment or order is one on the merits; (3) it was rendered by a court having jurisdiction
over the subject matter and the parties; (4) there is between the first and second actions, identity
of parties, of subject matter and of cause of action. cTDECH
3.ID.; ID.; DISMISSAL OF ACTION FOR FAILURE TO PROSECUTE; WHEN PROPER. — An action may
be dismissed for failure to prosecute in any of the following instances: (1) if the plaintiff fails to
appear at the time of trial, or (2) if he fails to prosecute the action for an unreasonable length of
time; or (3) if he fails to comply with the Rules of Court or any order of the court. Once a case is
dismissed for failure to prosecute, this has the effect of an adjudication on the merits and is
understood to be with prejudice to the filing of another action unless otherwise provided in the
order of dismissal. In other words, unless there be a qualification in the order of dismissal that it is
without prejudice, the dismissal should be regarded as an adjudication on the merits and is with
prejudice.
4.POLITICAL LAW; POWER OF THE STATE; EMINENT DOMAIN; EXERCISE THEREOF, CONSTRUED. —
The power of eminent domain is exercised by the filing of a complaint which shall join as
defendants all persons owning or claiming to own, or occupying, any part of the expropriated land
or interest therein. If a known owner is not joined as defendant, he is entitled to intervene in the
proceeding; or if he is joined but not served with process and the proceeding is already closed
before he came to know of the condemnation, he may maintain an independent suit for damages.
The defendants in an expropriation case are not limited to the owners of the property
condemned. They include all other persons owning, occupying or claiming to own the property.
When a parcel of land is taken by eminent domain, the owner of the fee is not necessarily the only
person who is entitled to compensation. In the American jurisdiction, the term "owner" when
employed in statutes relating to eminent domain to designate the persons who are to be made
parties to the proceeding, refers, as is the rule in respect of those entitled to compensation, to all
89
those who have lawful interest in the property to be condemned, including a mortgagee, a lessee
and a vendee in possession under an executory contract. Every person having an estate or interest
at law or in equity in the land taken is entitled to share in the award. If a person claiming an
interest in the land sought to be condemned is not made a party, he is given the right to intervene
and lay claim to the compensation. IcCDAS
DECISION
PUNO, J p:
In G.R. No. 108015, petitioners Cristina de Knecht and Rene Knecht seek to annul and set aside the
decision of the Court of Appeals 1 in CA-G.R. SP No. 28089dismissing an action to annul (1) the
decision and order of the Regional Trial Court, Branch 112, Pasay City, 2 in LRC Case No. 2636-P;
(2) the order of the Regional Trial Court, Branch 110, Pasay City 3 in LRC Case No. 2652-P; and (3)
the orders of dismissal by Regional Trial Court, Branch 119, Pasay City in Civil Case No. 2961-P;4
and (4) the orders and the writ of possession issued by the Regional Trial Court, Branch 111, Pasay
City, 5 in Civil Case No. 7327. LLcd
In G.R. No. 109234, petitioners Cristina de Knecht and Rene Knecht seek to annul the decision of
the Court of Appeals 6 in CA-G.R. SP No. 27817 which dismissed the petition for certiorari
questioning the order of the Regional Trial Court, Branch 111, Pasay City 7 denying its "Motion for
Intervention and to Implead Additional Parties" in Civil Case No. 7327.
The instant case is an unending sequel to several suits commenced almost twenty years ago over
the same subject matter. This involves a parcel of land with an area of 8,102.68 square meters,
more or less, located at the corner of the south end of the E. de los Santos Avenue (EDSA) 8 and
F.B. Harrison in Pasay City. The land was owned by petitioners Cristina de Knecht and her son,
Rene Knecht, under Transfer Certificate of Title (TCT) No. 9032 issued in their names by the
Register of Deeds of Pasay City. On the land, the Knechts constructed eight (8) houses of strong
materials, leased out the seven and occupied one of them as their residence.
In 1979, the Republic of the Philippines initiated Civil Case No. 7001-P for expropriation against
the Knechts' property before the then Court of First Instance of Rizal, Branch 111, Pasay City. 9
The government sought to utilize the land for the completion of the Manila Flood Control and
Drainage Project and the extension of the EDSA towards Roxas Boulevard.
The CFI issued a writ of possession. On petition of the Knechts, however, this Court, in G.R. No. L51078, held that the choice of area for the extension of EDSA was arbitrary. We annulled the writ
of possession and enjoined the trial court from taking further action in Civil Case No. 7001-P. 10
In 1982, the City Treasurer of Pasay discovered that the Knechts failed to pay real estate taxes on
the property from 1980 to 1982. 11 As a consequence of this deficiency, the City Treasurer sold
the property at public auction on May 27, 1982 for the sum of P63,000.00, the amount of the
deficiency taxes. 12 The highest bidders were respondent Spouses Anastacio and Felisa Babiera
(the Babieras) and respondent Spouses Alejandro and Flor Sangalang (the Sangalangs).
Petitioners failed to redeem the property within one year from the date of sale. In August 1983,
Anastacio Babiera filed with respondent Regional Trial Court, Branch 112, Pasay City, a petition for
registration of his name as co-owner pro-indiviso of the subject land. This case was docketed as
LRC Case No. 2636-P 13 and was filed allegedly without notice to the Knechts. On September 15,
1983, the trial court ordered the Register of Deeds to register Babiera's name and the Knechts to
surrender to the Register of Deeds the owner's duplicate of the title.
In October 1983, Alejandro Sangalang filed LRC Case No. 2652-P before the Regional Trial Court,
Branch 110, Pasay City. 14 Sangalang also sought to register his name as co-owner pro-indiviso of
the subject property. The proceedings were also conducted allegedly without notice to the
Knechts. The trial court granted the petition and ordered the Register of Deeds, Pasay City to
cancel TCT No. 9032 in the name of the Knechts and issue a new one in the names of Babiera and
Sangalang.
Pursuant to said orders, the Register of Deeds cancelled TCT No. 9032 and issued TCT No. 86670 in
the names of Sangalang and Babiera. The Knechts, who were in possession of the property,
allegedly learned of the auction sale only by the time they received the orders of the land
registration courts.
On March 12, 1985, Sangalang and Babiera sold the land to respondent Salem Investment
Corporation (Salem) for P400,000.00. TCT No. 86670 was cancelled and TCT No. 94059 was issued
in the name of Salem.
Meanwhile, on February 17, 1983, the Batasang Pambansa passed B.P. Blg. 340 authorizing the
national government to expropriate certain properties in Pasay City for the EDSA Extension, the
EDSA Outfall of the Manila Flood Control and Drainage Project, and the "Cut-Off" of the Estero
Tripa de Gallina which were all projects of the National Government. 15 The property of the
Knechts was part of those expropriated under B.P. Blg. 340.
In view of this Court's previous ruling in G.R. No. L-51078 16 annulling the expropriation
proceedings in Civil Case No. 7001-P, the government apprised this Court of the subsequent
enactment of B.P. Blg. 340. On February 12, 1990, we rendered a decision upholding the validity of
B.P. Blg. 340 in G.R. No. 87335. 17
While G.R. No. 87335 was pending in court, on June 24, 1985, the Knechts filed Civil Case No.
2961-P before the Regional Trial Court, Branch 119, Pasay City. 18They prayed for reconveyance,
annulment of the tax sale and the titles of the Babieras and Sangalangs. The Knechts based their
action on lack of the required notices to the tax sale.
In the same case, Salem filed on September 26, 1985 a petition for appointment of a receiver. The
court granted the petition and on November 7, 1985, appointed Metropolitan Bank and Trust
Company as receiver. The Knechts questioned this appointment on a petition for certiorari before
the Court of Appeals in CA-G.R. SP No. 08178. The Court of Appeals dismissed the petition which
this Court affirmed in G.R. No. 75609 on January 28, 1987.
Meanwhile, Civil Case No. 2961-P proceeded before Branch 119. The Knechts presented their
evidence. They, however, repeatedly requested for postponements. 19 At the hearing of
September 13, 1988, they and their counsel failed to appear. Accordingly, the trial court dismissed
the case for "apparent lack of interest of plaintiffs" . . . "considering that the case had been
pending for an unreasonable length of time." 20
The Knechts moved to set aside the order of dismissal. The motion was denied for late filing and
failure to furnish a copy to the other parties. 21 The Knechts questioned the order of dismissal
before the Court of Appeals. The appellate court sustained the trial court. They elevated the case
to this Court in G.R. No. 89862. The petition was denied for late payment of filing fees and for
failure to sufficiently show any reversible error. 22 On January 17, 1990, the petition was denied
with finality23 and entry of judgment was made on February 19, 1990. 24
Three (3) months later, on May 15, 1990, the Republic of the Philippines, through the Solicitor
General, filed before the Regional Trial Court, Branch 111, Pasay CityCivil Case No. 7327 "[f]or
determination of just compensation of lands expropriated under B.P. Blg. 340." 25 In its amended
petition, the National Government named as defendants Salem, Maria del Carmen Roxas de
Elizalde, Concepcion Cabarrus Vda. de Santos, Mila de la Rama and Inocentes de la Rama, the heirs
of Eduardo Lesaca and Carmen Padilla. 26 As prayed for, the trial court issued a writ of possession
on August 29, 1990. 27 The following day, August 30, seven of the eight houses of the Knechts
were demolished and the government took possession of the portion of land on which the houses
stood. 28
Meanwhile, Salem conveyed 5,611.92 square meters of the subject property to respondent
spouses Mariano and Anacoreta Nocom for which TCT No. 130323 was issued in their names.
Salem remained the owner of 2,490.69 square meters under TCT Nos. 130434 and 130435.
Since the Knechts refused to vacate their one remaining house, Salem instituted against them Civil
Case No. 85-263 for unlawful detainer before the Municipal TrialCourt, Branch 46, Pasay City. As
defense, the Knechts claimed ownership of the land and building. 29 The Municipal Trial Court,
however, granted the complaint and ordered the Knechts' ejectment. Pursuant to a writ of
execution, the last house of the Knechts was demolished on April 6, 1991. 30
The proceedings in Civil Case No. 7327 continued. As prayed for by Salem, the trial court issued an
order on September 13, 1990 for the release of P5,763,650.00 to Salem by the Philippine National
90
Bank (PNB) as partial payment of just compensation. 31 On June 7, 1991, the trial court issued
another order to the PNB for the release of P15,000,000.00 as another partial payment to Salem.
32
On September 9, 1991, the trial court issued an order fixing the compensation of all the lands
sought to be expropriated by the government. The value of the subject land was set at P28,961.00
per square meter. 33 This valuation did not include the improvements. 34
It was after these orders that the Knechts, on September 25, 1991, filed a "Motion for
Intervention and to Implead Additional Parties" in Civil Case No. 7327. They followed this with a
"Motion to Inhibit Respondent Judge Sayo and to Consolidate Civil Case No. 7327 with Civil Case
No. 8423."
Earlier, prior to the "Motion to Inhibit Respondent Judge Sayo and to Consolidate Civil Case No.
7327 with Civil Case No. 8423," the Knechts instituted Civil Case No.8423 before the Regional Trial
Court, Branch 117, Pasay City for recovery of ownership and possession of the property. On
January 2, 1992, the trial court dismissed Civil Case No. 8423 on the ground of res judicata. The
Knechts challenged the order of dismissal in G.R. No. 103448 before this Court. On February 5,
1992, we dismissed the Knechts' "Motion for Extension of Time to File Petition for Certiorari" for
non-compliance with Circular No. 1-88 35 and for late filing of the Petition. 36Entry of judgment
was made on May 21, 1992. 37
In Civil Case No. 7327, the trial court issued an order on April 14, 1992 denying the Knechts'
"Motion for Intervention and to Implead Additional Parties." The courtdid not rule on the "Motion
to Inhibit Respondent Judge Sayo and to Consolidate Civil Case No. 7327 with Civil Case No. 8423,"
declaring it moot and academic. LLcd
On April 23, 1992, as prayed for by Mariano Nocom, the trial court ordered the release of
P11,526,000.00 as third installment for his 5,611.92 square meters of the subject land. The
Knechts questioned the release of this amount before the Court of Appeals in CA-G.R. SP No.
27817. The Knechts later amended their petition to limit their cause of action to a review of the
order of April 14, 1992 which denied their "Motion for Intervention and to Implead Additional
Parties."
On March 5, 1993, the Court of Appeals dismissed the petition in CA-G.R. SP No. 27817 and denied
the Knechts' intervention in Civil Case No. 7327 after finding that the Knechts had no legal interest
on the subject property after the dismissal of Civil Case No. 2961-P. Hence the petition in G.R. No.
109234.
On June 9, 1992, while CA-G.R. SP No. 27817 was pending, the Knechts instituted also before the
Court of Appeals an original action for annulment of judgment of the trial courts. This case was
docketed as CA-G.R. SP No. 28089. Therein, the Knechts challenged the validity of the orders of
the land registration courts in the two petitions of the Sangalangs and Babieras for registration of
their names 38 , the reconveyance case 39 and the just compensation proceedings. 40 The
Knechts questioned the validity of the titles of the Babieras and Sangalangs, and those of Salem
and the Nocoms, and prayed for the issuance of new titles in their names. They also sought to
restrain further releases of payment of just compensation to Salem and the Nocoms in Civil Case
No. 7327.
The Court of Appeals dismissed the petition for lack of merit on November 24, 1992. Hence the
filing of G.R. No. 108015. In a Resolution dated February 1, 1993, we denied the petition finding
"no reversible error" committed by the Court of Appeals. The Knechts moved for reconsideration.
Pending a resolution of this Court on the Knechts' motion for reconsideration, respondents Nocom
moved for consolidation of the two actions. 41 We granted the motion.
In their petition in G.R. No. 109234, the Knechts alleged that:
"ITHE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR OF LAW IN HOLDING THAT CIVIL
CASE NO. 7327 IS NOT AN EMINENT DOMAIN PROCEEDING;
IITHE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR OF LAW IN HOLDING THAT RES
JUDICATA HAS SET IN TO BAR THE MOTION FOR INTERVENTION;
IIITHE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR OF LAW IN NOT ORDERING
RESPONDENT JUDGE TO RULE ON THE MOTION FOR INHIBITION." 42
In their Motion for Reconsideration in G.R. No. 108015, the Knechts reiterate that:
"ITHE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR OF LAW IN HOLDING THAT THE
PETITION FOR ANNULMENT OF JUDGMENT IS BARRED BY RES JUDICATA;
IITHE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR OF LAW IN UPHOLDING THE
DEFENSE OF RES JUDICATA EVEN AS ITS APPLICATION INVOLVES THE SACRIFICE OF JUSTICE TO
TECHNICALITY." 43
We rule against the petitioners.
In its decision, the Court of Appeals held that the Knechts had no right to intervene in Civil Case
No. 7327 for lack of any legal right or interest in the property subject of expropriation. The
appellate court declared that Civil Case No. 7327 was not an expropriation proceeding under Rule
67 of the Revised Rules of Court but merely a case for the fixing of just compensation. 44 The
Knechts' right to the land had been foreclosed after they failed to redeem it one year after the
sale at public auction. Whatever right remained on the property vanished after Civil Case No.
2961-P, the reconveyance case, was dismissed by the trial court. Since the petitions questioning
the order of dismissal were likewise dismissed by the Court of Appeals and this Court, the order of
dismissal became final and res judicata on the issue of ownership of the land. 45
The Knechts urge this Court, in the interest of justice, to take a second look at their case. They
claim that they were deprived of their property without due process of law. They allege that they
did not receive notice of their tax delinquency and that the Register of Deeds did not order them
to surrender their owner's duplicate for annotation of the tax lien prior to the sale. Neither did
they receive notice of the auction sale. After the sale, the certificate of sale was not annotated in
their title nor in the title with the Register of Deeds. In short, they did not know of the tax
delinquency and the subsequent proceedings until 1983 when they received the orders of the land
registration courts in LRC Cases Nos. 2636-P and 2652-P filed by the Babieras and Sangalangs. 46
This is the reason why they were unable to redeem the property.
It has been ruled that the notices and publication, as well as the legal requirements for a tax
delinquency sale, are mandatory; 47 and the failure to comply therewith can invalidate the sale.
48 The prescribed notices must be sent to comply with the requirements of due process. 49
The claim of lack of notice, however, is a factual question. This Court is not a trier of facts.
Moreover, this factual question had been raised repeatedly in all the previous cases filed by the
Knechts. These cases have laid to rest the question of notice and all the other factual issues they
raised regarding the property. Res judicata had already set in.
Res judicata is a ground for dismissal of an action. 50 It is a rule that precludes parties from
relitigating issues actually litigated and determined by a prior and final judgment. It pervades
every well-regulated system of jurisprudence, and is based upon two grounds embodied in various
maxims of the common law — one, public policy and necessity, that there should be a limit to
litigation; 51 and another, the individual should not be vexed twice for the same cause. 52 When a
right of fact has been judicially tried and determined by a court of competent jurisdiction, or an
opportunity for such trial has been given, the judgment of the court, so long as it remains
unreversed, should be conclusive upon the parties and those in privity with them in law or estate.
53 To follow a contrary doctrine would subject the public peace and quiet to the will and neglect
of individuals and prefer the gratification of the litigious disposition of the parties to the
preservation of the public tranquility. 54
Res judicata applies when: (1) the former judgment or order is final; (2) the judgment or order is
one on the merits; (3) it was rendered by a court having jurisdiction over the subject matter and
the parties; (4) there is between the first and second actions, identity of parties, of subject matter
and of cause of action. 55
Petitioners claim that Civil Case No. 2961-P is not res judicata on CA-G.R. SP No. 28089. They
contend that there was no judgment on the merits in Civil Case No. 2961-P , i.e., one rendered
after a consideration of the evidence or stipulations submitted by the parties at the trial of the
91
case. 56 They stress that Civil Case No. 2961-P was dismissed upon petitioners' failure to appear at
several hearings and was based on "lack of interest."
We are not impressed by petitioners' contention. "Lack of interest" is analogous to "failure to
prosecute." Section 3 of Rule 17 of the Revised Rules of Court provides:
"Section 3.Failure to Prosecute. — If plaintiff fails to appear at the time of the trial, or to prosecute
his action for an unreasonable length of time, or to comply with these rules or any order of the
court, the action may be dismissed upon motion of the defendant or upon the court's own
motion. This dismissal shall have the effect of an adjudication upon the merits, unless otherwise
provided by court."
An action may be dismissed for failure to prosecute in any of the following instances: (1) if the
plaintiff fails to appear at the time of trial; or (2) if he fails to prosecute the action for an
unreasonable length of time; or (3) if he fails to comply with the Rules of Court or any order of the
court. Once a case is dismissed for failure to prosecute, this has the effect of an adjudication on
the merits and is understood to be with prejudice to the filing of another action unless otherwise
provided in the order of dismissal. 57 In other words, unless there be a qualification in the order
of dismissal that it is without prejudice, the dismissal should be regarded as an adjudication on the
merits and is with prejudice. 58
Prior to the dismissal of Civil Case No. 2961-P, the Knechts were presenting their evidence. They,
however, repeatedly requested for postponements and failed to appear at the last scheduled
hearing. This prompted Salem to move for dismissal of the case. The court ordered thus:
"ORDER
It appearing that counsel for the plaintiff has been duly notified of today's hearing but despite
notice failed to appear and considering that this case has been pending for quite a considerable
length of time, on motion of counsel for the defendant Salem Investment joined by Atty. Jesus
Paredes for the defendant City of Pasay, for apparent lack of interest of plaintiffs, let their
complaint be DISMISSED. LLcd
As prayed for, let this case be reset to September 29, 1988 at 8:30 in the morning for the
reception of evidence of defendant's Salem Investment on its counterclaim.
SO ORDERED." 59
The order of dismissal was based on the following factors: (1) pendency of the complaint for a
considerable length of time; (2) failure of counsel to appear at the scheduled hearing despite
notice; and (3) lack of interest of the petitioners. Under Section 3, Rule 17, a dismissal order which
does not provide that it is without prejudice to the filing of another action is understood to be an
adjudication on the merits. Hence, it is one with prejudice to the filing of another action.
The order of dismissal was questioned before the Court of Appeals and this Court. The petitions
were dismissed and the order affirming dismissal became final in February 1990. Since the
dismissal order is understood to be an adjudication on the merits, then all the elements of res
judicata have been complied with. Civil Case No. 2961-P is therefore res judicata on the issue of
ownership of the land.
The Knechts contend, however, that the facts of the case do not call for the application of res
judicata because this amounts to "a sacrifice of justice to technicality." We cannot sustain this
argument. It must be noted that the Knechts were given the opportunity to assail the tax sale and
present their evidence on its validity in Civil Case No. 2961-P, the reconveyance case. Through
their and their counsel's negligence, however, this case was dismissed. They filed for
reconsideration, but their motion was denied. The Court of Appeals upheld this dismissal. We
affirmed the dismissal not on the basis of a mere technicality. This Court reviewed the merits of
petitioners' case and found that the Court of Appeals committed no reversible error in its
questioned judgment. 60
After years of litigation and several cases raising essentially the same issues, the Knechts cannot
now be allowed to avoid the effects of res judicata. 61 Neither can they be allowed to vary the
form of their action or adopt a different method of presenting their case to escape the operation
of the principle. 62 To grant what they seek will encourage endless litigations and forum-shopping.
Hence, the Court of Appeals correctly dismissed CA-G.R. SP No. 28089.
We find, however, that the Court of Appeals erred in declaring that Civil Case No. 7327 was not an
expropriation case. It was precisely in the exercise of the state's power of eminent domain under
B.P. Blg. 340 that expropriation proceedings were instituted against the owners of the lots sought
to be expropriated. B.P. Blg. 340 did not, by itself, lay down the procedure for expropriation. The
law merely described the specific properties expropriated and declared that just compensation
was to be determined by the court. It designated the then Ministry of Public Works and Highways
as the administrator in the "prosecution of the project." Thus, in the absence of a procedure in the
law for expropriation, reference must be made to the provisions on eminent domain in Rule 67 of
the Revised Rules of Court.
Section 1 of Rule 67 of the Revised Rules of Court provides:
"Section 1.The complaint. — The right of eminent domain shall be exercised by the filing of a
complaint which shall state with certainty the right and purpose of condemnation, describe the
real or personal property sought to be condemned, and join as defendants all persons owning or
claiming to own, or occupying, any part thereof or interest therein, showing, so far as practicable,
the interest of each defendant separately. If the title to any property sought to be condemned
appears to be in the Republic of the Philippines, although occupied by private individuals, or if the
title is otherwise obscure or doubtful so that the plaintiff cannot with accuracy or certainty specify
who are the real owners, averment to that effect may be made in the complaint."
The power of eminent domain is exercised by the filing of a complaint which shall join as
defendants all persons owning or claiming to own, or occupying, any part of the expropriated land
or interest therein. 63 If a known owner is not joined as defendant, he is entitled to intervene in
the proceeding; or if he is joined but not served with process and the proceeding is already closed
before he came to know of the condemnation, he may maintain an independent suit for damages.
64
The defendants in an expropriation case are not limited to the owners of the property
condemned. They include all other persons owning, occupying or claiming to own the property.
When a parcel of land is taken by eminent domain, the owner of the fee is not necessarily the only
person who is entitled to compensation. 65 In the American jurisdiction, the term "owner" when
employed in statutes relating to eminent domain to designate the persons who are to be made
parties to the proceeding, refers, as is the rule in respect of those entitled to compensation, to all
those who have lawful interest in the property to be condemned, 66 including a mortgagee, 67 a
lessee 68 and a vendee in possession under an executory contract. 69 Every person having an
estate or interest at law or in equity in the land taken is entitled to share in the award. 70 If a
person claiming an interest in the land sought to be condemned is not made a party, he is given
the right to intervene and lay claim to the compensation. 71
The Knechts insist that although they were no longer the registered owners of the property at the
time Civil Case No. 7327 was filed, they still occupied the property and therefore should have been
joined as defendants in the expropriation proceedings. When the case was filed, all their eight (8)
houses were still standing; seven (7) houses were demolished on August 29, 1990 and the last one
on April 6, 1991. They claim that as occupants of the land at the time of expropriation, they are
entitled to a share in the just compensation.
Civil Case No. 7327, the expropriation case, was filed on May 15, 1990. Four months earlier, in
January 1990, Civil Case No. 2961-P for reconveyance was dismissed with finality by this Court and
judgment was entered in February 1990. The Knechts lost whatever right or colorable title they
had to the property after we affirmed the order of the trial court dismissing the reconveyance
case. The fact that the Knechts remained in physical possession cannot give them another cause of
action and resurrect an already settled case. The Knechts' possession of the land and buildings was
based on their claim of ownership, 72 not on any juridical title such as a lessee, mortgagee, or
vendee. Since the issue of ownership was put to rest in Civil Case No. 2961-P, it follows that their
physical possession of the property after the finality of said case was bereft of any legality and
merely subsisted at the tolerance of the registered owners. 73 This tolerance ended when Salem
92
filed Civil Case No. 85-263 for unlawful detainer against the Knechts. As prayed for, the trial court
ordered their ejectment and the demolition of their remaining house.
Indeed, the Knechts had no legal interest in the property by the time the expropriation
proceedings were instituted. They had no right to intervene and the trial courtdid not err in
denying their "Motion for Intervention and to Implead Additional Parties." Their intervention
having been denied, the Knechts had no personality to move for the inhibition of respondent
Judge Sayo from the case. The Court of Appeals therefore did not err in dismissing CA-G.R. SP No.
27817.
IN VIEW WHEREOF, the Petition in G.R. No. 109234 is dismissed and the Motion for
Reconsideration in G.R. No. 108015 is denied. The decisions of the Court ofAppeals in CA-G.R. SP
No. 27817 and CA-G.R. SP No. 28089 are affirmed.
SO ORDERED. LLcd
Regalado, Melo, Mendoza and Martinez, JJ ., concur.
Footnotes
1.Penned by Justice Pacita Canizares-Nye and concurred in by Justice Manuel Herrera and Justice
Justo Torres, Jr., a former member of this Court.
2.Formerly presided by Judge Manuel Valenzuela; now presided by Judge Manuel Dumatol.
3.Formerly presided by Judge Manuel Romillo, Jr.; then presided by Judge Conchita Morales (now
Justice of the Court of Appeals).
4.Presided by Judge Aurora Navarette-Recina.
5.Presided by Judge Sofronio Sayo.
6.Penned by Justice Salome Montoya and concurred in by Justices Oscar Herrera and Minerva
Gonzaga-Reyes.
7.Presided by Judge Sofronio Sayo.
8.Formerly del Pan Street.
9.Civil Case No. 7001-P.
10.De Knecht v. Bautista, G.R. No. L-51078, 100 SCRA 660 [1980].
11."Final Bill of Sale," Annex "1-C" to the Petition, G.R. No. 108015, Rollo, p. 75.
12."Certificate of Sale of Delinquent Property to Purchaser," Annexes "1-A" and "1-B" to the
Petition, G.R. No. 108015, Rollo, pp. 73, 74.
13.Entitled "Petition to Register the Name of Anastacio Babiera as Co-owner Pro-indiviso of TCT
No. 9032."
14.Entitled "Petition to Register the Name of Alejandrino Sangalang as Co-owner Pro-indiviso of
TCT No. 9032."
15.Section 2, B.P. 340.
16.De Knecht v. Bautista, G.R. No. L-51078, 100 SCRA 660 [1980]; see also proceedings in Note No.
10.
17.Republic v. de Knecht, G.R. No. 87335, 182 SCRA 142 [1990].
18.Presided by Judge Aurora Navarrete-Recina.
19.Decision of the Court of Appeals, CA-G.R. SP No. 28089, p. 5, G.R. No. 108015, Rollo, p. 101.
20.Order of September 13, 1988, Annex "10" to the Petition, G.R. No. 108015, Rollo, p. 89.
21.Annex "10-A" to the Petition, Rollo, G.R. No. 108015, p. 90.
22.Annex "6" to Respondent Nocoms' "Opposition to the Motion for Extension of Time to File
Petition for Review on Certiorari with Motion for Contempt," G.R. No. 109234, Rollo, p. 40.
23.Annex "7" to Respondent Nocoms' "Opposition to the Motion for Extension . . . , G.R. No.
109234, Rollo, p. 42.
24.Annex "8" to Respondent Nocoms' Opposition to the Motion for Extension . . . , G.R. No.
109234, Rollo, p. 43.
25.G.R. No. 109234, Petition, p. 7, Rollo, p. 92.
26.Annex "B" to the Petition, G.R. No. 109234, Rollo, pp. 148-167.
27.Court of Appeals Rollo, pp. 111-115.
28.Petition, p. 6, G.R. No. 108015, Rollo, p. 33.
29.Petition, p. 33, G.R. No. 108015, Rollo, p. 60.
30.Petition, p. 6, G.R. No. 108015, Rollo, p. 33.
31.Annex "11" to the Petition, G.R. No. 108015, Rollo, p. 90.
32.Annex "12" to the Petition, G.R. No. 108015, Rollo, p. 91.
33.Annex "13" to the Petition, G.R. No. 108015, Rollo, pp. 92-94; Petition, G.R. No. 109234, p. 39,
Rollo, p. 124.
34.Id.
35.For failure to attach proof of service (Annex "9" to Respondent Nocoms' "Opposition to the
Motion for Extension of Time to File Petition for Review on Certiorari with Motion for Contempt,"
G.R. No. 109234, Rollo, p. 44).
36.Annex "10" to Respondent Nocoms' "Opposition to the Motion for Extension . . . ," G.R. No.
109234, Rollo, p. 46.
37.Annex "13" to Respondent Nocoms' "Opposition to the Motion for Extension . . . ," G.R. No.
109234, Rollo, p. 49.
38.LRC Cases Nos. 2636-P and 2652-P.
39.Civil Case No. 2961-P.
40.Civil Case No. 7327.
41.Motion to Consolidate by respondent Nocom, Rollo, G.R. No. 109234, pp. 58-66.
42.Petition, p. 5, Rollo, p. 90.
43.Motion for Reconsideration, p. 2, Rollo, p. 234; see also Petition, p. 8, Rollo, p. 35.
44.CA-G.R. SP No. 27817, pp. 5-8, Rollo, G.R. No. 109234, pp. 143-146.
45.CA-G.R. SP No. 28089, pp. 11-14, Rollo, G.R. No. 108015, pp. 106-110.
46.Petitions to register the names of Babiera and Sangalang as co-owners of TCT No. 9032.
47.Pantaleon v. Santos, 101 Phil. 1001 [1957]; Velayo v. Ordoveza, 102 Phil. 395, 403-404 [1957];
Presbitero v. Fernandez, 7 SCRA 625 [1963]; also cited in Vitug, Compendium of Tax Law and
Jurisprudence, p. 377 [1987].
48.Id.
49.Velayo v. Ordoveza, supra, at 403-404.
50.Rule 16, Sec. 1 [f], Revised Rules of Court.
51.Republicae ut sit finis litum — Yusingco v. Ong Hing Lian, 42 SCRA 589, 601-602; see also De
Ramos v. Court of Appeals, 213 SCRA 207, 214 [1992].
52.Nemo debet bis vexari et eadem causa — Yusingco v. Ong Hing Lian, supra.
53.Okol v. Tayug Rural Bank, Inc., 35 SCRA 619, 622-623 [1970]; see also Martin, Rules of Court,
vol. 1, p. 852 [1989].
54.De Ramos v. Court of Appeals, supra, at 214.
55.De Ramos v. Court of Appeals, supra, at 214-215; American Inter-Fashion Corp. v. Office of the
President, 197 SCRA 409, 417 [1991]; Nator v. Court of Industrial Relations, 4 SCRA 727, 733
[1962].
56.Regalado, Remedial Law Compendium, vol. 1, p. 308 [1988]; Saberon v. Alikpala, 62 O.G.
11267, 11270 [1967] citing Nator v. Court of Industrial Relations, 4 SCRA 727, 733 [1962]; also
cited in Martin, supra, at 855.
57.Insular Veneer, Inc. v. Plan, 73 SCRA 1, 7-8 [1976]; Malvar v. Pallingayan, 18 SCRA 121, 124
[1966]; Rivera v. Luciano, 14 SCRA 947, 948 [1965]; Guanzon v. Mapa, 7 SCRA 457, 459-460 [1963].
58.Insular Veneer v. Plan, supra, at 8.
59.Order of September 13, 1988; Annex "10" to the Petition, G.R. No. 108015, Rollo, p. 89.
60.Resolution dated November 20, 1989; Annex "6" to Respondent Nocoms' "Opposition to
Motion for Extension of Time to File Petition for Review on Certiorari with Motion for Contempt,"
G.R. No. 109234, Rollo, p. 40; See also Note No. 20.
61.Amberti v. Court of Appeals, 195 SCRA 659, 665-666 [1991].
62.Valera v. Banez, 116 SCRA 648, 655 [1982].
63.Tenorio v. Manila Railroad Co., 22 Phil. 411, 416-417 [1912]; also cited in Herrera, Remedial
Law, vol. 3, p. 173 [1991].
93
64.Tenorio, supra; Herrera, supra; see also De Ynchausti v. Manila Electric Railroad & Light Co., 39
Phil. 908, 911 [1917].
65.Francisco, The Revised Rules of Court in the Philippines, vol. IV-B, pp. 378-379 [1972]; citing 18
Am Jur 786-787.
66.Francisco, supra, at 394, citing 18 Am Jur 964.
67.Calumet River R. Co. v. Brown, 26 NE 501, 502 [1891]; See 27 Am Jur 2d, "Eminent Domain,"
Sec. 391 for a list of other cases.
68.Williams v. Jefferson County, 72 So 2d 920, 926 [1954]; See also 27 Am Jur 2d, supra.
69.Pierce County v. King, 287 P 2d 316, 318 [1955].
70.Francisco, supra, at 378.
71.Francisco, supra, at 394.
72.Their possession was in the concept of owner or jus possessionis (See Vitug, Compendium of
Civil Law and Jurisprudence, pp. 302-303 [1993]).
73.The mere holding, or possession without title whatsoever, of property in violation of the right
of the owner is wrongful. Examples of this possession are the possession of a thief or usurper (See
Tolentino, Civil Code of the Philippines, vol. II, p. 241 [1992]).
94
MIAA vs RODRIGUEZ
THIRD DIVISION
[G.R. No. 161836. February 28, 2006.]
MANILA INTERNATIONAL AIRPORT AUTHORITY and FRANCISCO E. ATAYDE, petitioners, vs.
JOAQUIN RODRIGUEZ, respondent.
DECISION
TINGA, J p:
Once again the perennial clash between government taking for public purpose, on one hand, and
individual property rights, on the other, comes to fore, with the present case rendered interesting
by a couple of twists. Apparently the taking was effected without the aegis of an expropriation
case and yet the present owner of the property who is claiming compensation purchased it
knowing that it has long been used as part of the airport runway.
In the early seventies, petitioner Manila International Airport Authority (MIAA), the governmentowned and controlled corporation managing and operating the Ninoy Aquino International Airport
Complex, implemented expansion programs for its runway. This necessitated the acquisition and
occupation of some of the properties surrounding its premises. Expropriation proceedings were
thus initiated over most of the properties.
On 12 January 1996, the MIAA through its then General Manager, petitioner Francisco Atayde
(Atayde), received a letter 1 from respondent Joaquin Rodriguez (Rodriguez) proposing to sell at
P2,350.00 per square meter, one of the lots already occupied by the expanded runway but
assumed as not yet expropriated by the MIAA. The proposal did not ripen to a deal. Subsequently,
on 29 April 1996, Rodriguez bought the bigger lot a portion of which was occupied by the runway,
as well as all the rights to claim reasonable rents and damages for the occupation, from its owner
then, Buck Estate, Inc., for P4,000,000.00. 2 The property purchased per the covering title 3 has a
total area of 9,687 square meters, of which a portion consisting of 7,687.5 square meters was
then already occupied by the runway. This occupied portion is hereinafter referred to as the
subject lot.
In a letter dated 20 January 1997, Rodriguez, through counsel, demanded from the MIAA full
payment for the property and back rentals for 27 years, amounting to P468,800,000.00. 4 As he
did not reach an agreement with the MIAA, Rodriguez filed a case for accion reinvindicatoria with
damages. 5 Finding that the MIAA had illegally taken possession of the property, the trial court
held:
WHEREFORE, judgment is hereby rendered:
1.Ordering defendant to pay plaintiff the amount of P70,868,936.72 as rental for the property
from 1972 to 1998;
2.Ordering defendant to pay P15,000.00 per square meter as purchase price of the property
occupied by it; SacTAC
3.Ordering defendant to pay exemplary damages in the amount of P1,000,000.00;
4.Ordering defendant to pay attorney's fees equivalent to 5% of the amount due.
SO ORDERED. 6
The MIAA elevated the case to the Court of Appeals, imputing as errors: (i) the award of rentals
commencing from 1972; (ii) the award of exemplary damages; and (iii) the order to pay
P145,305,000.00 as purchase price of the property. 7 In its Decision of 4 July 2003, the Court of
Appeals modified the trial court's Decision, holding that Rodriguez is entitled to back rentals only
from the time he became the registered owner of the property in 1996. According to the appellate
court, the award of rentals was not based on a contract of lease; rather, it was a grant of damages
representing unearned rentals or unrealized profits. Such damages, it was explained, must have
been inflicted directly upon the person seeking the indemnification; thus, Rodriguez cannot claim
damages he did not personally sustain or unrealized profits before he acquired the property. 8
The parties filed separate motions for reconsideration. 9 On 28 January 2004, the Court of Appeals
issued a Resolution, the dispositive portion of which reads:
WHEREFORE, premises considered, this Court resolves to:
(1)PARTIALLY GRANT plaintiff-appellees' motion for reconsideration by including the following rate
of legal interest in the award of rentals:
"Six (6%) percent per annum to be computed from the time of the judicial demand and twelve
(12%) percent interest, in lieu of the six (6%) percent, upon the finality of the decision until the
payment thereof."
(2)DENY defendant-appellants' motion for reconsideration for lack of merit.
SO ORDERED. 10
Both the MIAA and Atayde, as petitioners, have thus come before this Court. They claim that
Rodriguez was a buyer in bad faith, having purchased the subject lot in a highly speculative and
scheming manner, 11 and in anticipation of a grossly disproportionate amount of profit at the
expense of the Government. 12 This bad faith, according to petitioners, was made evident by the
fact that: (i) Rodriguez knew that the airport had been occupying the subject property even before
he bought it, and he bought it at the very low price of P4,000,000.00; (ii) three months before he
purchased the property, Rodriguez had written to Atayde, claiming to have the certificate of title
in his name and offering to sell the lot to the MIAA for P2,350.00 per square meter; and (iii) after
purchasing the property, Rodriguez increased his asking price to P9,000.00 per square meter. 13
Since Rodriguez was a buyer in bad faith, petitioners stress that the decisions of the courts below
entitling him to amass profits of more than P200,000,000.00 is contrary to morals, good customs
and public policy, and would lead to his unjust enrichment. 14
Further, petitioners allege that there is no basis for awarding exemplary damages and attorney's
fees in favor of Rodriguez since the MIAA in fact exerted efforts to negotiate with Rodriguez.
Considering that the Court of Appeals had ruled that Rodriguez could not claim damages in the
form of rentals from 1972 to 1995, the alleged encroachment starting in 1972 should not be used
as basis for computing and awarding damages and attorney's fees, petitioners add. 15
Petitioners posit that compared to Rodriguez's conduct of bad faith, the MIAA acted in good faith
when it occupied the subject lot. They claim that the property, which was then comprised of two
(2) smaller lots owned by one Eugenio Cruz, had already been expropriated by the Republic of the
Philippines as early as the 1970s. Since then, and after the expansion of the runway in 1972,
nobody had attempted to recover the subject lot or to demand compensation therefor (except
Rodriguez). 16
Finally, even assuming that the MIAA is required to pay compensation for the subject lot once
more, the same could not be at the current price of P15,000.00 per square meter as ruled by the
appellate court, but rather in the price at the time of the taking, 17 petitioners close. HAICET
On the other hand, Rodriguez argues that the instant petition calls for a review of the finding of
facts of the Court of Appeals which is not allowed in a petition forcertiorari under Rule 45.
Besides, the appellate court did not commit any reversible error.
Private property shall not be taken for public use without just compensation. 18 This is a
constitutional mandate that we must once more put in force. Pertinently, therefore, the Court
must determine the basis of compensation, as well as the kind and form of damages due
Rodriguez as a consequence of the MIAA's use and occupation of the subject lot. Likewise, the
Court has to decide on the alleged bad faith on the part of Rodriguez in purchasing the property.
The petition is partly meritorious.
While the instant case stemmed from the accion reinvindicatoria that Rodriguez had filed, it
essentially revolves around the taking of the subject lot by the MIAA. There is "taking" when the
expropriator enters private property not only for a momentary period but for a more permanent
duration, or for the purpose of devoting the property to a public use in such a manner as to oust
the owner and deprive him of all beneficial enjoyment thereof. 19 In this context, there was taking
when the MIAA occupied a portion thereof for its expanded runway.
The instant case is certainly neither unique nor of first impression. Where actual taking was made
without the benefit of expropriation proceedings, and the owner sought recovery of the
possession of the property prior to the filing of expropriation proceedings, the Court has invariably
95
ruled that it is the value of the property at the time of taking that is controlling for purposes of
compensation.
Thus, in Commissioner of Public Highways v. Burgos, 20 wherein it took the owner of a parcel of
land thirty-five (35) years before she filed a case for recovery of possession taken by the local
government unit for a road-right-of-way purpose, this Court held:
. . . there being no other legal provision cited which would justify a departure form the rule that
just compensation is determined on the basis of the value of the property at the time of the taking
thereof in expropriation by the Government, the value of the property as it is when the
Government took possession of the land in question, not the increased value resulting from the
passage of time which invariably brings unearned increment to landed properties, represents the
true value to be paid as just compensation for the property taken. 21
In Ansaldo v. Tantuico, Jr., 22 where the owners of two (2) lots used by the Government for road
widening sought compensation twenty-six (26) years after the lots were taken, the Court ruled in
the same vein, thus:
The sole question thus confronting the Court involves the precise time at which just compensation
should be fixed, whether as of the time of actual taking of possession by the expropriating entity
or, as the Ansaldos maintain, only after conveyance of title to the expropriator pursuant to
expropriation proceedings duly instituted since it is only at such a time that the constitutional
requirements of due process aside from those of just compensation may be fully met. 23
xxx xxx xxx
It is as of the time of such a taking, to repeat, that the just compensation for the property is to be
established. As stated in Republic v. Philippine National Bank,
". . . (W)hen plaintiff takes possession before the institution of the condemnation proceedings, the
value should be fixed as of the time of the taking of said possession, not of filing of the complaint
and the latter should be the basis for the determination of the value, when the taking of the
property involved coincides with or is subsequent to, the commencement of the proceedings.
Indeed, otherwise, the provision of Rule 69, Section 3, directing that compensation 'be
determined as of the date of the filing of the complaint' would never be operative. As intimated in
Republic v. Lara (supra), said provision contemplates 'normal circumstances,' under which 'the
complaint coincides or even precedes the taking of the property by the plaintiff.'"
The reason for the rule, as pointed out in Republic v. Lara, is that —
". . . (W)here property is taken ahead of the filing of the condemnation proceedings, the value
thereof may be enchanced by the public purpose for which it is taken; the entry by the plaintiff
upon the property may have depreciated its value thereby; or, there may have been a natural
increase in the value of the property from the time the complaint is filed, due to general economic
conditions. The owner of private property should be compensated only for what he actually loses;
it is not intended that his compensation shall extend beyond his loss or injury. And what he loses
is only the actual value of his property at the time it is taken. This is the only way that
compensation to be paid can be truly just; i.e., 'just not only to the individual whose property is
taken,' 'but to the public, which is to pay for it.'"
Clearly, then, the value of the Ansaldos' property must be ascertained as of the year 1947, when it
was actually taken, and not at the time of the filing of the expropriation suit, which, by the way,
still has to be done. It is as of that time that the real measure of their loss may fairly be adjudged.
The value, once fixed, shall earn interest at the legal rate until full payment is effected,
conformably with other principles laid down by case law. 24
The ruling was reiterated in Eslaban v. Vda. De Onorio. 25 There, a main irrigation canal was
constructed over a piece of land by the National Irrigation Administration but the property owner
filed the complaint seeking compensation only nine (9) years later. The Court declared:
Thus, the value of the property must be determined either as of the date of the taking of the
property or the filing of the complaint, "whichever came first." Even before the new rule,
however, it was already held in Commissioner of Public Highways v. Burgos that the price of the
land at the time of taking, not its value after the passage of time, represents the true value to be
paid as just compensation. It was, therefore, error for the Court of Appeals to rule that the just
compensation to be paid to respondent should be determined as of the filing of the complaint in
1990, and not the time of its taking by the NIA in 1981, because petitioner was allegedly remiss in
its obligation to pay respondent, and it was respondent who filed the complaint. In the case of
Burgos, it was also the property owner who brought the action for compensation against the
government after 25 years since the taking of his property for the construction of a road. IcHTCS
Indeed, the value of the land may be affected by many factors. It may be enhanced on account of
its taking for public use, just as it may depreciate. As observed in Republic v. Lara:
[W]here property is taken ahead of the filing of the condemnation proceedings, the value thereof
may be enhanced by the public purpose for which it is taken; the entry by the plaintiff upon the
property may have depreciated its value thereby; or there may have been a natural increase in the
value of the property from the time it is taken to the time the complaint is filed, due to general
economic conditions. The owner of private property should be compensated only for what he
actually loses; it is not intended that his compensation shall extend beyond his loss or injury. And
what he loses is only the actual value of his property at the time it is taken. This is the only way
that compensation to be paid can be truly just, i.e., "just" not only to the individual whose
property is taken, "but to the public, which is to pay for it" . . . .
In this case, the proper valuation for the property in question is P16,047.61 per hectare, the price
level for 1982, based on the appraisal report submitted by the commission (composed of the
provincial treasurer, assessor, and auditor of South Cotabato) constituted by the trial court to
make an assessment of the expropriated land and fix the price thereof on a per hectare basis. 26
Per the findings of the trial court, 27 the subject lot was occupied as a runway of the MIAA starting
in 1972. Thus, the value of the lot in 1972 should serve as the basis for the award of compensation
to the owner. However, said value does not appear in the record.
Now, the question of actual damages for the occupation of the subject lot.
Undeniably, the MIAA's illegal occupation for more than twenty (20) years has resulted in
pecuniary loss to Rodriguez and his predecessors-in-interest. Such pecuniary loss entitles him to
adequate compensation in the form of actual or compensatory damages, 28 which in this case
should be the legal interest (6%) 29 on the value of the land at the time of taking, from said point
up to full payment by the MIAA. 30 This is based on the principle that interest "runs as a matter of
law and follows from the right of the landowner to be placed in as good position as money can
accomplish, as of the date of the taking." 31
The award of interest renders unwarranted the grant of back rentals as extended by the courts
below. In Republic v. Lara, et al., 32 the Court ruled that the indemnity for rentals is inconsistent
with a property owner's right to be paid legal interest on the value of the property, for if the
condemnor is to pay the compensation due to the owners from the time of the actual taking of
their property, the payment of such compensation is deemed to retroact to the actual taking of
the property; and, hence, there is no basis for claiming rentals from the time of actual taking. 33
More explicitly, the Court held in Republic v. Garcellano 34 that:
The uniform rule of this Court, however, is that this compensation must be, not in the form of
rentals, but by way of 'interest from the date that the company [or entity] exercising the right of
eminent domain take possession of the condemned lands, and the amounts granted by the court
shall cease to earn interest only from the moment they are paid to the owners or deposited in
court . . . . 35
Petitioners claim that Rodriguez is a buyer in bad faith since prior to his purchase he was aware of
the MIAA's occupation of the property and therefore proceeded with the purchase in anticipation
of enormous profits from the subsequent sale to the MIAA. The point is irrelevant. Regardless of
whether or not Rodriguez acted in bad faith, all that he will be entitled to is the value of the
property at the time of the taking, with legal interest thereon from that point until full payment of
the compensation by the MIAA. Besides, assuming the question is of any consequence, the
circumstances surrounding Rodriguez's purchase may not even amount to bad faith. Bad faith has
been defined as a state of mind affirmatively operating with furtive design or with some motive of
self-interest or ill will or for an ulterior purpose, and implies a conscious and intentional design to
96
do a wrongful act for a dishonest purpose or moral obliquity. 36 There is nothing wrongful or
dishonest in expecting to profit from one's investment. However, Rodriguez can fault but only
himself for taking an obvious risk in purchasing property already being used for a public purpose.
It was a self-inflicted misfortune that his investment did not generate the windfall he had
expected. For ostensibly little did he know that he could not acquire more rights than the previous
owners had since the government taking had taken place earlier. SCIAaT
For more than twenty (20) years, the MIAA occupied the subject lot without the benefit of
expropriation proceedings and without the MIAA exerting efforts to ascertain ownership of the lot
and negotiating with any of the owners of the property. To our mind, these are wanton and
irresponsible acts which should be suppressed and corrected. Hence, the award of exemplary
damages and attorneys fees is in order. However, while Rodriguez is entitled to such exemplary
damages and attorney's fees, the award granted by the courts below should be equitably reduced.
We hold that Rodriguez is entitled only to P200,000.00 as exemplary damages, and attorney's fees
equivalent to one percent (1%) of the amount due.
The MIAA argues that it had already expropriated the subject lot back in the 1970s. However, the
Court cannot pass upon this defense, it having been brought up for the first time. Points of law,
theories, issues and arguments not adequately brought to the attention of the trial court need not
be, and ordinarily will not be, considered by a reviewing court as they cannot be raised for the first
time on appeal. 37 Moreover, this new theory of previous expropriation is negated by the fact
that petitioners negotiated with Rodriguez when the latter offered the subject property for sale to
the MIAA, as evidenced by the correspondence between the parties. 38 If the MIAA already
owned the property, there would be no more need to negotiate with Rodriguez; petitioners would
have asserted such fact as soon as Rodriguez had offered to sell the property to them.
WHEREFORE, the petition is GRANTED IN PART. The Decision of the Court of Appeals is MODIFIED
as follows:
a.The MIAA is ordered to pay Joaquin Rodriguez just compensation for the subject lot, the portion
actually occupied by the runway consisting of or based on the value thereof at the time of taking
in 1972, with interest thereon at the legal rate of six percent (6%) per annum from the time of the
taking until full payment is made. For the purpose of determining said value, the case is remanded
to the lower court. Said court is ordered to make the determination with deliberate dispatch;
b.The award of back rentals as damages is DELETED;
c.The MIAA is ordered to PAY exemplary damages in the reduced amount of P200,000.00, and
attorney's fees equivalent to one percent (1%) of the amount due.
No pronouncement as to costs. HESAIT
SO ORDERED.
Quisumbing, Carpio and Carpio Morales, JJ., concur.
Footnotes
1.Rollo, p. 104.
2.Deed of Absolute Sale, id. at 89-91.
3.After the purchase, TCT No. 109416 of the Registry of Deeds of Parañaque was issued to
Rodriguez; id. at 87-88.
4.Id. at 92.
5.Id. at 82-86. The case was raffled to Branch 2, Regional Trial Court of Parañaque City.
6.Page 5 of the RTC Decision; id. at 111.
7.Appellant's Brief, CA records, p. 64.
8.Rollo, p. 39.
9.Id. at 112-116, 117-123.
10.Id. at 44.
11.Id. at 22.
12.Id. at 25.
13.Id. at 17-20.
14.Id. at 21.
15.Id. at 22-24.
16.Id. at 26-27.
17.Id. at 28-29.
18.CONSTITUTION, Art. III, Sec. 9.
19.Ansaldo v. Tantuico, Jr., G.R. No. 50147, 3 August 1990, 188 SCRA 300, 304, citing Municipality
of La Carlota v. NAWASA, 12 SCRA 164.
20.No. L-36706, 31 March 1980, 96 SCRA 831.
21.Id. 838, citing Republic v. Philippine National Bank, 1 SCRA 957.
22.Supra note 19.
23.Id. at 303.
24.Id. at 304-305.
25.G.R. No. 146062, 28 June 2001, 360 SCRA 230.
26.Id. at 239-240.
27.Rollo, p. 108.
28.Civil Code, Art. 2199.
29.In Urtula v. Republic, No. L-22061, 31 January 1968, 22 SCRA 477, 481, the rate of six percent
(6%) interest on the amount of just compensation was deemed a "known factor."
30.Amigable v. Cuenca, No. L-26400, 29 February 1972, 43 SCRA 360, 365; Republic v. Lara, 96
Phil. 170 (1954).
31.Urtula v. Republic, supra note 29, at 480, citing 30 C.J.S. 230.
32.96 Phil. 170 (1954).
33.Id. at 184-185.
34.103 Phil. 231 (1958), also cited in Valderhueza, et al. v. Republic, No. L-21032, 19 May 1966, 17
SCRA 107, 113.
35.Id. at 237.
36.The Philippine American Life and General Insurance Co. v. Gramaje, G.R. No. 156963, 11
November 2004, 442 SCRA 274, 285.
37.Tan Chun Suy v. Court of Appeals, G.R. No. 93640, 7 January 1994, 229 SCRA 151, 165.
38.Rollo, pp. 92-95.
97
REPUBLIC vs LIM
EN BANC
[G.R. No. 161656. June 29, 2005.]
REPUBLIC OF THE PHILIPPINES, GENERAL ROMEO ZULUETA, COMMODORE EDGARDO GALEOS,
ANTONIO CABALUNA, DOROTEO MANTOS & FLORENCIO BELOTINDOS, petitioners, vs. VICENTE G.
LIM, respondent.
RESOLUTION
SANDOVAL-GUTIERREZ, J p:
Justice is the first virtue of social institutions. 1 When the state wields its power of eminent
domain, there arises a correlative obligation on its part to pay the owner of the expropriated
property a just compensation. If it fails, there is a clear case of injustice that must be redressed. In
the present case fifty-seven (57) years have lapsed from the time the Decision in the subject
expropriation proceedings became final, but still the Republic of the Philippines, herein petitioner,
has not compensated the owner of the property. To tolerate such prolonged inaction on its part is
to encourage distrust and resentment among our people — the very vices that corrode the ties of
civility and tempt men to act in ways they would otherwise shun.
A revisit of the pertinent facts in the instant case is imperative.
On September 5, 1938, the Republic of the Philippines (Republic) instituted a special civil action
for expropriation with the Court of First Instance (CFI) of Cebu, docketed as Civil Case No. 781,
involving Lots 932 and 939 of the Banilad Friar Land Estate, Lahug, Cebu City, for the purpose of
establishing a military reservation for the Philippine Army. Lot 932 was registered in the name of
Gervasia Denzon under Transfer Certificate of Title (TCT) No. 14921 with an area of 25,137 square
meters, while Lot 939 was in the name of Eulalia Denzon and covered by TCT No. 12560 consisting
of 13,164 square meters.
After depositing P9,500.00 with the Philippine National Bank, pursuant to the Order of the CFI
dated October 19, 1938, the Republic took possession of the lots. Thereafter, or on May 14, 1940,
the CFI rendered its Decision ordering the Republic to pay the Denzons the sum of P4,062.10 as
just compensation.
The Denzons interposed an appeal to the Court of Appeals but it was dismissed on March 11,
1948. An entry of judgment was made on April 5, 1948.
In 1950, Jose Galeos, one of the heirs of the Denzons, filed with the National Airports Corporation
a claim for rentals for the two lots, but it "denied knowledge of the matter." Another heir, Nestor
Belocura, brought the claim to the Office of then President Carlos Garcia who wrote the Civil
Aeronautics Administration and the Secretary of National Defense to expedite action on said
claim. On September 6, 1961, Lt. Manuel Cabal rejected the claim but expressed willingness to pay
the appraised value of the lots within a reasonable time. ETaSDc
For failure of the Republic to pay for the lots, on September 20, 1961, the Denzons' successors-ininterest, Francisca Galeos-Valdehueza and Josefina Galeos-Panerio, 2filed with the same CFI an
action for recovery of possession with damages against the Republic and officers of the Armed
Forces of the Philippines in possession of the property. The case was docketed as Civil Case No. R7208.
In the interim or on November 9, 1961, TCT Nos. 23934 and 23935 covering Lots 932 and 939
were issued in the names of Francisca Valdehueza and Josefina Panerio, respectively. Annotated
thereon was the phrase "subject to the priority of the National Airports Corporation to acquire
said parcels of land, Lots 932 and 939 upon previous payment of a reasonable market value."
On July 31, 1962, the CFI promulgated its Decision in favor of Valdehueza and Panerio, holding
that they are the owners and have retained their right as such over Lots 932 and 939 because of
the Republic's failure to pay the amount of P4,062.10, adjudged in the expropriation proceedings.
However, in view of the annotation on their land titles, they were ordered to execute a deed of
sale in favor of the Republic. In view of "the differences in money value from 1940 up to the
present," the court adjusted the market value at P16,248.40, to be paid with 6% interest per
annum from April 5, 1948, date of entry in the expropriation proceedings, until full payment.
After their motion for reconsideration was denied, Valdehueza and Panerio appealed from the CFI
Decision, in view of the amount in controversy, directly to this Court. The case was docketed as
No. L-21032. 3 On May 19, 1966, this Court rendered its Decision affirming the CFI Decision. It held
that Valdehueza and Panerio are still the registered owners of Lots 932 and 939, there having
been no payment of just compensation by the Republic. Apparently, this Court found nothing in
the records to show that the Republic paid the owners or their successors-in-interest according to
the CFI decision. While it deposited the amount of P9,500.00, and said deposit was allegedly
disbursed, however, the payees could not be ascertained.
Notwithstanding the above finding, this Court still ruled that Valdehueza and Panerio are not
entitled to recover possession of the lots but may only demand the payment of their fair market
value, ratiocinating as follows:
"Appellants would contend that: (1) possession of Lots 932 and 939 should be restored to them as
owners of the same; (2) the Republic should be ordered to pay rentals for the use of said lots, plus
attorney's fees; and (3) the court a quo in the present suit had no power to fix the value of the lots
and order the execution of the deed of sale after payment.
It is true that plaintiffs are still the registered owners of the land, there not having been a transfer
of said lots in favor of the Government. The records do not show that the Government paid the
owners or their successors-in-interest according to the 1940 CFI decision although, as stated,
P9,500.00 was deposited by it, and said deposit had been disbursed. With the records lost,
however, it cannot be known who received the money (Exh. 14 says: 'It is further certified that the
corresponding Vouchers and pertinent Journal and Cash Book were destroyed during the last
World War, and therefore the names of the payees concerned cannot be ascertained.') And the
Government now admits that there is no available record showing that payment for the value of
the lots in question has been made (Stipulation of Facts, par. 9, Rec. on Appeal, p. 28). SacDIE
The points in dispute are whether such payment can still be made and, if so, in what amount. Said
lots have been the subject of expropriation proceedings. By final and executory judgment in said
proceedings, they were condemned for public use, as part of an airport, and ordered sold to the
Government. In fact, the abovementioned title certificates secured by plaintiffs over said lots
contained annotations of the right of the National Airports Corporation (now CAA) to pay for and
acquire them. It follows that both by virtue of the judgment, long final, in the expropriation suit,
as well as the annotations upon their title certificates, plaintiffs are not entitled to recover
possession of their expropriated lots — which are still devoted to the public use for which they
were expropriated — but only to demand the fair market value of the same."
Meanwhile, in 1964, Valdehueza and Panerio mortgaged Lot 932 to Vicente Lim, herein
respondent, 4 as security for their loans. For their failure to pay Lim despite demand, he had the
mortgage foreclosed in 1976. Thus, TCT No. 23934 was cancelled, and in lieu thereof, TCT No.
63894 was issued in his name.
On August 20, 1992, respondent Lim filed a complaint for quieting of title with the Regional Trial
Court (RTC), Branch 10, Cebu City, against General Romeo Zulueta, as Commander of the Armed
Forces of the Philippines, Commodore Edgardo Galeos, as Commander of Naval District V of the
Philippine Navy, Antonio Cabaluna, Doroteo Mantos and Florencio Belotindos, herein petitioners.
Subsequently, he amended the complaint to implead the Republic.
On May 4, 2001, the RTC rendered a decision in favor of respondent, thus:
"WHEREFORE, judgment is hereby rendered in favor of plaintiff Vicente Lim and against all
defendants, public and private, declaring plaintiff Vicente Lim the absolute and exclusive owner of
Lot No. 932 with all the rights of an absolute owner including the right to possession. The
monetary claims in the complaint and in the counter claims contained in the answer of defendants
are ordered Dismissed.
Petitioners elevated the case to the Court of Appeals, docketed therein as CA-G.R. CV No. 72915.
In its Decision 5 dated September 18, 2003, the Appellate Court sustained the RTC Decision, thus:
98
"Obviously, defendant-appellant Republic evaded its duty of paying what was due to the
landowners. The expropriation proceedings had already become final in the late 1940's and yet,
up to now, or more than fifty (50) years after, the Republic had not yet paid the compensation
fixed by the court while continuously reaping benefits from the expropriated property to the
prejudice of the landowner. . . . This is contrary to the rules of fair play because the concept of just
compensation embraces not only the correct determination of the amount to be paid to the
owners of the land, but also the payment for the land within a reasonable time from its taking.
Without prompt payment, compensation cannot be considered "just" for the property owner is
made to suffer the consequence of being immediately deprived of his land while being made to
wait for a decade or more, in this case more than 50 years, before actually receiving the amount
necessary to cope with the loss. To allow the taking of the landowners' properties, and in the
meantime leave them empty-handed by withholding payment of compensation while the
government speculates on whether or not it will pursue expropriation, or worse, for government
to subsequently decide to abandon the property and return it to the landowners, is undoubtedly
an oppressive exercise of eminent domain that must never be sanctioned. (Land Bank of the
Philippines vs. Court of Appeals, 258 SCRA 404).
xxx xxx xxx
An action to quiet title is a common law remedy for the removal of any cloud or doubt or
uncertainty on the title to real property. It is essential for the plaintiff or complainant to have a
legal or equitable title or interest in the real property, which is the subject matter of the action.
Also the deed, claim, encumbrance or proceeding that is being alleged as cloud on plaintiff's title
must be shown to be in fact invalid or inoperative despite its prima facie appearance of validity or
legal efficacy (Robles vs. Court of Appeals, 328 SCRA 97). In view of the foregoing discussion,
clearly, the claim of defendant-appellant Republic constitutes a cloud, doubt or uncertainty on the
title of plaintiff-appellee Vicente Lim that can be removed by an action to quiet title. ESDHCa
WHEREFORE, in view of the foregoing, and finding no reversible error in the appealed May 4, 2001
Decision of Branch 9, Regional Trial Court of Cebu City, in Civil Case No. CEB-12701, the said
decision is UPHELD AND AFFIRMED. Accordingly, the appeal is DISMISSED for lack of merit."
Undaunted, petitioners, through the Office of the Solicitor General, filed with this Court a petition
for review on certiorari alleging that the Republic has remained the owner of Lot 932 as held by
this Court in Valdehueza vs. Republic. 6
In our Resolution dated March 1, 2004, we denied the petition outright on the ground that the
Court of Appeals did not commit a reversible error. Petitioners filed an urgent motion for
reconsideration but we denied the same with finality in our Resolution of May 17, 2004.
On May 18, 2004, respondent filed an ex-parte motion for the issuance of an entry of judgment.
We only noted the motion in our Resolution of July 12, 2004.
On July 7, 2004, petitioners filed an urgent plea/motion for clarification, which is actually asecond
motion for reconsideration. Thus, in our Resolution of September 6, 2004, we simply noted
without action the motion considering that the instant petition was already denied with finality in
our Resolution of May 17, 2004.
On October 29, 2004, petitioners filed a very urgent motion for leave to file a motion for
reconsideration of our Resolution dated September 6, 2004 (with prayer to refer the case to the
En Banc). They maintain that the Republic's right of ownership has been settled in Valdehueza.
The basic issue for our resolution is whether the Republic has retained ownership of Lot 932
despite its failure to pay respondent's predecessors-in-interest the just compensation therefor
pursuant to the judgment of the CFI rendered as early as May 14, 1940.
Initially, we must rule on the procedural obstacle.
While we commend the Republic for the zeal with which it pursues the present case, we reiterate
that its urgent motion for clarification filed on July 7, 2004 is actually a second motion for
reconsideration. This motion is prohibited under Section 2, Rule 52, of the 1997 Rules of Civil
Procedure, as amended, which provides:
"Sec. 2.Second motion for reconsideration. — No second motion for reconsideration of a
judgment or final resolution by the same party shall be entertained."
Consequently, as mentioned earlier, we simply noted without action the motion since petitioners'
petition was already denied with finality.
Considering the Republic's urgent and serious insistence that it is still the owner of Lot 932 and in
the interest of justice, we take another hard look at the controversial issue in order to determine
the veracity of petitioner's stance.
One of the basic principles enshrined in our Constitution is that no person shall be deprived of his
private property without due process of law; and in expropriation cases, an essential element of
due process is that there must be just compensation whenever private property is taken for public
use. 7 Accordingly, Section 9, Article III, of our Constitution mandates: "Private property shall not
be taken for public use without just compensation."
The Republic disregarded the foregoing provision when it failed and refused to pay respondent's
predecessors-in-interest the just compensation for Lots 932 and 939. The length of time and the
manner with which it evaded payment demonstrate its arbitrary high-handedness and
confiscatory attitude. The final judgment in the expropriation proceedings (Civil Case No. 781) was
entered on April 5, 1948. More than half of a century has passed, yet, to this day, the landowner,
now respondent, has remained empty-handed. Undoubtedly, over 50 years of delayed payment
cannot, in any way, be viewed as fair. This is more so when such delay is accompanied by
bureaucratic hassles. Apparent from Valdehueza is the fact that respondent's predecessors-ininterest were given a "run around" by the Republic's officials and agents. In 1950, despite the
benefits it derived from the use of the two lots, the National Airports Corporation denied
knowledge of the claim of respondent's predecessors-in-interest. Even President Garcia, who sent
a letter to the Civil Aeronautics Administration and the Secretary of National Defense to expedite
the payment, failed in granting relief to them. And, on September 6, 1961, while the Chief of Staff
of the Armed Forces expressed willingness to pay the appraised value of the lots, nothing
happened. aIcDCH
The Court of Appeals is correct in saying that Republic's delay is contrary to the rules of fair play,
as "just compensation embraces not only the correct determination of the amount to be paid to
the owners of the land, but also the payment for the land within a reasonable time from its taking.
Without prompt payment, compensation cannot be considered 'just.'" In jurisdictions similar to
ours, where an entry to the expropriated property precedes the payment of compensation, it has
been held that if the compensation is not paid in a reasonable time, the party may be treated as a
trespasser ab initio. 8
Corollarily, in Provincial Government of Sorsogon vs. Vda. De Villaroya, 9 similar to the present
case, this Court expressed its disgust over the government's vexatious delay in the payment of just
compensation, thus:
"The petitioners have been waiting for more than thirty years to be paid for their land which was
taken for use as a public high school. As a matter of fair procedure, it is the duty of the
Government, whenever it takes property from private persons against their will, to supply all
required documentation and facilitate payment of just compensation. The imposition of
unreasonable requirements and vexatious delays before effecting payment is not only galling and
arbitrary but a rich source of discontent with government. There should be some kind of swift and
effective recourse against unfeeling and uncaring acts of middle or lower level bureaucrats."
We feel the same way in the instant case.
More than anything else, however, it is the obstinacy of the Republic that prompted us to dismiss
its petition outright. As early as May 19, 1966, in Valdehueza, this Court mandated the Republic to
pay respondent's predecessors-in-interest the sum of P16,248.40 as "reasonable market value of
the two lots in question." Unfortunately, it did not comply and allowed several decades to pass
without obeying this Court's mandate. Such prolonged obstinacy bespeaks of lack of respect to
private rights and to the rule of law, which we cannot countenance. It is tantamount to
confiscation of private property. While it is true that all private properties are subject to the need
of government, and the government may take them whenever the necessity or the exigency of the
99
occasion demands, however, the Constitution guarantees that when this governmental right of
expropriation is exercised, it shall be attended by compensation. 10 From the taking of private
property by the government under the power of eminent domain, there arises an implied promise
to compensate the owner for his loss. 11
Significantly, the above-mentioned provision of Section 9, Article III of the Constitution is not a
grant but a limitation of power. This limiting function is in keeping with the philosophy of the Bill
of Rights against the arbitrary exercise of governmental powers to the detriment of the
individual's rights. Given this function, the provision should therefore be strictly interpreted
against the expropriator, the government, and liberally in favor of the property owner. 12
Ironically, in opposing respondent's claim, the Republic is invoking this Court's Decision in
Valdehueza, a Decision it utterly defied. How could the Republic acquire ownership over Lot 932
when it has not paid its owner the just compensation, required by law, for more than 50 years?
The recognized rule is that title to the property expropriated shall pass from the owner to the
expropriator only upon full payment of the just compensation. Jurisprudence on this settled
principle is consistent both here and in other democratic jurisdictions. In Association of Small
Landowners in the Philippines, Inc. et al., vs. Secretary of Agrarian Reform, 13 thus:
"Title to property which is the subject of condemnation proceedings does not vest the condemnor
until the judgment fixing just compensation is entered and paid, but the condemnor's title relates
back to the date on which the petition under the Eminent Domain Act, or the commissioner's
report under the Local Improvement Act, is filed.
. . . Although the right to appropriate and use land taken for a canal is complete at the time of
entry, title to the property taken remains in the owner until payment is actually made. (Emphasis
supplied.)
In Kennedy v. Indianapolis, the US Supreme Court cited several cases holding that title to property
does not pass to the condemnor until just compensation had actually been made. In fact, the
decisions appear to be uniform to this effect. As early as 1838, in Rubottom v. McLure, it was held
that 'actual payment to the owner of the condemned property was a condition precedent to the
investment of the title to the property in the State' albeit 'not to the appropriation of it to public
use.' In Rexford v. Knight, the Court of Appeals of New York said that the construction upon the
statutes was that the fee did not vest in the State until the payment of the compensation although
the authority to enter upon and appropriate the land was complete prior to the payment.
Kennedy further said that 'both on principle and authority the rule is . . . that the right to enter on
and use the property is complete, as soon as the property is actually appropriated under the
authority of law for a public use, but that the title does not pass from the owner without his
consent, until just compensation has been made to him."
Our own Supreme Court has held in Visayan Refining Co. v. Camus and Paredes, that:
'If the laws which we have exhibited or cited in the preceding discussion are attentively examined
it will be apparent that the method of expropriation adopted in this jurisdiction is such as to afford
absolute reassurance that no piece of land can be finally and irrevocably taken from an unwilling
owner until compensation is paid . . .'" (Emphasis supplied.)
Clearly, without full payment of just compensation, there can be no transfer of title from the
landowner to the expropriator. Otherwise stated, the Republic's acquisition of ownership is
conditioned upon the full payment of just compensation within a reasonable time. 14
Significantly, in Municipality of Biñan v. Garcia 15 this Court ruled that the expropriation of lands
consists of two stages, to wit:
". . . The first is concerned with the determination of the authority of the plaintiff to exercise the
power of eminent domain and the propriety of its exercise in the context of the facts involved in
the suit. It ends with an order, if not of dismissal of the action, "of condemnation declaring that
the plaintiff has a lawful right to take the property sought to be condemned, for the public use or
purpose described in the complaint, upon the payment of just compensation to be determined as
of the date of the filing of the complaint" . . .ECDaTI
The second phase of the eminent domain action is concerned with the determination by the court
of "the just compensation for the property sought to be taken." This is done by the court with the
assistance of not more than three (3) commissioners. . . .
It is only upon the completion of these two stages that expropriation is said to have been
completed. In Republic v. Salem Investment Corporation, 16 we ruled that, "the process is not
completed until payment of just compensation." Thus, here, the failure of the Republic to pay
respondent and his predecessors-in-interest for a period of 57 years rendered the expropriation
process incomplete.
The Republic now argues that under Valdehueza, respondent is not entitled to recover possession
of Lot 932 but only to demand payment of its fair market value. Of course, we are aware of the
doctrine that "non-payment of just compensation (in an expropriation proceedings) does not
entitle the private landowners to recover possession of the expropriated lots." This is our ruling in
the recent cases of Republic of the Philippines vs. Court of Appeals, et al., 17 and Reyes vs.
National Housing Authority. 18 However, the facts of the present case do not justify its
application. It bears stressing that the Republic was ordered to pay just compensation twice,
thefirst was in the expropriation proceedings and the second, in Valdehueza. Fifty-seven (57)
years have passed since then. We cannot but construe the Republic's failure to pay just
compensation as a deliberate refusal on its part. Under such circumstance, recovery of possession
is in order. In several jurisdictions, the courts held that recovery of possession may be had when
property has been wrongfully taken or is wrongfully retained by one claiming to act under the
power of eminent domain 19 or where a rightful entry is made and the party condemning refuses
to pay the compensation which has been assessed or agreed upon; 20 or fails or refuses to have
the compensation assessed and paid. 21
The Republic also contends that where there have been constructions being used by the military,
as in this case, public interest demands that the present suit should not be sustained.
It must be emphasized that an individual cannot be deprived of his property for the public
convenience. 22 In Association of Small Landowners in the Philippines, Inc. vs. Secretary of
Agrarian Reform, 23 we ruled:
"One of the basic principles of the democratic system is that where the rights of the individual are
concerned, the end does not justify the means. It is not enough that there be a valid objective; it is
also necessary that the means employed to pursue it be in keeping with the Constitution. Mere
expediency will not excuse constitutional shortcuts. There is no question that not even the
strongest moral conviction or the most urgent public need, subject only to a few notable
exceptions, will excuse the bypassing of an individual's rights. It is no exaggeration to say that a
person invoking a right guaranteed under Article III of the Constitution is a majority of one even as
against the rest of the nation who would deny him that right.
The right covers the person's life, his liberty and his property under Section 1 of Article III of the
Constitution. With regard to his property, the owner enjoys the added protection of Section 9,
which reaffirms the familiar rule that private property shall not be taken for public use without
just compensation."
The Republic's assertion that the defense of the State will be in grave danger if we shall order the
reversion of Lot 932 to respondent is an overstatement. First, Lot 932 had ceased to operate as an
airport. What remains in the site is just the National Historical Institute's marking stating that Lot
932 is the "former location of Lahug Airport." And second, there are only thirteen (13) structures
located on Lot 932, eight (8) of which are residence apartments of military personnel. Only two (2)
buildings are actually used as training centers. Thus, practically speaking, the reversion of Lot 932
to respondent will only affect a handful of military personnel. It will not result to "irreparable
damage" or "damage beyond pecuniary estimation," as what the Republic vehemently claims.
ETCcSa
We thus rule that the special circumstances prevailing in this case entitle respondent to recover
possession of the expropriated lot from the Republic. Unless this form of swift and effective relief
is granted to him, the grave injustice committed against his predecessors-in-interest, though no
fault or negligence on their part, will be perpetuated. Let this case, therefore, serve as a wake-up
100
call to the Republic that in the exercise of its power of eminent domain, necessarily in derogation
of private rights, it must comply with the Constitutional limitations. This Court, as the guardian of
the people's right, will not stand still in the face of the Republic's oppressive and confiscatory
taking of private property, as in this case.
At this point, it may be argued that respondent Vicente Lim acted in bad faith in entering into a
contract of mortgage with Valdehueza and Panerio despite the clear annotation in TCT No. 23934
that Lot 932 is "subject to the priority of the National Airports Corporation [to acquire said parcels
of land] . . . upon previous payment of a reasonable market value."
The issue of whether or not respondent acted in bad faith is immaterial considering that the
Republic did not complete the expropriation process. In short, it failed to perfect its title over Lot
932 by its failure to pay just compensation. The issue of bad faith would have assumed relevance
if the Republic actually acquired title over Lot 932. In such a case, even if respondent's title was
registered first, it would be the Republic's title or right of ownership that shall be upheld. But now,
assuming that respondent was in bad faith can such fact vest upon the Republic a better title over
Lot 932? We believe not. This is because in the first place, the Republic has no title to speak of.
At any rate, assuming that respondent had indeed knowledge of the annotation, still nothing
would have prevented him from entering into a mortgage contract involving Lot 932 while the
expropriation proceeding was pending. Any person who deals with a property subject of an
expropriation does so at his own risk, taking into account the ultimate possibility of losing the
property in favor of the government. Here, the annotation merely served as a caveat that the
Republic had apreferential right to acquire Lot 932 upon its payment of a "reasonable market
value." It did not proscribe Valdehueza and Panerio from exercising their rights of ownership
including their right to mortgage or even to dispose of their property. In Republic vs. Salem
Investment Corporation, 24 we recognized the owner's absolute right over his property pending
completion of the expropriation proceeding, thus:
"It is only upon the completion of these two stages that expropriation is said to have been
completed. Moreover, it is only upon payment of just compensation that title over the property
passes to the government. Therefore, until the action for expropriation has been completed and
terminated, ownership over the property being expropriated remains with the registered owner.
Consequently, the latter can exercise all rights pertaining to an owner, including the right to
dispose of his property subject to the power of the State ultimately to acquire it through
expropriation.
It bears emphasis that when Valdehueza and Panerio mortgaged Lot 932 to respondent in 1964,
they were still the owners thereof and their title had not yet passed to the petitioner Republic. In
fact, it never did. Such title or ownership was rendered conclusive when we categorically ruled in
Valdehueza that: "It is true that plaintiffs are still the registered owners of the land, there not
having been a transfer of said lots in favor of the Government."
For respondent's part, it is reasonable to conclude that he entered into the contract of mortgage
with Valdehueza and Panerio fully aware of the extent of his right as a mortgagee. A mortgage is
merely an accessory contract intended to secure the performance of the principal obligation. One
of its characteristics is that it is inseparablefrom the property. It adheres to the property
regardless of who its owner may subsequently be. 25 Respondent must have known that even if
Lot 932 is ultimately expropriated by the Republic, still, his right as a mortgagee is protected. In
this regard, Article 2127 of the Civil Code provides:
"Art. 2127.The mortgage extends to the natural accessions, to the improvements, growing fruits,
and the rents or income not yet received when the obligation becomes due, and to the amount of
the indemnity granted or owing to the proprietor from the insurers of the property mortgaged, or
in virtue of expropriation for public use, with the declarations, amplifications, and limitations
established by law, whether the estate remains in the possession of the mortgagor or it passes in
the hands of a third person. HcSDIE
In summation, while the prevailing doctrine is that "the non-payment of just compensation does
not entitle the private landowner to recover possession of the expropriated lots, 26 however, in
cases where the government failed to pay just compensation within five (5) 27 years from the
finality of the judgment in the expropriation proceedings, the owners concerned shall have the
right to recover possession of their property. This is in consonance with the principle that "the
government cannot keep the property and dishonor the judgment." 28 To be sure, the five-year
period limitation will encourage the government to pay just compensation punctually. This is in
keeping with justice and equity. After all, it is the duty of the government, whenever it takes
property from private persons against their will, to facilitate the payment of just compensation. In
Cosculluela v. Court of Appeals, 29 we defined just compensation as not only the correct
determination of the amount to be paid to the property owner but also the payment of the
property within a reasonable time. Without prompt payment, compensation cannot be
considered "just."
WHEREFORE, the assailed Decision of the Court of Appeals in CA-G.R. CV No. 72915 is AFFIRMED
in toto.
The Republic's motion for reconsideration of our Resolution dated March 1, 2004 is DENIED with
FINALITY. No further pleadings will be allowed.
Let an entry of judgment be made in this case.
SO ORDERED.
Davide, Jr., C. J., Puno, Panganiban, Quisumbing, Ynares-Santiago, Carpio, Austria-Martinez,
Corona, Carpio-Morales, Callejo, Sr., Azcuna, Tinga, Chico-Nazario andGarcia, JJ., concur.
Footnotes
1.Rawls, A Theory of Justice (1971) at 4.
2.They were joined by their husbands, Angel Valdehueza and Pablo Panerio, and father, Jose
Galeos.
3.May 19, 1966, 17 SCRA 107.
4.The mortgage was duly annotated at the back of the mortgagors' title in 1964, while the
Decision of this Court in Valdehueza vs. Republic was annotated in 1974.
5.Penned by Justice Sergio L. Pestaño (retired) and concurred in by Justices Perlita J. Tria Tirona
and Jose C. Mendoza.
6.Supra.
7.Cosculluela vs. Court of Appeals, No. L-77765, August 15, 1988, 164 SCRA 393, citing Province of
Pangasinan vs. CFI Judge of Pangasinan, Branch VIII, 80 SCRA 117, 120-121 (1977).
8.Law of Eminent Domain, Third Edition, Volume II § 931 citing Cushman vs. Smith, 34 Me. 247;
and see Davis vs. Russel, 47 Me. 443.
9.No. L-64037, August 27, 1987, 153 SCRA 291.
10.26 Am Jur 2d § 168.
11.Ibid.
12.Cruz, Constitutional Law, 1995 Ed., at 58-59.
13.G.R. No. 78742, July 14, 1989, 175 SCRA 343.
14."Just compensation is described as a full and fair equivalent of the property taken from the
private owner by the expropriator. This is intended to indemnify the owner fully for the loss he
has sustained as a result of the expropriation. The measure of this compensation is not the taker's
gain but the owner's loss. The word just is used to intensify the meaning of the word
compensation, to convey the idea that the equivalent to be rendered for the property taken shall
be real, substantial, full, ample." (Manila Railroad Co. vs. Velasquez, 32 Phil. 286).
15.G.R. No. 69260, December 22, 1989, 180 SCRA 576, 583-584.
16.G.R. No. 137569, June 23, 2000, 334 SCRA 320,329.
17.G.R. No. 146587, July 2, 2002, 383 SCRA 611.
18.G.R. No. 147511, January 20, 2003, 395 SCRA 494.
19.Law of Eminent Domain, Third Edition, Volume II § 927 citing Robinson vs. Southern California
Ry. Co., 129 Cal. 8, 61 Pac. 947; Meeker vs. Chicago, 23 Ill. App. 23; Wilson vs. Muskegon etc. R.R.
Co., 132 Mich. 469, 93 N.W. 1059; Illinois Cent. R.R. Co. vs. Hoskins, 80 Miss. 730, 32 So. 150, 92
Am St. Rep. 612; McClinton vs. Pittsburg etc. Ry Co., 66 Pa St. 404.
101
20.Id., citing White vs. Wabash, St. Louis & Pacific Ry. Co., 64 Ia. 281, 20 N.W. 436; St. Joseph &
Denver City R.R. Co. vs. Callender, 13 Kan. 496; Blackshire vs. Atchison, Topeka and Sta. Fe R.R.
Co., 13 Kan. 514; Kanne v. Minneapolis & St. Louis Ry. Co., 30 Minn. 423; Bartleson vs.
Minneapolis, 33 Minn. 468; Wheeling etc. R.R.Co. vs. Warrell, 122 Pa St. 613, 16 Alt 20.
21.Id., Citing Connellsville Gas Coal Co. vs. Baltimore, etc. R.R. Co., 216 Pa St. 309, 65 Atl. 669.
22.Law of Eminent Domain, Third Edition, Volume II § 929 citing Hooper vs. Columbus & Western
Ry. Co., 78 Ala. 213; Stratten vs. Great Western & Bradford Ry. Co., 40 L.J. Eq. 50. In the latter case
the court says. "With regard to what is said as to public interests, I am not inclined to listen to any
suggestion of public interest as against private rights acquired in a lawful way. I do not think that
the interest of the public in using something that is provided for their convenience is to be upheld
at the price of saying that a person's property is to be confiscated for that purpose. A man who
comes to this court is entitled to have his rights ascertained and declared, however, inconvenient
it may be to third persons to whom it may be a convenience to have the use of his property."
23.Supra at 375-376.
24.Supra.
25.Paras, Civil Code of the Philippines Annotated, 14th Ed., Book V, at 1021.
26.Republic of the Philippines vs. Court of Appeals, supra. and Reyes vs. National Housing
Authority, supra.
27.Section 6, Rule 39 provides that: "A final and executory judgment or order may be executed on
motion within five (5) years from the date of its entry. After the lapse of such time, and before it is
barred by the statute of limitations, a judgment may be enforced by action. The revived judgment
may also be enforced by motion within (5) years from the date of its entry and thereafter by
action before it is barred by the statute of limitations."
28.Commissioner of Public Highways v. San Diego, No. L-30098, February 18, 1970.
29.No. L-77765, August 15, 1988, 164 SCRA 393.
102
LANDBANK vs HEIRS OF RADAZA
THIRD DIVISION
[G.R. No. 183279. January 25, 2010.]
LAND BANK OF THE PHILIPPINES, petitioner, vs. DEPARTMENT OF AGRARIAN REFORM
ADJUDICATION BOARD and HEIRS OF VICENTE ADAZA, HEIRS OF ROMEO ADAZA, and HEIRS OF
CESAR ADAZA, represented by RUSSEL ADAZA, respondents.
DECISION
VELASCO, JR., J p:
The Case
Appealed under Rule 45 are the Decision 1 and Resolution 2 of the Court of Appeals (CA) dated
December 14, 2007 and June 3, 2008, respectively, in CA-G.R. SP No. 00984, affirming the orders
of the Department of Agrarian Reform Adjudication Board (DARAB) that granted private
respondents' motion to withdraw amended valuation.
The Facts
Private respondents, namely, the heirs of Vicente, Romeo, and Cesar, all surnamed Adaza,
represented by Russel (daza (Adazas, collectively), were owners of a tract of land with an area of
359 hectares, more or less, situated in Patagan, Manukan, Zamboanga del Norte and covered by
Transfer Certificate of Title No. T-42963. Of the total, the Department of Agrarian Reform (DAR)
identified a 278.4092-hectare portion as suitable for compulsory acquisition under the
comprehensive agrarian reform program (CARP) pursuant to the Comprehensive Agrarian Reform
Law of 1988 or Republic Act No. (RA) 6657, otherwise known as the CARP Law. In August 1991, the
DAR sent out a notice of coverage. The claim folder profile was then endorsed to petitioner Land
Bank of the Philippines (LBP) to determine the value of the land.
The LBP assigned the covered 278.4092-hectare area an aggregate value of PhP 786,654.46. The
DAR, in turn, offered the same amount to the Adazas as just compensation for their landholding,
but the latter considered the valuation for their developed property unreasonably low and
rejected the offer. This prompted DAR to order the LBP to deposit the amount aforestated to the
account of the Adazas, who then secured the release of that amount without prejudice to their
right to a final determination of just compensation. The DAR then subdivided the property into
smaller lots and, in December 1992, distributed them to identified beneficiaries. DCASEc
Pursuant to the pertinent provision of the then governing 2003 DARAB Rules of Procedure in
relation to Section 16(d) of RA 6657 in case of contested valuation, the Provincial Agrarian Reform
Adjudicator (PARAD) of Zamboanga del Norte conducted a summary administrative hearing to
determine just compensation. In the course of the hearing and on its preliminary estimation that
the computation was unconscionably low, the PARAD, by Order of December 22, 2003, 3 asked
the LBP to undertake another landsite inspection and recomputation of the value of the subject
landholding in accordance with the latest formulae on land valuation. The LBP later submitted its
compliance report, 4 in which it came out with a new revalued figure and prayed that the PARAD
adopt the recomputed value in the amount of PhP 3,426,153.80 as just compensation for the
Adazas' CARP-covered property. On May 23, 2005, the PARAD issued another Order 5 disposing as
follows:
WHEREFORE, . . . order is hereby issued affirming the recomputed valuation of the covered
landholding in the sum of P3,426,153.80 to be in accordance with the latest applicable
administrative order and guidelines, without prejudice to the right of the [Adazas] to appeal, or go
to the Special Agrarian Court whenever proper. 6
The Adazas found the reevaluated amount level still too low, prompting them to appeal to the
DARAB, docketed as DARAB Case No. 13719LV. Pending resolution of their appeal, the Adazas
interposed a Motion to Withdraw Amended Valuation 7 on August 9, 2005, seeking the release to
them of the amount representing the difference between the initial valuation and the second
valuation. The Adazas alleged having long been dispossessed of the subject property, while the
farmer-beneficiaries installed on it are enjoying full possession of it.
In its Comment 8 dated October 6, 2005, the LBP disputed the Adazas' right to lay claim on the
recomputed valuation, and, at the same time, questioned the legality of their right before the
DARAB. Thus, pending finality of the resolution setting just compensation, the LBP added, no
execution shall lie insofar as the incremental value is concerned.
By Order 9 dated January 2, 2006, the DARAB granted the motion to withdraw amended
valuation, with a directive to its Secretariat to issue the necessary writ of execution, on the
strength of the ensuing ratiocination: TaIHEA
Execution pending appeal is allowed when superior circumstances demanding urgency outweigh
the damages that may result from the issuance of the writ. [The Adazas] were already deprived of
the beneficial ownership of the subject landholding effective December 1992. . . .
To the mind of this Board, the long years of waiting by the [Adazas] for the final determination of
just compensation of the subject landholding outweighs the damages that may result from the
issuance of the writ of execution pending appeal.
Staying the execution of the 23 May 2005 Decision of the Adjudicator a quo who affirmed the
valuation made by the LBP, would bring more injustice to [the Adazas]. x x x
Besides, Section [1]6 of RA 6657 does not make a distinction as to initial valuation or amended
valuation made by the LBP. Any valuation made by the LBP on CARP-covered land is made
pursuant to Executive Order No. 405, Series of 1990.
LBP then moved for reconsideration, but the DARAB, per its Order 10 of March 14, 2006, denied
the motion and reiterated its earlier directive on the issuance of a writ of execution.
Therefrom, the LBP went to the CA on certiorari under Rule 65.
Ruling of the Appellate Court
By Decision dated December 14, 2007, as effectively reiterated in a Resolution of June 3, 2008, the
CA found the allegations on grave abuse of discretion on the part of the DARAB to be baseless and
accordingly denied the LBP's petition for certiorari, disposing:
WHEREFORE, the petition is DENIED. The assailed Orders of the DARAB dated January 2, 2006 and
March 14, 2006 are hereby AFFIRMED in toto.
Hence, this petition for review, on the following legal issue:
WHETHER OR NOT THE [DARAB] CAN ORDER THE RELEASE TO THE LANDOWNERS, BY WAY OF
EXECUTION PENDING APPEAL, OF THE INCREMENTAL DIFFERENCE OF A LANDBANK
RECOMPUTATION UPHELD IN A DECISION OF THE DAR ADJUDICATOR A QUO WITHIN THE
PURVIEW OF SECTION 16, ET SEQ. OF THE CARP LAW (R.A. 6657) AND ITS IMPLEMENTING RULES.
EHCcIT
In the main, it is the LBP's posture that the DARAB cannot validly order the release of the
incremental difference (amended valuation amount of PhP 3,426,153.80 - original valuation
amount of PhP 786,564.46 = incremental amount or difference) by way of execution pending
appeal inasmuch as the amended valuation has yet to be approved by DAR. Without such
approval, so LBP's argument goes, there is really no amended valuation within the ambit of Sec. 16
of the CARP Law, which contemplates of a DAR-LBP valuation. In the absence, thus, of a duly DARapproved valuation, there is no subject for execution. 11 And at any event, LBP also argues that it
has no statutory duty to release any amount resulting from any subsequent reevaluation based on
an order which is not yet final and executory. 12
Our Ruling
The petition is without merit.
Three points need to be emphasized at the outset. First, the amount of PhP 3,426,153.80 the
Adazas want to be released pending appeal, or pending final determination of just compensation,
to be precise, was arrived at by LBP, its re-evaluation efforts taken pursuant to Executive Order
No. 405, 13 Series of 1990, Sec. 1 of which reads:
SECTION 1. The [LBP] shall be primarily responsible for the determination of the land valuation
and compensation for all private lands suitable for agriculture under the Voluntary Offer to Sell
(VOS) or Compulsory Acquisition (CA) arrangement as governed by [RA] 6657. The [DAR] shall
make use of the determination of the land valuation and compensation by the [LBP] in the
performance of functions.
103
After effecting the transfer of titles from the landowner to the Republic of the Philippines, the
[LBP] shall inform the DAR of such fact in order that the latter may proceed with the distribution
of the lands to the qualified agrarian reform beneficiaries . . .
Second, the LBP, no less, had asked the PARAD to adopt LBP's recomputed value of PhP
3,426,153.80 as just compensation for the subject property.
And third, the Adazas' landholding had already been distributed before full payment of just
compensation could be effected. In fact, the Adazas have been deprived of the beneficial use and
ownership of their landholding since 1992 and have received only PhP 786,564.46 for their
278.40-hectare CARP-covered lands. 14
In light of the foregoing considerations, it is but just and proper to allow, with becoming dispatch,
withdrawal of the revised compensation amount, albeit protested. The concept of just
compensation contemplates of just and timely payment; it embraces not only the correct
determination of the amount to be paid to the landowner, but also the payment of the land within
a reasonable time from its taking. 15 Without prompt payment, compensation cannot, as Land
Bank of the Philippines v. Court of Appeals 16 instructs, be considered "just" for the owner is
made to suffer the consequence of being immediately deprived of his land while being made to
wait for years before actually receiving the amount necessary to cope with his loss. SIaHDA
The LBP's argument that by allowing withdrawal of the incremental amount, the government may
be placed at a losing end, citing the possibility that the recomputed amount may be more than the
just compensable value of the 278.40 hectares taken, is specious.
For one, as an exercise of police power to complement eminent domain, the forced taking of
private property under the CARP puts the landowners, and not the government, in a situation
where the odds are already stacked against them. One thing going for the landowners, though, is
that they cannot, as a matter of law, be compelled to accept the LBP's valuation of their
expropriated land and/or accept DAR's offer by way of compensation.
And for another, the stated risk which the DAR or the government will allegedly be exposed to if
immediate withdrawal of the rejected compensation is allowed is at the moment pure
speculation. The DARAB, with its presumptive expertise in agrarian land valuation, even dismissed
as "very remote" the possibility of the LBP-amended valuation exceeding the value of the subject
landholding using the valuation criteria and formulae prescribed under the law.
It may be well to explicate at this juncture the nature of the right of landowners to the amount set
aside for their land placed under CARP. Under the CARP Law, the landowners are entitled to
withdraw the amount deposited in their behalf pending the final resolution of the case involving
the final valuation of his property. This entitlement remains regardless of whether the amount is
provisional, as contemplated in Sec. 16(d) and (e) of RA 6657 or the final compensation as
provided under Sec. 18 of the same law. The provisions referred to respectively provide:
Sec. 16. Procedure for Acquisition of Private Lands. — For purposes of acquisition of private lands,
the following procedures shall be followed:
xxx xxx xxx
(d)In case of rejection [of the offer of DAR to pay a corresponding value in accordance with the
valuation set forth in Section 17 and 18] or failure to reply, the DAR shall conduct summary
administrative proceedings to determine the compensation for the land requiring the landowner,
the LBP and other interested parties to submit evidence as to the just compensation for the land,
within fifteen (15) days from the receipt of the notice. . . . DIETcC
(e)Upon receipt by the landowner of the corresponding payment or, in case of rejection or no
response from the landowner, upon the deposit with an accessible bank designated by the DAR of
the compensation in cash or in LBP bonds in accordance with this Act, the DAR shall take
immediate possession of the land and shall request the proper Register of Deeds to issue a
Transfer Certificate of Title (TCT) in the name of the Republic of the Philippines. The DAR shall
thereafter proceed with the redistribution of the land to the qualified beneficiaries. (Emphasis
supplied.)
Sec. 18. Valuation and Mode of Payment. — The LBP shall compensate the landowner the amount
as may be agreed upon by the landowner and the DAR and the LBP in accordance with the criteria
provided for in Sections 16 and 17, 17 and other provisions hereof or as may be finally determined
by the court as the just compensation for the land.
In Land Bank of the Philippines v. Court of Appeals, the Court stressed the need to allow the
landowners to withdraw immediately the amount deposited in their behalf, pending final
determination of what is just compensation for their land, thus:
The attempt to make a distinction between the deposit of compensation under Section 16(e) of
RA 6657 and determination of just compensation under Section 18 is unacceptable. To withhold
the right of the landowners to appropriate the amounts already deposited in their behalf as
compensation for their properties simply because they rejected the DAR's valuation, and
notwithstanding that they have already been deprived of the possession of such properties is an
oppressive exercise of eminent domain. The irresistible expropriation of private respondents'
properties was painful enough. But DAR rubbed it in all the more by withholding that which
rightfully belongs to private respondents in exchange for the taking x x x. This is misery twice
bestowed on private respondents, which the Court must rectify.
Hence, we find it unnecessary to distinguish between provisional compensation under Section
16(e) and final compensation under Section 18 for purposes of exercising the landowners' right to
appropriate the same. The immediate effect in both situations is the same, the landowner is
deprived of the use and possession of his property for which he should be fairly and immediately
compensated. 18 (Emphasis ours.)
The LBP, in a bid to stall further the Adazas' claim to the difference of the new and original
valuation amounts, would foist the argument that the sum which the CARP Law requires it to set
aside and which the landowner may withdraw is the amount corresponding to the LBP-DAR
valuation. LBP adds, however, that in the instant case, the DAR has yet to approve the new
valuation. DTCAES
The Court may accord cogency to LBP's argument, but for the fact that the Provincial Adjudicator a
quo and eventually the DARAB affirmed the new property valuation made by the LBP. By virtue of
such affirmatory action, the DAR has, in effect, approved the PhP 3,426,153.80-LBP valuation,
DARAB being the adjudicating arm of DAR. 19 Lest it be overlooked, the DARAB has primary
jurisdiction to adjudicate all agrarian disputes, inclusive of controversies relating to compensation
of lands under the CARP Law, 20 as the determination of just compensation is essentially a judicial
function. 21 As aptly observed by the DARAB, there is no way that such amended valuation would
go down as it is the landowners who have exhibited opposition to the valuation.
The LBP's lament about the impropriety of what amounts to the DARAB allowing execution
pending appeal without requiring the Adazas to post a bond does not persuade. Under Rule XX,
Section 2 of the 2003 DARAB Rules of Procedure, 22 the DARAB may grant a motion to execute an
order or decision pending appeal upon meritorious grounds. To the DARAB, "there is no more
ground more meritorious than the [Adazas'] agony of waiting for a long period of time to have
their properties properly valued." 23 We cannot agree more. The length of time that the Adazas
have been deprived of their property without receiving their just due on a rather simple issue of
just compensation will suffice to justify the exercise by DARAB of its discretion to allow execution
pending appeal. To paraphrase what we said in Apo Fruits Corporation v. Court of Appeals, 24
allowing the taking of the landowners' property and leaving them empty-handed while
government withholds compensation are undoubtedly oppressive.
On the matter of allowing execution pending appeal without requiring the Adazas to put up a
bond, we cite with approval what the DARAB sensibly wrote on that regard:
As [regards] the posting of bond, the office of bond is for the payment of damages which the
aggrieved party may suffer in the event the final order or decision is reversed on appeal. As stated
in the preceding paragraph the possibility of having the LBP amended valuation be reversed is
very remote. Thus, this Board is of the opinion that posting of bond is not necessary for the
execution pending appeal of the 23 May 2005 decision. Besides the amount to be released is the
amount computed by LBP itself.
WHEREFORE, this petition is hereby DENIED.
SO ORDERED.
104
Corona, Nachura, Peralta and Mendoza, JJ., concur.
Footnotes
1.Rollo, pp. 38-51. Penned by Associate Justice Elihu A. Ybañez and concurred in by Associate
Justices Romulo V. Borja and Mario V. Lopez.
2.Id. at 64-65.
3.Id. at 129.
4.Id. at 131.
5.Id. at 137-140.
6.Id. at 140.
7.Id. at 142-143.
8.Id. at 144.
9.Id. at 99-103.
10.Id. at 106-109.
11.Id. at 27-28.
12.Id. at 33.
13.Executive Order No. 405 dated June 14, 1990 vests the LBP the primary responsibility to
determine the land valuation and compensation for all private lands covered by RA 6657. SeeLand
Bank v. Banal, G.R. No. 143276, July 20, 2004, 434 SCRA 545; citing Philippine Veterans Bank v.
Court of Appeals, G.R. No. 132767, January 18, 2000, 322 SCRA 139.
14.Rollo, p. 108.
15.Apo Fruits Corporation v. Court of Appeals, G.R. No. 164195, February 6, 2007, 514 SCRA 537.
16.G.R. No. 118712, July 5, 1996, 258 SCRA 404; citations omitted.
17.Sec. 17. Determination of Just Compensation. — In determining just compensation, the cost of
the acquisition of the land, the current value of like properties, its nature, actual use and income,
the sworn valuation by the owner, the tax declarations and the assessment made by government
assessors shall be considered. The social and economic benefits contributed by the farmers and
the farm workers and by the Government to the property as well as the non-payment of taxes or
loans secured from any government financing institution on the said land shall be considered as
additional factors to determine its valuation.
18.G.R. No. 118712, October 6, 1995, 249 SCRA 149, 160.
19.Vda. de Tangub v. Court of Appeals, UDK No. 9864, December 3, 1990, 191 SCRA 885.
20.Nuesa v. Court of Appeals, G.R. No. 132048, March 6, 2002, 378 SCRA 351; citing DARAB
Revised Rules of Procedure, Rule II, Sec. 1.
21.Association of Small Landowners in the Phil., Inc. v. Secretary of Agrarian Reform, G.R. No.
78742, July 14, 1989, 175 SCRA 343; citing Export Processing Zone Authority v. Dulay, G.R. No.
59603, April 29, 1987, 149 SCRA 305.
22.SECTION 2. Execution Pending Appeal. — Any motion for execution of the decision of the
Adjudicator pending appeal shall be filed before the Board which may grant the same upon
meritorious grounds, upon posting of a sufficient bond in the amount conditioned for the
payment of damages which the aggrieved party may suffer in the event that the final order or
decision is reversed on appeal x x x. (The same provision is carried over the 2009 DARAB Rules of
Procedure.)
23.Rollo, p. 109.
24.Supra note 15.
105
HON. EUSEBIO vs LUIS, ET. AL
THIRD DIVISION
[G.R. No. 162474. October 13, 2009.]
HON. VICENTE P. EUSEBIO, LORNA A. BERNARDO, VICTOR ENDRIGA, and the CITY OF PASIG,
petitioners, vs. JOVITO M. LUIS, LIDINILA LUIS SANTOS, ANGELITA CAGALINGAN, ROMEO M. LUIS,
and VIRGINIA LUIS-BELLESTEROS, * respondents.
DECISION
PERALTA, J p:
This resolves the Petition for Review on Certiorari under Rule 45 of the Rules of Court, praying that
the Decision 1 of the Court of Appeals (CA) dated November 28, 2003, affirming the trial court
judgment, and the CA Resolution 2 dated February 27, 2004, denying petitioners' motion for
reconsideration, be reversed and set aside.
The antecedent facts are as follows:
Respondents are the registered owners of a parcel of land covered by Transfer Certificate of Title
Nos. 53591 and 53589 with an area of 1,586 square meters. Said parcel of land was taken by the
City of Pasig sometime in 1980 and used as a municipal road now known as A. Sandoval Avenue,
Barangay Palatiw, Pasig City. On February 1, 1993, the Sanggunian of Pasig City passed Resolution
No. 15 authorizing payments to respondents for said parcel of land. However, the Appraisal
Committee of the City of Pasig, in Resolution No. 93-13 dated October 19, 1993, assessed the
value of the land only at P150.00 per square meter. In a letter dated June 26, 1995, respondents
requested the Appraisal Committee to consider P2,000.00 per square meter as the value of their
land.
One of the respondents also wrote a letter dated November 25, 1994 to Mayor Vicente P. Eusebio
calling the latter's attention to the fact that a property in the same area, as the land subject of this
case, had been paid for by petitioners at the price of P2,000.00 per square meter when said
property was expropriated in the year 1994 also for conversion into a public road. Subsequently,
respondents' counsel sent a demand letter dated August 26, 1996 to Mayor Eusebio, demanding
the amount of P5,000.00 per square meter, or a total of P7,930,000.00, as just compensation for
respondents' property. In response, Mayor Eusebio wrote a letter dated September 9, 1996
informing respondents that the City of Pasig cannot pay them more than the amount set by the
Appraisal Committee. HaAISC
Thus, on October 8, 1996, respondents filed a Complaint for Reconveyance and/or Damages (Civil
Case No. 65937) against herein petitioners before the Regional Trial Court (RTC) of Pasig City,
Branch 155. Respondents prayed that the property be returned to them with payment of
reasonable rental for sixteen years of use at P500.00 per square meter, or P793,000.00, with legal
interest of 12% per annum from date of filing of the complaint until full payment, or in the event
that said property can no longer be returned, that petitioners be ordered to pay just
compensation in the amount of P7,930,000.00 and rental for sixteen years of use at P500.00 per
square meter, or P793,000.00, both with legal interest of 12% per annum from the date of filing of
the complaint until full payment. In addition, respondents prayed for payment of moral and
exemplary damages, attorney's fees and costs.
After trial, the RTC rendered a Decision 3 dated January 2, 2001, the dispositive portion of which
reads as follows:
WHEREFORE, in view of the foregoing, judgment is hereby rendered in favor of the plaintiffs and
against the defendants:
1.Declaring as ILLEGAL and UNJUST the action of the defendants in taking the properties of
plaintiffs covered by Transfer Certificates of Title Nos. 53591 and 53589 without their consent and
without the benefit of an expropriation proceedings required by law in the taking of private
property for public use;
2.Ordering the defendants to jointly RETURN the subject properties to plaintiffs with payment of
reasonable rental for its use in the amount of P793,000.00 with legal interest at the rate of 6% per
annum from the filing of the instant Complaint until full payment is made;
3.In the event that said properties can no longer be returned to the plaintiffs as the same is
already being used as a public road known as A. Sandoval Avenue, Pasig City, the defendants are
hereby ordered to jointly pay the plaintiffs the fair and reasonable value therefore at P5,000.00
per square meter or a total of P7,930,000.00 with payment of reasonable rental for its use in the
amount of P500.00 per square meter or a total of P793,000.00, both with legal interest at the rate
of 6% per annum from the filing of the instant Complaint until full payment is made; and
4.Ordering the defendants to jointly pay the plaintiffs attorney's fees in the amount of
P200,000.00.
No pronouncement as to costs.
SO ORDERED. HcDATC
Petitioners then appealed the case to the CA, but the CA affirmed the RTC judgment in its Decision
dated November 28, 2003.
Petitioners' motion for reconsideration of the CA Decision was denied per Resolution dated
February 27, 2004.
Hence, this petition where it is alleged that:
I.PUBLIC RESPONDENT COURT ERRED IN UPHOLDING THE RULING OF THE LOWER COURT DESPITE
THE APPARENT LACK OF JURISDICTION BY REASON OF PRESCRIPTION OF PRIVATE RESPONDENTS'
CLAIM FOR JUST COMPENSATION;
II.PUBLIC RESPONDENT COURT ERRED IN FIXING THE FAIR AND REASONABLE COMPENSATION FOR
RESPONDENTS' PROPERTY AT P5,000.00 PER SQUARE METER DESPITE THE GLARING FACT THAT AT
THE TIME OF TAKING IN THE YEAR 1980 THE FAIR MARKET VALUE WAS PEGGED BY AN APPRAISAL
COMMITTEE AT ONE HUNDRED SIXTY PESOS (PHP160.00);
III.PUBLIC RESPONDENT COURT ERRED IN UPHOLDING THE JUDGMENT OF THE LOWER COURT
AWARDING THE AMOUNT OF P793,000.00 AS REASONABLE RENTAL FOR THE USE OF
RESPONDENTS' PROPERTY IN SPITE OF THE FACT THAT THE SAME WAS CONVERTED INTO A
PUBLIC ROAD BY A PREVIOUSLY ELECTED MUNICIPAL MAYOR WITHOUT RESPONDENTS'
REGISTERING ANY COMPLAINT OR PROTEST FOR THE TAKING AND DESPITE THE FACT THAT SUCH
TAKING DID NOT PERSONALLY BENEFIT THE PETITIONERS BUT THE PUBLIC AT LARGE; AND
IV.PUBLIC RESPONDENT COURT OF APPEALS ERRED IN AFFIRMING THE P200,000.00 AWARD FOR
ATTORNEY'S FEES TO THE PRIVATE RESPONDENTS' COUNSEL DESPITE THE ABSENCE OF
NEGLIGENCE OR INACTION ON THE PART OF PETITIONERS RELATIVE TO THE INSTANT CLAIM FOR
JUST COMPENSATION. 4
At the outset, petitioners must be disabused of their belief that respondents' action for recovery
of their property, which had been taken for public use, or to claim just compensation therefor is
already barred by prescription. In Republic of the Philippines v. Court of Appeals, 5 the Court
emphasized "that where private property is taken by the Government for public use without first
acquiring title thereto either through expropriation or negotiated sale, the owner's action to
recover the land or the value thereof does not prescribe". The Court went on to remind
government agencies not to exercise the power of eminent domain with wanton disregard for
property rights as Section 9, Article III of the Constitution provides that "private property shall not
be taken for public use without just compensation". 6
The remaining issues here are whether respondents are entitled to regain possession of their
property taken by the city government in the 1980's and, in the event that said property can no
longer be returned, how should just compensation to respondents be determined. SHADEC
These issues had been squarely addressed in Forfom Development Corporation v. Philippine
National Railways, 7 which is closely analogous to the present case. In said earlier case, the
Philippine National Railways (PNR) took possession of the private property in 1972 without going
through expropriation proceedings. The San Pedro-Carmona Commuter Line Project was then
implemented with the installation of railroad facilities on several parcels of land, including that of
petitioner Forfom. Said owner of the private property then negotiated with PNR as to the amount
106
of just compensation. No agreement having been reached, Forfom filed a complaint for Recovery
of Possession of Real Property and/or Damages with the trial court sometime in August 1990.
In said case, the Court held that because the landowner did not act to question the lack of
expropriation proceedings for a very long period of time and even negotiated with the PNR as to
how much it should be paid as just compensation, said landowner is deemed to have waived its
right and is estopped from questioning the power of the PNR to expropriate or the public use for
which the power was exercised. It was further declared therein that:
. . . recovery of possession of the property by the landowner can no longer be allowed on the
grounds of estoppel and, more importantly, of public policy which imposes upon the public utility
the obligation to continue its services to the public. The non-filing of the case for expropriation
will not necessarily lead to the return of the property to the landowner. What is left to the
landowner is the right of compensation.
. . . It is settled that non-payment of just compensation does not entitle the private landowners to
recover possession of their expropriated lot. 8
Just like in the Forfom case, herein respondents also failed to question the taking of their property
for a long period of time (from 1980 until the early 1990's) and, when asked during trial what
action they took after their property was taken, witness Jovito Luis, one of the respondents,
testified that "when we have an occasion to talk to Mayor Caruncho we always asked for
compensation". 9 It is likewise undisputed that what was constructed by the city government on
respondents' property was a road for public use, namely, A. Sandoval Avenue in Pasig City. Clearly,
as in Forfom, herein respondents are also estopped from recovering possession of their land, but
are entitled to just compensation.
Now, with regard to the trial court's determination of the amount of just compensation to which
respondents are entitled, the Court must strike down the same for being contrary to established
rules and jurisprudence.
The prevailing doctrine on judicial determination of just compensation is that set forth in Forfom.
10 Therein, the Court ruled that even if there are no expropriation proceedings instituted to
determine just compensation, the trial court is still mandated to act in accordance with the
procedure provided for in Section 5, Rule 67 of the 1997 Rules of Civil Procedure, requiring the
appointment of not more than three competent and disinterested commissioners to ascertain and
report to the court the just compensation for the subject property. The Court reiterated its ruling
in National Power Corporation v. Dela Cruz 11 that "trial with the aid of commissioners is a
substantial right that may not be done away with capriciously or for no reason at all". 12 It was
also emphasized therein that although ascertainment of just compensation is a judicial
prerogative, the commissioners' findings may only be disregarded or substituted with the trial
court's own estimation of the property's value only if the commissioners have applied illegal
principles to the evidence submitted to them, where they have disregarded a clear preponderance
of evidence, or where the amount allowed is either grossly inadequate or excessive. Thus, the
Court concluded in Forfom that: cda
The judge should not have made a determination of just compensation without first having
appointed the required commissioners who would initially ascertain and report the just
compensation for the property involved. This being the case, we find the valuation made by the
trial court to be ineffectual, not having been made in accordance with the procedure provided for
by the rules. 13
Verily, the determination of just compensation for property taken for public use must be done not
only for the protection of the landowners' interest but also for the good of the public. In Republic
v. Court of Appeals, 14 the Court explained as follows:
The concept of just compensation, however, does not imply fairness to the property owner alone.
Compensation must be just not only to the property owner, but also to the public which ultimately
bears the cost of expropriation. 15
It is quite clear that the Court, in formulating and promulgating the procedure provided for in
Sections 5 and 6, Rule 67, found this to be the fairest way of arriving at the just compensation to
be paid for private property taken for public use.
With regard to the time as to when just compensation should be fixed, it is settled jurisprudence
that where property was taken without the benefit of expropriation proceedings, and its owner
files an action for recovery of possession thereof before the commencement of expropriation
proceedings, it is the value of the property at the time of taking that is controlling. 16 Explaining
the reason for this rule in Manila International Airport Authority v. Rodriguez, 17 the Court,
quoting Ansaldo v. Tantuico, Jr., 18 stated, thus:
The reason for the rule, as pointed out in Republic v. Lara, is that —
. . . [w]here property is taken ahead of the filing of the condemnation proceedings, the value
thereof may be enchanced by the public purpose for which it is taken; the entry by the plaintiff
upon the property may have depreciated its value thereby; or, there may have been a natural
increase in the value of the property from the time the complaint is filed, due to general economic
conditions. The owner of private property should be compensated only for what he actually loses;
it is not intended that his compensation shall extend beyond his loss or injury. And what he loses
is only the actual value of his property at the time it is taken. This is the only way that
compensation to be paid can be truly just; i.e., 'just not only to the individual whose property is
taken', 'but to the public, which is to pay for it'. 19
In this case, the trial court should have fixed just compensation for the property at its value as of
the time of taking in 1980, but there is nothing on record showing the value of the property at
that time. The trial court, therefore, clearly erred when it based its valuation for the subject land
on the price paid for properties in the same location, taken by the city government only sometime
in the year 1994. DEHaTC
However, in taking respondents' property without the benefit of expropriation proceedings and
without payment of just compensation, the City of Pasig clearly acted in utter disregard of
respondents' proprietary rights. Such conduct cannot be countenanced by the Court. For said
illegal taking, the City of Pasig should definitely be held liable for damages to respondents. Again,
in Manila International Airport Authority v. Rodriguez, 20 the Court held that the government
agency's illegal occupation of the owner's property for a very long period of time surely resulted in
pecuniary loss to the owner. The Court held as follows:
Such pecuniary loss entitles him to adequate compensation in the form of actual or compensatory
damages, which in this case should be the legal interest (6%) on the value of the land at the time
of taking, from said point up to full payment by the MIAA. This is based on the principle that
interest "runs as a matter of law and follows from the right of the landowner to be placed in as
good position as money can accomplish, as of the date of the taking".
The award of interest renders unwarranted the grant of back rentals as extended by the courts
below. In Republic v. Lara, et al., the Court ruled that the indemnity for rentals is inconsistent with
a property owner's right to be paid legal interest on the value of the property, for if the
condemnor is to pay the compensation due to the owners from the time of the actual taking of
their property, the payment of such compensation is deemed to retroact to the actual taking of
the property; and, hence, there is no basis for claiming rentals from the time of actual taking.
More explicitly, the Court held in Republic v. Garcellano that:
The uniform rule of this Court, however, is that this compensation must be, not in the form of
rentals, but by way of 'interest from the date that the company [or entity] exercising the right of
eminent domain take possession of the condemned lands, and the amounts granted by the court
shall cease to earn interest only from the moment they are paid to the owners or deposited in
court . . . .
xxx xxx xxx
For more than twenty (20) years, the MIAA occupied the subject lot without the benefit of
expropriation proceedings and without the MIAA exerting efforts to ascertain ownership of the lot
and negotiating with any of the owners of the property. To our mind, these are wanton and
irresponsible acts which should be suppressed and corrected. Hence, the award of exemplary
107
damages and attorneys fees is in order. However, while Rodriguez is entitled to such exemplary
damages and attorney's fees, the award granted by the courts below should be equitably reduced.
We hold that Rodriguez is entitled only to P200,000.00 as exemplary damages, and attorney's fees
equivalent to one percent (1%) of the amount due. 21
Lastly, with regard to the liability of petitioners Vicente P. Eusebio, Lorna A. Bernardo, and Victor
Endriga — all officials of the city government — the Court cannot uphold the ruling that said
petitioners are jointly liable in their personal capacity with the City of Pasig for payments to be
made to respondents. There is a dearth of evidence which would show that said petitioners were
already city government officials in 1980 or that they had any involvement whatsoever in the
illegal taking of respondents' property. Thus, any liability to respondents is the sole responsibility
of the City of Pasig. ADHcTE
IN VIEW OF THE FOREGOING, the petition is PARTIALLY GRANTED. The Decision of the Court of
Appeals dated November 28, 2003 is MODIFIED to read as follows:
1.The valuation of just compensation and award of back rentals made by the Regional Trial Court
of Pasig City, Branch 155 in Civil Case No. 65937 are hereby SET ASIDE. The City of Pasig,
represented by its duly-authorized officials, is DIRECTED to institute the appropriate expropriation
action over the subject parcel of land within fifteen (15) days from finality of this Decision, for the
proper determination of just compensation due to respondents, with interest at the legal rate of
six (6%) percent per annum from the time of taking until full payment is made.
2.The City of Pasig is ORDERED to pay respondents the amounts of P200,000.00 as exemplary
damages and P200,000.00 as attorney's fees.
No costs.
SO ORDERED.
Carpio, Chico-Nazario, Velasco, Jr. and Nachura, JJ., concur.
Footnotes
*The Court of Appeals is dropped as one of the respondents in accordance with Section 4, Rule 45
of the Rules of Court, which states that the petition shall not implead the lower courts or judges
thereof either as petitioners or respondents.
1.Penned by Associate Justice Renato C. Dacudao, with Associate Justices Cancio C. Garcia (now
retired SC Associate Justice) and Danilo B. Pine, concurring; rollo, pp. 44-56.
2.Id. at 58-59.
3.Rollo, pp. 41-42.
4.Id. at 18-19.
5.G.R. No. 147245, March 31, 2005, 454 SCRA 516.
6.Id. at 528.
7.G.R. No. 124795, December 10, 2008.
8.Emphasis ours.
9.TSN, September 15, 1998; records, p. 110.
10.Supra. See note 7.
11.G.R. No. 156093, February 2, 2007, 514 SCRA 56.
12.Id. at 70.
13.Supra note 7. (Emphasis and underscoring ours.)
14.Supra note 5.
15.Id. at 536. (Emphasis ours.)
16.Forfom v. Philippine National Railways, supra note 7; Manila International Airport Authority v.
Rodriguez, G.R. No. 161836, February 28, 2006, 483 SCRA 619, 627; Republic v. Court of Appeals,
supra note 5, at 534-535.
17.Supra, at 628.
18.G.R. No. 50147, August 3, 1990, 188 SCRA 300.
19.Id. at 628-629.
20.Supra note 16.
21.Id. at 630-632. (Emphasis and underscoring supplied.)
108
APO FRUITS CORPORATION vs LANDBANK
EN BANC
[G.R. No. 164195. October 12, 2010.]
APO FRUITS CORPORATION and HIJO PLANTATION, INC., petitioners, vs. LAND BANK OF THE
PHILIPPINES, respondent.
RESOLUTION
BRION, J p:
We resolve the petitioners' motion for reconsideration addressing our Resolution of December 4,
2009 whose dispositive portion directs:
WHEREFORE, the Court denies the petitioners' second motion for reconsideration (with respect to
the denial of the award of legal interest and attorney's fees), and reiterates the decision dated
February 6, 2007 and the resolution dated December 19, 2007 of the Third Division.
For a fuller and clearer presentation and appreciation of this Resolution, we hark back to the roots
of this case.
Factual Antecedents
Apo Fruits Corporation (AFC) and Hijo Plantation, Inc. (HPI), together also referred to as
petitioners, were registered owners of vast tracks of land; AFC owned 640.3483 hectares, while
HPI owned 805.5308 hectares. On October 12, 1995, they voluntarily offered to sell these
landholdings to the government via Voluntary Offer to Sell applications filed with the Department
of Agrarian Reform (DAR).
On October 16, 1996, AFC and HPI received separate notices of land acquisition and valuation of
their properties from the DAR's Provincial Agrarian Reform Officer(PARO). At the assessed
valuation of P165,484.47 per hectare, AFC's land was valued at P86,900,925.88, while HPI's
property was valued at P164,478,178.14. HPI and AFC rejected these valuations for being very
low.
In its follow through action, the DAR requested the Land Bank of the Philippines (LBP) to deposit
P26,409,549.86 in AFC's bank account and P45,481,706.76 in HPI's bank account, which amounts
the petitioners then withdrew. The titles over AFC and HPI's properties were thereafter cancelled,
and new ones were issued on December 9, 1996 in the name of the Republic of the Philippines.
THDIaC
On February 14, 1997, AFC and HPI filed separate petitions for determination of just
compensation with the DAR Adjudication Board (DARAB). When the DARAB failed to act on these
petitions for more than three years, AFC and HPI filed separate complaints for determination and
payment of just compensation with the Regional Trial Court (RTC) of Tagum City, acting as a
Special Agrarian Court. These complaints were subsequently consolidated.
On September 25, 2001, the RTC resolved the consolidated cases, fixing the just compensation for
the petitioners' 1,338.6027 hectares of land 1 at P1,383,179,000.00, with interest on this amount
at the prevailing market interest rates, computed from the taking of the properties on December
9, 1996 until fully paid, minus the amounts the petitioners already received under the initial
valuation. The RTC also awarded attorney's fees.
LBP moved for the reconsideration of the decision. The RTC, in its order of December 5, 2001,
modified its ruling and fixed the interest at the rate of 12% per annum from the time the
complaint was filed until finality of the decision. The Third Division of this Court, in its Decision of
February 6, 2007, affirmed this RTC decision.
On motion for reconsideration, the Third Division issued its Resolution of December 19, 2007,
modifying its February 6, 2007 Decision by deleting the 12% interest due on the balance of the
awarded just compensation. The Third Division justified the deletion by the finding that the LBP
did not delay the payment of just compensation as it had deposited the pertinent amounts due to
AFC and HPI within fourteen months after they filed their complaints for just compensation with
the RTC. The Court also considered that AFC had already collected approximately P149.6 million,
while HPI had already collected approximately P262 million from the LBP. The Third Division also
deleted the award of attorney's fees.
All parties moved for the reconsideration of the modified ruling. The Court uniformly denied all
the motions in its April 30, 2008 Resolution. Entry of Judgment followed on May 16, 2008.
Notwithstanding the Entry of Judgment, AFC and HPI filed the following motions on May 28, 2008:
(1) Motion for Leave to File and Admit Second Motion for Reconsideration; (2) Second Motion for
Reconsideration, with respect to the denial of the award of legal interest and attorney's fees; and
(3) Motion to Refer the Second Motion for Reconsideration to the Honorable Court En Banc.
ICcaST
The Third Division found the motion to admit the Second Motion for Reconsideration and the
motion to refer this second motion to the Court En Banc meritorious, and accordingly referred the
case to the Court En Banc. On September 8, 2009, the Court En Banc accepted the referral.
The Court En Banc Resolution
On December 4, 2009, the Court En Banc, by a majority vote, denied the petitioners' second
motion for reconsideration based on two considerations.
First, the grant of the second motion for reconsideration runs counter to the immutability of final
decisions. Moreover, the Court saw no reason to recognize the case as an exception to the
immutability principle as the petitioners' private claim for the payment of interest does not qualify
as either a substantial or transcendental matter or an issue of paramount public interest.
Second, on the merits, the petitioners are not entitled to recover interest on the just
compensation and attorney's fees because they caused the delay in the payment of the just
compensation due them; they erroneously filed their complaints with the DARAB when they
should have directly filed these with the RTC acting as an agrarian court. Furthermore, the Court
found it significant that the LBP deposited the pertinent amounts in the petitioners' favor within
fourteen months after the petitions were filed with the RTC. Under these circumstances, the Court
found no unreasonable delay on the part of LBP to warrant the award of 12% interest.
The Chico-Nazario Dissent
Justice Minita V. Chico-Nazario, 2 the ponente of the original December 19, 2007 Resolution
(deleting the 12% interest), dissented from the Court En Banc's December 4, 2009 Resolution.
On the issue of immutability of judgment, Justice Chico-Nazario pointed out that under
extraordinary circumstances, this Court has recalled entries of judgment on the ground of
substantial justice. Given the special circumstances involved in the present case, the Court En Banc
should have taken a second hard look at the petitioners' positions in their second motion for
reconsideration, and acted to correct the clearly erroneous December 19, 2007 Resolution.
Specifically, Justice Chico-Nazario emphasized the obligation of the State, in the exercise of its
inherent power of eminent domain, to pay just compensation to the owner of the expropriated
property. To be just, the compensation must not only be the correct amount to be paid; it must
also be paid within a reasonable time from the time the land is taken from the owner. If not, the
State must pay the landowner interest, by way of damages, from the time the property was taken
until just compensation is fully paid. This interest, deemed a part of just compensation due, has
been established by prevailing jurisprudence to be 12% per annum.
On these premises, Justice Nazario pointed out that the government deprived the petitioners of
their property on December 9, 1996, and paid the balance of the just compensation due them
only on May 9, 2008. The delay of almost twelve years earned the petitioners interest in the total
amount of P1,331,124,223.05. IDSaAH
Despite this finding, Justice Chico-Nazario did not see it fit to declare the computed interest to be
totally due; she found it unconscionable to apply the full force of the law on the LBP because of
the magnitude of the amount due. She thus reduced the awarded interest to P400,000,000.00, or
approximately 30% of the computed interest.
The Present Motion for Reconsideration
In their motion to reconsider the Court En Banc's December 4, 2009 Resolution (the present
Motion for Reconsideration), the petitioners principally argue that: (a) the principle of
immutability of judgment does not apply since the Entry of Judgment was issued even before the
109
lapse of fifteen days from the parties' receipt of the April 30, 2008 Resolution and the petitioners
timely filed their second motion for reconsideration within fifteen days from their receipt of this
resolution; (b) the April 30, 2008 Resolution cannot be considered immutable considering the
special and compelling circumstances attendant to the present case which fall within the
exceptions to the principle of immutability of judgments; (c) the legal interest due is at 12% per
annum, reckoned from the time of the taking of the subject properties and this rate is not subject
to reduction. The power of the courts to equitably reduce interest rates applies solely to
liquidated damages under a contract and not to interest set by the Honorable Court itself as due
and owing in just compensation cases; and (d) the Honorable Court's fears that the interest
payments due to the petitioners will produce more harm than good to the system of agrarian
reform are misplaced and are based merely on conjectures.
The Comment of the Land Bank of the Philippines
The LBP commented on the petitioners' motion for reconsideration on April 28, 2010. It
maintained that: (a) the doctrine of immutability of the decisions of the Supreme Court clearly
applies to the present case; (b) the LBP is not guilty of undue delay in the payment of just
compensation as the petitioners were promptly paid once the Court had determined the final
value of the properties expropriated; (c) the Supreme Court rulings invoked by the petitioners are
inapplicable to the present case; (d) since the obligation to pay just compensation is not a
forbearance of money, interest should commence only after the amount due becomes
ascertainable or liquidated, and the 12% interest per annum applies only to the liquidated
amount, from the date of finality of judgment; (e) the imposition of 12% interest on the balance of
P971,409,831.68 is unwarranted because there was no unjustified refusal by LBP to pay just
compensation, and no contractual breach is involved; (f) the deletion of the attorney's fees
equivalent to 10% of the amount finally awarded as just compensation is proper; (g) this case does
not involve a violation of substantial justice to justify the alteration of the immutable resolution
dated December 19, 2007 that deleted the award of interest and attorney's fees.
The Court's Ruling
We find the petitioners' arguments meritorious and accordingly GRANT the present motion for
reconsideration.
Just compensation — a Basic
Limitation on the State's
Power of Eminent Domain
At the heart of the present controversy is the Third Division's December 19, 2007 Resolution
which held that the petitioners are not entitled to 12% interest on the balance of the just
compensation belatedly paid by the LBP. In the presently assailed December 4, 2009 Resolution,
we affirmed the December 19, 2007 Resolution's findings that: (a) the LBP deposited "pertinent
amounts" in favor of the petitioners within fourteen months after they filed their complaint for
determination of just compensation; and (b) the LBP had already paid the petitioners
P411,769,168.32. We concluded then that these circumstances refuted the petitioners' assertion
of unreasonable delay on the part of the LBP.
A re-evaluation of the circumstances of this case and the parties' arguments, viewed in light of the
just compensation requirement in the exercise of the State's inherent power of eminent domain,
compels us to re-examine our findings and conclusions.
Eminent domain is the power of the State to take private property for public use. 3 It is an
inherent power of State as it is a power necessary for the State's existence; it is a power the State
cannot do without. 4 As an inherent power, it does not need at all to be embodied in the
Constitution; if it is mentioned at all, it is solely for purposes of limiting what is otherwise an
unlimited power. The limitation is found in the Bill of Rights 5 — that part of the Constitution
whose provisions all aim at the protection of individuals against the excessive exercise of
governmental powers.
Section 9, Article III of the 1987 Constitution (which reads "No private property shall be taken for
public use without just compensation.") provides two essential limitations to the power of
eminent domain, namely, that (1) the purpose of taking must be for public use and (2) just
compensation must be given to the owner of the private property. cCSDaI
It is not accidental that Section 9 specifies that compensation should be "just" as the safeguard is
there to ensure a balance — property is not to be taken for public use at the expense of private
interests; the public, through the State, must balance the injury that the taking of property causes
through compensation for what is taken,value for value.
Nor is it accidental that the Bill of Rights is interpreted liberally in favor of the individual and
strictly against the government. The protection of the individual is the reason for the Bill of Rights'
being; to keep the exercise of the powers of government within reasonable bounds is what it
seeks. 6
The concept of "just compensation" is not new to Philippine constitutional law, 7 but is not
original to the Philippines; it is a transplant from the American Constitution.8 It found fertile
application in this country particularly in the area of agrarian reform where the taking of private
property for distribution to landless farmers has been equated to the "public use" that the
Constitution requires. In Land Bank of the Philippines v. Orilla, 9 a valuation case under our
agrarian reform law, this Court had occasion to state:
Constitutionally, "just compensation" is the sum equivalent to the market value of the property,
broadly described as the price fixed by the seller in open market in the usual and ordinary course
of legal action and competition, or the fair value of the property as between the one who receives
and the one who desires to sell, it being fixed at the time of the actual taking by the government.
Just compensation is defined as the full and fair equivalent of the property taken from its owner
by the expropriator. It has been repeatedly stressed by this Court that the true measure is not the
taker's gain but the owner's loss. The word "just" is used to modify the meaning of the word
"compensation" to convey the idea that the equivalent to be given for the property to be taken
shall be real, substantial, full and ample. 10 [Emphasis supplied.]
In the present case, while the DAR initially valued the petitioners' landholdings at a total of
P251,379,104.02, 11 the RTC, acting as a special agrarian court, determined the actual value of the
petitioners' landholdings to be P1,383,179,000.00. This valuation, a finding of fact, has
subsequently been affirmed by this Court, and is now beyond question. In eminent domain terms,
this amount is the "real, substantial, full and ample" compensation the government must pay to
be "just" to the landowners.
Significantly, this final judicial valuation is far removed from the initial valuation made by the DAR;
their values differ by P1,131,799,897.00 — in itself a very substantial sum that is roughly four
times the original DAR valuation. We mention these valuations as they indicate to us how
undervalued the petitioners' lands had been at the start, particularly at the time the petitioners'
landholdings were "taken". This reason apparently compelled the petitioners to relentlessly
pursue their valuation claims all they way up to the level of this Court.
While the LBP deposited the total amount of P71,891,256.62 into the petitioners' accounts
(P26,409,549.86 for AFC and P45,481,706.76 for HPI) at the time the landholdings were taken,
these amounts were mere partial payments that only amounted to 5% of the P1,383,179,000.00
actual value of the expropriated properties. We point this aspect out to show that the initial
payments made by the LBP when the petitioners' landholdings were taken, although promptly
withdrawn by the petitioners, could not by any means be considered a fair exchange of values at
the time of taking; in fact, the LBP's actual deposit could not be said to be substantial even from
the original LBP valuation of P251,379,103.90. IaEASH
Thus, the deposits might have been sufficient for purposes of the immediate taking of the
landholdings but cannot be claimed as amounts that would excuse the LBPfrom the payment of
interest on the unpaid balance of the compensation due. As discussed at length below, they were
not enough to compensate the petitioners for the potential income the landholdings could have
earned for them if no immediate taking had taken place. Under the circumstances, the State acted
oppressively and was far from "just" in their position to deny the petitioners of the potential
income that the immediate taking of their properties entailed.
Just Compensation from the
110
Prism of the Element of Taking.
Apart from the requirement that compensation for expropriated land must be fair and reasonable,
compensation, to be "just," must also be made without delay. 12 Without prompt payment,
compensation cannot be considered "just" if the property is immediately taken as the property
owner suffers the immediate deprivation of both his land and its fruits or income.
This is the principle at the core of the present case where the petitioners were made to wait for
more than a decade after the taking of their property before they actually received the full
amount of the principal of the just compensation due them. 13 What they have not received to
date is the income of their landholdings corresponding to what they would have received had no
uncompensated taking of these lands been immediately made. This income, in terms of the
interest on the unpaid principal, is the subject of the current litigation.
We recognized in Republic v. Court of Appeals 14 the need for prompt payment and the necessity
of the payment of interest to compensate for any delay in the payment of compensation for
property already taken. We ruled in this case that:
The constitutional limitation of "just compensation" is considered to be the sum equivalent to the
market value of the property, broadly described to be the price fixed by the seller in open market
in the usual and ordinary course of legal action and competition or the fair value of the property
as between one who receives, and one who desires to sell, i[f] fixed at the time of the actual
taking by the government. Thus, if property is taken for public use before compensation is
deposited with the court having jurisdiction over the case, the final compensation must include
interest[s] on its just value to be computed from the time the property is taken to the time when
compensation is actually paid or deposited with the court. In fine, between the taking of the
property and the actual payment, legal interest[s] accrue in order to place the owner in a position
as good as (but not better than) the position he was in before the taking occurred. 15 [Emphasis
supplied.]
Aside from this ruling, Republic notably overturned the Court's previous ruling in National Power
Corporation v. Angas 16 which held that just compensation due for expropriated properties is not
a loan or forbearance of money but indemnity for damages for the delay in payment; since the
interest involved is in the nature of damages rather than earnings from loans, then Art. 2209 of
the Civil Code, which fixes legal interest at 6%, shall apply.
In Republic, the Court recognized that the just compensation due to the landowners for their
expropriated property amounted to an effective forbearance on the part of the State. Applying
the Eastern Shipping Lines ruling, 17 the Court fixed the applicable interest rate at 12% per
annum, computed from the time the property was taken until the full amount of just
compensation was paid, in order to eliminate the issue of the constant fluctuation and inflation of
the value of the currency over time. In the Court's own words:
The Bulacan trial court, in its 1979 decision, was correct in imposing interest[s] on the zonal value
of the property to be computed from the time petitioner instituted condemnation proceedings
and "took" the property in September 1969. This allowance of interest on the amount found to be
the value of the property as of the time of the taking computed, being an effective forbearance, at
12% per annum should help eliminate the issue of the constant fluctuation and inflation of the
value of the currency over time. 18 [Emphasis supplied.] CAIHTE
We subsequently upheld Republic's 12% per annum interest rate on the unpaid expropriation
compensation in the following cases: Reyes v. National Housing Authority, 19 Land Bank of the
Philippines v. Wycoco, 20 Republic v. Court of Appeals, 21 Land Bank of the Philippines v. Imperial,
22 Philippine Ports Authority v. Rosales-Bondoc, 23 and Curata v. Philippine Ports Authority. 24
These were the established rulings that stood before this Court issued the currently assailed
Resolution of December 4, 2009. These would be the rulings this Court shall reverse and deestablish if we maintain and affirm our ruling deleting the 12% interest on the unpaid balance of
compensation due for properties already taken.
Under the circumstances of the present case, we see no compelling reason to depart from the rule
that Republic firmly established. Let it be remembered that shorn of its eminent domain and social
justice aspects, what the agrarian land reform program involves is the purchase by the
government, through the LBP, of agricultural lands for sale and distribution to farmers. As a
purchase, it involves an exchange of values — the landholdings in exchange for the LBP's payment.
In determining the just compensation for this exchange, however, the measure to be borne in
mind is not the taker's gain but the owner's loss 25 since what is involved is the takeover of
private property under the State's coercive power. As mentioned above, in the value-for-value
exchange in an eminent domain situation, the State must ensure that the individual whose
property is taken is not shortchanged and must hence carry the burden of showing that the "just
compensation" requirement of the Bill of Rights is satisfied.
The owner's loss, of course, is not only his property but also its income-generating potential. Thus,
when property is taken, full compensation of its value must immediately be paid to achieve a fair
exchange for the property and the potential income lost. The just compensation is made available
to the property owner so that he may derive income from this compensation, in the same manner
that he would have derived income from his expropriated property. If full compensation is not
paid for property taken, then the State must make up for the shortfall in the earning potential
immediately lost due to the taking, and the absence of replacement property from which income
can be derived; interest on the unpaid compensation becomes due as compliance with the
constitutional mandate on eminent domain and as a basic measure of fairness.
In the context of this case, when the LBP took the petitioners' landholdings without the
corresponding full payment, it became liable to the petitioners for the income the landholdings
would have earned had they not immediately been taken from the petitioners. What is interesting
in this interplay, under the developments of this case, is that the LBP, by taking landholdings
without full payment while holding on at the same time to the interest that it should have paid,
effectively used or retained funds that should go to the landowners and thereby took advantage
of these funds for its own account.
From this point of view, the December 19, 2007 Resolution deleting the award of 12% interest is
not only patently and legally wrong, but is also morally unconscionable for being grossly unfair and
unjust. If the interest on the just compensation due — in reality the equivalent of the fruits or
income of the landholdings would have yielded had these lands not been taken — would be
denied, the result is effectively a confiscatory action by this Court in favor of the LBP. We would be
allowing the LBP, for twelve long years, to have free use of the interest that should have gone to
the landowners. Otherwise stated, if we continue to deny the petitioners' present motion for
reconsideration, we would — illogically and without much thought to the fairness that the
situation demands — uphold the interests of the LBP, not only at the expense of the landowners
but also that of substantial justice as well.
Lest this Court be a party to this monumental unfairness in a social program aimed at fostering
balance in our society, we now have to ring the bell that we have muted in the past, and formally
declare that the LBP's position is legally and morally wrong. To do less than this is to leave the
demands of the constitutional just compensation standard (in terms of law) and of our own
conscience (in terms of morality) wanting and unsatisfied.
The Delay in Payment Issue
Separately from the demandability of interest because of the failure to fully pay for property
already taken, a recurring issue in the case is the attribution of the delay.ITSCED
That delay in payment occurred is not and cannot at all be disputed. While the LBP claimed that it
made initial payments of P411,769,168.32 (out of the principal sum due of P1,383,179,000.00),
the undisputed fact is that the petitioners were deprived of their lands on December 9, 1996
(when titles to their landholdings were cancelled and transferred to the Republic of the
Philippines), and received full payment of the principal amount due them only on May 9, 2008.
In the interim, they received no income from their landholdings because these landholdings had
been taken. Nor did they receive adequate income from what should replace the income potential
of their landholdings because the LBP refused to pay interest while withholding the full amount of
the principal of the just compensation due by claiming a grossly low valuation. This sad state
continued for more than a decade. In any language and by any measure, a lengthy delay in
payment occurred.
111
An important starting point in considering attribution for the delay is that the petitioners
voluntarily offered to sell their landholdings to the government's land reform program; they
themselves submitted their Voluntary Offer to Sell applications to the DAR, and they fully
cooperated with the government's program. The present case therefore is not one where
substantial conflict arose on the issue of whether expropriation is proper; the petitioners
voluntarily submitted to expropriation and surrendered their landholdings, although they
contested the valuation that the government made.
Presumably, had the landholdings been properly valued, the petitioners would have accepted the
payment of just compensation and there would have been no need for them to go to the extent of
filing a valuation case. But, as borne by the records, the petitioners' lands were grossly
undervalued by the DAR, leaving the petitioners with no choice but to file actions to secure what
is justly due them.
The DAR's initial gross undervaluation started the cycle of court actions that followed, where the
LBP eventually claimed that it could not be faulted for seeking judicial recourse to defend the
government's and its own interests in light of the petitioners' valuation claims. This LBP claim, of
course, conveniently forgets that at the root of all these valuation claims and counterclaims was
the initial gross undervaluation by DAR that the LBP stoutly defended. At the end, this
undervaluation was proven incorrect by no less than this Court; the petitioners were proven
correct in their claim, and the correct valuation — more than five-fold the initial DAR valuation —
was decreed and became final.
All these developments cannot now be disregarded and reduced to insignificance. In blunter
terms, the government and the LBP cannot now be heard to claim that they were simply
protecting their interests when they stubbornly defended their undervalued positions before the
courts. The more apt and accurate statement is that they adopted a grossly unreasonable position
and the adverse developments that followed, particularly the concomitant delay, should be
directly chargeable to them.
To be sure, the petitioners were not completely correct in the legal steps they took in their
valuation claims. They initially filed their valuation claim before the DARAB instead of immediately
seeking judicial intervention. The DARAB, however, contributed its share to the petitioners' error
when it failed or refused to act on the valuation petitions for more than three (3) years. Thus, on
top of the DAR undervaluation was the DARAB inaction after the petitioners' landholdings had
been taken. This Court's Decision of February 6, 2007 duly noted this and observed: EIDaAH
It is not controverted that this case started way back on 12 October 1995, when AFC and HPI
voluntarily offered to sell the properties to the DAR. In view of the failure of the parties to agree
on the valuation of the properties, the Complaint for Determination of Just Compensation was
filed before the DARAB on 14 February 1997. Despite the lapse of more than three years from the
filing of the complaint, the DARAB failed to render a decision on the valuation of the land.
Meantime, the titles over the properties of AFC and HPI had already been cancelled and in their
place a new certificate of title was issued in the name of the Republic of the Philippines, even as
far back as 9 December 1996. A period of almost 10 years has lapsed. For this reason, there is no
dispute that this case has truly languished for a long period of time, the delay being mainly
attributable to both official inaction and indecision, particularly on the determination of the
amount of just compensation, to the detriment of AFC and HPI, which to date, have yet to be fully
compensated for the properties which are already in the hands of farmer-beneficiaries, who, due
to the lapse of time, may have already converted or sold the land awarded to them.
Verily, these two cases could have been disposed with dispatch were it not for LBP's counsel
causing unnecessary delay. At the inception of this case, DARAB, an agency of the DAR which was
commissioned by law to determine just compensation, sat on the cases for three years, which was
the reason that AFC and HPI filed the cases before the RTC. We underscore the pronouncement of
the RTC that "the delay by DARAB in the determination of just compensation could only mean the
reluctance of the Department of Agrarian Reform and the Land Bank of the Philippines to pay the
claim of just compensation by corporate landowners."
To allow the taking of landowners' properties, and to leave them empty-handed while
government withholds compensation is undoubtedly oppressive. [Emphasis supplied.]
These statements cannot but be true today as they were when we originally decided the case and
awarded 12% interest on the balance of the just compensation due. While the petitioners were
undisputedly mistaken in initially seeking recourse through the DAR, this agency itself — hence,
the government — committed a graver transgression when it failed to act at all on the petitioners'
complaints for determination of just compensation.
In sum, in a balancing of the attendant delay-related circumstances of this case, delay should be
laid at the doorsteps of the government, not at the petitioners'. We conclude, too, that the
government should not be allowed to exculpate itself from this delay and should suffer all the
consequences the delay caused.
The LBP's arguments on the
applicability of cases imposing
12% interest
The LBP claims in its Comment that our rulings in Republic v. Court of Appeals, 26 Reyes v.
National Housing Authority, 27 and Land Bank of the Philippines v. Imperial, 28 cannot be applied
to the present case.
According to the LBP, Republic is inapplicable because, first, the landowners in Republic remained
unpaid, notwithstanding the fact that the award for just compensation had already been fixed by
final judgment; in the present case, the Court already acknowledged that "pertinent amounts"
were deposited in favor of the landowners within 14 months from the filing of their complaint.
Second, while Republic involved an ordinary expropriation case, the present case involves
expropriation for agrarian reform. Finally, the just compensation in Republic remained unpaid
notwithstanding the finality of judgment, while the just compensation in the present case was
immediately paid in full after LBP received a copy of the Court's resolution.
We find no merit in these assertions. SHECcD
As we discussed above, the "pertinent amounts" allegedly deposited by LBP were mere partial
payments that amounted to a measly 5% of the actual value of the properties expropriated. They
could be the basis for the immediate taking of the expropriated property but by no stretch of the
imagination can these nominal amounts be considered "pertinent" enough to satisfy the full
requirement of just compensation — i.e., the full and fair equivalent of the expropriated property,
taking into account its income potential and the foregone income lost because of the immediate
taking.
We likewise find no basis to support the LBP's theory that Republic and the present case have to
be treated differently because the first involves a "regular" expropriation case, while the present
case involves expropriation pursuant to the country's agrarian reform program. In both cases, the
power of eminent domain was used and private property was taken for public use. Why one
should be different from the other, so that the just compensation ruling in one should not apply to
the other, truly escapes us. If there is to be a difference, the treatment of agrarian reform
expropriations should be stricter and on a higher plane because of the government's societal
concerns and objectives. To be sure, the government cannot attempt to remedy the ills of one
sector of society by sacrificing the interests of others within the same society.
Finally, we note that the finality of the decision (that fixed the value of just compensation) in
Republic was not a material consideration for the Court in awarding the landowners 12% interest.
The Court, in Republic, simply affirmed the RTC ruling imposing legal interest on the amount of
just compensation due. In the process, the Court determined that the legal interest should be 12%
after recognizing that the just compensation due was effectively a forbearance on the part of the
government. Had the finality of the judgment been the critical factor, then the 12% interest
should have been imposed from the time the RTC decision fixing just compensation became final.
Instead, the 12% interest was imposed from the time that the Republic commenced
condemnation proceedings and "took" the property.
The LBP additionally asserts that the petitioners erroneously relied on the ruling in Reyes v.
National Housing Authority. The LBP claims that we cannot apply Reyesbecause it involved just
112
compensation that remained unpaid despite the finality of the expropriation decision. LBP's point
of distinction is that just compensation was immediately paid in the present case upon the Court's
determination of the actual value of the expropriated properties. LBP claims, too, that in Reyes,
the Court established that the refusal of the NHA to pay just compensation was unfounded and
unjustified, whereas the LBP in the present case clearly demonstrated its willingness to pay just
compensation. Lastly, in Reyes, the records showed that there was an outstanding balance that
ought to be paid, while the element of an outstanding balance is absent in the present case.
Contrary to the LBP's opinion, the imposition of the 12% interest in Reyes did not depend on
either the finality of the decision of the expropriation court, or on the finding that the NHA's
refusal to pay just compensation was unfounded and unjustified. Quite clearly, the Court imposed
12% interest based on the ruling in Republic v. Court of Appeals that ". . . if property is taken for
public use before compensation is deposited with the court having jurisdiction over the case,the
final compensation must include interest[s] on its just value to be computed from the time the
property is taken to the time when compensation is actually paid or deposited with the court. In
fine, between the taking of the property and the actual payment, legal interest[s] accrue in order
to place the owner in a position as good as (but not better than) the position he was in before the
taking occurred." 29 This is the same legal principle applicable to the present case, as discussed
above.
While the LBP immediately paid the remaining balance on the just compensation due to the
petitioners after this Court had fixed the value of the expropriated properties, it overlooks one
essential fact — from the time that the State took the petitioners' properties until the time that
the petitioners were fully paid, almost 12 long years passed. This is the rationale for imposing the
12% interest — in order to compensate the petitioners for the income they would have made had
they been properly compensated for their properties at the time of the taking. DaScAI
Finally, the LBP insists that the petitioners quoted our ruling in Land Bank of the Philippines v.
Imperial out of context. According to the LBP, the Court imposed legal interest of 12% per annum
only after December 31, 2006, the date when the decision on just compensation became final.
The LBP is again mistaken. The Imperial case involved land that was expropriated pursuant to
Presidential Decree No. 27, 30 and fell under the coverage of DAR Administrative Order (AO) No.
13. 31 This AO provided for the payment of a 6% annual interest if there is any delay in payment
of just compensation. However,Imperial was decided in 2007 and AO No. 13 was only effective up
to December 2006. Thus, the Court, relying on our ruling in the Republic case, applied the
prevailing 12% interest ruling to the period when the just compensation remained unpaid after
December 2006. It is for this reason that December 31, 2006 was important, not because it was
the date of finality of the decision on just compensation.
The 12% Interest Rate and
the Chico-Nazario Dissent
To fully reflect the concerns raised in this Court's deliberations on the present case, we feel it
appropriate to discuss the Justice Minita Chico-Nazario's dissent from the Court's December 4,
2009 Resolution.
While Justice Chico-Nazario admitted that the petitioners were entitled to the 12% interest, she
saw it appropriate to equitably reduce the interest charges from P1,331,124,223.05 to
P400,000,000.00. In support of this proposal, she enumerated various cases where the Court,
pursuant to Article 1229 of the Civil Code, 32equitably reduced interest charges.
We differ with our esteemed colleague's views on the application of equity.
While we have equitably reduced the amount of interest awarded in numerous cases in the past,
those cases involved interest that was essentially consensual in nature,i.e., interest stipulated in
signed agreements between the contracting parties. In contrast, the interest involved in the
present case "runs as a matter of law and follows as a matter of course from the right of the
landowner to be placed in as good a position as money can accomplish, as of the date of taking."
33
Furthermore, the allegedly considerable payments made by the LBP to the petitioners cannot be a
proper premise in denying the landowners the interest due them under the law and established
jurisprudence. If the just compensation for the landholdings is considerable, this compensation is
not undue because the landholdings the owners gave up in exchange are also similarly
considerable — AFC gave up an aggregate landholding of 640.3483 hectares, while HPI's gave up
805.5308 hectares. When the petitioners surrendered these sizeable landholdings to the
government, the incomes they gave up were likewise sizeable and cannot in any way be
considered miniscule. The incomes due from these properties, expressed as interest, are what the
government should return to the petitioners after the government took over their lands without
full payment of just compensation. In other words, the value of the landholdings themselves
should be equivalent to the principal sum of the just compensation due; interest is due and should
be paid to compensate for the unpaid balance of this principal sum after taking has been
completed. This is the compensation arrangement that should prevail if such compensation is to
satisfy the constitutional standard of being "just." TEAcCD
Neither can LBP's payment of the full compensation due before the finality of the judgment of this
Court justify the reduction of the interest due them. To rule otherwise would be to forget that the
petitioners had to wait twelve years from the time they gave up their lands before the
government fully paid the principal of the just compensation due them. These were twelve years
when they had no income from their landholdings because these landholdings have immediately
been taken; no income, or inadequate income, accrued to them from the proceeds of
compensation payment due them because full payment has been withheld by government.
If the full payment of the principal sum of the just compensation is legally significant at all under
the circumstances of this case, the significance is only in putting a stop to the running of the
interest due because the principal of the just compensation due has been paid. To close our eyes
to these realities is to condone what is effectively a confiscatory action in favor of the LBP.
That the legal interest due is now almost equivalent to the principal to be paid is not per se an
inequitable or unconscionable situation, considering the length of time the interest has remained
unpaid — almost twelve long years. From the perspective of interest income, twelve years would
have been sufficient for the petitioners to double the principal, even if invested conservatively,
had they been promptly paid the principal of the just compensation due them. Moreover, the
interest, however enormous it may be, cannot be inequitable and unconscionable because it
resulted directly from the application of law and jurisprudence — standards that have taken into
account fairness and equity in setting the interest rates due for the use or forebearance of money.
If the LBP sees the total interest due to be immense, it only has itself to blame, as this interest
piled up because it unreasonably acted in its valuation of the landholdings and consequently failed
to promptly pay the petitioners. To be sure, the consequences of this failure — i.e., the enormity
of the total interest due and the alleged financial hemorrhage the LBP may suffer — should not be
the very reason that would excuse it from full compliance. To so rule is to use extremely flawed
logic. To so rule is to disregard the question of how the LBP, a government financial institution
that now professes difficulty in paying interest at 12% per annum, managed the funds that it failed
to pay the petitioners for twelve long years.
It would be utterly fallacious, too, to argue that this Court should tread lightly in imposing
liabilities on the LBP because this bank represents the government and, ultimately, the public
interest. Suffice it to say that public interest refers to what will benefit the public, not necessarily
the government and its agencies whose task is to contribute to the benefit of the public. Greater
public benefit will result if government agencies like the LBP are conscientious in undertaking its
tasks in order to avoid the situation facing it in this case. Greater public interest would be served if
it can contribute to the credibility of the government's land reform program through the
conscientious handling of its part of this program.
As our last point, equity and equitable principles only come into full play when a gap exists in the
law and jurisprudence. 34 As we have shown above, established rulings of this Court are in place
for full application to the present case. There is thus no occasion for the equitable consideration
that Justice Chico-Nazario suggested.
The Amount Due the Petitioners
as Just Compensation
113
As borne by the records, the 12% interest claimed is only on the difference between the price of
the expropriated lands (determined with finality to be P1,383,179,000.00) and the amount of
P411,769,168.32 already paid to the petitioners. The difference between these figures amounts to
the remaining balance of P971,409,831.68 that was only paid on May 9, 2008. DITEAc
As above discussed, this amount should bear interest at the rate of 12% per annum from the time
the petitioners' properties were taken on December 9, 1996 up to the time of payment. At this
rate, the LBP now owes the petitioners the total amount of One Billion Three Hundred Thirty-One
Million One Hundred Twenty-Four Thousand Two Hundred Twenty-Three and 05/100 Pesos
(P1,331,124,223.05), computed as follows:
Just CompensationP971,409,831.68
Legal Interest from 12/09/1996
To 05/09/2008 @ 12%/annum
12/09/1996 to 12/31/199623 days7,345,455.17
01/01/1997 to 12/31/200711 years1,282,260,977.82
01/01/2008 to 05/09/2008130 days41,517,790.07
––––––––––––––
P1,331,124,223.05 35
=============
The Immutability of Judgment Issue
As a rule, a final judgment may no longer be altered, amended or modified, even if the alteration,
amendment or modification is meant to correct what is perceived to be an erroneous conclusion
of fact or law and regardless of what court, be it the highest Court of the land, rendered it. 36 In
the past, however, we have recognized exceptions to this rule by reversing judgments and
recalling their entries in the interest of substantial justice and where special and compelling
reasons called for such actions.
Notably, in San Miguel Corporation v. National Labor Relations Commission, 37 Galman v.
Sandiganbayan, 38 Philippine Consumers Foundation v. National Telecommunications
Commission, 39 and Republic v. de los Angeles, 40 we reversed our judgment on the second
motion for reconsideration, while in Vir-Jen Shipping and Marine Services v. National Labor
Relations Commission, 41 we did so on a third motion for reconsideration. In Cathay Pacific v.
Romillo 42 and Cosio v. de Rama,43 we modified or amended our ruling on the second motion for
reconsideration. More recently, in the cases of Muñoz v. Court of Appeals, 44 Tan Tiac Chiong v.
Hon. Cosico, 45 Manotok IV v. Barque, 46 and Barnes v. Padilla, 47 we recalled entries of judgment
after finding that doing so was in the interest of substantial justice. InBarnes, we said:
. . . Phrased elsewise, a final and executory judgment can no longer be attacked by any of the
parties or be modified, directly or indirectly, even by the highest court of the land.
However, this Court has relaxed this rule in order to serve substantial justice considering (a)
matters of life, liberty, honor or property, (b) the existence of special or compelling circumstances,
(c) the merits of the case, (d) a cause not entirely attributable to the fault or negligence of the
party favored by the suspension of the rules, (e) a lack of any showing that the review sought is
merely frivolous and dilatory, and (f) the other party will not be unjustly prejudiced thereby.
Invariably, rules of procedure should be viewed as mere tools designed to facilitate the attainment
of justice. Their strict and rigid application, which would result in technicalities that tend to
frustrate rather than promote substantial justice, must always be eschewed. Even the Rules of
Court reflects this principle. The power to suspend or even disregard rules can be so pervasive and
compelling as to alter even that which this Court itself had already declared to be final. 48
[Emphasis supplied.]
That the issues posed by this case are of transcendental importance is not hard to discern from
these discussions. A constitutional limitation, guaranteed under no less than the all-important Bill
of Rights, is at stake in this case: how can compensation in an eminent domain be "just" when the
payment for the compensation for property already taken has been unreasonably delayed? To
claim, as the assailed Resolution does, that only private interest is involved in this case is to forget
that an expropriation involves the government as a necessary actor. It forgets, too, that under
eminent domain, the constitutional limits or standards apply to government who carries the
burden of showing that these standards have been met. Thus, to simply dismiss this case as a
private interest matter is an extremely shortsighted view that this Court should not leave
uncorrected. CaTSEA
As duly noted in the above discussions, this issue is not one of first impression in our jurisdiction;
the consequences of delay in the payment of just compensation have been settled by this Court in
past rulings. Our settled jurisprudence on the issue alone accords this case primary importance as
a contrary ruling would unsettle, on the flimsiest of grounds, all the rulings we have established in
the past.
More than the stability of our jurisprudence, the matter before us is of transcendental importance
to the nation because of the subject matter involved — agrarian reform, a societal objective that
the government has unceasingly sought to achieve in the past half century. This reform program
and its objectives would suffer a major setback if the government falters or is seen to be faltering,
wittingly or unwittingly, through lack of good faith in implementing the needed reforms. Truly,
agrarian reform is so important to the national agenda that the Solicitor General, no less,
pointedly linked agricultural lands, its ownership and abuse, to the idea of revolution. 49 This
linkage, to our mind, remains valid even if the landowner, not the landless farmer, is at the
receiving end of the distortion of the agrarian reform program.
As we have ruled often enough, rules of procedure should not be applied in a very rigid, technical
sense; rules of procedure are used only to help secure, not override, substantial justice. 50 As we
explained in Ginete v. Court of Appeals: 51
Let it be emphasized that the rules of procedure should be viewed as mere tools designed to
facilitate the attainment of justice. Their strict and rigid application, which would result in
technicalities that tend to frustrate rather than promote substantial justice, must always be
eschewed. Even the Rules of Court reflect this principle. The power to suspend or even disregard
rules can be so pervasive and compelling as to alter even that which this Court itself has already
declared to be final, as we are now constrained to do in the instant case.
xxx xxx xxx
The emerging trend in the rulings of this Court is to afford every party litigant the amplest
opportunity for the proper and just determination of his cause, free from the constraints of
technicalities. Time and again, this Court has consistently held that rules must not be applied
rigidly so as not to override substantial justice. 52 [Emphasis supplied.]
Similarly, in de Guzman v. Sandiganbayan, 53 we had occasion to state:
The Rules of Court was conceived and promulgated to set forth guidelines in the dispensation of
justice but not to bind and chain the hand that dispenses it, for otherwise, courts will be mere
slaves to or robots of technical rules, shorn of judicial discretion. That is precisely why courts in
rendering justice have always been, as they ought to be, conscientiously guided by the norm that
when on the balance, technicalities take a backseat against substantive rights, and not the other
way around. Truly then, technicalities, in the appropriate language of Justice Makalintal, "should
give way to the realities of the situation". 54 [Emphasis supplied.]
We made the same recognition in Barnes, 55 on the underlying premise that a court's primordial
and most important duty is to render justice; in discharging the duty to render substantial justice,
it is permitted to re-examine even a final and executory judgment. aSTHDc
Based on all these considerations, particularly the patently illegal and erroneous conclusion that
the petitioners are not entitled to 12% interest, we find that we are duty-bound to re-examine
and overturn the assailed Resolution. We shall completely and inexcusably be remiss in our duty
as defenders of justice if, given the chance to make the rectification, we shall let the opportunity
pass.
Attorney's Fees
We are fully aware that the RTC has awarded the petitioners attorney's fees when it fixed the just
compensation due and decreed that interest of 12% should be paid on the balance outstanding
after the taking of the petitioners' landholdings took place. The petitioners, however, have not
114
raised the award of attorney's fees as an issue in the present motion for reconsideration. For this
reason, we shall not touch on this issue at all in this Resolution.
WHEREFORE, premises considered, we GRANT the petitioners' motion for reconsideration. The
Court En Banc's Resolution dated December 4, 2009, as well as the Third Division's Resolutions
dated April 30, 2008 and December 19, 2007, are hereby REVERSED and SET ASIDE.
The respondent Land Bank of the Philippines is hereby ORDERED to pay petitioners Apo Fruits
Corporation and Hijo Plantation, Inc. interest at the rate of 12% per annum on the unpaid balance
of the just compensation, computed from the date the Government took the properties on
December 9, 1996, until the respondent Land Bank of the Philippines paid on May 9, 2008 the
balance on the principal amount.
Unless the parties agree to a shorter payment period, payment shall be in monthly installments at
the rate of P60,000,000.00 per month until the whole amount owing, including interest on the
outstanding balance, is fully paid.
Costs against the respondent Land Bank of the Philippines.
SO ORDERED.
Carpio Morales, Velasco, Jr., Del Castillo, Villarama, Jr., Perez, Mendoza and Sereno, JJ., concur.
Corona, C.J. and Nachura, J., join the dissent of J. Bersamin.
Carpio and Abad, JJ., are on wellness leave.
Leonardo-de Castro, J., I maintain my vote in the December 4, 2009 Resolution.
Peralta, J., is on leave.
Bersamin, J., I dissent.
Separate Opinions
BERSAMIN, J., dissenting:
By their motion for reconsideration, the petitioners seek the review and setting aside of the
resolution dated December 4, 2009, 1 whereby the Court disposed as follows:
WHEREFORE, the Court denies the petitioners' second motion for reconsideration (with respect to
the denial of the award of legal interest and attorney's fees), and reiterates the decision dated
February 6, 2007 and the resolution dated December 19, 2007 of the Third Division. IHcTDA
SO ORDERED.
The petitioners contend that the doctrine of immutability of judgment does not apply because of
the several special and compelling considerations exempting them from the application of the
doctrine, namely: (a) that they suffered substantial injustice from the patently unjust denial of
interest; (b) that their case, being impressed with public interest, had transcendental importance;
and (c) that the fact that the Court en banc had accepted the referral by the Third Division
indicated that the case deserved another review. They insist that the legal interest due on the just
compensation paid to them should be 12% per annum, a rate that was not subject to reduction.
The majority vote to grant the motion for reconsideration. Alas, I cannot join the majority.
I dissent.
The resolution dated December 19, 2007 promulgated by the Third Division (deleting the award of
interest of 12% per annum on the just compensation and the award of attorney's fees) already
attained finality. Entry of judgment was in fact issued on May 16, 2008.
In order to accord with the doctrine of immutability of judgment, the resolution dated December
4, 2009 rejected the petitioners' second motion for reconsideration (with respect to the denial of
the award of legal interest and attorney's fees), pointing out that granting the motion would
render nugatory the time-honored doctrine of immutability; that none of the recognized
exceptions to the doctrine of immutability applied to the petitioners; that even if the reopening of
the final judgment was allowed, the petitioners were still not entitled to recover interest on the
just compensation because there had been no delay in paying their just compensation; and that
granting the motion would produce more harm than good, considering that such reopening of a
final judgment would surely open the floodgates to petitions for the resurrection of litigations
long ago settled.
I concede that the immutability doctrine admits several exceptions, such as: (a) the correction of
clerical errors; (b) the nunc pro tunc entries that cause no prejudice to any party; (c) void
judgments; and (d) whenever circumstances transpire after the finality of the decision rendering
its execution unjust and inequitable. Yet, my review of the arguments raised in the petitioners'
motion for reconsideration discloses no compelling reason to deviate from the holding that none
of the exceptions applies herein. Consequently, I urge that we should continue to hold that the
matters involved herein were different from any of those involved in the exceptions. I do not think
that the petitioners established the existence of any of the special and compelling considerations
that supposedly exempted this case from the application of the immutability doctrine.
Neither was it unjust to deny interest to the petitioners, who were not entitled to interest in the
face of the showing that Land Bank of the Philippines (LBP) had not unduly delayed paying their
just compensation.
In this regard, I consider worth reiterating the following relevant portions of the questioned
resolution of December 4, 2009, to wit:
No Interest is Due Unless There is Delay
In Payment of Just Compensation
Even assuming, for the sake of argument, that the Court allows the reopening of a final judgment,
AFC and HPI are still not entitled to recover interest on the just compensation and attorney's fees.
xxx xxx xxx
In Land Bank of the Philippines v. Wycoco, however, the Court came to explicitly rule that interest
is to be imposed on the just compensation only in case of delay in its payment, which fact must be
sufficiently established. Significantly, Wycoco was moored on Article 2209, Civil Code, which
provides: cSDIHT
Article 2209.If the obligation consists in the payment of money and the debtor incurs in delay, the
indemnity for damages, there being no stipulation to the contrary, shall be the payment of the
interest agreed upon, and in the absence of stipulation, the legal interest, which is six per cent per
annum. (1108)
The history of this case proves that Land Bank did not incur delay in the payment of the just
compensation. As earlier mentioned, after the petitioners voluntarily offered to sell their lands on
October 12, 1995, DAR referred their VOS applications to Land Bank for initial valuation. Land
Bank initially fixed the just compensation at P165,484.47/hectare,that is, P86,900,925.88, for AFC,
and P164,478,178.14, for HPI. However, both petitioners rejected Land Bank's initial valuation,
prompting Land Bank to open deposit accounts in the petitioners' names, and to credit in said
accounts the amounts equivalent to their valuations. Although AFC withdrew the amount of
P26,409,549.86, while HPI withdrew P45,481,706.76, they still filed with DARAB separate
complaints for determination of just compensation. When DARAB did not act upon their
complaints for more than three years, AFC and HPI commenced their respective actions for
determination of just compensation in the Tagum City RTC, which rendered its decision on
September 25, 2001.
It is true that Land Bank sought to appeal the RTC's decision to the CA, by filing a notice of appeal;
and that Land Bank filed in March 2003 its petition for certiorari in the CA only because the RTC
did not give due course to its appeal. Any intervening delay thereby entailed could not be
attributed to Land Bank, however, considering that assailing an erroneous order before a higher
court is a remedy afforded by law to every losing party, who cannot thus be considered to act in
bad faith or in an unreasonable manner as to make such party guilty of unjustified delay. As stated
in Land Bank of the Philippines v. Kumassie Plantation:
The mere fact that LBP appealed the decisions of the RTC and the Court of Appeals does not mean
that it deliberately delayed the payment of just compensation to KPCI. . . . It may disagree with
DAR and the landowner as to the amount of just compensation to be paid to the latter and may
also disagree with them and bring the matter to court for judicial determination. This makes LBP
an indispensable party in cases involving just compensation for lands taken under the Agrarian
Reform Program, with a right to appeal decisions in such cases that are unfavorable to it. Having
only exercised its right to appeal in this case, LBP cannot be penalized by making it pay for
interest.
The Third Division justified its deletion of the award of interest thuswise:
115
AFC and HPI now blame LBP for allegedly incurring delay in the determination and payment of just
compensation. However, the same is without basis as AFC and HPI's proper recourse after
rejecting the initial valuations of respondent LBP was to bring the matter to the RTC acting as a
SAC, and not to file two complaints for determination of just compensation with the DAR, which
was just circuitous as it had already determined the just compensation of the subject properties
taken with the aid of LBP.
In Land Bank of the Philippines v. Wycoco, citing Reyes v. National Housing Authority and Republic
v. Court of Appeals, this Court held that the interest of 12% per annum on the just compensation
is due the landowner in case of delay in payment, which will in effect make the obligation on the
part of the government one of forbearance. On the other hand, interest in the form of damages
cannot be applied, where there was prompt and valid payment of just compensation. Thus:
The constitutional limitation of "just compensation" is considered to be the sum equivalent to the
market value of the property, broadly described to be the price fixed by the seller in open market
in the usual and ordinary course of legal action and competition or the fair value of the property
as between one who receives, and one who desires to sell, it being fixed at the time of the actual
taking by the government. Thus, if property is taken for public use before compensation is
deposited with the court having jurisdiction over the case, the final compensation must include
interests on its just value to be computed from the time the property is taken to the time when
compensation is actually paid or deposited with the court. In fine, between the taking of the
property and the actual payment, legal interests accrue in order to place the owner in a position
as good as (but not better than) the position he was in before the taking occurred. HICEca
. . . This allowance of interest on the amount found to be the value of the property as of the time
of the taking computed, being an effective forbearance, at 12%per annum should help eliminate
the issue of the constant fluctuation and inflation of the value of the currency over time. Article
1250 of the Civil Code, providing that, in case of extraordinary inflation or deflation, the value of
the currency at the time of the establishment of the obligation shall be the basis for the payment
when no agreement to the contrary is stipulated, has strict application only to contractual
obligations. In other words, a contractual agreement is needed for the effects of extraordinary
inflation to be taken into account to alter the value of the currency.
It is explicit from LBP v. Wycoco that interest on the just compensation is imposed only in case of
delay in the payment thereof which must be sufficiently established. Given the foregoing, we find
that the imposition of interest on the award of just compensation is not justified and should
therefore be deleted.
It must be emphasized that "pertinent amounts were deposited in favor of AFC and HPI within
fourteen months after the filing by the latter of the Complaint for determination of just
compensation before the RTC". It is likewise true that AFC and HPI already collected P149.6 and
P262 million, respectively, representing just compensation for the subject properties. Clearly,
there is no unreasonable delay in the payment of just compensation which should warrant the
award of 12% interest per annum in AFC and HPI's favor.
The foregoing justification remains correct, and is reiterated herein. 2
As far as I am concerned, nothing in the motion for reconsideration effectively refutes the
aforequoted ratiocination rendered in the resolution of December 4, 2009. With LBP not being
guilty of delay in paying to the petitioners their just compensation, any plea of suffering
substantial injustice from the denial of interest should be justifiably rejected.
Lastly, I cannot bring myself to agree that this case is impressed at all with public interest,
involving as it does only a "private claim for interest and attorney's fees which cannot even be
classified as unprecedented," which "does not qualify either as a substantial or transcendental
matter, or as an issue of paramount public interest for no special or compelling circumstance was
present to warrant the relaxation of the doctrine of immutability in favor of the petitioners." 3
ACCORDINGLY, I vote to deny the petitioners' motion for reconsideration and to uphold the
resolution dated December 4, 2009.
Footnotes
1.While the petitioners owned a total of 1,454.8791 hectares based on the landholdings stated in
this Court's February 6, 2007 Decision, the RTC, in its decision, fixed just compensation for
1,388.6027 hectares of land.
2.Retired from the Court on December 5, 2009.
3.See Masikip v. City of Pasig, G.R. No. 136349, January 23, 2006, 479 SCRA 391, citing Visayan
Refining Co. v. Camus, 40 Phil. 550, 558-559 (1919).
4.See Manapat v. Court of Appeals, G.R. Nos. 110478, 116176 and 116491-503, October 15, 2007,
536 SCRA 32.
5.See Heirs of Alberto Saguitan v. City of Mandaluyong, G.R. No. 135087, March 14, 2000, 328
SCRA 137.
6.Id., citing City of Manila v. Chinese Community of Manila, 40 Phil. 349 (1919).
7.The authority to exercise the power of eminent domain was expressly conferred to the
Philippine Government through Section 63 of the Philippine Bill of 1902, which states:
That the Government of the Philippine Islands is hereby authorized, subject to the limitations and
conditions prescribed in this Act, to acquire, require, hold, maintain, and convey title to real and
personal property, and may acquire real estate for public uses by the exercise of the right of
eminent domain. (Act of Congress of July 1, 1902.)
Section 74 of the same law, which deals with the authority of the Philippine Government to grant
franchises and concessions, provides:
That the Government of the Philippine Islands may grant franchises, privileges, and concessions,
including the authority to exercise the right of eminent domain for the construction and operation
of works of public utility and service . . .: Provided, That no private property shall be taken for any
purpose under this section without just compensation paid or tendered therefor . . . .
More specifically, Section 3 of the Jones Act (of 1916) provides that "[p]rivate property shall not
be taken for public use without just compensation."
See Visayan Refining Co. v. Camus, supra note 3.
8.We derived the concept of "just compensation" from the last clause of the Fifth Amendment to
the United States Constitution, which reads: "No person shall be held to answer for a capital, or
otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases
arising in the land or naval forces, or in the Militia, when in actual service in time of War or public
danger; nor shall any person be subject for the same offence to be twice put in jeopardy of life or
limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived
of life, liberty, or property, without due process of law; nor shall private property be taken for
public use, without just compensation."
The Fifth Amendment does not prohibit the government from taking its citizens' property; rather,
it merely prohibits the government from taking property without paying just compensation. (26
Am. Jur. 2d Eminent Domain § 3, citing Diamond Bar Cattle Co. v. U.S., 168 F.3d 1209 [10th Cir.
1999].) It is designed to secure compensation, not to limit governmental interference with
property rights. (Id., citing Preseault v. I.C.C., 494 U.S. 1, 110 S. Ct. 914, 108 L. Ed. 2d 1 [1990].) It
prevents the legislature (and other government actors) from depriving private persons of vested
property rights except for a "public use" and upon payment of "just compensation." (Id., citing
Landgraf v. USI Film Products, 511 U.S. 244, 114 S. Ct. 1522, 128 L. Ed. 2d 229 [1994].)
9.G.R. No. 157206, June 27, 2008, 556 SCRA 102, 116-117.
10.Id.
11.P86,900,925.88 for the land of AFC and P164,478,178.14 for HPI.
12.Land Bank v. Rodriguez, G.R. No. 148892, May 6, 2010.
13.Land Bank of the Philippines v. Orilla, supra note 9, at 117.
14.G.R. No. 146587, July 2, 2002, 383 SCRA 611.
15.Id. at 622-623.
16.G.R. Nos. 60225-26, May 8, 1992, 208 SCRA 542.
17.In Eastern Shipping Lines, Inc. v. Court of Appeals (G.R. No. 97412, July 12, 1994, 234 SCRA 78),
we said:
116
1. When the obligation is breached, and it consists in the payment of a sum of money, i.e., a loan
or forbearance of money, the interest due should be that which may have been stipulated in
writing. Furthermore, the interest due shall itself earn legal interest from the time it is judicially
demanded. In the absence of stipulation, the rate of interest shall be 12% per annum to be
computed from default, i.e., from judicial or extrajudicial demand under and subject to the
provisions of Article 1169 of the Civil Code.
2. When an obligation, not constituting a loan or forbearance of money, is breached, an interest
on the amount of damages awarded may be imposed at the discretion of the court at the rate of
6% per annum. No interest, however, shall be adjudged on unliquidated claims or damages except
when or until the demand can be established with reasonable certainty. Accordingly, where the
demand is established with reasonable certainty, the interest shall begin to run from the time the
claim is made judicially or extrajudicially (Art. 1169, Civil Code) but when such certainty cannot be
so reasonably established at the time the demand is made, the interest shall begin to run only
from the date the judgment of the court is made (at which time the quantification of damages
may be deemed to have been reasonably ascertained). The actual base for the computation of
legal interest shall, in any case, be on the amount finally adjudged.
3. When the judgment of the court awarding a sum of money becomes final and executory, the
rate of legal interest, whether the case falls under paragraph 1 or paragraph 2, above, shall be
12% per annum from such finality until its satisfaction, this interim period being deemed to be by
then an equivalent to a forbearance of credit.
18.Supra note 12.
19.G.R. No. 147511, January 20, 2003, 395 SCRA 494.
20.G.R. No. 140160, January 13, 2004, 419 SCRA 67.
21.G.R. No. 147245, March 31, 2005, 454 SCRA 516.
22.G.R. No. 157753, February 12, 2007, 515 SCRA 449.
23.G.R. No. 173392, August 24, 2007, 531 SCRA 198.
24.G.R. Nos. 154211-12, June 22, 2009, 590 SCRA 214.
25.Province of Tayabas v. Perez, 66 Phil. 467; J.M. Tuazon & Co., Inc. v. Land Tenure
Administration, No. L-21064, February 18, 1970, 31 SCRA 413; Municipality of Daet v. Court of
Appeals, No. L-35861, October 18, 1979, 93 SCRA 503; Manotok v. National Housing Authority, No.
L-55166, May 21, 1987, 150 SCRA 89.
26.Supra note 14.
27.Supra note 19.
28.Supra note 22.
29.Supra note 14.
30.Decreeing the Emancipation of Tenants from the Bondage of the Soil, Transferring to Them the
Ownership of the Land They Till and Providing the Instruments and Mechanisms Therefor.
31.Rules and Regulations Governing the Grant of Increment of Six Percent (6%) Yearly Interest
Compounded Annually on Lands Covered by Presidential Decree No. 27 and Executive Order No.
228 (Effective October 21, 1994). Amended by DAR AO No. 02, series of 2004 (Issued on
November 4, 2004).
32.Article 1229 states: "The judge shall equitably reduce the penalty when the principal obligation
has been partly or irregularly complied with by the debtor."
33.Republic v. Juan, G.R. No. L-24740, July 30, 1979, 92 SCRA 26; citing 30 CJS 230.
34.See Parent-Teachers' Association of St. Mathew Christian Academy v. Metropolitan Bank and
Trust Co., G.R. No. 176518, March 2, 2010, citing Tirazona v. Philippine EDS Techno-Service, Inc.
(PET, Inc.), G.R. No. 169712, January 20, 2009, 576 SCRA 625, 626.
35.Rollo, p. 1337.
36.Equitable Banking Corp. v. Sadac, G.R. No. 164772, June 8, 2006, 490 SCRA 380, 416-417.
37.G.R. No. 82467, June 29, 1989, 174 SCRA 510.
38.G.R. No. L-72670, September 12, 1986, 144 SCRA 43.
39.G.R. No. L-63318, August 18, 1984, 131 SCRA 200.
40.G.R. No. L-26112, October 4, 1971, 41 SCRA 422.
41.G.R. No. L-58011, November 18, 1983, 125 SCRA 577.
42.G.R. No. L-64276, August 12, 1986, 143 SCRA 396.
43.G.R. No. L-18452, May 20, 1966, 17 SCRA 207.
44.G.R. No. 125451, January 20, 2000, 322 SCRA 741.
45.434 Phil. 753 (2002).
46.G.R. No. 162335, December 18, 2008, 574 SCRA 468.
47.482 Phil. 903 (2004).
48.Id. at 915.
49.Oral arguments at the Supreme Court, Hacienda Luisita case, G.R. No. 171101, August 26, 2010.
50.Gregorio v. Court of Appeals, G.R. No. L-43511, July 28, 1976, 72 SCRA 121; Mc Entee v.
Manotoc, G.R. No. L-14968, October 27, 1961, 3 SCRA 279; Lim Tanhu v. Ramolete, G.R. No. L40098, August 29, 1975, 66 SCRA 441.
51.G.R. No. 127596, September 24, 1998, 292 SCRA 38.
52.Id. at 51-52.
53.326 Phil. 182 (1996).
54.Id. at 191.
55.Supra note 47.
BERSAMIN, J., dissenting:
1.Rollo, pp. 1428-1448.
2.Id., pp. 1440-1446; all underscorings are part of the original text.
3.Id., p. 1439.
117
LANDBANK vs RIVERA
FIRST DIVISION
[G.R. No. 182431. November 17, 2010.]
LAND BANK OF THE PHILIPPINES, petitioner, vs. ESTHER ANSON RIVERA, ANTONIO G. ANSON AND
CESAR G. ANSON, respondents.
DECISION
PEREZ, J p:
This is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure filed
by Petitioner Land Bank of the Philippines (LBP) assailing the Decision1 of the Court of Appeals
dated 9 October 2007 in CA G.R. SP No. 87463, ordering the payment by LBP of just compensation
and interest in favor of respondents Esther Anson Rivera, Antonio G. Anson and Cesar G. Anson,
and at the same time directed LBP to pay the costs of suit. Likewise assailed is the Resolution 2 of
the Court of Appeals dated 18 March 2008 denying the Motion for Reconsideration of LBP. 3
The respondents are the co-owners of a parcel of agricultural land embraced by Original
Certificate of Title No. P-082, and later transferred in their names under Transfer Certificate of
Title No. T-95690 that was placed under the coverage of Operation Land Transfer pursuant to
Presidential Decree No. 27 in 1972. Only 18.8704 hectares of the total area of 20.5254 hectares
were subject of the coverage.
After the Department of Agrarian Reform (DAR) directed payment, LBP approved the payment of
P265,494.20, exclusive of the advance payments made in the form of lease rental amounting to
P75,415.88 but inclusive of 6% increment of P191,876.99 pursuant to DAR Administrative Order
No. 13, series of 1994. 4
On 1 December 1994, the respondents instituted Civil Case No. 94-03 for determination and
payment of just compensation before the Regional Trial Court (RTC), Branch 3 of Legaspi City, 5
claiming that the landholding involved was irrigated with two cropping seasons a year with an
average gross production per season of 100cavans of 50 kilos/hectare, equivalent of 200
cavans/year/hectare; and that the fair market value of the property was not less that
P130,000.00/hectare, or P2,668,302.00 for the entire landholding of 20.5254 hectares.
LBP filed its answer, 6 stating that rice and corn lands placed under the coverage of Presidential
Decree No. 27 7 were governed and valued in accordance with the provisions of Executive Order
No. 228 8 as implemented by DAR Administrative Order No. 2, Series of 1987 and other statutes
and administrative issuances; that the administrative valuation of lands covered by Presidential
Decree No. 27 and Executive Order No. 228 rested solely in DAR and LBP was the only financing
arm; that the funds that LBP would use to pay compensation were public funds to be disbursed
only in accordance with existing laws and regulations; that the supporting documents were not
yet received by LBP; and that the constitutionality of Presidential Decree No. 27 and Executive
Order No. 228 was already settled. AICTcE
On 6 October 2004, the RTC rendered its decision, holding:
ACCORDINGLY, the just compensation of the land partly covered by TCT No. T-95690 is fixed at
Php1,297,710.63. Land Bank of the Philippines is hereby ordered to pay Esther Anson, Cesar
Anson and Antonio Anson the aforesaid value of the land, plus interest of 12% per annum or
Php194.36 per day effective October 7, 2004, until the value is fully paid, in cash or in bond or in
any other mode of payment at the option of the landowners in accordance with Sec. 18, RA 6657.
9
LBP filed a Motion for Reconsideration 10 which the RTC denied in its Order dated 29 October
2004. 11
LBP next filed a petition for Review to the Court of Appeals docketed as CA G.R. SP No. 87463. The
Court of Appeals rendered a decision dated 9 October 2007, thefallo of which reads: 12
WHEREFORE, the DECISION DATED OCTOBER 6, 2004 is MODIFIED, ordering petitioner LAND BANK
OF THE PHILIPPINES to pay to the respondents just compensation (inclusive of interests as of
October 6, 2004) in the amount of P823,957.23, plus interest of 12% per annum on the amount of
P515,777.57, or P61,893.30 per annum, beginning October 7, 2004 until the just compensation is
fully paid in accordance with this decision.
In arriving at its computation, the Court of Appeals explained:
In computing the just compensation of the property, pursuant to Executive Order No. 228, Sec. 2
thereof, the formula is —
LV = AGP x 2.5 x GSP x A
(LV is Land Valuation; AGP is Average Gross Production; GSP is Government Support Price and A is
the Area of the Land)
WHERE: AGP
=
99.36 cavans per hectare
GSP
=
Php35.00 per cavan
A
=
18.8704 hectares
COMPUTATION:
LV
=
(99.36 x 2.5 x 35.00) 18.8704
LV
=
8,694 x 18.8704
LV
=
Php164,059.26
With increment of 6% interest per annum compounded annually beginning October 21, 1972 until
October 21, 1994 and immediately after said date with 12% interest per annum until the value is
fully paid in accordance with extant jurisprudence, computed as follows:
To be compounded annually at 6% per annum from October 21, 1972 up to October 24, 1994. The
formula is — SAEHaC
CA = P(1+R)n
(CA is Compounded Amount; P is Principal; R is Rate; and n is the number of years)
WHERE: P
=
Php164,059.26
R
=
6% per annum
N
=
22 years
COMPUTATION:
CA
=
164,059.26 x (1+06) 22
CA
=
164,059.26 x (1.06) 22
CA
=
164,059.26 x 3.60353741
CA
=
Php591,193.68
Plus simple interest of 12% per annum from October 22, 1994 up to October 21, 2003, the formula
of which is:
I=PxRxT
(I is the Interest; P is the Principal; R is the Rate and T is the time)
WHERE: P
=
Php591,193.68
R
=
12% per annum
T
=
9 years
COMPUTATION:
I
=
591,193.68 x 12 x 9
I
=
70,943.24 x 9
I
=
Php638,489.18
(Plus interest of 12% per annum from October 22, 2003 up to October 6, 2004 or a period of 350
days)
I
=
(591,193.68 x .12) x 350
––––––––––––––––––––
350
I
=
194.3605 x 350
I
=
Php68,027.77
–––––––––––
Total Interest
Php706,516.95
===========
RECAPITULATION:
Compounded Amount
Php591,193.68
118
Total Interest
706,516.95
––––––––––––––
TOTAL AMOUNT
Php1,297,710.63
=============
The Court of Appeals pointed out that:
Pursuant to AO 13, considering that the landholding involved herein was tenanted prior to
October 21, 1972, the rate of 6% per annum is imposed, compounded annually from October 21,
1972 until October 21, 1994, the date of the effectivity of AO 13. Beyond October 21, 1994, only
the simple rate of 6% per annum interest is imposable until October 6, 2004 (the date of the
rendition of the decision of the RTC) on the total value (that is, P164,059.26 plus the compounded
increments up to October 21, 1994) but minus the lease rentals of P75,415.88. Only the simple
rate of 6% is applicable up to then because the obligation to pay was not founded on a written
agreement that stipulated a different rate of interest. From October 7, 2004 until the full
payment, the simple interest rate is raised to 12% per annum. The reason is that the amount thus
determined had by then acquired the character of a forbearance in money. 13
LBP disagreed with the imposition of 12% interest and its liability to pay the costs of suit. It filed a
Motion for Reconsideration which was denied in the Court of Appeals' Resolution dated 18 March
2008.
The Court of Appeals held:
We DENY the petitioner's motion for partial reconsideration for the following reasons, to wit:
1.Anent the first ground, the decision of October 9, 2007 has explained in detail why the
obligation of the petitioner should be charged 12% interest. Considering that the motion fails to
persuasively show that a modification of the decision thereon would be justified, we reject such
ground for lack of merit. SDHITE
2.Regarding costs of suit, they are allowed to the prevailing party as a matter of course, unless
there be special reasons for the court to decree otherwise (Sec. 1, Rule 43, Rules of Court). In
appeals, the Court has the power to render judgment for costs as justice may require (Sec. 2, Rule
142, Rules of Court).
In view of the foregoing, the award of costs to the respondents was warranted under the
circumstances. 14
Before this Court, LBP raises the same issues for resolution:
I.Is it valid or lawful to award 12% rate of interest per annum in favor of respondents
notwithstanding the 6% rate of interest per annum compounded annually prescribed under DAR
A.O. No. 13, series of 1994, DAR A.O. No. 02, series of 2004, and DAR A.O. No. 06, series of 2008,
". . . from November 1994 up to the time of actual payment?
II.Is it valid or lawful to adjudge petitioner LBP, which is performing a governmental function,
liable for costs of suit? 15
At the outset, the Court notes that the parcels of land subject matter of this case were acquired
under Presidential Decree No. 27, but the complaint for just compensation was filed in the RTC on
1 December 1994 after Republic Act No. 6657 already took into effect. 16 Thus, our
pronouncement in LBP v. Soriano 17 finds application. We quote:
. . . [I]f just compensation is not settled prior to the passage of Republic Act No. 6657, it should be
computed in accordance with the said law, although the property was acquired under Presidential
Decree No. 27. The fixing of just compensation should therefore be based on the parameters set
out in Republic Act No. 6657, with Presidential Decree No. 27 and Executive Order No. 228 having
only suppletory effect.
In the instant case, while the subject lands were acquired under Presidential Decree No. 27, the
complaint for just compensation was only lodged before the court on 23 November 2000 or long
after the passage of Republic Act No. 6657 in 1998. Therefore, Section 17 of Republic Act No. 6657
should be the principal basis of the computation for just compensation. As a matter of fact, the
factors enumerated therein had already been translated into a basic formula by the DAR pursuant
to its rule-making power under Section 49 of Republic Act No. 6657. The formula outlines in DAR
Administrative Order No. 5, series of 1998 should be applied in computing just compensation,
thus:
LV = (CNI x 0.6) + (CS x 0.3) + (MV x 0.1)
Where: LV
=
Land Value
CNI
=
Capitalized Net Income
CS
=
Comparable Sales
MV
=
Market Value per Tax Declaration
In the case before Us, the just compensation was computed based on Executive Order No. 228,
which computation the parties do not contest. Consequently, we reiterate our rule in LBP v.
Soriano that "while we uphold the amount derived from the old formula, since the application of
the new formula is a matter of law and thus, should be made applicable, the parties are not
precluded from asking for any additional amount as may be warranted by the new formula." 18
cSCTID
That settled, we now proceed to resolve the issue of the propriety of the imposition of 12%
interest on just compensation awarded to the respondents. The Court of Appeals imposed interest
of 12% per annum on the amount of P515,777.57 beginning 7 October 2004, until full payment.
We agree with the Court of Appeals.
In Republic v. Court of Appeals, 19 we affirmed the award of 12% interest on just compensation
due to the landowner. The court decreed:
The constitutional limitation of "just compensation" is considered to be the sum equivalent to the
market value of the property, broadly described to be the price fixed by the seller in open market
in the usual and ordinary course of legal action and competition or the fair value of the property
as between one who receives, and one who desires to sell, if fixed at the time of the actual taking
by the government. Thus, if property is taken for public use before compensation is deposited
with the court having jurisdiction over the case, the final compensation must include interest on
its just value to be computed from the time the property is taken to the time when compensation
is actually paid or deposited with the court. In fine, between the taking of the property and the
actual payment, legal interests accrue in order to place the owner in a position as good as (but not
better than) the position he was in before the taking occurred.
The Bulacan trial court, in its 1979 decision, was correct in imposing interest on the zonal value of
the property to be computed from the time petitioner instituted condemnation proceedings and
"took" the property in September 1969. This allowance of interest on the amount found to be the
value of the property as of the time of the taking computed, being an effective forbearance, at
12% per annum should help eliminate the issue of the constant fluctuation and inflation of the
value of the currency over time. 20
We similarly upheld Republic's 12% per annum interest rate on the unpaid expropriation
compensation in the following cases: Reyes v. National Housing Authority, 21Land Bank of the
Philippines v. Wycoco, 22 Republic v. Court of Appeals, 23 Land Bank of the Philippines v. Imperial,
24 Philippine Ports Authority v. Rosales-Bondoc,25 Nepomuceno v. City of Surigao, 26 and Curata
v. Philippine Ports Authority. 27
Conformably with the foregoing resolution, this Court rules that a 12% interest per annum on just
compensation, due to the respondents, from the finality of this decision until its satisfaction, is
proper. 28
We now proceed to the issue of whether or not the Court of Appeals correctly adjudged LBP liable
to pay the cost of suit.
According to LBP, it performs a governmental function when it disburses the Agrarian Reform
Fund to satisfy awards of just compensation. Hence, it cannot be made to pay costs in eminent
domain proceedings.
LBP cites Sps. Badillo v. Hon. Tayag, 29 to further bolster its claim that it is exempt from the
payment of costs of suit. The Court in that case made the following pronouncement:
On the other hand, the NHA contends that it is exempt from paying all kinds of fees and charges,
because it performs governmental functions. It cites Public Estates Authority v. Yujuico, which
holds that the Public Estates Authority (PEA), a government-owned and controlled corporation, is
119
exempt from paying docket fees whenever it files a suit in relation to its governmental functions.
ETHIDa
We agree. People's Homesite and Housing Corporation v. Court of Industrial Relations declares
that the provision of mass housing is a governmental function:
Coming now to the case at bar, We note that since 1941 when the National Housing Commission
(predecessor of PHHC, which is now known as the National Housing Authority [NHA] was created,
the Philippine government has pursued a mass housing and resettlement program to meet the
needs of Filipinos for decent housing. The agency tasked with implementing such governmental
program was the PHHC.
These can be gleaned from the provisions of Commonwealth Act 648, the charter of said agency.
We rule that the PHHC is a governmental institution performing governmental functions.
This is not the first time We are ruling on the proper characterization of housing as an activity of
the government. In the 1985 case of National Housing Corporation v. Juco and the NLRC (No. L64313, January 17, 1985, 134 SCRA 172), We ruled that housing is a governmental function.
While it has not always been easy to distinguish governmental from proprietary functions, the
Court's declaration in the Decision quoted above is not without basis. Indeed, the characterization
of governmental functions has veered away from the traditional constituent-ministrant
classification that has become unrealistic, if not obsolete. Justice Isagani A. Cruz avers: "[I]t is now
obligatory upon the State itself to promote social justice, to provide adequate social services to
promote a rising standard of living, to afford protection to labor to formulate and implement
urban and agrarian reform programs, and to adopt other measures intended to ensure the dignity,
welfare and security of its citizens . . . These functions, while traditionally regarded as merely
ministrant and optional, have been made compulsory by the Constitution." 30
We agree with the LBP. The relevant provision of the Rules of Court states:
Rule 142
Costs
Section 1.Costs ordinarily follow results of suit. — Unless otherwise provided in these rules, costs
shall be allowed to the prevailing party as a matter of coursebut the court shall have power, for
special reasons adjudge that either party shall pay the costs of an action, or that the same be
divided, as may be equitable. No costs shall be allowed against the Republic of the Philippines
unless otherwise provided by law.
In Heirs of Vidad v. Land Bank of the Philippines, 31 this Court extensively discussed the role of
LBP in the implementation of the agrarian reform program.
LBP is an agency created primarily to provide financial support in all phases of agrarian reform
pursuant to Section 74 of Republic Act (RA) No. 3844 and Section 64 of RA No. 6657. It is vested
with the primary responsibility and authority in the valuation and compensation of covered
landholdings to carry out the full implementation of the Agrarian Reform Program. It may agree
with the DAR and the land owner as to the amount of just compensation to be paid to the latter
and may also disagree with them and bring the matter to court for judicial determination. cCAIDS
xxx xxx xxx
To the contrary, the Court had already recognized in Sharp International Marketing v. Court of
Appeals that the LBP plays a significant role under the CARL and in the implementation of the
CARP, thus:
As may be gleaned very clearly from EO 229, the LBP is an essential part of the government sector
with regard to the payment of compensation to the landowner. It is, after all, the instrumentality
that is charged with the disbursement of public funds for purposes of agrarian reform. It is
therefore part, an indispensable cog, in the governmental machinery that fixes and determines
the amount compensable to the landowner. Were LBP to be excluded from that intricate, if not
sensitive, function of establishing the compensable amount, there would be no amount "to be
established by the government" as required in Sec. 6, EO 229. This is precisely why the law
requires the [Deed of Absolute Sale (DAS)], even if already approved and signed by the DAR
Secretary, to be transmitted still to the LBP for its review, evaluation and approval.
It needs no exceptional intelligence to understand the implications of this transmittal. It simply
means that if LBP agrees on the amount stated in the DAS, after its review and evaluation, it
becomes its duty to sign the deed. But not until then. For, it is only in that event that the amount
to be compensated shall have been "established" according to law. Inversely, if the LBP, after
review and evaluation, refuses to sign, it is because as a party to the contract it does not give its
consent thereto. This necessarily implies the exercise of judgment on the part of LBP, which is not
supposed to be a mere rubber stamp in the exercise. Obviously, were it not so, LBP could not have
been made a distinct member of [Presidential Agrarian Reform Council (PARC)], the super body
responsible for the successful implementation of the CARP. Neither would it have been given the
power to review and evaluate the DAS already signed by the DAR Secretary. If the function of the
LBP in this regard is merely to sign the DAS without the concomitant power of review and
evaluation, its duty to "review/evaluate" mandated in Adm. Order No. 5 would have been a mere
surplus age, meaningless, and a useless ceremony.
xxx xxx xxx
Even more explicit is R.A. 6657 with respect to the indispensable role of LBP in the determination
of the amount to be compensated to the landowner. Under Sec. 18 thereof, "the LBP shall
compensate the landowner in such amount as may be agreed upon by the landowner and the DAR
and LBP, in accordance with the criteria provided in Secs. 16 and 17, and other pertinent
provisions hereof, or as may be finally determined by the court, as the just compensation for the
land."
xxx xxx xxx
It must be observed that once an expropriation proceeding for the acquisition of private
agricultural lands is commenced by the DAR, the indispensable role of Land Bankbegins.
xxx xxx xxx
It is evident from the afore-quoted jurisprudence that the role of LBP in the CARP is more than just
the ministerial duty of keeping and disbursing the Agrarian Reform Funds. As the Court had
previously declared, the LBP is primarily responsible for the valuation and determination of
compensation for all private lands. It has the discretion to approve or reject the land valuation and
just compensation for a private agricultural land placed under the CARP. In case the LBP disagrees
with the valuation of land and determination of just compensation by a party, the DAR, or even
the courts, the LBP not only has the right, but the duty, to challenge the same, by appeal to the
Court of Appeals or to this Court, if appropriate. 32 CSIDTc
It is clear from the above discussions that since LBP is performing a governmental function in
agrarian reform proceeding, it is exempt from the payment of costs of suit as provided under Rule
142, Section 1 of the Rules of Court.
WHEREFORE, premises considered, the petition is GRANTED. The decision of the Court of Appeals
in CA G.R. SP No. 87463 dated 9 October 2007 is AFFIRMEDwith the MODIFICATION that LBP is
hereby held exempted from the payment of costs of suit. In all other respects, the Decision of the
Court of Appeals isAFFIRMED. No costs.
SO ORDERED.
Corona, C.J., Velasco, Jr., Leonardo-de Castro and Peralta, * JJ., concur.
Footnotes
1.Penned by Associate Justice Lucas P. Bersamin (now a member of this Court), with Associate
Justices Portia Aliño Hormachuelos and Estela M. Perlas-Bernabe, concurring. Rollo, pp. 50-62.
2.Id. at 82-83.
3.Id. at 7.
4.Memorandum of the Petitioner.
5.Rollo, p. 139.
6.Id. at 146.
7.Entitled, "Decreeing the Emancipation of Tenants from the Bondage of the Soil Transferring to
Them the Ownership of the Land They Till and Providing the Instruments and Mechanism
Therefor."
120
8.Declaring full land ownership to qualified farmer beneficiaries covered by Presidential Decree
No. 27. Determining the value of remaining unvalued rice and corn lands subject to Presidential
Decree No. 27 and providing for the manner of payment by the farmer beneficiary and modes of
compensation to the landowners.
9.Id. at 122.
10.Id. at 124.
11.Id. at 123.
12.Id. at 10-20.
13.Id. at 56-57.
14.Id. at 62.
15.Id. at 6.
16.Comprehensive Agrarian Reform Law (CARL), which took effect on 15 June 1988.
17.G.R. Nos. 180772 and 180776, 6 May 2010; see also Land Bank of the Philippines v. Gallego, Jr.,
G.R. No. 173226, 20 January 2009, 576 SCRA 680; Land Bank of the Philippines v. Heirs of Asuncion
Añonuevo Vda. De Santos, G.R. No. 179862, 3 September 2009, 598 SCRA 115.
18.Land Bank of the Philippines v. Soriano, id.
19.433 Phil. 106 (2002).
20.Id. at 122-123.
21.443 Phil. 603 (2003).
22.464 Phil. 83 (2004).
23.494 Phil. 494 (2005).
24.G.R. No. 157753, 12 February 2007, 515 SCRA 449.
25.G.R. No. 173392, 24 August 2007, 531 SCRA 198.
26.G.R. No. 146091, 28 July 2008, 560 SCRA 41.
27.G.R. Nos. 154211-12, 22 June 2009, 590 SCRA 214.
28.National Housing Authority v. Heirs of Guivelondo, G.R. No. 166518, 16 June 2009, 589 SCRA
213, 222 citing Republic v. Court of Appeals, supra note 19.
29.448 Phil. 606 (2003).
30.Id. at 617-618.
31.G.R. No. 166461, 30 April 2010.
32.Id.
*Per Special Order No. 913, Associate Justice Diosdado M. Peralta is designated as additional
member in place of Associate Justice Mariano C. Del Castillo who is on official leave.
121
DPWH SECRETARY vs SPS TECSON
THIRD DIVISION
G.R. No. 179334
July 1, 2013
SECRETARY OF THE DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS and DISTRICT ENGINEER
CELESTINO R. CONTRERAS, Petitioners,
vs.
SPOUSES HERACLEO and RAMONA TECSON, Respondents.
DECISION
PERALTA, J.:
This is a petition for review on certiorari under Rule 45 of the Rules of Court, assailing the Court of
Appeals (CA) Decision1 dated July 31, 2007 in CA-G.R. CV No. 77997. The assailed decision
affirmed with modification the Regional Trial Court (RTC)2 Decision3 dated March 22, 2002 in Civil
Case No. 208-M-95.
The case stemmed from the following factual and procedural antecedents:
Respondent spouses Heracleo and Ramona Tecson (respondents) are co-owners of a parcel of
land with an area of 7,268 square meters located in San Pablo, Malolos, Bulacan and covered by
Transfer Certificate of Title (TCT) No. T-430064 of the Register of Deeds of Bulacan. Said parcel of
land was among the properties taken by the government sometime in 1940 without the owners’
consent and without the necessary expropriation proceedings and used for the construction of the
MacArthur Highway.5
In a letter6 dated December 15, 1994, respondents demanded the payment of the fair market
value of the subject parcel of land. Petitioner Celestino R. Contreras (petitioner Contreras), then
District Engineer of the First Bulacan Engineering District of petitioner Department of Public Works
and Highways (DPWH), offered to pay the subject land at the rate of P0.70 per square meter per
Resolution of the Provincial Appraisal Committee (PAC) of Bulacan.7 Unsatisfied with the offer,
respondents demanded for the return of their property or the payment of compensation at the
current fair market value.8
As their demand remained unheeded, respondents filed a Complaint9 for recovery of possession
with damages against petitioners, praying that they be restored to the possession of the subject
parcel of land and that they be paid attorney’s fees.10 Respondents claimed that the subject
parcel of land was assessed at P2,543,800.00.11
Instead of filing their Answer, petitioners moved for the dismissal of the complaint on the
following grounds: (1) that the suit is against the State which may not be sued without its consent;
(2) that the case has already prescribed; (3) that respondents have no cause of action for failure to
exhaust administrative remedies; and (4) if respondents are entitled to compensation, they should
be paid only the value of the property in 1940 or 1941.12
On June 28, 1995, the RTC issued an Order13 granting respondents’ motion to dismiss based on
the doctrine of state immunity from suit. As respondents’ claim includes the recovery of damages,
there is no doubt that the suit is against the State for which prior waiver of immunity is required.
When elevated to the CA,14 the appellate court did not agree with the RTC and found instead that
the doctrine of state immunity from suit is not applicable, because the recovery of compensation
is the only relief available to the landowner. To deny such relief would undeniably cause injustice
to the landowner. Besides, petitioner Contreras, in fact, had earlier offered the payment of
compensation although at a lower rate.Thus, the CA reversed and set aside the dismissal of the
complaint and, consequently, remanded the case to the trial court for the purpose of determining
the just compensation to which respondents are entitled to recover from the government.15 With
the finality of the aforesaid decision, trial proceeded in the RTC.
The Branch Clerk of Court was initially appointed as the Commissioner and designated as the
Chairman of the Committee that would determine just compensation,16 but the case was later
referred to the PAC for the submission of a recommendation report on the value of the subject
property.17 In PAC Resolution No. 99-007,18 the PAC recommended the amount of P1,500.00 per
square meter as the just compensation for the subject property.
On March 22, 2002, the RTC rendered a Decision,19 the dispositive portion of which reads:
WHEREFORE, premises considered, the Department of Public Works and Highways or its duly
assigned agencies are hereby directed to pay said Complainants/Appellants the amount of One
Thousand Five Hundred Pesos (P1,500.00) per square meter for the lot subject matter of this case
in accordance with the Resolution of the Provincial Appraisal Committee dated December 19,
2001.
SO ORDERED.20
On appeal, the CA affirmed the above decision with the modification that the just compensation
stated above should earn interest of six percent (6%) per annum computed from the filing of the
action on March 17, 1995 until full payment.21
In its appeal before the CA, petitioners raised the issues of prescription and laches, which the CA
brushed aside on two grounds: first, that the issue had already been raised by petitioners when
the case was elevated before the CA in CA-G.R. CV No. 51454. Although it was not squarely ruled
upon by the appellate court as it did not find any reason to delve further on such issues,
petitioners did not assail said decision barring them now from raising exactly the same issues; and
second, the issues proper for resolution had been laid down in the pre-trial order which did not
include the issues of prescription and laches. Thus, the same can no longer be further considered.
As to the propriety of the property’s valuation as determined by the PAC and adopted by the RTC,
while recognizing the rule that the just compensation should be the reasonable value at the time
of taking which is 1940, the CA found it necessary to deviate from the general rule. It opined that
it would be obviously unjust and inequitable if respondents would be compensated based on the
value of the property in 1940 which is P0.70 per sq m, but the compensation would be paid only
today. Thus, the appellate court found it just to award compensation based on the value of the
property at the time of payment. It, therefore, adopted the RTC’s determination of just
compensation of P1,500.00 per sq m as recommended by the PAC. The CA further ordered the
payment of interest at the rate of six percent (6%) per annum reckoned from the time of taking,
which is the filing of the complaint on March 17, 1995.
Aggrieved, petitioners come before the Court assailing the CA decision based on the following
grounds:
I.
122
THE COURT OF APPEALS GRAVELY ERRED IN GRANTING JUST COMPENSATION TO RESPONDENTS
CONSIDERING THE HIGHLY DUBIOUS AND QUESTIONABLE CIRCUMSTANCES OF THEIR ALLEGED
OWNERSHIP OF THE SUBJECT PROPERTY.
II.
THE COURT OF APPEALS GRAVELY ERRED IN AWARDING JUST COMPENSATION TO RESPONDENTS
BECAUSE THEIR COMPLAINT FOR RECOVERY OF POSSESSION AND DAMAGES IS ALREADY BARRED
BY PRESCRIPTION AND LACHES.
III.
THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE TRIAL COURT’S DECISION ORDERING
THE PAYMENT OF JUST COMPENSATION BASED ON THE CURRENT MARKET VALUE OF THE
ALLEGED PROPERTY OF RESPONDENTS.22
Petitioners insist that the action is barred by prescription having been filed fifty-four (54) years
after the accrual of the action in 1940. They explain that the court can motu proprio dismiss the
complaint if it shows on its face that the action had already prescribed. Petitioners likewise aver
that respondents slept on their rights for more than fifty years; hence, they are guilty of laches.
Lastly, petitioners claim that the just compensation should be based on the value of the property
at the time of taking in 1940 and not at the time of payment.23
The petition is partly meritorious.
The instant case stemmed from an action for recovery of possession with damages filed by
respondents against petitioners. It, however, revolves around the taking of the subject lot by
petitioners for the construction of the MacArthur Highway. There is taking when the expropriator
enters private property not only for a momentary period but for a permanent duration, or for the
purpose of devoting the property to public use in such a manner as to oust the owner and deprive
him of all beneficial enjoyment thereof.24
It is undisputed that the subject property was taken by petitioners without the benefit of
expropriation proceedings for the construction of the MacArthur Highway. After the lapse of more
than fifty years, the property owners sought recovery of the possession of their property. Is the
action barred by prescription or laches? If not, are the property owners entitled to recover
possession or just compensation?
As aptly noted by the CA, the issues of prescription and laches are not proper issues for resolution
as they were not included in the pre-trial order. We quote with approval the CA’s ratiocination in
this wise:
Procedurally, too, prescription and laches are no longer proper issues in this appeal. In the pretrial order issued on May 17, 2001, the RTC summarized the issues raised by the defendants, to
wit: (a) whether or not the plaintiffs were entitled to just compensation; (b) whether or not the
valuation would be based on the corresponding value at the time of the taking or at the time of
the filing of the action; and (c) whether or not the plaintiffs were entitled to damages. Nowhere
did the pre-trial order indicate that prescription and laches were to be considered in the
adjudication of the RTC.25
To be sure, the pre-trial order explicitly defines and limits the issues to be tried and controls the
subsequent course of the action unless modified before trial to prevent manifest injustice.26
Even if we squarely deal with the issues of laches and prescription, the same must still fail. Laches
is principally a doctrine of equity which is applied to avoid recognizing a right when to do so would
result in a clearly inequitable situation or in an injustice.27 This doctrine finds no application in
this case, since there is nothing inequitable in giving due course to respondents’ claim. Both equity
and the law direct that a property owner should be compensated if his property is taken for public
use.28 Neither shall prescription bar respondents’ claim following the long-standing rule "that
where private property is taken by the Government for public use without first acquiring title
thereto either through expropriation or negotiated sale, the owner’s action to recover the land or
the value thereof does not prescribe."29
When a property is taken by the government for public use, jurisprudence clearly provides for the
remedies available to a landowner. The owner may recover his property if its return is feasible or,
if it is not, the aggrieved owner may demand payment of just compensation for the land taken.30
For failure of respondents to question the lack of expropriation proceedings for a long period of
time, they are deemed to have waived and are estopped from assailing the power of the
government to expropriate or the public use for which the power was exercised. What is left to
respondents is the right of compensation.31 The trial and appellate courts found that respondents
are entitled to compensation. The only issue left for determination is the propriety of the amount
awarded to respondents.
Just compensation is "the fair value of the property as between one who receives, and one who
desires to sell, x x x fixed at the time of the actual taking by the government." This rule holds true
when the property is taken before the filing of an expropriation suit, and even if it is the property
owner who brings the action for compensation.32
The issue in this case is not novel.
In Forfom Development Corporation [Forfom] v. Philippine National Railways [PNR],33 PNR
entered the property of Forfom in January 1973 for public use, that is, for railroad tracks, facilities
and appurtenances for use of the Carmona Commuter Service without initiating expropriation
proceedings.34 In 1990, Forfom filed a complaint for recovery of possession of real property
and/or damages against PNR. In Eusebio v. Luis,35 respondent’s parcel of land was taken in 1980
by the City of Pasig and used as a municipal road now known as A. Sandoval Avenue in Pasig City
without the appropriate expropriation proceedings. In 1994, respondent demanded payment of
the value of the property, but they could not agree on its valuation prompting respondent to file a
complaint for reconveyance and/or damages against the city government and the mayor. In
Manila International Airport Authority v. Rodriguez,36 in the early 1970s, petitioner implemented
expansion programs for its runway necessitating the acquisition and occupation of some of the
properties surrounding its premises. As to respondent’s property, no expropriation proceedings
were initiated.1âwphi1 In 1997, respondent demanded the payment of the value of the property,
but the demand remained unheeded prompting him to institute a case for accion reivindicatoria
with damages against petitioner. In Republic v. Sarabia,37 sometime in 1956, the Air
Transportation Office (ATO) took possession and control of a portion of a lot situated in Aklan,
registered in the name of respondent, without initiating expropriation proceedings. Several
structures were erected thereon including the control tower, the Kalibo crash fire rescue station,
the Kalibo airport terminal and the headquarters of the PNP Aviation Security Group. In 1995,
several stores and restaurants were constructed on the remaining portion of the lot. In 1997,
respondent filed a complaint for recovery of possession with damages against the storeowners
where ATO intervened claiming that the storeowners were its lessees.
The Court in the above-mentioned cases was confronted with common factual circumstances
where the government took control and possession of the subject properties for public use
without initiating expropriation proceedings and without payment of just compensation, while the
123
landowners failed for a long period of time to question such government act and later instituted
actions for recovery of possession with damages. The Court thus determined the landowners’
right to the payment of just compensation and, more importantly, the amount of just
compensation. The Court has uniformly ruled that just compensation is the value of the property
at the time of taking that is controlling for purposes of compensation. In Forfom, the payment of
just compensation was reckoned from the time of taking in 1973; in Eusebio, the Court fixed the
just compensation by determining the value of the property at the time of taking in 1980; in MIAA,
the value of the lot at the time of taking in 1972 served as basis for the award of compensation to
the owner; and in Republic, the Court was convinced that the taking occurred in 1956 and was
thus the basis in fixing just compensation. As in said cases, just compensation due respondents in
this case should, therefore, be fixed not as of the time of payment but at the time of taking, that
is, in 1940.
The reason for the rule has been clearly explained in Republic v. Lara, et al.,38 and repeatedly held
by the Court in recent cases, thus:
x x x "The value of the property should be fixed as of the date when it was taken and not the date
of the filing of the proceedings." For where property is taken ahead of the filing of the
condemnation proceedings, the value thereof may be enhanced by the public purpose for which it
is taken; the entry by the plaintiff upon the property may have depreciated its value thereby; or,
there may have been a natural increase in the value of the property from the time it is taken to
the time the complaint is filed, due to general economic conditions. The owner of private property
should be compensated only for what he actually loses; it is not intended that his compensation
shall extend beyond his loss or injury. And what he loses is only the actual value of his property at
the time it is taken x x x.39
Both the RTC and the CA recognized that the fair market value of the subject property in 1940 was
P0.70/sq m.40 Hence, it should, therefore, be used in determining the amount due respondents
instead of the higher value which is P1,500.00. While disparity in the above amounts is obvious
and may appear inequitable to respondents as they would be receiving such outdated valuation
after a very long period, it is equally true that they too are remiss in guarding against the cruel
effects of belated claim. The concept of just compensation does not imply fairness to the property
owner alone. Compensation must be just not only to the property owner, but also to the public
which ultimately bears the cost of expropriation.41
Clearly, petitioners had been occupying the subject property for more than fifty years without the
benefit of expropriation proceedings. In taking respondents’ property without the benefit of
expropriation proceedings and without payment of just compensation, petitioners clearly acted in
utter disregard of respondents’ proprietary rights which cannot be countenanced by the Court.42
For said illegal taking, respondents are entitled to adequate compensation in the form of actual or
compensatory damages which in this case should be the legal interest of six percent (6%) per
annum on the value of the land at the time of taking in 1940 until full payment.43 This is based on
the principle that interest runs as a matter of law and follows from the right of the landowner to
be placed in as good position as money can accomplish, as of the date of taking.44
DIOSDADO M. PERALTA
Associate Justice
WE CONCUR:
(Dissenting and Concurring Opinion)
PRESBITERO J. VELASCO, JR.
Associate Justice
Chairperson
ROBERTO A. ABAD
Associate Justice
JOSE CATRAL MENDOZA
Associate Justice
See separate opinion
MARVIC MARIO VICTOR F. LEONEN
Associate Justice
ATTESTATION
I attest that the conclusions in the above Decision had been reached in consultation before the
case was assigned to the writer of the opinion of the Court’s Division.
PRESBITERO J. VELASCO, JR.
Associate Justice
Chairperson, Third Division
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution and the Division Acting Chairperson's
Attestation, I certify that the conclusions in the above Decision had been reached in consultation
before the case was assigned to the writer of the opinion of the Court's Division.
MARIA LOURDES P. A. SERENO
Chief Justice
Footnotes
1 Penned by Associate Justice Lucas P. Bersamin (now a member of this Court), with Associate
Justices Portia Aliño-Hormachuelos and Estela M. Perlas-Bernabe (now a member of this Court),
concurring; rollo, pp. 124-137.
2 Branch 80, Malolos, Bulacan.
3 Penned by .Judge Caesar A. Casanova; rollo, pp. 165-167.
WHEREFORE, premises considered, the pet1t10n is PARTIALLY GRANTED. The Court of Appeals
Decision dated July 31, 2007 in CAG.R. CV No. 77997 is MODIFIED, in that the valuation of the
subject property owned by respondents shall be F0.70 instead of P1,500.00 per square meter,
with interest at six percent ( 6o/o) per annum from the date of taking in 1940 instead of March 17,
1995, until full payment.
4 Records, p. 5.
5 Rollo, p. 125.
6 Records, p. 6.
SO ORDERED.
7 Id. at 7.
124
32 Republic v. Court of Appeals, supra note 27, at 534. (Emphasis supplied.)
8 Rollo, p. 125.
33 Supra note 31.
9 Records, pp. 1-4.
34 Forfom Development Corporation v. Philippine National Railways, supra note 31, at 366.
10 Id. at 3.
35 Supra note 29.
11 Id. at 2.
36 Supra note 24.
12 Id. at 17-19.
37 G.R. No. 157847, August 25, 2005, 468 SCRA 142.
13 Id. at 29-30.
38 96 Phil. 170 (1954).
14 The case was docketed as CA-G.R. CV No. 51454.
39 Republic v. Lara, et al., supra, at 177-178.
15 Embodied in a Decision dated February 11, 1999, penned by Associate Justice Artemon D. Luna,
with Associate Justices Delilah Vidallon-Magtolis and Rodrigo V. Cosico, concurring; records, pp.
56-62.
40 Rollo, p. 44.
41 Republic v. Court of Appeals, supra note 27, at 536.
16 Records, p. 104.
42 Eusebio v. Luis, supra note 29, at 587.
17 Id. at 116.
18 Id. at 122.
43 Id. at 587-588; Forfom Development Corporation v. Philippine National Railways, supra note
31, at 373; Manila International Airport Authority v. Rodriguez, supra note 24, at 761. (Citations
omitted).
19 Id. at 150-152.
44 Manila International Airport Authority v. Rodriguez, supra note 24, at 761. (Citation omitted).
20 Id. at 152.
21 Supra note 1.
22 Rollo, p. 108.
23 Id. at 24-32.
24 Manila International Airport Authority v. Rodriguez, 518 Phil. 750, 757 (2006).
25 Rollo, p. 133.
26 Rules of Court, Rule 18, Sec. 7.
27 Republic v. Court of Appeals, G.R. No. 147245, March 31, 2005, 454 SCRA 516, 527.
28 Id.
29 Eusebio v. Luis, G.R. No. 162474, October 13, 2009, 603 SCRA 576, 583; Republic v. Court of
Appeals, supra note 27, at 528.
30 Republic v. Court of Appeals, supra note 27, at 532.
31 Eusebio v. Luis, supra note 29, at 584; Forfom Development Corporation v. Philippine National
Railways, G.R. No. 124795, December 10, 2008, 573 SCRA 350, 366-367.
125
EPZA vs ESTATE OF SALUD JIMENEZ
FIRST DIVISION
[G.R. No. 188995. August 24, 2011.]
EXPORT PROCESSING ZONE AUTHORITY (NOW PHILIPPINE EXPORT ZONE AUTHORITY), petitioner,
vs. JOSE PULIDO, VICENTA PANGANIBAN, RURAL BANK OF SALINAS, INC., FRANCISCA M.
PRODIGALIDAD, ABELARDO PRODIGALIDAD, CARMEN PRECIOSA TABLANTE, CARMENCITA M.
PRODIGALIDAD, MELVIN J. BOUCHER, MARY LOU M. PRODIGALIDAD, SALVADOR MENES, JR.,
DELILAH M. PRODIGALIDAD, NANNETTE M. PRODIGALIDAD, ANSELMO M. PRODIGALIDAD III,
GREGORIO M. PRODIGALIDAD, AND ESTATE OF SALUD JIMENEZ, respondents.
DECISION
BERSAMIN, J p:
In this appeal, we heed the plea of the owner of expropriated property for the much-delayed
payment of just compensation by affirming the decision promulgated on April 20, 2009 1 and the
resolution dated July 20, 2009, 2 whereby the Court of Appeals (CA) respectively upheld the
decision rendered on September 19, 2005 by the Regional Trial Court (RTC), Branch 17, in Cavite
City, 3 and denied the petitioner's motion for reconsideration.
Antecedents
The controversy has its genesis in the action for the expropriation of three parcels of irrigated
riceland situated in Rosario, Cavite that the petitioner commenced on May 15, 1981 in the Court
of First Instance of Cavite against the several individual owners. 4 The parcels of Riceland were: (a)
Lot 1408, with an area of 31,426 square meters and covered by Transfer Certificate of Title (TCT)
No. T-2908 of the Registry of Deeds of Cavite in the names of Jose Pulido and Vicenta Panganiban;
(b) Lot 1409-B-2, with an area of 32,907 square meters and covered by TCT No. T-70724 of the
Registry of Deeds of Cavite co-owned by Francisco Prodigalidad and Medardo Prodigalidad; and (c)
Lot 1406, with an area of 26,008 square meters and covered by TCT No. T-113498 registered in the
name of Salud Jimenez. CTDacA
During the pendency of the case, Lot 1406 was subdivided into Lot 1406-A (with an area of 12,890
square meters) and 1406-B (with an area of 13,118 square meters).
On July 11, 1991, the RTC sustained the right of the petitioner to expropriate the three parcels of
riceland, but later partly reconsidered and released Lot 1406-A from expropriation.
The petitioner appealed to the CA.
On January 4, 1993, the petitioner and the Estate of Salud Jimenez (due to Salud Jimenez having
meanwhile died on October 30, 1984) entered into a Compromise Agreement, stipulating
essentially as follows:
(a)That the petitioner "agrees to withdraw its appeal from the Order of the Honorable Court dated
October 25, 1991 which released lot 1406-A from the expropriation proceedings" and the Estate
of Jimenez, in turn, "agrees to waive, quitclaim and forfeit its claim for damages and loss of
income which it sustained by reason of the possession of [Lot 1406-A] by [EPZA] from 1981 up to
the present";
(b)The parties agree that the Estate of Salud Jimenez would transfer Lot 1406-B to the petitioner
in exchange for "lot 434 with an area of 14,167 square meters and covered by Transfer Certificate
of Title No. 14772 of the Registry of Deeds of Cavite";
(c)The swap arrangement "recognizes the fact that the lot 1406-B . . . is considered expropriated in
favor of the government" and the payment for which being Lot 434; and
(d)The parties "agree that they will abide by the terms of the foregoing agreement in good faith
and the Decision to be rendered based on this Compromise Agreement is immediately final and
executory."
In due time, the CA remanded the case to the RTC for the consideration and approval of the
Compromise Agreement.
On August 23, 1993, the RTC approved the Compromise Agreement.
Contrary to its express undertaking under the Compromise Agreement, the petitioner failed to
transfer the title of Lot 434 to the Estate of Salud Jimenez because the registered owner was
Progressive Realty Estate, Inc., not the petitioner. As a result, on March 13, 1997, the Estate of
Salud Jimenez filed a Motion to Partially Annul the Order dated August 23, 1993.
On August 4, 1997, the RTC annulled the Compromise Agreement and directed the petitioner to
peacefully return Lot 1406-B to the Estate of Salud Jimenez.
The petitioner went to the CA by petition for certiorari and prohibition, essentially to nullify the
order dated August 4, 1997.
In its decision promulgated on March 25, 1998, the CA partially granted the petition for certiorari
and prohibition; set aside the order of the RTC on the return of Lot 1406-B to the Estate of Salud
Jimenez; and directed that the RTC determine the just compensation for Lot 1406-B.
Upon the CA's denial of its Motion for Reconsideration, the Estate of Salud Jimenez appealed to
the Court (G.R. No. 137285). 5
On January 16, 2001, 6 the Court promulgated its decision in G.R. No. 137285, disposing:
WHEREFORE, the instant petition is hereby denied. The Regional Trial Court of Cavite City is
hereby ordered to proceed with the hearing of the expropriation proceedings, docketed as Civil
Case No. N-4029, regarding the determination of just compensation for Lot 1406-B, covered and
described in TCT No. T-113498-Cavite, and to resolve the same with dispatch.
SO ORDERED.
The Court explained in G.R. No. 137285 that the Estate of Salud Jimenez had already
acknowledged the propriety of the expropriation of Lot 1406-B by entering into the Compromise
Agreement; and that the provisions of the Compromise Agreement had consequently related only
to the form or mode of payment of the just compensation for Lot 1406-B, that is, in lieu of cash,
another lot (Lot 434) was to be delivered as just compensation to the Estate of Salud Jimenez,
stating:
. . . The only issue for consideration is the manner and amount of payment due to [the Estate of
Salud Jimenez]. In fact, aside from the withdrawal of [PEZA's] appeal to the Court of Appeals
concerning Lot 1406-A, the matter of payment of just compensation was the only subject of the
compromise agreement dated January 4, 1993. Under the compromise agreement, [the Estate of
Salud Jimenez] was supposed to receive [PEZA's] Lot No. 434 in exchange for Lot 1406-B. When
[PEZA] failed to fulfil its obligation to deliver Lot 434, [the Estate of Salud Jimenez] can again
demand for the payment but not the return of the expropriated Lot 1406-B. This interpretation by
the Court of Appeals is in accordance with Sections 4 to 8, Rule 67 of the Rules of Court. 7
Considering that the decision in G.R. No. 137285 became final and executory, the RTC conducted
proceedings to determine the just compensation for Lot 1406-B. During the trial, however, the
petitioner raised the issue of whether the just compensation should be based on the value or
assessment rate prevailing in 1981 or in 1993, insisting that the just compensation for Lot 1406-B
should be equivalent to its fair market value in 1981, the time of the filing of its expropriation
complaint, which was the time of the taking. The Estate of Salud Jimenez contended, in contrast,
that the just compensation should be reckoned as of August 4, 1997, when theCompromise
Agreement was annulled and set aside.
In its decision, 8 the RTC resolved that:
(a)The just compensation for Lot 1406-B should be based on the value or assessment rate
prevalent in 1993, the year the parties entered into theCompromise Agreement and thereby
agreed that the just compensation for Lot 1406-B was Lot 434; HCSAIa
(b)The just compensation of Lot 1406-B was P6,200.00/square meter as substantiated by the
several documents presented to show the value of properties adjacent to Lot 1406-B, namely: (1)
the Deed of Sale of Lot 1406-A executed in 1994, whereby one of the heirs of Salud Jimenez sold
the lot to the Manila Electric Company (MERALCO) for P6,395.00/square meter; (2) a certified true
copy of the 1998 zonal valuation of properties along the PEZA Road, Barangay Tejero, Cavite City,
containing the zonal valuations of residential and commercial properties in the area to be,
respectively, P4,000.00/square meter and P8,000.00/square meter; (3) an appraisal report on Lot
1406-B by an independent appraiser stating that the value of properties in the vicinity of Lot 1406-
126
B was P7,500.00/square meter in 1997; and (4) other documents showing payment of just
compensation by PEZA to the owners of previously expropriated properties adjacent to or near
Lot 1406-B; and
(c)The total compensation to be paid should bear interest at the legal rate reckoned from August
23, 1993.
On appeal, the CA affirmed the decision of the RTC. 9 Hence, the petitioner comes to the Court to
seek a further review.
Issue
The petitioner now submits that just compensation for Lot 1406-B was only P41,610.00, the
equivalent of the zonal valuation of Lot 1406-B under Tax Declaration No. 7252 issued in 1981;
that any amount above Lot 1406-B's 1981 zonal valuation would unjustly enrich the Estate of
Salud Jimenez due to the escalated price of the expropriated property; and that the Estate of
Salud Jimenez was entitled only to compensation for the loss of its "vacant and idle land at the
time of taking and/or filing of the complaint, whichever came first, and not to the incremental
benefit that has been derived therefrom after the introduction of improvements thereto by [the
petitioner]." 10
On the other hand, the Estate of Salud Jimenez maintains that just compensation for Lot 1406-B
must be based on the value of the property (and of other properties adjacent to it) in 1993 when
the parties entered into the Compromise Agreement and agreed that the just compensation for
Lot 1406-B was Lot 434, or Lot 434's equivalent value. The Estate of Salud Jimenez articulates the
reason in its Comment, thuswise:
[T]he peremptory exercise by the state of its power to expropriate the subject lot has been
extremely painful to the original owner, Salud Jimenez, who already expired on October 30, 1984
without any more enjoying the fruits of her property. Thereafter, her heirs likewise failed to savor
the produce or income of the land for twenty eight (28) long years up to the present time. In
contrast, petitioner without paying a single centavo for the land, has collected millions of pesos
from the lessee banks and bus and jitney operators and continue to reap a bounty from the
property. It cannot be gainsaid that petitioner [PEZA] has been unfairly harsh to herein
respondent when it foisted a land upon which it has no legal title. In this factual milieu, justice and
equity demand that an equitable relief be granted to herein respondent to fix the just
compensation as of 1993 and not on May 15, 1981 which is the date of filing of the complaint. 11
The issue is simply whether or not just compensation should be based on the value of Lot 1406-B
prevailing in 1981 or in 1993.
Ruling
The petition for review lacks merit.
1.
Just compensation for Lot 1406-B must be
based on value of property prevailing in 1993
What would have been an easy and straightforward implementation of the decision promulgated
on January 16, 2001 in G.R. No. 137285 was delayed by the petitioner's interposition of the issue
on the proper reckoning point for computing the just compensation for Lot 1406-B. A reading of
the decision in G.R. No. 137285 exposes the interposition as nothing more than an insincere
attempt of the petitioner to delay the inevitable performance of its obligation to pay just
compensation for Lot 1406-B. Indeed, the Court pronounced there that "the compromise
agreement was only about the mode of payment by swapping of lots . . ., only the originally
agreed form of compensation that is by [lot] 12 payment, was rescinded." 13 TCDHaE
That pronouncement became the law of the case, anything to the contrary of which the petitioner
could not validly rely upon. The doctrine of the law of the case means that whatever is irrevocably
established as the controlling legal rule between the same parties in the same case, whether
correct on general principles or not, continues to be the law of the case for as long as the facts on
which the legal rule was predicated continue to be the facts of the case before the court. 14 It
applies in a situation where an appellate court has made a ruling on a question on appeal and
thereafter remands the case to the lower court for further proceedings; the question then settled
by the appellate court becomes the law of the case binding the lower court and any subsequent
appeal, 15 and questions necessarily involved and dealt with in a former appeal will be regarded
as the law of the case in a subsequent appeal, although the questions are not expressly treated in
the opinion of the court, inasmuch as the presumption is that all the facts in the case bearing on
the point decided have received due consideration whether all or none of them are mentioned in
the opinion.16
To reiterate, in G.R. No. 137285, the Court upheld the annulment of the Compromise Agreement
and recognized that the agreed upon mode of payment of the just compensation for Lot 1406-B
with Lot 434 was cancelled. It is notable that the Court mentioned nothing therein about the
invalidation of the amount of just compensation corresponding to the mode of payment, which
was the value of Lot 434 at the time, which silence was the Court's acknowledgment that the
parties understood and accepted, by entering into the Compromise Agreement in 1993, that the
just compensation for Lot 1406-B was Lot 434 (or the value of Lot 434, which at the time of the
swap in 1993 was definitely much higher than Lot 434's value in 1981).
Accordingly, we completely agree with the RTC's observation that "when the parties signed the
compromise agreement and the same was approved, they had in fact settled between themselves
the question of what is just compensation and that both of them had intended that defendant
would be compensated on the basis of prevailing values at the time of the agreement." 17 We
further completely agree with the CA's conclusion that "by agreeing to a land swap in 1993 in the
ill-fated compromise agreement, [PEZA] had impliedly agreed to paying just compensation using
the market values in 1993." 18
2.
P6,200.00/square meter is the correct
just compensation for Lot 1406-B
With the annulment of the Compromise Agreement, the payment of just compensation for Lot
1406-B now has to be made in cash. In that regard, the order of the Court to remand to the RTC
for the determination of just compensation was indubitably for the sole objective of ascertaining
the equivalent monetary value in 1993 of Lot 1406-B or Lot 434.
In due course, the RTC found that just compensation of Lot 1406-B was P6,200.00/square meter.
Such finding, which the CA upheld, took into due consideration the clear and convincing evidence
proving the fair valuation of properties similar and adjacent to Lot 1406-B at or near 1993, the
time in question, namely:
(a)The deed of sale executed in 1994 by one of the heirs of the late Salud Jimenez to sell Lot 1406A to MERALCO for P6,395.00/square meter;
(b)A certified true copy of the 1998 zonal valuation of properties along the PEZA Road, Barangay
Tejero, Cavite City showing the zonal valuations of residential and commercial properties in the
vicinity of Lot 1406-B to be P4,000.00/square meter and P8,000.00/square meter, respectively;
HAEDCT
(c)An appraisal report done on Lot 1406-B by an independent appraiser stating that the value of
properties in the vicinity of Lot 1406-B went for P7,500.00/square meter in 1997; and
(d)Other documents showing payments of just compensation by PEZA to the owners of other
previously expropriated properties adjacent to or near Lot 1406-B.
The uniform findings of fact upon the question of just compensation reached by the CA and the
RTC are entitled to the greatest respect. They are conclusive on the Court in the absence of a
strong showing by the petitioner that the CA and the RTC erred in appreciating the established
facts and in drawing inferences from such facts. We concur with the findings.
3.
Estate of Salud Jimenez entitled to
Interest of 12% per annum
The power of eminent domain is not an unlimited power. Section 9, Article III of the 1987
Constitution sets down the essential limitations upon this inherent right of the State to take
private property, namely: (a) that the taking must be for a public purpose; and (b) that just
compensation must be paid to the owner. The State must first establish that the exercise of
127
eminent domain is for a public purpose, which, here, is already settled. What remains to be
determined is the just compensation. InApo Fruits Corporation v. Land Bank, 19 the Court has held
that compensation cannot be just to the owner in the case of property that is immediately taken
unless there is prompt payment, considering that the owner thereby immediately suffers not only
the loss of his property but also the loss of its fruits or income. Thus, in addition, the owner is
entitled to legal interest from the time of the taking of the property until the actual payment in
order to place the owner in a position as good as, but not better than, the position he was in
before the taking occurred. 20
It is undeniable that just compensation was not promptly made to the Estate of Salud Jimenez for
the taking of Lot 1406-B by the petitioner. The move to compensate through the swap
arrangement under the Compromise Agreement was aborted or amounted to nothing through no
fault of the Estate of Salud Jimenez. The petitioner, which should have known about the inefficacy
of the swapping of Lot 434 for Lot 1406-B, could even be said to have resorted to the swapping for
the purpose of delaying the payment. Thus, it was solely responsible for the delay. In fact, the
Estate of Salud Jimenez was compelled to seek the rescission of the Compromise Agreement, a
process that prolonged even more the delay in the payment of just compensation. In view of this,
the CA's fixing of legal interest at only 6% per annumcannot be upheld and must be corrected, for
that rate would not ensure that compensation was just in the face of the long delay in payment.
Already in G.R. No. 137285, the Court noted the long delay in payment and was naturally
prompted to strongly condemn "the cavalier attitude of government officials who adopt such a
despotic and irresponsible stance," quoting from Cosculluela v. Court of Appeals, 21 that:
[It] is high time that the petitioner be paid what was due him eleven years ago. It is arbitrary and
capricious for a government agency to initiate expropriation proceedings, seize a person's
property, allow a judgment of the court to become final and executory and then refuse to pay on
the ground that there are no appropriations for the property earlier taken and profitably used. We
condemn in the strongest possible terms the cavalier attitude of government officials who adopt
such a despotic and irresponsible stance. 22
Accordingly, we hereby impose 12% interest per annum on the unpaid gross value of
P81,331,600.00 for Lot 1406-B (i.e., 13,118 square meters x P6,200.00/square meter) from August
23, 1993, the date of the approval of the failed Compromise Agreement, until the full amount of
the just compensation is paid, as a way of making the compensation just. This accords with a long
line of pertinent jurisprudence, 23 whereby the Court has imposed interest at 12% per annum in
eminent domain whenever the expropriator has not immediately delivered the just compensation.
WHEREFORE, we DENY the petition for review on certiorari filed by Philippine Export Zone
Authority, and AFFIRM the decision promulgated by the Court of Appeals on April 20, 2009,
subject to the MODIFICATION that the legal interest chargeable on the unpaid just compensation
for Lot 1406-B is 12% per annumreckoned from August 23, 1993 on the unpaid gross value of
P81,331,600.00 for Lot 1406-B.
This decision is immediately final and executory, and no further pleadings shall be allowed.
The petitioner shall pay the costs of suit.
SO ORDERED. DaECST
Corona, C.J., Leonardo-de Castro, Del Castillo and Villarama, Jr., JJ., concur.
Footnotes
9.Supra, note 1.
10.Rollo, p. 23.
11.Id., p. 310.
12.The word cash was erroneously used.
13.Estate of Salud Jimenez v. Philippine Export Processing Zone, supra, note 6, p. 259.
14.Vios, et al. v. Pantangco, Jr., G.R. No. 163103, February 6, 2009, 578 SCRA 129; citing Bañes v.
Lutheran Church in the Philippines, G.R. No. 142308, November 15, 2005, 475 SCRA 13, 30-31;
United Overseas Bank of the Philippines v. Rose Moor Mining and Development Corporation, G.R.
No. 172651, October 2, 2007, 534 SCRA 528, 542-543; citing Padillo v. Court of Appeals, G.R. No.
119707, November 29, 2001, 371 SCRA 27, 41-43.
15.Vios v. Pantangco, Jr., G.R. No. 163103, February 6, 2009, 578 SCRA 129.
16.People v. Pinuila, 103 Phil. 992, 999 (1958).
17.Supra, note 3.
18.Supra, note 1.
19.G.R. No. 164195, October 12, 2010, 632 SCRA 727.
20.Republic v. Court of Appeals, G.R. No. 146587, July 2, 2002, 383 SCRA 611, where the Court
opines:
The constitutional limitation of "just compensation" is considered to be the sum equivalent to the
market value of the property, broadly described to be the price fixed by the seller in open market
in the usual and ordinary course of legal action and competition or the fair value of the property
as between one who receives, and one who desires to sell, it fixed at the time of the actual taking
by the government. Thus, if property is taken for public use before compensation is deposited
with the court having jurisdiction over the case, the final compensation must include interests on
its just value to be computed from the time the property is taken to the time when compensation
is actually paid or deposited with the court. In fine, between the taking of the property and the
actual payment, legal interests accrue in order to place the owner in a position as good as (but not
better than) the position he was in before the taking occurred.
21.G.R. No. L-77765, August 15, 1988, 164 SCRA 393, 401.
22.See note 6 at pp. 264-265.
23.Apo Fruits Corporation v. Land Bank of the Philippines, G.R. No. 164195, October 12, 2010, 632
SCRA 727; Curata v. Philippine Ports Authority, G.R. Nos. 154211-12, June 22, 2009, 590 SCRA 214;
Philippine Ports Authority v. Rosales-Bondoc, G.R. No. 173392, August 24, 2007, 531 SCRA 198;
Land Bank v. Imperial, G.R. No. 157753, February 12, 2007, 515 SCRA 449; Republic v. Court of
Appeals, G.R. No. 147245, March 31, 2005, 454 SCRA 516; Land Bank v. Wycoco, G.R. No. 140160,
January 13, 2004, 419 SCRA 67; Reyes v. National Housing Authority, G.R. No. 147511, January 20,
2003, 395 SCRA 494; Republic v. Court of Appeals, G.R. No. 146587, July 2, 2002, 383 SCRA 611;
Eastern Shipping Lines, Inc. v. Court of Appeals, G.R. No. 97412, July 12, 1994, 234 SCRA 78.
1.Rollo, pp. 33-52; penned by Associate Justice Romeo F. Barza, and concurred in by Associate
Justice Bienvenido L. Reyes and Associate Justice Arcangelita M. Romilla-Lontok (retired).
2.Id., pp. 54-55.
3.Id., pp. 62-70.
4.Id., pp. 74-81.
5.Id., pp. 150-199.
6.349 SCRA 240.
7.Id., p. 258.
8.Rollo, pp. 62-70.
128
MUNICIPALITY OF BIÑAN vs. Hon. JOSE MAR GARCIA
FIRST DIVISION
[G.R. No. 69260. December 22, 1989.]
MUNICIPALITY OF BIÑAN, petitioner, vs. Hon. JOSE MAR GARCIA, Judge of the Regional Trial Court
at Biñan, Laguna (BRANCH XXXIV, Region IV), and ERLINDA FRANCISCO, respondents.
The Provincial Fiscal for petitioner.
Roman M. Alonte for private respondent.
SYLLABUS
1.REMEDIAL LAW; SPECIAL CIVIL ACTION; EMINENT DOMAIN; MOTION TO DISMISS FILED THEREIN
TAKES PLACE OF AN ANSWER IN AN ORDINARY CIVIL ACTION. — One of the defendants was
Erlinda Francisco. She filed a "Motion to Dismiss" dated August 26, 1983, on the following
grounds; (a) the allegations of the complaint are vague and conjectural; (b) the complaint violates
the constitutional limitations of law and jurisprudence on eminent domain; (c) it is oppressive; (d)
it is barred by prior decision and disposition on the subject matter; and (e) it states no cause of
action. Now, her "motion to dismiss" was filed pursuant to Section 3, Rule 67 of the Rules of
Court: "Sec. 3. Defenses and objections. — Within the time specified in the summons, each
defendant, in lieu of an answer, shall present in a single motion to dismiss or for other appropriate
relief, all of his objections and defenses to the right of the plaintiff to take his property for the use
or purpose specified in the complaint. All such objections and defenses not so presented are
waived. A copy of the motion shall be served on the plaintiff's attorney of record and filed with
the court with the proof of service." Her "motion to dismiss" was thus actually a pleading, taking
the place of an answer in an ordinary civil action; it was not an ordinary motion governed by Rule
15, or a "motion to dismiss" within the contemplation of Rule 16 of the Rules of Court.
2.ID.; ID.; ID.; STAGES IN AN ACTION OF EXPROPRIATION. — There are two (2) stages in every
action of expropriation. The first is concerned with the determination of the authority of the
plaintiff to exercise the power of eminent domain and the propriety of its exercise in the context
of the facts involved in the suit. It ends with an order, if not of dismissal of the action, "of
condemnation declaring that the plaintiff has a lawful right to take the property sought to be
condemned, for the public use or purpose described in the complaint, upon the payment of just
compensation to be determined as of the date of the filing of the complaint." An order of
dismissal, if this be ordained, would be a final one, of course, since it finally disposes of the action
and leaves nothing more to be done by the Court on the merits. So, too, would an order of
condemnation be a final one, for thereafter, as the Rules expressly state, in the proceedings
before the Trial Court, "no objection to the exercise of the right of condemnation (or the propriety
thereof) shall be filed or heard." The second phase of the eminent domain action is concerned
with the determination by the Court of "the just compensation for the property sought to be
taken." This is done by the Court with the assistance of not more than three (3) commissioners.
The order fixing the just compensation on the basis of the evidence before, and findings of, the
commissioners would be final, too. It would finally dispose of the second stage of the suit, and
leave nothing more to be done by the Court regarding the issue. Obviously, one or another of the
parties may believe the order to be erroneous in its appreciation of the evidence or findings of
fact or otherwise. Obviously, too, such a dissatisfied party may seek reversal of the order by taking
an appeal therefrom.
3.ID.; ID.; PHASES OF A PARTITION AND/OR ACCOUNTING SUIT. — A two-phase feature is found in
the special civil action of partition and accounting under Rule 69 of the Rules of Court. The first
phase of a partition and/or accounting suit is taken up with the determination of whether or not a
co-ownership in fact exists, and a partition is proper (i.e., not otherwise legally proscribed) and
may be made by voluntary agreement of all the parties interested in the property. This phase may
end with a declaration that plaintiff is not entitled to have a partition either because a coownership does not exist, or partition is legally prohibited. It may end, on the other hand, with an
adjudgment that a co-ownership does in truth exist, partition is proper in the premises and an
accounting of rents and profits received by the defendant from the real estate in question is in
order. In the latter case, "the parties may, if they are able to agree, make partition among
themselves by proper instruments of conveyance, and the court shall confirm the partition so
agreed upon. In either case — i.e., either the action is dismissed or partition and/or accounting is
decreed — the order is a final one, and may be appealed by any party aggrieved thereby. The
second phase commences when it appears that "the parties are unable to agree upon the
partition" directed by the court. In that event partition shall be done for the parties by the Court
with the assistance of not more than three (3) commissioners. This second stage may well also
deal with the rendition of the accounting itself and its approval by the Court after the parties have
been accorded opportunity to be heard thereon, and an award for the recovery by the party or
parties thereto entitled of their just share in the rents and profits of the real estate in question."
Such an order is, to be sure, final and appealable.
4.ID.; ID.; EMINENT DOMAIN; PERIOD FOR APPEAL FROM AN ORDER OF CONDEMNATION. — The
Court holds that in actions of eminent domain, as in actions for partition, since no less than two
(2) appeals are allowed by law, the period for appeal from an order of condemnation is thirty (30)
days counted from notice of order and not the ordinary period of fifteen (15) days prescribed for
actions in general, conformably with the provision of Section 39 of Batas Pambansa Bilang 129, in
relation to paragraph 19 (b) of the Implementing Rules to the effect that in "appeals in special
proceedings in accordance with Rule 109 of the Rules of Court and other cases wherein multiple
appeals are allowed, the period of appeal shall be thirty (30) days, a record of appeal being
required."
5.ID.; B.P. BLG. 129; PERIOD OF APPEAL FROM A SEPARATE JUDGMENT RENDERED IN AN ACTION
AGAINST SEVERAL DEFENDANTS. — Where a single complaint was filed against several defendants
having individual, separate interests, and a separate trial was held relative to one of said
defendants after which a final order or judgment was rendered on the merits of the plaintiff's
claim against that particular defendant, it is obvious that in the event of an appeal from that
separate judgment, the original record cannot and should not be sent up to the appellate tribunal.
The record will have to stay with the trial court because it will still try the case as regards the other
defendants. As the rule above quoted states, "In an action against several defendants, the court
may, when a several judgment is proper, render judgment against one or more of them, leaving
the action to proceed against the others." In lieu of the original record, a record on appeal will
perforce have to be prepared and transmitted to the appellate court. More than one appeal being
permitted in this case, therefore, "the period of appeal shall be thirty (30) days, a record of appeal
being required," as provided by the Implementing Rules in relation to Section 39 of B.P. Blg. 129,
supra.
6.ID.; CIVIL PROCEDURE MOTION TO DISMISS; FAILURE TO COMPLAINT TO STATE CAUSE OF
ACTION, NOT GROUND THEREFOR. — Nothing in the record reveals any valid cause to reverse the
order of trial. What the Trial Court might have had in mind was the provision of Section 5, Rule 16
of the Rules of Court allowing "any of the grounds for dismissal" in Rule 16 to "be pleaded as an
affirmative defense," and authorizing the holding of a "preliminary hearing . . . thereon as if a
motion to dismiss had been filed." Assuming this to be the fact, the reception of Francisco's
evidence first was wrong, because obviously, her asserted objection or defense — that the
locational clearance issued in her favor by the HSRC was a legal bar to the expropriation suit —
was not a ground for dismissal under Rule 16. She evidently meant to prove the Municipality's lack
of cause of action; but lack of cause of action is not a ground for dismissal of an action under Rule
16; the ground is the failure of the complaint to state a cause of action, which is obviously not the
same as plaintiff's not having a cause of action.
7.ADMINISTRATIVE LAW; HUMAN SETTLEMENT REGULATORY COMMISSION; LOCATION
CLEARANCE CONSIDERED AUTOMATICALLY REVOKED IF NOT USED WITHIN ONE (1) YEAR FROM
DATE OF ISSUE. — It seems evident that said clearance did become a "worthless sheet of paper,"
as averred by the Municipality, upon the lapse of one (1) year from said date in light of the explicit
condition in the clearance that it "shall be considered automatically revoked if not used within a
129
period of one (1) year from date of issue," and the unrebutted fact that Francisco had not really
made use of it within that period.
DECISION
NARVASA, J p:
Three (3) questions are resolved in the action of certiorari at bar. The first is whether the special
civil action of eminent domain under Rule 67 of the Rules of Court is a case "wherein multiple
appeals are allowed," 1 as regards which "the period of appeal shall be thirty [30] days," 2 instead
of fifteen (15) days. 3 The second is whether or not the Trial Court may treat the "motion to
dismiss" filed by one of the defendants in the action of eminent domain as a motion to dismiss
under Rule 16 of the Rules of Court, reverse the sequence of trial in order and hear and determine
said motion to dismiss, and thereafter dismiss the expropriation suit as against the movant. And
the third is whether or not a "locational clearance" issued by the Human Settlements Regulatory
Commission relative to use of land is a bar to an expropriation suit involving that land. prLL
The expropriation suit involved in this certiorari proceeding was commenced by complaint of the
Municipality of Biñan, Laguna, 4 filed in the Regional Trial Court of Laguna and City of San Pablo,
presided over by respondent Judge Jose Mar Garcia. The complaint named as defendants the
owners of eleven (11) adjacent parcels of land in Biñan with an aggregate area of about eleven
and a half (11-1/2) hectares. The land sought to be expropriated was intended for use as the new
site of a modern public market and the acquisition was authorized by a resolution of the
Sangguniang Bayan of Biñan approved on April 11, 1983. llcd
One of the defendants was Erlinda Francisco. She filed a "Motion to Dismiss" dated August 26,
1983, on the following grounds; (a) the allegations of the complaint are vague and conjectural; (b)
the complaint violates the constitutional limitations of law and jurisprudence on eminent domain;
(c) it is oppressive; (d) it is barred by prior decision and disposition on the subject matter; and (e) it
states no cause of action. 5 Now, her "motion to dismiss" was filed pursuant to Section 3, Rule 67
of the Rules of Court:
"Sec. 3.Defenses and objections. — Within the time specified in the summons, each defendant, in
lieu of an answer, shall present in a single motion to dismiss or for other appropriate relief, all of
his objections and defenses to the right of the plaintiff to take his property for the use or purpose
specified in the complaint. All such objections and defenses not so presented are waived. A copy
of the motion shall be served on the plaintiff's attorney of record and filed with the court with the
proof of service."
Her "motion to dismiss" was thus actually a pleading, taking the place of an answer in an ordinary
civil action; 6 it was not an ordinary motion governed by Rule 15, or a "motion to dismiss" within
the contemplation of Rule 16 of the Rules of Court.
On October 23, 1983, respondent Judge issued a writ of possession in favor of the plaintiff
Municipality.
On February 3, 1984, Erlinda Francisco filed a "Motion for Separate Trial," invoking Section 2, Rule
31. 7 She alleged that there had already been no little delay in bringing all the defendants within
the court's jurisdiction, and some of the defendants seemed "nonchalant or without special
interest in the case" if not mere "free riders;" and "while the cause of action and defenses are
basically the same;" she had, among other defenses, "a constitutional defense of vested right via a
pre-existing approved Locational Clearance from the H.S.R.C." 8 Until this clearance was revoked,
Francisco contended, or the Municipality had submitted and obtained approval of a "rezoning of
the lots in question," it was premature for it to "file a case for expropriation." 9 The Court granted
the motion. By Order dated March 2, 1984, it directed that a separate trial be held for defendant
Erlinda Francisco regarding her special defenses mentioned in her . . . Motion for Separate Trial
and in her Motion to Dismiss, distinct from and separate from the defenses commonly raised by
all the defendants in their respective motions to dismiss."
At the separate trial, the Fiscal, in representation of the Municipality called the Trial Court's
attention to the irregularity of allowing Francisco to present her evidence ahead of the plaintiff,
"putting the cart before the horse, as it were." He argued that the motion to dismiss was in truth
an answer, citing Rural Progress Administration v. Judge de Guzman, and its filing did "not mean
that the order of presentation of evidence will be reversed," but the usual procedure should be
followed; and the evidence adduced should be deemed "evidence only for the motion for
reconsideration of the writ of possession." 10
Nevertheless, at the hearing of March 5, and March 26, 1984, the Court directed Francisco to
commence the presentation of evidence. Francisco presented the testimony of Atty. Josue L.
Jorvina, Jr. and certain exhibits — the Land Use Map of the Municipality of Biñan, the Locational
Clearance and Development Permit issued by the HSRC in favor of "Erlinda Francisco c/o Ferlins
Realty & Development Corporation, and Executive Order No. 648 and Letter of Instruction No.
729, etc. Thereafter, the respondent Judge issued an Order dated July 24, 1984 dismissing the
complaint "as against defendant ERLINDA FRANCISCO," and amending the Writ of Possession
dated October 18, 1983 so as to "exclude therefrom and from its force and effects said defendant
. . . and her property . . ." His Honor found that —
1)a Locational Clearance had been issued on May 4, 1983 by the Human Settlements Regulatory
Commission to the "Ferlin's Realty . . . owned by defendant Erlinda Francisco to convert . . . (her)
lot to a commercial complex;
2)according to the testimony of Atty. Jorvina of the HSRC, "a grantee of a locational clearance
acquires a vested right over the subject property in the sense that . . . said property may not be
subject of an application for locational clearance by another applicant while said locational
clearance is subsisting;
3)such a clearance should be "considered as a decision and disposition of private property coequal with or in parity with a disposition of private property through eminent domain;
4)the clearance was therefore "a legal bar against the right of plaintiff Municipality . . . to
expropriate the said property."
The Municipality filed on August 17, 1984 a Motion for Reconsideration. Therein it (a) reiterated
its contention respecting the irregularity of the reversal of the order of trial, supra. 11 (b) decried
the act of the Court in considering the case submitted for decision after the presentation of
evidence by Francisco without setting the case for further hearing for the reception of the
plaintiff's own proofs, (c) pointed out that as admitted by Atty. Jorvina, the locational clearance
did not "mean that other persons are already prevented from filing locational clearance for the
same project, and so could not be considered a bar to expropriation, (d) argued that the locational
clearance issued on May 4, 1983, became a "worthless sheet of paper" one year later, on May 4,
1984 in accordance with the explicit condition in the clearance that it "shall be considered
automatically revoked if not used within a period of one (1) year from date of issue," the required
municipal permits to put up the commercial complex never having been obtained by Francisco;
and (e) alleged that all legal requirements for the expropriation of the property had been duly
complied with by the Municipality. 12
The Municipality set its motion for reconsideration for hearing on August 28, 1984 after furnishing
Francisco's counsel with copy thereof. The Court however re-scheduled the hearing more than
two (2) months later, on November 20, 1984. 13 Why the hearing was reset to such a remote date
is not explained.
On September 13, 1984, Francisco filed an "Ex-Parte Motion for Execution and/or Finality of
Order," contending that the Order of July 27, 1984 had become "final and executory on August 12,
1984" for failure of the Municipality "to file a motion for reconsideration and/or appeal within the
reglementary period," 14 i.e., "fifteen (15) days counted from the notice of the final order . . .
appealed from." 15
On October 10, 1984, the Court issued an Order declaring the Municipality's motion for
reconsideration dated August 15, 1984 to have been "filed out of time," on account of which the
Court "could not give due course to and/or act . . . (thereon) except to dismiss (as it did thereby
dismiss) the same." 16 It drew attention to the fact that notice of its Order of July 24, 1984
(dismissing the complaint as against Francisco) was served on plaintiff Municipality on July 27,
1984, but its motion for reconsideration was not presented until August 17, 1984, beyond the
fifteen-day period for appeal prescribed by law. And on October 15, 1985, His Honor promulgated
130
another Order directing the issuance of (1) a writ of execution of the Order of July 24, 1984, and
(2) a "certificate of finality" of said order. 17
The Municipality attempted to have the respondent Court reconsider both said Orders of October
10, and October 15, 1984. To this end it submitted a motion contending that: 18
1)"multiple appeals are allowed by law" in actions of eminent domain, and hence the period of
appeal is thirty (30), not fifteen (15) days;
2)moreover, the grant of a separate trial at Francisco's instance had given rise "ipso facto to a
situation where multiple appeals became available (Sections 4 and 5, Rule 36, . . ., Santos v.
Pecson, 79 Phil. 261);
3)it was wrong for the Trial Court to have acted ex parte on the motion for execution, the motion
being "litigable in character;" and
4)it (the Municipality) was denied due process when the Court, after receiving Francisco's
evidence and admitting her exhibits, immediately resolved the case on the merits as regards
Francisco, without setting the case "for further hearing for reception of evidence for the plaintiff."
The motion was denied, by Order dated October 18, 1984; hence, the special civil action of
certiorari at bar.
1.There are two (2) stages in every action of expropriation. The first is concerned with the
determination of the authority of the plaintiff to exercise the power of eminent domain and the
propriety of its exercise in the context of the facts involved in the suit. 19 It ends with an order, if
not of dismissal of the action, "of condemnation declaring that the plaintiff has a lawful right to
take the property sought to be condemned, for the public use or purpose described in the
complaint, upon the payment of just compensation to be determined as of the date of the filing of
the complaint." 20 An order of dismissal, if this be ordained, would be a final one, of course, since
it finally disposes of the action and leaves nothing more to be done by the Court on the merits. 21
So, too, would an order of condemnation be a final one, for thereafter, as the Rules expressly
state, in the proceedings before the Trial Court, "no objection to the exercise of the right of
condemnation (or the propriety thereof) shall be filed or heard. 22
The second phase of the eminent domain action is concerned with the determination by the Court
of "the just compensation for the property sought to be taken." This is done by the Court with the
assistance of not more than three (3) commissioners. 23 The order fixing the just compensation
on the basis of the evidence before, and findings of, the commissioners would be final, too. It
would finally dispose of the second stage of the suit, and leave nothing more to be done by the
Court regarding the issue. Obviously, one or another of the parties may believe the order to be
erroneous in its appreciation of the evidence or findings of fact or otherwise. Obviously, too, such
a dissatisfied party may seek reversal of the order by taking an appeal therefrom. cdrep
A similar two-phase feature is found in the special civil action of partition and accounting under
Rule 69 of the Rules of Court. 24
The first phase of a partition and/or accounting suit is taken up with the determination of whether
or not a co-ownership in fact exists, and a partition is proper (i.e., not otherwise legally
proscribed) and may be made by voluntary agreement of all the parties interested in the property.
25 This phase may end with a declaration that plaintiff is not entitled to have a partition either
because a co-ownership does not exist, or partition is legally prohibited. 26 It may end, on the
other hand, with an adjudgment that a co-ownership does in truth exist, partition is proper in the
premises and an accounting of rents and profits received by the defendant from the real estate in
question is in order. 27 In the latter case, "the parties may, if they are able to agree, make
partition among themselves by proper instruments of conveyance, and the court shall confirm the
partition so agreed upon. 28 In either case — i.e., either the action is dismissed or partition and/or
accounting is decreed — the order is a final one, and may be appealed by any party aggrieved
thereby. 29
The second phase commences when it appears that "the parties are unable to agree upon the
partition" directed by the court. In that event partition shall be done for the parties by the Court
with the assistance of not more than three (3) commissioners. 30 This second stage may well also
deal with the rendition of the accounting itself and its approval by the Court after the parties have
been accorded opportunity to be heard thereon, and an award for the recovery by the party or
parties thereto entitled of their just share in the rents and profits of the real estate in question. 31
Such an order is, to be sure, final and appealable.
Now, this Court has settled the question of the finality and appealability of a decision or order
decreeing partition or recovery of property and/or accounting. InMiranda v. Court of Appeals,
decided on June 18, 1986, 32 the Court resolved the question affirmatively, and expressly revoked
the ruling in Zaldarriaga v. Enriquez 33— that a decision or order of partition is not final because it
leaves something more to be done in the trial court for the complete disposition of the case, i.e,
the appointment of commissioners, the proceedings for the determination by said commissioners
of just compensation, the submission of their reports, and hearing thereon, and the approval of
the partition — and in Fuentebella vs. Carrascoso 34 — that a judgment for recovery of property
with accounting is not final, but merely interlocutory and hence not appealable until the
accounting is made and passed upon. As pointed out in Miranda, imperative considerations of
public policy, of sound practice and adherence to the constitutional mandate of simplified, just,
speedy and inexpensive determination of every action require that judgments for recovery (or
partition) of property with accounting be considered as final judgments, duly appealable. This,
notwithstanding that further proceedings will still have to be rendered by the party required to do
so, it will be ventilated and discussed by the parties, and will eventually be passed upon by the
Court. It is of course entirely possible that the Court disposition may not sit well with either the
party in whose favor the accounting is made, or the party rendering it. In either case, the Court's
adjudication on the accounting is without doubt a final one, for it would finally terminate the
proceedings thereon and leave nothing more to be done by the Court on the merits of the issue.
And it goes without saying that any party feeling aggrieved by that ultimate action of the Court on
the accounting may seek reversal or modification thereof by the Court of Appeals or the Supreme
Court. 35
The Miranda doctrine was reiterated in de Guzman v. C.A.; 36 Valdez v. Bagaso; 37 Lagunzad v.
Gonzales; 38 Cease v. C.A.; 39 Macadangdang v. CA.; 40 andHernandez v. C.A.; 41 Gabor v. C.A. 42
Fabrica v. C.A. 43
No reason presents itself for different disposition as regards cases of eminent domain. On the
contrary, the close analogy between the special actions of eminent domain and partition already
pointed out, argues for the application of the same rule to both proceedings.
The Court therefore holds that in actions of eminent domain, as in actions for partition, since no
less than two (2) appeals are allowed by law, the period for appeal from an order of
condemnation 44 is thirty (30) days counted from notice of order and not the ordinary period of
fifteen (15) days prescribed for actions in general, conformably with the provision of Section 39 of
Batas Pambansa Bilang 129, in relation to paragraph 19 (b) of the Implementing Rules to the effect
that in "appeals in special proceedings in accordance with Rule 109 of the Rules of Court and other
cases wherein multiple appeals are allowed, the period of appeal shall be thirty (30) days, a record
of appeal being required." 45
The municipality's motion for reconsideration filed on August 17, 1984 was therefore timely
presented, well within the thirty-day period laid down by law therefor; and it was error for the
Trial Court to have ruled otherwise and to have declared that the order sought to be considered
had become final and executory.
2.As already observed, the Municipality's complaint for expropriation impleaded eleven (11)
defendants. A separate trial was held on motion of one of them, Erlinda Francisco, 46 it appearing
that she had asserted a defense personal and peculiar to her, and inapplicable to the other
defendants, supra. Subsequently, and on the basis of the evidence presented by her, the Trial
Court promulgated a separate Order dismissing the action as to her, in accordance with Section 4,
Rule 36 of the Rules of Court reading as follows:
Sec. 4.Several judgments. — In an action against several defendants, the court may, when a
several judgment is proper, render judgment against one or more of them, leaving the action to
proceed against the others.
131
It is now claimed by the Municipality that the issuance of such a separate, final order or judgment
had given rise "ipso facto to a situation where multiple appeals became available." The
Municipality is right.
In the case at bar, where a single complaint was filed against several defendants having individual,
separate interests, and a separate trial was held relative to one of said defendants after which a
final order or judgment was rendered on the merits of the plaintiff's claim against that particular
defendant, it is obvious that in the event of an appeal from that separate judgment, the original
record cannot and should not be sent up to the appellate tribunal. The record will have to stay
with the trial court because it will still try the case as regards the other defendants. As the rule
above quoted states, "In an action against several defendants, the court may, when a several
judgment is proper, render judgment against one or more of them, leaving the action to proceed
against the others." 47 In lieu of the original record, a record on appeal will perforce have to be
prepared and transmitted to the appellate court. More than one appeal being permitted in this
case, therefore, "the period of appeal shall be thirty (30) days, a record of appeal being required,"
as provided by the Implementing Rules in relation to Section 39 of B.P. Blg. 129, supra. 48
3.Erlinda Francisco filed a "motion to dismiss" in traverse of the averments of the Municipality's
complaint for expropriation. That "motion to dismiss" was in fact the indicated responsive
pleading to the complaint, "in lieu of an answer." 49
Now, the Trial Court conducted a separate trial to determine whether or not, as alleged by
Francisco in her "motion to dismiss," she had a "vested right via a pre-existing approved Locational
Clearance from the HSRC," making the expropriation suit premature. 50 While such a separate
trial was not improper in the premises, 51and was not put at issue by the Municipality, the latter
did protest against the Trial Court's (a) reversing the order of trial and receiving first, the evidence
of defendant Francisco, and (b) subsequently rendering its order sustaining Francisco's defense
and dismissing the action as to her, solely on the basis of said Francisco's evidence and without
giving the plaintiff an opportunity to present its own evidence on the issue. The Trial Court was
clearly wrong on both counts. The Court will have to sustain the Municipality on these points. prLL
Nothing in the record reveals any valid cause to reverse the order of trial. What the Trial Court
might have had in mind was the provision of Section 5, Rule 16 of the Rules of Court allowing "any
of the grounds for dismissal" in Rule 16 to "be pleaded as an affirmative defense," and authorizing
the holding of a "preliminary hearing . . . thereon as if a motion to dismiss had been filed."
Assuming this to be the fact, the reception of Francisco's evidence first was wrong, because
obviously, her asserted objection or defense — that the locational clearance issued in her favor by
the HSRC was a legal bar to the expropriation suit — was not a ground for dismissal under Rule 16.
She evidently meant to prove the Municipality's lack of cause of action; but lack of cause of action
is not a ground for dismissal of an action under Rule 16; the ground is the failure of the complaint
to state a cause of action, which is obviously not the same as plaintiff's not having a cause of
action.
Nothing in the record, moreover, discloses any circumstances from which a waiver by the
Municipality of the right to present contrary proofs may be inferred. So, in deciding the issue
without according the Municipality that right to present contrary evidence, the Trial Court had
effectively denied the Municipality due process and thus incurred in another reversible error.
4.Turning now to the locational clearance issued by the HSRC in Francisco's favor on May 4, 1983,
it seems evident that said clearance did become a "worthless sheet of paper," as averred by the
Municipality, upon the lapse of one (1) year from said date in light of the explicit condition in the
clearance that it "shall be considered automatically revoked if not used within a period of one (1)
year from date of issue," and the unrebutted fact that Francisco had not really made use of it
within that period. The failure of the Court to consider these facts, despite its attention having
been drawn to them, is yet another error which must be corrected. prcd
WHEREFORE, the challenged Order issued by His Honor on July 24, 1984 in Civil Case No. 8-1960 is
ANNULLED AND SET ASIDE, and the case is remanded to the Trial Court for the reception of the
evidence of the plaintiff Municipality of Biñan as against defendant Erlinda Francisco, and for
subsequent proceedings and judgment in accordance with the Rules of Court and the law. Costs
against private respondent.
SO ORDERED.
Cruz, Gancayco, Griño-Aquino and Medialdea, JJ., concur.
Footnotes
1.Sec. 39, BP 129.
2.Par. 19 (b), Interim Rules of the Supreme Court en banc dated Jan. 11, 1987 in implementation
of the Judiciary Reorganization Act of 1981 (B.P. Blg. 129).
3.Par. 19(a), id.
4.Docketed as Civil Case No. 8-1960.
5.Rollo, pp. 34 et seq.
6.Moran, Comments on the Rules, 1980 ed., Vol. 3, p. 248, citing Rural Progress Adm. v. Judge de
Guzman, L-3224, Aug. 15, 1951.
7.Which reads as follows: "The court, in furtherance of convenience or to avoid prejudice, may
order a separate trial of any claim, cross-claim, counterclaim or third-party claim, or of any
separate issue or of any number of claims, cross-claims, counterclaims, third-party claims or
issues."
8.Human Settlements Regulatory Commission.
9.Rollo, pp. 40-44.
10.Id., pp. 53-54.
11.Ibid.
12.Rollo., pp. 54-61.
13.Id., p. 62 (Minutes of the session of September 28, 1984).
14.Rollo, pp. 63-65.
15.Sec. 39, B.P. 129; par. 19(a), Interim Rules of the Supreme Court in Implementation of the
Judiciary Reorganization Act of 1981.
16.Rollo, p. 67.
17.Id., p. 66.
18.Id., pp. 68-73.
19.SEE Secs. 1, 2 and 3, Rule 67 of the Rules of Court.
20.Sec. 4, Rule 67; See Nieto v. Isip, 97 Phil. 31; Benguet Consolidated v. Republic, 143 SCRA 466.
21.SEE Investments, Inc. v. C.A., et al., 147 SCRA 334, 339-341.
22.Ibid.
23.Secs. 5 to 8, Rule 67.
24.SEE Miranda v. C.A., 71 SCRA 295 (1976); Roque v. I.A.C., 165 SCRA 118, 125-126; Fabrica v.
C.A., 148 SCRA 250; Garbo v. C.A., 129 SCRA 616; Valdez v. Bagaso, 82 SCRA 22.
25.Secs. 1 and 2, Rule 69, Rules of Court.
26.Roque v. I.A.C., supra.
27.Sec. 8, Rule 69.
28.Sec. 2, Rule 69.
29.SEE footnote 3, at page 5, supra.
30.Secs. 3-7, Rule 69.
31.Sec. 8, Rule 69, supra.
32.71 SCRA 295; 73 O.G. 11646.
33.111 Phil. 829; 1 SCRA 1188 (1966).
34.G.R. No. 48102, May 27, 1942 (unpublished), 14 L.J. 305 (1949).
35.Mr. Justice Jose Y. Feria (ret.) in his annotations on B.P. Blg. 129 and the Interim Rules and
Guidelines, Rules of Court (Philippine Legal Studies, Series No. 1, 1983 ed., Central Lawbook) (at p.
52) pointed out that under Miranda, supra and de Guzman, infra, "a judgment for recovery of
property is final and appealable without awaiting the accounting; and an order of partition is final
and appealable without awaiting the actual partition. Hence the accounting or the partition may
continue pending the appeal, and a second appeal may be taken from the judgment on the
accounting or the partition."
132
36.71 SCRA 195 (1976).
37.82 SCRA 22 (1978).
38.92 SCRA 476 (1979).
39.93 SCRA 483 (1981).
40.108 SCRA 314 (1981).
41.120 SCRA 856 (1983).
42.129 SCRA 616.
43.148 SCRA 250.
44.The first final order.
45.Emphasis supplied.
46.Pursuant to Sec. 2 of Rule 31 already quoted; footnote 3 on page 2, supra.
47.Emphasis supplied.
48.SEE Santos v. Pecson, et. al., 79 Phil 261, 265, 270, Dissenting Opinion, distinguishing between
the situation of defendants having separate or severable interest, and that of defendants having
solidary or joint or common interest.
49.See footnote 6 at page 2, supra.
50.SEE footnote 9 and related text, at page 2 supra.
51.SEE footnote 7, at page 2, supra.
133
AGAN JR. et al vs PIATCO
EN BANC
[G.R. No. 155001. May 5, 2003.]
DEMOSTHENES P. AGAN, JR., JOSEPH B. CATAHAN, JOSE MARI B. REUNILLA, MANUEL ANTONIO B.
BOÑE, MAMERTO S. CLARA, REUEL E. DIMALANTA, MORY V. DOMALAON, CONRADO G.
DIMAANO, LOLITA R. HIZON, REMEDIOS P. ADOLFO, BIENVENIDO C. HILARIO, MIASCOR WORKERS
UNION-NATIONAL LABOR UNION (MWU-NLU), and PHILIPPINE AIRLINES EMPLOYEES
ASSOCIATION (PALEA),petitioners, vs. PHILIPPINE INTERNATIONAL AIR TERMINALS CO., INC.,
MANILA INTERNATIONAL AIRPORT AUTHORITY, DEPARTMENT OF TRANSPORTATION AND
COMMUNICATIONS and SECRETARY LEANDRO M. MENDOZA, in his capacity as Head of the
Department of Transportation and Communications, respondents.
MIASCOR GROUNDHANDLING CORPORATION, DNATA-WINGS AVIATION SYSTEMS CORPORATION,
MACROASIA-EUREST SERVICES, INC., MACROASIA-MENZIES AIRPORT SERVICES CORPORATION,
MIASCOR CATERING SERVICES CORPORATION, MIASCOR AIRCRAFT MAINTENANCE
CORPORATION, and MIASCOR LOGISTICS CORPORATION, petitioners-in-intervention,
[G.R. No. 155547. May 5, 2003.]
SALACNIB F. BATERINA, CLAVEL A. MARTINEZ and CONSTANTINO G. JARAULA, petitioners, vs.
PHILIPPINE INTERNATIONAL AIR TERMINALS CO., INC., MANILA INTERNATIONAL AIRPORT
AUTHORITY, DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS, DEPARTMENT OF
PUBLIC WORKS AND HIGHWAYS, SECRETARY LEANDRO M. MENDOZA, in his capacity as Head of
the Department of Transportation and Communications, and SECRETARY SIMEON A.
DATUMANONG, in his capacity as Head of the Department of Public Works and Highways,
respondents,
JACINTO V. PARAS, RAFAEL P. NANTES, EDUARDO C. ZIALCITA, WILLY BUYSON VILLARAMA,
PROSPERO C. NOGRALES, PROSPERO A. PICHAY, JR., HARLIN CAST ABAYON, and BENASING O.
MACARANBON, respondents-intervenors,
[G.R. No. 155661. May 5, 2003.]
CEFERINO C. LOPEZ, RAMON M. SALES, ALFREDO B. VALENCIA, MA. TERESA V. GAERLAN,
LEONARDO DE LA ROSA, DINA C. DE LEON, VIRGIE CATAMIN RONALD SCHLOBOM, ANGELITO
SANTOS, MA. LUISA M. PALCON and SAMAHANG MANGGAGAWA SA PALIPARAN NG PILIPINAS
(SMPP), petitioners, vs. PHILIPPINE INTERNATIONAL AIR TERMINALS CO., INC., MANILA
INTERNATIONAL AIRPORT AUTHORITY, DEPARTMENT OF TRANSPORTATION AND
COMMUNICATIONS, SECRETARY LEANDRO M. MENDOZA, in his capacity as Head of the
Department of Transportation and Communications, respondents.
Salonga Hernandez & Mendoza for petitioners in G.R. No. 155001.
Jose A. Bernas for petitioners in G.R. No. 155547.
Erwin P. Erfe for petitioners in G.R. No. 155661.
Jose Espinas for MWU-NLU.
Jose E. Marigondon for PALEA.
Angara Abello Concepcion Regala and Cruz for petitioners-in-intervention.
Arthur D. Lim Law Office for Asia's Emerging Dragon etc.
Romulo Mabanta Buenaventura Sayoc & Delos Angeles, Chavez & Laureta & Associate and Moises
Tolentino, Jr. for PIATCO.
The Office of the Government Corporate Counsel for MIAA.
The Solicitor General for public respondents.
Mario E. Ongkiko, Fernando F. Manas, Jr. Raymund C. de Castro & Angelito S. Lazaro, Jr. for
respondents-intervenors.
SYNOPSIS
On October 5, 1994, Asia's Emerging Dragon Corp. (AEDC) submitted an unsolicited proposal to
the Government for the development of Ninoy Aquino International Airport International
Passenger Terminal III (NAIA IPT III) under a build-operate-and-transfer arrangement pursuant to
RA 6957, as amended. It was endorsed to the National Economic Development Authority (NEDA),
which, in turn, reviewed and approved it for bidding. The Paircargo Consortium was the only
company that submitted a competitive proposal. AEDC questioned, among others, the financial
capability of Paircargo Consortium. However, the Pre-Qualification Bids and Awards Committee
(PBAC) had prequalified the Paircargo Consortium to undertake the project. Later, Paircargo
Consortium incorporated into Philippine International Airport Terminals Co., (PIATCO). And for
failure of AEDC to match the price proposal submitted by PIATCO, the project was awarded to
PIATCO. On July 12, 1997, the Government signed the 1997 Concession Agreement. Thereafter,
the Amended and Restated Concession Agreement (ARCA) and three Supplements thereto were
signed by the Government and PIATCO. Consequently, the workers of the international airline
service providers, claiming that they stand to lose their employment upon the implementation of
the said agreements, filed before this Court a petition for prohibition docketed as G.R. No.
155001. Later, the service providers joined their cause. Congressmen Salacnib Baterina, Clavel
Martinez and Constantino Jaraula, alleging that the said contracts compelled government
expenditure without appropriation, filed a similar petition docketed as G.R. No. 155547. And
several employees of the MIAA likewise filed a petition docketed as G.R. No. 155661 assailing the
legality of these agreements.
The Court ruled that in accordance with the provisions of R.A. No. 337, as amended, the maximum
amount that Security Bank, as one of the members of the Paircargo Consortium could validly
invest, is only 15% of its entire net worth. The total net worth, therefore of the Paircargo
Consortium, after considering the maximum amounts that may be validly invested by each of its
members, is only 6.08% of the project cost, which substantially less than the prescribed minimum
equity investment which is 30% of the project cost. Thus, the award of the contract by the PBAC to
the Paircargo Consortium, a disqualified bidder, is null and void.
As to the validity of the agreements, the ARCA obligates the Government to pay for all loans,
advances and obligations arising out of financial facilities extended to PIATCO for the
implementation of the NAIA IPT III project should PIATCO default in its loan obligations to its
Senior Lenders and the latter fails to appoint a qualified nominee or transferee. This in effect
would make the Government liable for PIATCO's loans should the conditions set forth in the ARCA
arise. This is a form of direct government guarantee and to declare the PIATCO contracts valid
despite the clear statutory prohibitions against a direct government guarantee would only make a
mockery of that the BOT Law seeks to prevent. The Court also ruled that the operation of an
international passenger airport terminal is no doubt an undertaking imbued with public interest.
Thus, the privilege given to PIATCO is subject to reasonable regulation and supervision by the
Government through the MIAA. Another thing, PIATCO, by the mere expedient of claiming an
exclusive right to operate, cannot require the Government to break its contractual obligations to
the service providers. Accordingly, the 1997 Concession Agreement, the Amended and Restated
Concession Agreement and the Supplements thereto were set aside for being null and void.
TCEaDI
SYLLABUS
1.REMEDIAL LAW; CIVIL PROCEDURE; PARTIES; INTEREST OF PERSON ASSAILING THE
CONSTITUTIONALITY OF A STATUTE MUST BE DIRECT AND PERSONAL. — The question on legal
standing is whether such parties have "alleged such a personal stake in the outcome of the
controversy as to assure that concrete adverseness which sharpens the presentation of issues
upon which the court so largely depends for illumination of difficult constitutional questions."
Accordingly, it has been held that the interest of a person assailing the constitutionality of a
statute must be direct and personal. He must be able, to show, not only that the law or any
government act is invalid, but also that he sustained or is in imminent danger of sustaining some
direct injury as a result of its enforcement, and not merely that he suffers thereby in some
indefinite way. It must appear that the person complaining has been or is about to be denied
some right or privilege to which he is lawfully entitled or that he is about to be subjected to some
burdens or penalties by reason of the statute or act complained of.
134
2.ID.; ID.; ID.; ID.; FINANCIAL PREJUDICE IS A LEGITIMATE INTEREST SUFFICIENT TO CONFER THE
REQUISITE STANDING. — [P]etitioners have a direct and substantial interest to protect by reason
of the implementation of the PIATCO Contracts. They stand to lose their source of livelihood, a
property right which is zealously protected by the Constitution. Moreover, subsisting concession
agreements between MIAA and petitioners-intervenors and service contracts between
international airlines and petitioners-intervenors stand to be nullified or terminated by the
operation of the NAIA IPT III under the PIATCO Contracts. The financial prejudice brought about by
the PIATCO Contracts on petitioners and petitioners-intervenors in these cases are legitimate
interests sufficient to confer on them the requisite standing to file the instant petitions.
3.ID.; ID.; ID.; ID.; COURT MUST BE MORE LIBERAL IN DETERMINING WHETHER THE PETITIONERS
HAVE LOCUS STANDI TO FILE A PETITION. — Standing is a peculiar concept in constitutional law
because in some cases, suits are not brought by parties who have been personally injured by the
operation of a law or any other government act but by concerned citizens, taxpayers or voters
who actually sue in the public interest. Although we are not unmindful of the cases of Imus
Electric Co. v. Municipality of Imus and Gonzales v. Raquiza wherein this Court held that
appropriation must be made only on amounts immediately demandable, public interest demands
that we take a more liberal view in determining whether the petitioners suing as legislators,
taxpayers and citizens have locus standi to file the instant petition. In Kilosbayan, Inc. v. Guingona,
this Court held "[i]n line with the liberal policy of this Court on locus standi, ordinary taxpayers,
members of Congress, and even association of planters, and non-profit civic organizations were
allowed to initiate and prosecute actions before this Court to question the constitutionality or
validity of laws, acts, decisions, rulings, or orders of various government agencies or
instrumentalities," Further, "insofar as taxpayers' suits are concerned . . . (this Court) is not devoid
of discretion as to whether or not it should be entertained." As such ". . . even if, strictly speaking,
they [the petitioners] are not covered by the definition, it is still within the wide discretion of the
Court to waive the requirement and so remove the impediment to its addressing and resolving the
serious constitutional questions raised." In view of the serious legal questions involved and their
impact on public interest, we resolve to grant standing to the petitioners.
4.ID.; ID.; JURISDICTION; HIERARCHY OF COURTS MAY BE RELAXED WHEN THE REDRESS DESIRED
CANNOT BE OBTAINED IN THE APPROPRIATE COURTS. — The rule on hierarchy of courts will not
also prevent this Court from assuming jurisdiction over the cases at bar. The said rule may be
relaxed when the redress desired cannot be obtained in the appropriate courts or where
exceptional and compelling circumstances justify availment of a remedy within and calling for the
exercise of this Court's primary jurisdiction. ATaDHC
5.ID.; ID.; ID.; PROCEDURAL BARS MAY BE LOWERED TO GIVE WAY FOR THE SPEEDY DISPOSITION
OF CASES OF TRANSCENDENTAL IMPORTANCE. — It is easy to discern that exceptional
circumstances exist in the cases at bar that call for the relaxation of the rule. Both petitioners and
respondents agree that these cases are of transcendental importance as they involve the
construction and operation of the country's premier international airport. Moreover, the crucial
issues submitted for resolution are of first impression and they entail the proper legal
interpretation of key provisions of the Constitution, the BOT Law and its Implementing Rules and
Regulations. Thus, considering the nature of the controversy before the Court, procedural bars
may be lowered to give way for the speedy disposition of the instant cases.
6.CIVIL LAW; OBLIGATIONS AND CONTRACTS; ARBITRATION CLAUSE; NOT BINDING TO PERSONS
NOT PARTIES TO THE CONTRACT. — It is established thatpetitioners in the present cases who have
presented legitimate interests in the resolution of the controversy are not parties to the PIATCO
Contracts. Accordingly, they cannot be bound by the arbitration clause provided for in the ARCA
and hence, cannot be compelled to submit to arbitration proceedings. A speedy and decisive
resolution of all the critical issues in the present controversy, including those raised by petitioners,
cannot be made before an arbitral tribunal. The object of arbitration is precisely to allow an
expeditious determination of a dispute. This objective would not be met if this Court were to
allow the parties to settle the cases by arbitration as there are certain issues involving non-parties
to the PIATCO Contracts which the arbitral tribunal will not be equipped to resolve.
7.POLITICAL LAW; ADMINISTRATIVE LAW; REPUBLIC ACT NO. 6957 (BUILD-OPERATE-ANDTRANSFER or BOT LAW); CONTRACT SHALL BE AWARDED TO THE BIDDER WHO SATISFIED THE.
MINIMUM FINANCIAL, TECHNICAL, ORGANIZATIONAL AND LEGAL STANDARDS REQUIRED BY LAW.
— Under the BOT Law, in case of a build-operate-and-transfer arrangement, the contract shall be
awarded to the bidder "who, having satisfied the minimum financial, technical, organizational and
leg standards" required by the law, has submitted the lowest bid and most favorable terms of the
project. . . . Accordingly, . . . the Paircargo Consortium or any challenger to the unsolicited
proposal of AEDC has to show that it possesses the requisite financial capability to undertake the
project in the minimum amount of 30% of the project cost through (i) proof of the ability to
provide a minimum amount of equity to the project, and (ii) a letter testimonial from reputable
banks attesting that the project proponent or members of the consortium are banking with them,
that they are in good financial standing, and that they have adequate resources.
8.ID.; ID.; ID.; ID.; TOTAL NET WORTH OF THE PAIRCARGO CONSORTIUM IS LESS THAT THE
PRESCRIBED MINIMUM EQUITY INVESTMENT REQUIRED FOR THE PROJECT. — We agree with
public respondents that with respect to Security Bank, the entire amount of its net worth could
not be invested in a single undertaking or enterprise, whether allied or non-allied in accordance
with the provisions of R.A. No. 337, as amended or the General Banking Act[.] . . . Thus, the
maximum amount that Security Bank could validly invest in the Paircargo Consortium is only
P528,525,656.55, representing 15% of its entire net worth. The total net worth therefore of the
Paircargo Consortium, after considering the maximum amounts that may be validly invested by
each of its members is P558,384,871.55 or only 6.08% of the project cost, an amount substantially
less than the prescribed minimum equity investment required for the project in the amount of
P2,755,095,000.00 or 30% of the project cost. cHaADC
9.ID.; ID.; PUBLIC BIDDING; PRE-QUALIFICATION STAGE; GOVERNMENT AGENCY MUST
DETERMINE THE BIDDER'S FINANCIAL CAPACITY. — The purpose of pre-qualification in any public
bidding is to determine, at the earliest opportunity, the ability of the bidder to undertake the
project. Thus, with respect to the bidder's financial capacity at the pre-qualification stage, the law
requires the government agency to examine and determine the ability of the bidder to fund the
entire cost of the project by considering the maximum amounts that each bidder may invest in the
project at the time of pre-qualification.
10.ID.; ID.; ID.; ID.; ID.; SHOULD DETERMINE THE MAXIMUM AMOUNT THAT EACH MEMBER OF
THE CONSORTIUM MAY COMMIT WITHOUT DISREGARDING THE INVESTMENT CEILINGS
PROVIDED BY APPLICABLE LAW. — The PBAC has determined that any prospective bidder, for the
construction, operation and maintenance of the NAIA IPT III project should prove that it has the
ability to provide equity in the minimum amount of 30% of the project cost, in accordance with
the 70:30 debt-to-equity ratio prescribed in the Bid Documents. Thus, in the case of Paircargo
Consortium, the PBAC should determine the maximum amounts that each member of the
consortium may commit for the construction, operation and maintenance of the NAIA IPT III
project at the time of pre-qualification. With respect to Security Bank, the maximum amount
which may be invested by it would only be 15% of its net worth in view of the restrictions imposed
by the General Banking Act. Disregarding the investment ceilings provided by applicable law would
not result in a proper evaluation of whether or not a bidder is pre-qualified to undertake the
project as for all intents and purposes, such ceiling or legal restriction determines the true
maximum amount which a bidder may invest in the project.
11.ID.; ID.; ID.; ID.; ID.; EVALUATION OF THE FINANCIAL CAPACITY OF THE BIDDER MUST BE AT
THE TIME THE BID IS SUBMITTED. — [T]he determination of whether or not a bidder is prequalified to undertake the project requires an evaluation of the financial capacity of the said
bidder at the time the bid is submittedbased on the required documents presented by the bidder.
The PBAC should not be allowed to speculate on the future financial ability of the bidder to
undertake the project on the basis of documents submitted. This would open doors to abuse and
defeat the very purpose of a public bidding. This is especially true in the case at bar which involves
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the investment of billions of pesos by the project proponent. The relevant government authority is
duty-bound to ensure that the awardee of the contract possesses the minimum required financial
capability to complete the project. To allow the PBAC to estimate the bidder's future financial
capability would not secure the viability and integrity of the project.
12.ID.; ID.; ID.; ID.; ID.; IF THE BIDDER FALLS SHORT OF THE MINIMUM AMOUNTS REQUIRED, THE
SAID BIDDER SHOULD BE DISQUALIFIED. — Thus, if themaximum amount of equity that a bidder
may invest in the project at the time the bids are submitted falls short of the minimum amounts
required to be put up by the bidder, said bidder should be properly disqualified. Considering that
at the pre-qualification stage, the maximum amounts which the Paircargo Consortium may invest
in the project fell short of the minimum amounts prescribed by the PBAC, we hold that Paircargo
Consortium was not a qualified bidder. Thus the award of the contract by the PBAC to the
Paircargo Consortium, a disqualified bidder, is null and void.
13.ID.; ID.; ID.; RESTRICTIVE AND CONSERVATIVE APPLICATION OF THE RULES AND PROCEDURE IS
NECESSARY. — A restrictive and conservative application of the rules and procedures of public
bidding is necessary not only to protect the impartiality and regularity of the proceedings but also
to ensure the financial and technical reliability of the project. It has been held that: "The basic rule
in public bidding is that bids should be evaluated based on the required documents submitted
before and not after the opening of bids. Otherwise, the foundation of a fair and competitive
public bidding would be defeated. Strict observance of the rules, regulations, and guidelines of the
bidding process is the only safeguard to a fair, honest and competitive public bidding." ACIDSc
14.ID.; ID.; ID.; PURPOSE. — By its very nature, public bidding aims to protect the public interest
by giving the public the best possible advantages through open competition. Thus: "Competition
must be legitimate, fair and honest. In the field of government contract law, competition requires,
not only bidding upon a common standard, a common basis, upon the same thing, the same
subject matter, the same undertaking,' but also that it be legitimate, fair and honest; and not
designed to injure or defraud the government."
15.ID.; ID.; ID.; ALL BIDDERS MUST BE ON EQUAL FOOTING ON THE CONTRACT RIDDED UPON. —
An essential element of a publicly bidded contract is that all bidders must be on equal footing. Not
simply in terms of application of the procedural rules and regulations imposed by the relevant
government agency, but more importantly, on the contract bidded upon. Each bidder must be
able to bid on the same thing. The rationale is obvious. If the winning bidder is allowed to later
include or modify certain provisions in the contract awarded such that the contract is altered in
any material respect, then the essence of fair competition in the public bidding is destroyed. A
public bidding would indeed be a farce if after the contract is awarded, the winning bidder may
modify the contract and include provisions which are favorable to it that were not previously
made available to the other bidders.
16.ID.; ID.; ID.; AMENDMENTS TO CONTRACT BIDDED; WINNING BIDDER IS NOT PRECLUDED
FROM MODIFYING OR AMENDING CERTAIN PROVISIONS OF THE CONTRACT THAT DOES NOT
CONSTITUTE SUBSTANTIAL OR MATERIAL AMENDMENTS. — While we concede that a winning
bidder is not precluded from modifying or amending certain provisions of the contract bidded
upon, such changes must not constitute substantial or material amendments that would alter the
basic parameters of the contract and would constitute a denial to the other bidders of the
opportunity to bid on the same terms. Hence, the determination of whether or not a modification
or amendment of a contract bidded out constitutes a substantial amendment rests on whether
the contract, when taken as a whole, would contain substantially different terms and conditions
that would have the effect of altering the technical and/or financial proposals previously
submitted by other bidders. The alterations and modifications in the contract executed between
the government and the winning bidder must be such as to render such executed contract to be
an entirely different contract from the one that was bidded upon.
17.ID.; ID.; ID.; ID.; SIGNIFICANT AMENDMENTS IN THE PIATCO'S DRAFT CONCESSION
AGREEMENT; TYPES OF FEES THAT MAY BE IMPOSED AND COLLECTED BY PIATCO. — When taken
as a whole, the changes under the 1997 Concession Agreement with respect to reduction in the
types of fees that are subject to MIAA regulation and the relaxation of such regulation with
respect to other fees are significant amendments that substantially distinguish the draft
Concession Agreement from the 1997 Concession Agreement. The 1997 Concession Agreement, in
this respect, clearly gives PIATCO more favorable terms than what was available to other bidders
at the time the contract was bidded out. It is not very difficult to see that the changes in the 1997
Concession Agreement translate to direct and concrete financial advantages for PIATCO which
were not available at the time the contract was offered for bidding. It cannot be denied that under
the 1997 Concession Agreement only "Public Utility Revenues" are subject to MIAA regulation.
Adjustments of all other fees imposed and collected by PIATCO are entirely within its control.
Moreover, with respect to terminal fees, under the 1997 Concession Agreement, the same is
further subject to "Interim Adjustments" not previously stipulated in the draft Concession
Agreement. Finally, the change in the currency stipulated for "Public Utility Revenues" under the
1997 Concession Agreement, except terminal fees, gives PIATCO an added benefit which was not
available at the time of bidding. acHCSD
18.ID.; ID.; ID.; ID.; ID.; ASSUMPTION BY THE GOVERNMENT OF THE LIABILITIES OF PIATCO IN THE
EVENT OF THE LATTER'S DEFAULT TRANSLATES BETTER TERMS AND CONDITION FOR PIATCO. —
Under the draft Concession Agreement, default by PIATCO of any of its obligations to creditors
who have provided, loaned or advanced funds for the NAIA IPT III project does not result in the
assumption by the Government of these liabilities. In fact, nowhere in the said contract does
default of PIATCO's loans figure in the agreement. Such default does not directly result in any
concomitant right or obligation in favor of the Government. However, the 1997 Concession
Agreement . . . [u]nder . . . Section 4.04 in relation to the definition of "Attendant Liabilities,"
default by PIATCO of its loans used to finance the NAIA IPT III project triggers the occurrence of
certain events that leads to the assumption by the Government of the liability for the loans. Only
in one instance may the Government escape the assumption of PIATCO's liabilities, i.e., when the
Government so elects and allows a qualified operator to take over as Concessionaire. However,
this circumstance is dependent on the existence and availability of a qualified operator who is
willing to take over the rights and obligations of PIATCO under the contract, a circumstance that is
not entirely within the control of the Government. Without going into the validity of this provision
at this juncture, suffice it to state that Section 4.04 of the 1997 Concession Agreement may be
considered a form of security for the loans PIATCO has obtained to finance the project, an option
that was not made available in the draft Concession Agreement. Section 4.04 is an important
amendment to the 1997 Concession Agreement because it grants PIATCO a financial advantage or
benefit which was not previously made available during the bidding process. This financial
advantage is a significant modification that translates to better terms and conditions for PIATCO.
19.ID.; ID.; ID.; ID.; SHOULD ALWAYS CONFORM TO THE GENERAL PUBLIC POLICY. — [T]his Court
maintains that amendments to the contract bidded upon should always conform to the general
policy on public bidding if such procedure is to be faithful to its real nature and purpose. By its
very nature and characteristic, competitive public bidding aims to protect the public interest by
giving the public the best possible advantages through open competition. It has been held that the
three principles in public bidding are (1) the offer to the public; (2) opportunity for competition;
and (3) a basis for the exact comparison of bids. A regulation of the matter which excludes any of
these factors destroys the distinctive character of the system and thwarts the purpose of its
adoption. These are the basic parameters which every awardee of a contract bidded out must
conform to, requirements of financing and borrowing notwithstanding. Thus, upon a concrete
showing that, as in this case, the contract signed by the government and the contract awardee is
an entirely different contract from the contract bidded, courts should not hesitate to strike down
said contract in its entirety for violation of public policy on public bidding. A strict adherence on
the principles, rules and regulations on public bidding must be sustained if only to preserve the
integrity and the faith of the general public on the procedure.
20.ID.; ID.; ID.; ID.; ANY GOVERNMENT ACTION WHICH PERMITS ANY SUBSTANTIAL VARIANCE
THEREOF IS A GRAVE ABUSE OF DISCRETION. — Public bidding is a standard practice for procuring
government contracts for public service and for furnishing supplies and other materials. It aims to
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secure for the government the lowest possible price under the most favorable terms and
conditions, to curtail favoritism in the award of government contracts and avoid suspicion of
anomalies and it places all bidders in equal footing. Any government action which permits any
substantial variance between the conditions under which the bids are invited and the contract
executed after the award thereof is a grave abuse of discretion amounting to lack or excess of
jurisdiction which warrants proper judicial action. CaHcET
21.ID.; ID.; ID.; ID.; DIRECTLY TRANSLATES CONCRETE FINANCIAL ADVANTAGES TO PIATCO THAT
WERE PREVIOUSLY NOT AVAILABLE DURING THE BIDDING PROCESS. — The fact that the . . .
substantial amendments were made on the 1997 Concession Agreement renders the same null
and void for being contrary to public policy. These amendments convert the 1997 Concession
Agreement to an entirely different agreement from the contract bidded out or the draft
Concession Agreement. It is not difficult to see that the amendments on (1) the types of fees or
charges that are subject to MIAA regulation or control and the extent thereof and (2) the
assumption by the Government, under certain conditions, of the liabilities of PIATCO directly
translates concrete financial advantages to PIATCO that were previously not available during the
bidding process. These amendments cannot be taken as merely supplements to or implementing
provisions of those already existing in the draft Concession Agreement. The amendments
discussed above present new terms and conditions which provide financial benefit to PIATCO
which may have altered the technical and financial parameters of other bidders had they known
that such terms were available.
22.ID.; ID.; BOT LAW; PURPOSE. — One of the main impetus for the enactment of the BOT Law is
the lack of government funds to construct the infrastructure and development projects necessary
for economic growth and development. This is why private sector resources are being tapped in
order to finance these projects. The BOT law allows the private sector to participate, and is in fact
encouraged to do so by way of incentives, such as minimizing, the unstable flow of returns,
provided that the government would not have to unnecessarily expend scarcely available funds
for the project itself. As such, direct guarantee, subsidy and equity by the government in these
projects are strictly prohibited. This is but logical for if the government would in the end still be at
a risk of paying the debts incurred by the private entity in the BOT projects, then the purpose of
the law is subverted.
23.ID.; ID.; ID.; CONDITIONS FOR THE ACCEPTANCE OF THE UNSOLICITED PROPOSAL FOR A BOT
PROJECT. — The BOT Law and its implementing rules provide that in order for an unsolicited
proposal for a BOT project may be accepted, the following conditions must first be met: (1) the
project involves a new concept in technology and/or is not part of the list of priority projects, (2)
no direct government guarantee, subsidy or equity is required, and (3) the government agency or
local government unit has invited by publication other interested parties to a public bidding and
conducted the same. The failure to meet any of the above conditions will result in the denial of
the proposal.
24.ID.; ID.; ID.; STRICTLY PROHIBITS DIRECT GOVERNMENT GUARANTEE, SUBSIDY AND EQUITY IN
UNSOLICITED PROPOSAL. — It is further provided that the presence of direct government
guarantee, subsidy or equity will "necessarily, disqualify a proposal from being treated and
accepted as an unsolicited proposal." The BOT Law clearly and strictly prohibits direct government
guarantee, subsidy and equity in unsolicited proposals that the mere inclusion of a provision to
that effect is fatal and is sufficient to deny the proposal. It stands to reason therefore that if a
proposal can be denied by reason of the existence of direct government guarantee, then its
inclusion in the contract executed after the said proposal has been accepted is likewise sufficient
to invalidate the contract itself. A prohibited provision, the inclusion of which would result in the
denial of a proposal cannot, and should not, be allowed to later on be inserted in the contract
resulting from the said proposal. The basic rules of justice and fair play alone militate against such
an occurrence and must not, therefore, be countenanced particularly in this instance where the
government is exposed to the risk of shouldering hundreds of million of dollars in debt. CSDcTA
25.ID.; ID.; ID.; ID.; VIOLATED IN CASE AT BAR. — The proscription against government guarantee
in any form is one of the policy considerations behind the BOT Law. Clearly, in the present case,
the ARCA obligates the Government to pay for all loans, advances and obligations arising out of
financial facilities extended to PIATCO for the implementation of the NAIA IPT III project should
PIATCO default in its loan obligations to its Senior Lenders and the latter fails to appoint a
qualified nominee or transferee. This in effect would make the Government liable for PIATCO's
loans should the conditions as set forth in the ARCA arise. This is a form of direct government
guarantee. . . . This Court has long and consistently adhered to the legal maxim that those that
cannot be done directly cannot be done indirectly. To declare the PIATCO contracts valid despite
the clear statutory prohibition against a direct government guarantee would not only make a
mockery of what the BOT Law seeks to prevent — which is to expose the government to the risk
of incurring a monetary obligation resulting from a contract of loan between the project
proponent and its lenders and to which the Government is not a party to — but would also render
the BOT Law useless for what it seeks to achieve — to make use of the resources of the private
sector in the "financing, operation and maintenance of infrastructure and development projects"
which are necessary for national growth and development but which the government,
unfortunately, could ill-afford to finance at this point in time.
26.ID.; CONSTITUTIONAL LAW; POLICE POWER; TEMPORARY TAKEOVER OF BUSINESS AFFECTED
WITH PUBLIC INTEREST; GOVERNMENT IS NOT REQUIRED TO COMPENSATE THE PRIVATE ENTITYOWNER. — Article XII, Section 17 of the 1987 Constitution . . . pertains to the right of the State in
times of national emergency, and in the exercise of its police power, to temporarily take over the
operation of any business affected with public interest. In the 1986 Constitutional Commission,
the term "national emergency" was defined to include threat from external aggression, calamities
or national disasters, but not strikes "unless it is of such proportion that would paralyze
government service." The duration of the emergency itself is the determining factor as to how
long the temporary takeover by the government would last. The temporary takeover by the
government extends only to the operation of the business and not to the ownership thereof. As
such thegovernment is not required to compensate the private entity-owner of the said business
as there is no transfer of ownership, whether permanent or temporary. The private entity-owner
affected by the temporary takeover cannot, likewise, claim just compensation for the use of the
said business and its properties as the temporary takeover by the government is in exercise of its
police power and not of its power of eminent domain.
27.ID.; ID.; ID.; ID.; ID.; CANNOT BE CONTRAVENED BY MERE CONTRACTUAL STIPULATION. —
PIATCO cannot, by mere contractual stipulation, contravene the Constitutional provision on
temporary government takeover and obligate the government to pay "reasonable cost for the use
of the Terminal and/or Terminal Complex." Article XII, Section 17 of the 1987 Constitution
envisions a situation wherein the exigencies of the times necessitate the government to
"temporarily take over or direct the operation of any privately owned public utility or business
affected with public interest." It is the welfare and interest of the public which is the paramount
consideration in determining whether or not to temporarily take over a particular business.
Clearly, the State in effecting the temporary takeover is exercising its police power. Police power is
the "most essential, insistent, and illimitable of powers." Its exercise therefore must not be
unreasonably hampered nor its exercise be a source of obligation by the government in the
absence of damage due to arbitrariness of its exercise. Thus, requiring the government to pay
reasonable compensation for the reasonable use of the property pursuant to the operation of the
business contravenes the Constitution.
28.ID.; ID.; NATIONAL ECONOMY AND PATRIMONY; CONSTITUTION STRICTLY REGULATES
MONOPOLIES. — A monopoly is "a privilege or peculiar advantage vested in one or more persons
or companies, consisting in the exclusive right (or power) to carry on a particular business or
trade, manufacture a particular article, or control the sale of a particular commodity." The 1987
Constitution strictly regulates monopolies, whether private or public, and even provides for their
prohibition if public interest so requires. . . . Clearly, monopolies are not per se prohibited by the
Constitution but may be permitted to exist to aid the government in carrying on an enterprise or
137
to aid in the performance of various services and functions in the interest of the public.
Nonetheless, a determination must first be made as to whether public interest requires a
monopoly. As monopolies are subject to abuses that can inflict severe prejudice to the public, they
are subject to a higher level of State regulation than an ordinary business undertaking. ETHIDa
29.ID.; ID.; ID.; ID.; PRIVILEGE GIVEN TO PIATCO SHOULD BE SUBJECT TO REASONABLE
REGULATION AND SUPERVISION BY THE GOVERNMENT. — The operation of an international
passenger airport terminal is no doubt an undertaking imbued with public interest. In entering
into a Build-Operate-and-Transfer contract for the construction, operation and maintenance of
NAIA IPT III, the government has determined that public interest would be served better if private
sector resources were used in its construction and an exclusive right to operate be granted to the
private entity undertaking the said project, in this case PIATCO. Nonetheless, the privilege given to
PIATCO is subject to reasonable regulation and supervision by the Government through the MIAA,
which is the government agency authorized to operate the NAIA complex, as well as DOTC, the
department to which MIAA is attached. This is in accord with the Constitutional mandate that a
monopoly which is not prohibited must be regulated.
30.ID.; ID.; ID.; ID.; OPERATION OF PUBLIC UTILITY CANNOT BE DONE IN AN ARBITRARY MANNER
TO THE DETRIMENT OF THE PUBLIC. — While it is the declared policy of the BOT Law to encourage
private sector participation by "providing a climate of minimum government regulations," the
same does not mean that Government must completely surrender its sovereign power to protect
public interest in the operation of a public utility as a monopoly. The operation of said public
utility can not be done in an arbitrary manner to the detriment of the public which it seeks to
serve. The right granted to the public utility may be exclusive but the exercise of the right cannot
run riot. Thus, while PIATCO may be authorized to exclusively operate NAIA IPT III as an
international passenger terminal, the Government, through the MIAA, has the right and the duty
to ensure that it is done in accord with public interest. PIATCO's right to operate NAIA IPT III
cannot also violate the rights of third parties.
31.ID.; ID.; BILL OF RIGHTS NON-IMPAIRMENT OF OBLIGATIONS OF CONTRACT; PIATCO, BY
CLAIMING AN EXCLUSIVE RIGHT TO OPERATE, CANNOT REQUIRE THE GOVERNMENT TO BREAK ITS
CONTRACTUAL OBLIGATIONS TO THE SERVICE PROVIDERS. — We hold that while the service
providers presently operating at NAIA Terminal 1 do not have an absolute right for the renewal or
the extension of their respective contracts, those contracts whose duration extends beyond NAIA
IPT III's In-Service-Date should not be unduly prejudiced. These contracts must be respected not
just by the parties thereto but also by third parties. PIATCO cannot, by law and certainly not by
contract, render a valid and binding contract nugatory. PIATCO, by the mere expedient of claiming
an exclusive right to operate, cannot require the Government to break its contractual obligations
to the service providers. In contrast to the arrastre and stevedoring service providers in the case
of Anglo-Fil Trading Corporation v. Lazaro whose contracts consist of temporary hold-over
permits, the affected service providers in the cases at bar, have a valid and binding contract with
the Government, through MIAA, whose period of effectivity, as well as the other terms and
conditions thereof cannot be violated.
32.ID.; ID.; ID.; ID.; MIAA SHOULD ENSURE THAT WHOEVER BY CONTRACT IS GIVEN THE RIGHT TO
OPERATE NAIA IPT III WILL DO SO WITHIN THE BOUNDS OF THE LAW. — In fine, the efficient
functioning of NAIA IPT III is imbued with public interest. The provisions of the 1997 Concession
Agreement and the ARCA did not strip government, thru the MIAA, of its right to supervise the
operation of the whole NAIA complex, including NAIA IPT III. As the primary government agency
tasked with the job, it is MIAA's responsibility to ensure that whoever by contract is given the right
to operate NAIA IPT III will do so within the bounds of the law and with due regard to the rights of
third parties and above all, the interest of the public. TSHIDa
PANGANIBAN, J., separate opinion:
1.REMEDIAL LAW; SPECIAL CIVIL ACTION; PROHIBITION; DIRECT RESORT TO THE SUPREME COURT
BY THE EMPLOYEES WHO FEARED LOSS OF THEIR JOBS IS JUSTIFIED. — The Court has, in the past,
held that questions relating to gargantuan government contracts ought to be settled without
delay. This holding applies with greater force to the instant cases. Respondent Piatco is partly
correct in averring that petitioners can obtain relief from the regional trial courts via an action to
annul the contracts. Nevertheless, the unavoidable consequence of having to await the rendition
and the finality of any such judgment would be a prolonged state of uncertainty that would be
prejudicial to the nation, the parties and the general public. And, in light of the feared loss of jobs
of the petitioning workers, consequent to the inevitable pretermination of contracts of the
petitioning service providers that will follow upon the heels of the impending opening of NAIA
Terminal III, the need for relief is patently urgent, and therefore, direct resort to this Court
through the special civil action of prohibition is thus justified.
2.ID.; ID.; ID.; DISPOSITION THEREOF ULTIMATELY RUNS ON QUESTIONS OF LAW; CASE AT BAR. —
Contrary to Piatco's argument that the resolution of the issues raised in the Petitions will require
delving into factual questions, I submit that their disposition ultimately turns on questions of law.
Further, many of the significant and relevant factual questions can be easily addressed by an
examination of the documents submitted by the parties. In any event, the Petitions raise some
novel questions involving the application of the amended BOT Law, which this Court has seen fit
to tackle.
3.ID.; CIVIL PROCEDURE; ARBITRATION PROCEEDINGS; CANNOT ADDRESS, DETERMINE AND
DEFINITIVELY RESOLVE THE CONSTITUTIONAL AND LEGAL QUESTIONS. — As will be discussed at
length later, the Piatco contracts are indeed void in their entirety; thus, a resort to the aforesaid
provision on arbitration is unavailing. Besides, petitioners and petitioners-in-intervention have
pointed out that, even granting arguendo that the arbitration clause remained a valid provision, it
still cannot bind them inasmuch as they are not parties to the Piatco contracts. And in the final
analysis, it is unarguable that the arbitration process provided for under Section 10.02 of the
Amended and Restated Concession Agreement (ARCA), to be undertaken by a panel of three (3)
arbitrators appointed in accordance with the Rules of Arbitration of the International Chamber of
Commerce, will not be able to address, determine and definitively resolve the constitutional and
legal questions that have been raised in the Petitions before us.
4.ID.; ID.; LOCUS STANDI; CITIZEN, TAXPAYER AND MEMBERS OF THE HOUSE OF
REPRESENTATIVES ARE SUFFICIENTLY CLOTHED WITH STANDING TO BRING SUIT QUESTIONING
THE VALIDITY OF CONTRACT AFFECTING PUBLIC INTEREST. — Given this Court's previous decisions
in cases of similar import, no one will seriously doubt that, being taxpayers and members of the
House of Representatives, Petitioners Baterina et al. have locus standi to bring the Petition in GR
No. 155547. In Albano v. Reyes, this Court held that the petitioner therein, suing as a citizen,
taxpayer and member of the House of Representatives, was sufficiently clothed with standing to
bring the suit questioning the validity of the assailed contract. The Court cited the fact that public
interest was involved, in view of the important role of the Manila International Container Terminal
(MICT) in the country's economic development and the magnitude of the financial consideration.
This, notwithstanding the fact that expenditure of public funds was not required under the
assailed contract. CcEHaI
5.ID.; ID.; ID.; MEMBERS OF HOUSE OF REPRESENTATIVES ARE DEPRIVED OF DISCRETION; CASE AT
BAR. — In the cases presently under consideration, petitioners' personal and substantial interest
in the controversy is shown by the fact that certain provisions in the Piatco contracts create
obligations on the part of government (through the DOTC and the MIAA) to disburse public funds
without prior congressional appropriations. Petitioners thus correctly assert that the injury to
them has a twofold aspect: (1) they are adversely affected as taxpayers on account of the illegal
disbursement of public funds; and (2) they are prejudiced qualegislators, since the contractual
provisions requiring the government to incur expenditures without appropriations also operate as
limitations upon the exclusive power and prerogative of Congress over the public purse. As
members of the House of Representatives, they are actually deprived of discretion insofar as the
inclusion of those items of expenditure in the budget is concerned. To prevent such encroachment
upon the legislative privilege and obviate injury to the institution of which they are members,
petitioners-legislators have locus standi to bring suit.
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6.ID.; ID.; ID.; EMPLOYEES ARE CONFRONTED WITH THE PROSPECT OF BEING LAID OFF FROM
THEIR JOBS. — Messrs. Agan et al. and Lopez et al., are likewise taxpayers and thus possessed of
standing to challenge the illegal disbursement of public funds. Messrs. Agan et al., in particular,
are employees (or representatives of employees) of various service providers that have (1) existing
concession agreements with the MIAA to provide airport services necessary to the operation of
the NAIA and (2) service agreements to furnish essential support services to the international
airlines operating at the NAIA. Messrs. Lopez et al. are employees of the MIAA. These petitioners
(Messrs. Agan et al. and Messrs. Lopez et al.) are confronted with the prospect of being laid off
from their jobs and losing their means of livelihood when their employer-companies are forced to
shut down or otherwise retrench and cut back on manpower. Such development would result
from the imminent implementation of certain provisions in the contracts that tend toward the
creation of a monopoly in favor of Piatco, its subsidiaries and related companies.
7.ID.; ID.; ID.; SERVICE PROVIDERS CLAIM TO BE DEPRIVED OF THEIR PROPERTY AND OF THE
LIBERTY TO CONTRACT WITHOUT DUE PROCESS OF LAW. — Petitioners-in-intervention are service
providers in the business of furnishing airport-related services to international airlines and
passengers in the NAIA and are therefore competitors of Piatco as far as that line of bu