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JUST COMPENSATION

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.
GUTIERREZ, JR., J.:
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794 and 1533 have repealed and superseded Sections 5 to 8 of Rule 67 of the Revised Rules of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.
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 acccordance 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
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 flied 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 Med 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 flied 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

fundametal 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 onjust
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 ofappeals (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.
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 ihat 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 wellentrenched 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,
351; 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 Pao, 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.

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.
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 ubrupt 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.

MOISES TINIO, JR. and FRANCIS TINIO, Petitioners,


vs.
NATIONAL POWER CORPORATION, Respondent.
DECISION
PERALTA, J.:
Before the Court are two consolidated petitions for review on certiorari under Rule 45 of the
Rules of Court both seeking the reversal and setting aside of the Decision1 of the Court of
Appeals (CA) in CA-G.R. CV No. 70252, dated November 19, 2003. The assailed CA Decision
modified the Resolution2 dated January 22, 2001, of the Regional Trial Court (RTC) of Urdaneta,
Pangasinan, Branch 48 in Civil Case No. U-6938.
The pertinent factual and procedural antecedents of the case are as follows:
The National Power Corporation (NPC) is a government-owned and controlled corporation
created and existing by virtue of Republic Act No. 6395,3 as amended by Presidential Decree
No. 938. The main purpose of the NPC, as stated in its charter, is to undertake the development
of hydroelectric generation of power and the production of electricity from nuclear, geothermal
and other sources, as well as the transmission of electric power on a nationwide basis. In order
to accomplish its objectives, the NPC is granted the power, among others, to exercise the right
of eminent domain.
For purposes of constructing and maintaining its San Roque Multi-Purpose Project, which is one
of the major undertakings of the government for North Luzon, the NPC filed on October 13,
1999 a complaint for eminent domain with the RTC of Urdaneta, Pangasinan against Moises
Tinio, Jr. and Francis Tinio (hereafter collectively referred to as the Tinios) for the purpose of
expropriating a parcel of land owned by the Tinios. The subject property, consisting of 52,710
square meters, denominated as Lot 14556-A and covered by Transfer Certificate of Title (TCT)
No. T-5775, is located at Barangay San Roque, San Manuel, Pangasinan.
Prior to filing its complaint, the NPC took possession of the subject land on February 9, 1998 by
virtue of a Permit to Enter signed by Moises.
During the pre-trial conference, one of the stipulations proposed by the NPC and admitted by
the Tinios is the authority of the NPC to expropriate the subject lot. Thus, the parties agreed that
the only issue left for determination by the trial court is the just compensation to be paid to the
Tinios.
Commissioners were then appointed to appraise the value of the subject property and,
thereafter, to make a recommendation to the RTC. Subsequently, the commissioners made
separate reports and recommendations.
On January 22, 2001, the trial court issued a Resolution disposing of the case as follows:
WHEREFORE, PREMISES CONSIDERED, the Court hereby orders the National Power
Corporation to pay defendants Moises Tinio, Jr. and Francis Tinio the amount

of P12,850,400.00, plus legal interest until fully paid as just compensation for Lot No. 14556
under TCT No. T-5775 with a total area of 52,710 sq.m.
Costs against the plaintiff.
SO ORDERED.4
NPC filed a Motion for Reconsideration,5 but the same was denied by the RTC in an
Order6 dated February 20, 2001.
Thereafter, the NPC appealed the January 22, 2001 Resolution and February 20, 2001 Order of
the RTC with the CA.
On November 19, 2003, the CA rendered its presently assailed Decision, with the following
dispositive portion:
In view of the Foregoing, the resolution appealed from is MODIFIED, in that the NPC is ordered
to pay the defendants as just compensation for the land taken from them, the amount
of P2,343,900 with legal interest of 6 percent [per] annum from February 9, 1998 until paid.
SO ORDERED.7
Feeling aggrieved, both the NPC and the Tinios are now before this Court arguing that the CA
committed error in its judgment.
Praying that the judgment of the RTC be reinstated, the Tinios contend that the CA erred in
affirming the findings of the RTC that the NPC took possession of, or entered upon, the subject
property on February 9, 1998.
They also argue that the CA erred in arriving at a lower amount of just compensation than that
arrived at by the RTC on the ground that before the NPC made improvements on the subject
property, the same was already classified as industrial or commercial land. The Tinios claim that
in 1997, the NPC declared its properties in Barangay San Roque, San Manuel, Pangasinan, as
commercial lands with a value of P250.00 per square meter. They aver that the subject lot is
within the vicinity of the NPC properties. As such, any increase in the value of the NPC
properties should also redound to the benefit of the lands which are located within the same
locality.
On its part, the NPC's main asseveration is that the CA erred in relying on the present state and
character of the subject land as commercial in determining just compensation. It prayed for the
reduction of the just compensation awarded by the CA.
The issues raised by the parties boil down to the question of whether the CA was correct in its
determination of just compensation as based on its findings on the time of taking of the subject
property and the nature and character of the subject property at the time of such taking.
The Court finds no error in the assailed Decision of the CA.

With respect to the time of the taking of the subject property, the findings of fact of the CA and
the RTC with respect to this issue shall no longer be disturbed. It is axiomatic that this Court will
not review, much less reverse, the factual findings of the CA, especially where, as in this case,
such findings coincide with those of the trial court and that these findings are supported by
sufficient evidence. Both the RTC and the CA are one in finding that the NPC took possession of
the subject lot on February 9, 1998 as evidenced by a Permit to Enter Land/Property8 signed by
Moises on even date. While the Tinios aver that Moises was deceived into signing the said
permit, no evidence was presented to prove this allegation.
As to the nature and character of the subject lot at the time of its taking, the Court takes
exception to the contention of the NPC that the CA determined the value of just compensation
on the basis of the subject lot's classification as industrial.
A perusal of the disputed decision of the CA would clearly show that the appellate court's
determination of just compensation is based on its finding that 12,710 square meters of the
subject property was considered residential and that the remaining 40,000 square meter portion
thereof was classified as agricultural land at the time of taking of the said lot. This finding is
based on a certification dated March 10, 1998 issued by the Municipal Assessor of San Manuel,
Pangasinan, attesting to the fact that the disputed property was indeed partly residential and
largely agricultural prior to its possession by the NPC. In this respect, the Court agrees with the
following findings of the CA:
x x x The four government offices which gave their contemporaneous findings at the time were
one in saying that of the total area of 5.2 hectares, 4 were for agricultural use. About 1.2
hectares had been traversed by the hydro highway, and an area of this size was specifically
determined by the municipal assessor to be residential in character. x x x9
In fact, an examination of the evidence on record, to wit: a subsequent certification issued by
the Municipal Assessor, dated August 11, 1998, and the Tinios' Tax Declaration for 1999, would
show that the subject lot was classified as industrial only after six months upon the NPC's entry
into and development of the said land.
It is settled that the nature and character of the land at the time of its taking is the principal
criterion for determining how much just compensation should be given to the landowner.10
Hence, the argument of the Tinios that the subject property should benefit from the subsequent
classification of its adjoining properties as industrial lands is, likewise, untenable. The Court, in a
number of cases,11 has enunciated the principle that it would be injustice on the part of the
expropriator where the owner would be given undue incremental advantages arising from the
use to which the government devotes the property expropriated.
1wphi1

In the instant case, it cannot be denied that prior to the NPC's introduction of improvements in
the area where the subject parcel of land is located, the properties therein, including the
disputed lot, remained agricultural and residential. It was only upon entry of the NPC in
Barangay San Roque, and after constructing buildings and other facilities and bringing in
various equipment for its multi-purpose project, that the lands in the said locality were later
classified as commercial or industrial.

Stated differently, to allow the Tinios to ask compensation on the basis of the subsequent
classification of the contested lot as industrial 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.
WHEREFORE, the petitions are DENIED. The Decision of the Court of Appeals, dated
November 19, 2003, in CA-G.R. CV No. 70252, is AFFIRMED.
SO ORDERED.

WHEN SHOULD JUST COMPENSATION BE FIXED?

SANTIAGO ESLABAN, JR., in his capacity as Project Manager of the National Irrigation
Administration, petitioner,
vs.
CLARITA VDA. DE ONORIO, respondent.
MENDOZA, J.:
This is a petition for review of the decision1 of the Court of Appeals which affirmed the decision
of the Regional Trial Court, Branch 26, Surallah, South Cotabato, ordering the National Irrigation
Administration (NIA for brevity) to pay respondent the amount of P107,517.60 as just
compensation for the taking of the latters property.
The facts are as follows:
Respondent Clarita Vda. de Enorio is the owner of a lot in Barangay M. Roxas, Sto. Nio, South
Cotabato with an area of 39,512 square meters. The lot, known as Lot 1210-A-Pad-11-000586,
is covered by TCT No. T-22121 of the Registry of Deeds, South Cotabato. On October 6, 1981,
Santiago Eslaban, Jr., Project Manager of the NIA, approved the construction of the main
irrigation canal of the NIA on the said lot, affecting a 24,660 square meter portion thereof.
Respondents husband agreed to the construction of the NIA canal provided that they be paid by
the government for the area taken after the processing of documents by the Commission on
Audit.
Sometime in 1983, a Right-of-Way agreement was executed between respondent and the NIA
(Exh. 1). The NIA then paid respondent the amount of P4,180.00 as Right-of-Way damages.
Respondent subsequently executed an Affidavit of Waiver of Rights and Fees whereby she
waived any compensation for damages to crops and improvements which she suffered as a
result of the construction of a right-of-way on her property (Exh. 2). The same year, petitioner
offered respondent the sum of P35,000.00 by way of amicable settlement pursuant to Executive
Order No. 1035, 18, which provides in part that
Financial assistance may also be given to owners of lands acquired under C.A. 141, as
amended, for the area or portion subject to the reservation under Section 12 thereof in such

amounts as may be determined by the implementing agency/instrumentality concerned in


consultation with the Commission on Audit and the assessors office concerned.

Respondent demanded payment for the taking of her property, but petitioner refused to pay.
Accordingly, respondent filed on December 10, 1990 a complaint against petitioner before the
Regional Trial Court, praying that petitioner be ordered to pay the sum of P111,299.55 as
compensation for the portion of her property used in the construction of the canal constructed by
the NIA, litigation expenses, and the costs.
Petitioner, through the Office of the Solicitor-General, filed an Answer, in which he admitted that
NIA constructed an irrigation canal over the property of the plaintiff and that NIA paid a certain
landowner whose property had been taken for irrigation purposes, but petitioner interposed the
defense that: (1) the government had not consented to be sued; (2) the total area used by the
NIA for its irrigation canal was only 2.27 hectares, not 24,600 square meters; and (3)
respondent was not entitled to compensation for the taking of her property considering that she
secured title over the property by virtue of a homestead patent under C.A. No. 141.
At the pre-trial conference, the following facts were stipulated upon: (1) that the area taken was
24,660 square meters; (2) that it was a portion of the land covered by TCT No. T-22121 in the
name of respondent and her late husband (Exh. A); and (3) that this area had been taken by the
NIA for the construction of an irrigation canal.2
On October 18, 1993, the trial court rendered a decision, the dispositive portion of which reads:
In view of the foregoing, decision is hereby rendered in favor of plaintiff and against the
defendant ordering the defendant, National Irrigation Administration, to pay to plaintiff the
sum of One Hundred Seven Thousand Five Hundred Seventeen Pesos and Sixty Centavos
(P107,517.60) as just compensation for the questioned area of 24,660 square meters of land
owned by plaintiff and taken by said defendant NIA which used it for its main canal plus
costs.3

On November 15, 1993, petitioner appealed to the Court of Appeals which, on October 31,
2000, affirmed the decision of the Regional Trial Court. Hence this petition.
The issues in this case are:
1. WHETHER OR NOT THE PETITION IS DISMISSIBLE FOR FAILURE TO COMPLY WITH
THE PROVISIONS OF SECTION 5, RULE 7 OF THE REVISED RULES OF CIVIL
PROCEDURE.
2. WHETHER OR NOT LAND GRANTED BY VIRTUE OF A HOMESTEAD PATENT AND
SUBSEQUENTLY REGISTERED UNDER PRESIDENTIAL DECREE 1529 CEASES TO BE
PART OF THE PUBLIC DOMAIN.
3. WHETHER OR NOT THE VALUE OF JUST COMPENSATION SHALL BE DETERMINED
FROM THE TIME OF THE TAKING OR FROM THE TIME OF THE FINALITY OF THE
DECISION.

4. WHETHER THE AFFIDAVIT OF WAIVER OF RIGHTS AND FEES EXECUTED BY


RESPONDENT EXEMPTS PETITIONER FROM MAKING PAYMENT TO THE FORMER.

We shall deal with these issues in the order they are stated.
First. Rule 7, 5 of the 1997 Revised Rules on Civil Procedure provides
Certification against forum shopping. The plaintiff or principal party shall certify under oath
in the complaint or other initiatory pleading asserting a claim for relief, or in a sworn
certification annexed thereto and simultaneously filed therewith: (a) that he has not
theretofore commenced any action or filed any claim involving the same issues in any court,
tribunal or quasi-judicial agency and, to the best of his knowledge, no such other action or
claim is pending therein; (b) if there is such other pending action or claim, a complete
statement of the present status thereof; and (c) if he should thereafter learn that the same or
similar action or claim has been filed or is pending, he shall report the fact within five (5)
days therefrom to the court wherein his aforesaid complaint or initiatory pleading has been
filed.
Failure to comply with the foregoing requirements shall not be curable by mere amendment
of the complaint or other initiatory pleading but shall be cause for the dismissal of the case
without prejudice, unless otherwise provided, upon motion and after hearing . . . .

By reason of Rule 45, 4 of the 1997 Revised Rules on Civil Procedure, in relation to Rule 42,
2 thereof, the requirement of a certificate of non-forum shopping applies to the filing of petitions
for review on certiorari of the decisions of the Court of Appeals, such as the one filed by
petitioner.
As provided in Rule 45, 5, "The failure of the petitioner to comply with any of the foregoing
requirements regarding . . . the contents of the document which should accompany the petition
shall be sufficient ground for the dismissal thereof."
The requirement in Rule 7, 5 that the certification should be executed by the plaintiff or the
principal means that counsel cannot sign the certificate against forum-shopping. The reason for
this is that the plaintiff or principal knows better than anyone else whether a petition has
previously been filed involving the same case or substantially the same issues. Hence, a
certification signed by counsel alone is defective and constitutes a valid cause for dismissal of
the petition.4
In this case, the petition for review was filed by Santiago Eslaban, Jr., in his capacity as Project
Manager of the NIA. However, the verification and certification against forum-shopping were
signed by Cesar E. Gonzales, the administrator of the agency. The real party-in-interest is the
NIA, which is a body corporate. Without being duly authorized by resolution of the board of the
corporation, neither Santiago Eslaban, Jr. nor Cesar E. Gonzales could sign the certificate
against forum-shopping accompanying the petition for review. Hence, on this ground alone, the
petition should be dismissed.
Second. Coming to the merits of the case, the land under litigation, as already stated, is
covered by a transfer certificate of title registered in the Registry Office of Koronadal, South

Cotabato on May 13, 1976. This land was originally covered by Original Certificate of Title No.
(P-25592) P-9800 which was issued pursuant to a homestead patent granted on February 18,
1960. We have held:
Whenever public lands are alienated, granted or conveyed to applicants thereof, and the
deed grant or instrument of conveyance [sales patent] registered with the Register of Deeds
and the corresponding certificate and owners duplicate of title issued, such lands are
deemed registered lands under the Torrens System and the certificate of title thus issued is
as conclusive and indefeasible as any other certificate of title issued to private lands in
ordinary or cadastral registration proceedings.5

The Solicitor-General contends, however, that an encumbrance is imposed on the land in


question in view of 39 of the Land Registration Act (now P.D. No. 1529, 44) which provides:
Every person receiving a certificate of title in pursuance of a decree of registration, and every
subsequent purchaser of registered land who takes a certificate of title for value in good faith
shall hold the same free from all encumbrances except those noted on said certificate, and
any of the following encumbrances which may be subsisting, namely:
....
Third. Any public highway, way, private way established by law, or any government irrigation
canal or lateral thereof, where the certificate of title does not state that the boundaries of
such highway, way, irrigation canal or lateral thereof, have been determined.

As this provision says, however, the only servitude which a private property owner is required to
recognize in favor of the government is the easement of a "public highway, way, private way
established by law, or any government canal or lateral thereof where the certificate of title does
not state that the boundaries thereof have been pre-determined." This implies that the same
should have been pre-existing at the time of the registration of the land in order that the
registered owner may be compelled to respect it. Conversely, where the easement is not preexistingand is sought to be imposed only after the land has been registered under the Land
Registration Act, proper expropriation proceedings should be had, and just compensation paid
to the registered owner thereof.6
In this case, the irrigation canal constructed by the NIA on the contested property was built only
on October 6, 1981, several years after the property had been registered on May 13, 1976.
Accordingly, prior expropriation proceedings should have been filed and just compensation paid
to the owner thereof before it could be taken for public use.
Indeed, the rule is that where private property is needed for conversion to some public use, the
first thing obviously that the government should do is to offer to buy it.7 If the owner is willing to
sell and the parties can agree on the price and the other conditions of the sale, a voluntary
transaction can then be concluded and the transfer effected without the necessity of a judicial
action. Otherwise, the government will use its power of eminent domain, subject to the payment
of just compensation, to acquire private property in order to devote it to public use.

Third. With respect to the compensation which the owner of the condemned property is entitled
to receive, it is likewise settled that it is the market value which should be paid or "that sum of
money which a person, desirous but not compelled to buy, and an owner, willing but not
compelled to sell, would agree on as a price to be given and received therefor."8 Further, just
compensation means not only the correct amount to be paid to the owner of the land but also
the payment of the land within a reasonable time from its taking. Without prompt payment,
compensation cannot be considered "just" for then 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 before actually receiving the amount necessary to cope with his loss.9 Nevertheless, as
noted in Ansaldo v. Tantuico, Jr.,10 there are instances where the expropriating agency takes
over the property prior to the expropriation suit, in which case just compensation shall be
determined as of the time of taking, not as of the time of filing of the action of eminent domain.
Before its amendment in 1997, Rule 67, 4 provided:
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. . . .

It is now provided that


SEC. 4. Order of expropriation. If the objections to and the defense against the right of the
plaintiff to expropriate the property are overruled, or when no party appears to defend as
required by this Rule, the court may issue an order of expropriation declaring 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, upon the payment of just compensation to be
determined as of the date of the taking of the property or the filing of the complaint,
whichever came first.
A final order sustaining the right to expropriate the property may be appealed by any party
aggrieved thereby. Such appeal, however, shall not prevent the court from determining the
just compensation to be paid.
After the rendition of such an order, the plaintiff shall not be permitted to dismiss or
discontinue the proceeding except on such terms as the court deems just and equitable.
(Emphasis added)

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. Burgos11 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,12 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.
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:13
[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.14
Fourth. Petitioner finally contends that it is exempt from paying any amount to respondent
because the latter executed an Affidavit of Waiver of Rights and Fees of any compensation due
in favor of the Municipal Treasurer of Barangay Sto. Nio, South Cotabato. However, as the
Court of Appeals correctly held:
[I]f NIA intended to bind the appellee to said affidavit, it would not even have bothered to give
her any amount for damages caused on the improvements/crops within the appellees
property. This, apparently was not the case, as can be gleaned from the disbursement
voucher in the amount of P4,180.00 (page 10 of the Folder of Exhibits in Civil Case 396)
issued on September 17, 1983 in favor of the appellee, and the letter from the Office of the
Solicitor General recommending the giving of "financial assistance in the amount
of P35,000.00" to the appellee.
Thus, We are inclined to give more credence to the appellees explanation that the waiver of
rights and fees "pertains only to improvements and crops and not to the value of the land
utilized by NIA for its main canal."15

WHEREFORE, premises considered, the assailed decision of the Court of Appeals is hereby
AFFIRMED with MODIFICATION to the extent that the just compensation for the contested
property be paid to respondent in the amount of P16,047.61 per hectare, with interest at the
legal rate of six percent (6%) per annum from the time of taking until full payment is made.
Costs against petitioner.
1wphi1.nt

SO ORDERED.
JULITA P. TAN, Petitioner,
vs.

THE REPUBLIC OF THE PHILIPPINES, Represented by the PUBLIC ESTATES


AUTHORITY, Respondent.
DECISION
SANDOVAL-GUTIERREZ, J.:
For our resolution is the Petition for Review on Certiorari assailing the Decision1 of the Court of
Appeals (Thirteenth Division, Special Division of Five) dated July 6, 2005 in CA-G.R. SP No.
84667.
The undisputed facts of the case are:
Julita P. Tan, petitioner herein, is the registered owner of a parcel of land consisting of 7,161
square meters located at the southern bank of the Zapote River in Sitio Wawa, Pulang Lupa,
Las Pias City. Her ownership is evidenced by Transfer Certificate of Title (TCT) No. 78188 of
the Registry of Deeds, same city. She acquired this property from the San Antonio Development
Corporation (SADC) as shown by a document denominated "Irrevocable and Exclusive Special
Power of Attorney" dated April 6, 2001, whereby she assumed SADCs "obligation of paying all
imposable taxes due said land." In consideration of such assumption and "for value" she
"stepped into the shoes" of SADC "free to exercise such rights and prerogatives as owner of the
subject property, including the right to collect and demand payment for the sale and/or use of
the subject land or any portion thereof, by and from any person or entity."
The Public Estates Authority (PEA) is a government-owned and controlled corporation,
organized and existing pursuant to Presidential Decree (P.D.) No. 1084 representing in this case
the Republic of the Philippines, herein respondent. Among the properties PEA manages is
the Manila-Cavite Coastal Road (Coastal Road), also known as the R-1 Expressway.
Prior to the transfer of the property to petitioner by SADC, or on March 29, 1985, PEA wrote
SADC requesting permission to enter the latters property, then covered by TCT No. 439101, for
the purpose of constructing thereon the southern abutment of the Zapote Bridge at the Coastal
Road. PEA also proposed to SADC to start their negotiation for its acquisition of the latters
property.
On April 11, 1985, SADC replied authorizing PEA to enter the property, subject to the condition
that the latter should pay a monthly rental of P10,000.00. PEA then directed its contractor, the
Philippine National Construction Corporation, to enter the property and begin the necessary
engineering works on the Coastal Road.
In a letter dated May 28, 1985, PEA requested SADC either to donate or sell the property to the
government.
On October 22, 1985, SADC replied by offering to sell the property to PEA. SADCs asking price
was P1,288,980.00 plus P400,000.00 as compensation for the house and other improvements
thereon that were destroyed during the construction of the Coastal Road.

On January 7, 1987, PEA informed SADC it has no plan to buy the whole lot, but only the 1,131
square meter portion above sea level. PEA then asked SADC to submit proofs of ownership and
costs of the improvements which were demolished.
Negotiations then ensued between the parties. However, for the past twenty (20) years, they
failed to reach an agreement.
On October 2, 2000, SADC asked PEA to pay compensation equivalent to the current zonal
value plus interest of ten percent (10%) per annum and a monthly rental of P10,000.00, also
with the same interest. These sums, according to SADC, could be considered just
compensation for the governments use of the property since 1985 until September 2000 and
thereafter.
The following month, PEA inquired from the Bureau of Internal Revenue (BIR) District 53,
Alabang, Muntinlupa City the zonal value of the SADC property. It submitted to the BIR the
appraisal reports prepared by two (2) independent licensed appraisers.
On April 6, 2001, petitioner Julita Tan acquired the property from SADC.

1a\^/phi1.net

On July 12, 2001, the BIR sent a letter to PEA stating that the zonal value of the property
is P2,900.00 per square meter, with the caveat that the said assessment is subject to review
and approval by higher tax authorities.
On October 9, 2001, the BIR informed PEA that the current zonal value of the property
is P20,000.00 per square meter.
In the meantime, the construction of the Coastal Road was completed. PEA entered into a Joint
Venture Agreement with the Toll Regulatory Board and the UEM-MARA Philippine Corporation
for the toll operation of the Coastal Road, as shown by the Certificate of the Secretary of the Toll
Regulatory Board dated May 13, 2003.2
PEA has been collecting toll fees from the road users in the average amount of P1,039,404.85
per day, as shown by a document denominated "Traffic Count of the Year 2002.3 Despite its
collection of huge toll fees, PEA continuously refuses to pay petitioner any compensation.
On October 22, 2001, petitioner, in her desperation, wrote PEA expressing her willingness to be
compensated through a land swapping arrangement. She proposed that PEAs Fishermans
Wharf be given to her in exchange for her property.
On August 6, 2002, the PEA Board approved the exchange of a portion of petitioners lot
consisting of 4,719 square meters for PEAs Lot 12 with an area of 2,360 square meters. The
parties entered into a Memorandum of Agreement wherein PEA agreed to execute a Deed of
Exchange by way of compensation for petitioners property affected by the Coastal Road.
However, on June 18, 2003, PEA withdrew from the land swapping agreement. Instead, on
September 22, 2003, it filed with the Regional Trial Court (RTC), Branch 202, Las Pias City a
complaint for expropriation, docketed as Civil Case No. 03-0220. PEA alleged therein, among
1a\^/phi1.net

others, that its liability for just compensation is based on the zonal value of the land at the time
of the taking in 1985. Thus, it is liable for only P852,993.51 for the 4,719 square meter portion.
In her answer, petitioner claimed that PEA should pay for the whole area consisting of 7,161
square meters at P20,000.00 per square meter, the zonal value set by the BIR pursuant to
Republic Act No. 8974.4 She then prayed that she be paid P143,200,000.00 plus interest of
twelve percent (12%) per annum, aside from theP10,000.00 monthly rental with 12% interest
per annum for the occupancy and use of the property since April 1985 up to the present.
On October 20, 2003, petitioner filed with the RTC a motion to order PEA to immediately pay
her just compensation based on the zonal valuation of the BIR. This was opposed by PEA.
On December 16, 2003, the trial court issued the following Order5:
WHEREFORE, finding merit to the "Motion To Order the Plaintiff to Immediately Pay Defendant
Her Expropriated Property," dated October 20, 2003, the same is hereby GRANTED.
Accordingly, plaintiff, through PEA, is hereby ordered to immediately pay defendant the sum
of P94,380,000.00 (ninety-four million, three hundred eighty thousand pesos) representing the
just compensation for the 4,719 square meters of defendants property covered by TCT No.
78188 of the Registry of Deeds of Las Pias based on P20,000.00 per square meter zonal
valuation of the Bureau of Internal Revenue.
SO ORDERED.
PEA timely filed a motion for reconsideration but it was denied by the trial court in its
Order6 dated April 14, 2004.
PEA then elevated the matter to the Court of Appeals by way of a petition
for certiorari, prohibition, and mandamus.
On July 6, 2005, the Court of Appeals rendered its Decision, the dispositive portion of which
reads:
WHEREFORE, the instant petition for certiorari and prohibition is hereby GRANTED while that
of mandamus is hereby DENIED (sic). Accordingly, the assailed Orders, dated December 16,
2003 and April 14, 2004, are hereby REVERSED and SET ASIDE. Public respondent is hereby
ordered to DESIST from enforcing the assailed Orders.
SO ORDERED.
Petitioner filed a motion for reconsideration. In a Resolution dated December 12, 2005, the
Court of Appeals denied the same.
Hence, the present petition anchored on these twin issues: Whether the Court of Appeals erred
in sustaining PEAs petition for certiorari and prohibition and in dismissing that for mandamus;
and in holding that the just compensation for petitioners property should be based on the BIR
zonal valuation in 1985 when petitioner entered the subject property.
1awphi1.nt

The first issue involves the nature of the two Orders of the trial court dated December 16, 2003
and April 14, 2004. The Order of December 16, 2003 directed PEA to pay petitioner just
compensation in the sum of P94,380,000.00. The Order of April 14, 2004 denied PEAs motion
for reconsideration. Are these orders final or interlocutory?
Sec. 1, Rule 41 of the 1997 Rules of Civil Procedure, as amended, partly provides:
SEC. 1. Subject of appeal. An appeal may be taken from a judgment or final order that
completely disposes of the case, or of a particular matter therein when declared by these Rules
to be appealable.
No appeal may be taken from:
xxx
(c) an interlocutory order.
xxx
A final order is one that disposes of the subject matter in its entirety or terminates a particular
proceeding or action, leaving nothing else to be done but to enforce by execution what has been
determined by the court, while an interlocutory order is one which does not dispose of the case
completely but leaves something to be decided upon.7
Under Rule 67 of the same Rules, there are two (2) stages in a condemnation proceeding:8
(1) 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, with 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 payment of just compensation. An order of expropriation is
final.9 An order of dismissal, if this be ordained, would be a final one, as it finally disposes of
the action and leaves nothing more to be done by the court on the merits. 10 The order of
expropriation would also be a final one for after its issuance, no objection to the right of
condemnation shall be heard. The order of expropriation may be appealed by any party
aggrieved thereby by filing a record on appeal.11
(2) Determination by the court of the just compensation for the property sought to be taken
with the assistance of not more than three (3) commissioners. The order fixing the just
compensation on the basis of the evidence before the court and findings of the
commissioners would likewise be a final one, as it would leave nothing more to be done by
the court regarding this issue. A second and separate appeal may be taken from this order
fixing the just compensation.

The trial courts Orders in Civil Case No. 03-0220 required PEA to pay
petitioner P94,380,000.00 representing the just compensation for her 4,719 square meter
lot based on the BIR zonal valuation ofP20,000.00 per square meter. Clearly, the Orders are
final, hence, appealable. However, instead of appealing from the said Orders within the

reglementary period, PEA resorted to certiorari, prohibition and mandamus. It is basic that the
remedy of certiorari is not a substitute for a lost appeal, as in this case.
On the second issue, Section 9, Article III of the Constitution specifically mandates that "Private
property shall not be taken for public use without just compensation."
In City of Manila v. Estrada,12 we held that "compensation" means "an equivalent for the value of
land (property) taken." The use of the word "just" is "to convey the idea that the equivalent to be
rendered for the property taken shall be real, substantial, full, ample." Thus, Estrada defined just
compensation as "a fair and full equivalent for the loss sustained." This definition has been
reiterated in Manila Railroad Co. v. Velasquez[13] and Province of Tayabas v. Perez.14 Then
in Manila Railroad Co. v. Caligsahan,15 we held that "to be exactly just, the compensation should
be estimated at the time of the taking." Subsequently, in Republic v. Vda. de Castellvi,16 we ruled
that just compensation is determined as of the date of the taking of the property or the
filing of the complaint, whichever came first.
The Court of Appeals, in its challenged Decision, held that PEAs taking of petitioners property
occurred in 1985. Even if PEA requested permission to enter the subject property and petitioner
granted such request on condition that PEA should pay a monthly rental of P10,000.00, "it does
not change the fact that there was taking of the property for public use." Consequently, the
compensation should be computed on the basis of the zonal value of the property at that time
(1985) which was P2,900.00 per square meter per letter dated July 12, 2001 of the BIR to PEA.
The Court of Appeals is wrong. PEAs entry into the property with the permission of SADC, its
previous owner, was not for the purpose of expropriating the property. Records show and as
stressed by Mr. Justice Renato C. Dacudao of the Court of Appeals in his Dissenting Opinion,
SADC allowed PEA to enter the land on condition that it should pay a monthly rental
of P10,000.00. Thereafter, PEA, in a letter dated May 28, 1985, requested SADC to donate or
sell the land to the government. On October 22, 1985, SADC responded, offering to sell the land
to PEA forP1,288,980.00, plus P400,000.00 representing the value of the improvements
destroyed by PEA when it entered the property. However, since 1985 up to the present, no
agreement has been reached between PEA and SADC or herein petitioner who acquired the
property from the latter.
While PEA has been earning huge toll fees, it has refused to pay petitioner any compensation
for the use of her property in violation of her right as an owner.
The above circumstances clearly show that when PEA entered petitioners land in 1985, it was
not for the purpose of expropriating it. We stress that after its entry, PEA wrote SADC requesting
to donate or sell the land to the government. Indeed, there was no intention on the part of PEA
to expropriate the subject property. Why did it ask permission from SADC to enter the property?
Thereafter, why did it request SADC to donate or sell the land to the government? It could have
simply exercised its power of eminent domain.
Section 2, Rule 67 (on Expropriation) of the same Rules provides, among others, that upon the
filing of the complaint or at any time thereafter and after due notice to the defendant, the plaintiff
shall have the right to take or enter upon the possession of the real property involved if he

deposits with the authorized government depositary an amount equivalent to the assessed
value of the property. It bears reiterating that in Republic v. Vda. de Castellvi,17we ruled that just
compensation is determined as of the date of the taking of the property or the filing of the
complaint, whichever came first.
We have made it clear that there was no taking of the property in 1985 by PEA for purposes of
expropriation. As shown by the records, PEA filed with the RTC its petition for expropriation on
September 22, 2003. The trial court, therefore, was correct in ordering respondent, through
PEA, upon the filing of its complaint for expropriation, to pay petitioner just compensation on the
basis of the BIR zonal valuation of the subject property at P20,000.00 per square meter.
In sum, we rule that the Court of Appeals erred (1) in not dismissing PEAs petition for certiorari,
prohibition and mandamus; and (2) in ruling that PEAs taking of the property occurred in 1985
and that the compensation should be based on the BIR zonal valuation in that year.
WHEREFORE, the assailed Decision of the Court of Appeals dated July 6, 2005, in CA-G.R. SP
No. 84667 isREVERSED. The Decision of the RTC, Branch 202, Las Pias City is AFFIRMED.
SO ORDERED.
HEIRS OF MATEO PIDACAN AND ROMANA EIGO, namely: PACITA PIDACAN VDA. DE
ZUBIRI (deceased), survived by JOSE BELLO BATINA, VICKY BELLO BATINA, ROBERTO
BELLO BATINA, VILMA BELLO BATINA, and FRANCISCO N. BATINA; and ADELA
PIDACAN VDA. DE ROBLES, Petitioners,
vs.
AIR TRANSPORTATION OFFICE (ATO), represented by its Acting Director BIENVENIDO
MANGA,Respondent.
DECISION
QUISUMBING, J.:
For review on certiorari are the Decision1 dated August 20, 2003 and the Resolution dated
March 17, 2004 of the Court of Appeals in CA-G.R. CV No. 72404, which reversed the
Decision2 dated February 1, 2001 of the Regional Trial Court (RTC) of San Jose, Occidental
Mindoro, Branch 46 in Civil Case No. R-800.
The facts, summarized by the Court of Appeals and borne by the records, are as follows:
Sometime in 1935, spouses Mateo Pidacan and Romana Eigo acquired under the homestead
provision of Act No. 28743 a parcel of land consisting of about 22 hectares situated in San Jose,
Occidental Mindoro. Patent No. 33883 and Original Certificate of Title (OCT) No. 2204 were
issued on the land, in the names of the Pidacan spouses.
In 1948, the Civil Aeronautics Administration (now Air Transportation Office or "ATO") used a
portion of the said property as an airport. Upon the death of the Pidacan spouses in 1974, the

ATO constructed a perimeter fence and a new terminal building on the property. The ATO also
lengthened, widened, and cemented the airports runway.
The spouses heirs namely, Pacita Pidacan Vda. de Zubiri and Adela Pidacan Vda. de Robles
demanded from ATO the payment of the value of the property as well as rentals for the use of
the occupied premises. However, they were told that payment could not be made because the
property was still in their parents name.
With the loss of the owners copy of OCT No. 2204, Pacita Pidacan Vda. de Zubiri filed a
petition for the issuance of another owners duplicate. The heirs then executed an extrajudicial
settlement adjudicating the property among themselves.
On February 23, 1988, OCT No. 2204 was cancelled and Transfer Certificate of Title (TCT) No.
T-7160 was issued in favor of the heirs. The heirs presented TCT No. T-7160 and the death
certificates of their parents to the ATO, but the latter still refused to pay them.
The heirs claimed that they were entitled to payment of rentals plus the value of the property.
The ATO countered that the heirs were not entitled to any payment, either of the value of the
land or of the rentals because the property had been sold to its predecessor, the defunct Civil
Aeronautics Administration for P0.70 per square meter. The ATO claimed that even if it failed to
obtain title in its name, it had been declaring the property for taxation purposes.
The heirs subsequently filed with the RTC a complaint4 against the ATO for payment of the value
of the property as well as rentals for its use and occupation. The ATO, in turn, filed a complaint
for expropriation, which was dismissed on the ground that it would be absurd for the ATO to
expropriate a parcel of land it considered its own.
Pacita Pidacan Vda. de Zubiri was substituted by her surviving son, Tomas Batina, who in turn
was later substituted by his heirs namely, Jose Bello Batina, Vicky Bello Batina, Roberto Bello
Batina, and Vilma Bello Batina. Francisco N. Batina, an alleged son of Tomas Batina, intervened
in the proceedings.
On September 12, 1994, the trial court promulgated a Decision5 ordering the ATO to pay rentals
and the value of the land at P89 per square meter. The ATO appealed to the Court of Appeals
on the ground that the trial court erred in fixing the value of the property on the basis of its
present value.
The Court of Appeals rendered a Decision6 setting aside the RTC Decision and remanded the
case to the court a quo for further proceedings. The appellate court also ruled that just
compensation should be determined as of the time the property was taken for public use.
After trial upon remand of the case to the court of origin, judgment was rendered anew as
follows:
WHEREFORE, in view of all the foregoing, judgment is hereby rendered:

1. Expropriating the actual area occupied by the defendant Air Transportation Office of the
plaintiffs property covered by Transfer Certificate of Title No. T-7160, totaling Two Hundred
Fifteen Thousand Seven Hundred Thirty Seven (215,737) square meters, in favor of defendant;
2. Ordering defendant Air Transportation Office to pay plaintiffs the amount of Three Hundred
Four ((P304.00) Pesos per square meter for the area herein expropriated which totals to Sixty
Five Million Five Hundred Eight (sic) Four Thousand Forty Eight (P65,584,048.00) Pesos with
interest thereon at the rate of 12% per annum from February 1, 2001, until the same is fully
paid.
3. Ordering defendant Air Transportation Office to pay plaintiffs monthly rentals for the use and
occupation of the subject property cited in item No. 1 above, computed as follows:
a) Three Thousand Fifty Eight Pesos and Forty Centavos (P3,058.40) from 1957 to 1977;
b) Four Thousand Twenty Two Pesos and Sixty five Centavos (P4,022.60) from 1978 to 1979;
c) Six Thousand Thirty Four Pesos and Fifty Centavos (P6,034.50) from 1980 to 1984;
d) Nine Thousand Six Hundred Ninety Nine Pesos and Sixty Centavos (P9,699.60) from 1985 to
1991;
e) Seventeen Thousand Nine Hundred thirteen Pesos and Sixty Centavos (P17,913.60) from
1992 to 1994;
f) Thirty Seven Thousand One Hundred Eighty One Pesos and Eighty Centavos (P37,181.80)
from 1995 to 1997;
g) Fifty Four Thousand Six Hundred Fifty Eight Pesos and Sixty Centavos (P54,658.60) from
1998 to January 31, 2001;
or a total monthly rentals, from January 1, 1957 to January 31, 2001, of Six Million Two hundred
Forty Nine Thousand Six Hundred Forty Five Pesos and Forty Centavos (P6,249,645.40) with
interest thereon at the rate of 12% per annum, until the same is fully paid;
4. Ordering defendant Air Transportation Office to pay plaintiffs ten (10%) per cent of the
amount involved as and for attorneys fees and expenses of litigation; and
5. Ordering defendant Air Transportation Office to pay the costs of suit.
SO ORDERED.7
The ATO once again appealed to the Court of Appeals, which in its assailed Decision reversed
the trial courts ruling, thus:
WHEREFORE, premises considered, the assailed Decision dated February 1, 2001 of the
Regional Trial Court of San Jose, Occidental Mindoro in Civil Case No. R-800 is

hereby REVERSED AND SET ASIDE and a new one entered remanding the instant case to the
court a quo for the determination of just compensation on the basis of the market value
prevailing in 1948. No pronouncement as to costs.
SO ORDERED.8
The heirs moved for reconsideration but it was denied. Aggrieved, the heirs filed the instant
petition alleging that:
I
THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ERROR AND ABUSE OF
DISCRETION BY DISREGARDING THE LAW, JURISPRUDENCE AND EVIDENCE IN
REVERSING THE TRIAL COURTS DECISION AND RULING THAT THERE WAS "TAKING"
OF THE SUBJECT PROPERTY IN 1948[;]
II
THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ERROR AND ABUSE OF
DISCRETION BY DISREGARDING THE LAW, JURISPRUDENCE AND EVIDENCE IN RULING
THAT THE REMAND OF THE CASE TO THE LOWER COURT WAS ONLY FOR THE
PURPOSE OF ASCERTAINING THE TIME OF "TAKING" OF THE SUBJECT PROPERTY[;]
III
THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ERROR AND ABUSE OF
DISCRETION BY DISREGARDING THE LAW, JURISPRUDENCE AND EVIDENCE IN
REVERSING THE DECISION OF THE LOWER COURT WHICH ORDERED THE PAYMENT
OF UNPAID RENTALS FROM 1957 TO 2001[.]9
Petitioners contend the reckoning point for taking cannot be 1948 as the elements necessary to
constitute taking were not present at that time. They also point out that the ATOs complaint for
expropriation filed in 1993 is inconsistent with its claim that it had already bought the property in
1959 or that there was already taking in 1948. Petitioners further allege that the ATO is
estopped from questioning the valuation of the property at P304 per square meter because it
was the ATO that actually recommended the said amount. Finally, petitioners insist that the
Pidacan spouses merely leased the property to the ATO.
Respondent ATO, on the other hand, counters that the fact of taking has been definitely
established by the Court of Appeals and implicitly admitted by petitioners. The ATO stresses that
for the purpose of fixing just compensation, the only issue is the time of taking, which it
maintains was in 1948 when an airport was constructed on the property. Lastly, the ATO calls
our attention to the alleged absence of any competent evidence proving the existence of a
contract of lease between the parties.
Simply put, the issues for resolution are: (1) whether there was taking of the subject property;
(2) the time when the taking took place; and (3) the appropriate value of just compensation.

On the first issue, we are unable to consider the parties bare allegation that there was a
contract of lease or a contract of sale between the ATO and the Pidacan spouses, for lack of
competent evidence adduced to prove either claim. On the contrary, preponderance of evidence
on record strongly indicates that the ATOs conversion of the property into an airport in 1948
comes within the purview of eminent domain.
Eminent domain or expropriation is the inherent right of the state to condemn private property to
public use upon payment of just compensation.10 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 as to oust the owner and
deprive him of all beneficial enjoyment of the property.11
When private property is rendered uninhabitable by an entity with the power to exercise eminent
domain, the taking is deemed complete.12 Taking occurs not only when the government actually
deprives or dispossesses the property owner of his property or of its ordinary use, but also when
there is a practical destruction or material impairment of the value of his property.13
In this case, it is undisputed that petitioners private property was converted into an airport by
respondent ATO. As a consequence, petitioners were completely deprived of beneficial use and
enjoyment of their property. Clearly, there was taking in the concept of expropriation as early as
1948 when the airport was constructed on petitioners private land.
As a rule, the determination of just compensation in eminent domain cases is reckoned from the
time of taking.14 In this case, however, application of the said rule would lead to grave injustice.
Note that the ATO had been using petitioners property as airport since 1948 without having
instituted the proper expropriation proceedings. To peg the value of the property at the time of
taking in 1948, despite the exponential increase in its value considering the lapse of over half a
century, would be iniquitous. We cannot allow the ATO to conveniently invoke the right of
eminent domain to take advantage of the ridiculously low value of the property at the time of
taking that it arbitrarily chooses to the prejudice of petitioners.
In this particular case, justice and fairness dictate that the appropriate reckoning point for the
valuation of petitioners property is when the trial court made its order of expropriation in 2001.
As for the fair value of the subject property, we believe that the amount arrived at by the
commissioners appointed by the trial court, P304.39 per square meter, constitutes just
compensation to petitioners.15
However, the trial courts award of rental payments to petitioners is not supported by evidence
on record and must be deleted. To justify such award, the purported contract of lease must first
be proven by competent evidence. The letter16 of one Director Nabor C. Gaviola of the
Department of Transportation and Communications endorsing the appeal of a certain Herminia
R. Parales for the immediate payment of rentals is plain hearsay and does little to prove the
existence of a contract of lease between the parties.

Lastly, the interest accruing fixed by the trial court at the rate of 12% per annum is not
consistent with law and should be reduced to the legal interest rate of 6% per annum.17
WHEREFORE, the petition is GRANTED. The assailed Decision dated August 20, 2003 and the
Resolution dated March 17, 2004 of the Court of Appeals in CA-G.R. CV No. 72404 are SET
ASIDE. The Decision dated February 1, 2001 of the Regional Trial Court of San Jose,
Occidental Mindoro, Branch 46 in Civil Case No. R-800 is AFFIRMED with MODIFICATION, as
follows:
1. The actual area occupied by respondent ATO covered by Transfer Certificate of Title No. T7160, totaling 215,737 square meters is declared expropriated in favor of the ATO.
2. The ATO is ordered to pay petitioners the amount of P304.39 per square meter for the area
expropriated, or a total of P65,668,185.43 with interest at the rate of 6% per annum from
February 1, 2001, until the same is fully paid.
No pronouncement as to costs.
SO ORDERED.
FORM OF PAYMENT

EDGARDO SANTOS, represented by his attorney-in-fact ROMEO L. SANTOS, petitioner,


vs.
LAND BANK OF THE PHILIPPINES, JESUS DIAZ, ROBERTO ONG and AUGUSTO
AQUINO, respondents.
DECISION
PANGANIBAN, J.:
The Comprehensive Agrarian Reform Law (RA 6657) provides that just compensation to
landowners shall be paid in cash and bonds. Hence, a trial court decision directing the payment
of such compensation "in the manner provided by R.A. 6657" is not illegally amended but is
merely clarified by an order, issued during the execution proceedings, that such amount shall be
paid in cash and bonds.
The Case
Before the Court is a Petition for Review on Certiorari of the December 8, 1998 Decision1 and
the February 2, 1999 Resolution2 of the Court of Appeals (CA)3 in CA-GR SP No. 48517, which
had respectively dismissed the Petition for Certiorari and Mandamus, filed by petitioner, and
denied reconsideration.
The decretal part of the assailed Decision reads:
"WHEREFORE, the petition is DISMISSED. The Order of April 24, 1998 is AFFIRMED."4

The Facts
The antecedents of the case are adequately summarized in the assailed Decision, as follows:
"It appears that petitioner Edgardo Santos is the plaintiff in Agrarian Case No. RTC 94-3206 for
the determination of just compensation regarding properties which were taken by DAR under
P.D. No. 27 in 1972. On August 12, 1997, the Regional Trial Court, sitting as an Agrarian Court
rendered judgment, the dispositive portion of which reads:
"WHEREFORE, judgment is hereby rendered (1) fixing the amount of P49,241,876.00 to be the
just compensation for the irrigated and unirrigated ricelands with areas of 36.4152 and 40.7874
hectares, respectively, and situated at Pinit, Ocampo, Camarines Sur which are portions of the
agricultural lands covered by Transfer Certificates of Title Nos. 2883 and 2884 in the name of
the [p]laintiff, and which were taken by the government pursuant to Land Reform Program as
provided in Presidential Decree No. 27; and (2) ordering Defendant Land Bank of the
Philippines to pay [p]laintiff the amount of FORTY-FIVE MILLION SIX HUNDRED NINE-EIGHT
THOUSAND EIGHT HUNDRED FIVE AND 34/100 (P45,698,805.34) PESOS, Philippine
[c]urrency, in the manner provided by R.A. 6657, by way of full payment of the said just
compensation. No pronouncement as to costs."
"A preliminary valuation in the amount of P3,543,070.66 had in fact been previously released by
the Land Bank in cash and bond; thus deducting it from the total amount adjudged, the balance
unpaid amount[ed] to P45,698,805.34 which was ordered by the Regional Trial Court to be paid
in accordance with RA 6657.
"The Land Bank elevated the matter to the Supreme Court, which eventually dismissed the
appeal in its Resolution dated December 17, 1997. Accordingly, a writ of execution was issued
by the Regional Trial Court on December 4, 1997 and a notice of garnishment was served on
the Land Bank on December 17, 1997.
"On December 22, 1997, the Regional Trial Court issued an Order declaring that the Land Bank
had complied with the writ of execution and ordered the same to release the amount of
P44,749,947.82 to petitioner and the amount of P948,857.52 to the Clerk of Court as
commission fees for execution of judgment.
"The Land Bank remitted the amount of P948,857.52 to the Clerk of Court on December 24,
1997 and released the amount of P3,621,023.01 in cash and Land Bank Bond No. AR-0002206
in the amount of P41,128,024.81 to the petitioner.
"Petitioner filed a motion for the issuance of an alias writ of execution before the Regional Trial
Court, praying that the payment of the compensation be in proportion of P8,629,179.36 in bonds
and P32,499,745 in cash, alleging that the cash portion should include the amounts in the
Decision representing the interest payments.
"Before the motion could be resolved by the Regional Trial Court, petitioner moved to withdraw
the same and instead filed a motion for release of the balance of the garnished amount. He
claimed that the payment of P41,128,024.81 in Land Bank Bonds was not acceptable to him
and that the said amount should be paid in cash or certified check. The respondent Land Bank,
on the other hand, opposed the motion, contending that the judgment amount had already been
satisfied on December 24, 1997.

"The Regional Trial Court issued an Order on March 20, 1998 for the Land Bank to release the
balance of P41,128,024.81 from the garnished amount in cash or certified check.
"The Land Bank moved for a reconsideration of the said Order, maintaining that the payment
was properly made in Land Bank Bonds.
"On March 25, 1998, petitioner filed a motion to hold the Land Bank in contempt for its refusal to
release the balance of the garnished amount in cash or certified check.
"Respondent Regional Trial Court presided over by a new judge, resolved the two motions on
April 24, 1998. It held that the payment of just compensation must be computed in the manner
provided for in Section 18, Republic Act No. 6657. Thus, it ruled that:
"To summarize, the very issue to be resolved in the instant case is to determine how much
should be paid in cash and how much also should be paid in bonds, to fully satisfy the judgment
herein rendered in the amount of P49,241,876.00, the computation of which is as follows:
Total land value per judgment P49,241,876.00
Amount payable in bonds:
70% (50 has) P22,323,932.75
75% (excess) P13,012,907.41 35,336,840.16
Amount payable in cash:
30% (50 has) P9,567,399.75
35% (excess) 4,337,635.81 13,905,035.56
Less:
Preliminary valuation: P3,543,070.66
Commissioner's Fee: 948,857.52
Payment to plaintiff on
12-24-97 3,621,023.01 P 8,112,951.19
______________
P 5,792,084.37
"Consequently, not only must the Order of March 20, 1997 be reconsidered, but by implication,
the Order of this Court dated December 22, 1997 is likewise deemed reconsidered. It goes
without saying that the payment of just compensation must be made in accordance with Sec.

18, Republic Act No. 6657 in relation to Section 9, Rule 39 of the 1997 Rules of Civil Procedure
insofar as it does not contravene x x x the former.
"On the basis of the foregoing discussion, this Court finds no merit [i]n the motion to cite in contempt
of court the Land Bank of the Philippines.
"Be it also noted that Defendant Land Bank, through counsel, has submitted a re-computation of the
compensation in accordance with her manifestation on oral argument [with] which this court begs to
disagree.
"WHEREFORE, Defendant Land Bank of the Philippines is hereby ordered to pay the [p]laintiff the
[c]ash [b]alance of FIVE MILLION SEVEN HUNDRED NINETY TWO THOUSAND EIGHTY-FOUR
and 37/100 (P5,792,084.37), Philippine [c]urrency and the amount of THIRTY FIVE MILLION,
THREE HUNDRED THIRTY SIX THOUSAND EIGHT HUNDRED FORTY and 16/100
(P35,336,840.16) PESOS in government instruments or bonds to fully satisfy the Judgment herein in
the amount of forty-nine million two hundred forty one thousand eight hundred seventy six
(P49,241,876.00) pesos, Philippine [c]urrency as just compensation due the [p]laintiff.
"Thus, the Order of this Court dated March 20, 1998 is hereby reconsidered and SET ASIDE and by
implication, the Order dated December 22, 1997 is hereby deemed reconsidered and MODIFIED
accordingly.
"The Motion to Cite in Contempt of Court the Land Bank of the Philippines is hereby DENIED.

"SO ORDERED."
"Petitioner's motion to reconsider the above-mentioned Order was denied on June 17, 1998[;]
hence, this petition."5
The CA Ruling
The CA upheld the questioned April 24, 1998 Order of the trial court. The appellate court opined
that the Order merely ascertained the mode of compensation for petitioner's expropriated
properties, as decreed in the final judgment, and was issued pursuant to the court a
quo's general supervisory control over the process of execution. Said the CA:
"RA 6657 is clear and leaves no doubt as to its interpretation regarding the manner of payment
of just compensation. The provision allows the landowner to choose the manner of payment
from the list provided therein, but since plaintiff had obviously wanted payment to be made in
cash, then the trial court, through the new presiding judge, Judge Villegas-Llaguno, had only to
apply Section 18 of R.A. 6657 which provides for the payment of a percentage thereon in cash
and the balance in bond, in the exercise of her ministerial duty to execute the decision which
ha[d] become final and executory. Nevertheless, in the exercise of her supervisory powers over
the execution of a final and executory judgment, Judge Villegas-Llaguno found it necessary to
modify the order of Judge Naval dated December 22, 1997 as regards the order of execution
since it had erroneously applied Section 9, Article 39 of the Rules of Court regarding satisfaction
of money judgments in the manner of payment even as to the portion required to be paid in
bonds, and thus, had completely disregarded the portion in the final and executory decision of
August 12, 1997 which makes direct reference to RA 6657.

"The garnishment, on the other hand, of the amount of P45,698,805.34 from the Land Bank of
the Philippines does not affect the execution of the judgment in the case. As above-expounded,
the judgment was to be fully executed in accordance with the provisions of R.A. 6657 which
allows the landowner to have the compensation be paid in cash and in bond, but not fully in
cash, as herein petitioner would like to maintain. Technically, the garnishment which was made
in this case pursuant to the order of execution by Judge Naval shall extend only to the cash
portion of the judgment amount. On the other hand, with respect to the amount to be issued in
bonds, the only jurisdiction of the trial court is to order the Land Bank of the Philippines to issue
the corresponding bonds and deliver the same to herein petitioners.
Hence, this Petition.6
Issues
In his Memorandum,7 petitioner submits the following issues for resolution:
"1. Did respondent judge act without jurisdiction when she issued the Order dated 24 April 1998
amending the final Judgment dated 12 August 1997?
"2. Is it a ministerial duty of the respondent judge to order the release and of the Land Bank to
release the garnished amount under Section 9 (c) of Rule 39 of the Rules of Court?
"3. May respondent Land Bank question the legality of its own compliance with the Writ of
Execution?
"4. Are the respondent judge and the respondent Land Bank and its officials liable for damages
under Section 3 of Rule 65 of the Rules of Court?"8
In short, the main issue is whether the April 24, 1998 Order of Judge Llaguno was proper.
The Court's Ruling
We find no merit in this Petition.
Main Issue: Propriety and Efficacy of the April 24, 1998 RTC Order
Petitioner insists that the April 24, 1998 Order of Judge Llaguno was issued without jurisdiction.
That is, it allegedly amended the August 12, 1997 judgment of the Special Agrarian Court by
requiring the payment of compensation in cash and bonds.
Assailed Order Not an
Amendment, But an Iteration

of Final Judgment
The argument is not persuasive. The April 24, 1998 Order was not an illegal amendment of the
August 12, 1997 judgment which had become final and executory. The reason is that the Order

did not revise, correct, or alter the Decision. Rather, the Order iterated and made clear the
essence of the final judgment.
The August 12, 1997 judgment mandated compensation to the petitioner "in the manner
provided by R.A. 6657."9There is certitude with regard to this assertion. The confusion in the
present case, which required the issuance of the assailed Order, arose from petitioner's belief
that the Land Bank had obligated itself to pay in cash the compensation due him. This fact can
allegedly be gleaned from its compliance with the December 4, 1997 Writ of Execution and
December 19, 1997 Notice of Garnishment.
Compensation Due Petitioner to Be Paid Pursuant to RA 6657
However, it is clear from the August 12, 1997 judgment that the compensation was to be paid "in
the manner provided by RA 6657."10 Pursuant to Section 18 of the same law, payment was to be
in cash and bonds, as indicated below:
"Section 18. Valuation and Mode of Compensation. -- 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 for in Sections 16 and 17, and other pertinent provisions hereof, or as
may be finally determined by the court, as the just compensation for the land.
1wphi1

"The compensation shall be paid in one of the following modes, at the option of the landowner:
(1) Cash payment, under the following terms and conditions

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Be that as it may, petitioner contends that the bank is estopped from questioning its alleged
undertaking to pay him in cash. This contention was purportedly manifested in its lettercompliance with the Writ of Execution and the Notice of Garnishment. In the letter, respondent
said that it was segregating a specified amount from the Agrarian Reform Fund, in order to pay
him. He insists that such amount was garnished in accordance with Section 1, Rule 39 of the
Rules of Court, and should have been delivered to him pursuant to Section 9 of the same Rule.
We disagree. Respondent bank was obliged to follow the mandate of the August 12, 1997
judgment. Hence, its compliance with the Writ of Execution and the Notice of
Garnishment11 ought to have been construed as an agreement to pay petitioner in the manner
set forth in Republic Act No. 6657. Its compliance was not an undertaking to pay in cash
because such act would have been a deviation from the dictum of the final judgment, to which
execution must conform.12 Paying in cash, as petitioner demands, is not compatible with such
judgment.
Misplaced is petitioner's reliance on Section 9, Rule 39 of the Rules of Court, because the final
judgment decrees payment in cash and bonds. Indeed, this provision must be taken in
conjunction with RA 6657. Since respondent bank had already given petitioner the entire
adjudged amount in the required proportion of cash and bonds, it must be deemed to have
complied with its duty under Rule 39.
We understand petitioner's desire to be paid in cash; after all, his compensation was long
overdue. However, we cannot grant his Petition because it is not sustained by the law. In this

regard, we recall the Court's explanation inAssociation of Small Landowners in the Philippines,
Inc. v. Secretary of Agrarian Reform:13
"It cannot be denied from these cases that the traditional method for the payment of just
compensation is money and no other. And so, conformably, has just compensation been paid in
the past solely in that medium. However, we do not deal here with the traditional exercise of the
power of eminent domain. This is not an ordinary expropriation where only a specific property of
relatively limited area is sought to be taken by the State from its owner for a specific and
perhaps local purpose. What we deal with here is a revolutionary kind of expropriation.
xxx

xxx

xxx

"With these assumptions, the Court hereby declares that the content and manner of the just
compensation provided for in the afore-quoted Section 18 of the CARP Law is not violative of
the Constitution. We do not mind admitting that a certain degree of pragmatism has influenced
our decision on this issue, but after all this Court is not a cloistered institution removed from the
realities and demands of society or oblivious to the need for its enhancement. The Court is as
acutely anxious as the rest our people to see the goal of agrarian reform achieved at last after
the frustrations and deprivations of our peasant masses during all these disappointing decades.
We are aware that invalidation of the said section will result in the nullification of the entire
program, killing the farmer's hopes even as they approach realization and resurrecting the
specter of discontent and dissent in the restless countryside. That is not in our view the intention
of the Constitution, and that is not what we shall decree today.
"Accepting the theory that payment of the just compensation is not always required to be made
fully in money, we find further that the proportion of cash payment to the other things of value
constituting the total payment, as determined on the basis of the areas of the lands
expropriated, is not unduly oppressive upon the landowner. It is noted that the smaller the land,
the bigger the payment in money, primarily because the small landowner will be needing it more
than the big landowners, who can afford a bigger balance in bonds and other things of value. No
less importantly, the government financial instruments making up the balance of the payment
are 'negotiable at any time.' The other modes, which are likewise available to be landowner at
his option, are also not unreasonable because payment is made in shares of stock, LBP bonds,
other properties or assets, tax credits, and other things of value equivalent to the amount of just
compensation.
"Admittedly, the compensation contemplated in the law will cause the landowners, big and
small, not a little inconvenience. As already remarked, this cannot be avoided. Nevertheless, it
is devoutly hoped that these countrymen of ours, conscious as we know they are of the need for
their forbearance and even sacrifice, will not begrudge us their indispensable share in the
attainment of the ideal of agrarian reform. Otherwise, our pursuit of this elusive goal will be like
the quest for the Holy Grail."
All told, we hold that the appellate court was correct in sustaining the propriety and the efficacy
of the April 24, 1998 Order of Judge Llaguno. In the exercise of her supervisory powers over the
execution of a final and executory judgment,14 such as her August 12, 1997 Decision, special
circumstances attending its execution impelled her to issue the Order clarifying the terms
thereof.

Petitioner's claim for damages against the bank must likewise be denied because, as already
explained, it was well within its rights in resisting the former's claim.
WHEREFORE, the Petition is hereby DENIED and the assailed Decision AFFIRMED. Costs
against petitioner.
SO ORDERED.

EFFECT OF NON-PAYMENT
(REYES VS NHA 2003, REPUBLIC VS CA 2002)
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.:
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.
For failure of the Republic to pay for the lots, on September 20, 1961, the Denzons successorsin-interest,Francisca Galeos-Valdehueza and Josefina Galeos-Panerio,2 filed 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. R-7208.
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 Republics 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-ininterest 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 attorneys 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).
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 Decision5dated September 18, 2003, the Appellate Court sustained the RTC
Decision, thus:

"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 1940s
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. x x x. 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).
xxxxxx
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 plaintiffs
title must be shown to be in fact invalid or inoperative despite its prima facieappearance 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.
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
a second 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 Republics 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 respondents 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 Republics 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 petitioners 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 respondents
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 respondents
predecessors-in-interest were given a "run around" by the Republics 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 respondents 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.
lawphil.net

The Court of Appeals is correct in saying that Republics 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 areasonable
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 governments 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 respondents 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 Courts 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 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 limitationof 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
individuals rights. Given this function, the provision should therefore bestrictly interpreted
against the expropriator, the government, and liberally in favor of the property owner.12

Ironically, in opposing respondents claim, the Republic is invoking this Courts 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
condemnors title relates back to the date on which the petition under the Eminent Domain Act,
or the commissioners report under the Local Improvement Act, is filed.
x x x 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 Republics acquisition of ownership is
conditioned upon the full payment of just compensation within a reasonable time.14
Significantly, in Municipality of Bian v. Garcia15 this Court ruled that the expropriation of lands
consists of two stages, to wit:

"x x x 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" x x x.
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. x x x.
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.,17and 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, the first was in the expropriation proceedings and the second,
in Valdehueza. Fifty-seven (57) years have passed since then. We cannot but construe the
Republics 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 domain19 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 InAssociation 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 persons 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 Republics 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 Institutes marking stating
that Lot 932 is the "former location of Lahug Airport." Andsecond, 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.
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 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 peoples right, will not stand still in the face of the Republics 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] x x x 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
respondents title was registered first, it would be the Republics 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 caveatthat the
Republic had a preferential 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 owners 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 respondents 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.
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 fiveyear 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 Republics 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.
CRISTINA DE KNECHT, petitioner,
vs.
HON. PEDRO JL. BAUTISTA, as Judge presiding over Branch III of the Court of First
Instance (Pasay City) and the REPUBLIC OF THE PHILIPPINES, respondents.

FERNANDEZ, J.:

This is a petition for certiorari and prohibition filed by Cristina de Knecht against the Honorable
Pedro JL. Bautista, as Judge presiding over Branch III of the Court of First Instance of Rizal
(Pasay City), and the Republic of the Philippines pines seeking the following relief:
WHEREFORE, petitioner respectfully prays that judgment be rendered annulling the
order for immediate possession issued by respondent court in the expropriation
proceedings and commanding respondents to desist from further proceedings in the
expropriation action or the order for immediate possession issued in said action, with
costs.
Petitioner prays that a restraint order or writ of preliminary injunction be issued exparte enjoining respondents, their representative representative and agents from
enforcing the here questioned order for mediate posession petitioner offering to post
a bond executed to the parties enjoined in an amount to be fixed by the Court to the
effect that she will pay to such parties all damages which they may sustain by reason
of the injunction if the Court should finally decide she is not entitled there
She prays for such other remedy as the Court may deem just and equitable in the
premises.
Quezon City for July 1979. 1
The petitioner alleges that than ten (10) years ago, the government through the Department of
Public Workmen's and Communication (now MPH) prepared a to Epifanio de los Santos Avenue
(EDSA) to Roxas Boulevard; that the proposed extension, an adjunct of building program, the Manila
Cavite Coastal Read Project, would pass through Cuneta Avenue up to Roxas Boulevard that this
route would be a straight one taking into account the direction of EDSA; that preparation to the
implementation of the aforesaid plan, or on December 13, 1974, then Secretary Baltazar Aquino of
the Department of Public Highways directed the City Engineer of Pasay City not to issue temporary
or permanent permits for the construction and/or improvement of buildings and other structures
located within the proposed extension through Cuneta Avenue that shortly thereafter the Department

of Public Highways decided to make the proposed extension go through Fernando Rein and Del Pan
Streets which are lined with old substantial houses; that upon learning of the changed the owners of
the residential houses that would be affected, the herein petitioner being one of them, filed on April
15, 1977 a formal petition to President Ferdinand E. Marcos asking him to order the Ministry of
Public Highways to adoption, the original plan of making the extension of EDSA through Araneta
Avenue instead of the new plan going through Fernando Rein and Del Pan Streets; that President
Marcos directed then Minister Baltazar Aquino to explain within twenty-four (24) hours why the
proposed project should not be suspended; that on April 21, 1977 then Minister Aquino submitted his
explanation defending the new proposed route; that the President then referred the matter to the
Human Settlements Commission for investigation and recommendation; that after formal hearings to
which all the parties proponents and oppositors were given full opportunity to ventilate their views
and to present their evidence, the Settlements Commission submitted a report recommending the
reversion of the extension of EDSA to the original plan passing through Cuneta Avenue; and that
notwithstanding the said report and recommendation, the Ministry of Public Highways insisted on
implementing the plan to make the extension of EDSA go through Fernando Rein and Del Pan
Streets. 2
In February 1979, the government filed in the Court of First Instance of Rizal, Branch III, Pascual
City presided by the respondent Judge, a complaint for expropriation against the owners of the
houses standing along Fernando Rein and Del Pan Streets, among them the herein petitioner. The
complaint was docketed as Civil Case No. 7001-P and entitled"Republic of the Philippines vs.
Concepcion Cabarrus Vda. de Santos, etc."
The herein petitioner filed a motion to dismiss dated March 19, 1979 on the following grounds:
(a) court had no jurisdiction over the subject matter of the action because the complaint failed to
allege that the instant project for expropriation bore the approval of the Ministry of Human
Settlements and the Metro Manila Government nor pursuant to Presidential Decrees Nos. 824, 1396
and 1517;
(b) The choice of properties to be expropriated made by the Ministry of Public Highways was
arbitrary and erroneous;
(c) The complaint was premature as the plaintiff never really had gone through serious negotiations
with the defendant for the purchase of her property; and
(d) The complaint relied on an arbitrary and erroneous valuation of properties and disregarded
consequential damages.
An urgent motion dated March 28, 1979 for preliminary junction was also filed.
In June 1979 the Republic of the Philippines filed a motion for the issuance of a writ of possession of
the property sought to be expropriated on the ground that said Republic had made the required
deposit with the Philippine National Bank.
The respondent judge issued a writ of possession dated June 14, 1979 authorizing the Republic of
the Philippines to take and enter upon the possession of the properties sought be condemned. 3
The petitioner contends that "Respondent court lacked or exceeded its jurisdiction or gravely abused
its discretion in issuing the order to take over and enter upon the possession of the properties sought
to be expropriated-petitioner having raised a constitutional question which respondent court must

resolve before it can issue an order to take or enter upon the possession of properties sought to be
expropriated." 4
The petitioner assails the choice of the Fernando Rein and Del Pan Streets route on the following
grounds:
The choice of property to be expropriated cannot be without rhyme or reason. The
condemnor may not choose any property it wants. Where the legislature has
delegated a power of eminent do-main, the question of the necessity for taking a
particular fine for the intended improvement rests in the discretion of the grantee
power subject however to review by the courts in case of fraud, bad faith or gross
abuse of discretion. The choice of property must be examined for bad faith,
arbitrariness or capriciousness and due process determination as to whether or not
the proposed location was proper in terms of the public interests. Even the claim of
respondent's Secretary Baltazar Aquino that there would be a saving of P2 million
under his new plan must be reviewed for it bears no relation to the site of the
proposed EDSA extension As envisioned by the government, the EDSA extension
would be linked to the Cavite Expressway. Logically then, the proposed extension
must point to the south and not detour to the north.
Also, the equal protection of the law must be accorded, not on to the motel owners
along Cuneta (Fisher) Avenue, but also to the owners of solid and substantial homes
and quality residential lands occupied for generations. 5
The respondents maintain that the respondent court did not act without jurisdiction or exceed its
jurisdiction or gravel abuse its discretion in issuing the order dated June 14, 1979 authorizing the
Republic of the Philippines to take over and enter the possession of the properties sought to be
appropriated because the Republic has complied with all the statutory requirements which entitled it
to have immediate possession of the properties involved. 6
Defending the change of the EDSA extension to pass through Fernando Rein Del Pan Streets,
the respondents aver:
'There was no sudden change of plan in the selection of the site of the EDSA
Extension to Roxas Blvd. As a matter of fact, when the Ministry of Public Highways
decided to change the site of EDSA Ex- tension to Roxas Boulevard from Cuneta
Avenue to the Del Pan Fernando Item Streets the residents of Del Pan and
Fernando Rein Streets who were to be adversely affected by the construction of ED
SA Extension to Roxas Boulevard along Del Pan - Fernando Rein Streets were
duly notified of such proposed project. Petitioner herein was one of those notified
Annex 1). It be conceded that the Cuneta Avenue line goes southward and outward
(from the city center while the Del Pan Fernando Rein Streets line follows
northward and inward direction. It must be stated that both lines, Cuneta Avenue and
Del Pan Fernando Rein Streets lines, meet satisfactorily planning and design
criteria and therefore are both acceptable. In selecting the Del Pan Fernando Rein
Streets line the Government did not do so because it wanted to save the motel
located along Cuneta Avenue but because it wanted to minimize the social impact
factor or problem involved. 7
There is no question as to the right of the Republic of the Philippines to take private property for
public use upon the payment of just compensation. Section 2, Article IV of the Constitution of the
Philippines provides: "Private property shall not be taken for public use without just compensation."

It is recognized, was, that the government may not capriciously or arbitrarily' choose what private
property should be taken. In J. M. Tuazon & Co., Inc. vs. Land Tenure administration 31 SCRA, 413,
433, the Supreme Court said:
For the purpose of obtaining a judicial declaration of nullity, it is enough if the
respondents or defendants named be the government officials who would give
operation and effect to official action allegedly tainted with unconstitutionality. Thus,
where the statute assailed was sought to be enforced by the Land Tenure
Administrative and the Solicitor General, the two officials may be made respondents
in the action without need of including the Executive Secretary as a party in the
action
The failure to meet tile exacting standard of due process would likewise constitute a
valid objection to the exercise of this congressional power. That was so intimated in
the above leading Guido Case. There was an earlier pronouncement to that effect in
a decision rendered long before the adoption of the Constitution under the previous
organic law then in force, while the Philippines was still an unincorporated territory of
the United States.
It is obvious then that a landowner is covered by the mantle of protection due
process affords. It is a mandate of reason. It frowns on arbitrariness, it is the
antithesis of any governmental act that smacks of whim or caprice. It negates state
power to act in an impressive manner. It is, as had been stressed so often, the
embodiment of the sporting Idea of fair play. In that sense, it stands as a guaranty of
justice. That is the standard that must be met by any government talk agency in the
exercise of whatever competence is entrusted to it. As was so emphatically stressed
by the present Chief Justice, 'Acts of Congress, as well as those of the Executive,
can deny due process only under pain of nullity, ...
In the same case the Supreme Court concluded:
With due recognition then of the power of Congress to designate the particular
property to be taken and how much thereof may be condemned in the exercise of the
power of expropriation, it is still a judicial question whether in the exercise of such
competence, the party adversely affected is the victim of partiality and prejudice.
That the equal protection clause will not allow. (p. 436)
In the instant case, it is a fact that the Department of Public Highways originally establish the
extension of EDSA along Cuneta Avenue. It is to be presumed that the Department of Public
Highways made studies before deciding on Cuneta Avenue. It is indeed odd why suddenly the
proposed extension of EDSA to Roxas Boulevard was changed to go through Fernando Rein-Del
Pan Streets which the Solicitor General con- cedes "... the Del Pan Fernando Rein Streets line
follows northward and inward direction. While admit "that both lines, Cuneta Avenue and Del Pan
Fernando Rein Streets lines, meet satisfactorily planning and design criteria and therefore are both
acceptable ... the Solicitor General justifies the change to Del Pan Fernando Rein Streets on the
ground that the government "wanted to the social impact factor or problem involved." 8
It is doubtful whether the extension of EDSA along Cuneta Avenue can be objected to on the ground
of social impact. The improvements and buildings along Cuneta Avenue to be affected by the
extension are mostly motels. Even granting,arguendo, that more people be affected, the Human
Setlements Commission has suggested coordinative efforts of said Commission with the National

Housing Authority and other government agencies in the relocation and resettlement of those
adversely affected. 9
The Human Settlements Commission considered conditionality social impact and cost. The pertinent
portion of its report reads:
Comparison of Alignment 1 (Cuneta Fisher) and Alignment 2 (Del Pan Fernando
Rein) based on the criteria of functionality, social impact and cost
A. Functionality
This issue has to do with the physical design of a highway, inclusive of engineering
factors and management consideration
From both engineering and traffic management viewpoints, it is incontestable that the
straighter and shorter alignment is preferable to one which is not. Systematically and
diagramatically, alignment 1 is straighter than alignment 2. In fact, Director Antonio
Goco of the Department of Public Highways admitted that alignment 2 is three (3)
meters longer than alignment 1. Furthermore, alignment 1 is definitely the contour
conforming alignment to EDSA whereas alignment 2 affords a greater radius of
unnatural curvature as it hooks slightly northward before finally joining with Roxas
Boulevard. Besides, whichever alignment is adopted, there will be a need for a grade
separator or interchange at the Roxas Boulevard junction. From the of highway
design, it is imperative to have interchanges as far apart as possible to avoid traffic
from slow down in negotiating the slope on the interchanges. Up north would be the
future Buendia Avenue- Roxas Boulevard Interchange. Consequently, alignment 1
which is farther away from Buendia Avenue than alignment 2 is the better alignment
from the viewpoint of the construction of the grade separator or interchange, a
necessary corollary to the extension project. Finally, the choice of alignment 2 which
is longer by three (3) meters than alignment 1 could have serious repercussions on
our energy conservation drive and from the larger perspective of the national
economy, considering that, by ad- statistical data, no less than fifty thousand
(50,000) vehicles a day will have to traverse an extra three (3) meters.
B. Social Impact
The following factual data which have a direct bearing on the issue of social impact
were culled from the records of the case and the evidence presented during the
public hearings:

(1) Number of property owners:

Alignment 1

73

Alignment 2

49

(2) Incidence of non-resident owner:

Alignment 1

25 (34.3%)

Alignment 2

31 (63.3%)

(3) Number of actually affected residents:

Alignment 1

547

Alignment 2

290 (estimated)

(4) Average income of residents:

Alignment 2:

Below P350 P350 P500 P 500 P 800 P800 Pl000 Over P1000 16 (28%) 24
(42%) 0 (14%) 5 (9%) 4 (7%)
Alignment 2: Figures not available.
It is evident from the foregoing figures that social impact is greater on the residents of
alignment 1.
C. Cost
The resolution of the issue of right-of-way acquisition cost depends to a large extend
on the nature of the properties to be affected and the relative value thereof. A
comparison of alignment 1 and alignment 2 on these two points has produced the
following results:

(1) Nature and number of properties involved:


Line I Line 2

Lo
ts

Lot
s

Im
pr
ov
e
m
en
t

Lot
s

Im
pro
ve
me
nts

R
e
si
d
e
nt
ia
l

41

46

38

34

C
o
m
m
e
rc
ia
l

25

24

11

13

In
d
u
st
ri
al

C
h
u
rc

E
d
u
c
at
io
n
al

T
O
T
A
L

72

75

51

49

(2) Relative value of properties affected:

L
o
t
s

Im
pr
ov
em
ent
s

T
o
t
a
l

A
l
i
g
n
m
e
n
t

P9
,30
0,1
36

P
5
,
9
2
8
,
6
8
0

P
1
5,
2
2
8,
8
1
6

8,3

l
i
g
n
m
e
n
t

14,
89
0

,
6
4
4
,
1
3
0

4,
9
5
9,
0
2
0

D
i
f
f
e
r
e
n
c
e

P
2
6
9,
7
9
6

It is obvious from the immediately table that the right- of-way acquisition cost
difference factor of the two alignment is only P269,196 and not P2M as alleged by
the Department of Public Highways and P1.2M as claimed by the oppositors.
Consequently, the cost difference factor between the two alignments is so minimal as
to be practically nil in the consideration of the issues involved in this case. 10
After considering all the issues and factors, the Human Setlements Commission made the following
recommendations:
Weighing in the balance the issues and factors of necessity, functionality, impact,
cost and property valuation as basis for scheme of compensation to be adopted in
the instant case, the Hearing Board takes cognizance of the following points:
1. The EDSA extension to Roxas Boulevard is necessary and desirable from the
strictly technical viewpoint and the overall perspective of the Metro Manila transport
system.
2. The right-of-way acquisition cost difference factor is so minimal as to influence in
any way the choice of either alignment as the extension of EDSA to Roxas
Boulevard.
3. The negotiated sale approach to compensation as proposed should apply to a
whichever alignment is selected.

4. The factor of functionality states strongly against the selection of alignment 2 while
the factor of great social and economic impact bears grieviously on the residents of
alignment 1.
The course of the decision in this case consequently boils down to the soulsearching and heart-rending choice between people on one hand and progress and
development on the other. In deciding in favor of the latter, the Hearing Board is not
unmindful that progress and development are carried out by the State precisely and
ultimately for the benefit of its people and therefore, recommends the reverend of the
extension project to alignment 1. However, before the Government, through its
implementing agencies, particularly the Department of Public Highways, undertakes
the actual step of appropriating properties on alignment I to pave the way for the
extension the hearing Board recommends the following as absolute. binding and
imperative preconditions:
1. The preparation, and ignore importantly, the execution of a comprehensive and
detailed plan for the relocation and resettlement of the adversely and genuinely
affected residents of alignment I which will necessitate the coordinative efforts of
such agencies as the Human Settlements Commission, the National Housing
Authority and other such governmental agencies. To be concrete, a self sufficient
community or human settlement complete with infrastructure capture market, school,
church and industries for employment should be set up to enable the affected
residents of alignment 1 to maintain, their present social and economic standing.
2. The prompt payment of fair and just compensation through the negotiated sale
approach.
Finally, the Hearing Board recommends that the Department of Public Highways
conduct public hearings before undertaking on future expropriations of private
properties for public use.
Respectfully submitted to the Human Settlements Commission Commissioners for
consideration, final disposition and endorsement thereof to His Excellency, the
President of the Philippines.
Makati, Metro Manila, July 4, 1977. 11
... From all the foregoing, the facts of record and recommendations of the Human Settlements
Commission, it is clear that the choice of Fernando Rein Del Pan Streets as the line through
which the Epifanio de los Santos Avenue should be extended to Roxas Boulevard is arbitrary and
should not receive judicial approval. The respondent judge committed a grave abuse of discretion in
allowing the Republic of the Philippines to take immediate possession of the properties sought to be
expropriated.
WHEREFORE, the petition for certiorari and prohibition is hereby granted. The order of June 14,
1979 authorizing the Republic of the Philippines to take or enter upon the possession of the
properties sought to be condemned is set aside and the respondent Judge is permanently enjoined
from taking any further action on Civil Case No. 7001-P, entitled "Republic of the Philippines vs.
Concepcion Cabarrus Vda. de Santos, etc." except to dismiss said case.
SO ORDERED.

REPUBLIC OF THE PHILIPPINES, plaintiff-appellant,


vs.
LA ORDEN DE PP. BENEDICTINOS DE FILIPINAS, defendant-appellee.
Office of the Solicitor General for plaintiff-appellant.
Ledesma, Puno, Guytingco, Antonio and Associates for defendant-appellee.
DIZON, J.:
To ease and solve the daily traffic congestion on Legarda Street, the Government drew plans to
extend Azcarraga street from its junction with Mendiola street, up to the Sta. Mesa Rotonda,
Sampaloc, Manila. To carry out this plan it offered to buy a portion of approximately 6,000
square meters of a bigger parcel belonging to La Orden de PP. Benedictinos de Filipinas, a
domestic religious corporation that owns the San Beda College, a private educational institution
situated on Mendiola street. Not having been able to reach an agreement on the matter with the
owner, the Government instituted the present expropriation proceedings.
On May 27, 1957 the trial court, upon application of the Government hereinafter referred to
as appellant issued an order fixing the provisional value of the property in question at
P270,000.00 and authorizing appellant to take immediate possession thereof upon depositing
said amount. The deposit having been made with the City Treasurer of Manila, the trial court
issued the corresponding order directing the Sheriff of Manila to place appellant in possession
of the property aforesaid.
On June 8, 1957, as directed by the Rules of Court, the herein appellee, in lieu of an answer,
filed a motion to dismiss the complaint based on the following grounds:
I. That the property sought to be expropriated is already dedicated to public use and
therefore is not subject to expropriation.
II. That there is no necessity for the proposed expropriation.
III. That the proposed Azcarraga Extension could pass through a different site which would
entail less expense to the Government and which would not necessitate the expropriation of
a property dedicated to education.
IV. That the present action filed by the plaintiff against the defendant is discriminatory.
V. That the herein plaintiff does not count with sufficient funds to push through its project of
constructing the proposed Azcarraga Extension and to allow the plaintiff to expropriate
defendant's property at this time would be only to needlessly deprive the latter of the use of
its property.".

The government filed a written opposition to the motion to dismiss (Record on Appeal, pp. 3037) while appellee filed a reply thereto (Id., pp. 38-48). On July 29, 1957, without receiving
evidence upon the questions of fact arising from the complaint, the motion to dismiss and the
opposition thereto filed, the trial court issued the appealed order dismissing the case.

The appealed order shows that the trial court limited itself to deciding the point of whether or not
the expropriation of the property in question is necessary (Rec. on Ap., p. 50) and, having
arrived at the conclusion that such expropriation was not of extreme necessity, dismissed the
proceedings.
It is to be observed that paragraph IV of the complaint expressly alleges that appellant needs,
among other properties, the portion of appellee's property in question for the purpose of
constructing the Azcarraga street extension, and that paragraph VII of the same complaint
expressly alleges that, in accordance with Section 64(b) of the Revised Administrative Code, the
President of the Philippines had authorized the acquisition, thru condemnation proceedings, of
the aforesaid parcel of land belonging to appellee, as evidenced by the third indorsement dated
May 15, 1957 of the Executive Secretary, Office of the President of the Philippines, a copy of
which was attached to the complaint as Annex "C" and made an integral part thereof. In denial
of these allegations appellee's motion to dismiss alleged that "there is no necessity for the
proposed expropriation". Thus, the question of fact decisive of the whole case arose.
It is the rule in this jurisdiction that private property may be expropriated for public use and upon
payment of just compensation; that condemnation of private property is justified only if it is for
the public good and there is a genuine necessity therefor of a public character. Consequently,
the courts have the power to inquire into the legality of the exercise of the right of eminent
domain and to determine whether or not there is a genuine necessity therefor (City of Manila vs.
Chinese Community, 40 Phil. 349; Manila Railroad Company vs. Hacienda Benito, Inc., 37 O.G.
1957).
Upon the other hand, it does not need extended argument to show that whether or not the
proposed opening of the Azcarraga extension is a necessity in order to relieve the daily
congestion of traffic on Legarda St., is a question of fact dependent not only upon the facts of
which the trial court very liberally took judicial notice but also up on other factors that do not
appear of record and must, therefore, be established by means of evidence. We are, therefore,
of the opinion that the parties should have been given an opportunity to present their respective
evidence upon these factors and others that might be of direct or indirect help in determining the
vital question of fact involved, namely, the need to open the extension of Azcarraga street to
ease and solve the traffic congestion on Legarda street.
WHEREFORE, the appealed order of dismissal is set aside and the present case is remanded
to the trial court for further proceedings in accordance with this decision. Without costs.

POWER OF TAXATION
REV. FR. CASIMIRO LLADOC, petitioner,
vs.
The COMMISSIONER OF INTERNAL REVENUE and The COURT of TAX
APPEALS, respondents.
Hilado and Hilado for petitioner.
Office of the Solicitor General for respondents.

PAREDES, J.:
Sometime in 1957, the M.B. Estate, Inc., of Bacolod City, donated P10,000.00 in cash to Rev.
Fr. Crispin Ruiz, then parish priest of Victorias, Negros Occidental, and predecessor of herein
petitioner, for the construction of a new Catholic Church in the locality. The total amount was
actually spent for the purpose intended.
On March 3, 1958, the donor M.B. Estate, Inc., filed the donor's gift tax return. Under date of
April 29, 1960, the respondent Commissioner of Internal Revenue issued an assessment for
donee's gift tax against the Catholic Parish of Victorias, Negros Occidental, of which petitioner
was the priest. The tax amounted to P1,370.00 including surcharges, interests of 1% monthly
from May 15, 1958 to June 15, 1960, and the compromise for the late filing of the return.
Petitioner lodged a protest to the assessment and requested the withdrawal thereof. The protest
and the motion for reconsideration presented to the Commissioner of Internal Revenue were
denied. The petitioner appealed to the Court of Tax Appeals on November 2, 1960. In the
petition for review, the Rev. Fr. Casimiro Lladoc claimed, among others, that at the time of the
donation, he was not the parish priest in Victorias; that there is no legal entity or juridical person
known as the "Catholic Parish Priest of Victorias," and, therefore, he should not be liable for the
donee's gift tax. It was also asserted that the assessment of the gift tax, even against the
Roman Catholic Church, would not be valid, for such would be a clear violation of the provisions
of the Constitution.
After hearing, the CTA rendered judgment, the pertinent portions of which are quoted below:
... . Parish priests of the Roman Catholic Church under canon laws are similarly situated as
its Archbishops and Bishops with respect to the properties of the church within their parish.
They are the guardians, superintendents or administrators of these properties, with the right
of succession and may sue and be sued.
xxx

xxx

xxx

The petitioner impugns the, fairness of the assessment with the argument that he should not
be held liable for gift taxes on donation which he did not receive personally since he was not
yet the parish priest of Victorias in the year 1957 when said donation was given. It is
intimated that if someone has to pay at all, it should be petitioner's predecessor, the Rev. Fr.
Crispin Ruiz, who received the donation in behalf of the Catholic parish of Victorias or the
Roman Catholic Church. Following petitioner's line of thinking, we should be equally unfair to
hold that the assessment now in question should have been addressed to, and collected
from, the Rev. Fr. Crispin Ruiz to be paid from income derived from his present parish where
ever it may be. It does not seem right to indirectly burden the present parishioners of Rev. Fr.
Ruiz for donee's gift tax on a donation to which they were not benefited.
xxx

xxx

xxx

We saw no legal basis then as we see none now, to include within the Constitutional
exemption, taxes which partake of the nature of an excise upon the use made of the

properties or upon the exercise of the privilege of receiving the properties. (Phipps vs.
Commissioner of Internal Revenue, 91 F [2d] 627; 1938, 302 U.S. 742.)
It is a cardinal rule in taxation that exemptions from payment thereof are highly disfavored by
law, and the party claiming exemption must justify his claim by a clear, positive, or express
grant of such privilege by law. (Collector vs. Manila Jockey Club, G.R. No. L-8755, March 23,
1956; 53 O.G. 3762.)
The phrase "exempt from taxation" as employed in Section 22(3), Article VI of the
Constitution of the Philippines, should not be interpreted to mean exemption from all kinds of
taxes. Statutes exempting charitable and religious property from taxation should be
construed fairly though strictly and in such manner as to give effect to the main intent of the
lawmakers. (Roman Catholic Church vs. Hastrings 5 Phil. 701.)
xxx

xxx

xxx

WHEREFORE, in view of the foregoing considerations, the decision of the respondent


Commissioner of Internal Revenue appealed from, is hereby affirmed except with regard to
the imposition of the compromise penalty in the amount of P20.00 (Collector of Internal
Revenue v. U.S.T., G.R. No. L-11274, Nov. 28, 1958); ..., and the petitioner, the Rev. Fr.
Casimiro Lladoc is hereby ordered to pay to the respondent the amount of P900.00 as
donee's gift tax, plus the surcharge of five per centum (5%) as ad valorem penalty under
Section 119 (c) of the Tax Code, and one per centum (1%) monthly interest from May 15,
1958 to the date of actual payment. The surcharge of 25% provided in Section 120 for failure
to file a return may not be imposed as the failure to file a return was not due to willful neglect.
( ... ) No costs.

The above judgment is now before us on appeal, petitioner assigning two (2) errors allegedly
committed by the Tax Court, all of which converge on the singular issue of whether or not
petitioner should be liable for the assessed donee's gift tax on the P10,000.00 donated for the
construction of the Victorias Parish Church.
Section 22 (3), Art. VI of the Constitution of the Philippines, exempts from taxation
cemeteries, churches and parsonages or convents, appurtenant thereto, and
all lands, buildings, and improvements used exclusively for religious purposes. The exemption is
only from the payment of taxes assessed on such properties enumerated, as property taxes, as
contra distinguished from excise taxes. In the present case, what the Collector assessed was a
donee's gift tax; the assessment was not on the properties themselves. It did not rest upon
general ownership; it was an excise upon the use made of the properties, upon the exercise of
the privilege of receiving the properties (Phipps vs. Com. of Int. Rec. 91 F 2d 627). Manifestly,
gift tax is not within the exempting provisions of the section just mentioned. A gift tax is not a
property tax, but an excise tax imposed on the transfer of property by way of giftinter vivos, the
imposition of which on property used exclusively for religious purposes, does not constitute an
impairment of the Constitution. As well observed by the learned respondent Court, the phrase
"exempt from taxation," as employed in the Constitution (supra) should not be interpreted to
mean exemption from all kinds of taxes. And there being no clear, positive or express grant of
such privilege by law, in favor of petitioner, the exemption herein must be denied.

The next issue which readily presents itself, in view of petitioner's thesis, and Our finding that a
tax liability exists, is, who should be called upon to pay the gift tax? Petitioner postulates that he
should not be liable, because at the time of the donation he was not the priest of Victorias. We
note the merit of the above claim, and in order to put things in their proper light, this Court, in its
Resolution of March 15, 1965, ordered the parties to show cause why the Head of the Diocese
to which the parish of Victorias pertains, should not be substituted in lieu of petitioner Rev. Fr.
Casimiro Lladoc it appearing that the Head of such Diocese is the real party in interest. The
Solicitor General, in representation of the Commissioner of Internal Revenue, interposed no
objection to such a substitution. Counsel for the petitioner did not also offer objection thereto.
On April 30, 1965, in a resolution, We ordered the Head of the Diocese to present whatever
legal issues and/or defenses he might wish to raise, to which resolution counsel for petitioner,
who also appeared as counsel for the Head of the Diocese, the Roman Catholic Bishop of
Bacolod, manifested that it was submitting itself to the jurisdiction and orders of this Court and
that it was presenting, by reference, the brief of petitioner Rev. Fr. Casimiro Lladoc as its own
and for all purposes.
In view here of and considering that as heretofore stated, the assessment at bar had been
properly made and the imposition of the tax is not a violation of the constitutional provision
exempting churches, parsonages or convents, etc. (Art VI, sec. 22 [3], Constitution), the Head of
the Diocese, to which the parish Victorias Pertains, is liable for the payment thereof.
The decision appealed from should be, as it is hereby affirmed insofar as tax liability is
concerned; it is modified, in the sense that petitioner herein is not personally liable for the said
gift tax, and that the Head of the Diocese, herein substitute petitioner, should pay, as he is
presently ordered to pay, the said gift tax, without special, pronouncement as to costs.