17. Republic v. Lim, G.R.

161656, June 29, 2005

Fact: 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, involving Lots of the Banilad Friar Land
Estate, Lahug, Cebu City, for the purpose of establishing a military reservation for the Philippine Army.
After depositing ₱9,500.00 with the Philippine National Bank, the Republic took possession of the lots.
Thereafter, the CFI rendered its Decision ordering the Republic to pay the Denzons the sum of ₱4,062.10
as just compensation. 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. in 1962, the CFI promulgated its Decision in favor of Valdehueza and Panerio, holding that
they are the owners and have retained their right as such over Lots 932 and 939 because of the
Republic’s failure to pay the amount of ₱4,062.10, adjudged in the expropriation proceedings. In view of
“the differences in money value from 1940 up to the present,” the court adjusted the market value at
₱16,248.40, to be paid with 6% interest per annum from April 5, 1948, date of entry in the expropriation
proceedings, until full payment.

Meanwhile, in 1964, Valdehueza and Panerio mortgaged and foreclosed Lot 932 to Vicente Lim for
failure to pay. in 1992, respondent filed a complaint for quieting of title with the (RTC) seeking an
absolute and exclusive possession of the property. in 2001, the RTC rendered a decision in favor of
respondent. Petitioners elevated the case to the CA but the Ruling of the RTC was upheld and affirmed.

Issue: Whether the owner of the expropriated land is entitled for the repossession of his property when
party condemning refuses to pay the compensation which has been assessed or agreed upon?

Held: Yes, 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) 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.” To be sure, the five-year period limitation will encourage the government to
pay just compensation punctually. This is in keeping with justice and equity. After all, it is the duty of the
government, whenever it takes property from private persons against their will, to facilitate the
payment of just compensation which the court defined 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.”

Police Power
Roxas and Co., Inc. vs Court of Appeals
GR 127876
December 17, 1999

Facts: This case involves three haciendas in Nasugbu Batangas owned by petitioner and the
validity of the acquisition of these by the government under RA 6657 or the Comprehensive
Agrarian Reform Law of 9188. Petitioner Roxas and Co. is a domestic corporation and is the
registered owner of three haciendas, namely Hacienda Palico, Banilad and Caylaway. The events
of this case occurred during the incumbency of then President Aquino, in the exercise of
legislative power, the President signed on July 22, 1987, Proclamation No. 131 instituting a
Comprehensive Agrarian Reform Program and Executive Order No. 229 providing the
mechanisms necessary to initially implement the program. Congress passed Republic Act No.
6657; the Act was signed by the President on June 10, 1988 and took effect on June 15, 1988.
Before the law’s effectivity, petitioner filed with respondent DAR a voluntary offer to sell
Hacienda Caylaway pursuant to the provisions of EO No. 229. Haciendas Palico and Banilad were
later placed under compulsory acquisition by respondent DAR in accordance with the CARL.

Petitioner was informed that 1,023.999 hectares of its land in Hacienda Palico were subject to
immediate acquisition and distribution by the government under the CARL. Meanwhile in a letter
dated May 4, 1993, petitioner applied with the DAR for conversion of Haciendas Palico and
Banilad from agricultural to non-agricultural lands under the provisions of the CARL. Despite
petitioner’s application for conversion, respondent DAR proceeded with the acquisition of the
two Haciendas. The Land Bank of the Philippines trust accounts as compensation for Hacienda
Palico were replaced by respondent DAR with cash and LBP bonds. On October 22, 1993, from
the title of the Hacienda, respondent DAR registered Certificate of Land Ownership Award No.
6654. On October 30, 1993, CLOA’s were distributed to farmer beneficiaries. On December 18,
1991, the LBP certified certain amounts in cash and LBP bonds had been earmarked as
compensation for petitioner’s land in Hacienda Banilad. On May 4, 1993, petitioner applied for
conversion of both Haciendas Palico and Banilad. Hacienda Caylaway was voluntarily offered for
sale to the government on May 6, 1988 before the effectivity of the CARL. Nevertheless, on
August 6, 1992, petitioner, through its President, Eduardo Roxas, sent a letter to the Secretary of
respondent DAR withdrawing its VOS of Hacienda Caylaway. The Sangguniang Bayan of Nasugbu,
Batangas allegedly authorized the reclassification of Hacienda Caylaway from agricultural to non-
agricultural. As a result, petitioner informed respondent DAR that it was applying for conversion
of Hacienda Caylaway from agricultural to other uses. Respondent DAR Secretary informed
petitioner that a reclassification of the land would not exempt it from agrarian reform.
On August 24, 1993, petitioner instituted a case with respondent DAR Adjudication Board praying
for the cancellation of the CLOA’s issued by respondent DAR in the name of the
farmers. Petitioner alleged that the Municipality of Nasugbu, where the haciendas are located,
had been declared a tourist zone, that the land is not suitable for agricultural production, and
that the Sangguniang Bayan of Nasugbu had reclassified the land to non-agricultural. Respondent
DARAB held that the case involved the prejudicial question of whether the property was subject
to agrarian reform; hence, this question should be submitted to the Office of the Secretary of
Agrarian Reform for determination.
Petitioner filed a petition with the CA. It questioned the expropriation of its properties under the
CARL and the denial of due process in the acquisition of its landholdings. Meanwhile, the petition
for conversion of the three haciendas was denied. Petitioner’s petition was dismissed by the CA.
Hence, this recourse.
Issue: Whether or not the acquisition proceedings over the haciendas were valid and in
accordance with the law.
Held: No, for a valid implementation of the CAR Program, two notices are required first the Notice
of Coverage and letter of invitation to a preliminary conference sent to the landowner, the
representatives of the BARC, LBP, farmer beneficiaries and other interested parties and second,
the Notice of Acquisition sent to the landowner under Section 16 of the CARL. The importance
of the first notice, the Notice of Coverage and the letter of invitation to the conference, and its
actual conduct cannot be understated. They are steps designed to comply with the requirements
of administrative due process. The implementation of the CARL is an exercise of the State’s
police power and the power of eminent domain. To the extent that the CARL prescribes
retention limits to the landowners, there is an exercise of police power for the regulation of
private property in accordance with the Constitution. But where, to carry out such regulation,
the owners are deprived of lands they own in excess of the maximum area allowed, there is also
a taking under the power of eminent domain. In this case, respondent DAR claims that it sent a
letter of invitation to petitioner corporation, through Jaime Pimentel, the administrator of
Hacienda Palico but he was not authorized as such by the corporation. The SC stressed that the
failure of respondent DAR to comply with the requisites of due process in the acquisition
proceedings does not give the SC the power to nullify the CLOA’s already issued to the farmer
beneficiaries. The Court said, to assume the power is to short-circuit the administrative process,
which has yet to run its regular course. Respondent DAR must be given the chance to correct its
procedural lapses in the acquisition proceedings. In Hacienda Palico alone, CLOA's were issued
to 177 farmer beneficiaries in 1993. Since then until the present, these farmers have been
cultivating their lands. It goes against the basic precepts of justice, fairness and equity to deprive
these people, through no fault of their own, of the land they till. The petition is granted in part
and the acquisition proceedings over the three haciendas are nullified for respondent DAR's
failure to observe due process.