1

G.R. Nos. L-60549, 60553 to 60555. October 26, 1983.]

HEIRS OF JUANCHO ARDON

||| (Heirs Ardona v. Reyes, G.R. Nos. L-60549, 60553 to 60555, [October 26, 1983], 210 PHIL
187-208)
DECISION

GUTIERREZ, JR., J p:

This is a petition for certiorari with preliminary injunction challenging the

constitutionality of Presidential Decree No. 564, the Revised Charter of the Philippine Tourism
Authority, and Proclamation No. 2052 declaring the barangays of Sibugay, Malubog, Babag
and Sirao including the proposed Lusaran Dam in the City of Cebu and in the municipalities
of Argao and Dalaguete in the province of Cebu as tourist zones. The petitioners ask that we
restrain respondent Court of First Instance of Cebu and the Philippine Tourism Authority (PTA)
from enforcing and implementing the writs of possession issued in four (4) expropriation cases
filed by PTA against the petitioners: Civil Cases Nos. R-19562, R-19684, R-20701, and R-
21608 of the Court of First Instance of Cebu (Branch I).
The Philippine Tourism Authority filed four (4) complaints with the Court of First
Instance of Cebu City for the expropriation of some 282 hectares of rolling land situated in
barangays Malubog and Babag, Cebu City, under PTA's express authority "to acquire by
purchase, by negotiation or by condemnation proceedings any private land within and without
the tourist zones" for the purposes indicated in Section 5, paragraph B(2), of its Revised
Charter (PD 564), more specifically, for the development into integrated resort complexes of
selected and well-defined geographic areas with potential tourism value. As uniformly alleged
in the complaints, the purposes of the expropriation are:
xxx xxx xxx
V
"Plaintiff, in line with the policy of the government to promote tourism and
development of tourism projects will construct in Barangays Malubog, Busay and
Babag, all of Cebu City, a sports complex (basketball courts, tennis courts,
volleyball courts, track and field, baseball and softball diamonds, and swimming
pools), clubhouse, gold course, children's playground and a nature area for
picnics and horseback riding for the use of the public.
"The development plan, covering approximately 1,000 hectares, includes
the establishment of an electric power grid in the area by the National Power
Corporation, thus assuring the supply of electricity therein for the benefit of the
whole community. Deep wells will also be constructed to generate water supply
within the area. Likewise, a complex sewerage and drainage system will be
devised and constructed to protect the tourists and nearby residents from the
dangers of pollution.
"Complimentary and support facilities for the project will be constructed,
including public rest houses, lockers, dressing rooms, coffee shops, shopping
malls, etc. Said facilities will create and offer employment opportunities to
residents of the community and further generate income for the whole of Cebu
City.
"Plaintiff needs the property above described which is directly covered by
the proposed golf course."
xxx xxx xxx
The defendants in Civil Cases Nos. R-20701 and R-21608 filed their respective
Opposition with Motion to Dismiss and/or Reconsideration. The defendants in Civil Case No.
R19562 filed a manifestation adopting the answer of defendants in Civil Case No. R-19864.
The defendants, now petitioners, had a common allegation in that the taking is allegedly not
impressed with public use under the Constitution.
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In their motions to dismiss, the petitioners alleged, in addition to the issue of public
use, that there is no specific constitutional provision authorizing the taking of private property
for tourism purposes; that assuming that PTA has such power, the intended use cannot be
paramount to the determination of the land as a land reform area; that limiting the amount of
compensation by legislative fiat is constitutionally repugnant; and that since the land is under
the land reform program, it is the Court of Agrarian Relations and not the Court of First
Instance, that has jurisdiction over the expropriation cases.
The Philippine Tourism Authority having deposited with the Philippine National Bank,
Cebu City Branch, an amount equivalent to 10% of the value of the properties pursuant
to Presidential Decree No. 1533, the lower court issued separate orders authorizing PTA to
take immediate possession of the premises and directing the issuance of writs of possession.
On May 25, 1982, petitioners filed this petition questioning the orders of the respondent
Judge. The respondents have correctly restated the grounds in the petition as follows:
xxx xxx xxx
"A. The complaints for expropriation lack basis because
the Constitution does not provide for the expropriation of private property for
tourism or other related purposes;
"B. The writs of possession or orders authorizing PTA to take immediate
possession is premature because the `public use' character of the taking has not
been previously demonstrated;
"C. The taking is not for public use in contemplation of eminent domain
law;
"D. The properties in question have been previously declared a land
reform area; consequently, the implementation of the social justice provision of
the Constitution on agrarian reform is paramount to the right of the State to
expropriate for the purposes intended:
"E. Proclamation No. 2052 declaring certain barangays in Cebu City,
which include the lands subject of expropriation as within a tourist zone, is
unconstitutional for it impairs the obligation of contracts;
"F. Since the properties are within a land reform area, it is the Court of
Agrarian Relations, not the lower court, that has jurisdiction pursuant to Pres.
Decree No. 946;
"G. The forcible ejectment of defendants from the premises constitutes a
criminal act under Pres. Decree No. 583;"
In their memorandum, the petitioners have summarized the issues as follows:
I. Enforcement of the Writ of Possession is Premature:
II Presidential Decree 564 Amending Presidential Decree 189 is
Constitutionally Repugnant:
III. The Condemnation is not for Public Use, Therefore, Unconstitutional:
IV. The Expropriation for Tourism Purposes of Lands Covered by the
Land Reform Program Violates the Constitution:
V. Presidential Proclamation 2052 is Unconstitutional:
VI. Presidential Decree No. 1533 is Unconstitutional: VII. The Court of
First Instance has no Jurisdiction:
VIII. The Filing of the Present Petition is not Premature.
The issues raised by the petitioners revolve around the proposition that the actions to
expropriate their properties are constitutionally infirm because nowhere in
the Constitution can a provision be found which allows the taking of private property for the
promotion of tourism.
The petitioners' arguments in their pleadings in support of the above proposition are
subsumed under the following headings:
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1. Non-compliance with the "public use" requirement under the eminent

domain provision of the Bill of Rights.
2. Disregard of the land reform nature of the property being expropriated.
3. Impairment of the obligation of contracts.
There are three provisions of the Constitution which directly provide for the exercise
of the power of eminent domain. Section 2, Article IV states that private property shall not be
taken for public use without just compensation. Section 6, Article XIV allows the State, in the
interest of national welfare or defense and upon payment of just compensation to transfer to
public ownership, utilities and other private enterprises to be operated by the government.
Section 13, Article XIV states that the Batasang Pambansa may authorize upon payment of
just compensation the expropriation of private lands to be subdivided into small lots and
conveyed at cost to deserving citizens.
While not directly mentioning the expropriation of private properties upon payment of
just compensation, the provisions on social justice and agrarian reforms which allow the
exercise of police power together with the power of eminent domain in the implementation of
constitutional objectives are even more far reaching insofar as taxing of private property is
concerned.
Section 6, Article II provides:
"Sec. 6. The State shall promote social justice to ensure the dignity,
welfare, and security of all the people. Towards this end, the State shall regulate
the acquisition, ownership, use, enjoyment, and disposition of private property,
and equitably diffuse property ownership and profits."
xxx xxx xxx
Section 12, Article XIV provides:
"Sec. 12. The State shall formulate and implement an agrarian reform
program aimed at emancipating the tenant from the bondage of the soil and
achieving the goals enunciated in this Constitution."
The equitable diffusion of property ownership in the promotion of social justice implies
the exercise, whenever necessary, of the power to expropriate private property. Likewise
there can be no meaningful agrarian reform program unless the power to expropriate is
utilized.
We cite all the above provisions on the power to expropriate because of the petitioners'
insistence on a restrictive view of the eminent domain provision. The thrust of all constitutional
provisions on expropriation is in the opposite direction.
As early as 1919, this Court in Visayan Refining Co. v. Samus (40 Phil. 550)
categorized the restrictive view as wholly erroneous and based on a misconception of
fundamentals.
The petitioners look for the word "tourism" in the Constitution. Understandably the
search would be in vain. The policy objectives of the framers can be expressed only in general
terms such as social justice, local autonomy, conservation and development of the national
patrimony, public interest, and general welfare, among others. The programs to achieve these
objectives vary from time to time and according to place. To freeze specific programs like
tourism into express constitutional provisions would make the Constitution more prolix than a
bulky code and require of the framers a prescience beyond Delphic proportions. The particular
mention in the Constitution of agrarian reform and the transfer of utilities and other private
enterprises to public ownership merely underscores the magnitude of the problems sought to
be remedied by these programs. They do not preclude nor limit the exercise of the power of
eminent domain for such purposes like tourism and other development programs.
In the leading case of Visayan Refining Co. v. Camus (supra), this Court emphasized
that the power of eminent domain is inseparable from sovereignty being essential to the
existence of the State and inherent in government even in its most primitive forms. The only
purpose of the provision in the Bill of Rights is to provide some form of restraint on the
sovereign power. It is not a grant of authority —
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" 'The power of eminent domain does not depend for its existence on a
specific grant in the constitution. It is inherent in sovereignty and exists in a
sovereign state without any recognition of it in the constitution. The provisions
found in most of the state constitutions relating to the taking of property for the
public use do not by implication grant the power to the government of the state,
but limit a power which would otherwise be without limit.' "
The constitutional restraints are public use and just compensation.
Do the purposes of the taking in this case constitute "public use"?
The petitioners ask us to adopt a strict construction and declare that "public use"
means literally use by the public and that "public use" is not synonymous with "public interest",
"public benefit", or "public welfare" and much less "public convenience."
The petitioners face two major obstacles. First, their contention which is rather
sweeping in its call for a retreat from the public welfare orientation is unduly restrictive and
outmoded. Second, no less than the lawmaker has made a policy determination that the power
of eminent domain may be exercised in the promotion and development of Philippine tourism.
The restrictive view of public use may be appropriate for a nation which circumscribes
the scope of government activities and public concerns and which possesses big and correctly
located public lands that obviate the need to take private property for public purposes. Neither
circumstance applies to the Philippines. We have never been a laissez faire State. And the
necessities which impel the exertion of sovereign power are all too often found in areas of
scarce public land or limited government resources.
Certain aspects of parliamentary government were introduced by the 1973
amendments to the Constitution with further modifications in the 1976 and 1981 amendments.
Insofar as the executive and legislative departments are concerned, the traditional concept of
checks and balances in a presidential form was considerably modified to remove some
roadblocks in the expeditious implementation of national policies. There was no such change
for the judiciary. We remain as a checking and balancing department even as all strive to
maintain respect for constitutional boundaries. At the same time, the philosophy of
coordination in the pursuit of developmental goals implicit in the amendments also constrains
the judiciary to defer to legislative discretion in the judicial review of programs for economic
development and social progress unless a clear case of constitutional infirmity is established.
We cannot stop the legitimate exercise of power on an invocation of grounds better left
interred in a bygone age and time. ** As we review the efforts of the political departments to
bring about self-sufficiency, if not eventual abundance, we continue to maintain the liberal
approach because the primary responsibility and the discretion belong to them.
There can be no doubt that expropriation for such traditional purposes as the
construction of roads, bridges, ports, waterworks, schools, electric and telecommunications
systems, hydroelectric power plants, markets and slaughterhouses, parks, hospitals,
government office buildings, and flood control or irrigation systems is valid. However, the
concept of public use is not limited to traditional purposes. Here as elsewhere the idea that
"public use" is strictly limited to clear cases of "use by the public" has been discarded.
In the United States, the rule was enunciated in Berman v. Parker (348 U.S. 25; 99 L.
ed. 27) as follows: LibLex
"We do not sit to determine whether a particular housing project is or is
not desirable. The concept of the public welfare is broad and inclusive. See
DayBrite Lighting, Inc. v. Missouri, 342 US 421, 424, 96 L ed 469, 472, 72 S Ct
405. The values it represents are spiritual as well as physical, aesthetic as well
as monetary. It is within the power of the legislature to determine that the
community should be beautiful as well as healthy, spacious as well as clean,
well-balanced as well as carefully patrolled. In the present case, the Congress
and its authorized agencies have made determinations that take into account a
wide variety of values. It is not for us to reappraise them. If those who govern the
District of Columbia decide that the Nation's Capital should be beautiful as well
as sanitary, there is nothing in the Fifth Amendment that stands in the way.
"Once the object is within the authority of Congress, the right to realize it
through the exercise of eminent domain is clear. For the power of eminent
domain is merely the means to the end. See Luxton v. North River Bridge Co.
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153 US 525, 529, 530, 38 L ed 808, 810, 14 S Ct 891; United States v.

Gettysburg Electric R. Co. 160 US 668, 679, 40 L ed 576, 580, 16 S Ct 427."
In an earlier American case, where a village was isolated from the rest of North
Carolina because of the flooding of the reservoir of a dam thus making the provision of police,
school, and health services unjustifiably expensive, the government decided to expropriate
the private properties in the village and the entire area was made part of an adjoining national
park. The district court and the appellate court ruled against the expropriation or excess
condemnation. The Court of Appeals applied the "use by the public" test and stated that the
only land needed for public use was the area directly flooded by the reservoir. The village may
have been cut off by the dam but to also condemn it was excess condemnation not valid under
the "public use" requirement. The U.S. Supreme Court in United States ex rel T.V.A. v.
Welch (327 U.S. 546; 90 L. ed 843 unanimously reversed the lower courts. It stated:
"The Circuit Court of Appeals, without expressly relying on a compelling
rule of construction that would give the restrictive scope to the T.V.A. Act given
it by the district court, also interpreted the statute narrowly. It first analyzed the
facts by segregating the total problem into distinct parts, and thus came to the
conclusion that T.V.A.'s purpose in condemning the land in question was only
one to reduce its liability arising from the destruction of the highway. The Court
held that use of the lands for that purpose is a 'private' and not a 'public use' or,
at best, a 'public use' not authorized by the statute. We are unable to agree with
the reasoning and conclusion of the Circuit Court of Appeals.
"We think that it is the function of Congress to decide what type of taking
is for a public use and that the agency authorized to do the taking may do so to
the full extent of its statutory authority. United States v. Gettysburg Electric R.
Co. 160 US 668, 679, 40 L ed 576, 580, 16 S Ct 427. . . "
xxx xxx xxx
". . . But whatever may be the scope of the judicial power to determine
what is a 'public use' in Fourteenth Amendment controversies, this Court has
said that when Congress has spoken on this subject 'Its decision is entitled to
deference until it is shown to involve an impossibility.' Old Dominion Land Co. v.
United States, 269, US 55, 66, 70 L ed 162, 46 S Ct 39. Any departure from this
judicial restraint would result in courts deciding on what is and is not a
governmental function and in their invalidating legislation on the basis of their
view on that question at the moment of decision, a practice which has proved
impracticable in other fields. See Case v. Bowles, decided February 4, 1946, 437
US 92, 101, ante, 552, 559, 66 S Ct 438. New York v. United States, 326 US 572
[ante, 326, 66 S Ct 310). We hold that the T.V.A. took the tracts here involved
for a public purpose, if, as we think is the case, Congress authorized the Authority
to acquire, hold, and use the lands to carry out the purposes of the T.V.A. Act."
In the Philippines, Chief Justice Enrique M. Fernando has aptly summarized the
statutory and judicial trend as follows:
"The taking to be valid must be for public use. There was a time when it
was felt that a literal meaning should be attached to such a requirement.
Whatever project is undertaken must be for the public to enjoy, as in the case of
streets or parks. Otherwise, expropriation is not allowable. It is not any more. As
long as the purpose of the taking is public, then the power of eminent domain
comes into play. As just noted, the constitution in at least two cases, to remove
any doubt, determines what is public use. One is the expropriation of lands to be
subdivided into small lots for resale at cost to individuals. The other is in the
transfer, through the exercise of this power, of utilities and other private
enterprise to the government. It is accurate to state then that at present whatever
may be beneficially employed for the general welfare satisfies the requirement
of public use." (Fernando, The Constitution of the Philippines, 2nd ed., pp. 523-
524)
The petitioners' contention that the promotion of tourism is not "public use" because
private concessioners would be allowed to maintain various facilities such as restaurants,
hotels, stores, etc. inside the tourist complex is impressed with even less merit. Private bus
firms, taxicab fleets, roadside restaurants, and other private businesses using public streets
 6

and highways do not diminish in the least bit the public character of expropriations for roads
and streets. The lease of store spaces in underpasses of streets built on expropriated land
does not make the taking for a private purpose. Airports and piers catering exclusively to
private airlines and shipping companies are still for public use. The expropriation of private
land for slum clearance and urban development is for a public purpose even if the developed
area is later sold to private homeowners, commercial firms, entertainment and service
companies, and other private concerns. prLL
The petitioners have also failed to overcome the deference that is appropriately
accorded to formulations of national policy expressed in legislation. The rule in Berman v.
Parker (supra) of deference to legislative policy even if such policy might mean taking from
one private person and conferring on another private person applies as well as in the
Philippines.
". . . Once the object is within the authority of Congress, the means by
which it will be attained is also for Congress to determine. Here one of the means
chosen is the use of private enterprise for redevelopment of the area. Appellants
argue that this makes the project a taking from one businessman for the benefit
of another businessman. But the means of executing the project are for
Congress and Congress alone to determine, once the public purpose has been
established. See Luxton v. North River Bridge Co. (US) supra; cf. Highland v.
Russel Car & Snow Plow Co. 279 US 253, 73 L ed 688, 49 S Ct 314. The public
end may be as well or better served through an agency of private enterprise than
through a department of government — or so the Congress might conclude. We
cannot say that public ownership is the sole method of promoting the public
purposes of community redevelopment projects. What we have said also
disposes of any contention concerning the fact that certain property owners in
the area may be permitted to repurchase their properties for redevelopment in
harmony with the over-all plan. That, too, is a legitimate means which Congress
and its agencies may adopt, if they choose." (Berman v. Parker, 99 L ed 38, 348
US 33, 34)
An examination of the language in the 1919 cases of City of Manila v. Chinese
Community of Manila (140 Phil. 349) and Visayan Refining Co. v. Camus, earlier cited, shows
that from the very start of constitutional government in our country judicial deference to
legislative policy has been clear and manifest in eminent domain proceedings.
The expressions of national policy are found in the revised charter of the Philippine
Tourism Authority, Presidential Decree No. 564:
"WHEREAS, it is the avowed aim of the government to promote
Philippine tourism and work for its accelerated and balanced growth as well as
for economy and expediency in the development of the tourism plant of the
country;"
xxx xxx xxx
"SECTION 1. Declaration of Policy. — It is hereby declared to be the
policy of the State to promote, encourage, and develop Philippine tourism as an
instrument in accelerating the development of the country, of strengthening the
country's foreign exchange reserve position, and of protecting Philippine culture,
history, traditions and natural beauty, internationally as well as domestically."
The power of eminent domain is expressly provided for under Section 5 B(2) as follows:
xxx xxx xxx
2. Acquisition of Private Lands, Power of Eminent Domain. — To acquire
by purchase, by negotiation or by condemnation proceedings any private land
within and without the tourist zones for any of the following reasons: (a)
consolidation of lands for tourist zone development purposes, (b) prevention of
land speculation in areas declared as tourist zones, (c) acquisition of right of way
to the zones, (d) protection of water shed areas and natural assets with tourism
value, and (e) for any other purpose expressly authorized under this Decree and
accordingly, to exercise the power of eminent domain under its own name, which
shall proceed in the manner prescribed by law and/or the Rules of Court on
condemnation proceedings. The Authority may use any mode of payment which
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it may deem expedient and acceptable to the land owners: Provided, That in
case bonds are used as payment, the conditions and restrictions set forth in
Chapter III, Section 8 to 13 inclusively, of this Decree shall apply."
xxx xxx xxx
The petitioners rely on the Land Reform Program of the government in raising their
second argument. According to them, assuming that PTA has the right to expropriate, the
properties subject of expropriation may not be taken for the purposes intended since they are
within the coverage of "operation land transfer" under the land reform program. Petitioners
claim that certificates of land transfer (CLT'S) and emancipation patents have already been
issued to them thereby making the lands expropriated within the coverage of the land reform
area under Presidential Decree No. 2; that the agrarian reform program occupies a higher
level in the order of priorities than other State policies like those relating to the health and
physical well-being of the people; and that property already taken for public use may not be
taken for another public use. llcd
We have considered the above arguments with scrupulous and thorough
circumspection. For indeed any claim of rights under the social justice and land reform
provisions of the Constitution deserves the most serious consideration. The petitioners,
however, have failed to show that the area being developed is indeed a land reform area and
that the affected persons have emancipation patents and certificates of land transfer.
The records show that the area being developed into a tourism complex consists of
more than 808 hectares, almost all of which is not affected by the land reform program. The
portion being expropriated is 282 hectares of hilly and unproductive land where even
subsistence farming of crops other than rice and corn can hardly survive. And of the 282
disputed hectares, only 8,970 square meters — less than one hectare — is affected by
Operation Land Transfer. Of the 40 defendants, only two have emancipation patents for the
less than one hectare of land affected. And this 8,970 square meters parcel of land is not even
within the sports complex proper but forms part of the 32 hectares resettlement area where
the petitioners and others similarly situated would be provided with proper housing, subsidiary
employment, community centers, schools, and essential services like water and electricity —
which are non-existent in the expropriated lands. We see no need under the facts of this
petition to rule on whether one public purpose is superior or inferior to another purpose or
engage in a balancing of competing public interests. The petitioners have also failed to
overcome the showing that the taking of the 8,970 square meters covered by Operation Land
Transfer forms a necessary part of an inseparable transaction involving the development of
the 808 hectares tourism complex. And certainly, the human settlement needs of the many
beneficiaries of the 32 hectares resettlement area should prevail over the property rights of
two of their compatriots.
The invocation of the contracts clause has no merit. The non-impairment clause has
never been a barrier to the exercise of police power and likewise eminent domain. As stated
in Manigault v. Springs (199 U.S. 473) "parties by entering into contracts may not estop the
legislature from enacting laws intended for the public good."
The applicable doctrine is expressed in Arce v. Genato (69 SCRA 544) which involved
the expropriation of land for a public plaza. The Court stated:
xxx xxx xxx
". . . What is claimed is that there must be a showing of necessity for such
condemnation and that it was not done in this case. In support of such a view,
reliance is placed on City of Manila v. Arellano Law Colleges. (85 Phil. 663
[1950]) That doctrine itself is based on the earlier case of City of Manila v.
Chinese Community of Manila, (50 Phil. 349) also, like Camus, a 1919 decision.
As could be discerned, however, in the Arellano Law Colleges decision, it was
the antiquarian view of Blackstone with its sanctification of the right to one's
estate on which such an observation was based. As did appear in his
Commentaries: `So great is the regard of the law for private property that it will
not authorize the least violation of it, even for the public good, unless there exists
a very great necessity thereof.' Even the most cursory glance at such well-nigh
absolutist concept of property would show its obsolete character at least for
Philippine constitutional law. It cannot survive the test of the 1935
Constitution with its mandates on social justice and protection to labor. (Article
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II, Section 5 of the 1935 Constitution reads: `The promotion of social justice to
insure the well-being and economic security of all the people should be the
concern of the State.' Article XI, Section 6 of the same Constitution provides:
'The State shall afford protection to labor, especially to working women and
minors, and shall regulate the relation between landowner and tenant, and
between labor and capital in industry and in agriculture. The State may provide
for compulsory arbitration.') What is more, the present Constitution pays even
less heed to the claims of property — and rightly so. After stating that the State
shall promote social justice, it continues: 'Towards this end, the State shall
regulate the acquisition, ownership, use, enjoyment, and disposition of private
property, and equitably diffuse property ownership and profits.' (That is the
second sentence of Article II, Section 6 of the Constitution) If there is any need
for explicit confirmation of what was set forth in Presidential Decree No. 42, the
above provision supplies it. Moreover, that is merely to accord to what of late has
been the consistent course of decisions of this Court whenever property rights
are pressed unduly. (Cf. Alalayan v. National Power Corporation, L-24396, July
29, 1968, 24 SCRA 172; Agricultural Credit and Cooperative Financing
Administration v. Confederation of Unions, L-21484, Nov. 29, 1969, 30 SCRA
649; Edu v. Ericta, L-32096, Oct. 24, 1970, 35 SCRA 481; Phil. Virginia Tobacco
Administration v. Court of Industrial Relations, L-32052, July 25, 1975, 65 SCRA
416) The statement therefore, that there could be discerned a constitutional
objection to a lower court applying a Presidential Decree, when it leaves no doubt
that a grantee of the power of eminent domain need not prove the necessity for
the expropriation, carries its own refutation,"
"xxx xxx xxx
The issue of prematurity is also raised by the petitioners. They claim that since the
necessity for the taking has not been previously established, the issuance of the orders
authorizing the PTA to take immediate possession of the premises, as well as the
corresponding writs of possession was premature.
Under Presidential Decree No. 42, as amended by Presidential Decree No. 1533, the
government, its agency or instrumentality, as plaintiff in an expropriation proceedings is
authorized to take immediate possession, control and disposition of the property and the
improvements, with power of demolition, notwithstanding the pendency of the issues before
the court, upon deposit with the Philippine National Bank of an amount equivalent to 10% of
the value of the property expropriated. The issue of immediate possession has been settled
in Arce v. Genato (supra). In answer to the issue:
". . . whether the order of respondent Judge in an expropriation case
allowing the other respondent, . . . to take immediate possession of the parcel of
land sought to be condemned for the beautification of its public plaza, without a
prior hearing to determine the necessity for the exercise of the power of eminent
domain, is vitiated by jurisdictional defect, . . ."
this Court held that:
". . . It is not disputed that in issuing such order, respondent Judge relied
on Presidential Decree No. 42 issued on the 9th of November, 1972.
(Presidential Decree No. 42 is entitled 'Authorizing the Plaintiff in Eminent
Domain Proceedings to Take Possession of the Property involved Upon
Depositing the Assessed Value for Purposes of Taxation.') The question as thus
posed does not occasion any difficulty as to the answer to be given. This petition
for certiorari must fail, there being no showing that compliance with the
Presidential Decree, which under the Transitory Provisions is deemed a part of
the law of the land, (According to Article XVII, Section 3 par. (2) of
the Constitution: `All proclamations, orders, decrees, instructions, and acts
promulgated, issued, or done by the incumbent President shall be part of the law
of the land, and shall remain valid, legal, binding, and effective even after lifting
of martial law or the ratification of this Constitution, unless modified, revoked, or
superseded by subsequent proclamations, orders, decrees, instructions, or other
acts of the incumbent President, or unless expressly and explicitly modified or
repealed by the regular National Assembly') would be characterized as either an
act in excess of jurisdiction or a grave abuse of discretion. So we rule."
 9

Likewise in Ramos v. Philippine Tourism Authority (G.R. Nos. 52449-50, June 9,

1980), this Court held:
". . . condemnation or expropriation proceedings is in the nature of one
that is quasi-in-rem, wherein the fact that the owner of the property is made a
party is not essentially indispensable insofar at least as it concerns the
immediate taking of possession of the property and the preliminary determination
of its value, including the amount to be deposited."
In their last argument, the petitioners claim that a consequence of the expropriation
proceedings would be their forcible ejectment. They contend that such forcible ejectment is a
criminal act under Presidential Decree No. 583. This contention is not valid. Presidential
Decree No. 583 prohibits the taking cognizance or implementation of orders designed to
obstruct the land reform program. It refers to the harassment of tenant-farmers who try to
enforce emancipation rights. It has nothing to do with the expropriation by the State of lands
needed for public purposes. As a matter of fact, the expropriated area does not appear in the
master lists of the Ministry of Agrarian Reforms as a tenanted area. The petitioners' bare
allegations have not been supported with particulars pointing to specific parcels which are
subject of tenancy contracts. The petitioners may be owner-tillers or may have some form of
possessory or ownership rights but there has been no showing of their being tenants on the
disputed lands.
The petitioners have failed to overcome the burden of anyone trying to strike down a
statute or decree whose avowed purpose is the legislative perception Or the public good. A
statute has in its favor the presumption of validity. All reasonable doubts should be resolved
in favor of the constitutionality of a law. The courts will not set aside a law as violative of
the Constitution except in a clear case (People v. Vera, 65 Phil. 56). And in the absence of
factual findings or evidence to rebut the presumption of validity, the presumption prevails
(Ermita-Malate Hotel, etc. v. Mayor of Manila, 20 SCRA 849; Morfe v. Mutuc, 22 SCRA
424). LLphil
The public respondents have stressed that the development of the 808 hectares
includes plans that would give the petitioners and other displaced persons productive
employment, higher incomes, decent housing, water and electric facilities, and better living
standards. Our dismissing this petition is, in part, predicated on those assurances. The right
of the PTA to proceed with the expropriation of the 282 hectares already identified as fit for
the establishment of a resort complex to promote tourism is, therefore, sustained.
WHEREFORE, the instant petition for certiorari is hereby DISMISSED for lack of merit.
SO ORDERED.
||| (Heirs Ardona v. Reyes, G.R. Nos. L-60549, 60553 to 60555, [October 26, 1983], 210 PHIL

FIRST DIVISION

[G.R. No. L-34915. June 24, 1983.]

CITY GOVERNMENT OF QUEZON CITY and CITY COUNCIL OF QUEZON
CITY, petitioners, vs. HON. JUDGE VICENTE G. ERICTA as Judge of the
Court of First Instance of Rizal, Quezon City, Branch XVIII; HIMLAYANG
PILIPINO, INC., respondents.

||| (City Government of Quezon City v. Ericta, G.R. No. L-34915, [June 24, 1983], 207 PHIL 648-
657)
DECISION

GUTIERREZ, JR., J p:

This is a petition for review which seeks the reversal of the decision of the Court of
First Instance of Rizal, Branch XVIII declaring Section 9 of Ordinance No. 6118, S-64, of the
Quezon City Council null and void.
 10

Section 9 of Ordinance No. 6118, S-64, entitled "ORDINANCE REGULATING THE

ESTABLISHMENT, MAINTENANCE AND OPERATION OF PRIVATE MEMORIAL TYPE
CEMETERY OR BURIAL GROUND WITHIN THE JURISDICTION OF QUEZON CITY AND
PROVIDING PENALTIES FOR THE VIOLATION THEREOF" provides:
"Sec. 9. At least six (6) percent of the total area of the memorial park
cemetery shall be set aside for charity burial of deceased persons who are
paupers and have been residents of Quezon City for at least 5 years prior to their
death, to be determined by competent City Authorities. The area so designated
shall immediately be developed and should be open for operation not later than
six months from the date of approval of the application."
For several years, the aforequoted section of the Ordinance was not enforced by city
authorities but seven years after the enactment of the ordinance, the Quezon City Council
passed the following resolution: LexLib
"RESOLVED by the council of Quezon assembled, to request, as it does
hereby request the City Engineer, Quezon City, to stop any further selling and/or
transaction of memorial park lots in Quezon City where the owners thereof have
failed to donate the required 6% space intended for paupers burial."
Pursuant to this petition, the Quezon City Engineer notified respondent Himlayang Pilipino,
Inc. in writing that Section 9 of Ordinance No. 6118, S-64 would be enforced.
Respondent Himlayang Pilipino reacted by filing with the Court of First Instance of
Rizal, Branch XVIII at Quezon City, a petition for declaratory relief, prohibition and mandamus
with preliminary injunction (Sp. Proc. No. Q-16002) seeking to annul Section 9 of the
Ordinance in question. The respondent alleged that the same is contrary to the Constitution,
the Quezon City Charter, the Local Autonomy Act, and the Revised Administrative Code.
There being no issue of fact and the questions raised being purely legal, both
petitioners and respondent agreed to the rendition of a judgment on the pleadings. The
respondent court, therefore, rendered the decision declaring Section 9 of Ordinance No. 6118,
S-64 null and void.
A motion for reconsideration having been denied, the City Government and City
Council filed the instant petition. cdlex
Petitioners argue that the taking of the respondent's property is a valid and reasonable
exercise of police power and that the land is taken for a public use as it is intended for the
burial ground of paupers. They further argue that the Quezon City Council is authorized under
its charter, in the exercise of local police power, "to make such further ordinances and
resolutions not repugnant to law as may be necessary to carry into effect and discharge the
powers and duties conferred by this Act and such as it shall deem necessary and proper to
provide for the health and safety, promote the prosperity, improve the morals, peace, good
order, comfort and convenience of the city and the inhabitants thereof, and for the protection
of property therein."
On the other hand, respondent Himlayang Pilipino, Inc. contends that the taking or
confiscation of property is obvious because the questioned ordinance permanently restricts
the use of the property such that it cannot be used for any reasonable purpose and deprives
the owner of all beneficial use of his property.
The respondent also stresses that the general welfare clause is not available as a
source of power for the taking of the property in this case because it refers to "the power of
promoting the public welfare by restraining and regulating the use of liberty and property." The
respondent points out that if an owner is deprived of his property outright under the State's
police power, the property is generally not taken for public use but is urgently and summarily
destroyed in order to promote the general welfare. The respondent cites the case of a
nuisance per se or the destruction of a house to prevent the spread of a conflagration. LexLib

We find the stand of the private respondent as well as the decision of the respondent
Judge to be well-founded. We quote with approval the lower court's ruling which declared null
and void Section 9 of the questioned city ordinance:
"The issue is: Is Section 9 of the ordinance in question a valid exercise
of the police power?
 11

"An examination of the Charter of Quezon City (Rep. Act No. 5371), does
not reveal any provision that would justify the ordinance in question except the
provision granting police power to the City. Section 9 cannot be justified under
the power granted to Quezon City to tax, fix the license fee, and regulate such
other business, trades, and occupation as may be established or practiced in the
City.' (Sub-sections 'C', Sec. 12, R.A. 537).
"The power to regulate does not include the power to prohibit (People vs.
Esguerra, 81 Phil. 33, Vega vs. Municipal Board of Iloilo, L-6765, May 12, 1954;
39 N.J. Law, 70, Mich. 396). A fortiori, the power to regulate does not include the
power to confiscate. The ordinance in question not only confiscates but also
prohibits the operation of a memorial park cemetery, because under Section 13
of said ordinance, 'Violation of the provision thereof is punishable with a fine
and/or imprisonment and that upon conviction thereof the permit to operate and
maintain a private cemetery shall be revoked or cancelled.' The confiscatory
clause and the penal provision in effect deter one from operating a memorial
park cemetery. Neither can the ordinance in question be justified under sub-
section 't', Section 12 of Republic Act 537 which authorizes the City Council to
—
"'prohibit the burial of the dead within the center of population of
the city and provide for their burial in such proper place and in such
manner as the council may determine, subject to the provisions of the
general law regulating burial grounds and cemeteries and governing
funerals and disposal of the dead.'(Sub-sec. (t), Sec. 12, Rep. Act No.
537).
There is nothing in the above provision which authorizes confiscation or as
euphemistically termed by the respondents, 'donation.'
We now come to the question whether or not Section 9 of the ordinance
in question is a valid exercise of police power. The police power of Quezon City
is defined in sub-section 00, Sec. 12, Rep. Act 537 which reads as follows:
"(00) To make such further ordinance and regulations not
repugnant to law as may be necessary to carry into effect and discharge
the powers and duties conferred by this act and such as it shall deem
necessary and proper to provide for the health and safety, promote, the
prosperity, improve the morals, peace, good order, comfort and
convenience of the city and the inhabitants thereof, and for the protection
of property therein; and enforce obedience thereto with such lawful fines
or penalties as the City Council may prescribe under the provisions of
subsection (jj) of this section.'
"We start the discussion with a restatement of certain basic principles.
Occupying the forefront in the bill of rights is the provision which states that 'no
person shall be deprived of life, liberty or property without due process of law'
(Art. III, Section 1 subparagraph 1, Constitution).
"On the other hand, there are three inherent powers of government by
which the state interferes with the property rights, namely (1) police power, (2)
eminent domain, (3) taxation. These are said to exist independently of the
Constitution as necessary attributes of sovereignty.
"Police power is defined by Freund as 'the power of promoting the public
welfare by restraining and regulating the use of liberty and property' (Quoted in
Political Law by Tañada and Carreon, V-II, p. 50). It is usually exerted in order to
merely regulate the use and enjoyment of property of the owner. If he is deprived
of his property outright, it is not taken for public use but rather to destroy in order
to promote the general welfare. In police power, the owner does not recover from
the government for injury sustained in consequence thereof. (12 C.J. 623). It has
been said that police power is the most essential of government powers, at times
the most insistent, and always one of the least limitable of the powers of
government (Ruby vs. Provincial Board, 39 Phil. 660; Ichong vs. Hernandez, L-
7995, May 31, 1957). This power embraces the whole system of public regulation
(U.S. vs. Linsuya Fan, 10 Phil. 104). The Supreme Court has said that police
 12

power is so far-reaching in scope that it has almost become impossible to limit

its sweep. As it derives its existence from the very existence of the state itself, it
does not need to be expressed or defined in its scope. Being coextensive with
self-preservation and survival itself, it is the most positive and active of all
governmental processes, the most essential, insistent and illimitable. Especially
it is so under the modern democratic framework where the demands of society
and nations have multiplied to almost unimaginable proportions. The field and
scope of police power have become almost boundless, just as the fields of public
interest and public welfare have become almost all embracing and have
transcended human foresight. Since the Courts cannot foresee the needs and
demands of public interest and welfare, they cannot delimit beforehand the
extent or scope of the police power by which and through which the state seeks
to attain or achieve public interest and welfare. (Ichong vs. Hernandez, L-7995,
May 31, 1957).
"The police power being the most active power of the government and
the due process clause being the broadest limitation on governmental power, the
conflict between this power of government and the due process clause of the
Constitution is oftentimes inevitable.
"It will be seen from the foregoing authorities that police power is usually
exercised in the form of mere regulation or restriction in the use of liberty or
property for the promotion of the general welfare. It does not involve the taking
or confiscation of property with the exception of a few cases where there is a
necessity to confiscate private property in order to destroy it for the purpose of
protecting the peace and order and of promoting the general welfare as for
instance, the confiscation of an illegally possessed article, such as opium and
firearms.
"It seems to the court that Section 9 of Ordinance No. 6118, Series of
1964 of Quezon City is not a mere police regulation but an outright confiscation.
It deprives a person of his private property without due process of law, nay, even
without compensation."
In sustaining the decision of the respondent court, we are not unmindful of the heavy
burden shouldered by whoever challenges the validity of duly enacted legislation, whether
national or local. As early as 1913, this Court ruled in Case v. Board of Health (24 Phil. 250)
that the courts resolve every presumption in favor of validity and, more 90, where the
municipal corporation asserts that the ordinance was enacted to promote the common good
and general welfare. LLpr
In the leading case of Ermita-Malate Hotel and Motel Operators Association Inc. v.
City Mayor of Manila (20 SCRA 849) the Court speaking through the then Associate Justice
and now Chief Justice Enrique M. Fernando stated:
"Primarily what calls for a reversal of such a decision is the absence of
any evidence to offset the presumption of validity that attaches to a challenged
statute or ordinance. As was expressed categorically by Justice Malcolm: 'The
presumption is all in favor of validity. . . . The action of the elected representatives
of the people cannot be lightly set aside. The councilors must, in the very nature
of things, be familiar with the necessities of their particular municipality and with
all the facts and circumstances which surround the subject and necessitate
action. The local legislative body, by enacting the ordinance, has in effect given
notice that the regulations are essential to the well-being of the people. . . . The
Judiciary should not lightly set aside legislative action when there is not a clear
invasion of personal or property rights under the guise of police regulation.' (U.S.
v. Salaveria [1918], 39 Phil. 102, at p. 111. There was an affirmation of the
presumption of validity of municipal ordinance as announced in the leading
Salaveria decision in Eboña v. Daet, [1950] 85 Phil. 369.).
We have likewise considered the principles earlier stated in Case v. Board of Health
supra:
". . . Under the provisions of municipal charters which are known as the
general welfare clauses, a city, by virtue of its police power, may adopt
ordinances to secure the peace, safety, health, morals and the best and highest
 13

interests of the municipality. It is a well-settled principle, growing out of the nature

of well-ordered and civilized society, that every holder of property, however
absolute and unqualified may be his title, holds it under the implied liability that
his use of it shall not be injurious to the equal enjoyment of others having an
equal right to the enjoyment of their property, nor injurious to the rights of the
community. All property in the state is held subject to its general regulations,
which are necessary to the common good and general welfare. Rights of
property, like all other social and conventional rights, are subject to such
reasonable limitations in their enjoyment as shall prevent them from being
injurious, and to such reasonable restraints and regulations, established by law,
as the legislature, under the governing and controlling power vested in them by
the constitution, may think necessary and expedient. The state, under the police
power, is possessed with plenary power to deal with all matters relating to the
general health, morals, and safety of the people, so long as it does not
contravene any positive inhibition of the organic law and providing that such
power is not exercised in such a manner as to justify the interference of the courts
to prevent positive wrong and oppression."
but find them not applicable to the facts of this case.
There is no reasonable relation between the setting aside of at least six (6) percent of
the total area of all private cemeteries for charity burial grounds of deceased paupers and the
promotion of health, morals, good order, safety, or the general welfare of the people. The
ordinance is actually a taking without compensation of a certain area from a private cemetery
to benefit paupers who are charges of the municipal corporation. Instead of building or
maintaining a public cemetery for this purpose, the city passes the burden to private
cemeteries. LLphil
The expropriation without compensation of a portion of private cemeteries is not
covered by Section 12(t) of Republic Act 537, the Revised Charter of Quezon City which
empowers the city council to prohibit the burial of the dead within the center of population of
the city and to provide for their burial in a proper place subject to the provisions of general law
regulating burial grounds and cemeteries. When the Local Government Code, Batas
Pambansa Blg. 337 provides in Section 177 (q) that a Sangguniang panlungsod may "provide
for the burial of the dead in such place and in such manner as prescribed by law or ordinance"
it simply authorizes the city to provide its own city owned land or to buy or expropriate private
properties to construct public cemeteries. This has been the law and practice in the past. It
continues to the present. Expropriation, however, requires payment of just compensation. The
questioned ordinance is different from laws and regulations requiring owners of subdivisions
to set aside certain areas for streets, parks, playgrounds, and other public facilities from the
land they sell to buyers of subdivision lots. The necessities of public safety, health, and
convenience are very clear from said requirements which are intended to insure the
development of communities with salubrious and wholesome environments. The beneficiaries
of the regulation, in turn, are made to pay by the subdivision developer when individual lots
are sold to homeowners.
As a matter of fact, the petitioners rely solely on the general welfare clause or on
implied powers of the municipal corporation, not on any express provision of law as statutory
basis of their exercise of power. The clause has always received broad and liberal
interpretation but we cannot stretch it to cover this particular taking. Moreover, the questioned
ordinance was passed after Himlayang Pilipino, Inc. had incorporated, received necessary
licenses and permits, and commenced operating. The sequestration of six percent of the
cemetery cannot even be considered as having been impliedly acknowledged by the private
respondent when it accepted the permits to commence operations.
WHEREFORE, the petition for review is hereby DISMISSED. The decision of the
respondent court is affirmed.
SO ORDERED.
||| (City Government of Quezon City v. Ericta, G.R. No. L-34915, [June 24, 1983], 207 PHIL 648-
657)

N BANC
 14

[G.R. No. 155746. October 13, 2004.]

DIOSDADO LAGCAO, DOROTEO LAGCAO and URSULA
LAGCAO, petitioners,vs.JUDGE GENEROSA G. LABRA, Branch 23,
Regional Trial Court, Cebu, and the CITY OF CEBU, respondent.

DECISION

CORONA, J p:

Before us is a petition for review of the decision dated July 1, 2002 of the Regional Trial
Court, Branch 23, Cebu City 1 upholding the validity of the City of Cebu's Ordinance No. 1843,
as well as the lower court's order dated August 26, 2002 denying petitioner's motion for
reconsideration.
In 1964, the Province of Cebu donated 210 lots to the City of Cebu. One of these lots was
Lot 1029, situated in Capitol Hills, Cebu City, with an area of 4,048 square meters. In 1965,
petitioners purchased Lot 1029 on installment basis. But then, in late 1965, the 210 lots, including
Lot 1029, reverted to the Province of Cebu. 2 Consequently, the province tried to annul the sale
of Lot 1029 by the City of Cebu to the petitioners. This prompted the latter to sue the province for
specific performance and damages in the then Court of First Instance.
On July 9, 1986, the court a quo ruled in favor of petitioners and ordered the Province of
Cebu to execute the final deed of sale in favor of petitioners. On June 11, 1992, the Court of
Appeals affirmed the decision of the trial court. Pursuant to the ruling of the appellate court, the
Province of Cebu executed on June 17, 1994 a deed of absolute sale over Lot 1029 in favor of
petitioners. Thereafter, Transfer Certificate of Title (TCT) No. 129306 was issued in the name of
petitioners and Crispina Lagcao. 3
After acquiring title, petitioners tried to take possession of the lot only to discover that it
was already occupied by squatters. Thus, on June 15, 1997, petitioners instituted ejectment
proceedings against the squatters. The Municipal Trial Court in Cities (MTCC),Branch 1, Cebu
City, rendered a decision on April 1, 1998, ordering the squatters to vacate the lot. On appeal, the
RTC affirmed the MTCC's decision and issued a writ of execution and order of
demolition. CDaSAE
However, when the demolition order was about to be implemented, Cebu City Mayor Alvin
Garcia wrote two letters 4 to the MTCC, requesting the deferment of the demolition on the ground
that the City was still looking for a relocation site for the squatters. Acting on the mayor's request,
the MTCC issued two orders suspending the demolition for a period of 120 days from February
22, 1999. Unfortunately for petitioners, during the suspension period, the Sangguniang
Panlungsod (SP) of Cebu City passed a resolution which identified Lot 1029 as a socialized
housing site pursuant to RA 7279. 5 Then, on June 30, 1999, the SP of Cebu City passed
Ordinance No. 1772 6 which included Lot 1029 among the identified sites for socialized housing.
On July, 19, 2000, Ordinance No. 1843 7 was enacted by the SP of Cebu City authorizing the
mayor of Cebu City to initiate expropriation proceedings for the acquisition of Lot 1029 which was
registered in the name of petitioners. The intended acquisition was to be used for the benefit of
the homeless after its subdivision and sale to the actual occupants thereof. For this purpose, the
ordinance appropriated the amount of P6,881,600 for the payment of the subject lot. This
ordinance was approved by Mayor Garcia on August 2, 2000.
On August 29, 2000, petitioners filed with the RTC an action for declaration of nullity of
Ordinance No. 1843 for being unconstitutional. The trial court rendered its decision on July 1,
2002 dismissing the complaint filed by petitioners whose subsequent motion for reconsideration
was likewise denied on August 26, 2002.
In this appeal, petitioners argue that Ordinance No. 1843 is unconstitutional as it sanctions
the expropriation of their property for the purpose of selling it to the squatters, an endeavor
contrary to the concept of "public use" contemplated in the Constitution. 8 They allege that it will
benefit only a handful of people. The ordinance, according to petitioners, was obviously passed
for politicking, the squatters undeniably being a big source of votes.
 15

In sum, this Court is being asked to resolve whether or not the intended expropriation by
the City of Cebu of a 4,048-square-meter parcel of land owned by petitioners contravenes
the Constitution and applicable laws.
Under Section 48 of RA 7160, 9 otherwise known as the Local Government Code of
1991, 10 local legislative power shall be exercised by the Sangguniang Panlungsod of the city.
The legislative acts of the Sangguniang Panlungsod in the exercise of its lawmaking authority are
denominated ordinances. cEAHSC
Local government units have no inherent power of eminent domain and can exercise it
only when expressly authorized by the legislature. 11 By virtue of RA 7160, Congress conferred
upon local government units the power to expropriate. Ordinance No. 1843 was enacted pursuant
to Section 19 of RA 7160:
SEC. 19. Eminent Domain.— A local government unit may, through its
chief executive and acting pursuant to an ordinance, exercise the power of
eminent domain for public use, or purpose, or welfare for the benefit of the poor
and the landless, upon payment of just compensation, pursuant to the provisions
of the Constitution and pertinent laws ....(italics supplied).
Ordinance No. 1843 which authorized the expropriation of petitioners' lot was enacted by
the SP of Cebu City to provide socialized housing for the homeless and low-income residents of
the City.
However, while we recognize that housing is one of the most serious social problems of
the country, local government units do not possess unbridled authority to exercise their power of
eminent domain in seeking solutions to this problem.
There are two legal provisions which limit the exercise of this power: (1) no person shall
be deprived of life, liberty, or property without due process of law, nor shall any person be denied
the equal protection of the laws; 12 and (2) private property shall not be taken for public use
without just compensation. 13 Thus, the exercise by local government units of the power of
eminent domain is not absolute. In fact, Section 19 of RA 7160 itself explicitly states that such
exercise must comply with the provisions of the Constitution and pertinent laws.
The exercise of the power of eminent domain drastically affects a landowner's right to
private property, which is as much a constitutionally-protected right necessary for the preservation
and enhancement of personal dignity and intimately connected with the rights to life and
liberty. 14 Whether directly exercised by the State or by its authorized agents, the exercise of
eminent domain is necessarily in derogation of private rights. 15 For this reason, the need for a
painstaking scrutiny cannot be overemphasized.
The due process clause cannot be trampled upon each time an ordinance orders the
expropriation of a private individual's property. The courts cannot even adopt hands-off policy
simply because public use or public purpose is invoked by an ordinance, or just compensation
has been fixed and determined. In De Knecht vs. Bautista, 16 we said:
It is obvious then that a land-owner 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 oppressive 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 governmental
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. ....
The foundation of the right to exercise eminent domain is genuine necessity and that
necessity must be of public character. 17 Government may not capriciously or arbitrarily choose
which private property should be expropriated. In this case, there was no showing at all why
petitioners' property was singled out for expropriation by the city ordinance or what necessity
impelled the particular choice or selection. Ordinance No. 1843 stated no reason for the choice
of petitioners' property as the site of a socialized housing project. HTDAac
Condemnation of private lands in an irrational or piecemeal fashion or the random
expropriation of small lots to accommodate no more than a few tenants or squatters is certainly
 16

not the condemnation for public use contemplated by the Constitution. This is depriving a citizen
of his property for the convenience of a few without perceptible benefit to the public. 18
RA 7279 is the law that governs the local expropriation of property for purposes of. urban
land reform and housing. Sections 9 and 10 thereof provide:
SEC 9. Priorities in the Acquisition of Land.— Lands for socialized
housing shall be acquired in the following order:
(a) Those owned by the Government or any of its subdivisions,
instrumentalities, or agencies, including government-owned or
controlled corporations and their subsidiaries;
(b) Alienable lands of the public domain;
(c) Unregistered or abandoned and idle lands;
(d) Those within the declared Areas or Priority Development, Zonal
Improvement Program sites, and Slum Improvement and
Resettlement Program sites which have not yet been acquired;
(e) Bagong Lipunan Improvement of Sites and Services or BLISS which
have not yet been acquired; and
(f) Privately-owned lands.
Where on-site development is found more practicable and advantageous
to the beneficiaries, the priorities mentioned in this section shall not apply. The
local government units shall give budgetary priority to on-site development of
government lands. (Emphasis supplied).

SEC. 10. Modes of Land Acquisition.— The modes of acquiring lands for
purposes of this Act shall include, among others, community mortgage, land
swapping, land assembly or consolidation, land banking, donation to the
Government, joint venture agreement, negotiated purchase, and expropriation:
Provided, however, That expropriation shall be resorted to only when other
modes of acquisition have been exhausted:Provided further, That where
expropriation is resorted to, parcels of land owned by small property owners shall
be exempted for purposes of this Act: ...(Emphasis supplied).
In the recent case of Estate or Heirs of the Late Ex-Justice Jose B.L. Reyes et al. vs. City
of Manila, 19 we ruled that the above-quoted provisions are strict limitations on the exercise of
the power of eminent domain by local government units, especially with respect to (1) the order
of priority in acquiring land for socialized housing and (2) the resort to expropriation proceedings
as a means to acquiring it. Private lands rank last in the order of priority for purposes of socialized
housing. In the same vein, expropriation proceedings may be resorted to only after the other
modes of acquisition are exhausted. Compliance with these conditions is mandatory because
these are the only safeguards of oftentimes helpless owners of private property against what may
be a tyrannical violation of due process when their property is forcibly taken from them allegedly
for public use. SacTCA
We have found nothing in the records indicating that the City of Cebu complied strictly with
Sections 9 and 10 of RA 7279. Ordinance No. 1843 sought to expropriate petitioners' property
without any attempt to first acquire the lands listed in (a) to (e) of Section 9 of RA 7279. Likewise,
Cebu City failed to establish that the other modes of acquisition in Section 10 of RA 7279 were
first exhausted. Moreover, prior to the passage of Ordinance No. 1843, there was no evidence of
a valid and definite offer to buy petitioners' property as required by Section 19 of RA 7160. 20 We
therefore find Ordinance No. 1843 to be constitutionally infirm for being violative of the petitioners'
right to due process.
It should also be noted that, as early as 1998, petitioners had already obtained a favorable
judgment of eviction against the illegal occupants of their property. The judgment in this ejectment
case had, in fact, already attained finality, with a writ of execution and an order of demolition. But
Mayor Garcia requested the trial court to suspend the demolition on the pretext that the City was
still searching for a relocation site for the squatters. However, instead of looking for a relocation
site during the suspension period, the city council suddenly enacted Ordinance No. 1843 for the
 17

expropriation of petitioners' lot. It was trickery and bad faith, pure and simple. The unconscionable
manner in which the questioned ordinance was passed clearly indicated that respondent City
transgressed the Constitution, RA 7160 and RA 7279.
For an ordinance to be valid, it must not only be within the corporate powers of the city or
municipality to enact but must also be passed according to the procedure prescribed by law. It
must be in accordance with certain well-established basic principles of a substantive nature.
These principles require that an ordinance (1) must not contravene the Constitution or any statute
(2) must not be unfair or oppressive (3) must not be partial or discriminatory (4) must not prohibit
but may regulate trade (5) must be general and consistent with public policy, and (6) must not be
unreasonable. 21
Ordinance No. 1843 failed to comply with the foregoing substantive requirements. A clear
case of constitutional infirmity having been thus established, this Court is constrained to nullify
the subject ordinance. We recapitulate:
first, as earlier discussed, the questioned ordinance is repugnant to the
pertinent provisions of the Constitution, RA 7279 and RA 7160;
second,the precipitate manner in which it was enacted was plain
oppression masquerading as a pro-poor ordinance;
third,the fact that petitioners' small property was singled out for
expropriation for the purpose of awarding it to no more than a few squatters
indicated manifest partiality against petitioners, and
fourth,the ordinance failed to show that there was a reasonable relation
between the end sought and the means adopted. While the objective of the City
of Cebu was to provide adequate housing to slum dwellers, the means it
employed in pursuit of such objective fell short of what was legal, sensible and
called for by the circumstances.
Indeed, experience has shown that the disregard of basic liberties and the use of short-
sighted methods in expropriation proceedings have not achieved the desired results. Over the
years, the government, has tried to remedy the worsening squatter problem. Far from solving it,
however, government's kid-glove approach has only resulted in the multiplication and proliferation
of squatter colonies and blighted areas. A pro-poor program that is well-studied, adequately
funded, genuinely sincere and truly respectful of everyone's basic rights is what this problem calls
for, not the improvident enactment of politics-based ordinances targeting small private lots in no
rational fashion. ATCaDE
WHEREFORE, the petition is hereby GRANTED. The July 1, 2002 decision of Branch 23
of the Regional Trial Court of Cebu City is RESERVED and SET ASIDE.
SO ORDERED.
||| (Lagcao v. Labra, G.R. No. 155746, [October 13, 2004], 483 PHIL 303-315)

SECOND DIVISION

[G.R. No. L-21064. February 18, 1970.]

J. M. TUASON & CO, INC., petitioner-appellee, vs. THE LAND TENURE
ADMINISTRATION, THE SOLICITOR GENERAL and THE AUDITOR
GENERAL, respondents-appellants.

||| (J. M. Tuason & Co., Inc. v. Land Tenure Adm., G.R. No. L-21064, [February 18, 1970], 142
PHIL 393-493)
DECISION

FERNANDO, J p:
 18

In this special civil action for prohibition to nullify a legislative act directing the
expropriation of the Tatalon Estate, Quezon City, 1 this Court is called upon to inquire further
into how far the power of Congress under the Constitution to authorize upon payment of just
compensation the expropriation of lands to be subdivided into small lots and conveyed at cost
to individuals 2 may extend, the more so as this is the first time the judiciary is confronted with
such a challenge addressed to the validity of a statute specifically made applicable to a
particular piece of land, owned by petitioner J. M. Tuason & Co. In the leading case of Guido
v. Rural Progress, 3 decided in 1949, this Court in passing upon the scope of the power of the
President conferred by statute "to acquire private lands or any interest therein, through
purchase or expropriation, and to subdivide the same into home lots or small farms for resale
at reasonable prices and under such conditions as he may fix to their bona fide tenants or
occupants" 4 had occasion to delineate the contours of the above constitutional provision,
reconciling the undoubtedly broad grant of constitutional authority to Congress with the right
of property that might be adversely affected by its exercise.
The prevailing opinion in the later case Republic v. Baylosis 5 tilted the balance in
favor of property. In deciding this suit, filed with the Court of First Instance of Quezon City, the
lower court, as was understandable, bowed to what it considered the compulsion such an
opinion carries and being unable to perceive any relevant ground for distinction, declared the
challenged statute invalid. The respondents, the Land Tenure Administration, the Solicitor
General and the Auditor General in this prohibition proceeding, appealed. We are possessed
undoubtedly of greater discretion on the matter. Nor is it to be lost sight of, as
abovementioned, that this is the first controversy where the expropriation of a particular
property authorized by Congress under the above constitutional provision is assailed as
beyond its power. The opportunity is thus here present of making more definite the boundaries
of such congressional competence.
As will hereafter be explained with some measure of fullness, we cannot affix the
stamp of approval to the judgment of the lower court; we reach a different conclusion. There
is to our mind no sufficient showing of the unconstitutionality of the challenged act. We
reverse.
On August 3, 1959, Republic Act No. 2616 took effect without executive approval. It is
therein provided: "The expropriation of the Tatalon Estate in Quezon City jointly owned by the
J. M. Tuason and Company, Inc., Gregorio Araneta and Company, Inc., and Florencio Deudor,
et al., is hereby authorized." 6 As noted in the appealed decision: "The lands involved in this
action, to which Republic Act No. 2616 refer and which constitute a certain portion of the Sta.
Mesa Heights Subdivision, have a total area of about 109 hectares and are covered by
Transfer Certificates of Title Nos. 42774 and 49235 of the Registry of Deeds of Rizal (Quezon
City) registered in the name of petitioner." 7
Thereafter, on November 15, 1960, respondent Land Tenure Administration was
directed by the then Executive Secretary to institute the proceeding for the expropriation of
the Tatalon Estate. Not losing any time, petitioner J.M. Tuason & Co., Inc. filed before the
lower court on November 17, 1960 a special action for prohibition with preliminary injunction
against respondents praying that the above act be declared unconstitutional, seeking in the
meanwhile a preliminary injunction to restrain respondents from instituting such expropriation
proceeding, thereafter to be made permanent after trial. The next day, on November 18, 1960,
the lower court granted the prayer for the preliminary injunction upon the filing of a P20,000.00
bond. After trial, the lower court promulgated its decision on January 10, 1963 holding
that Republic Act No. 2616 as amended is unconstitutional and granting the writ of prohibition
prayed for.
Hence this appeal by respondents, one we find meritorious. With the problem thus laid
bare and with an exposition of the constitutional principles that compel a result different from
that arrived at by the lower court, we cannot accept its holding that the statute thus assailed
should be annulled.
1. Respondents would interpose two procedural bars sufficient in their opinion to
preclude the lower court from passing on the question of validity. 8 The first is the allegation
that in effect this special proceeding for prohibition is "actually a suit against the State, which
is not allowed without its consent." 9 The second would require, on the assumption that the
suit could proceed, that the Executive Secretary, as the real party in interest, ought to have
been impleaded. Neither objection suffices to preclude the lower court from passing upon the
question of validity of the statute in question.
 19

As was held by this Court in the leading case of Angara v. Electoral

Commission, 10 speaking through Justice Laurel, the power of judicial review is granted, if
not expressly, at least by clear implication from the relevant provisions of the
Constitution. 11 This power may be exercised when the party adversely affected by either a
legislative or executive act, or a municipal ordinance for that matter, files the appropriate suit
to test its validity. The special civil action of prohibition has been relied upon precisely to
restrain the enforcement of what is alleged to be an unconstitutional statute. 12 As it is a
fundamental postulate that the Constitution as the supreme law is binding on all governmental
agencies, failure to observe the limitations found therein furnishes a sufficient ground for a
declaration of the nullity of the governmental measure challenged. The argument then that
the government is the adverse party and that therefore must consent to its being sued certainly
is far from persuasive. Moreover, it is equally well-settled that for the purpose of thus 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 hinted with
unconstitutionality. As it cannot be denied that in 1959 the then Land Tenure Administration
as well as the Solicitor General were called upon to enforce the statute now assailed, it would
appear clear that the insistence on the Executive Secretary being made a party lacks support
in law.
It would be then to set aside and disregard doctrines of unimpeachable authority if the
plea of respondents on these procedural points raised were to meet an affirmative response.
That we are not disposed to do.
2. Thus we reach the merits. It would appear, at noted at the outset, that for the
purpose of deciding the question of validity squarely raised, a further inquiry into the scope of
the constitutional power of Congress to authorize the expropriation of lands to be subdivided
into small lots and conveyed at cost to individuals 13 is indicated, if for no other purpose than
to attain a greater degree of clarity. The question is one then of constitutional construction. It
well to recall fundamentals. The primary task is one of ascertaining and thereafter assuring
the realization of the purpose of the framers and of the people in the adoption of the
Constitution. 14
We look to the language of the document itself in our search for its meaning. We do
not of course stop there, but that is where we begin. It is to be assumed that the words in
which constitutional provisions are couched express the objective sought to be attained. They
are to be given their ordinary meaning except where technical terms are employed in which
case the significance thus attached to them prevails. As the Constitution is not primarily a
lawyer's document, it being essential for the rule of law to obtain that it should ever be present
in the people's consciousness, its language as much as possible should be understood in the
sense they have in common use. What it says according to the text of the provision to be
construed compels acceptance and negates the power of the courts to alter it, based on the
postulate that the framers and the people mean what they say. Thus there are cases where
the need for construction is reduced to a minimum.
This is one of them. It does not admit of doubt that the congressional power thus
conferred is far from limited. It is left to the legislative will to determine what lands may be
expropriated so that they could be subdivided for resale to those in need of them. Nor can it
be doubted either that as to when such authority may be exercised is purely for Congress to
decide. Its discretion on the matter is not to be interfered with. The language employed is not
swathed in obscurity. The recognition of the broad congressional competence is undeniable.
The judiciary in the discharge of its task to enforce constitutional commands and prohibitions
is denied the prerogative of curtailing its well-nigh all-embracing sweep.
Reference to the historical basis of this provision as reflected in the proceedings of the
Constitutional Convention, two of the extrinsic aids to construction along with the
contemporaneous understanding and the consideration of the consequences that flow from
the interpretation under consideration, yields additional light on the matter. The opinion of
Justice Tuason, in the Guido case did precisely that. It cited the speech of delegate Miguel
Cuaderno, who, in speaking of large estates and trusts in perpetuity, stated: "`There has been
an impairment of public tranquillity, and to be sure a continuous impairment of it, because of
the existence of these conflicts. In our folklore the oppression and exploitation of the tenants
are vividly referred to; their sufferings at the hand of the landlords are emotionally pictured in
our drama; and even in the native movies and talkies of today, this theme of economic slavery
has been touched upon. In official documents these same conflicts are narrated and
exhaustively explained as a threat to social order and stability.'" 15 He invoked likewise what
 20

happened to the family of our national hero Jose Rizal: "`But we should go to Rizal for
inspiration and illumination in this problem of the conflicts between landlords and tenants. The
national hero and his family were persecuted because of these same conflicts in Calamba,
and Rizal himself met a martyr's death because of his exposal of the cause of the tenant class,
because he would not close his eyes to oppression and persecution with his own people as
victims.'" 16 Delegate Cuaderno closed with this appeal: "`If we are to be true to our trust, if it
is our purpose in drafting our constitution to insure domestic tranquillity and to provide for the
well-being of our people, we cannot, we must not fail to prohibit the ownership of large estates,
to make it the duty of the government to break up existing large estates, and to provide for
their acquisition by purchase or through expropriation and sale to their occupants, as has
been provided in the Constitutions of Mexico and Jugoslavia." 17
The above address was delivered during the early days of the convention on August
21, 1984. 18 Subsequently, the day before the above constitutional provision was voted on
January 29, 1935 he reiterated what was said by him in the above address. Thus: "Mr.
President, this will be my last speech in the Convention. And I just want to remind the
Convention of the first speech that I delivered — the first speech I delivered before this
Assembly. I believe, Mr. President, that one of the best provisions that this draft of the
Constitution contains is this provision that will prevent the repetition of the history of misery,
of trials and tribulations of the poor tenants throughout the length and breadth of the Philippine
Islands." 19
This is not to say that such an appeal to history as disclosed by what could be accepted
as the pronouncement that did influence the delegates to vote for such a grant of power could
be utilized to restrict the scope thereof, considering the language employed. For what could
be expropriated are "lands," not "landed estates." It is well to recall what Justice Laurel would
impress on us, "historical discussion while valuable is not necessarily decisive." 20 It is easy
to understand why.
The social and economic conditions are not static. They change with the times. To
identify the text of a written constitution with the circumstances that inspired its inclusion may
render it incapable of being responsive to future needs. Precisely, it is assumed to be one of
the virtues of a written constitution that it suffices to govern the life of the people not only at
the time of its framing but far into the indefinite future. It is not to be considered as so lacking
in flexibility and suppleness that it may be a bar to measures, novel and unorthodox, as they
may appear to some, but nonetheless imperatively called for. Otherwise, it might expose itself
to the risk of inability to survive in the face of complexities that time may bring in its wake.
It would thus be devoid of the character of permanency, which is the distinguishing
mark of a constitution. Such was the conclusion deliberately arrived at after extensive
discussion in the Constitutional Convention that the Constitution as adopted in 1935 would be
good not only for the Commonwealth but for the Republic, with all the vicissitudes that time
and circumstance would bring. Our people in signifying their adherence to the Constitution at
the plebiscite thereafter held were of a similar persuasion.
The continuing life of a constitution was stressed by one of the chief architects of the
Constitution, Manuel A. Roxas, later to be the first President of the Republic. For him it is "the
essence [of such an] instrument." 21 It was his view that the constitution to be adopted by the
Constitutional Convention of 1934 would "have an indefinite life, will be permanent, subject of
course, to revisions, amendments and other changes that may be adopted
constitutionally." 22 That would be an assurance that constitutional guarantees "will be
maintained, property rights will be safeguarded and individual rights maintained immaculate
and sanctified. . . .." 23 Another prominent delegate, Gregorio Perfecto, later a member of this
Tribunal, aptly noted that the transitory character is essentially incompatible with the nature of
laws, and necessarily so of a constitution, which is the supreme law of a people and therefore
must be impressed with such attribute of permanency, much more than ordinary statutes
passed under its authority. 24
It could thus be said of our Constitution as of the United States Constitution, to borrow
from Chief Justice Marshall's pronouncement in M'Culloch v. Maryland 25 that it is "intended
to endure for ages to come and consequently, to be adapted to the various crisis of human
affairs." It cannot be looked upon as other than, in the language of another American jurist,
Chief Justice Stone, "a continuing instrument of government." 26 Its framers were not
visionaries, toying with speculations or theories, but men of affairs, at home in statecraft,
laying down the foundations of a government which can make effective and operative all the
 21

powers conferred or assumed, with the corresponding restrictions to secure individual rights
and, anticipating, subject to the limitations of human foresight, the problems that events to
come in the distant days ahead will bring. Thus a constitution, to quote from Justice Cardozo,
"states or ought to state not rules for the passing hour, but principles for an expanding
future." 27
To that primordial intent, all else is subordinated. Our Constitution, any constitution, is
not to be construed narrowly or pedantically, for the prescriptions therein contained, to
paraphrase Justice Holmes, are not mathematical formulas having their essence in their form,
but are organic living institutions, the significance of which is vital nor formal. There must be
an awareness, as with Justice Brandeis, not only of what has been, but of what may be. The
words employed by it are not to be construed to yield fixed and rigid answers but as impressed
with the necessary attributes of flexibility and accommodation to enable them to meet
adequately whatever problems the future has in store. It is not, in brief, a printed finality but a
dynamic process.
3. The conclusion is difficult to resist that the text of the constitutional provision in
question, its historical background as noted in pronouncements in the Constitutional
Convention and the inexonerable need for the Constitution to have the capacity for growth
and ever be adaptable to changing social and economic conditions all argue against its
restrictive construction. Such an approach was reflected succinctly in the dissenting opinion
of Justice J.B.L Reyes, concurred in by the present Chief Justice, in the Baylosis case. We
find it persuasive.
His dissenting opinion opens thus: "I am constrained to dissent from the opinion of the
majority. The reasons set forth by it against the validity of the proposed expropriation strike
me as arguments against the expropriation policies adopted by the government rather than
reasons against the existence and application of the condemnation power in the present
case." 28 Then he stated: "The propriety of exercising the power of eminent domain under
Article XIII, section 4 of our Constitution can not be determined on a purely quantitative or
area basis. Not only does the constitutional provision speak of lands instead of landed
estates, but I see no cogent reason why the government, in its quest for social justice and
peace, should exclusively devote attention to conflicts of large proportions, involving a
considerable number of individuals, and eschew small controversies and wait until they grow
into a major problem before taking remedial action." 29
As to the role of the courts in the appraisal of the congressional implementation of
such a power, he had this to say: "The Constitution considered the small individual land tenure
to be so important to the maintenance of peace and order and to the promotion of progress
and the general welfare that it not only provided for the expropriation and subdivision of lands
but also opened the way for the limitation of private landholdings (Art. XIII, section 3). It is not
for this Court to judge the worth of these and other social and economic policies expressed
by the Constitution; our duty is to conform to such policies and not to block their realization." 30
The above dissent, as well as that penned by the then Chief Justice Paras with whom
the then Justice Pablo was in agreement, with Justice Alex Reyes writing a concurring opinion,
resulted in that the main opinion of Justice Montemayor, while prevailing, failed to elicit the
necessary majority vote of six. If for that reason alone its re-examination would not appear to
be inappropriate. Moreover, it could not be considered as controlling the present suit, in view
of the fact that the exercise of the congressional authority to expropriate land was not direct
as in this case but carried out in pursuance of the statutory authority conferred on the
President under Commonwealth Act No. 539.
The absence of any controlling force of such prevailing opinion can likewise be
predicated on facts which would differentiate the present situation from that found in the
Baylosis case. Thus Justice Montemayor noted: "The evidence shows that both Sinclair and
Cirilo P. Baylosis at one time were willing to sell to some of the tenants and occupants herein
involved under certain conditions and provided that they buy in groups, presumably to avoid
subdivisions and the problem of dealing with many individual buyers, but the tenants failed to
buy. Naturally, they may not now compel Sinclair and Cirilo P. Baylosis to sell to them through
the Government by means of expropriation. Besides, the bulk of the lands that Sinclair and
Cirilo P. Baylosis had formerly offered to them for sale which offer they failed to take
advantage of, has now been sold to others, the other co-defendants herein, in small
lots." 31 Likewise, it was noted by him: "There is another point that merits consideration. The
 22

defendants claim and correctly that many of the tenants and occupants now insisting on
expropriation have lands of their own." 32
The more fundamental reason though why we find ourselves unable to yield deference
to such opinion of Justice Montemayor, well-written and tightly-reasoned as it is, is its undue
stress on property rights. It thus appears then that it failed to take into account the greater
awareness exhibited by the framers of our Constitution of the social forces at work when they
drafted the fundamental law. To be more specific, they were seriously concerned with the
grave problems of inequality of wealth, with its highly divisive tendency, resulting in the
generous scope accorded the police power and eminent domain prerogatives of the state,
even if the exercise thereof would cover terrain previously thought of as beyond state control,
to promote social justice and the general welfare.
This is not to say of course that property rights are disregarded. This is merely to
emphasize that the philosophy of our Constitution embodying as it does what Justice Laurel
referred to as its "nationalistic and socialist traits discoverable upon even a sudden dip into a
variety of [its] provisions" although not extending as far as the "destruction or annihilation" of
the rights to property, 33 negates the postulate which at one time reigned supreme in
American constitutional law as to their well-nigh inviolable character. This is not so under our
Constitution, which rejects the doctrine of laissez faire with its abhorrence for the least
interference with the autonomy supposed to be enjoyed by the property owner. Laissez faire,
as Justice Malcolm pointed out as far back as 1919, did not take too firm a foothold in our
jurisprudence. 34 Our Constitution is much more explicit. There is no room for it for laissez
faire. So Justice Laurel affirmed not only in the above opinion but in another concurring opinion
quoted with approval in at least two of our subsequent decisions. 35 We had occasion to
reiterate such a view in the ACCFA case, decided barely two months ago. 36
This particular grant of authority to Congress authorizing the expropriation of land is a
clear manifestation of such a policy that finds expression in our fundamental law. So is the
social justice principle enshrined in the Constitution of which it is an expression, as so clearly
pointed out in the respective dissenting opinions of Justice J.B.L. Reyes and Chief Justice
Paras in the Baylosis case. Why it should be thus is so plausibly set forth in the ACCFA
decision, the opinion being penned by Justice Makalintal. We quote: "The growing
complexities of modern society, however, have rendered this traditional classification of the
functions of government quite unrealistic, not to say obsolete. The areas which used to be left
to private enterprise and initiative and which the government was called upon to enter
optionally, and only `because it was better equipped to administer for the public welfare than
is any private individual or group of individuals,' continue to lose their well-defined boundaries
and to be absorbed within activities that the government must undertake in its sovereign
capacity if it is to meet the increasing social challenges of the times. Here as almost
everywhere else the tendency is undoubtedly towards a greater socialization of economic
forces. Here of course this development was envisioned, indeed adopted as a national policy,
by the Constitution itself in its declaration of principle concerning the promotion of social
justice."
It would thus appear that the prevailing opinion in the Baylosis case is far from
compelling. To the extent that the conclusion reached by us in this suit proceeds from a
different reading of the constitutional provision in question, it must be deemed as being
possessed of less than decisive weight.
4. There need be no fear that such constitutional grant of power to expropriate lands
is without limit. As in the case of the more general provision on eminent domain, there is the
explicit requirement of the payment of just compensation. It is well-settled 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. The market value of the land taken
is the just compensation to which the owner of condemned property is entitled, the market
value being 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
for such property. There must be a consideration then of all the facts which make it
commercially valuable. The question is what would be obtained for it on the market from
parties who want to buy and would give full value. Testimonies as to real estate transactions
in the vicinity are admissible. It must be shown though that the property as to use must be of
similar character to the one sought to be condemned. The transaction must likewise be coeval
 23

as to time. To the market value must be added the consequential damages, if any, minus the
consequential benefits. The assessed value of real property while constituting prima
facie evidence of its value in case of condemnation proceedings is not conclusive. 37
Then, too, it is a prerequisite for the valid exercise of such a congressional power that
the taking be for the public use. To quote from the Guido decision: "It has been truly said that
the assertion of the right on the part of the legislature to take the property of one citizen and
transfer it to another, even for a full compensation, when the public interest is not promoted
thereby, is claiming a despotic power, and one inconsistent with every just principle and
fundamental maxim of a free government." 38 It is on that account that we granted prohibition
to restrain respondent Rural Progress Administration from proceeding with the expropriation
of petitioner's land, two adjoining lots, part commercial with a combined area of slightly more
than two hectares. As was stressed by Justice Tuason in his opinion: "No fixed line of
demarcation between what taking is for public use and what is not can be made; each case
has to be judged according to its peculiar circumstances. It suffices to say for the purpose of
this decision that the case under consideration is far wanting in those elements which make
for public convenience or public use." 39 Such is not the situation before us now. Nor are we
disposed to dispute the legislative appraisal of the matter.
5. The failure to meet the 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. 40
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
oppressive 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 governmental agency in the exercise of whatever competence is entrusted to
it. 41 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, . . .." 42
It is easily understandable then why the expropriation of lots less than one hectare in
City of Manila v. Arellano Law College, 43 Lee Tay v. Choco 44 and Republic vs.
Samia 45 and of lots less than two hectares in Commonwealth v. De Borja 46 and Republic
v. Prieto 47 was not given the sanction of approval by this Court, the failure to meet the due
process requirement being quite evident.
6. It is primarily the equal protection guaranty though that petitioner's case is made to
rest. The Constitution requires that no person be denied "the equal protection of the
laws." 48 A juridical being is included within its terms.
The assumption underlying such a guaranty is that a legal norm, whether embodied in
a rule, principle, or standard, constitutes a defense against anarchy at one extreme and
tyranny at the other. Thereby, people living together in a community with its myriad and
complex problems can minimize the friction and reduce the conflicts, to assure, at the very
least, a peaceful ordering of existence. The ideal situation is for the law's benefits to be
available to all, that none be placed outside the sphere of its coverage. Only thus could chance
and favor be excluded and the affairs of men governed by that serene and impartial uniformity,
which is of the very essence of the idea of law.
The actual, given things as they are and likely to continue to be; cannot approximate
the ideal. Nor is the law susceptible to the reproach that it does not take into account the
realities of the situation. The constitutional guaranty then is not to be given a meaning that
disregards what is, what does in fact exist. 49 To assure that the general welfare be promoted,
which is the end of law, a regulatory measure may cut into the rights to liberty and property.
Those adversely affected may under such circumstances invoke the equal protection clause
only if they can show that the governmental act assailed, far from being inspired by the
attainment of the common weal was prompted by the spirit of hostility, or at the very least,
discrimination that finds no support in reason.
It suffices then that the laws operate equally and uniformly on all persons under similar
circumstances or that all persons must be treated in the same manner, the conditions not
being different, both in the privileges conferred and the liabilities imposed. Favoritism and
 24

undue preference cannot be allowed. For the principle is that equal protection and security
shall be given to every person under circumstances, which if not identical are analogous. If
law be looked upon in terms of burden or charges, those that fall within a class should be
treated in the same fashion, whatever restrictions cast on some in the group equally binding
on the rest.
It is precisely because the challenged statute applies only to petitioner that he could
assert a denial of equal protection. As set forth in its brief: "Republic Act No. 2616 is directed
solely against appellee and for this reason violates the equal protection clause of the
Constitution. Unlike other laws which confer authority to expropriate landed estates in general,
it singles out the Tatalon Estate. It cannot be said, therefore, that it deals equally with other
lands in Quezon City or elsewhere." 50 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.
The judiciary can look into the facts then, no conclusiveness being attached to a
determination of such character when reliance is had either to the due process clause which
is a barrier against arbitrariness and oppressiveness and the equal protection guaranty which
is an obstacle to invidious discrimination.
We start of course with the presumption of validity, the doubts being resolved in favor
of the challenged enactment. 51 As this is the first statute of its kind assailed, we should not
stop our inquiry here. The occasion that called for such legislation, if known, goes far in
meeting any serious constitutional objection raised. We turn to the Explanatory Note of the
bill, 52 which was enacted into the challenged statute. It started with the declaration that it
provides for the "expropriation of the Tatalon Estate, Quezon City, and for the sale at cost of
the lots therein to their present bona fide occupants, authorizing therefor the appropriation of
ten million pesos." Then it continued: "The Tatalon Estate has an area of more than ninety-
six hectares and the lots therein are at present occupied by no less than one thousand five
hundred heads of families, most of whom are veterans of World War II. It is the earnest desire
of this group of patriotic and loyal citizens to purchase the lots at a minimum cost." Why there
was such a need for expropriation was next taken up: "The population of Quezon City has
considerably increased. This increase in population is posing a serious housing problem to
city residents. This bill will not only solve the problem but will also implement the land-for-the-
landless program of the present Administration."
What other facts are there which would remove the alleged infirmity of the statute on
equal protection grounds? The brief for respondents invited our attention to "the social
problem which this legislation was intended to remedy. Thus: "There is a vital point which
should have great weight in the decision of this case. The petitioner led the occupants of
Tatalon Estate to believe that they were dealing with the representatives of the real owners,
the Veterans Subdivision, in the purchase of their lots. The occupants believed in good faith
that they were dealing with the representatives of the owners of the lots. This belief was
bolstered by the fact that the petitioners herein even entered into a compromise agreement
on March 16, 1953 with the Deudors, agreeing to give the latter millions of pesos in settlement
of their claim over the Tatalon Estate. The occupants, therefore, purchased their respective
portions from the Veterans Subdivision in good faith. The petitioner allowed the Veterans
Subdivision to construct roads in the Tatalon Estate; it allowed said firm to establish an office
in the Tatalon Estate and to advertise the sale of the lots inside the Tatalon Estate. Petitioner
admits having full knowledge of the activities of the Veterans Subdivision and yet did not lift a
finger to stop said acts. The occupants paid good money for their lots and spent fortunes to
build their homes. It was after the place has been improved with the building of the roads and
the erection of substantial residential homes that petitioner stepped into the picture, claiming
for the first time that it is the owner of the Tatalon Estate. Some of the occupants had erected
their houses as early as 1947 and 1948 . . ." 53
The cutting edge of the above assertions could have been blunted by the brief for
petitioner. This is all it did say on the matter though: "Appellants alleged that appellee `led the
occupants of Tatalon Estate to believe that they were dealing with the representatives of the
real owners, the Veterans Subdivision, in the purchase at their lots' . . . . There is absolutely
no evidence on record to establish this ludicrous allegation. 54 "Only the alleged duplicity of
petitioner was denied, leaving unanswered the rather persuasive recital of conditions that
could rightly motivate Congress to act as it did. Clearly, there is no sufficient refutation of the
 25

seriousness of the problem thus underscored by respondents, the solution of which is the aim
of the statute now under attack.
This is not to deny that whenever Congress points to a particular piece of property to
be expropriated, it is faced with a more serious scrutiny as to its power to act in the premises.
It would require though a clear and palpable showing of its having singled out a party to bear
the brunt of governmental authority that may be legitimately exerted, induced, it would appear
by a feeling of disapproval or ill-will to make out a case of this guaranty having been
disregarded. If such were the case, then in the language of Justice Laurel, it "will be the time
to make the [judicial] hammer fall and heavily. But not until then." 55 The most careful study
of the matter before us however yields the conclusion that petitioner was unable to sustain
the burden of demonstrating a denial of equal protection.
Moreover, there is nothing to prevent Congress in view of the public funds at its
disposal to follow a system of priorities. It could thus determine what lands would first be the
subject of expropriation. This it did under the challenged legislative act. As already noted,
Congress was moved to act in view of what it considered a serious social and economic
problem. The solution which for it was the most acceptable was the authorization of the
expropriation of the Tatalon Estate. So it provided under the statute in question. It was
confronted with a situation that called for correction, and the legislation that was the result of
its deliberation sought to apply the necessary palliative. That it stopped short of possibly
attaining the cure of other analogous ills certainly does not stigmatize its effort as a denial of
equal protection. We have given our sanction to the principle underlying the exercise of police
power and taxation, but certainly not excluding eminent domain, that "the legislature is not
required by the Constitution to adhere to the policy of `all or none'." 56 Thus, to reiterate, the
invocation by petitioner of equal protection clause is not attended with success.
7. The other points raised may be briefly disposed of. Much is made of what the lower
court considered to be the inaccuracy apparent on the face of the challenged statute as to the
ownership of the Tatalon Estate. It could very well be that Congress ought to have taken
greater pains to avoid such imprecision. At any rate, the lower court, unduly alarmed, would
consider it a deprivation of property without due process of law. 57 Such a fear is unwarranted.
In the course of the expropriation proceedings, there undoubtedly would be a judicial
determination as to the party entitled to the just compensation. As of now then, such a
question would appear at the very least to be premature. Reference is likewise made as to
the effect of the authorized expropriation on those purchasers of lots located in the Tatalon
Estate. Again, on the occasion of the expropriation, whatever contractual rights might be
possessed by vendors and vendees could be asserted and accorded the appropriate
constitutional protection.
8. What appears undeniable is that in the light of the broad grant of congressional
power so apparent from the text of the constitutional provision, the historical background as
made clear during the deliberation for the Constitutional Convention, and the cardinal
postulate underlying constitutional construction that its provisions are not to be interpreted to
preclude their being responsive to future needs, the fundamental law being intended to govern
the life of a nation as it unfolds through the ages, the challenged statute can survive the test
of validity. If it were otherwise, then the judiciary may lend itself susceptible to the charge that
in its appraisal of governmental measures with social and economic implications, its decisions
are characterized by the narrow, unyielding insistence on the primacy of property rights,
contrary to what the Constitution ordains. In no other sphere of judicial activity are judges
called upon to transcend personal predilections and private notions of policy, lest legislation
intended to bring to fruition the hope of a better life for the great masses of our people, as
embodied in the social justice principle of which this constitutional provision under scrutiny is
a manifestation, be unjustifiably stricken down. The appealed decision cannot stand.
WHEREFORE, the decision of the lower court of January 10, 1963 holding
that Republic Act No. 2616 as amended by Republic Act No. 3453 is unconstitutional is
reversed. The writ of prohibition suit is denied, and the preliminary injunction issued by the
lower court set aside. With costs against petitioner.
||| (J. M. Tuason & Co., Inc. v. Land Tenure Adm., G.R. No. L-21064, [February 18, 1970], 142
PHIL 393-493)

[G.R. No. 175983. April 16, 2009.]

 26

METROPOLITAN CEBU WATER DISTRICT (MCWD), petitioner, vs. J. KING

AND SONS COMPANY, INC., respondent.

DECISION

TINGA, J p:

Before us is a Rule 45 petition 1 which seeks the reversal of the decision 2 and
resolution 3 of the Court of Appeals in CA-G.R. CEB-SP No. 00810. The Court of Appeals'
decision nullified the orders 4 and the writ of possession 5 issued by the Regional Trial Court
(RTC) of Cebu City, Branch 23, allowing petitioner to take possession of respondent's
property.
Petitioner Metropolitan Cebu Water District is a government-owned and controlled
corporation created pursuant to Presidential Decree No. 198, as amended. Among its
purposes are to acquire, install, improve, maintain and operate water supply and distribution
systems within the boundaries of the District. 6
Petitioner wanted to acquire a five (5)-square meter lot occupied by its production well.
The lot is part of respondent's property covered by TCT No. 168605 and located in Banilad,
Cebu City. Petitioner initiated negotiations 7 with respondent J. King and Sons Company, Inc.
for the voluntary sale of the latter's property. Respondent did not acquiesce to petitioner's
proposal. After the negotiations had failed, petitioner pursuant to its charter 8 initiated
expropriation proceedings through Board Resolution No. 015-2004 9 which was duly
approved by the Local Water Utilities Administration (LWUA). 10 On 10 November 2004,
petitioner filed a complaint 11 to expropriate the five (5)-square meter portion of respondent's
property. AcaEDC
On 7 February 2005, petitioner filed a motion 12 for the issuance of a writ of
possession. Petitioner wanted to tender the amount to respondent during a rescheduled
hearing which petitioner's counsel had failed to attend. 13 Petitioner deposited 14 with the
Clerk of Court the amount of P17,500.00 equivalent to one hundred percent (100%) of the
current zonal value of the property which the Bureau of Internal Revenue had pegged at
P3,500.00 per square meter. 15 Subsequently, the trial court granted the motion 16 and
issued the writ of possession. 17 Respondent moved for reconsideration but the motion was
denied. 18
Respondent filed a petition 19 for certiorari under Rule 65 with the Court of Appeals.
It sought the issuance of a temporary restraining order (TRO) which the Court of Appeals
granted. 20 Thus, petitioner was not able to gain entry to the lot. 21 ESTCHa
On 26 July 2006, the Court of Appeals rendered the assailed decision 22 granting
respondent's petition. It ruled that the board resolution which authorized the filing of the
expropriation complaint lacked exactitude and particularity which made it invalid; that there
was no genuine necessity for the expropriation of the five (5)-square meter lot and; that the
reliance on Republic Act (R.A.) No. 8974 in fixing the value of the property contravenes the
judicial determination of just compensation. Petitioner moved 23 for reconsideration but the
motion was rejected. 24
Hence, this petition.
The issues raised by petitioner can be summarized as follows:
1. Whether there was sufficient authority from the petitioner's board of directors
to institute the expropriation complaint; and
2. Whether the procedure in obtaining a writ of possession was properly
observed. aDcTHE
Eminent domain is the right of the state to acquire private property for public use upon
payment of just compensation. 25 The power of eminent domain is inseparable in sovereignty
being essential to the existence of the State and inherent in government. Its exercise is
proscribed by only two Constitutional requirements: first, that there must be just
compensation, and second, that no person shall be deprived of life, liberty or property without
due process of law. 26
 27

As an inherent sovereign prerogative, the power to expropriate pertains to the

legislature. However, Congress may, as in fact it often does, delegate the exercise of the
power to government agencies, public officials and quasi-public entities. Petitioner is one of
the numerous government offices so empowered. Under its charter, P.D. No. 198, as
amended, 27 petitioner is explicitly granted the power of eminent domain.
On 7 November 2000, Congress enacted R.A. No. 8974, entitled "An Act to Facilitate
the Acquisition of Right-of-Way, Site or Location for National Government Infrastructure
Projects and for Other Purposes". Section 2 thereof defines national government projects as
follows: SDHAEC
Sec. 2. National Government Projects. — The term "national government
projects" shall refer to all national government infrastructure, engineering works
and service contracts, including projects undertaken by government-owned
and -controlled corporations, all projects covered by Republic Act No. 6957,
as amended by Republic Act No. 7718, otherwise known as the Build-Operate-
and-Transfer Law, and other related and necessary activities, such as site
acquisition, supply and/or installation of equipment and materials,
implementation, construction, completion, operation, maintenance,
improvement, repair and rehabilitation, regardless of source of funding".
(emphasis ours)
R.A. No. 8974 includes projects undertaken by government owned and controlled
corporations, 28 such as petitioner. Moreover, the Implementing Rules and Regulations
of R.A. No. 8974 explicitly includes water supply, sewerage, and waste management facilities
among the national government projects covered by the law. 29 It is beyond question,
therefore, that R.A. No. 8974 applies to the expropriation subject of this case. DIHETS
The Court of Appeals held that the board resolution authorizing the expropriation
lacked exactitude and particularity. It described the board resolution as akin to a general
warrant in criminal law and as such declared it invalid. Respondent reiterates the same
argument in its comment and adds that petitioner's exercise of the power of eminent domain
was not reviewed by the LWUA.
A corporation does not have powers beyond those expressly conferred upon it by its
enabling law. Petitioner's charter provides that it has the powers, rights and privileges given
to private corporations under existing laws, in addition to the powers granted in it. 30 All the
powers, privileges, and duties of the district shall be exercised and performed by and through
the board and that any executive, administrative or ministerial power may be delegated and
redelegated by the board to any of its officers or agents for such purpose. 31 Being a
corporation, petitioner can exercise its powers only through its board of directors. CSDcTH
For petitioner to exercise its power of eminent domain, two requirements should be
met, namely: first, its board of directors passed a resolution authorizing the expropriation, and;
second, the exercise of the power of eminent domain was subjected to review by the LWUA.
In this case, petitioner's board of directors approved on 27 February 2004, Board Resolution
No. 015-2004 32 authorizing its general manager to file expropriation and other cases.
Moreover, the LWUA did review and gave its stamp of approval to the filing of a complaint for
the expropriation of respondent's lot. Specifically, the LWUA through its Administrator,
Lorenzo H. Jamora, wrote petitioner's manager, Armando H. Paredes, a letter dated 28
February 2005 33 authorizing petitioner to file the expropriation case "against the owner of
the five-square meter portion of Lot No. 921-A covered by TCT No. 168805, pursuant to
Section 25 of P.D. No. 198, as amended".
The letter not only explicitly debunks respondent's claim that there was no
authorization from LWUA but it also identifies the lot sought to be expropriated with sufficient
particularity.
It is settled that the validity of a complaint may be questioned immediately upon its
filing through a motion to dismiss or raised thereafter as an affirmative defense. However,
there is no need to further belabor the issue since it is established that petitioner has the legal
capacity to institute the expropriation complaint.
Anent the second issue involving the issuance of a writ of possession, a discussion on
the various stages in an expropriation proceeding is necessary.
 28

The general rule is that upon filing of the expropriation complaint, the plaintiff has the
right to take or enter into possession of the real property involved if he deposits with the
authorized government depositary an amount equivalent to the assessed value of the property
for purposes of taxation. An exception to this procedure is provided by R.A. No. 8974. 34 It
requires the payment of one hundred percent (100%) of the zonal value of the property to be
expropriated to entitle the plaintiff to a writ of possession. IDATCE
In an expropriation proceeding there are two stages: first, is the determination of the
validity of the expropriation, and second is the determination of just compensation. 35 In Tan
v. Republic, 36 we explained the two (2) stages in an expropriation proceeding to wit:
(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.
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 courts on the
merits. 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.
(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 the issue. A second and
separate appeal may be taken from this order fixing the just compensation. 37
Thus, the determination of the necessity of the expropriation is a justiciable question
which can only be resolved during the first stage of an expropriation proceeding. Respondent's
claim that the expropriated property is too small to be considered for public use can only be
resolved during that stage.
Further, the Court of Appeals ruled that Section 4 of R.A. No. 8974 runs counter to the
express mandate of Section 2 of Rule 67. 38 It held that the law undermined the principle that
the determination of just compensation is a judicial function. However, this Court has already
settled the issue. In Republic v. Gingoyon, 39 this Court held that:
It is the plain intent of Rep. Act No. 8974 to supersede the system of
deposit under Rule 67 with the scheme of "immediate payment" in cases
involving national government infrastructure projects.
xxx xxx xxx
It likewise bears noting that the appropriate standard of just
compensation is a substantive matter. It is well within the province of the
legislature to fix the standard, which it did through the enactment of Rep. Act No.
8974. Specifically, this prescribes the new standards in determining the amount
of just compensation in expropriation cases relating to national government
infrastructure projects, as well as the manner of payment thereof. At the same
time, Section 14 of the Implementing Rules recognizes the continued
applicability of Rule 67 on procedural aspects when it provides "all matters
regarding defenses and objections to the complaint, issues on uncertain
ownership and conflicting claims, effects of appeal on the rights of the parties,
and such other incidents affecting the complaint shall be resolved under the
provisions on expropriation of Rule 67 of the Rules of Court. 40 ICTaEH
R.A. No. 8974 does not take away from the courts the power to judicially determine
the amount of just compensation. The law merely sets the minimum price of the property as
the provisional value. Thus, the amount of just compensation must still be determined by the
courts according to the standards set forth in Section 5 41 of R.A. No. 8974.
R.A. No. 8974 provides a different scheme for the obtention of a writ of possession.
The law does not require a deposit with a government bank; instead it requires the government
 29

to immediately pay the property owner. 42 The provisional character of this payment means
that it is not yet final, yet, sufficient under the law to entitle the Government to the writ of
possession over the expropriated property. 43 The provisional payment is a
prerequisite 44 and a trigger 45 for the issuance of the writ of possession. In Gingoyon, 46 we
held that:
It is the plain intent of Rep. Act No. 8974 to supersede the system of
deposit under Rule 67 with the scheme of "immediate payment" in cases
involving national government infrastructure projects. 47
xxx xxx xxx
Rep. Act No. 8974 is plainly clear in imposing the requirement of
immediate prepayment, and no amount of statutory deconstruction can evade
such requisite. It enshrines a new approach towards eminent domain that
reconciles the inherent unease attending expropriation proceedings with a
position of fundamental equity. While expropriation proceedings have always
demanded just compensation in exchange for private property, the previous
deposit requirement impeded immediate compensation to the private owner,
especially in cases wherein the determination of the final amount of
compensation would prove highly disputed. Under the new modality prescribed
by Rep. Act No. 8974, the private owner sees immediate monetary recompense,
with the same degree of speed as the taking of his/her property. 48
Petitioner was supposed to tender the provisional payment directly to respondent during a
hearing which it had failed to attend. Petitioner, then, deposited the provisional payment with
the court. The trial court did not commit an error in accepting the deposit and in issuing the
writ of possession. The deposit of the provisional amount with the court is equivalent to
payment.
Indeed, Section 4 of R.A. No. 8974 is emphatic to the effect that "upon compliance
with the guidelines . . . the court shall immediately issue to the implementing agency an order
to take possession of the property and start the implementation of the project". 49 Under this
statutory provision, when the government, its agencies or government-owned and controlled
corporations, make the required provisional payment, the trial court has a ministerial duty to
issue a writ of possession. In Capitol Steel Corporation v. PHIVIDEC Industrial
Authority, 50 we held that:
Upon compliance with the requirements, a petitioner in an expropriation
case . . . is entitled to a writ of possession as a matter of right and it becomes
the ministerial duty of the trial court to forthwith issue the writ of possession.
No hearing is required and the court neither exercises its discretion or judgment
in determining the amount of the provisional value of the properties to be
expropriated as the legislature has fixed the amount under Section 4 of R.A. No.
8974. 51 (emphasis ours)
It is mandatory on the trial court's part to issue the writ of possession and on the
sheriff's part to deliver possession of respondent's property to petitioner pursuant to the writ.
WHEREFORE, the Court of Appeals' Decision dated 26 July 2006 and Resolution
dated 28 September 2006 are REVERSED. The ORDERS of the Regional Trial Court dated
01 April 2005 and 9 May 2005 are hereby REINSTATED. The Regional Trial Court is further
DIRECTED to immediately REMIT the amount of P17,500.00 to respondent and to REQUIRE
the sheriff to implement the writ of possession. The case is REMANDED to the trial court for
further proceedings.
SO ORDERED.
||| (Metropolitan Cebu Water District v. J. King and Sons Co., Inc., G.R. No. 175983, [April 16,
2009], 603 PHIL 471-488)

SECOND DIVISION

[G.R. No. 136349. January 23, 2006.]

LOURDES DE LA PAZ MASIKIP, petitioner, vs. THE CITY OF PASIG, HON.
MARIETTA A. LEGASPI, in her capacity as Presiding Judge of the Regional
 30

Trial Court of Pasig City, Branch 165 and THE COURT OF

APPEALS, respondents.

||| (Masikip v. City of Pasig, G.R. No. 136349, [January 23, 2006], 515 PHIL 364-376)
DECISION

SANDOVAL GUTIERREZ, J p:

Where the taking by the State of private property is done for the benefit of a small
community which seeks to have its own sports and recreational facility, notwithstanding that
there is such a recreational facility only a short distance away, such taking cannot be
considered to be for public use. Its expropriation is not valid. In this case, the Court defines
what constitutes a genuine necessity for public use.
This petition for review on certiorari assails the Decision 1 of the Court of Appeals
dated October 31, 1997 in CA-G.R. SP No. 41860 affirming the Order 2 of the Regional Trial
Court, Branch 165, Pasig City, dated May 7, 1996 in S.C.A. No. 873. Likewise assailed is the
Resolution 3 of the same court dated November 20, 1998 denying petitioner's Motion for
Reconsideration.
The facts of the case are:
Petitioner Lourdes Dela Paz Masikip is the registered owner of a parcel of land with
an area of 4,521 square meters located at Pag-Asa, Caniogan, Pasig City, Metro Manila.
In a letter dated January 6, 1994, the then Municipality of Pasig, now City of Pasig,
respondent, notified petitioner of its intention to expropriate a 1,500 square meter portion of
her property to be used for the "sports development and recreational activities" of the residents
of Barangay Caniogan. This was pursuant to Ordinance No. 42, Series of 1993 enacted by
the then Sangguniang Bayan of Pasig.
Again, on March 23, 1994, respondent wrote another letter to petitioner, but this time
the purpose was allegedly "in line with the program of the Municipal Government to provide
land opportunities to deserving poor sectors of our community."
On May 2, 1994, petitioner sent a reply to respondent stating that the intended
expropriation of her property is unconstitutional, invalid, and oppressive, as the area of her lot
is neither sufficient nor suitable to "provide land opportunities to deserving poor sectors of our
community." DTcASE
In its letter of December 20, 1994, respondent reiterated that the purpose of the
expropriation of petitioner's property is "to provide sports and recreational facilities to its poor
residents."
Subsequently, on February 21, 1995, respondent filed with the trial court a complaint
for expropriation, docketed as SCA No. 873. Respondent prayed that the trial court, after due
notice and hearing, issue an order for the condemnation of the property; that commissioners
be appointed for the purpose of determining the just compensation; and that judgment be
rendered based on the report of the commissioners.
On April 25, 1995, petitioner filed a Motion to Dismiss the complaint on the following
grounds:
I
PLAINTIFF HAS NO CAUSE OF ACTION FOR THE EXERCISE OF THE
POWER OF EMINENT DOMAIN, CONSIDERING THAT:
(A) THERE IS NO GENUINE NECESSITY FOR THE TAKING OF
THE PROPERTY SOUGHT TO BE EXPROPRIATED.
(B) PLAINTIFF HAS ARBITRARILY AND CAPRICIOUSLY
CHOSEN THE PROPERTY SOUGHT TO BE EXPROPRIATED.
(C) EVEN ASSUMING ARGUENDO THAT DEFENDANT’S
PROPERTY MAY BE EXPROPRIATED BY PLAINTIFF, THE FAIR
 31

MARKET VALUE OF THE PROPERTY TO BE EXPROPRIATED FAR

EXCEEDS SEVENTY-EIGHT THOUSAND PESOS (P78,000.00)
II
PLAINTIFF’S COMPLAINT IS DEFECTIVE IN FORM AND SUBSTANCE,
CONSIDERING THAT:
(A) PLAINTIFF FAILS TO ALLEGE WITH CERTAINTY THE
PURPOSE OF THE EXPROPRIATION.
(B) PLAINTIFF HAS FAILED TO COMPLY WITH THE
PREREQUISITES LAID DOWN IN SECTION 34, RULE VI OF THE
RULES AND REGULATIONS IMPLEMENTING THE LOCAL
GOVERNMENT CODE; THUS, THE INSTANT EXPROPRIATION
PROCEEDING IS PREMATURE.
III
THE GRANTING OF THE EXPROPRIATION WOULD VIOLATE SECTION 261
(V) OF THE OMNIBUS ELECTION CODE.
IV
PLAINTIFF CANNOT TAKE POSSESSION OF THE SUBJECT PROPERTY BY
MERELY DEPOSITING AN AMOUNT EQUAL TO FIFTEEN PERCENT (15%)
OF THE VALUE OF THE PROPERTY BASED ON THE CURRENT TAX
DECLARATION OF THE SUBJECT PROPERTY. 4
On May 7, 1996, the trial court issued an Order denying the Motion to Dismiss, 5 on
the ground that there is a genuine necessity to expropriate the property for the sports
and recreational activities of the residents of Pasig. As to the issue of just compensation,
the trial court held that the same is to be determined in accordance with the Revised Rules of
Court.
Petitioner filed a motion for reconsideration but it was denied by the trial court in its
Order of July 31, 1996. Forthwith, it appointed the City Assessor and City Treasurer of Pasig
City as commissioners to ascertain the just compensation. This prompted petitioner to file with
the Court of Appeals a special civil action for certiorari, docketed as CA-G.R. SP No. 41860.
On October 31, 1997, the Appellate Court dismissed the petition for lack of merit. Petitioner's
Motion for Reconsideration was denied in a Resolution dated November 20, 1998.
Hence, this petition anchored on the following grounds:
THE QUESTIONED DECISION DATED 31 OCTOBER 1997 (ATTACHMENT
"A") AND RESOLUTION DATED 20 NOVEMBER 1998 (ATTACHMENT "B")
ARE CONTRARY TO LAW, THE RULES OF COURT AND JURISPRUDENCE
CONSIDERING THAT:
I
A. THERE IS NO EVIDENCE TO PROVE THAT THERE IS GENUINE
NECESSITY FOR THE TAKING OF THE PETITIONER'S
PROPERTY.
B. THERE IS NO EVIDENCE TO PROVE THAT THE PUBLIC USE
REQUIREMENT FOR THE EXERCISE OF THE POWER OF
EMINENT DOMAIN HAS BEEN COMPLIED WITH.
C. THERE IS NO EVIDENCE TO PROVE THAT RESPONDENT CITY
OF PASIG HAS COMPLIED WITH ALL CONDITIONS
PRECEDENT FOR THE EXERCISE OF THE POWER OF
EMINENT DOMAIN.
THE COURT A QUO'S ORDER DATED 07 MAY 1996 AND 31 JULY 1996, WHICH
WERE AFFIRMED BY THE COURT OF APPEALS, EFFECTIVELY AMOUNT TO THE
TAKING OF PETITIONER'S PROPERTY WITHOUT DUE PROCESS OF LAW:
II
 32

THE COURT OF APPEALS GRAVELY ERRED IN APPLYING

OF RULE ON ACTIONABLE DOCUMENTS TO THE DOCUMENTS
ATTACHED TO RESPONDENT CITY OF
PASIG'S COMPLAINT DATED 07 APRIL 1995 TO JUSTIFY THE
COURT A QUO'S DENIAL OF PETITIONER'S RESPONSIVE
PLEADING TO THE COMPLAINT FOR EXPROPRIATION (THE
MOTION TO DISMISS DATED 21 APRIL 1995).
III
THE COURT OF APPEALS GRAVELY ERRED IN APPLYING
THE RULE ON HYPOTHETICAL ADMISSION OF FACTS ALLEGED IN
A COMPLAINT CONSIDERING THAT THE MOTION TO
DISMISS FILED BY PETITIONER IN THE EXPROPRIATION CASE
BELOW WAS THE RESPONSIVE PLEADING REQUIRED TO BE
FILED UNDER THE THEN RULE 67 OF THE RULES OF COURT AND
NOT AN ORDINARY MOTION TO DISMISS UNDER RULE 16 OF
THE RULES OF COURT.
The foregoing arguments may be synthesized into two main issues — one substantive
and one procedural. We will first address the procedural issue.
Petitioner filed her Motion to Dismiss the complaint for expropriation on April 25, 1995.
It was denied by the trial court on May 7, 1996. At that time, the rule on expropriation was
governed by Section 3, Rule 67 of the Revised Rules of Court which provides:
"SEC. 3. Defenses and objections. — Within the time specified in the
summons, each defendant, in lieu of an answer, shall present in a single motion
to dismiss or for other appropriate relief, all his objections and defenses to the
right of the plaintiff to take his property for the use or purpose specified in the
complaint. All such objections and defenses not so presented are waived. A copy
of the motion shall be served on the plaintiff's attorney of record and filed with
the court with proof of service."
The motion to dismiss contemplated in the above Rule clearly constitutes the
responsive pleading which takes the place of an answer to the complaint for expropriation.
Such motion is the pleading that puts in issue the right of the plaintiff to expropriate the
defendant's property for the use specified in the complaint. All that the law requires is that a
copy of the said motion be served on plaintiff's attorney of record. It is the court that at its
convenience will set the case for trial after the filing of the said pleading. 6
The Court of Appeals therefore erred in holding that the motion to dismiss filed by
petitioner hypothetically admitted the truth of the facts alleged in the complaint, "specifically
that there is a genuine necessity to expropriate petitioner's property for public use." Pursuant
to the above Rule, the motion is a responsive pleading joining the issues. What the trial court
should have done was to set the case for the reception of evidence to determine whether
there is indeed a genuine necessity for the taking of the property, instead of summarily making
a finding that the taking is for public use and appointing commissioners to fix just
compensation. This is especially so considering that the purpose of the expropriation was
squarely challenged and put in issue by petitioner in her motion to dismiss.
Significantly, the above Rule allowing a defendant in an expropriation case to file a
motion to dismiss in lieu of an answer was amended by the 1997 Rules of Civil Procedure,
which took effect on July 1, 1997. Section 3, Rule 67 now expressly mandates that any
objection or defense to the taking of the property of a defendant must be set forth in an answer.
The fact that the Court of Appeals rendered its Decision in CA-G.R. SP No. 41860 on
October 31, after the 1997 Rules of Civil Procedure took effect, is of no moment. It is only fair
that the Rule at the time petitioner filed her motion to dismiss should govern. The new
provision cannot be applied retroactively to her prejudice.
We now proceed to address the substantive issue.
In the early case of US v. Toribio, 7 this Court defined the power of eminent domain
as "the right of a government to take and appropriate private property to public use, whenever
the public exigency requires it, which can be done only on condition of providing a reasonable
compensation therefor." It has also been described as the power of the State or its
 33

instrumentalities to take private property for public use and is inseparable from sovereignty
and inherent in government. 8
The power of eminent domain is lodged in the legislative branch of the government. It
delegates the exercise thereof to local government units, other public entities and public utility
corporations, 9 subject only to Constitutional limitations. Local governments have no inherent
power of eminent domain and may exercise it only when expressly authorized by
statute. 10 Section 19 of the Local Government Code of 1991 (Republic Act No. 7160)
prescribes the delegation by Congress of the power of eminent domain to local government
units and lays down the parameters for its exercise, thus:
"SEC. 19. Eminent Domain. — A local government unit may, through its
chief executive and acting pursuant to an ordinance, exercise the power of
eminent domain for public use, purpose or welfare for the benefit of the poor and
the landless, upon payment of just compensation, pursuant to the provisions of
the Constitution and pertinent laws: Provided, however, That, the power of
eminent domain may not be exercised unless a valid and definite offer has been
previously made to the owner and such offer was not accepted: Provided,
further, That, the local government unit may immediately take possession of the
property upon the filing of expropriation proceedings and upon making a deposit
with the proper court of at least fifteen percent (15%) of the fair market value of
the property based on the current tax declaration of the property to be
expropriated: Provided, finally, That, the amount to be paid for expropriated
property shall be determined by the proper court, based on the fair market value
at the time of the taking of the property." CSHcDT
Judicial review of the exercise of eminent domain is limited to the following areas of
concern: (a) the adequacy of the compensation, (b) the necessity of the taking, and (c) the
public use character of the purpose of the taking. 11
In this case, petitioner contends that respondent City of Pasig failed to establish a
genuine necessity which justifies the condemnation of her property. While she does not
dispute the intended public purpose, nonetheless, she insists that there must be a genuine
necessity for the proposed use and purposes. According to petitioner, there is already an
established sports development and recreational activity center at Rainforest Park in Pasig
City, fully operational and being utilized by its residents, including those from Barangay
Caniogan. Respondent does not dispute this. Evidently, there is no "genuine necessity" to
justify the expropriation.
The right to take private property for public purposes necessarily originates from "the
necessity" and the taking must be limited to such necessity. In City of Manila v. Chinese
Community of Manila, 12 we held that the very foundation of the right to exercise eminent
domain is a genuine necessity and that necessity must be of a public character.
Moreover, the ascertainment of the necessity must precede or accompany and not follow, the
taking of the land. In City of Manila v. Arellano Law College, 13 we ruled that "necessity within
the rule that the particular property to be expropriated must be necessary, does not mean an
absolute but only a reasonable or practical necessity, such as would combine the greatest
benefit to the public with the least inconvenience and expense to the condemning party and
the property owner consistent with such benefit."
Applying this standard, we hold that respondent City of Pasig has failed to establish
that there is a genuine necessity to expropriate petitioner's property. Our scrutiny of the
records shows that the Certification 14 issued by the Caniogan Barangay Council dated
November 20, 1994, the basis for the passage of Ordinance No. 42 s. 1993 authorizing the
expropriation, indicates that the intended beneficiary is the Melendres Compound
Homeowners Association, a private, non-profit organization, not the residents of Caniogan. It
can be gleaned that the members of the said Association are desirous of having their own
private playground and recreational facility. Petitioner's lot is the nearest vacant space
available. The purpose is, therefore, not clearly and categorically public. The necessity has
not been shown, especially considering that there exists an alternative facility for sports
development and community recreation in the area, which is the Rainforest Park, available to
all residents of Pasig City, including those of Caniogan.
The right to own and possess property is one of the most cherished rights of men. It is
so fundamental that it has been written into organic law of every nation where the rule of law
prevails. Unless the requisite of genuine necessity for the expropriation of one's property is
 34

clearly established, it shall be the duty of the courts to protect the rights of individuals to their
private property. Important as the power of eminent domain may be, the inviolable sanctity
which the Constitution attaches to the property of the individual requires not only that the
purpose for the taking of private property be specified. The genuine necessity for the taking,
which must be of a public character, must also be shown to exist.
WHEREFORE, the petition for review is GRANTED. The challenged Decision and
Resolution of the Court of Appeals in CA-G.R. SP No. 41860 are REVERSED. The complaint
for expropriation filed before the trial court by respondent City of Pasig, docketed as SCA No.
873, is ordered DISMISSED. cDSAEI
SO ORDERED.
||| (Masikip v. City of Pasig, G.R. No. 136349, [January 23, 2006], 515 PHIL 364-376)

THE CITY OF MANILA, plaintiff-

appellant, vs. CHINESE COMMUNITY OF MANILA ET AL., defendants-
appellees.

City Fiscal Diaz for appellant.

Crossfield & O'Brien, Williams, Ferrier & Sycip, Delgado & Delgado, Filemon
Sotto, and Ramon Salinas for appellees.
SYLLABUS

1. EMINENT DOMAIN; EXPROPRIATION OF PRIVATE PROPERTY,

RIGHT OF COURTS TO INQUIRE INTO NECESSITY OF. — When a municipal corporation
attempts to expropriate private property and an objection is made thereto by the owner, the
courts have ample authority, in this jurisdiction, to make inquiry, and to hear proof upon an-
issue properly presented, concerning the question whether or not the purpose of the
appropriation is, in fact, for some public use. The right of expropriation is not inherent power
in a municipal corporation and before it can exercise the right some law must exist conferring
the power upon it. A municipal corporation in this jurisdiction cannot expropriate public
property. The land to be expropriated must be private, and the purpose of the expropriation
must be public. If the court. upon trial, finds that neither of said condition exists, or that either
one of them fails, the right to expropriate does not exist. If the property is taken in the
ostensible behalf of a public improvement which it can never by any possibility serve, it is
being taken for a use not public, and the owner's constitutional rights call for protection by the
courts.
||| (City of Manila v. Chinese Community of Manila, G.R. No. 14355, [October 31, 1919], 40 PHIL
349-385)
DECISION

JOHNSON, J p:

The important question presented by this appeal is: In expropriation proceedings by

the city of Manila, may the courts inquire into, and hear proof upon, the necessity of the
expropriation?
That question arose in the following manner:
On the 11th day of December, 1916, the city of Manila presented a petition in the
Court of First Instance of said city, praying that certain lands, therein particularly described,
be expropriated for the purpose of constructing a public improvement. The petitioner, in the
second paragraph of the petition, alleged:
"That for the purpose of constructing a public improvement, namely, the
extension of Rizal Avenue, Manila, it is necessary for the plaintiff to acquire
ownership in fee simple of certain parcels of land situated in the
district of Binondo of said city within Block 83 of said district, and within the
jurisdiction of this court."
 35

The defendant, the Comunidad de Chinos de Manila [Chinese Community of Manila],

answering the petition of the plaintiff, alleged that it was a corporation organized and existing
under and by virtue of the laws of the Philippine Islands, having for its purpose the benefit and
general welfare of the Chinese Community of the City of Manila; that it was the
owner of parcels one and two of the land described in paragraph 2 of the complaint; that
it denied that it was either necessary or expedient that the said parcels be expropriated for
street purposes; that existing street and roads furnished ample means of communication for
the public in the district covered by such proposed expropriation; that if the construction of the
street or road should be considered a public necessity, other routes were available, which
would fully satisfy the plaintiff's purposes, at much less expense and without disturbing the
resting places of the dead; that it had a Torrens title for the lands in question; that the lands
in question had been used by the defendant for cemetery purposes; that a great
number of Chinese were buried in said cemetery; that if said expropriation be carried into
effect, it would disturb the resting places of the dead, would require the expenditure of a large
sum of money in the transfer or removal of the bodies to some other place or site and in the
purchase of such new sites, would involve the destruction of existing monuments and the
erection of new monuments in their stead, and would create irreparable loss and injury to the
defendant and to all those persons owning and interested in the graves and monuments which
would have to be destroyed; that the plaintiff was without right or authority to expropriate said
cemetery or any part or portion thereof for street purposes; and that the expropriation, in fact,
was not necessary as a public improvement.
The defendant Ildefonso Tambunting, answering the petition, denied each and every
allegation of the complaint, and alleged that said expropriation was not a public improvement;
that it was not necessary for the plaintiff to acquire the parcels of land in question; that a
portion of the lands in question was used as a cemetery in which were the graves of his
ancestors; that monuments and tomb-stones of great value were found thereon; that the land
had become quasi-public property of a benevolent association, dedicated and used for the
burial of the dead and that many dead were buried there; that if the plaintiff deemed it
necessary to extend Rizal Avenue, he had offered and still offers to grant a right of way for
the said extension over other land, without cost to the plaintiff, in order that the sepulchers,
chapels and graves of his ancestors may not be disturbed; that the land so
ordered, free of charge, would answer every public necessity on the part of the plaintiff.
The defendant Feliza Concepcion de Delgado, with her husband, Jose Maria Delgado,
and each of the other defendants, answering separately, presented substantially the same
defense as that presented by the Comunidad de Chinos de Manila and Ildefonso Tambunting
above referred to.
The foregoing parts of the defense presented by the defendants have been inserted
in order to show the general character of the defenses presented by each of the defendants.
The plaintiff alleged that the expropriation was necessary. The defendants each alleged (a)
that no necessity existed for said expropriation and (b) that the land in question was a
cemetery, which had been used as such for many years, and was covered with sepulchers
and monuments, and that the same should not be converted into a street for public purposes.
Upon the issue thus presented by the petition and the various answers, the Honorable
Simplicio del Rosario, judge, in a very elucidated opinion, with very clear and explicit reasons,
supported by abundance of authorities, decided that there was no necessity for the
expropriation of the particular-strip of land in question, and absolved each and all of the
defendants from all liability under the complaint, without any finding as to costs.
From that judgment the plaintiff appealed and presented the above question as its
principal ground of appeal.
The theory of the plaintiff is, that once it has established the fact, under the law, that it
has authority to expropriate land, it may expropriate any land it may desire; that the only
function of the court in such proceedings is to ascertain the value of the land in question; that
neither the court nor the owners of the land can inquire into the advisable purpose of the
expropriation or ask any questions concerning the necessities therefor; that
the courts are mere appraisers of the land involved in expropriation proceedings, and, when
the value of the land is fixed by the method adopted by the law, to render a judgment in
favor of the defendant for its value.
 36

That the city of Manila has authority to expropriate private lands for public purposes,
is not denied. Section 2429 of Act No. 2711 (Charter of the city of Manila) provides that
"the city (Manila) . . . may condemn private property for public use."
The Charter of the city of Manila contains no procedure by which the said authority
may be carried into effect. We are driven, therefore, to the procedure marked out by Act No.
190 to ascertain how the said authority may be exercised. From an examination of Act No.
190, in its section 241, we find how the right of eminent domain may be exercised. Said
section 241 provides that, "The Government of the Philippine Islands, or of any province or
department thereof, or of any municipality, and any person, or public or private corporation
having, by law, the right to condemn private property for public use, shall exercise that right
in the manner hereinafter prescribed."
Section 242 provides that a complaint in expropriation proceeding shall be presented;
that the complaint shall state with certainty the right of condemnation, with a description of the
property sought to be condemned together with the interest of each defendant separately
Section 243 provides that if the court shall find upon trial that the right to expropriate
the land in question exists, it shall then appoint commissioners.
Sections 244, 245 and 246 provide the method of procedure and duty of the
commissioners. Section 248 provides for an appeal from the judgment of the Court of First
Instance to the Supreme Court. Said section 248 gives the Supreme Court authority to inquire
into the right of expropriation on the part of the plaintiff. If the Supreme Court on appeal shall
determine that no right of expropriation existed, it shall remand the cause to the Court of First
Instance with a mandate that the defendant be replaced in the possession of the property and
that he recover whatever damages he may have sustained by reason of the possession of the
plaintiff.
It is contended on the part of the plaintiff that the phrase in said section, "and if the
court shall find that the right to expropriate exists," means simply that, if the court finds that
there is some law authorizing the plaintiff to expropriate, then the courts have no other function
than to authorize the expropriation and to proceed to ascertain the value of the land involved;
that the necessity for the expropriation is a legislative and not a judicial question.
Upon the question whether expropriation is a legislative function exclusively, and that
the courts cannot intervene except for the purpose of determining the value of the land in
question, there is much legal literature. Much has been written upon both sides of that
question. A careful examination of the discussions pro and con will disclose the fact that the
decisions depend largely upon particular constitutional or statutory provisions. It cannot be
denied, if the legislature under proper authority should grant the
expropriation of a certain or particular parcel of land for some specified public purpose, that
the courts would be without jurisdiction to inquire into the purpose of that legislation.
If, upon the other hand, however, the Legislature should grant general authority to a
municipal corporation to expropriate private land for public purposes, we think the courts have
ample authority in this jurisdiction, under the provisions above quoted, to make inquiry and to
hear proof, upon an issue properly presented, concerning whether or not the lands
were private and whether the purpose was, in fact, public. In other words, have not the courts
in this jurisdiction the right, inasmuch as the questions relating to expropriation must be
referred to them (sec. 241, Act No. 190) for final decision, to ask whether or not the law has
been complied with ? Suppose, in a particular case, it should be denied that the property is
not private property but public, may not the courts hear proof upon that question? Or, suppose
the defense is, that the purpose of the expropriation is not public but private, or that there
exists no public purpose at all, may not the courts make inquiry and hear proof upon that
question?
The city of Manila is given authority to expropriate private lands for public purposes.
Can it be possible that said authority confers the right to determine for itself that the land is
private and that the purpose is public, and that the people of the city of Manila who pay the
taxes for its support, especially those who are directly affected, may not question one or the
other, or both, of these questions? Can it be successfully contended that the phrase used
in Act No. 190, "and if the court upon trial shall find that such right exists," means simply that
the court shall examine the statutes simply for the purpose of ascertaining whether a law
exists authorizing the petitioner to exercise the right of eminent domain ? Or, when the case
arrives in the Supreme Court, can it be possible that the phrase, "if the Supreme Court shall
determine that no right of expropriation exists," that that simply means that the Supreme Court
 37

shall also examine the enactments of the legislature for the purpose of determining whether
or not a law exists permitting the plaintiff to expropriate?
We are of the opinion that the power of the court is not limited to that question. The
right of expropriation is not an inherent power in a municipal corporation, and before it can
exercise the right some law must exist conferring the power upon it. When the courts come to
determine the question, they must not only find (a) that a law or authority exists for the
exercise of the right of eminent domain, but (b) also that the right or authority is being
exercised in accordance with the law. In the present case there are two conditions imposed
upon the authority conceded to the City of Manila: First, the land must be private;
and, second, the purpose must be public. If the court, upon trial, finds that neither of these
conditions exists or that either one of them fails, certainly it cannot be contended that the right
is being exercised in accordance with law
Whether the purpose for the exercise of the right of eminent domain is public, is a
question of fact. Whether the land is public or private is also a question of fact; and, in our
opinion, when the legislature conferred upon the courts of the Philippine Islands the right to
ascertain upon trial whether the right exists for the exercise of eminent domain, it intended
that the courts should inquire into, and hear proof upon, those questions. Is it possible that
the owner of valuable land in this jurisdiction is compelled to stand mute while his land is being
expropriated for a use not public, with the right simply to beg the city of Manila to pay him the
value of his land? Does the law in this jurisdiction permit municipalities to expropriate lands,
without question, simply for the purpose of satisfying the aesthetic sense of those who
happen for the time being to be in authority ? Expropriation of lands usually calls for public
expense. The taxpayers are called upon to pay the costs. Cannot the owners of land question
the public use or the public necessity?
As was said above, there is a wide divergence of opinion upon the authority of the
court to question the necessity or advisability of the exercise of the right of eminent domain.
The divergence is usually found to depend upon particular statutory or constitutional
provisions.
It has been contended — and many cases are cited in support of that contention, and
section 158 of volume 10 of Ruling Case Law is cited as conclusive — that the necessity for
taking property under the right of eminent domain is not a judicial question. But those who
cited said section evidently overlooked the section immediately following (sec. 159), which
adds: "But it is obvious that if the property is taken in the ostensible behalf of a public
improvement which it can never by any possibility serve, it is being taken for a use not
public, and the owner's constitutional rights call for protection by the courts. While many
courts have used sweeping expression in the decisions in which they have disclaimed the
power of supervising the selection of the sites of public improvements, it may be safely said
that the courts of the various states would feel bound to interfere to prevent an abuse of the
discretion delegated by the legislature, by an attempted appropriation of land in utter
disregard of the possible necessity of its use, or when the alleged purpose was a cloak to
some sinister scheme." Norwich City vs. Johnson, 86 Conn., 151; Bell vs. Mattoon
Waterworks, etc. Co., 245 Ill., 544; Wheeling, etc. R. R. Co. vs. Toledo Ry. etc. Co., 72 Ohio
St., 368; State vs. Stewart, 74 Wis., 620.)
Said section 158 (10 R. C. L., 183) which is cited as conclusive authority in
support of the contention of the appellant, says:
"The legislature, in providing for the exercise of the power of eminent
domain, may directly determine the necessity for appropriating private property
for a particular improvement for public use, and it may select the exact
location of the improvement. In such a case, it is well settled that the utility of the
proposed improvement, the extent of the public necessity for its construction, the
expediency of constructing it, the suitableness of the location selected and the
consequent necessity of taking the land selected for its site, are all questions
exclusively for the legislature to determine and the courts have no power to
interfere, or to substitute their own views for those of the representatives of the
people."
Practically every case cited in support of the above doctrine has been examined, and
we are justified in making the statement that in each case the legislature directly determined
the necessity for the exercise of the right of eminent domain in the particular case. It is not
denied that if the necessity for the exercise of the right of eminent domain is presented to the
 38

legislative department of the government and that department decides that there exists a
necessity for the exercise of the right in a particular case, that then and in that case, the courts
will not go behind the action of the legislature and make inquiry concerning the necessity. But
in the case of Wheeling, etc. R. R. Co. vs. Toledo, Ry., etc. Co. (72 Ohio St., 368 [106 Am.
St. Rep., 622, 628] ), which is cited in support of the doctrine laid down in section 158 above
quoted, the court said:
"But when the statute does not designate the property to be taken nor
how much may be taken, then the necessity of taking particular property is a
question for the courts Where the application to condemn or appropriate is made
directly to the court, the question (of necessity) should be raised and decided in
limine."
The legislative department of the government very rarely undertakes to designate the
precise property which should be taken for public use. It has generally, like in the present
case, merely conferred general authority to take land for public use when a necessity exists
therefor. We believe that it can be confidently asserted that, under such statute, the
allegation of the necessity for the appropriation is an issuable allegation which it is competent
for the courts to decide. (Lynch vs. Forbes, 161 Mass., 302 [42 Am. St. Rep., 402, 407].)
There is a wide distinction between a legislative declaration that a municipality is given
authority to exercise the right of eminent domain, and a decision by the municipality that there
exists a necessity for the exercise of that right in a particular case. The first is a declaration
simply that there exist reasons why the right should be conferred upon municipal corporation,
while the second is the application of the right to a particular case. Certainly, the legislative
declaration relating to the advisability of granting the power cannot be converted into a
declaration that a necessity exists for its exercise in a particular case, and especially so when,
perhaps, the land in question was not within the territorial jurisdiction of the municipality at the
time the legislative authority was granted.
Whether it was wise, advisable, or necessary to confer upon a municipality the power
to exercise the right of eminent domain, is a question with which the courts are not concerned.
But when that right or authority is exercised for the purpose of depriving citizens of their
property, the courts are authorized, in this jurisdiction, to make inquiry and to hear proof upon
the necessity in the particular case, and not the general authority.
Volume 15 of the Cyclopedia of Law and Procedure (Cyc.), page 629, is cited as a
further conclusive authority upon the question that the necessity for the exercise of the
right of eminent domain is a legislative and not a judicial question. Cyclopedia, at the page
stated, says:
"In the absence of some constitutional or statutory provision to the
contrary, the necessity and expediency of exercising the right of eminent
domain are questions essentially political and not judicial in their character. The
determination of those questions (the necessity and the expediency) belongs to
the sovereign power; the legislative department is final and conclusive, and the
courts have no power to review it (the necessity and the expediency) . . . . It (the
legislature) may designate the particular property to be condemned, and its
determination in this respect cannot be reviewed by the courts."
The volume of Cyclopedia, above referred to, cites many cases in support of the
doctrine quoted. While time has not permitted an examination of all of said citations,
many of them have been examined, and it can be confidently asserted that said cases which
are cited in support of the assertion that, "the necessity and expediency of exercising the
right of eminent domain are questions essentially political and not judicial," show clearly and
invariably that in each case the legislature itself usually, by a special law, designated
the particular case in which the right of eminent domain might be exercised by the particular
municipal corporation or entity within the state. (Eastern R. Co. vs. Boston, etc., R. Co., 11
Mass., 125 [15 Am. Rep., 13]; Brooklyn Park Com'rs. vs. Armstrong, 45 N. Y., 234 [6 Am.
Rep., 70]; Hairston vs. Danville, etc. Ry. Co., 208 U. S. 598; Cincinnati vs. Louisville, etc. Ry.
Co., 223 U. S. 390; U. S. vs. Chandler-Dunbar Water Power Co., 229 U. S., 53; U. S. vs.
Gettysburg, etc. Co., 160 U. S., 668; Traction Co. vs. Mining Co., 196 U. S., 239;
Sears vs. City of Akron, 246 U. S., 351 [erroneously cited as 242 U. S.].)
In the case of Traction Co. vs. Mining Co. (196 U. S., 239), the Supreme Court of the
United States said: "It is erroneous to suppose that the legislature is beyond the control of the
courts in exercising the power of eminent domain, either as to the nature of the use or the
 39

necessity to the use of any particular property. For if the use be not public or no necessity for
the taking exists, the legislature cannot authorize the taking of private property against the
will of the owner, notwithstanding compensation may be required."
In the case of School Board of Carolina vs. Saldaña (14 Porto Rico, 339, 356), we find
the Supreme Court of Porto Rico, speaking through Justice MacLeary, quoting approvingly
the following, upon the question which we are discussing: "It is well settled that although the
legislature must necessarily determine in the first instance whether the use for which they
(municipalities, etc.) attempt to exercise the power is a public one or not, their (municipalities,
etc.) determination is not final, but is subject to correction by the courts, who may undoubtedly
declare the statute unconstitutional, if it shall clearly appear that the use for which it is
proposed to authorize the taking of private property is in reality not public but private." Many
cases are cited in support of that doctrine.
Later, in the same decision, we find the Supreme Court of Porto Rico says: "At any
rate, the rule is quite well settled that in the cases under consideration the determination of the
necessity of taking a particular piece or a certain amount of land rests ultimately with the
courts." (Spring Valley etc. Co. vs. San Mateo, etc. Co., 64 Cal., 123.) In the
case of Board of Water Com'rs., etc. vs. Johnson (86 Conn., 571 [41 L. R. A., N. S., 1024] ),
the Supreme Court of Connecticut approvingly quoted the following doctrine from Lewis on
Eminent Domain (3d ed.), section 599: "In all such cases the necessity of public utility of the
proposed work or improvement is a judicial question. In all such cases, where the authority is
to take property necessary for the purpose, the necessity of taking particular property for a
particular purpose is a judicial one, upon which the owner is entitled to be heard." Riley vs.
Charleston, etc. Co., 71 S. C., 457, 489 [110 Am. St. Rep., 579]; Henderson vs. Lexington
132 Ky., 390, 403.)
The taking of private property for any use which is not required by the necessities or
convenience of the inhabitants of the state, is an unreasonable exercise of the
right of eminent domain, and beyond the power of the legislature to delegate. (Bennett vs.
Marion, 106 Iowa, 628, 633; Wilson vs. Pittsburg, etc. Co., 222 Pa. St., 541, 545; Greasy, etc.
Co. vs. Ely, etc. Co., 132 Ky., 692, 697.)
In the case of New Central Coal Co. vs. George's, etc. Co. (37 Md., 537, 564), the
Supreme Court of the State of Maryland, discussing the question before us, said: "To justify
the exercise of this extreme power ,(eminent domain) where the legislature has left it to
depend upon the necessity that may be found to exist, in order to accomplish the
purposes of the incorporation, as in this case, the party claiming the right to the exercise of the
power should be required to show at least a reasonable degree of necessity for its exercise.
Any rule less strict than this, with the large and almost indiscriminate delegation of the right to
corporations, would likely lead to oppression and the sacrifice of private right to corporate
power."
In the case of Dewey vs. Chicago, etc. Co. (184 Ill., 426, 433), the court said: "Its right
to condemn property is not a general power of condemnation, but is limited to cases where a
necessity for resort to private property is shown to exist. Such necessity must appear upon
the face of the petition to condemn. If the necessity is denied the burden is upon the company
(municipality) to establish it." (Highland, etc. Co. vs. Strickley, 116 Fed., 852, 856; Kiney vs.
Citizens' Water & Light Co., 173 Ind., 252, 257; Bell vs Mattoon Waterworks, etc. Co., 245 Ill.,
544 [137 Am St. Rep., 388].)
It is true that many decisions may be found asserting that what is a public use is a
legislative question, and many other decisions declaring with equal emphasis that it is a
judicial question. But, as long as there is a constitutional or statutory provision denying the
right to take land for any use other than a public use, it occurs to us that the question whether
any particular use is a public one or not is ultimately, at least, a judicial question. The
legislature may, it is true, in effect declare certain uses to be public, and, under the
operation of the well-known rule that a statute will not be declared to be unconstitutional
except in a case free, or comparatively free, from doubt, the courts will certainly sustain the
action of the legislature, unless it appears that the particular use is clearly not of a public
nature. The decisions must be understood with this limitation; for, certainly, no court of last
resort will be willing to declare that any and every purpose which the legislature might happen
to designate as a public use shall be conclusively held to be so, irrespective of the purpose in
question and of its manifestly private character. Blackstone in his Commentaries on the
English Law remarks that, so great is the regard of the law for private property that it will not
 40

authorize the least violation of it, even for the public good, unless there exists a very great
necessity therefor.
In the case of Wilkinson vs. Leland (2 Fet. [U. S.], 657), the Supreme Court of the
United States said: "That government can scarcely be deemed free where the
rights of property are left solely dependent on the legislative body, without restraint. The
fundamental maxims of free government seem to require that the rights of personal liberty and
private property should be held sacred. At least no court of justice in this country would be
warranted in assuming that the power to violate and disregard them — a power so repugnant
to the common principles of justice and civil liberty — lurked in any general grant of legislative
authority, or ought to be implied from any general expression of the people. The people ought
not to be presumed to part with rights so vital to their security and well-being without very
strong and direct expression of such intention." (Lewis on Eminent Domain, sec. 603;
Lecoul vs. Police Jury, 20 La. Ann., 308; Jefferson vs. Jazem, 7 La. Ann., 182.)
Blackstone, in his Commentaries on the English Law, said that the right to own and
possess land — a place to live separate and apart from others — to retain it as a home for
the family in a way not to be molested by others — is one of the most sacred rights that men
are heirs to. That right has been written into the organic law of every civilized nation. The
Acts of Congress of July 1, 1902, and of August 29, 1916, which provide that "no law shall be
enacted in the Philippine Islands which shall deprive any person of his property without due
process of law," are but a restatement of the time-honored protection of the absolute
right of the individual to his property. Neither did said Acts of Congress add anything to the
law already existing in the Philippine Islands. The Spaniard fully recognized the principle and
adequately protected the inhabitants of the Philippine Islands against the encroachment upon
the private property of the individual. Article 349 of the Civil Code provides that: "No one may
be deprived of his property unless it be by competent authority, for some
purpose of proven public utility, and after payment of the proper compensation. Unless this
requisite (proven public utility and payment) has been complied with, it shall be the duty of the
courts to protect the owner of such property in its possession or to restore its possession to
him, as the case may be."
The exercise of the right of eminent domain, whether directly by the State, or by its
authorized agents, is necessarily in derogation of private rights, and the rule in that case is
that the authority must be strictly construed. No species of property is held by individuals with
greater tenacity, and none is guarded by the constitution and laws more sedulously, than the
right to the freehold of inhabitants. When the legislature interferes with that right, and, for
greater public purposes, appropriates the land of an individual without his consent, the plain
meaning of the law should not be enlarged by doubtly interpretation. (Bensley vs. Mountain
lake Water Co., 13 Cal., 306 and cases cited [73 Am. Dec., 576].)
The statutory power of taking property from the owner without his consent is one of the
most delicate exercise of governmental authority. It is to be watched with jealous scrutiny.
Important as the power may be to the government, the inviolable sanctity which all free
constitutions attach to the right of property of the citizens, constrains the strict
observance of the substantial provisions of the law which are prescribed as modes of the
exercise of the power, and to protect it from abuse. Not only must the authority of municipal
corporations to take property be expressly conferred and the use for which it is taken specified,
but the power, with all constitutional limitation and directions for its exercise, must be strictly
pursued. (Dillon on Municipal Corporations [5th Ed.], sec. 1040, and cases cited;
Tenorio vs. Manila Railroad Co., 22 Phil., 411.)
It can scarcely be contended that a municipality would be permitted to take property
for some public use unless some public necessity existed therefor. The right to take private
property for public use originates in the necessity, and the taking must be limited by such
necessity. The appellant contends that inasmuch as the legislature has given it general
authority to take private property for public use, that the legislature has, therefore, settled the
question of the necessity in every case and that the courts are closed to the owners of the
property upon that question. Can it be imagined, when the legislature adopted section
2429 of Act No. 2711, that it thereby declared that it was necessary to appropriate the
property of Juan de la Cruz, whose property, perhaps, was not within the city limits at the time
the law was adopted ? The legislature, then, not having declared the necessity, can it be
contemplated that it intended that a municipality should be the sole judge of the necessity in
every case, and that the courts, in the face of the provision that "if upon trial they shall find
 41

that a right exists," cannot in that trial inquire into and hear proof upon the necessity for the
appropriation in a particular case ?
The Charter of the city of Manila authorizes the taking of private property
for public use. Suppose the owner of the property denies and successfully proves that the
taking of his property serves no public use: Would the courts not be justified in inquiring into
that question and in finally denying the petition if no public purpose was proved ? Can it be
denied that the courts have a right to inquire into that question? If the courts can ask questions
and decide, upon an issue properly presented, whether the use is public or not, is not that
tantamount to permitting the courts to inquire into the necessity of the appropriation? If there
is no public use, then there is no necessity, and if there is no necessity, it is difficult to
understand how a public use can necessarily exist. If the courts can inquire into the question
whether a public use exists or not, then it seems that it must follow that they can examine into
the question of the necessity.
The very foundation of the right to exercise eminent domain is a genuine necessity,
and that necessity must be of a public character. The ascertainment of the necessity must
precede or accompany, and not follow, the taking of the land. (Morrison vs. Indianapolis, etc.
Ry. Co., 166 Ind., 611; Stearns vs. Barre, 73 Vt., 281; Wheeling, etc. R. R. Co. vs. Toledo,
Ry. etc. Co., 72 Ohio St., 368.)
The general power to exercise the right of eminent domain must not be confused with
the right to exercise it in a particular case. The power of the legislature to confer, upon
municipal corporations and other entities within the State, general authority to exercise the
right of eminent domain cannot be questioned by the courts, but that general
authority of municipalities or entities must not be confused with the right to exercise it in
particular instances. The moment the municipal corporation or entity attempts to exercise the
authority conferred, it must comply with the conditions accompanying the authority. The
necessity for conferring the authority upon a municipal corporation to exercise the
right of eminent domain is admittedly within the power of the legislature. But whether or not
the municipal corporation or entity is exercising the right in a particular case under the
conditions imposed by the general authority, is a question which the courts have the right to
inquire into.
The conflict in the authorities upon the question whether the necessity for the
exercise of the right of eminent domain is purely legislative and not judicial, arises generally
in the wisdom and propriety of the legislature in authorizing the exercise of the
right of eminent domain instead of in the question of the right to exercise it in a particular case.
(Creston Waterworks Co. vs. McGrath, 89 Iowa, 502.)
By the weight of authorities, the courts have the power of restricting the
exercise of eminent domain to the actual reasonable necessities of the case and for the
purposes designated by the law. (Fairchild vs. City of St. Paul. 48 Minn.. 540.)
And, moreover, the record does not show conclusively that the plaintiff has definitely
decided that their exists a necessity for the appropriation of the particular land described in
the complaint. Exhibits 4, 5, 7, and E clearly indicate that the municipal board believed at one
time that other land might be used for the proposed improvement, thereby avoiding the
necessity of disturbing the quiet resting place of the dead.
Aside from insisting that there exists no necessity for the alleged improvement, the
defendants further contend that the street in question should not be opened through the
cemetery. One of the defendants alleges that said cemetery is public property. If that
allegations is true, then, of course, the city of Manila cannot appropriate it for public use.
The city of Manila can only expropriate private property.
It is a well known fact that cemeteries may be public or private. The former is a
cemetery used by the general community, or neighborhood, or church, while the latter is used
only by a family, or a small portion of the community or neighborhood. (11 C. J., 50.)
Where a cemetery is open to the public, it is a public use and no part of the ground
can be taken for other public uses under a general authority. And this immunity extends to the
unimproved and unoccupied parts which are held in good faith for future use. (Lewis on
Eminent Domain, sec. 434, and cases cited.)
The cemetery in question seems to have been established under governmental
authority. The Spanish Governor-General, in an order creating the same, used the following
language:
 42

"The cemetery and general hospital for indigent Chinese having been
founded and maintained by the spontaneous and fraternal contribution of their
protector, merchants and industrials, benefactors of mankind, in
consideration of their services to the Government of the Islands its internal
administration, government and regime must necessarily be adjusted to the taste
and traditional practices of those born and educated in China in order that the
sentiments which animated the founders may be perpetually effectuated."
It is alleged, and not denied, that the cemetery in question may be used by the
general community of Chinese, which fact, in the general acceptation of the definition of a
public cemetery, would make the cemetery in question public property. If that is true,
then, of course, the petition of the plaintiff must be denied, for the reason that
the city of Manila has no authority or right under the law to expropriate public property.
But, whether or not the cemetery is public or private property, its appropriation for the
uses of a public street, especially during the lifetime of those specially interested in its
maintenance as a cemetery, should be a question of great concern, and its appropriation
should not be made for such purposes until it is fully established that the greatest necessity
exists therefor.
While we do not contend that the dead must not give place to the living, and while it is
a matter of public knowledge that in the process of time sepulchers may become the
seat of cities and cemeteries traversed by streets and daily trod by the feet oœ
millions of men, yet, nevertheless such sacrifices and such uses of the places of the dead
should not be made unless and until it is fully established that there exists an eminent
necessity therefor. While cemeteries and sepulchers and the places of the burial of the dead
are still within the memory and command of the active care of the living; while they are still
devoted to pious uses and sacred regard, it is difficult to believe that even the legislature would
adopt a law expressly providing that such places, under such circumstances, should be
violated.
In such an appropriation, what, we may ask, would be the measure of damages at law,
for the wounded sensibilities of the living, in having the graves of kindred and loved ones
blotted out and desecrated by a common highway or street for public travel ? The
impossibility of measuring the damage and inadequacy of a remedy at law is too apparent to
admit of argument. To disturb the mortal remains of those endeared to us in life sometimes
becomes the sad duty of the living; but, except in cases of necessity, or for laudable purposes,
the sanctity of the grave, the last resting place of our friends, should be maintained, and the
preventative aid of the courts should be invoked for that object. (Railroad Company vs.
Cemetery Co., 116 Tenn., 400; Evergreen Cemetery Association vs. The City of New Haven,
43 Conn., 234; Anderson vs. Acheson, 132 Iowa, 744; Beatty vs. Kurtz, 2 Peters, 566.)
In the present case, even granting that a necessity exists for the opening of the street
in question, the record contains no proof of the necessity of opening the same through the
cemetery. The record shows that adjoining and adjacent lands have been offered to
the city free of charge, which will answer every purpose of the plaintiff.
For all of the foregoing, we are fully persuaded that the judgment of the lower court
should be and is hereby affirmed, with costs against the appellant. So ordered.
Arellano, C. J., Torres, Araullo and Avanceña, JJ., concur.
||| (City of Manila v. Chinese Community of Manila, G.R. No. 14355, [October 31, 1919], 40 PHIL
349-385)

G.R. No. L-12792. February 28, 1961.]

REPUBLIC OF THE PHILIPPINES, plaintiff-appellant, vs. LA ORDEN DE PP.
BENEDICTINOS DE FILIPINAS, defendant-appellee.

||| (Republic v. La Orden de PP. Benedictinos de Filipinas, G.R. No. L-12792, [February 28, 1961],
111 PHIL 230-233)
SYLLABUS
 43

1. EMINENT DOMAIN; EXERCISE OF POWER BY THE STATE; POWER OF

COURTS TO INQUIRE INTO LEGALITY OF EXERCISE. — Private property may be
expropriated for public use and upon payment of just compensation and condemnation of
private property is justified only if it is for the public good and there is 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., 37 349; Manila Railroad Company vs. Hacienda
Benito, Inc., 37 Off. Gaz. 1957).
DECISION

DIZON, J p:

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 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. 30-37) while appellee filed a reply thereto (Id. pp. 38-48). On July 29, 1957, without
receiving evidence upon the questions of facts 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 ordered 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
 44

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 upon 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.
||| (Republic v. La Orden de PP. Benedictinos de Filipinas, G.R. No. L-12792, [February 28, 1961],
111 PHIL 230-233)

G.R. No. L-18841. January 27, 1969.]

REPUBLIC OF THE PHILIPPINES, plaintiff-appellant, vs. PHILIPPINE LONG
DISTANCE TELEPHONE COMPANY, defendant-appellant.

Solicitor General Arturo A. Alafriz, Assistant Solicitor General Antonio A.

Torres and Solicitor Camilo D. Quiason for plaintiff- appellant.
Ponce Enrile, Siguion Reyna, Montecillo & Belo for defendant-appellant.
SYLLABUS

1. CONSTITUTIONAL LAW; EMINENT DOMAIN; EXPROPRIATION OF PUBLIC

SERVICE UTILITIES; PAYMENT OF JUST COMPENSATION LIKE EXPROPRIATION OF
REAL PROPERTY. — Where the Republic may not compel the PLDT to celebrate a contract
with it, the Republic may, in the exercise of the sovereign power of eminent domain, require
the telephone company to permit interconnection of the government telephone system and
that of the PLDT, as the needs of the government service may require, subject to the payment
of just compensation to be determined by the court. Normally, of course, the power of eminent
domain results in the taking or appropriation of title to, and possession of, the expropriated
property; but no cogent reason appears why the said power may not be availed of to impose
only a burden upon the owner of condemned property, without loss of title and possession. It
is unquestionable that the real property may, through expropriation, be subjected to an
easement of right of way. The use of the PLDT's lines and services to allow interservice
connection between both telephone systems is not much different. In either case private
property is subjected to a burden for public use and benefit. If, under Section 6, Article XIII, of
the Constitution, the State may, in the interest of national welfare, transfer utilities to public
ownership upon payment of just compensation, there is no reason why the State may not
require a public utility to render services in the general interest, provided just compensation is
paid therefor.
 45

||| (Republic v. Philippine Long Distance Telephone Co., G.R. No. L-18841, [January 27, 1969],
136 PHIL 20-36)
DECISION

REYES, J.B.L., J p:

Direct appeals, upon a joint record on appeal, by both the plaintiff and the defendant
from the dismissal, after hearing, by the Court of First Instance of Manila, in its Civil Case No.
35805, of their respective complaint and counterclaims, but making permanent a preliminary
mandatory injunction therefore issued against the defendant on the inter-connection of
telephone facilities owned and operated by said parties.
The plaintiff, Republic of the Philippines, is a political entity exercising governmental
powers through its branches and instrumentalities, one of which is the Bureau of
Telecommunications. That office was created on 1 July 1947, under Executive Order No. 94,
with the following powers and duties, in addition to certain powers and duties formerly vested
in the Director of Posts:
"SEC. 79. The Bureau of Telecommunications shall exercise the
following powers and duties:
"(a) To operate and maintain existing wire-telegraph and radio-
telegraph offices, stations, and facilities, and those to be established to
restore the pre-war telecommunication service under the Bureau of
Posts, as well as such additional offices or stations as may hereafter be
established to provide telecommunication service in places requiring
such service;
"(b) To investigate, consolidate, negotiate for, operate and
maintain wire-telephone or radio telephone communication service
throughout the Philippines by utilizing such existing facilities in cities,
towns, and provinces as may be found feasible and under such terms
and conditions or arrangements with the present owners or operators
thereof as may be agreed upon to the satisfaction of all concerned;
"(c) To prescribe, subject to approval by the Department Head,
equitable rates of charges for messages handled by the system and/or
for timecalls and other services that may be rendered by said system;
"(d) To establish and maintain coastal stations to serve ships at
sea or aircrafts and, when public interest so requires, to engage in the
international telecommunication service in agreement with other
countries desiring to establish such service with the Republic of the
Philippines; and
"(e) To abide by all existing rules and regulations prescribed by
the International Telecommunication Convention relative to the
accounting, disposition and exchange of messages handled in the
international service, and those that may hereafter be promulgated by
said convention and adhered to by the Government of the Republic of the
Philippines." 1
The defendant, Philippine Long Distance Telephone Company (PLDT for short), is a public
service corporation holding a legislative franchise, Act 3426, as amended by Commonwealth
Act 407, to install, operate and maintain a telephone system throughout the Philippines and
to carry on the business of electrical transmission of messages within the Philippines and
between the Philippines and the telephone systems of other countries. 2 The RCA
Communications, Inc., (which is not a party to the present case, but has contractual relations
with the parties) is an American corporation authorized to transact business in the Philippines
and is the grantee, by assignment, of a legislative franchise to operate a domestic station for
the reception and transmission of long distance wireless messages (Act 2178) and to operate
broadcasting and radio-telephone and radio-telegraphic communications services (Act
3180) 3
 46

Sometime in 1933, the defendant, PLDT, and the RCA Communications, Inc., entered
into an agreement whereby telephone messages, coming from the United States and received
by RCA's domestic station, could automatically be transferred to the lines of PLDT; and vice-
versa, for calls collected by the PLDT for transmission from the Philippines to the United
States. The contracting parties agreed to divide the tolls, as follows: 25% to PLDT and 75%
to RCA. The sharing was amended in 1941 to 30% for PLDT and 70% for RCA, and again
amended in 1947 to a 50-50 basis. The arrangement was later extended to radio-telephone
messages to and from European and Asiatic countries. Their contract contained a stipulation
that either party could terminate it on a 24-month notice to the other. 4 On 2 February 1956,
PLDT gave notice to RCA to terminate their contract on 2 February 1956. 5
Soon after its creation in 1947, the Bureau of Telecommunications set up its own
Government Telephone System by utilizing its own appropriation and equipment and by
renting trunk lines of the PLDT to enable government offices to call private parties. 6 Its
application for the use of these trunk lines was in the usual form of applications for telephone
service, containing a statement, above the signature of the applicant, that the latter will abide
by the rules and regulations of the PLDT which are on file with the Public Service
Commission. 7 One of the many rules prohibits the public use of the service furnished the
telephone subscriber for his private use. 8 The Bureau has extended its services to the
general public since 1948, 9 using the same trunk lines owned by, and rented from, the PLDT,
and prescribing its (the Bureau's) own schedule of rates. 10 Through these trunk lines, a
Government Telephone System (GTS) subscriber could make a call to a PLDT subscriber in
the same way that the latter could make a call to the former.
On 5 March 1958, the plaintiff, through the Director of Telecommunications, entered
into an agreement with RCA Communications, Inc., for a joint overseas telephone service
whereby the Bureau would convey radio-telephone overseas calls received by RCA's station
to and from local residents. 11 Actually, they inaugurated this joint operation on 2 February
1958, under a "provisional" agreement. 12
On 7 April 1958, the defendant, Philippine Long Distance Telephone Company,
complained to the Bureau of Telecommunications that said bureau was violating the
conditions under which their Private Branch Exchange (PBX) is interconnected with the
PLDT's facilities, referring to the rented trunk lines, for the Bureau had used the trunk lines
not only for the use of government offices but even to serve private persons or the general
public, in competition with the business of the PLDT; and gave notice that if said violations
were not stopped by midnight of 12 April 1958, the PLDT would sever the telephone
connections. 13 When the PLDT received no reply, it disconnected the trunk lines being
rented by the Bureau at midnight on 12 April 1958. 14 The result was the isolation of the
Philippines, on telephone services, from the rest of the world, except the United States. 15
At that time, the Bureau was maintaining 5,000 telephones and had 5,000 pending
applications for telephone connection. 16 The PLDT was also maintaining 60,000 telephones
and had also 20,000 pending applications. 17 Through the years, neither of them has been
able to fill up the demand for telephone service.
The Bureau of Telecommunications had proposed to the PLDT on 8 January 1958 that
both enter into an interconnecting agreement, with the government paying (on a call basis) for
all calls passing through the interconnecting facilities from the Government Telephone System
to the PLDT. 18 The PLDT replied that it was willing to enter into an agreement on overseas
telephone service to Europe and Asian countries provided that the Bureau would submit to
the jurisdiction and regulations of the Public Service Commission and in consideration of 37
1/2% of the gross revenues. 19 In its memorandum in lieu of oral argument in this Court dated
9 February 1964, on page 8, the defendant reduced its offer to 33 1/3% (1/3) as its share in
the overseas telephone service. The proposals were not accepted by either party.
On 12 April 1958, plaintiff Republic commenced suit against the defendant, Philippine
Long Distance Telephone Company, in the Court of First Instance of Manila (Civil Case No.
35805), praying in its complaint for judgment commanding the PLDT to execute a contract
with plaintiff, through the Bureau, for the use of the facilities of defendant's telephone system
throughout the Philippines under such terms and conditions as the court might consider
reasonable, and for a writ of preliminary injunction against the defendant company to restrain
the severance of the existing telephone connections and/or restore those severed.
 47

Acting on the application of the plaintiff, and on the ground that the severance of
telephone connections by the defendant company would isolate the Philippines from other
countries, the court a quo, on 14 April 1958, issued an order for the defendant:
"(1) to forthwith reconnect and restore the seventy-eight (78) trunk lines
that it has disconnected between the facilities of the Government Telephone
System, including its overseas telephone services, and the facilities of
defendant; (2) to refrain from carrying into effect its threat to sever the existing
telephone communication between the Bureau of Telecommunications and
defendant, and not to make connection over its telephone system of telephone
calls coming to the Philippines from foreign countries through the said Bureau's
telephone facilities and the radio facilities Of RCA Communications, Inc.; and (3)
to accept and connect through its telephone system all such telephone calls
coming to the Philippines from foreign countries — until further order of this
Court."
On 28 April 1958, the defendant company filed its answer, with counterclaims.
It denied any obligation on its part to execute a contract of services with the Bureau of
Telecommunications; contested the jurisdiction of the Court of First Instance to compel it to
enter into interconnecting agreements, and averred that it was justified to disconnect the trunk
lines heretofore leased to the Bureau of Telecommunications under the existing agreement
because its facilities were being used in fraud of its rights. The PLDT further claimed that the
Bureau was engaging in commercial telephone operations in excess of authority, in
competition with, and to the prejudice of, the PLDT, using defendant's own telephone poles,
without proper accounting of revenues.
After trial, the lower court rendered judgment that it could not compel the PLDT to enter
into an agreement with the Bureau because the parties were not in agreement; that under
Executive Order 94, establishing the Bureau of Telecommunications, said Bureau was not
limited to servicing government offices alone, nor was there any in the contract of lease of the
trunk lines, since the PLDT knew, or ought to have known, at the time that their use by the
Bureau was to be public throughout the Islands, hence the Bureau was neither guilty of fraud,
abuse, or misuse of the poles of the PLDT; and, in view of serious public prejudice that would
result from the disconnection of the trunk lines, declared the preliminary injunction permanent,
although it dismissed both the complaint and the counterclaims.
Both parties appealed.
Taking up first the appeal of the Republic, the latter complains of the action of the trial
court in dismissing the part of its complaint seeking to compel the defendant to enter into an
interconnecting contract with it, because the parties could not agree on the terms and
conditions of the interconnection, and of its refusal to fix the terms and conditions therefor.
We agree with the court below that parties can not be coerced to enter into a contract
where no agreement is had between them as to the principal terms and conditions of the
contract. Freedom to stipulate such terms and conditions is of the essence of our contractual
system, and by express provision of the statute, a contract may be annulled if tainted by
violence, intimidation or undue influence (Articles 1306, 1336, 1337, Civil Code of the
Philippines). But the court a quo has apparently overlooked that while the Republic may not
compel the PLDT to celebrate a contract with it, the Republic may, in the exercise of the
sovereign power of eminent domain, require the telephone company to permit interconnection
of the government telephone system and that of the PLDT, as the needs of the government
service may require, subject to the payment of just compensation to be determined by the
court. Normally, of course, the power of eminent domain results in the taking or appropriation
of title to, and possession of, the expropriated property; but no cogent reason appears why
the said power may not be availed of to impose only a burden upon the owner of condemned
property, without loss of title and possession. It is unquestionable that real property may,
through expropriation, be subjected to an easement of right of way. The use of the PLDT's
lines and services to allow interservice connection between both telephone systems is not
much different. In either case private property is subjected to a burden for public use and
benefit. If under Section 6, Article XIII, of the Constitution, the State may, in the interest of
national welfare, transfer utilities to public ownership upon payment of just compensation,
there is no reason why the State may not require a public utility to render services in the
general interest, provided just compensation is paid therefor. Ultimately, the beneficiary of the
 48

interconnecting service would be the users of both telephone systems, so that the
condemnation would be for public use.
The Bureau of Telecommunications, under Section 78(b) of Executive Order No. 94,
may operate and maintain wire telephone or radio telephone communications throughout the
Philippines by utilizing existing facilities in cities, towns, and provinces under such terms and
conditions or arrangement with present owners or operators as may be agreed upon to the
satisfaction of all concerned; but there is nothing in this Section that would exclude resort to
condemnation proceedings where unreasonable or unjust terms and conditions are exacted,
to the extent of crippling or seriously hampering the operations of said Bureau.
A perusal of the complaint shows that the Republic's cause of action is predicated
upon the radio telephonic isolation of the Bureau's facilities from the outside world if the
severance of interconnection were to be carried out by the PLDT, thereby preventing the
Bureau of Telecommunications from properly discharging its functions, to the prejudice of the
general public. Save for the prayer to compel the PLDT to enter into a contract (and the prayer
is no essential part of the pleading), the averments make out a case for compulsory rendering
of inter-connecting services by the telephone company upon such terms and conditions as
the court may determine to be just. And since the lower court found that both parties "are
practically at one that defendant (PLDT) is entitled to reasonable compensation from plaintiff
for the reasonable use of the former's telephone facilities" (Decision, Record on Appeal, page
224), the lower court should have proceeded to treat the case as one of condemnation of such
services independently of contract and proceeded to determine the just and reasonable
compensation for the same, instead of dismissing the petition.
This view we have taken of the true nature of the Republic's petition necessarily results
in overruling the plea of defendant- appellant PLDT that the court of first instance had no
jurisdiction to entertain the petition and that the proper forum for the action was the Public
Service Commission. That body, under the law, has no authority to pass upon actions for the
taking of private property under the sovereign right of eminent domain. Furthermore, while the
defendant telephone company is a public utility corporation whose franchise, equipment and
other properties are under the jurisdiction, supervision and control of the Public Service
Commission (Sec. 13, Public Service Act), yet the plaintiff's telecommunications network is a
public service owned by the Republic and operated by an instrumentality of the National
Government, hence exempt, under Section 14 of the Public Service Act, from such jurisdiction,
supervision and control. The Bureau of Telecommunications was created in pursuance of a
state policy reorganizing the government offices —
"to meet the exigencies attendant upon the establishment of the free and
independent Government of the Republic of the Philippines, and for the purpose
of promoting simplicity, economy and efficiency in its operation" (Section
1, Republic Act No. 51)
and the determination of state policy is not vested in the Commission (Utilities Com. vs.
Bartonville Bus Line, 290 Ill. 574; 124 N.E. 373)
Defendant PLDT, as appellant, contends that the court below was in error in not
holding that the Bureau of Telecommunications was not empowered to engage in commercial
telephone business, and in ruling that said defendant was not justified in disconnecting the
telephone trunk lines it had previously leased to the Bureau. We find that the court a quo ruled
correctly in rejecting both assertions.
Executive Order No. 94, Series of 1947, reorganizing the Bureau of
Telecommunications, expressly empowered the latter in its Section 79, subsection (b), to
"negotiate for, operate and maintain wire telephone or radio telephone communication service
throughout the Philippines," and, in subsection (c), "to prescribe subject to approval by the
Department Head, equitable rates of charges for messages handled by the system and/or for
time calls and other services that may be rendered by the system." Nothing in these provisions
limits the Bureau to non-commercial activities or prevents it from serving the general public. It
may be that in its original prospectuses the Bureau officials had stated that the service would
be limited to government offices: but such limitations could not block future expansion of the
system, as authorized by the terms of the Executive Order, nor could the officials of the Bureau
bind the Government not to engage in services that are authorized by law. It is a well-known
rule that erroneous application and enforcement of the law by public officers do not block
subsequent correct application of the statute (PLDT vs. Collector of Internal Revenue, 90 Phil.
676), and that the Government is never estopped by mistake or error on the part of its agents
 49

(Pineda vs. Court of First Instance of Tayabas, 52 Phil. 803, 807; Benguet Consolidated
Mining Co. vs. Pineda, 98 Phil. 711, 724)
The theses that the Bureau's commercial services constituted unfair competition, and
that the Bureau was guilty of fraud and abuse under its contract, are, likewise, untenable.
First, the competition is merely hypothetical, the demand for telephone service being
very much more than the supposed competitors can supply. As previously noted, the PLDT
had 20,000 pending applications at the time, and the Bureau had another 5,000. The
telephone company's inability to meet the demands for service are notorious even now.
Second, the charter of the defendant expressly provides:
"Sec. 14. The rights herein granted shall not be exclusive, and the rights
and power to grant to any corporation, association or person other than the
grantee franchise for the telephone or electrical transmission of messages or
signals shall not be impaired or affected by the granting of this franchise: —" (Act
3436)
And third, as the trial court correctly stated, "when the Bureau of Telecommunications
subscribed to the trunk lines, defendant knew or should have known that their use by the
subscriber was more or less public and all embracing in nature, that is, throughout the
Philippines, if not abroad" (Decision, Record on Appeal, page 216)
The acceptance by the defendant of the payment of rentals, despite its knowledge that
the plaintiff had extended the use of the trunk lines to commercial purposes, continuously
since 1948, implies assent by the defendant to such extended use. Since this relationship has
been maintained for a long time and the public has patronized both telephone systems, and
their interconnection is to the public convenience, it is too late for the defendant to claim
misuse of its facilities, and it is not now at liberty to unilaterally sever the physical connection
of the trunk lines.
". . ., but there is high authority for the position that, when such physical
connection has been voluntarily made, under a fair and workable arrangement
and guaranteed by contract and the continuous line has come to be patronized
and established as a great public convenience, such connection shall not in
breach of the agreement be severed by one of the parties. In that case, the public
is held to have such an interest in the arrangement that its rights must receive
due consideration. This position finds approval in State ex rel. vs. Cadwaller, 172
Ind. 619, 636, 87 N.E. 650, and is stated in the elaborate and learned opinion of
Chief Justice Myers as follows: `Such physical connection cannot be required as
of right, but if such connection is voluntarily made by contract, as is here alleged
to be the case, so that the public acquires an interest in its continuance, the act
of the parties in making such connection is equivalent to a declaration of a
purpose to waive the primary right of independence, and it imposes upon the
property such a public status that it may not be disregarded' — citing Mohan v.
Mich. Tel. Co., 132 Mich, 242, 93 N.W. 629, and the reasons upon which it is in
part made to rest are referred to in the same opinion, as follows: `Where private
property is by the consent of the owner invested with a public interest or privilege
for the benefit of the public, the owner can no longer deal with it as private
property only, but must hold it subject to the rights of the public in the exercise
of that public interest or privilege conferred for their benefit.' Allnut v. Inglis (1810)
12 East, 527. The doctrine of this early case is the acknowledged law." (Clinton-
Dunn Tel. Co. v. Carolina Tel. & Tel. Co., 74 S.E. 636, 638)
It is clear that the main reason for the objection of the PLDT lies in the fact that said
appellant did not expect that the Bureau's telephone system would expand with such rapidity
as it has done; but this expansion is no ground for the discontinuance of the service agreed
upon.
The last issue urged by the PLDT as appellant is its right to compensation for the use
of its poles for bearing telephone wires of the Bureau of Telecommunications. Admitting that
Section 19 of the PLDT charter reserves to the Government —
"the privilege without compensation of using the poles of the grantee to
attach one ten-pin cross-arm, and to install, maintain and operate wires of its
telegraph system thereon: Provided, however, That the Bureau of Posts shall
have the right to place additional cross-arms and wires on the poles of the
 50

grantee by paying a compensation, the rate of which is to be agreed upon by the

Director of Posts and the grantee; —"
the defendant counterclaimed for P8,772.00 for the use of its poles by the plaintiff, contending
that what was allowed free use, under the aforequoted provision, was one ten-pin cross-arm
attachment and only for plaintiff's telegraph system, not for its telephone system; that said
Section could not refer to the plaintiff's telephone system, because it did not have such
telephone system when defendant acquired its franchise. The implication of the argument is
that plaintiff has to pay for the use of defendant's poles if such use is for plaintiff's telephone
system and has to pay also if it attaches more than one (1) ten-pin cross-arm for telegraphic
purposes.
As there is no proof that the telephone wires strain the poles of the PLDT more than
the telegraph wires, nor that they cause more damage than the wires of the telegraph system,
or that the Government has attached to the poles more than one ten-pin in cross-arm as
permitted by the PLDT charter, we see no point in this assignment of error. So long as the
burden to be borne by the PLDT poles is not increased, we see no reason why the reservation
in favor of the telegraph wires of the government should not be extended to its telephone line,
any time that the government decided to engage also in this kind of communication.
In the ultimate analysis, the true objection of the PLDT to continue the link between its
network and that of the Government is that the latter competes "politically" (sic) with its own
telephone services. Considering, however, that the PLDT franchise is non- exclusive; that it
is well-known that defendant PLDT is unable to adequately cope with the current demands for
telephone service, as shown by the number of pending applications therefor; and that the
PLDT's right to just compensation for the services rendered to the Government telephone
system and its users is herein recognized and preserved, the objections of defendant-
appellant are without merit. To uphold the PLDT's contention is to subordinate the needs of
the general public to the right of the PLDT to derive profit from the future expansion of its
services under its non-exclusive franchise.
WHEREFORE, the decision of the Court of First Instance, now under appeal, is
affirmed, except in so far as it dismisses the petition of the Republic of the Philippines to
compel the Philippine Long Distance Telephone Company to continue servicing the
Government telephone system upon such terms, and for a compensation, that the trial court
may determine to be just, including the period elapsed from the filing of the original complaint
or petition. And for this purpose, the records are ordered returned to the court of origin for
further hearings and other proceedings not inconsistent with this opinion. No costs.
Concepcion, C.J., Dizon, Makalintal, Zaldivar, Sanchez, Ruiz Castro, Fernando,
Capistrano, Teehankee and Barredo, JJ., concur.
||| (Republic v. Philippine Long Distance Telephone Co., G.R. No. L-18841, [January 27, 1969],
136 PHIL 20-36)

HIRD DIVISION

[G.R. No. 155065. July 28, 2005.]

NATIONAL POWER CORPORATION, petitioner, vs. HON. SYLVA G.
AGUIRRE PADERANGA

||| (National Power Corp. v. Aguirre-Paderanga, G.R. No. 155065, [July 28, 2005], 502 PHIL 722-
736)
2.ID.; ID.; SPECIAL CIVIL ACTIONS; EXPROPRIATION; A COMPLAINT FOR
EXPROPRIATION ALLOWS A MULTIPLE APPEAL IN WHICH A RECORD ON APPEAL IS
REQUIRED TO BE FILED. — Jurisprudential law, no doubt, recognizes the existence of multiple
appeals in a complaint for expropriation. The case of Municipality of Biñan v. Garcia vividly
expounds on the matter, viz.: "1. There are two (2) stages in every action of expropriation. The
first is concerned with the determination of the authority of the plaintiff to exercise the power of
eminent domain and the propriety of its exercise in the context of the facts involved in the suit. 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
 51

date of the filing of the complaint." An order of dismissal, if this be ordained, would be a final one,
of course, since it finally disposes of the action and leaves nothing more to be done by the Court
on the merits. So, too, would an order of condemnation be a final one, for thereafter, as the Rules
expressly state, in the proceedings before the Trial Court, "no objection to the exercise of the right
of condemnation (or the propriety thereof) shall be filed or heard. The second phase of the
eminent domain action is concerned with the determination by the Court of "the just compensation
for the property sought to be taken." This is done by the Court with the assistance of not more
than three (3) commissioners. The order fixing the just compensation on the basis of the evidence
before, and findings of, the commissioners would be final, too. It would finally dispose of the
second stage of the suit, and leave nothing more to be done by the Court regarding the issue.
Obviously, one or another of the parties may believe the order to be erroneous in its appreciation
of the evidence or findings of fact or otherwise. Obviously, too, such a dissatisfied party may seek
reversal of the order by taking an appeal therefrom." Thus, in Municipality of Biñan, this Court
held that in actions for eminent domain, since no less than two appeals are allowed by law, the
period for appeal from an order of condemnation is thirty days counted from notice thereof and
not the ordinary period of fifteen days prescribed for actions in general. As such, the complaint
falls under the classification of "other cases of multiple or separate appeal where the law or these
rules so require" in above-quoted Section 2 (a) of Rule 41 of the Rules of Civil Procedure in which
a record on appeal is required to be filed and served.
3.ID.; ID.; ID.; ID.; INCLUDES A RIGHT-OF-WAY EASEMENT RESULTING IN A
RESTRICTION OR LIMITATION ON PROPERTY RIGHTS; CASE AT BAR. — [E]xpropriation is
not limited to the acquisition of real property with a corresponding transfer of title or possession.
The right-of-way easement resulting in a restriction or limitation on property rights over the land
traversed by transmission lines, as in the present case, also falls within the ambit of the term
"expropriation." . . . [I]t cannot be gainsaid that NPC's complaint merely involves a simple case of
mere passage of transmission lines over Dilao et al.'s property. Aside from the actual damage
done to the property traversed by the transmission lines, the agricultural and economic activity
normally undertaken on the entire property is unquestionably restricted and perpetually hampered
as the environment is made dangerous to the occupant's life and limb.
DECISION

CARPIO MORALES, J p:

The Court of Appeals Decision 1 dated June 6, 2002, as well as its Resolution 2 dated
August 30, 2002, affirming the decision 3 of the Regional Trial Court of Danao City, Branch 25
which granted the complaint for expropriation filed by herein petitioner National Power
Corporation (NPC) against herein respondents "Petrona Dilao et al." are being assailed in the
present Petition for Review on Certiorari.
To implement its Leyte-Cebu Interconnection Project, the NPC filed on March 19, 1996
before the Regional Trial Court of Danao City a complaint for expropriation 4 of parcels of land
situated at Baring and Cantumog, Carmen, Cebu 5 against the following defendants:
NAMES ADDRESS

1. Petrona O. 6 Dilao Poblacion, Carmen, Cebu

2. Fidel T. Osmeña -do-
3. Isabel T. Osmeña -do-
4. Celestina O. Galon -do-
5. Potenciana O. Batucan -do-
6. Trinidad T. Osmeña -do-
7. Lulia T. Osmeña -do-
8. Lourdes O. Daffon -do-
9. Victoria O. Barriga -do-
10. Juan T. Osmeña, Jr. -do-
11. Estefania Enriquez Marijoy Realty Corp.
Natalio Bacalso Ave.
 52

Mambaling, Cebu City 7

(Underscoring supplied)
The complaint covers (a) 7,281 square meters of the 25,758 square meters of land co-
owned by herein respondents Petrona O. Dilao (Dilao) and the above-listed defendant Nos. 2-10
who are her siblings, and (b) 7,879 square meters of the 17,019 square meters of land owned by
Estefania Enriquez (Enriquez). 8
A day after the complaint was filed or on March 20, 1996, NPC filed an urgent ex
parte motion for the issuance of writ of possession of the lands.
Dilao filed her Answer with Counterclaim on April 19, 1996. 9 Enriquez did not. 10
On May 9, 1996, Branch 25 of the RTC Danao, issued an Order 11 granting NPC's motion
for the issuance of writ of possession. It then appointed a Board of Commissioners to determine
just compensation. 12
The commissioners submitted on April 15, 1999 their report 13 to the trial court containing,
among other things, their recommended appraisal of the parcel of land co-owned by defendants
Dilao and her siblings at P516.66 per square meter.
To the Commissioners' Report, the NPC filed its Comment/Opposition 14 assailing the
correctness of the appraisal for failing to take into account Republic Act (R.A.) No. 6395 (AN ACT
REVISING THE CHARTER OF THE NATIONAL POWER CORPORATION), as amended,
specifically Section 3A 15 thereof which provides that the just compensation for right-of-way
easement (for which that portion of the Dilao property is being expropriated) shall be equivalent
to ten percent (10%) of the market value of the property. The traversed land, NPC asserted, could
still be used for agricultural purposes by the defendants, subject only to its easement. It added
that the lots were of no use to its operations except for its transmission lines. 16
By Decision of November 10, 1999, the trial court rendered a decision on the complaint,
adopting the commissioners' recommended appraisal of the land co-owned by Dilao and her
siblings. The dispositive portion of the decision reads:
WHEREFORE, judgment is hereby rendered condemning the property
of Petrona Dilao et al. which has been affected by 7,281 square meters in
favor of plaintiff; declaring in favor of defendants for plaintiff to pay the fair market
value of said area affected at P516.66 per square or a total of P3,761,801.40
plus P250,000.00 for the value of the improvements affected by herein
expropriation.
SO ORDERED. 17 (Emphasis and underscoring supplied).
Copy of the decision was received by NPC on November 18, 1999. 18
NPC filed a Notice of Appeal 19 but the trial court, by Order of January 17, 2000, denied
the same for NPC's failure to file and perfect it within the reglementary period, it having failed to
file a record on appeal. 20 To the Order, NPC filed a motion for reconsideration, 21 contending
that a record on appeal was not required as the trial court rendered judgment against all the
defendants including Enriquez as shown, so it claimed, by the dispositive portion of the decision
referring to "Petrona Dilao et al."
By Resolution 22 of March 7, 2000, the trial court denied NPC's motion for
reconsideration, clarifying that the reference to "Petrona Dilao et al." in the dispositive portion of
its decision was meant to cover only Dilao and her co-owner-siblings. 23
NPC subsequently filed before the trial court a petition for relief from the denial of its appeal
on the ground that its failure to file a record on appeal was due to honest mistake and excusable
neglect, it having believed that a record on appeal was not required in light of the failure of the
other defendant, Enriquez, to file an answer to the complaint. 24
The trial court denied NPC's petition for relief for lack of factual and legal basis. 25
On August 17, 2001, the trial court granted Dilao et al.'s motion for execution of
judgment. 26 NPC thereupon filed a petition for certiorari with the Court of Appeals with prayer
for temporary restraining order and a writ of preliminary injunction 27 assailing the trial court's
order denying its appeal and other orders related thereto, as well as the order granting Dilao et
al.'s motion for execution. The appellate court, however, denied NPC's petition, 28 it holding that
 53

under Rule 41, Section 2 of the 1997 Rules of Civil Procedure, the filing of a record on appeal is
required in special proceedings and other cases of multiple or separate appeals, as in an action
for expropriation in which the order determining the right of the plaintiff to expropriate and the
subsequent adjudication on the issue of just compensation may be the subject of separate
appeals 29
Aggrieved, NPC challenged the appellate court's decision via the present petition, 30 it
contending that the trial court's questioned orders "effectively deprived it of its constitutional right
to due process."
NPC argues that a complaint for expropriation is a Special Civil Action under Rule 67 of
the Rules of Civil Procedure, not a "special proceeding" as contemplated under Rule 41, Section
2 of the Rules of Civil Procedure; that there is no law or rules specifically requiring that a record
on appeal shall be filed in expropriation cases; and of the two sets of defendants in the present
case, the Dilaos and Enriquez, the first, while they filed an answer, did not appeal the trial court's
decision, while with respect to the second, there is no showing that summons was served upon
her, hence, the trial court did not acquire jurisdiction over her and, therefore, no appeal could
arise whatsoever with respect to the complaint against her. Ergo, petitioner concludes, no
possibility of multiple appeals arose from the case. aESIDH
The petition fails.
Rule 41, Section 2 of the 1997 Rules of Civil Procedure, as amended, clearly provides:
SEC. 2.Modes of Appeals. —
(a)Ordinary appeal. — The appeal to the Court of Appeals in cases
decided by the Regional Trial Court in the exercise of its original jurisdiction shall
be taken by filing a notice of appeal with the court which rendered the judgment
or final order appealed from and serving a copy thereof upon the adverse party.
No record on appeal shall be required except in special proceedings and other
cases of multiple or separate appeals where the law or these Rules so
require. In such cases, the record on appeal shall be filed and served in like
manner.
xxx xxx xxx (Emphasis and underscoring supplied.)
While admittedly a complaint for expropriation is not a special proceeding, the above-quoted
rule requires the filing of a record on appeal in "other cases of multiple or separate appeal."
Jurisprudential law, no doubt, recognizes the existence of multiple appeals in a complaint
for expropriation. 31 The case of Municipality of Biñan v. Garcia 32 vividly expounds on the
matter, viz:
1.There are two (2) stages in every action of expropriation. The first is
concerned with the determination of the authority of the plaintiff to exercise the
power of eminent domain and the propriety of its exercise in the context of the
facts involved in the suit. It ends with an order, if not of dismissal of the action,
"of condemnation declaring that the plaintiff has a lawful right to take the property
sought to be condemned, for the public use or purpose described in the
complaint, upon the payment of just compensation to be determined as of the
date of the filing of the complaint." An order of dismissal, if this be ordained,
would be a final one, of course, since it finally disposes of the action and leaves
nothing more to be done by the Court on the merits. So, too, would an order of
condemnation be a final one, for thereafter, as the Rules expressly state, in the
proceedings before the Trial Court, "no objection to the exercise of the right of
condemnation (or the propriety thereof) shall be filed or heard.
The second phase of the eminent domain action is concerned with the
determination by the Court of "the just compensation for the property sought to
be taken." This is done by the Court with the assistance of not more than three
(3) commissioners. The order fixing the just compensation on the basis of the
evidence before, and findings of, the commissioners would be final, too. It would
finally dispose of the second stage of the suit, and leave nothing more to be done
by the Court regarding the issue. Obviously, one or another of the parties may
believe the order to be erroneous in its appreciation of the evidence or findings
 54

of fact or otherwise. Obviously, too, such a dissatisfied party may seek reversal
of the order by taking an appeal therefrom. (Underscoring supplied).

Thus, in Municipality of Biñan, this Court held that in actions for eminent domain, since no
less than two appeals are allowed by law, the period for appeal from an order of condemnation is
thirty days counted from notice thereof and not the ordinary period of fifteen days prescribed for
actions in general. 33 As such, the complaint falls under the classification of "other cases of
multiple or separate appeal where the law or these rules so require" in above-quoted Section 2(a)
of Rule 41 of the Rules of Civil Procedure in which a record on appeal is required to be filed and
served.
Respecting NPC's claim that the trial court did not acquire jurisdiction over the other
defendant, Enriquez, there being no evidence that summons was served on her and, therefore,
no appeal with respect to the case against her arose, the trial court's Order 34 of May 9, 1996
belies said claim:
xxx xxx xxx
In the letter-appeal by defendant Estefania V. Enriquez addressed to
the Court, defendant did manifest no opposition to the right of plaintiff to
the use of her land but only wich (sic) that payment be based on the actual
market value of the property sought to be expropriated. In comment to said letter-
appeal, plaintiff stressed that the amount deposited was purely to secure a writ
of possession as provided under PD 42. It agreed with defendant that the fair
market value or actual market value shall be the basis for the just compensation
of the property.
xxx xxx xxx (Emphasis and underscoring supplied).
That the defendant Enriquez did not file an answer to the complaint did not foreclose the
possibility of an appeal arising therefrom. For Section 3 of Rule 67 provides: DSTCIa
Sec. 3.Defenses and objections. — If a defendant has no objection or
defense to the action or the taking of his property, he may file and serve a notice
of appearance and a manifestation to that effect, specifically designating or
identifying the property in which he claims to be interested, within the time stated
in the summons. Thereafter, he shall be entitled to notice of all proceedings
affecting the same.
If a defendant has any objection to the filing of or the allegations in the
complaint, or any objection or defense to the taking of his property, he shall serve
his answer within the time stated in the summons. The answer shall specifically
designate or identify the property in which he claims to have an interest, state
the nature and extent of the interest claimed, and adduce all his objections and
defenses to the taking of his property. No counterclaim, cross-claim or third-party
complaint shall be alleged or allowed in the answer or any subsequent pleading.
A defendant waives all defenses and objections not so alleged but the
court, in the interest of justice, may permit amendments to the answer to be made
not later than ten (10) days from the filing thereof. However, at the trial of the
issue of just compensation, whether or not a defendant has previously
appeared or answered, he may present evidence as to the amount of the
compensation to be paid for his property, and he may share in the distribution of
the award. (Emphasis and underscoring supplied).
In other words, once the compensation for Enriquez' property is placed in issue at the trial,
she could, following the third paragraph of the immediately-quoted Section 3 of Rule 67,
participate therein and if she is not in conformity with the trial court's determination of the
compensation, she can appeal therefrom.
Multiple or separate appeals being existent in the present expropriation case, NPC should
have filed a record on appeal within 30 days from receipt of the trial court's decision. The trial
court's dismissal of its appeal, which was affirmed by the appellate court, was thus in order.
 55

En passant, glossing over NPC's failure to file record on appeal, its appeal would still not
prosper on substantive grounds.
NPC anchored its appeal 35 on the alleged overvalued appraisal by the commissioners of
the compensation to be awarded to Dilao et al., the commissioners having allegedly lost sight of
the already mentioned 10% limit provided under Section 3A of R.A. No. 6395.
In National Power Corporation v. Chiong, 36 petitioner similarly argued therein that the
Court of Appeals gravely erred in upholding the RTC order requiring it to pay the full market
value of the expropriated properties, despite the fact that it was only acquiring an easement of
right-of-way for its transmission lines. It pointed out, as it does in the present case, that under
Section 3A of RA No. 6395, as amended, where only an easement of right-of-way shall be
acquired, with the principal purpose for which the land is actually devoted is unimpaired, the
compensation should not exceed ten percent (10%) of the market value of the property.
Upholding the trial court and the Court of Appeals' approval of the commissioners'
recommendation in that case, this Court declared:
In fixing the valuation at P500.00 per square meter, the Court of
Appeals noted that the trial court had considered the reports of the
commissioners and the proofs submitted by the parties. This includes the
fair market value of P1,100.00 per square meter proffered by the
respondents. This valuation by owners of the property may not be binding
upon the petitioner or the court, although it should at least set a ceiling
price for the compensation to be awarded. The trial court found that the
parcels of land sought to be expropriated are agricultural land, with
minimal improvements. It is the nature and character of the land at the time
of its taking that is the principal criterion to determine just compensation
to the landowner. Hence, the trial court accepted not the owner's valuation
of P1,100 per square meter but only P500 as recommended in the majority
report of the commissioners.
xxx xxx xxx
In finding that the trial court did not abuse its authority in evaluating the
evidence and the reports placed before it nor did it misapply the rules governing
fair valuation, the Court of Appeals found the majority report's valuation of P500
per square meter to be fair. Said factual finding of the Court of Appeals,
absent any showing that the valuation is exorbitant or otherwise
unjustified, is binding on the parties as well as this Court. (Emphasis and
underscoring supplied).
Indeed, expropriation is not limited to the acquisition of real property with a corresponding
transfer of title or possession. The right-of-way easement resulting in a restriction or limitation on
property rights over the land traversed by transmission lines, as in the present case, also falls
within the ambit of the term "expropriation". As explained in National Power Corporation v.
Gutierrez, 37 viz:
The trial court's observation shared by the appellate court show that ". . .
While it is true that plaintiff [is] only after a right-of-way easement, it
nevertheless perpetually deprives defendants of their proprietary rights as
manifested by the imposition by the plaintiff upon defendants that below
said transmission lines no plant higher than three (3) meters is allowed.
Furthermore, because of the high-tension current conveyed through said
transmission lines, danger to life and limbs that may be caused beneath
said wires cannot altogether be discounted, and to cap it all, plaintiff only
pays the fee to defendants once, while the latter shall continually pay the
taxes due on said affected portion of their property."
The foregoing facts considered, the acquisition of the right-of-way
easement falls within the purview of the power of eminent domain. Such
conclusion finds support in similar cases of easement of right-of-way where the
Supreme Court sustained the award of just compensation for private property
condemned for public use (See National Power Corporation vs. Court of
Appeals, 129 SCRA 665, 1984; Garcia vs. Court of Appeals, 102 SCRA 597,
 56

1981). The Supreme Court, in Republic of the Philippines vs. PLDT, thus held
that:
"Normally, of course, the power of eminent domain results in the
taking or appropriation of title to, and possession of, the expropriated
property; but no cogent reason appears why said power may not be availed
of to impose only a burden upon the owner of condemned property,
without loss of title and possession. It is unquestionable that real property
may, through expropriation, be subjected to an easement of right-of-way."
In the case at bar, the easement of right-of-way is definitely a taking under
the power of eminent domain. Considering the nature and effect of the
installation of the 230 KV Mexico-Limay transmission lines, the limitation
imposed by NPC against the use of the land for an indefinite period
deprives private respondents of its ordinary use. (Emphasis and
underscoring supplied).
From the Commissioners' Report 38 chronicling the following findings:
xxx xxx xxx
1.The parcel of land owned by the defendant PETRONA O. DILAO, et al.
is very fertile, plain, suited for any crops production, portion of which planted with
coco trees and mango trees, portion planted with corn, sometimes planted with
sugar cane, the said land has a distance of about 1 kilometer from the trading
center, about 100 meters from an industrial land (Shemberg Biotech Corp.)
adjacent to a Poultry Farm and lies along the Provincial Road.
xxx xxx xxx
IMPROVEMENTS AFFECTED
Per ocular inspection made on lot own by PETRONA O. DILAO, et al.
traversed by a transmission line of NPC and with my verification as to the number
of improvements, the following trees had been damaged.
1.55 coco trees productive
2.10 mango trees productive
3.30 cacao trees productive
4.110 bananas
5.400 ipil-ipil trees
xxx xxx xxx, 39
it cannot be gainsaid that NPC's complaint merely involves a simple case of mere passage of
transmission lines over Dilao et al.'s property. Aside from the actual damage done to the
property traversed by the transmission lines, the agricultural and economic activity normally
undertaken on the entire property is unquestionably restricted and perpetually hampered as
the environment is made dangerous to the occupant's life and limb.

The determination of just compensation in expropriation proceedings being a judicial

function, 40 this Court finds the commissioners' recommendation of P516.66 per square meter,
which was approved by the trial court, to be just and reasonable compensation for the
expropriated property of Dilao and her siblings.
In fine, the appeal sought by NPC does not stand on both procedural and substantive
grounds.
WHEREFORE, the petition is hereby DENIED.
SO ORDERED.
||| (National Power Corp. v. Aguirre-Paderanga, G.R. No. 155065, [July 28, 2005], 502 PHIL 722-
736)
 57

[G.R. No. L-12172. August 29, 1958.]

THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. JUAN F.
FAJARDO, ET AL., defendants-appellants.

Assistant Solicitor General Esmeraldo Umali and Higinio V. Catalan for appellee.
Prila, Pardalis & Pejo for appellants.
SYLLABUS

1. MUNICIPAL CORPORATION; CONSTITUTIONAL LAW; MUNICIPAL

ORDINANCE; BUILDING PERMIT; UNDEFINED AND UNLIMITED DELEGATION OF
POWER. — Where an ordinance of a Municipality fails to state any policy or to set up any
standard to guide or limit the mayor's action; expresses no purpose to be attained by requiring
a permit; enumerates no conditions for its grant or refusal; and entirely lacks standards thus
confering upon the mayor arbitrary and unrestricted power to grant or deny the issuance of
building permits, such ordinance is invalid, being an undefined and unlimited delegation of
power to allow or prevent an activity, per se lawful. (People vs. Vera, 65 Phil., 56; Primicias
vs. Fugoso, 80 Phil. 71; Schloss Poster Adv. Co., Inc. vs. City of Rock Hill, et al., 2 SE [2d],
pp. 394-395)
2. ID.; ID.; ID.; WHEN REASONABLE AND OPPRESSIVE. — A Municipal Ordinance
is unreasonable and oppressive if it operates to permanently deprive appellants of the right to
use their own property; it then oversteps the bounds of police power without just
compensation. We do not overlook that the modern tendency is to regard the beautification of
neighborhoods as conducive to the comfort and happiness of residents. But while property
may be regulated in the interest of the general welfare and, in its pursuit, the State may prohibit
structures offensive to sight (Churchill and Tait vs. Rafferty, 32 Phil., 580), the State may not,
under guise of police power, permanently divest owners of the beneficial use of their property
and practically confiscate them solely to preserve or assure the aesthetic appearance of the
community. To legally achieve that result, the landowner should be given just compensation
and an opportunity to be heard.
DECISION

REYES, J.B.L., J p:

Appeal from the decision of the Court of First Instance of Camarines Sur convicting
defendants-appellants Juan F. Fajardo and Pedro Babilonia of a violation of Ordinance No. 7,
Series of 1950, of the Municipality of Baao, Camarines Sur, for having constructed without a
permit from the municipal mayor a building that destroys the view of the public plaza.
It appears that on August 15, 1950, during the incumbency of defendant-appellant
Juan F. Fajardo as mayor of the municipality of Baao, Camarines Sur, the municipal council
passed the ordinance in question providing as follows:
"SECTION 1. Any person or persons who will construct or repair a
building should, before constructing or repairing, obtain a written permit from the
Municipal Mayor.
SEC. 2. A fee of not less than P2.00 should be charged for each building
permit and P1.00 for each repair permit issued.
SEC. 3. PENALTY — Any violation of the provisions of the above, this
ordinance, shall make the violation liable to pay a fine of not less than P25 nor
more than P50 or imprisonment of not less than 12 days nor more than 24 days
or both, at the discretion of the court. If said building destroys the view of the
Public Plaza or occupies any public property, it shall be removed at the expense
of the owner of the building or house.
SEC. 4. EFFECTIVITY — This ordinance shall take effect on its
approval." (Orig. Recs., P. 3)
Four years later, after the term of appellant Fajardo as mayor had expired, he and his
son-in-law, appellant Babilonia, filed a written request with the incumbent municipal mayor for
 58

a permit to construct a building adjacent to their gasoline station on a parcel of land registered
in Fajardo's name, located along the national highway and separated from the public plaza by
a creek (Exh. D). On January 16, 1954, the request was denied, for the reason among others
that the proposed building would destroy the view or beauty of the public plaza (Exh. E). On
January 18, 1954, defendants reiterated their request for a building permit (Exh. 3), but again
the request was turned down by the mayor. Whereupon, appellants proceeded with the
construction of the building without a permit, because they needed a place of residence very
badly, their former house having been destroyed by a typhoon and hitherto they had been
living on leased property.
On February 26, 1954, appellants were charged before and convicted by the justice of
the peace court of Baao, Camarines Sur, for violation of the ordinance in question. Defendants
appealed to the Court of First Instance, which affirmed the conviction, and sentenced
appellants to pay a fine of P35 each and the costs, as well as to demolish the building in
question because it destroys the view of the public plaza of Baao, in that "it hinders the view
of travelers from the National Highway to the said public plaza." From this decision, the
accused appealed to the Court of Appeals, but the latter forwarded the records to us because
the appeal attacks the constitutionality of the ordinance in question.
We find that the appealed conviction can not stand.
A first objection to the validity of the ordinance in question is that under it the mayor
has absolute discretion to issue or deny a permit. The ordinance fails to state any policy, or
to set up any standard to guide or limit the mayor's action. No purpose to be attained by
requiring the permit is expressed; no conditions for its grant or refusal are enumerated. It is
not merely a case of deficient standards; standards are entirely lacking. The ordinance thus
confers upon the mayor arbitrary and unrestricted power to grant or deny the issuance of
building permits, and it is a settled rule that such an undefined and unlimited delegation of
power to allow or prevent an activity, per se lawful, is invalid (People vs. Vera, 65 Phil., 56;
Primicias vs. Fugoso, 80 Phil., 71; Schloss Poster Adv. Co. vs. Rock Hill, 2 SE (2d) 392).
The ordinance in question in no way controls or guides the discretion
vested thereby in the respondents. It prescribes no uniform rule upon which the
special permission of the city is to be granted. Thus the city is clothed with the
uncontrolled power to capriciously grant the privilege to some and deny it to
others; to refuse the application of one landowner or lessee and to grant that of
another, when for all material purposes, the two are applying for precisely the
same privileges under the same circumstances. The danger of such an
ordinance is that it makes possible arbitrary discriminations and abuses in its
execution, depending upon no conditions or qualifications whatever, other than
the unregulated arbitrary will of the city authorities as the touchstone by which its
validity is to be tested. Fundamental rights under our government do not depend
for their existence upon such a slender and uncertain thread. Ordinances which
thus invest a city council with a discretion which is purely arbitrary, and which
may be exercised in the interest of a favored few, are unreasonable and invalid.
The ordinance should have established a rule by which its impartial enforcement
could be secured. All of the authorities cited above sustain this conclusion."
xxx xxx xxx
"As was said in City of Richmond vs. Dudley, 129 Ind. 112, 28 N. E. 312,
314 13 L. R. A. 587, 28 Am. St. Rep. 180: 'It seems from the foregoing authorities
to be well established that municipal ordinances placing restrictions upon lawful
conduct or the lawful use of property must, in order to be valid, specify the rules
and conditions to be observed in such conduct or business; and must admit of
the exercise of the privilege of all citizens alike who will comply with such rules
and conditions; and must not admit of the exercise, or of an opportunity for the
exercise, of any arbitrary discrimination by the municipal authorities between
citizens who will so comply." (Schloss Poster Adv. Co., Inc. vs. City of Rock Hill,
et al., 2 SE (2d), pp. 394-395).
It is contended, on the other hand, that the mayor can refuse a permit solely in case
that the proposed building "destroys the view of the public plaza or occupies any public
property" (as stated in its section 3); and in fact, the refusal of the Mayor of Baao to issue a
building permit to the appellant was predicated on the ground that the proposed building would
"destroy the view of the public plaza" by preventing its being seen from the public highway.
 59

Even thus interpreted, the ordinance is unreasonable and oppressive, in that it operates — to
permanently deprive appellants of the right to use their own property; hence, it oversteps the
bounds of police power, and amounts to a taking of appellants property without just
compensation. We do not overlook that the modern tendency is to regard the beautification of
neighborhoods as conducive to the comfort and happiness of residents. But while property
may be regulated in the interest of the general welfare, and in its pursuit, the State may prohibit
structures offensive to the sight (Churchill and Tait vs. Rafferty, 32 Phil. 580), the State may
not, under the guise of police power, permanently divest owners of the beneficial use of their
property and practically confiscate them solely to preserve or assure the aesthetic appearance
of the community. As the case now stands, every structure that may be erected on appellants'
land, regardless of its own beauty, stands condemned under the ordinance in question,
because it would interfere with the view of the public plaza from the highway. The appellants
would, in effect, be constrained to let their land remain idle and unused for the obvious
purpose for which it is best suited, being urban in character. To legally achieve that result, the
municipality must give appellants just compensation and an opportunity to be heard.
"An ordinance which permanently so restricts the use of property that it
can not be used for any reasonable purpose goes, it is plain, beyond regulation
and must be recognized as a taking of the property. The only substantial
difference, in such case, between restriction and actual taking, is that the
restriction leaves the owner subject to the burden of payment of taxation, while
outright confiscation would relieve him of that burden." (Arverne Bay Constr.
Co. vs. Thatcher (N.Y.) 117 ALR. 1110, 1116).

'A regulation which substantially deprives an owner of all beneficial use

of his property is confiscation and is a deprivation within the meaning of the 14th
Amendment." (Sundlum vs. Zoning Bd., 145 Atl. 451; also Eaton vs. Sweeny,
177 NE 412; Taylor vs. Jacksonville, 133 So. 114).
"Zoning which admittedly limits property to a use which can not
reasonably be made of it cannot be said to set aside such property to a use but
constitutes the taking of such property without just compensation. Use of
property is an element of ownership therein. Regardless of the opinion of zealots
that property may properly, by zoning, be utterly destroyed without
compensation, such principle finds no support in the genius of our government
nor in the principles of justice as we known them. Such a doctrine shocks the
sense of justice. If it be of public benefit that property remain open and unused,
then certainly the public, and not the private individuals, should bear the cost of
reasonable compensation for such property under the rules of law governing the
condemnation of private property for public use. (Tews vs. Woolhiser (1933) 352
111. 212, 185 N.E. 827) (Emphasis supplied.)
The validity of the ordinance in question was justified by the court below under section
2243, par. (c), of the Revised Administrative Code, as amended. This section provides:
"SEC. 2243. Certain legislative powers of discretionary character. — The
municipal council shall have authority to exercise the following discretionary
powers:
xxx xxx xxx
(c) To establish fire limits in populous centers, prescribe the kinds of
buildings that may be constructed or repaired within them, and issue permits for
the creation or repair thereof, charging a fee which shall be determined by the
municipal council and which shall not be less than two pesos for each building
permit and one peso for each repair permit issued. The fees collected under the
provisions of this subsection shall accrue to the municipal school fund."
Under the provisions of the section above quoted, however, the power of the municipal
council to require the issuance of building permits rests upon its first establishing fire limits in
populous parts of the town and prescribing the kinds of buildings that may be constructed or
repaired within them. As there is absolutely no showing in this case that the municipal council
had either established fire limits within the municipality or set standards for the kind or kinds
of buildings to be constructed or repaired within them before it passed the ordinance in
question, it is clear that said ordinance was not conceived and promulgated under the express
authority of sec. 2243 (c) aforequoted.
 60

We rule that the regulation in question, Municipal Ordinance No. 7, Series of 1950, of
the Municipality of Baao, Camarines Sur, was beyond the authority of said municipality to
enact, and is therefore null and void. Hence, the conviction of herein appellants is reversed,
and said accused are acquitted, with costs de oficio. So ordered.
Paras, C.J., Bengzon, Padilla, Montemayor, Reyes, A., Bautista Angelo, Concepcion,
Endencia and Felix, JJ., concur.
||| (People v. Fajardo, G.R. No. L-12172, [August 29, 1958], 104 PHIL 443-449)

G.R. No. L-20620. August 15, 1974.]

REPUBLIC OF THE PHILIPPINES, plaintiff-appellant, vs. CARMEN M. VDA.
DE CASTELLVI, ET AL., defendants-appellees.

DECISION

ZALDIVAR, J p:

Appeal from the decision of the Court of First Instance of Pampanga in its Civil Case
No. 1623, an expropriation proceeding.
Plaintiff-appellant, the Republic of the Philippines, (hereinafter referred to as the
Republic) filed, on June 26, 1959, a complaint for eminent domain against defendant-
appellee, Carmen M. vda. de Castellvi, judicial administratrix of the estate of the late Alfonso
de Castellvi hereinafter referred to as Castellvi), over a parcel of land situated in the barrio of
San Jose, Floridablanca, Pampanga, described as follows:
"A parcel of land, Lot No. 199-B Bureau of Lands Plan Swo-23666.
Bounded on the NE by Maria Nieves Toledo-Gozun; on the SE by national road;
on the SW by AFP reservation, and on the NW by AFP reservation. Containing
an area of 759,299 square meters, more or less, and registered in the name of
Alfonso Castellvi under TCT No. 13631 of the Register of Deeds of Pampanga .
. .";
and against defendant-appellee Maria Nieves Toledo Gozun (hereinafter referred to as
Toledo-Gozun), over two parcels of land described as follows:
"A parcel of land (Portion of Lot 1-B, Blk-1, Bureau of Lands Plan Psd,
26254. Bounded on the NE by Lot 3, on the SE by Lot 3; on the SW by Lot 1-B,
Blk. 2 (equivalent to Lot 199-B Swo 23666; on the NW by AFP military
reservation. Containing an area of 450,273 square meters, more or less, and
registered in the name of Maria Nieves Toledo-Gozun under TCT No. 8708 of
the Register of Deeds of Pampanga. . . .", and
"A parcel of land (Portion of Lot 3, Blk-1, Bureau of Lands Plan Psd
26254. Bounded on the NE by Lot No. 3, on the SE by school lot and national
road, on the SW by Lot 1-B Blk 2 (equivalent to Lot 199-B Swo 23666), on the
NW by Lot 1-B, Blk-1. Containing an area of 88,772 square meters, more or less,
and registered in the name of Maria Nieves Toledo Gozun under TCT No. 8708
of the Register of Deeds of Pampanga, . . ."
In its complaint, the Republic alleged, among other things, that the fair market value
of the above-mentioned lands, according to the Committee on Appraisal for the Province of
Pampanga, was not more than P2,000 per hectare, or a total market value of P259,669.10;
and prayed, that the provisional value of the lands be fixed at P259,669.10, that the court
authorizes plaintiff to take immediate possession of the lands upon deposit of that amount
with the Provincial Treasurer of Pampanga; that the court appoints three commissioners to
ascertain and report to the court the just compensation for the property sought to be
expropriated, and that the court issues thereafter a final order of condemnation.
On June 29, 1959 the trial court issued an order fixing the provisional value of the
lands at P259,669.10.
 61

In her "motion to dismiss" filed on July 14, 1959, Castellvi alleged, among other things,
that the land under her administration, being a residential land, had a fair market value of
P15.00 per square meter, so it had a total market value of P11,389,485.00; that the Republic,
through the Armed Forces of the Philippines, particularly the Philippine Air Force, had been,
despite repeated demands, illegally occupying her property since July 1, 1956, thereby
preventing her from using and disposing of it, thus causing her damages by way of unrealized
profits. This defendant prayed that the complaint be dismissed, or that the Republic be ordered
to pay her P15.00 per square meter, or a total of P11,389,485.00, plus interest thereon at 6%
per annum from July 1, 1956; that the Republic be ordered to pay her P5,000,000.00 as
unrealized profits, and the costs of the suit.
By order of the trial court, dated August, 1959, Amparo C. Diaz, Dolores G. viuda de
Gil, Paloma Castellvi, Carmen Castellvi, Rafael Castellvi, Luis Castellvi, Natividad Castellvi
de Raquiza, Jose Castellvi and Consuelo Castellvi were allowed to intervene as parties
defendants. Subsequently, Joaquin V. Gozun, Jr., husband of defendant Nieves Toledo
Gozun, was also allowed by the court to intervene as a party defendant.
After the Republic had deposited with the Provincial Treasurer of Pampanga the
amount of P259,669.10, the trial court ordered that the Republic be placed in possession of
the lands. The Republic was actually placed in possession of the lands on August 10, 1959. 1
In her "motion to dismiss", dated October 22, 1959, Toledo-Gozun alleged, among
other things, that her two parcels of land were residential lands, in fact a portion with an area
of 343,303 square meters had already been subdivided into different lots for sale to the
general public, and the remaining portion had already been set aside for expansion sites of
the already completed subdivisions; that the fair market value of said lands was P15.00 per
square meter, so they had a total market value of P8,085,675.00; and she prayed that the
complaint be dismissed, or that she be paid the amount of P8,085,675.00, plus interest
thereon at the rate of 6% per annum from October 13, 1959, and attorney's fees in the amount
of P50,000.00.
Intervenors Jose Castellvi and Consuelo Castellvi in their answer, filed on February
11, 1960, and also intervenor Joaquin Gozun, Jr., husband of defendant Maria Nieves Toledo-
Gozun, in his motion to dismiss, dated May 27, 1960, all alleged that the value of the lands
sought to be expropriated was at the rate of P15.00 per square meter.
On November 4, 1959, the trial court authorized the Provincial Treasurer of Pampanga
to pay defendant Toledo-Gozun the sum of P107,609.00 as provisional value of her
lands. 2 On May 16, 1960 the trial Court authorized the Provincial Treasurer of Pampanga to
pay defendant Castellvi the amount of P151,859.80 as provisional value of the land under her
administration, and ordered said defendant to deposit the amount with the Philippine National
Bank under the supervision of the Deputy Clerk of Court. In another order of May 16, 1960
the trial Court entered an order of condemnation. 3
The trial Court appointed three commissioners: Atty. Amadeo Yuzon, Clerk of Court,
as commissioner for the court; Atty. Felicisimo G. Pamandanan, counsel of the Philippine
National Bank Branch at Floridablanca, for the plaintiff; and Atty. Leonardo F. Lansangan,
Filipino legal counsel at Clark Air Base, for the defendants. The Commissioners, after having
qualified themselves, proceeded to the performance of their duties.
On March 15, 1961 the Commissioners submitted their report and recommendation,
wherein, after having determined that the lands sought to be expropriated were residential
lands, they recommended unanimously that the lowest price that should be paid was P10.00
per square meter, for both the lands of Castellvi and Toledo-Gozun; that an additional
P5,000.00 be paid to Toledo-Gozun for improvements found on her land; that legal interest
on the compensation, computed from August 10, 1959, be paid after deducting the amounts
already paid to the owners, and that no consequential damages be awarded. 4 The
Commissioners' report was objected to by all the parties in the case — by defendants Castellvi
and Toledo-Gozun, who insisted that the fair market value of their lands should be fixed at
P15.00 per square meter; and by the Republic, which insisted that the price to be paid for the
lands should be fixed at P0.20 per square meter. 5
After the parties-defendants and intervenors had filed their respective memoranda,
and the Republic, after several extensions of time, had adopted as its memorandum its
objections to the report of the Commissioners, the trial court, on May 26, 1961, rendered its
decision 6 the dispositive portion of which reads as follows:
 62

"WHEREFORE, taking into account all the foregoing circumstances, and

that the lands are titled, . . . the rising trend of land values,. . . and the lowered
purchasing power of the Philippine peso, the court finds that the unanimous
recommendation of the commissioners of ten (P10.00) pesos per square meter
for the three lots of the defendants subject of this action is fair and just."
xxx xxx xxx
"The plaintiff will pay 6% interest per annum on the total value of the lands
of defendant Toledo-Gozun since (sic) the amount deposited as provisional
value from August 10, 1959 until full payment is made to said defendant or
deposit therefor is made in court.
"In respect to the defendant Castellvi, interest at 6% per annum will also
be paid by the plaintiff to defendant Castellvi from July 1, 1956 when plaintiff
commenced its illegal possession of the Castellvi land when the instant action
had not yet been commenced to July 10, 1959 when the provisional value thereof
was actually deposited in court, on the total value of the said (Castellvi) land as
herein adjudged. The same rate of interest shall be paid from July 11, 1959 on
the total value of the land herein adjudged minus the amount deposited as
provisional value, or P151,859.80, such interest to run until full payment is made
to said defendant or deposit therefor is made in court. All the Intervenors having
failed to produce evidence in support of their respective interventions, said
interventions are ordered dismissed.
"The costs shall be charged to the plaintiff."
On June 21, 1961 the Republic filed a motion for a new trial and/or reconsideration,
upon the grounds of newly-discovered evidence, that the decision was not supported by the
evidence, and that the decision was against the law, against which motion defendants
Castellvi and Toledo-Gozun filed their respective oppositions. On July 8, 1961 when the
motion of the Republic for new trial and/or reconsideration was called for hearing, the Republic
filed a supplemental motion for new trial upon the ground of additional newly-discovered
evidence. This motion for new trial and/or reconsideration was denied by the court on July 12,
1961.
On July 17, 1961 the Republic gave notice of its intention to appeal from the decision
of May 26, 1961 and the order of July 12, 1961. Defendant Castellvi also filed, on July 17,
1961, her notice of appeal from the decision of the trial court.
The Republic filed various ex-parte motions for extension of time within which to file
its record on appeal. The Republic's record on appeal was finally submitted on December 6,
1961.
Defendants Castellvi and Toledo-Gozun filed not only a joint opposition to the approval
of the Republic's record on appeal, but also a joint memorandum in support of their opposition.
The Republic also filed a memorandum in support of its prayer for the approval of its record
on appeal. On December 27, 1961 the trial court issued an order declaring both the record on
appeal filed by the Republic, and the record on appeal filed by defendant Castellvi as having
been filed out of time, thereby dismissing both appeals.
On January 11, 1962 the Republic filed a "motion to strike out the order of December
27, 1961 and for reconsideration", and subsequently an amended record oil appeal, against
which motion the defendants Castellvi and Toledo-Gozun filed their opposition. On July 26,
1962 the trial court issued an order, stating that "in the interest of expediency, the questions
raised may be properly and finally determined by the Supreme Court," and at the same time
it ordered the Solicitor General to submit a record on appeal containing copies of orders and
pleadings specified therein. In an order dated November 19, 1962, the trial court approved
the Republic's record on appeal as amended.
Defendant Castellvi did not insist on her appeal. Defendant Toledo-Gozun did not
appeal.
The motion to dismiss the Republic's appeal was reiterated by appellees Castellvi and
Toledo-Gozun before this Court, but this Court denied the motion.
 63

In her motion of August 11, 1964, appellee Castellvi sought to increase the provisional
value of her land. The Republic, in its comment on Castellvi's motion, opposed the same. This
Court denied Castellvi's motion in a resolution dated October 2, 1964.
The motion of appellees, Castellvi and Toledo-Gozun, dated October 6, 1969, praying
that they be authorized to mortgage the lands subject of expropriation, was denied by this
Court or October 14, 1969.
On February 14, 1972, Attys. Alberto Cacnio, and Associates, counsel for the estate
of the late Don Alfonso de Castellvi in the expropriation proceedings, filed a notice of attorney's
lien, stating that as per agreement with the administrator of the estate of Don Alfonso de
Castellvi they shall receive by way of attorney's fees, "the sum equivalent to ten per centum
of whatever the court may finally decide as the expropriated price of the property subject
matter of the case."
Before this Court, the Republic contends that the lower court erred:
1. In finding the price of P10 per square meter of the lands subject of the
instant proceedings as just compensation;
2. In holding that the "taking" of the properties under expropriation
commenced with the filing of this action;
3. In ordering plaintiff-appellant to pay 6% interest on the adjudged value
of the Castellvi property to start from July of 1956;
4. In denying plaintiff-appellant's motion for new trial based on newly
discovered evidence.
In its brief, the Republic discusses the second error assigned as the first issue to be
considered. We shall follow the sequence of the Republic's discussion.
1. In support of the assigned error that the lower court erred in holding that the "taking"
of the properties under expropriation commenced with the filing of the complaint in this case,
the Republic argues that the "taking" should be reckoned from the year 1947 when by virtue
of a special lease agreement between the Republic and appellee Castellvi, the former was
granted the "right and privilege" to buy the property should the lessor wish to terminate the
lease, and that in the event of such sale, it was stipulated that the fair market value should be
as of the time of occupancy; and that the permanent improvements amounting to more than
half a million pesos constructed during a period of twelve years on the land, subject of
expropriation, were indicative of an agreed pattern of permanency and stability of occupancy
by the Philippine Air Force in the interest of national security. 7
Appellee Castellvi, on the other hand, maintains that the "taking" of property under the
power of eminent domain requires two essential elements, to wit: (1) entrance and occupation
by condemnor upon the private property for more than a momentary or limited period, and (2)
devoting it to a public use in such a way as to oust the owner and deprive him of all beneficial
enjoyment of the property. This appellee argues that in the instant case the first element is
wanting, for the contract of lease relied upon provides for a lease from year to year; that the
second element is also wanting, because the Republic was paying the lessor Castellvi a
monthly rental of P445.58; and that the contract of lease does not grant the Republic the "right
and privilege" to buy the premises "at the value at the time of occupancy." 8
Appellee Toledo-Gozun did not comment on the Republic's argument in support of the
second error assigned, because as far as she was concerned the Republic had not taken
possession of her lands prior to August 10, 1959. 9
In order to better comprehend the issues raised in the appeal, in so far as the Castellvi
property is concerned, it should be noted that the Castellvi property had been occupied by the
Philippine Air Force since 1947 under a contract of lease, typified by the contract marked Exh.
4-Castellvi, the pertinent portions of which read:
"CONTRACT OF LEASE
"This AGREEMENT OF LEASE MADE AND ENTERED into by and
between INTESTATE ESTATE OF ALFONSO DE CASTELLVI, represented by
CARMEN M. DE CASTELLVI Judicial Administratrix x x x hereinafter called the
LESSOR and THE REPUBLIC OF THE PHILIPPINES represented by MAJ.
 64

GEN. CALIXTO DUQUE, Chief of Staff of the ARMED FORCES OF THE

PHILIPPINES, hereinafter called the LESSEE,
"WITNESSETH:
"1. For and in consideration of the rentals hereinafter reserved and the
mutual terms, covenants and conditions of the parties, the LESSOR has, and by
these presents does, lease and let unto the LESSEE the following described land
together with the improvements thereon and appurtenances thereof, viz:
'Un Terreno, Lote No. 27 del Plano de
subdivision Psu 34752, parte de la hacienda de
Campauit, situado en el Barrio de San Jose, Municipio
de Floridablanca, Pampanga . . . midiendo una
extension superficial de cuatro milliones once mil cuatro
cientos trienta y cinco (4,001,435) [sic] metros
cuadrados, mas o menos.
'Out of the above described property, 75.93
hectares thereof are actually occupied and covered by
this contract.
'Above lot is more particularly described in TCT
No. 1016, province of Pampanga . . .
of which premises, the LESSOR warrants that he/she/they/is/are the
registered owner(s) and with full authority to execute a contract of this nature.
"2. The term of this lease shall be for the period beginning July 1, 1952
the date the premises were occupied by the PHILIPPINE AIR FORCE, AFP until
June 30, 1953, subject to renewal for another year at the option of the LESSEE
or unless sooner terminated by the LESSEE as hereinafter provided.
"3. The LESSOR hereby warrants that the LESSEE shall have quiet,
peaceful and undisturbed possession of the demised premises throughout the
full term or period of this lease and the LESSOR undertakes without cost to the
LESSEE to eject all trespassers, but should the LESSOR fail to do so, the
LESSEE at its option may proceed to do so at the expense of the LESSOR. The
LESSOR further agrees that should he/she/they sell or encumber all or any part
of the herein described premises during the period of this lease, any conveyance
will be conditioned on the right of the LESSEE hereunder.
"4. The LESSEE shall pay to the LESSOR as monthly rentals under this
lease the sum of FOUR HUNDRED FIFTY-FIVE PESOS & 58/100(P455.58) . .
.
"5. The LESSEE may, at anytime prior to the termination of this lease,
use the property for any purpose or purposes and, at its own costs and expense
make alteration, install facilities and fixtures and erect additions . . . which
facilities or fixtures . . . so placed in, upon or attached to the said premises shall
be and remain property of the LESSEE and may be removed therefrom by the
LESSEE prior to the termination of this lease. The LESSEE shall surrender
possession of the premises upon the expiration or termination of this lease and
if so required by the LESSOR, shall return the premises in substantially the same
condition as that existing at the time same were first occupied by the AFP,
reasonable and ordinary wear and tear and damages by the elements or by
circumstances over which the LESSEE has no control excepted: PROVIDED,
that if the LESSOR so requires the return of the premises in such condition, the
LESSOR shall give written notice thereof to the LESSEE at least twenty (20)
days before the termination of the lease and provided, further, that should the
LESSOR give notice within the time specified above, the LESSEE shall have the
right and privilege to compensate the LESSOR at the fair value or the equivalent,
in lieu of performance of its obligation, if any, to restore the premises. Fair value
is to be determined as the value at the time of occupancy less fair wear and tear
and depreciation during the period of this lease.
 65

"6. The LESSEE may terminate this lease at any time during the term
hereof by giving written notice to the LESSOR at least thirty (30) days in advance
. . ."
"7. The LESSEE should not be responsible, except under special
legislation for any damages to the premises by reason of combat operations,
acts of GOD, the elements or other acts and deeds not due to the negligence on
the part of the LESSEE.
"8. This LEASE AGREEMENT supersedes and voids any and all
agreements and undertakings, oral or written, previously entered into between
the parties covering the property herein leased, the same having been merged
herein. This AGREEMENT may not be modified or altered except by instrument
in writing only duly signed by the parties." 10
It was stipulated by the parties, that "the foregoing contract of lease (Exh. 4, Castellvi)
is 'similar in terms and conditions, including the date', with the annual contracts entered into
from year to year between defendant Castellvi and the Republic of the Philippines (p. 17,
t.s.n., Vol. III)". 11 It is undisputed, therefore, that the Republic occupied Castellvi's land from
July 1, 1947, by virtue of the above-mentioned contract, on a year to year basis (from July 1
of each year to June 30 of the succeeding year) under the terms and conditions therein stated.
Before the expiration of the contract of lease on June 30, 1956 the Republic sought to
renew the same but Castellvi refused. When the AFP refused to vacate the leased premises
after the termination of the contract, on July 11, 1956, Castellvi wrote to the Chief of Staff,
AFP, informing the latter that the heirs of the property had decided not to continue leasing the
property in question because they had decided to subdivide the land for sale to the general
public, demanding that the property be vacated within 30 days from receipt of the letter, and
that the premises be returned in substantially the same condition as before occupancy (Exh.
5 — Castellvi). A follow-up letter was sent on January 12, 1957, demanding the delivery and
return of the property within one month from said date (Exh. 6 — Castellvi). On January 30,
1957, Lieutenant General Alfonso Arellano, Chief of Staff, answered the letter of Castellvi,
saying that it was difficult for the army to vacate the premises in view of the permanent
installations and other facilities worth almost P500,000.00 that were erected and already
established on the property, and that, there being no other recourse, the acquisition of the
property by means of expropriation proceedings would be recommended to the President
(Exhibit "7" — Castellvi).
Defendant Castellvi then brought suit in the Court of First Instance of Pampanga, in
Civil Case No. 1458, to eject the Philippine Air Force from the land. While this ejectment case
was pending, the Republic instituted these expropriation proceedings, and, as stated earlier
in this opinion, the Republic was placed in possession of the lands on August 10, 1959. On
November 21, 1959, the Court of First Instance of Pampanga, dismissed Civil Case No. 1458,
upon petition of the parties, in an order which, in part, reads as follows:
"1. Plaintiff has agreed, as a matter of fact has already signed an
agreement with defendants, whereby she has agreed to receive the rent of the
lands, subject matter of the instant case from June 30, 1966 up to 1959 when
the Philippine Air Force was placed in possession by virtue of an order of the
Court upon depositing the provisional amount as fixed by the Provincial Appraisal
Committee with the Provincial Treasurer of Pampanga;
"2. That because of the above-cited agreement wherein the
administratrix decided to get the rent corresponding to the rent from 1956 up to
1959 and considering that this action is one of illegal detainer and/or to recover
the possession of said land by virtue of nonpayment of rents, the instant case
now has become moot and academic and/or by virtue of the agreement signed
by plaintiff, she has waived her cause of action in the above-entitled case." 12
The Republic urges that the "taking " of Castellvi's property should be
deemed as of the year 1947 by virtue of afore-quoted lease agreement. In
American Jurisprudence, Vol. 26, 2nd edition, Section 157, on the subject of
"Eminent Domain, we read the definition of "taking" (in eminent domain) as
follows:
 66

"'Taking' under the power of eminent domain may be defined generally

as entering upon private property for more than a momentary period, and, under
the warrant or color of legal authority, devoting it to a public use, or otherwise
informally appropriating or injuriously affecting it in such a way as substantially
to oust the owner and deprive him of all beneficial enjoyment thereof." 13
Pursuant to the aforecited authority, a number of circumstances must be present in
the "taking" of property for purposes of eminent domain.
First, the expropriator must enter a private property. This circumstance is present in
the instant case, when by virtue of the lease agreement the Republic, through the AFP, took
possession of the property of Castellvi.
Second, the entrance into private property must be for more than a momentary period.
"Momentary" means, "lasting but a moment; of but a moment's duration" (The Oxford English
Dictionary, Volume VI, page 596); "lasting a very short time; transitory; having a very brief life;
operative or recurring at every moment" (Webster's Third International Dictionary, 1963
edition.) The word "momentary" when applied to possession or occupancy of (real) property
should be construed to mean "a limited period" — not indefinite or permanent. The aforecited
lease contract was for a period of one year, renewable from year to year. The entry on the
property, under the lease, is temporary, and considered transitory. The fact that the Republic,
through the AFP, constructed some installations of a permanent nature does not alter the fact
that the entry into the land was transitory, or intended to last a year, although renewable from
year to year by consent of the owner of the land. By express provision of the lease agreement
the Republic, as lessee, undertook to return the premises in substantially the same condition
as at the time the property was first occupied by the AFP. It is claimed that the intention of the
lessee was to occupy the land permanently, as may be inferred from the construction of
permanent improvements. But this "intention" cannot prevail over the clear and express terms
of the lease contract. Intent is to be deduced from the language employed by the parties, and
the terms of the contract, when unambiguous, as in the instant case, are conclusive in the
absence of averment and proof of mistake or fraud — the question being not what the intention
was, but what is expressed in the language used. (City of Manila v. Rizal Park Co., Inc., 53
Phil. 515, 525); Magdalena Estate, Inc. v. Myrick, 71 Phil. 344, 348). Moreover, in order to
judge the intention of the contracting parties, their contemporaneous and subsequent acts
shall be principally considered (Art. 1371, Civil Code). If the intention of the lessee (Republic)
in 1947 was really to occupy permanently Castellvi's property, why was the contract of lease
entered into on year to year basis? Why was the lease agreement renewed from year to year?
Why did not the Republic expropriate this land of Castellvi in 1949 when, according to the
Republic itself, it expropriated the other parcels of land that it occupied at the same time as
the Castellvi land, for the purpose of converting them into a jet air base?" 14 It might really
have been the intention of the Republic to expropriate the lands in question at some future
time, but certainly mere notice — much less an implied notice — of such intention on the part
of the Republic to expropriate the lands in the future did not, and could not, bind the landowner,
nor bind the land itself. The expropriation must be actually commenced in court (Republic vs.
Baylosis, et al., 96 Phil. 461, 484).
Third, the entry into the property should be under warrant or color of legal authority.
This circumstance in the "taking" may be considered as present in the instant case, because
the Republic entered the Castellvi property as lessee.
Fourth, the property must be devoted to a public use or otherwise informally
appropriated or injuriously affected. It may be conceded that the circumstance of the property
being devoted to public use is present because the property was used by the air force of the
AFP.
Fifth, the utilization of the property for public use must be in such a way as to oust the
owner and deprive him of all beneficial enjoyment of the property. In the instant case, the entry
of the Republic into the property and its utilization of the same for public use did not oust
Castellvi and deprive her of all beneficial enjoyment of the property. Castellvi remained as
owner, and was continuously recognized as owner by the Republic, as shown by the renewal
of the lease contract from year to year, and by the provision in the lease contract whereby the
Republic undertook to return the property to Castellvi when the lease was terminated. Neither
was Castellvi deprived of all the beneficial enjoyment of the property, because the Republic
was bound to pay, and had been paying, Castellvi the agreed monthly rentals until the time
when it filed the complaint for eminent domain on June 26, 1959.
 67

It is clear, therefore, that the "taking" of Castellvi's property for purposes of eminent
domain cannot be considered to have taken place in 1947 when the Republic commenced to
occupy the property as lessee thereof. We find merit in the contention of Castellvi that two
essential elements in the "taking" of property under the power of eminent domain, namely: (1)
that the entrance and occupation by the condemnor must be for a permanent, or indefinite
period, and (2) that in devoting the property to public use the owner was ousted from the
property and deprived of its beneficial use, were not present when the Republic entered and
occupied the Castellvi property in 1947.
Untenable also is the Republic's contention that although the contract between the
parties was one of lease on a year to year basis, it was "in reality a more or less permanent
right to occupy the premises under the guise of lease with the 'right and privilege' to buy the
property should the lessor wish to terminate the lease," and "the right to buy the property is
merged as an integral part of the lease relationship . . . so much so that the fair market value
has been agreed upon, not as of the time of purchase, but as of the time of occupancy". 15 We
cannot accept the Republic's contention that a lease on a year to year basis can give rise to
a permanent right to occupy, since by express legal provision a lease made for a determinate
time, as was the lease of Castellvi's land in the instant case, ceases upon the day fixed,
without need of a demand (Article 1669, Civil Code). Neither can it be said that the right of
eminent domain may be exercised by simply leasing the premises to be expropriated (Rule
67, Section 1, Rules of Court). Nor can it be accepted that the Republic would enter into a
contract of lease where its real intention was to buy, or why the Republic should enter into a
simulated contract of lease ("under the guise of lease", as expressed by counsel for the
Republic) when all the time the Republic had the right of eminent domain, and could
expropriate Castellvi's land if it wanted to without resorting to any guise whatsoever. Neither
can we see how a right to buy could be merged in a contract of lease in the absence of any
agreement between the parties to that effect. To sustain the contention of the Republic is to
sanction a practice whereby in order to secure a low price for a land which the government
intends to expropriate (or would eventually expropriate) it would first negotiate with the owner
of the land to lease the land (for say ten or twenty years) then expropriate the same when the
lease is about to terminate, then claim that the "taking" of the property for the purposes of the
expropriation be reckoned as of the date when the Government started to occupy the property
under the lease, and then assert that the value of the property being expropriated be reckoned
as of the start of the lease, in spite of the fact that the value of the property, for many good
reasons, had in the meantime increased during the period of the lease. This would be
sanctioning what obviously is a deceptive scheme, which would have the effect of depriving
the owner of the property of its true and fair market value at the time when the expropriation
proceedings were actually instituted in court. The Republic's claim that it had the "right and
privilege" to buy the property at the value that it had at the time when it first occupied the
property as lessee nowhere appears in the lease contract. What was agreed expressly in
paragraph No. 5 of the lease agreement was that, should the lessor require the lessee to
return the premises in the same condition as at the time the same was first occupied by the
AFP, the lessee would have the "right and privilege" (or option) of paying the lessor what it
would fairly cost to put the premises in the same condition as it was at the commencement of
the lease, in lieu of the lessee's performance of the undertaking to put the land in said
condition. The "fair value" at the time of occupancy, mentioned in the lease agreement, does
not refer to the value of the property if bought by the lessee, but refers to the cost of restoring
the property in the same condition as of the time when the lessee took possession of the
property. Such fair value cannot refer to the purchase price, for purchase was never intended
by the parties to the lease contract. It is a rule in the interpretation of contracts that "However
general the terms of a contract may be, they shall not be understood to comprehend things
that are distinct and cases that are different from those upon which the parties intended to
agree" (Art. 1372, Civil Code)
We hold, therefore, that the "taking' of the Castellvi property should not be reckoned
as of the year 1947 when the Republic first occupied the same pursuant to the contract of
lease, and that the just compensation to be paid for the Castellvi property should not be
determined on the basis of the value of the property as of that year. The lower court did not
commit an error when it held that the "taking" of the property under expropriation commenced
with the filing of the complaint in this case.
Under Section 4 of Rule 67 of the Rules of Court, 16 the "just compensation" is to be
determined as of the date of the filing of the complaint. This Court has ruled that when the
taking of the property sought to be expropriated coincides with the commencement of the
 68

expropriation proceedings, or takes place subsequent to the filing of the complaint for eminent
domain, the just compensation should be determined as of the date of the filing of the
complaint. (Republic vs. Philippine National Bank, L-14158, April 12, 1961, 1 SCRA 957, 961-
962). In the instant case, it is undisputed that the Republic was placed in possession of the
Castellvi property, by authority of the court, on August 10, 1959. The "taking" of the Castellvi
property for the purposes of determining the just compensation to be paid must, therefore, be
reckoned as of June 26, 1959 when the complaint for eminent domain was filed.
Regarding the two parcels of land of Toledo-Gozun, also sought to be expropriated,
which had never been under lease to the Republic, the Republic was placed in possession of
said lands, also by authority of the court, on August 10, 1959. The taking of those lands,
therefore, must also be reckoned as of June 26, 1959, the date of the filing of the complaint
for eminent domain.
2. Regarding the first assigned error — discussed as the second issue — the Republic
maintains that, even assuming that the value of the expropriated lands is to be determined as
of June 26, 1959, the price of P10.00 per square meter fixed by the lower court "is not only
exorbitant but also unconscionable, and almost fantastic". On the other hand, both Castellvi
and Toledo-Gozun maintain that their lands are residential lands with a fair market value of
not less than P15.00 per square meter.
The lower court found, and declared, that the lands of Castellvi and Toledo-Gozun are
residential lands. The finding of the lower court is in consonance with the unanimous opinion
of the three commissioners who, in their report to the court, declared that the lands are
residential lands.
The Republic assails the finding that the lands are residential, contending that the
plans of the appellees to convert the lands into subdivision for residential purposes were only
on paper, there being no overt acts on the part of the appellees which indicated that the
subdivision project had been commenced, so that any compensation to be awarded on the
basis of the plans would be speculative. The Republic's contention is not well taken. We find
evidence showing that the lands in question had ceased to be devoted to the production of
agricultural crops, that they had become adaptable for residential purposes, and that the
appellees had actually taken steps to convert their lands into residential subdivisions even
before the Republic filed the complaint for eminent domain.
In the case of City of Manila vs. Corrales (Phil. 82, 98) this Court laid down basic
guidelines in determining the value of the property expropriated for public purposes. This
Court said:
"In determining the value of land appropriated for public purposes, the
same consideration are to be regarded as in a sale of property between private
parties. The inquiry, in such cases, must be what is the property worth in the
market, viewed not merely with reference to the uses to which it is at the time
applied, but with reference to the uses to which it is plainly adapted, that is to
say, What is it worth from its availability for valuable uses?
"So many and varied are the circumstances to be taken into account in
determining the value of property condemned for public purposes, that it is
practically impossible to formulate a rule to govern its appraisement in all cases.
Exceptional circumstances will modify the most carefully guarded rule, but, as a
general thing, we should say that the compensation of the owner is to be
estimated by reference to the use for which the property is suitable, having
regard to the existing business or wants of the community, or such as may be
reasonably expected in the immediate future. (Miss. and Rum River Boom Co.
vs. Patterson, 98 U.S., 403)."
In expropriation proceedings, therefore, the owner of the land has the right to its value
for the use for which it would bring the most in the market. 17 The owner may thus show every
advantage that his property possesses, present and prospective, in order that the price it could
be sold for in the market may be satisfactorily determined. 18 The owner may also show that
the property is suitable for division into village or town lots. 19
The trial court, therefore, correctly considered, among other circumstances, the
proposed subdivision plans of the lands sought to be expropriated in finding that those lands
are residential lots. This finding of the lower court is supported not only by the unanimous
opinion of the commissioners, as embodied in their report, but also by the Provincial Appraisal
 69

Committee of the province of Pampanga composed of the Provincial Treasurer, the Provincial
Auditor and the District Engineer. In the minutes of the meeting of the Provincial Appraisal
Committee, held on May 14, 1959 (Exh. 13-Castellvi) We read in its Resolution No. 10 the
following:
"3. Since 1957 the land has been classified as residential in view of its
proximity to the air base and due to the fact that it was not being devoted to
agriculture. In fact, there is a plan to convert it into a subdivision for residential
purposes. The taxes due on the property have been paid based on its
classification as residential land;"
The evidence shows that Castellvi broached the idea of subdividing her land into
residential lots as early as July 11, 1956 in her letter to the Chief of Staff of the Armed Forces
of the Philippines. (Exh. 5-Castellvi) As a matter of fact, the layout of the subdivision plan was
tentatively approved by the National Planning Commission on September 7, 1956. (Exh. 8-
Castellvi). The land of Castellvi had not been devoted to agriculture since 1947 when it was
leased to the Philippine Army. In 1957 said land was classified as residential, and taxes based
on its classification as residential had been paid since then (Exh. 13-Castellvi). The location
of the Castellvi land justifies its suitability for a residential subdivision. As found by the trial
court, "It is at the left side of the entrance of the Basa Air Base and bounded on two sides by
roads (Exh. 13-Castellvi), paragraphs 1 and 2, Exh. 12-Castellvi), the poblacion, (of
Floridablanca) the municipal building, and the Pampanga Sugar Mills are closed by. The barrio
schoolhouse and chapel are also near (T.S.N. November 23, 1960, p. 68)". 20
The lands of Toledo-Gozun (Lot 1-B and Lot 3) are practically of the same condition
as the land of Castellvi. The lands of Toledo-Gozun adjoin the land of Castellvi. They are also
contiguous to the Basa Air Base, and are along the road. These lands are near the barrio
schoolhouse, the barrio chapel, the Pampanga Sugar Mills, and the poblacion of
Floridablanca (Exhs. 1, 3 and 4-Toledo-Gozun). As a matter of fact, regarding lot 1-B it had
already been surveyed and subdivided, and its conversion into a residential subdivision was
tentatively approved by the National Planning Commission on July 8, 1959 (Exhs. 5 and 6
Toledo-Gozun). As early as June, 1958, no less than 32 man connected with the Philippine
Air Force among them commissioned officers, non-commission officers, and enlisted men had
requested Mr. and Mrs. Joaquin D. Gozun to open a subdivision on their lands in question
(Exhs. 8, 8-A to 8-ZZ-Toledo-Gozun). 21
We agree with the findings, and the conclusions, of the lower court that the lands that
are the subject of expropriation in the present case, as of August 10, 1959 when the same
were taken possession of by the Republic, were residential lands and were adaptable for use
as residential subdivisions. Indeed, the owners of these lands have the right to their value for
the use for which they would bring the most in the market at the time the same were taken
from them. The most important issue to be resolved in the present case relates to the question
of what is the just compensation that should be paid to the appellees.
The Republic asserts that the fair market value of the lands of the appellees is P.20
per square meter. The Republic cites the case of Republic vs. Narciso, et al., L-6594, which
this Court decided on May 18, 1956. The Narciso case involved lands that belonged to
Castellvi and Toledo-Gozun, and to one Donata Montemayor, which were expropriated by the
Republic in 1949 and which are now the site of the Basa Air Base. In the Narciso case this
Court fixed the fair market value at P.20 per square meter. The lands that are sought to be
expropriated in the present case being contiguous to the lands involved in the Narciso case,
it is the stand of the Republic that the price that should be fixed for the lands now in question
should also be at P.20 per square meter.
We can not sustain the stand of the Republic. We find that the price of P.20 per square
meter, as fixed by this Court in the Narciso case, was based on the allegation of the
defendants (owners) in their answer to the complaint for eminent domain in that case that the
price of their lands was P2,000.00 per hectare and that was the price that they asked the court
to pay them. This Court said, then, that the owners of the land could not be given more than
what they had asked, notwithstanding the recommendation of the majority of the Commission
on Appraisal — which was adopted by the trial court — that the fair market value of the lands
was P3,000.00 per hectare. We also find that the price of P.20 per square meter in the Narciso
case was considered the fair market value of the lands as of the year 1949 when the
expropriation proceedings were instituted, and at that time the lands were classified as sugar
lands, and assessed for taxation purposes at around P400.00 per hectare, or P.04 per square
 70

meter. 22 While the lands involved in the present case, like the lands involved in the Narciso
case, might have a fair market value of P.20 per square meter in 1949, it can not be denied
that ten years later, in 1959, when the present proceedings were instituted, the value of those
lands had increased considerably. The evidence shows that since 1949 those lands were no
longer cultivated as sugar lands, and in 1959 those lands were already classified, and
assessed for taxation purposes, as residential lands. In 1959 the land of Castellvi was
assessed at P1.00 per square meter. 23
The Republic also points out that the Provincial Appraisal Committee of Pampanga, in
its resolution No. 5 of February 15, 1957 (Exhibit D), recommended the sum of P.20 per
square meter as the fair valuation of the Castellvi property. We find that this resolution was
made by the Republic the basis in asking the court to fix the provisional value of the lands
sought to be expropriated at P259,669.10, which was approved by the court. 24 It must be
considered, however, that the amount fixed as the provisional value of the lands that are being
expropriated does not necessarily represent the true and correct value of the land. The value
is only "provisional" or "tentative", to serve as the basis for the immediate occupancy of the
property being expropriated by the condemnor. The records show that this resolution No. 5
was repealed by the same Provincial Committee on Appraisal in its resolution No. 10 of May
14, 1959 (Exhibit 13-Castellvi). In that resolution No. 10, the appraisal committee stated that
"The Committee has observed that the value of the land in this locality has increased since
1957 . . .", and recommended the price of P1.50 per square meter. It follows, therefore, that,
contrary to the stand of the Republic, that resolution No. 5 of the Provincial Appraisal
Committee can not be made the basis for fixing the fair market value of the lands of Castellvi
and Toledo-Gozun.
The Republic further relied on the certification of the Acting Assistant Provincial
Assessor of Pampanga, dated February 8, 1961 (Exhibit K), to the effect that in 1950 the lands
of Toledo-Gozun were classified partly as sugar land and partly as urban land, and that the
sugar land was assessed at P.40 per square meter, while part of the urban land was assessed
at P.40 per square meter and part at P.20 per square meter; and that in 1956 the Castellvi
land was classified as sugar land and was assessed at P450.00 per hectare, or P.045 per
square meter. We can not also consider this certification of the Acting Assistant Provincial
Assessor as a basis for fixing the fair market value of the lands of Castellvi and Toledo-Gozun
because, as the evidence shows, the lands in question, in 1957, were already classified and
assessed for taxation purposes as residential lands. The certification of the assessor refers to
the year 1950 as far as the lands of Toledo-Gozun are concerned, and to the year 1956 as
far as the land of Castellvi is concerned. Moreover, this Court has held that the valuation fixed
for the purposes of the assessment of the land for taxation purposes can not bind the
landowner where the latter did not intervene in fixing it. 25
On the other hand, the Commissioners, appointed by the court to appraise the lands
that were being expropriated, recommended to the court that the price of P10.00 per square
meter would be the fair market value of the lands. The commissioners made their
recommendation on the basis of their observation after several ocular inspections of the lands,
of their own personal knowledge of land values in the province of Pampanga, of the
testimonies of the owners of the land, and other witnesses, and of documentary evidence
presented by the appellees. Both Castellvi and Toledo-Gozun testified that the fair market
value of their respective land was at P15.00 per square meter. The documentary evidence
considered by the commissioners consisted of deeds of sale of residential lands in the town
of San Fernando and in Angeles City, in the province of Pampanga, which were sold at prices
ranging from P8.00 to P20.00 per square meter (Exhibits 15, 16, 17, 18, 19, 20, 21, 22, 23-
Castellvi). The commissioners also considered the decision in Civil Case No. 1531 of the
Court of First Instance of Pampanga, entitled Republic vs. Sabina Tablante, which was an
expropriation case filed on January 13, 1959, involving a parcel of land adjacent to the Clark
Air Base in Angeles City, where the court fixed the price at P18.00 per square meter (Exhibit
14-Castellvi). In their report, the commissioners, among other things, said:
". . . This expropriation case is specially pointed out, because the
circumstances and factors involved therein are similar in many respects to the
defendants' lands in this case. The land in Civil Case No. 1531 of this Court and
the lands in the present case (Civil Case No. 1623) are both near the air bases,
the Clark Air Base and the Basa Air Base respectively. There is a national road
fronting them and are situated in a first-class municipality. As added advantage
it may be said that the Basa Air Base land is very near the sugar mill at Del
 71

Carmen, Floridablanca, Pampanga, owned by the Pampanga Sugar Mills. Also

just stone's throw away from the same lands is a beautiful vacation spot at
Palacol, a sitio of the town of Floridablanca, which counts with a natural
swimming pool for vacationists on weekends. These advantages are not found
in the case of the Clark Air Base. The defendants' lands are nearer to the
poblacion of Floridablanca then Clark Air Base is nearer (sic) to the poblacion of
Angeles, Pampanga.
"The deeds of absolute sale, according to the undersigned
commissioners, as well as the land in Civil Case No. 1531 are competent
evidence, because they were executed during the year 1959 and before August
10 of the same year. More specifically so the land at Clark Air Base which
coincidentally is the subject matter in the complaint in said Civil Case No. 1531,
it having been filed on January 13, 1959 and the taking of the land involved
therein was ordered by the Court of First Instance of Pampanga on January 15,
1959, several months before the lands in this case were taken by the plaintiffs. .
.
"From the above and considering further that the lowest as well as the
highest price per square meter obtainable in the market of Pampanga relative to
subdivision lots within its jurisdiction in the year 1959 is very well known by the
Commissioners, the Commission finds that the lowest price that can be awarded
to the lands in question is P10.00 per square meter." 26
The lower court did not altogether accept the findings of the Commissioners based on
the documentary evidence, but it considered the documentary evidence as basis for
comparison in determining land values. The lower court arrived at the conclusion that "the
unanimous recommendation of the commissioners of ten (P10.00) pesos per square meter
for the three lots of the defendants subject of this action is fair and just". 27 In arriving at its
conclusion, the lower court took into consideration, among other circumstances, that the lands
are titled, that there is a rising trend of land values, and the lowered purchasing power of the
Philippine peso.
In the case of Manila Railroad Co. vs. Caligsihan, 40 Phil. 326, 328, this Court said:
"A court of first instance or, on appeal, the Supreme Court, may change
or modify the report of the commissioners by increasing or reducing the amount
of the award if the facts of the case so justify. While great weight is attached to
the report of the commissioners, yet a court may substitute therefor its estimate
of the value of the property as gathered from the record in certain cases, as,
where the commissioners have applied illegal principles to the evidence
submitted to them, or where they have disregarded a clear preponderance of
evidence, or where the amount allowed is either palpably inadequate or
excessive." 28
The report of the commissioners of appraisal in condemnation proceedings are not
binding, but merely advisory in character, as far as the court is concerned. 29 In our analysis
of the report of the commissioners, We find points that merit serious consideration in the
determination of the just compensation that should be paid to Castellvi and Toledo-Gozun for
their lands. It should be noted that the commissioners had made ocular inspections of the
lands and had considered the nature and similarities of said lands in relation to the lands in
other places in the province of Pampanga, like San Fernando and Angeles City. We cannot
disregard the observations of the commissioners regarding the circumstances that make the
lands in question suited for residential purposes — their location near the Basa Air Base, just
like the lands in Angeles City that are near the Clark Air Base, and the facilities that obtain
because of their nearness to the big sugar central of the Pampanga Sugar mills, and to the
flourishing first class town of Floridablanca. It is true that the lands in question are not in the
territory of San Fernando and Angeles City, but, considering the facilities of modern
communications, the town of Floridablanca may be considered practically adjacent to San
Fernando and Angeles City. It is not out of place, therefore, to compare the land values in
Floridablanca to the land values in San Fernando and Angeles City, and form an idea of the
value of the lands in Floridablanca with reference to the land values in those two other
communities.
 72

The important factor in expropriation proceeding is that the owner is awarded the just
compensation for his property. We have carefully studied the record, and the evidence, in this
case, and after considering the circumstances attending the lands in question. We have
arrived at the conclusion that the price of P10.00 per square meter, as recommended by the
commissioners and adopted by the lower court, is quite high. It is Our considered view that
the price of P5.00 per square meter would be a fair valuation of the lands in question and
would constitute a just compensation to the owners thereof. In arriving at this conclusion We
have particularly taken into consideration the resolution of the Provincial Committee on
Appraisal of the province of Pampanga informing, among others, that in the year 1959 the
land of Castellvi could he sold for from P3.00 to P4.00 per square meter, while the land of
Toledo-Gozun could be sold for from P2.50 to P3.00 per square meter. The Court has weighed
all the circumstances relating to this expropriations proceedings, and in fixing the price of the
lands that are being expropriated the Court arrived at a happy medium between the price as
recommended by the commissioners and approved by the court, and the price advocated by
the Republic. This Court has also taken judicial notice of the fact that the value of the Philippine
peso has considerably gone down since the year 1959. 30 Considering that the lands of
Castellvi and Toledo-Gozun are adjoining each other, and are of the same nature, the Court
has deemed it proper to fix the same price for all these lands.
3. The third issue raised by the Republic relates to the payment of interest. The
Republic maintains that the lower court erred when it ordered the Republic to pay Castellvi
interest at the rate of 6% per annum on the total amount adjudged as the value of the land of
Castellvi, from July 1, 1956 to July 10, 1959. We find merit in this assignment of error.
In ordering the Republic to pay 6% interest on the total value of the land of Castellvi
from July 1, 1956 to July 10, 1959, the lower court held that the Republic had illegally
possessed the land of Castellvi from July 1, 1956, after its lease of the land had expired on
June 30, 1956, until August 10, 1959 when the Republic was placed in possession of the land
pursuant to the writ of possession issued by the court. What really happened was that the
Republic continued to occupy the land of Castellvi after the expiration of its lease on June 30,
1956, so much so that Castellvi filed an ejectment case against the Republic in the Court of
First Instance of Pampanga. 31 However, while that ejectment case was pending, the
Republic filed the complaint for eminent domain in the present case and was placed in
possession of the land on August 10, 1959, and because of the institution of the expropriation
proceedings the ejectment case was later dismissed. In the order dismissing the ejectment
case, the Court of First Instance of Pampanga said:
"Plaintiff has agreed, as a matter of fact has already signed an agreement
with defendants, whereby she had agreed to receive the rent of the lands, subject
matter of the instant case from June 30, 1956 up to 1959 when the Philippine Air
Force was placed in possession by virtue of an order of the Court upon
depositing the provisional amount as fixed by the Provincial Appraisal Committee
with the Provincial Treasurer of Pampanga; . . ."
If Castellvi had agreed to receive the rentals from June 30, 1956 to August 10, 1959,
she should be considered as having allowed her land to be leased to the Republic until August
10, 1959, and she could not at the same time be entitled to the payment of interest during the
same period on the amount awarded her as the just compensation of her land. The Republic,
therefore, should pay Castellvi interest at the rate of 6% per annum on the value of her land,
minus the provisional value that was deposited, only from July 10, 1959 when it deposited in
court the provisional value of the land.
4. The fourth error assigned by the Republic relates to the denial by the lower court of
its motion for a new trial based on nearly discovered evidence. We do not find merit in this
assignment of error.
After the lower court had decided this case on May 26, 1961, the Republic filed a
motion for a new trial, supplemented by another motion, both based upon the ground of newly
discovered evidence. The alleged newly discovered evidence in the motion filed on June 21,
1961 was a deed of absolute sale — executed on January 25, 1961, showing that a certain
Serafin Francisco had sold to Pablo L. Narciso a parcel of sugar land having an area of
100,000 square meters with a sugar quota of 100 piculs, covered by P.A. No. 1701, situated
in Barrio Fortuna, Floridablanca, for P14,000, or P.14 per square meter.
In the supplemental motion, the alleged newly discovered evidence were: (1) a deed
of sale of some 35,000 square meters of land situated at Floridablanca for P7,500.00 (or about
 73

P.21 per square meter) executed in July, 1959, by the spouses Evelyn D. Laird and Cornelio
G. Laird in favor of spouses Bienvenido S. Aguas and Josefina Q. Aguas; and (2) a deed of
absolute sale of a parcel of land having an area of 4,120,101 square meters, including the
sugar quota covered by Plantation Audit No. 16-1345, situated at Floridablanca, Pampanga,
for P860.00 per hectare (a little less than P.09 per square meter) executed on October 22,
1957 by Jesus Toledo y Mendoza in favor of the Land Tenure Administration.
We find that the lower court acted correctly when it denied the motions for a new trial.
To warrant the granting of a new trial based on the ground of newly discovered
evidence, it must appear that the evidence was discovered after the trial; that even with the
exercise of due diligence, the evidence could not have been discovered and produced at the
trial; and that the evidence is of such a nature as to alter the result of the case if
admitted. 32 The lower court correctly ruled that these requisites were not complied with.
The lower court, in a well-reasoned order, found that the sales made by Serafin
Francisco to Pablo Narciso and that made by Jesus Toledo to the Land Tenure Administration
were immaterial and irrelevant, because those sales covered sugarlands with sugar quotas,
while the lands sought to be expropriated in the instant case are residential lands. The lower
court also concluded that the land sold by the spouses Laird to the spouses Aguas was a
sugar land.
We agree with the trial court. In eminent domain proceedings, in order that evidence
as to the sale price of other lands may be admitted in evidence to prove the fair market value
of the land sought to be expropriated, the lands must, among other things, be shown to be
similar.
But even assuming, gratia argumenti, that the lands mentioned in those deeds of sale
were residential, the evidence would still not warrant the grant of a new trial, for said evidence
could have been discovered and produced at the trial, and they cannot be considered newly
discovered evidence as contemplated in Section 1(b) of Rule 37 of the Rules of Court.
Regarding this point, the trial court said:
"The Court will now show that there was no reasonable diligence
employed.
"The land described in the deed of sale executed by Serafin Francisco,
copy of which is attached to the original motion, is covered by a Certificate of
Title issued by the Office of the Register of Deeds of Pampanga. There is no
question in the mind of the court but this document passed through the Office of
the Register of Deeds for the purpose of transferring the title or annotating the
sale on the certificate of title. It is true that Fiscal Lagman went to the Office of
the Register of Deeds to check conveyances which may be presented in the
evidence in this case as it is now sought to be done by virtue of the motions at
bar, Fiscal Lagman, one of the lawyers of the plaintiff, did not exercise
reasonable diligence as required by the rules. The assertion that he only went to
the office of the Register of Deeds 'now and then' to check the records in that
office only shows the half-hazard [sic] manner by which the plaintiff looked for
evidence to be presented during the hearing before the Commissioners, if it is at
all true that Fiscal Lagman did what he is supposed to have done according to
Solicitor Padua. It would have been the easiest matter for plaintiff to move for the
issuance of a subpoena duces tecum directing the Register of Deeds of
Pampanga to come to testify and to bring with him all documents found in his
office pertaining to sales of land in Floridablanca adjacent to or near the lands in
question executed or recorded from 1958 to the present. Even this elementary
precaution was not done by plaintiff's numerous attorneys.
"The same can be said of the deeds of sale attached to the
supplementary motion. They refer to lands covered by certificate of title issued
by the Register of Deeds of Pampanga. For the same reason they could have
been easily discovered if reasonable diligence has been exerted by the
numerous lawyers of the plaintiff in this case. It is noteworthy that all these deeds
of sale could be found in several government offices, namely, in the Office of the
Register of Deeds of Pampanga, the Office of the Provincial Assessor of
Pampanga, the Office of the Clerk of Court as a part of notarial reports of notaries
public that acknowledged these documents, or in the archives of the National
 74

Library. In respect to Annex 'B' of the supplementary motion copy of the

document could also be found in the Office of the Land Tenure Administration,
another government entity. Any lawyer with a modicum of ability handling this
expropriation case would have right away though [sic] of digging up documents
diligently showing conveyances of lands near or around the parcels of land
sought to be expropriated in this case in the offices that would have naturally
come to his mind such as the offices mentioned above, and had counsel for the
movant really exercised the reasonable diligence required by the Rule'
undoubtedly they would have been able to find these documents and/or caused
the issuance of subpoena duces tecum. . . .
"It is also recalled that during the hearing before the Court of the Report
and Recommendation of the Commissioners and objection thereto, Solicitor
Padua made the observation:
'I understand, Your Honor, that there was a sale that took place in this
place of land recently where the land was sold for P0.20 which is contiguous to
this land.'
"The Court gave him permission to submit said document subject to the
approval of the Court. . . This was before the decision was rendered, and later
promulgated on May 26, 1961 or more than one month after Solicitor Padua
made the above observation. He could have, therefore, checked up the alleged
sale and moved for a reopening to adduce further evidence. He did not do so.
He forgot to present the evidence at a more propitious time. Now, he seeks to
introduce said evidence under the guise of newly-discovered evidence.
Unfortunately, the Court cannot classify it as newly-discovered evidence,
because under the circumstances, the correct qualification that can be given is
'forgotten evidence'. Forgotten evidence, however, is not newly-discovered
evidence." 33
The granting or denial of a motion for new trial is, as a general rule, discretionary with
the trial court, whose judgment should not be disturbed unless there is a clear showing of
abuse of discretion. 34 We do not see any abuse of discretion on the part of the lower court
when it denied the motions for a new trial.
WHEREFORE, the decision appealed from is modified, as follows:
(a) the lands of appellees Carmen vda. de Castellvi and Maria Nieves
Toledo-Gozun, as described in the complaint, are declared expropriated for
public use;
(b) the fair market value of the lands of the appellees is fixed at P5.00 per
square meter;
(c) the Republic must pay appellee Castellvi the sum of P3,796,495.00
as just compensation for her one parcel of land that has an area of 759,299
square meters, minus the sum of P151,859.80 that she withdrew out of the
amount that was deposited in court as the provisional value of the land, with
interest at the rate of 6% per annum from July 10, 1959 until the day full payment
is made or deposited in court;
(d) the Republic must pay appellee Toledo-Gozun the sum of
P2,695,225.00 as the just compensation for her two parcels of land that have a
total area of 539,045 square meters, minus the sum of P107,809.00 that she
withdrew out of the amount that was deposited in court as the provisional value
of her lands, with interest at the rate of 6%, per annum from July 10, 1959 until
the day full payment is made or deposited in court;
(e) the attorney's lien of Atty. Alberto Cacnio is enforced; and
(f) the costs should be paid by appellant Republic of the Philippines, as
provided in Section 12, Rule 67, and in Section 13 Rule 141, of the Rules of
Court.
IT IS SO ORDERED.
||| (Republic v. Vda. de Castellvi, G.R. No. L-20620, [August 15, 1974], 157 PHIL 329-364)
 75

[G.R. No. 103125. May 17, 1993.]

PROVINCE OF CAMARINES SUR, vs. THE COURT OF APPEALS (THIRD
DIVISION), ERNESTO SAN JOAQUIN and EFREN SAN
JOAQUIN, respondents.

SYLLABUS

1. POLITICAL LAW; INHERENT POWERS OF THE STATE; EMINENT DOMAIN;

PUBLIC PURPOSE; CONCEPT. — Modernly, there has been a shift from the literal to a
broader interpretation of "public purpose" or "public use" for which the power of eminent
domain may be exercised. The old concept was that the condemned property must actually
be used by the general public (e.g. roads, bridges, public plazas, etc.) before the taking thereof
could satisfy the constitutional requirement of "public use". Under the new concept, "public
use" means public advantage, convenience or benefit, which tends to contribute to the general
welfare and the prosperity of the whole community, like a resort complex for tourists or housing
project (Heirs of Juancho Ardano v. Reyes, 125 SCRA 220 [1983]; Sumulong v. Guerrero,
154 SCRA 461 [1987]).
2. ID.; ID.; ID.; ID.; DEEMED SATISFIED WHEN THE PURPOSE DIRECTLY AND
SIGNIFICANTLY AFFECTS PUBLIC HEALTH; SAFETY, THE ENVIRONMENT AND IN SUM
THE GENERAL WELFARE. — The expropriation of the property authorized by the questioned
resolution is for a public purpose. The establishment of a pilot development center would inure
to the direct benefit and advantage of the people of the Province of Camarines Sur. Once
operational, the center would make available to the community invaluable information and
technology on agriculture, fishery and the cottage industry. Ultimately, the livelihood of the
farmers, fishermen and craftsmen would be enhanced. The housing project also satisfies the
public purpose requirement of the Constitution. As held in Sumulong v. Guerrero, 154 SCRA
461, "Housing is a basic human need. Shortage in housing is a matter of state concern since
it directly and significantly affects public health, safety, the environment and in sum the general
welfare."
DECISION

QUIASON, J p:
In this appeal by certiorari from the decision of the Court of Appeals in AC-G.R. SP
No. 20551 entitled "Ernesto N. San Joaquin, et al., v. Hon. Benjamin V. Panga, et al.," this
Court is asked to decide whether the expropriation of agricultural lands by local government
units is subject to the prior approval of the Secretary of the Agrarian Reform, as the
implementor of the agrarian reform program.
On December 22, 1988, the Sangguniang Panlalawigan of the Province of Camarines
Sur passed Resolution No. 129, Series of 1988, authorizing the Provincial Governor to
purchase or expropriate property contiguous to the provincial capitol site, in order to establish
a pilot farm for non-food and non-traditional agricultural crops and a housing project for
provincial government employees. cdasia
The "WHEREAS" clause of the Resolution states:
"WHEREAS, the province of Camarines Sur has adopted a five-year
Comprehensive Development plan, some of the vital components of which
includes the establishment of model and pilot farm for non-food and non-
traditional agricultural crops, soil testing and tissue culture laboratory centers,
15 small scale technology soap making, small scale products of plaster of
paris, marine biological and sea farming research center, and other
progressive feasibility concepts objective of which is to provide the necessary
scientific and technology know-how to farmers and fishermen in Camarines
Sur and to establish a housing project for provincial government employees;
 76

"WHEREAS, the province would need additional land to be acquired

either by purchase or expropriation to implement the above program
component;
"WHEREAS, there are contiguous/adjacent properties to be (sic)
present Provincial Capitol Site ideally suitable to establish the same pilot
development center;
"WHEREFORE, . . . ."
Pursuant to the Resolution, the Province of Camarines Sur, through its Governor, Hon.
Luis R. Villafuerte, filed two separate cases for expropriation against Ernesto N. San Joaquin
and Efren N. San Joaquin, docketed as Special Civil Action Nos. P-17-89 and P-19-89 of the
Regional Trial Court, Pili, Camarines Sur, presided by the Hon. Benjamin V. Panga.
Forthwith, the Province of Camarines Sur filed a motion for the issuance of a writ of
possession. The San Joaquins failed to appear at the hearing of the motion.
The San Joaquins moved to dismiss the complaints on the ground of inadequacy of
the price offered for their property. In an order dated December 6, 1989, the trial court denied
the motion to dismiss and authorized the Province of Camarines Sur to take possession of
the property upon the deposit with the Clerk of Court of the amount of P5,714.00, the amount
provisionally fixed by the trial court to answer for damages that private respondents may suffer
in the event that the expropriation cases do not prosper. The trial court issued a writ of
possession in an order dated January 18, 1990.
The San Joaquins filed a motion for relief from the order, authorizing the Province of
Camarines Sur to take possession of their property and a motion to admit an amended motion
to dismiss. Both motions were denied in the order dated February 26, 1990. cdll
In their petition before the Court of Appeals, the San Joaquins asked: (a) that
Resolution No. 129, Series of 1988 of the Sangguniang Panlalawigan be declared null and
void; (b) that the complaints for expropriation be dismissed; and (c) that the order dated
December 6, 1989 (i) denying the motion to dismiss and (ii) allowing the Province of
Camarines Sur to take possession of the property subject of the expropriation and the order
dated February 26, 1990, denying the motion to admit the amended motion to dismiss, be set
aside. They also asked that an order be issued to restrain the trial court from enforcing the
writ of possession, and thereafter to issue a writ of injunction.
In its answer to the petition, the Province of Camarines Sur claimed that it has the
authority to initiate the expropriation proceedings under Sections 4 and 7 of Local Government
Code (B.P. Blg. 337) and that the expropriations are for a public purpose.
Asked by the Court of Appeals to give his Comment to the petition, the Solicitor
General stated that under Section 9 of the Local Government Code (B.P. Blg. 337), there was
no need for the approval by the Office of the President of the exercise by the Sangguniang
Panlalawigan of the right of eminent domain. However, the Solicitor General expressed the
view that the Province of Camarines Sur must first secure the approval of the Department of
Agrarian Reform of the plan to expropriate the lands of petitioners for use as a housing project.
The Court of Appeals set aside the order of the trial court, allowing the Province of
Camarines Sur to take possession of private respondents' lands and the order denying the
admission of the amended motion to dismiss. It also ordered the trial court to suspend the
expropriation proceedings until after the Province of Camarines Sur shall have submitted the
requisite approval of the Department of Agrarian Reform to convert the classification of the
property of the private respondents from agricultural to non-agricultural land.
Hence this petition.
It must be noted that in the Court of Appeals, the San Joaquins asked for: (i) the
dismissal of the complaints for expropriation on the ground of the inadequacy of the
compensation offered for the property and (ii) the nullification of Resolution No. 129, Series
of 1988 of the Sangguniang Panlalawigan of the Province of Camarines Sur.
The Court of Appeals did not rule on the validity of the questioned resolution; neither
did it dismiss the complaints. However, when the Court of Appeals ordered the suspension of
the proceedings until the Province of Camarines Sur shall have obtained the authority of the
Department of Agrarian Reform to change the classification of the lands sought to be
 77

expropriated from agricultural to non-agricultural use, it assumed that the resolution is valid
and that the expropriation is for a public purpose or public use. cdll
Modernly, there has been a shift from the literal to a broader interpretation of "public
purpose" or "public use" for which the power of eminent domain may be exercised. The old
concept was that the condemned property must actually be used by the general public (e.g.
roads, bridges, public plazas, etc.) before the taking thereof could satisfy the constitutional
requirement of "public use". Under the new concept, "public use" means public advantage,
convenience or benefit, which tends to contribute to the general welfare and the prosperity of
the whole community, like a resort complex for tourists or housing project (Heirs of Juancho
Ardano v. Reyes, 125 SCRA 220 [1983]; Sumulong v. Guerrero, 154 SCRA 461 [1987]).
The expropriation of the property authorized by the questioned resolution is for a public
purpose. The establishment of a pilot development center would inure to the direct benefit and
advantage of the people of the Province of Camarines Sur. Once operational, the center would
make available to the community invaluable information and technology on agriculture, fishery
and the cottage industry. Ultimately, the livelihood of the farmers, fishermen and craftsmen
would be enhanced. The housing project also satisfies the public purpose requirement of the
Constitution. As held in Sumulong v. Guerrero, 154 SCRA 461, "Housing is a basic human
need. Shortage in housing is a matter of state concern since it directly and significantly affects
public health, safety, the environment and in sum the general welfare."
It is the submission of the Province of Camarines Sur that its exercise of the power of
eminent domain cannot be restricted by the provisions of the Comprehensive Agrarian Reform
Law (R.A. No. 6657), particularly Section 65 thereof, which requires the approval of the
Department of Agrarian Reform before a parcel of land can be reclassified from an agricultural
to a non-agricultural land.
The Court of Appeals, following the recommendation of the Solicitor General, held that
the Province of Camarines Sur must comply with the provision of Section 65 of
the Comprehensive Agrarian Reform Law and must first secure the approval of the
Department of Agrarian Reform of the plan to expropriate the lands of the San Joaquins.
In Heirs of Juancho Ardana v. Reyes, 125 SCRA 220, petitioners raised the issue of
whether the Philippine Tourism Authority can expropriate lands covered by the "Operation
Land Transfer" for use of a tourist resort complex. There was a finding that of the 282 hectares
sought to be expropriated, only an area of 8,970 square meters or less than one hectare was
affected by the land reform program and covered by emancipation patents issued by the
Ministry of Agrarian Reform. While the Court said that there was "no need under the facts of
this petition to rule on whether the public purpose is superior or inferior to another purpose or
engage in a balancing of competing public interest," it upheld the expropriation after noting
that petitioners had failed to overcome the showing that the taking of 8,970 square meters
formed part of the resort complex. A fair and reasonable reading of the decision is that this
Court viewed the power of expropriation as superior to the power to distribute lands under the
land reform program.
The Solicitor General denigrated the power to expropriate by the Province of
Camarines Sur by stressing the fact that local government units exercise such power only by
delegation. (Comment, pp. 14-15; Rollo, pp. 128-129). cdrep
It is true that local government units have no inherent power of eminent domain and
can exercise it only when expressly authorized by the legislature (City of Cincinnati v. Vester,
281 US 439, 74 L.ed. 950, 50 S Ct. 360). It is also true that in delegating the power to
expropriate, the legislature may retain certain control or impose certain restraints on the
exercise thereof by the local governments (Joslin Mfg. Co. v. Providence, 262 US 668 67 L.
ed. 1167, 43 S Ct. 684). While such delegated power may be a limited authority, it is complete
within its limits. Moreover, the limitations on the exercise of the delegated power must be
clearly expressed, either in the law conferring the power or in other legislations.
Resolution No. 219, Series of 1988, was promulgated pursuant to Section 9 of B.P.
Blg. 337, the Local Government Code, which provides:
"A local government unit may, through its head and acting pursuant to
a resolution of its sanggunian exercise the right of eminent domain and institute
condemnation proceedings for public use or purpose."
 78

Section 9 of B.P. Blg. 337 does not intimate in the least that local government units
must first secure the approval of the Department of Land Reform for the conversion of lands
from agricultural to non-agricultural use, before they can institute the necessary expropriation
proceedings. Likewise, there is no provision in the Comprehensive Agrarian Reform
Law which expressly subjects the expropriation of agricultural lands by local government units
to the control of the Department of Agrarian Reform. The closest provision of law that the
Court of Appeals could cite to justify the intervention of the Department of Agrarian Reform in
expropriation matters is Section 65 of the Comprehensive Agrarian Reform Law, which reads:
"SECTION 65. Conversion of Lands. — After the lapse of five (5) years
from its award, when the land ceases to be economically feasible and sound
for agricultural purposes, or the locality has become urbanized and the land
will have a greater economic value for residential, commercial or industrial
purposes, the DAR, upon application of the beneficiary or the landowner, with
due notice to the affected parties, and subject to existing laws, may authorize
the reclassification or conversion of the land and its disposition: Provided, That
the beneficiary shall have fully paid his obligation."

The opening, adverbial phrase of the provision sends signals that it applies to lands
previously placed under the agrarian reform program as it speaks of "the lapse of five (5)
years from its award."
The rules on conversion of agricultural lands found in Section 4 (k) and 5 (1)
of Executive Order No. 129 - A, Series of 1987, cannot be the source of the authority of the
Department of Agrarian Reform to determine the suitability of a parcel of agricultural land for
the purpose to which it would be devoted by the expropriating authority. While those rules vest
on the Department of Agrarian Reform the exclusive authority to approve or disapprove
conversions of agricultural lands for residential, commercial or industrial uses, such authority
is limited to the applications for reclassification submitted by the land owners or tenant
beneficiaries.
Statutes confering the power of eminent domain to political subdivisions cannot be
broadened or constricted by implication (Schulman v. People, 10 N.Y. 2d. 249, 176 N.E. 2d.
817, 219 NYS 2d. 241).
To sustain the Court of Appeals would mean that the local government units can no
longer expropriate agricultural lands needed for the construction of roads, bridges, schools,
hospitals, etc., without first applying for conversion of the use of the lands with the Department
of Agrarian Reform, because all of these projects would naturally involve a change in the land
use. In effect, it would then be the Department of Agrarian Reform to scrutinize whether the
expropriation is for a public purpose or public use.
Ordinarily, it is the legislative branch of the local government unit that shall determine
whether the use of the property sought to be expropriated shall be public, the same being an
expression of legislative policy. The courts defer to such legislative determination and will
intervene only when a particular undertaking has no real or substantial relation to the public
use (United States Ex Rel Tennessee Valley Authority v. Welch, 327 US 546, 90 L. ed. 843,
66 S Ct 715; State ex rel Twin City Bldg. and Invest. Co. v. Houghton, 144 Minn. 1, 174 NW
885, 8 ALR 585).
There is also an ancient rule that restrictive statutes, no matter how broad their terms
are, do not embrace the sovereign unless the sovereign is specially mentioned as subject
thereto (Alliance of Government Workers v. Minister of Labor and Employment, 124 SCRA 1
[1983]). The Republic of the Philippine, as sovereign, or its political subdivisions, as holders
of delegated sovereign powers, cannot be bound by provisions of law couched in general
terms. prcd
The fears of private respondents that they will be paid on the basis of the valuation
declared in the tax declarations of their property, are unfounded. This Court has declared as
unconstitutional the Presidential Decrees fixing the just compensation in expropriation cases
to be the value given to the condemned property either by the owners or the assessor,
whichever was lower ([Export Processing Zone Authority v. Dulay, 149 SCRA 305 [1987]). As
held in Municipality of Talisay Ramirez, 183 SCRA 528 [1990]7 the rules for determining just
compensation are those laid down in Rule 67 of the Rules of Court, which allow private
 79

respondents to submit evidence on what they consider shall be the just compensation for their
property.
WHEREFORE, the petition is GRANTED and the questioned decision of the Court of
Appeals is set aside insofar as it (a) nullifies the trial court's order allowing the Province of
Camarines Sur to take possession of private respondents' property; (b) orders the trial court
to suspend the expropriation proceedings; and (c) requires the Province of Camarines Sur to
obtain the approval of the Department of Agrarian Reform to convert or reclassify private
respondents' property from agricultural to non-agricultural use. cdasia
The decision of the Court of Appeals is AFFIRMED insofar as it sets aside the order
of the trial court, denying the amended motion to dismiss of the private respondents.
SO ORDERED.
||| (Province of Camarines Sur v. Court of Appeals, G.R. No. 103125, [May 17, 1993])

[G.R. No. L-59603. April 29, 1987.]

EXPORT PROCESSING ZONE AUTHORITY, petitioner, vs. HON. CEFERINO
E. DULAY, in his capacity as the Presiding Judge, Court of First Instance
of Cebu, Branch XVI, Lapu-Lapu City, and SAN ANTONIO DEVELOPMENT
CORPORATION, respondents.

Elena M. Cuevas for respondents.

SYLLABUS

1. CONSTITUTIONAL LAW; JUST COMPENSATION; PROVISIONS OF P.D. NOS.

76, 464, 794 AND 1533 CONSTITUTES IMPERMISSIBLE ENCROACHMENT ON JUDICIAL
PREROGATIVES. — The method of ascertaining just compensation under the aforecited
decrees constitutes impermissible encroachment on judicial prerogatives. It tends to render
this Court initial in a matter which under the Constitution is reserved to it for final determination.
Thus, although in an expropriation proceeding the court technically would still have the power
to determine the just compensation for the property, following the applicable decrees, its task
would be relegated to simply stating the lower value of the property as declared either by the
owner or the assessor. As a necessary consequence, it would be useless for the court to
appoint commissioners under Rule 67 of the Rules of Court. Moreover, the need to satisfy the
due process clause in the taking of private property is seemingly fulfilled since it cannot be
said that a judicial proceeding was not had before the actual taking. However, the strict
application of the decrees during the proceedings would be nothing short of a mere formality
or charade as the court has only to choose between the valuation of the owner and that of the
assessor, and its choice is always limited to the lower of the two. The court cannot exercise
its discretion or independence in determining what is just or fair. Even a grade school pupil
could substitute for the judge insofar as the determination of constitutional just compensation
is concerned.
2. ID.; ID.; VALUATION IN THE DECREE MAY ONLY SERVE AS A GUIDING
PRINCIPLE IN THE DETERMINATION OF JUST COMPENSATION BUT MAY NOT
SUBSTITUTE THE COURT'S OWN JUDGMENT AS TO WHAT AMOUNT SHOULD BE
AWARDED AND HOW TO ARRIVE AT SUCH AMOUNT; DOCTRINE ENUNCIATED IN THE
CASE OF NATIONAL HOUSING AUTHORITY V. REYES (123 SCRA 245) ABANDONED. —
We are convinced and so rule that the trial court correctly stated that the valuation in the
decree may only serve as a guiding principle or one of the factors in determining just
compensation but it may not substitute the court's own judgment as to what amount should
be awarded and how to arrive at such amount. A return to the earlier well-established doctrine,
to our mind, is more in keeping with the principle that the judiciary should live up to its mission
"by vitalizing and not denigrating constitutional rights." (See Salonga v. Cruz Paño, 134 SCRA
438, 462; citing Mercado v. Court of First Instance of Rizal, 116 SCRA 93.) The doctrine we
enunciated in National Housing Authority v. Reyes, supra, therefore, must necessarily be
abandoned if we are to uphold this Court's role as the guardian of the fundamental rights
guaranteed by the due process and equal protection clauses and as the final arbiter over
transgressions committed against constitutional rights.
 80

3. ID.; ID.; DEFINITION OF JUST COMPENSATION; WHAT CONSTITUTES

ARBITRARY AND CONFISCATORY VALUATION. — Just compensation means the value of
the property at the time of the taking. It means a fair and full equivalent for the loss sustained.
All the facts as to the condition of the property and its surroundings, its improvements and
capabilities, should be considered. In this particular case, the tax declarations presented by
the petitioner as basis for just compensation were made by the Lapu-Lapu municipal, later
city assessor long before martial law, when land was not only much cheaper but when
assessed values of properties were stated in figures constituting only a fraction of their true
market value. The private respondent was not even the owner of the properties at the time. It
purchased the lots for development purposes. To peg the value of the lots on the basis of
documents which are out of date and at prices below the acquisition cost of present owners
would be arbitrary and confiscatory.
4. ID.; ID.; FACTORS CONSIDERED IN THE VALUATION OF PROPERTIES FOR
EXPROPRIATION. — Various factors can come into play in the valuation of specific properties
singled out for expropriation. The values given by provincial assessors are usually uniform for
very wide areas covering several barrios or even an entire town with the exception of the
poblacion. Individual differences are never taken into account. The value of land is based on
such generalities as its possible cultivation for rice, corn, coconuts, or other crops. Very often
land described as "cogonal" has been cultivated for generations. Buildings are described in
terms of only two or three classes of building materials and estimates of areas are more often
inaccurate than correct. Tax values can serve as guides but cannot be absolute substitutes
for just compensation.
5. ID.; ID.; DENIAL TO THE OWNER OF EXPROPRIATED PROPERTY OF THE
OPPORTUNITY TO QUESTION THE VALUATION IN THE TAX DOCUMENTS IS
VIOLATIVE OF DUE PROCESS. — To say that the owners are estopped to question the
valuations made by assessors since they had the opportunity to protest is illusory. The
overwhelming mass of land owners accept unquestioningly what is found in the tax
declarations prepared by local assessors or municipal clerks for them. They do not even look
at, much less analyze, the statements. The idea of expropriation simply never occurs until a
demand is made or a case filed by an agency authorized to do so. It is violative of due process
to deny to the owner the opportunity to prove that the valuation in the tax documents is unfair
or wrong. And it is repulsive to basic concepts of justice and fairness to allow the haphazard
work of a minor bureaucrat or clerk to absolutely prevail over the judgment of a court
promulgated only after expert commissioners have actually viewed the property, after
evidence and arguments pro and con have been presented, and after all factors and
considerations essential to a fair and just determination have been judiciously evaluated.
6. ID.; ID.; ID.; DETERMINATION OF JUST COMPENSATION, A JUDICIAL
FUNCTION. — The determination of "just compensation" in eminent domain cases is a judicial
function. The executive department or the legislature may make the initial determinations but
when a party claims a violation of the guarantee in the Bill of Rights that private property may
not be taken for public use without just compensation, no statute, decree, or executive order
can mandate that its own determination shall prevail over the court's findings. Much less can
the courts be precluded from looking into the "just-ness" of the decreed compensation.
7. ID.; ID.; PRESIDENTIAL DECREE NO. 1533; DECLARED UNCONSTITUTIONAL
AND VOID. — We, hold that P.D. No. 1533, which eliminates the court's discretion to appoint
commissioners pursuant to Rule 67 of the Rules of Court, is unconstitutional and void. To hold
otherwise would be to undermine the very purpose why this Court exists in the first place.
DECISION

GUTIERREZ, JR., J p:

The question raised in this petition is whether or not Presidential Decrees Numbered
76, 464, 794 and 1533 have repealed and superseded Sections 5 to 8 of Rule 67 of the
Revised Rules of Court, such that in determining the just compensation of property in an
expropriation case, the only basis should be its market value as declared by the owner or as
determined by the assessor, whichever is lower. LibLex
On January 15, 1979, the President of the Philippines, issued Proclamation No. 1811,
reserving a certain parcel of land of the public domain situated in the City of Lapu-Lapu, Island
 81

of Mactan, Cebu and covering a total area of 1,193,669 square meters, more or less, for the
establishment of an export processing zone by petitioner Export Processing Zone Authority
(EPZA).
Not all the reserved area, however, was public land. The proclamation included,
among others, four (4) parcels of land with an aggregate area of 22,328 square meters owned
and registered in the name of the private respondent. The petitioner, therefore, offered to
purchase the parcels of land from the respondent in accordance with the valuation set forth in
Section 92, Presidential Decree (P.D.) No. 464, as amended. The parties failed to reach an
agreement regarding the sale of the property.
The petitioner filed with the then Court of First Instance of Cebu, Branch XVI, Lapu-
Lapu City, a complaint for expropriation with a prayer for the issuance of a writ of possession
against the private respondent, to expropriate the aforesaid parcels of land pursuant to P.D.
No. 66, as amended, which empowers the petitioner to acquire by condemnation proceedings
any property for the establishment of export processing zones, in relation to Proclamation No.
1811, for the purpose of establishing the Mactan Export Processing Zone.
On October 21, 1980, the respondent judge issued a writ of possession authorizing
the petitioner to take immediate possession of the premises. On December 23, 1980, the
private respondent filed its answer.
At the pre-trial conference on February 13, 1981, the respondent judge issued an order
stating that the parties have agreed that the only issue to be resolved is the just compensation
for the properties and that the pre-trial is thereby terminated and the hearing on the merits is
set on April 2, 1981.
On February 17, 1981, the respondent judge issued the order of condemnation
declaring the petitioner as having the lawful right to take the properties sought to be
condemned, upon the payment of just compensation to be determined as of the filing of the
complaint. The respondent judge also issued a second order, subject of this petition,
appointing certain persons as commissioners to ascertain and report to the court the just
compensation for the properties sought to be expropriated.
On June 19, 1981, the three commissioners submitted their consolidated report
recommending the amount of P15.00 per square meter as the fair and reasonable value of
just compensation for the properties.
On July 29, 1981, the petitioner filed a Motion for Reconsideration of the order of
February 19, 1981 and Objection to Commissioner's Report on the grounds that P.D. No.
1533 has superseded Sections 5 to 8 of Rule 67 of the Rules of Court on the ascertainment
of just compensation through commissioners; and that the compensation must not exceed the
maximum amount set by P.D. No. 1533.
On November 14, 1981, the trial court denied the petitioner's motion for
reconsideration and gave the latter ten (10) days within which to file its objection to the
Commissioner's Report.
On February 9, 1982, the petitioner filed this present petition for certiorari and
mandamus with preliminary restraining order, enjoining the trial court from enforcing the order
dated February 17, 1981 and from further proceeding with the hearing of the expropriation
case.
The only issue raised in this petition is whether or not Sections 5 to 8, Rule 67 of the
Revised Rules of Court had been repealed or deemed amended by P.D. No. 1533 insofar as
the appointment of commissioners to determine the just compensation is concerned. Stated
in another way, is the exclusive and mandatory mode of determining just compensation in P.D.
No. 1533 valid and constitutional?
The petitioner maintains that the respondent judge acted in excess of his jurisdiction
and with grave abuse of discretion in denying the petitioner's motion for reconsideration and
in setting the commissioner's report for hearing because under P.D. No. 1533, which is the
applicable law herein, the basis of just compensation shall be the fair and current market value
declared by the owner of the property sought to be expropriated or such market value as
determined by the assessor, whichever is lower. Therefore, there is no more need to appoint
commissioners as prescribed by Rule 67 of the Revised Rules of Court and for said
commissioners to consider other highly variable factors in order to determine just
compensation. The petitioner further maintains that P.D. No. 1533 has vested on the
 82

assessors and the property owners themselves the power or duty to fix the market value of
the properties and that said property owners are given the full opportunity to be heard before
the Local Board of Assessment Appeals and the Central Board of Assessment Appeals. Thus,
the vesting on the assessor or the property owner of the right to determine the just
compensation in expropriation proceedings, with appropriate procedure for appeal to higher
administrative boards, is valid and constitutional.
Prior to the promulgation of P.D. Nos. 76, 464, 794 and 1533, this Court has
interpreted the eminent domain provisions of the Constitution and established the meaning,
under the fundamental law, of just compensation and who has the power to determine it. Thus,
in the following cases, wherein the filing of the expropriation proceedings were all commenced
prior to the promulgation of the aforementioned decrees, we laid down the doctrine on just
compensation:
Municipality of Daet v. Court of Appeals (93 SCRA 503, 516),
xxx xxx xxx
". . . And in the case of J.M. Tuason & Co., Inc. v. Land Tenure
Administration, 31 SCRA 413, the Court, speaking thru now Chief Justice
Fernando, reiterated the 'well-settled (rule) that just compensation means
the equivalent for the value of the property at the time of its taking. Anything
beyond that is more and anything short of that is less, than just
compensation. It means a fair and full equivalent for the loss sustained,
which is the measure of the indemnity, not whatever gain would accrue to
the expropriating entity.' "
Garcia v. Court of Appeals (102 SCRA 597, 608),
xxx xxx xxx
". . . Hence, in estimating the market value, all the capabilities of
the property and all the uses to which it may be applied or for which it is
adapted are to be considered and not merely the condition it is in the time
and the use to which it is then applied by the owner. All the facts as to the
condition of the property and its surroundings, its improvements and
capabilities may be shown and considered in estimating its value."
Republic v. Santos (141 SCRA 30, 35-36),
"According to section 8 of Rule 67, the court is not bound by the
commissioners' report. It may make such order or render such judgment as shall
secure to the plaintiff the property essential to the exercise of his right of
condemnation, and to the defendant just compensation for the property
expropriated. This Court may substitute its own estimate of the value as gathered
from the record (Manila Railroad Company v. Velasquez, 32 Phil. 286).
However, the promulgation of the aforementioned decrees practically set aside the
above and many other precedents hammered out in the course of evidence-laden, well
argued, fully heard, studiously deliberated, and judiciously considered court proceedings. The
decrees categorically and peremptorily limited the definition of just compensation thus:
P.D. No. 76:
xxx xxx xxx
"For purposes of just compensation in cases of private property acquired
by the government for public use, the basis shall be the current and fair market
value declared by the owner or administrator, or such market value as
determined by the Assessor, whichever is lower."
P.D. No. 464:
"Section 92. Basis for payment of just compensation in expropriation
proceedings. — In determining just compensation which private property is
acquired by the government for public use, the basis shall be the market value
declared by the owner or administrator or anyone having legal interest in the
property, or such market value as determined by the assessor, whichever is
lower."
P.D. No. 794:
 83

"Section 92. Basis for payment of just compensation in expropriation

proceedings. — In determining just compensation when private property is
acquired by the government for public use, the same shall not exceed the market
value declared by the owner or administrator or anyone having legal interest in
the property, or such market value as determined by the assessor, whichever is
lower."
P.D. No. 1533:
"Section 1. In determining just compensation for private property
acquired through eminent domain proceedings, the compensation to be paid
shall not exceed the value declared by the owner or administrator or anyone
having legal interest in the property or determined by the assessor, pursuant to
the Real Property Tax Code, whichever value is lower, prior to the
recommendation or decision of the appropriate Government office to acquire the
property."
We are constrained to declare the provisions of the Decrees on just compensation
unconstitutional and void and accordingly dismiss the instant petition for lack of merit. cdtai
The method of ascertaining just compensation under the aforecited decrees
constitutes impermissible encroachment on judicial prerogatives. It tends to render this Court
inutile in a matter which under the Constitution is reserved to it for final determination.
Thus, although in an expropriation proceeding the court technically would still have the
power to determine the just compensation for the property, following the applicable decrees,
its task would be relegated to simply stating the lower value of the property as declared either
by the owner or the assessor. As a necessary consequence, it would be useless for the court
to appoint commissioners under Rule 67 of the Rules of Court. Moreover, the need to satisfy
the due process clause in the taking of private property is seemingly fulfilled since it cannot
be said that a judicial proceeding was not had before the actual taking. However, the strict
application of the decrees during the proceedings would be nothing short of a mere formality
or charade as the court has only to choose between the valuation of the owner and that of the
assessor, and its choice is always limited to the lower of the two. The court cannot exercise
its discretion or independence in determining what is just or fair. Even a grade school pupil
could substitute for the judge insofar as the determination of constitutional just compensation
is concerned.
In the case of National Housing Authority v. Reyes (123 SCRA 245), this Court
upheld P.D. No. 464, as further amended by P.D. Nos. 794, 1224 and 1259. In this case, the
petitioner National Housing Authority contended that the owner's declaration at P1,400.00
which happened to be lower than the assessor's assessment, is the just compensation for the
respondent's property under section 92 of P.D. No. 464. On the other hand, the private
respondent stressed that while there may be basis for the allegation that the respondent judge
did not follow the decree, the matter is still subject to his final disposition, he having been
vested with the original and competent authority to exercise his judicial discretion in the light
of the constitutional clauses on due process and equal protection.
To these opposing arguments, this Court ruled that under the conceded facts, there
should be a recognition that the law as it stands must be applied; that the decree having
spoken so clearly and unequivocably calls for obedience; and that on a matter where the
applicable law speaks in no uncertain language, the Court has no choice except to yield to its
command. We further stated that "the courts should recognize that the rule introduced by P.D.
No. 76 and reiterated in subsequent decrees does not upset the established concepts of
justice or the constitutional provision on just compensation for, precisely, the owner is allowed
to make his own valuation of his property."
While the Court yielded to executive prerogative exercised in the form of absolute law-
making power, its members, nonetheless, remained uncomfortable with the implications of
the decision and the abuse and unfairness which might follow in its wake. For one thing, the
President himself did not seem assured or confident with his own enactment. It was not
enough to lay down the law on determination of just compensation in P.D. 76. It had to be
repeated and reiterated in P.D. 464, P.D. 794, and P.D. 1533. The provision is also found
in P.D. 1224, P.D. 1259 and P.D. 1313. Inspite of its effectivity as general law and the wide
publicity given to it, the questioned provision or an even stricter version had to be embodied
 84

in cases of specific expropriations by decree as in P.D. 1669 expropriating the Tambunting

Estate and P.D. 1670 expropriating the Sunog Apog area in Tondo, Manila.
In the present petition, we are once again confronted with the same question of
whether the courts under P.D. 1533, which contains the same provision on just compensation
as its predecessor decrees, still have the power and authority to determine just compensation,
independent of what is stated by the decree and to this effect, to appoint commissioners for
such purpose.
This time, we answer in the affirmative.
In overruling the petitioner's motion for reconsideration and objection to the
commissioner's report, the trial court said:
"Another consideration why the Court is empowered to appoint
commissioners to assess the just compensation of these properties under
eminent domain proceedings, is the well-entrenched ruling that 'the owner
of property expropriated is entitled to recover from expropriating authority
the fair and full value of the lot, as of the time when possession thereof was
actually taken by the province, plus consequential damages — including
attorney's fees — from which the consequential benefits, if any should be
deducted, with interest at the legal rate, on the aggregate sum due to the
owner from and after the date of actual taking.' (Capitol Subdivision, Inc. v.
Province of Negros Occidental, 7 SCRA 60). In fine, the decree only
establishes a uniform basis for determining just compensation which the
Court may consider as one of the factors in arriving at 'just compensation,'
as envisage in the Constitution. In the words of Justice Barredo,
'Respondent court's invocation of General Order No. 3 of September 21,
1972 is nothing short of an unwarranted abdication of judicial authority,
which no judge duly imbued with the implications of the paramount
principle of independence of the judiciary should ever think of doing.' (Lina
v. Purisima, 82 SCRA 344, 361; Cf. Prov. of Pangasinan v. CFI Judge of
Pangasinan, Br. VIII, 80 SCRA 117) Indeed, where this Court simply
follows PD 1533, thereby limiting the determination of just compensation
on the value declared by the owner or administrator or as determined by
the Assessor, whichever is lower, it may result in the deprivation of the
landowner's right of due process to enable it to prove its claim to just
compensation, as mandated by the Constitution. (Uy v. Genato, 57 SCRA
123). The tax declaration under the Real Property Tax Code is,
undoubtedly, for purposes of taxation."
We are convinced and so rule that the trial court correctly stated that the valuation in
the decree may only serve as a guiding principle or one of the factors in determining just
compensation but it may not substitute the court's own judgment as to what amount should
be awarded and how to arrive at such amount. A return to the earlier well-established doctrine,
to our mind, is more in keeping with the principle that the judiciary should live up to its mission
"by vitalizing and not denigrating constitutional rights." (See Salonga v. Cruz Paño, 134 SCRA
438, 462; citing Mercado v. Court of First Instance of Rizal, 116 SCRA 93.) The doctrine we
enunciated in National Housing Authority v. Reyes, supra, therefore, must necessarily be
abandoned if we are to uphold this Court's role as the guardian of the fundamental rights
guaranteed by the due process and equal protection clauses and as the final arbiter over
transgressions committed against constitutional rights.
The basic unfairness of the decrees is readily apparent.
Just compensation means the value of the property at the time of the taking. It means
a fair and full equivalent for the loss sustained. All the facts as to the condition of the property
and its surroundings, its improvements and capabilities, should be considered.
In this particular case, the tax declarations presented by the petitioner as basis for just
compensation were made by the Lapu-Lapu municipal, later city assessor long before martial
law, when land was not only much cheaper but when assessed values of properties were
stated in figures constituting only a fraction of their true market value. The private respondent
was not even the owner of the properties at the time. It purchased the lots for development
purposes. To peg the value of the lots on the basis of documents which are out of date and
at prices below the acquisition cost of present owners would be arbitrary and confiscatory.
 85

Various factors can come into play in the valuation of specific properties singled out
for expropriation. The values given by provincial assessors are usually uniform for very wide
areas covering several barrios or even an entire town with the exception of the poblacion.
Individual differences are never taken into account. The value of land is based on such
generalities as its possible cultivation for rice, corn, coconuts, or other crops. Very often land
described as "cogonal" has been cultivated for generations. Buildings are described in terms
of only two or three classes of building materials and estimates of areas are more often
inaccurate than correct. Tax values can serve as guides but cannot be absolute substitutes
for just compensation. LLjur
To say that the owners are estopped to question the valuations made by assessors
since they had the opportunity to protest is illusory. The overwhelming mass of land owners
accept unquestioningly what is found in the tax declarations prepared by local assessors or
municipal clerks for them. They do not even look at, much less analyze, the statements. The
idea of expropriation simply never occurs until a demand is made or a case filed by an agency
authorized to do so.
It is violative of due process to deny to the owner the opportunity to prove that the
valuation in the tax documents is unfair or wrong. And it is repulsive to basic concepts of
justice and fairness to allow the haphazard work of a minor bureaucrat or clerk to absolutely
prevail over the judgment of a court promulgated only after expert commissioners have
actually viewed the property, after evidence and arguments pro and con have been presented,
and after all factors and considerations essential to a fair and just determination have been
judiciously evaluated.
As was held in the case of Gideon v. Wainwright (93 ALR 2d, 733, 742):
"In the light of these and many other prior decisions of this Court, it is not
surprising that the Betts Court, when faced with the contention that 'one charged
with crime, who is unable to obtain counsel' must be furnished counsel by the
State,' conceded that '[E]xpressions in the opinions of this court lend color to the
argument . . .' 316 U.S., at 462, 463, 86 L ed. 1602, 62 S Ct. 1252. The fact is
that in deciding as it did - that 'appointment of counsel is not a fundamental right,
essential to a fair trial' — the Court in Betts v. Brady made an abrupt brake with
its own well-considered precedents. In returning to these old precedents,
sounder we believe than the new, we but restore constitutional principles
established to achieve a fair system of justice. . . .'.
We return to older and more sound precedents. This Court has the duty to formulate
guiding and controlling constitutional principles, precepts, doctrines, or rules. (See Salonga v.
Cruz Pano, supra).
The determination of "just compensation" in eminent domain cases is a judicial
function. The executive department or the legislature may make the initial determinations but
when a party claims a violation of the guarantee in the Bill of Rights that private property may
not be taken for public use without just compensation, no statute, decree, or executive order
can mandate that its own determination shall prevail over the court's findings. Much less can
the courts be precluded from looking into the "just-ness" of the decreed compensation.
We, therefore, hold that P.D. No. 1533, which eliminates the court's discretion to
appoint commissioners pursuant to Rule 67 of the Rules of Court, is unconstitutional and void.
To hold otherwise would be to undermine the very purpose why this Court exists in the first
place.
WHEREFORE, IN VIEW OF THE FOREGOING, the petition is hereby DISMISSED.
The temporary restraining order issued on February 16, 1982 is LIFTED and SET ASIDE.
SO ORDERED.
||| (Export Processing Zone Authority v. Dulay, G.R. No. L-59603, [April 29, 1987], 233 PHIL 313-
326)

[G.R. No. 78742. July 14, 1989.]

ASSOCIATION OF SMALL LANDOWNERS IN THE PHILIPPINES, INC.
 86

||| (Association of Small Landowners in the Philippines, Inc. v. Secretary of Agrarian Reform, G.R.
Nos. 78742, 79310, 79744 & 79777, [July 14, 1989], 256 PHIL 777-827)
DECISION

CRUZ, J p:

In ancient mythology, Antaeus was a terrible giant who blocked and challenged
Hercules for his life on his way to Mycenae after performing his eleventh labor. The two
wrestled mightily and Hercules flung his adversary to the ground thinking him dead, but
Antaeus rose even stronger to resume their struggle. This happened several times to
Hercules' increasing amazement. Finally, as they continued grappling, it dawned on Hercules
that Antaeus was the son of Gaea and could never die as long as any part of his body was
touching his Mother Earth. Thus forewarned, Hercules then held Antaeus up in the air, beyond
the reach of the sustaining soil, and crushed him to death.
Mother Earth. The sustaining soil. The giver of life, without whose invigorating touch
even the powerful Antaeus weakened and died.
The cases before us are not as fanciful as the foregoing tale. But they also tell of the
elemental forces of life and death, of men and women who, like Antaeus, need the sustaining
strength of the precious earth to stay alive.
"Land for the Landless" is a slogan that underscores the acute imbalance in the
distribution of this precious resource among our people. But it is more than a slogan. Through
the brooding centuries, it has become a battlecry dramatizing the increasingly urgent demand
of the dispossessed among us for a plot of earth as their place in the sun. cdasia
Recognizing this need, the Constitution in 1935 mandated the policy of social justice
to "insure the well-being and economic security of all the people," 1 especially the less
privileged. In 1973, the new Constitution affirmed this goal, adding specifically that "the State
shall regulate the acquisition, ownership, use, enjoyment and disposition of private property
and equitably diffuse property ownership and profits." 2 Significantly, there was also the
specific injunction to "formulate and implement an agrarian reform program aimed at
emancipating the tenant from the bondage of the soil." 3
The Constitution of 1987 was not to be outdone. Besides echoing these sentiments, it
also adopted one whole and separate Article XIII on Social Justice and Human Rights,
containing grandiose but undoubtedly sincere provisions for the uplift of the common people.
These include a call in the following words for the adoption by the State of an agrarian reform
program:
SEC. 4. The State shall, by law, undertake an agrarian reform program
founded on the right of farmers and regular farmworkers, who are landless, to
own directly or collectively the lands they till or, in the case of other farmworkers,
to receive a just share of the fruits thereof. To this end, the State shall encourage
and undertake the just distribution of all agricultural lands, subject to such
priorities and reasonable retention limits as the Congress may prescribe, taking
into account ecological, developmental, or equity considerations and subject to
the payment of just compensation. In determining retention limits, the State shall
respect the right of small landowners. The State shall further provide incentives
for voluntary land-sharing.
Earlier, in fact, R.A. No. 3844, otherwise known as the Agricultural Land Reform Code,
had already been enacted by the Congress of the Philippines on August 8, 1963, in line with
the above-stated principles. This was substantially superseded almost a decade later by P.D.
No. 27, which was promulgated on October 21, 1972, along with martial law, to provide for
the compulsory acquisition of private lands for distribution among tenant-farmers and to
specify maximum retention limits for landowners.
The people power revolution of 1986 did not change and indeed even energized the
thrust for agrarian reform. Thus, on July 17, 1987, President Corazon C. Aquino issued E.O.
No. 228, declaring full land ownership in favor of the beneficiaries of P.D. No. 27 and providing
for the valuation of still unvalued lands covered by the decree as well as the manner of their
payment. This was followed on July 22, 1987 by Presidential Proclamation No. 131, instituting
 87

a comprehensive agrarian reform program (CARP), and E.O. No. 229, providing the
mechanics for its implementation.
Subsequently, with its formal organization, the revived Congress of the Philippines
took over legislative power from the President and started its own deliberations, including
extensive public hearings, on the improvement of the interests of farmers. The result, after
almost a year of spirited debate, was the enactment of R.A. No. 6657, otherwise known as
the Comprehensive Agrarian Reform Law of 1988, which President Aquino signed on June
10, 1988. This law, while considerably changing the earlier mentioned enactments,
nevertheless gives them suppletory effect insofar as they are not inconsistent with its
provisions. 4
The above-captioned cases have been consolidated because they involve common
legal questions, including serious challenges to the constitutionality of the several measures
mentioned above. They will be the subject of one common discussion and resolution. The
different antecedents of each case will require separate treatment, however, and will must be
explained hereunder.
G.R. No. 79777
Squarely raised in this petition is the constitutionality of P.D. No. 27, E.O. Nos. 228 and
229, and R.A. No. 6657.
The subjects of this petition are a 9-hectare riceland worked by four tenants and owned
by petitioner Nicolas Manaay and his wife and a 5-hectare riceland worked by four tenants
and owned by petitioner Augustin Hermano, Jr. The tenants were declared full owners of these
lands by E.O. No. 228 as qualified farmers under P.D. No. 27.
The petitioners are questioning P.D. No. 27 and E.O. Nos. 228 and 229 on
grounds inter alia of separation of powers, due process, equal protection and the
constitutional limitation that no private property shall be taken for public use without just
compensation.
They contend that President Aquino usurped legislative power when she
promulgated E.O. No. 228. The said measure is invalid also for violation of Article XIII, Section
4, of the Constitution, for failure to provide for retention limits for small landowners. Moreover,
it does not conform to Article VI, Section 25(4) and the other requisites of a valid appropriation.
In connection with the determination of just compensation, the petitioners argue that
the same may be made only by a court of justice and not by the President of the Philippines.
They invoke the recent cases of EPZA v. Dulay 5 and Manotok v. National Food
Authority. 6 Moreover, the just compensation contemplated by the Bill of Rights is payable in
money or in cash and not in the form of bonds or other things of value.
In considering the rentals as advance payment on the land, the executive order also
deprives the petitioners of their property rights as protected by due process. The equal
protection clause is also violated because the order places the burden of solving the agrarian
problems on the owners only of agricultural lands. No similar obligation is imposed on the
owners of other properties.
The petitioners also maintain that in declaring the beneficiaries under P.D. No. 27 to
be the owners of the lands occupied by them, E.O. No. 228 ignored judicial prerogatives and
so violated due process. Worse, the measure would not solve the agrarian problem because
even the small farmers are deprived of their lands and the retention rights guaranteed by
the Constitution.
In his Comment, the Solicitor General stresses that P.D. No. 27 has already been
upheld in the earlier cases of Chavez v. Zobel, 7 Gonzales v. Estrella, 8 and Association of
Rice and Corn Producers of the Philippines, Inc. v. the National Land Reform council 9 The
determination of just compensation by the executive authorities conformably to the formula
prescribed under the questioned order is at best initial or preliminary only. It does not foreclose
judicial intervention whenever sought or warranted. At any rate, the challenge to the order is
premature because no valuation of their property has as yet been made by the Department
of Agrarian Reform. The petitioners are also not proper parties because the lands owned by
them do not exceed the maximum retention limit of 7 hectares.
Replying, the petitioners insist they are proper parties because P.D. No. 27 does not
provide for retention limits on tenanted lands and that in any event their petition is a class suit
brought in behalf of landowners with landholdings below 24 hectares. They maintain that the
 88

determination of just compensation by the administrative authorities is a final ascertainment.

As for the cases invoked by the public respondent, the constitutionality of P.D. No. 27 was
merely assumed in Chavez, while what was decided in Gonzales was the validity of the
imposition of martial law.
In the amended petition dated November 22, 1988, it is contended that P.D. No.
27, E.O. Nos. 228 and 229 (except Sections 20 and 21) have been impliedly repealed by R.A.
No. 6657. Nevertheless, this statute should itself also be declared unconstitutional because it
suffers from substantially the same infirmities as the earlier measures.
A petition for intervention was filed with leave of court on June 1, 1988 by Vicente
Cruz, owner of a 1.83-hectare land, who complained that the DAR was insisting on the
implementation of P.D. No. 27 and E.O. No. 228 despite a compromise agreement he had
reached with his tenant on the payment of rentals. In a subsequent motion dated April 10,
1989, he adopted the allegations in the basic amended petition that the above-mentioned
enactments have been impliedly repealed by R.A. No. 6657.
G.R. No. 79310
The petitioners herein are landowners and sugar planters in the Victorias Mill District,
Victorias, Negros Occidental. Co-petitioner Planters' Committee, Inc. is an organization
composed of 1,400 planter-members. This petition seeks to prohibit the implementation of
Proc. No. 131 and E.O. No. 229.
The petitioners claim that the power to provide for a Comprehensive Agrarian Reform
Program as decreed by the Constitution belongs to Congress and not the President. Although
they agree that the President could exercise legislative power until the Congress was
convened, she could do so only to enact emergency measures during the transition period.
At that, even assuming that the interim legislative power of the President was properly
exercised, Proc. No. 131 and E.O. No. 229 would still have to be annulled for violating the
constitutional provisions on just compensation, due process, and equal protection.
They also argue that under Section 2 of Proc. No. 131 which provides:
Agrarian Reform Fund. — There is hereby created a special fund, to be
known as the Agrarian Reform Fund, an initial amount of FIFTY BILLION PESOS
(P50,000,000,000.00) to cover the estimated cost of the Comprehensive
Agrarian Reform Program from 1987 to 1992 which shall be sourced from the
receipts of the sale of the assets of the Asset Privatization Trust and Receipts of
sale of ill-gotten wealth received through the Presidential Commission on Good
Government and such other sources as government may deem appropriate. The
amounts collected and accruing to this special fund shall be considered
automatically appropriated for the purpose authorized in this Proclamation.
the amount appropriated is in futuro, not in esse. The money needed to cover the cost of the
contemplated expropriation has yet to be raised and cannot be appropriated at this time.
Furthermore, they contend that taking must be simultaneous with payment of just
compensation as it is traditionally understood, i.e., with money and in full, but no such payment
is contemplated in Section 5 of the E.O. No. 229. On the contrary, Section 6, thereof provides
that the Land Bank of the Philippines "shall compensate the landowner in an amount to be
established by the government, which shall be based on the owner's declaration of current
fair market value as provided in Section 4 hereof, but subject to certain controls to be defined
and promulgated by the Presidential Agrarian Reform Council." This compensation may not
be paid fully in money but in any of several modes that may consist of part cash and part
bond, with interest, maturing periodically, or direct payment in cash or bond as may be
mutually agreed upon by the beneficiary and the landowner or as may be prescribed or
approved by the PARC.
The petitioners also argue that in the issuance of the two measures, no effort was
made to make a careful study of the sugar planters' situation. There is no tenancy problem in
the sugar areas that can justify the application of the CARP to them. To the extent that the
sugar planters have been lumped in the same legislation with other farmers, although they
are a separate group with problems exclusively their own, their right to equal protection has
been violated.
A motion for intervention was filed on August 27, 1987 by the National Federation of
Sugarcane Planters (NASP) which claims a membership of at least 20,000 individual sugar
 89

planters all over the country. On September 10, 1987, another motion for intervention was
filed, this time by Manuel Barcelona, et al., representing coconut and riceland owners. Both
motions were granted by the Court.
NASP alleges that President Aquino had no authority to fund the Agrarian Reform
Program and that, in any event, the appropriation is invalid because of uncertainty in the
amount appropriated. Section 2 of Proc. No. 131 and Sections 20 and 21 of E.O. No.
229 provide for an initial appropriation of fifty billion pesos and thus specifies the minimum
rather than the maximum authorized amount. This is not allowed. Furthermore, the
stated initial amount has not been certified to by the National Treasurer as actually available.
Two additional arguments are made by Barcelona, to wit, the failure to establish by
clear and convincing evidence the necessity for the exercise of the powers of eminent domain,
and the violation of the fundamental right to own property.
The petitioners also decry the penalty for non-registration of the lands, which is the
expropriation of the said land for an amount equal to the government assessor's valuation of
the land for tax purposes. On the other hand, if the landowner declares his own valuation, he
is unjustly required to immediately pay the corresponding taxes on the land, in violation of the
uniformity rule.
In his consolidated Comment, the Solicitor General first invokes the presumption of
constitutionality in favor of Proc. No. 131 and E.O. No. 229. He also justifies the necessity for
the expropriation as explained in the "whereas" clauses of the Proclamation and submits that,
contrary to the petitioner's contention, a pilot project to determine the feasibility of CARP and
a general survey on the people's opinion thereon are not indispensable prerequisites to its
promulgation.
On the alleged violation of the equal protection clause, the sugar planters have failed
to show that they belong to a different class and should be differently treated. The Comment
also suggests the possibility of Congress first distributing public agricultural lands and
scheduling the expropriation of private agricultural lands later. From this viewpoint, the petition
for prohibition would be premature.
The public respondent also points out that the constitutional prohibition is against the
payment of public money without the corresponding appropriation. There is no rule that only
money already in existence can be the subject of an appropriation law. Finally, the earmarking
of fifty billion pesos as Agrarian Reform Fund, although denominated as an initial amount, is
actually the maximum sum appropriated. The word "initial" simply means that additional
amounts may be appropriated later when necessary.
On April 11, 1988, Prudencio Serrano, a coconut planter, filed a petition on his own
behalf, assailing the constitutionality of E.O. No. 229. In addition to the arguments already
raised, Serrano contends that the measure is unconstitutional because:
(1) Only public lands should be included in the CARP;
(2) E.O. No. 229 embraces more than one subject which is not expressed in the title;
(3) The power of the President to legislate was terminated on July 2, 1987; and
(4) The appropriation of a P50 billion special fund from the National Treasury did not
originate from the House of Representatives.
G.R. No. 79744
The petitioner alleges that the then Secretary of Department of Agrarian Reform, in
violation of due process and the requirement for just compensation, placed his landholding
under the coverage of Operation Land Transfer. Certificates of Land Transfer were
subsequently issued to the private respondents, who then refused payment of lease rentals
to him.
On September 3, 1986, the petitioner protested the erroneous inclusion of his small
landholding under Operation Land Transfer and asked for the recall and cancellation of the
Certificates of Land Transfer in the name of the private respondents. He claims that on
December 24, 1986, his petition was denied without hearing. On February 17, 1987, he filed
a motion for reconsideration, which had not been acted upon when E.O. Nos. 228 and
229 were issued. These orders rendered his motion moot and academic because they directly
effected the transfer of his land to the private respondents.
 90

The petitioner now argues that:

(1) E.O. Nos. 228 and 229 were invalidly issued by the President of the Philippines.
(2) The said executive orders are violative of the constitutional provision that no private
property shall be taken without due process or just compensation.
(3) The petitioner is denied the right of maximum retention provided for under the 1987
Constitution.
The petitioner contends that the issuance of E.O Nos. 228 and 229 shortly before
Congress convened is anomalous and arbitrary, besides violating the doctrine of separation
of powers. The legislative power granted to the President under the Transitory Provisions
refers only to emergency measures that may be promulgated in the proper exercise of the
police power.
The petitioner also invokes his rights not to be deprived of his property without due
process of law and to the retention of his small parcels of riceholding as guaranteed under
Article XIII, Section 4 of the Constitution. He likewise argues that, besides denying him just
compensation for his land, the provisions of E.O. No. 228 declaring that:
Lease rentals paid to the landowner by the farmer-beneficiary after
October 21, 1972 shall be considered as advance payment for the land.
is an unconstitutional taking of a vested property right. It is also his contention that the
inclusion of even small landowners in the program along with other landowners with lands
consisting of seven hectares or more is undemocratic.
In his Comment, the Solicitor General submits that the petition is premature because
the motion for reconsideration filed with the Minister of Agrarian Reform is still unresolved. As
for the validity of the issuance of E.O. Nos. 228 and 229, he argues that they were enacted
pursuant to Section 6, Article XVIII of the Transitory Provisions of the 1987 Constitution which
reads:
The incumbent president shall continue to exercise legislative powers
until the first Congress is convened.
On the issue of just compensation, his position is that when P.D. No. 27 was
promulgated on October 21, 1972, the tenant-farmer of agricultural land was deemed the
owner of the land he was tilling. The leasehold rentals paid after that date should therefore be
considered amortization payments.
In his Reply to the public respondents, the petitioner maintains that the motion he filed
was resolved on December 14, 1987. An appeal to the Office of the President would be
useless with the promulgation of E.O. Nos. 228 and 229, which in effect sanctioned the validity
of the public respondent's acts.
G.R. No. 78742
The petitioners in this case invoke the right of retention granted by P.D. No. 27 to
owners of rice and corn lands not exceeding seven hectares as long as they are cultivating or
intend to cultivate the same. Their respective lands do not exceed the statutory limit but are
occupied by tenants who are actually cultivating such lands.
According to P.D. No. 316, which was promulgated in implementation of P.D. No. 27:
No tenant-farmer in agricultural lands primarily devoted to rice and corn
shall be ejected or removed from his farmholding until such time as the
respective rights of the tenant-farmers and the landowner shall have been
determined in accordance with the rules and regulations implementing P.D. No.
27.
The petitioners claim they cannot eject their tenants and so are unable to enjoy their
right of retention because the Department of Agrarian Reform has so far not issued the
implementing rules required under the above-quoted decree. They therefore ask the Court for
a writ of mandamus to compel the respondent to issue the said rules.
In his Comment, the public respondent argues that P.D. No. 27 has been amended
by LOI 474 removing any right of retention from persons who own other agricultural lands of
more than 7 hectares in aggregate area or lands used for residential, commercial, industrial
or other purposes from which they derive adequate income for their family. And even
 91

assuming that the petitioners do not fall under its terms, the regulations implementing P.D.
No. 27 have already been issued, to wit, the Memorandum dated July 10, 1975 (Interim
Guidelines on Retention by Small Landowners, with an accompanying Retention Guide
Table), Memorandum Circular No. 11 dated April 21, 1978, (Implementation Guidelines of LOI
No. 474), Memorandum Circular No. 18-81 dated December 29, 1981 (Clarificatory
Guidelines on Coverage of P.D. No. 27 and Retention by Small Landowners), and
DAR Administrative Order No. 1, series of 1985 (Providing for a Cut-off Date for Landowners
to Apply for Retention and/or to Protest the Coverage of their Landholdings under Operation
Land Transfer pursuant to P.D. No. 27). For failure to file the corresponding applications for
retention under these measures, the petitioners are now barred from invoking this right.
The public respondent also stresses that the petitioners have prematurely initiated this
case notwithstanding the pendency of their appeal to the President of the Philippines.
Moreover, the issuance of the implementing rules, assuming this has not yet been done,
involves the exercise of discretion which cannot be controlled through the writ
of mandamus. This is especially true if this function is entrusted, as in this case, to a separate
department of the government.
In their Reply, the petitioners insist that the above-cited measures are not applicable
to them because they do not own more than seven hectares of agricultural land. Moreover,
assuming arguendo that the rules were intended to cover them also, the said measures are
nevertheless not in force because they have not been published as required by law and the
ruling of this Court in Tañada v. Tuvera. 10 As for LOI 474, the same is ineffective for the
additional reason that a mere letter of instruction could not have repealed the presidential
decree.
I
Although holding neither purse nor sword and so regarded as the weakest of the three
departments of the government, the judiciary is nonetheless vested with the power to annul
the acts of either the legislative or the executive or of both when not conformable to the
fundamental law. This is the reason for what some quarters call the doctrine of judicial
supremacy. Even so, this power is not lightly assumed or readily exercised. The doctrine of
separation of powers imposes upon the courts a proper restraint, born of the nature of their
functions and of their respect for the other departments, in striking down the acts of the
legislative and the executive as unconstitutional. The policy, indeed, is a blend of courtesy
and caution. To doubt is to sustain. The theory is that before the act was done or the law was
enacted, earnest studies were made by Congress or the President, or both, to insure that
the Constitution would not be breached.
In addition, the Constitution itself lays down stringent conditions for a declaration of
unconstitutionality, requiring therefor the concurrence of a majority of the members of the
Supreme Court who took part in the deliberations and voted on the issue during their
session en banc. 11 And as established by judge-made doctrine, the Court will assume
jurisdiction over a constitutional question only if it is shown that the essential requisites of a
judicial inquiry into such a question are first satisfied. Thus, there must be an actual case or
controversy involving a conflict of legal rights susceptible of judicial determination, the
constitutional question must have been opportunely raised by the proper party, and the
resolution of the question is unavoidably necessary to the decision of the case itself. 12
With particular regard to the requirement of proper party as applied in the cases before
us, we hold that the same is satisfied by the petitioners and intervenors because each of them
has sustained or is in danger of sustaining an immediate injury as a result of the acts or
measures complained of. 13 And even if, strictly speaking, they are not covered by the
definition, it is still within the wide discretion of the Court to waive the requirement and so
remove the impediment to its addressing and resolving the serious constitutional questions
raised.
In the first Emergency Powers Cases, 14 ordinary citizens and taxpayers were allowed
to question the constitutionality of several executive orders issued by President Quirino
although they were invoking only an indirect and general interest shared in common with the
public. The Court dismissed the objection that they were not proper parties and ruled that "the
transcendental importance to the public of these cases demands that they be settled promptly
and definitely, brushing aside, if we must, technicalities of procedure." We have since then
applied this exception in many other cases. 15
 92

The other above-mentioned requisites have also been met in the present petitions.
In must be stressed that despite the inhibitions pressing upon the Court when
confronted with constitutional issues like the ones now before it, it will not hesitate to declare
a law or act invalid when it is convinced that this must be done. In arriving at this conclusion,
its only criterion will be the Constitution as God and its conscience give it the light to probe its
meaning and discover its purpose. Personal motives and political considerations are
irrelevancies that cannot influence its decision. Blandishment is as ineffectual as intimidation.
For all the awesome power of the Congress and the Executive, the Court will not
hesitate to "make the hammer fall, and heavily," to use Justice Laurel's pithy language, where
the acts of these departments, or of any public official, betray the people's will as expressed
in the Constitution.
It need only be added, to borrow again the words of Justice Laurel, that —
. . . when the judiciary mediates to allocate constitutional boundaries, it
does not assert any superiority over the other departments; it does not in reality
nullify or invalidate an act of the Legislature, but only asserts the solemn and
sacred obligation assigned to it by the Constitution to determine conflicting
claims of authority under the Constitution and to establish for the parties in an
actual controversy the rights which that instrument secures and guarantees to
them. This is in truth all that is involved in what is termed "judicial supremacy"
which properly is the power of judicial review under the Constitution. 16
The cases before us categorically raise constitutional questions that this Court must
categorically resolve. And so we shall.
II
We proceed first to the examination of the preliminary issues before resolving the more
serious challenges to the constitutionality of the several measures involved in these
petitions. cdtai
The promulgation of P.D. No. 27 by President Marcos in the exercise of his powers
under martial law has already been sustained in Gonzales v. Estrella and we find no reason
to modify or reverse it on that issue. As for the power of President Aquino to promulgate Proc.
No. 131 and E.O. Nos. 228 and 229, the same was authorized under Section 6 of the
Transitory Provisions of the 1987 Constitution, quoted above.
The said measures were issued by President Aquino before July 27, 1987, when the
Congress of the Philippines was formally convened and took over legislative power from her.
They are not "midnight" enactments intended to pre-empt the legislature because E.O. No.
228 was issued on July 17, 1987, and the other measures, i.e., Proc. No. 131 and E.O. No.
229, were both issued on July 22, 1987. Neither is it correct to say that these measures ceased
to be valid when she lost her legislative power for, like any statute, they continue to be in force
unless modified or repealed by subsequent law or declared invalid by the courts. A statute
does not ipso facto become inoperative simply because of the dissolution of the legislature
that enacted it. By the same token, President Aquino's loss of legislative power did not have
the effect of invalidating all the measures enacted by her when and as long as she possessed
it.
Significantly, the Congress she is alleged to have undercut has not rejected but in fact
substantially affirmed the challenged measures and has specifically provided that they shall
be suppletory to R.A. No. 6657 whenever not inconsistent with its provisions. 17 Indeed,
some portions of the said measures, like the creation of the P50 billion fund in Section 2 of
Proc. No. 131, and Sections 20 and 21 of E.O. No. 229, have been incorporated by reference
in the CARP Law. 18
That fund, as earlier noted, is itself being questioned on the ground that it does not
conform to the requirements of a valid appropriation as specified in the Constitution. Clearly,
however, Proc. No. 131 is not an appropriation measure even if it does provide for the creation
of said fund, for that is not its principal purpose. An appropriation law is one the primary and
specific purpose of which is to authorize the release of public funds from the treasury. 19 The
creation of the fund is only incidental to the main objective of the proclamation, which is
agrarian reform.
 93

It should follow that the specific constitutional provisions invoked, to wit, Section 24
and Section 25(4) of Article VI, are not applicable. With particular reference to Section 24, this
obviously could not have been complied with for the simple reason that the House of
Representatives, which now has the exclusive power to initiate appropriation measures, had
not yet been convened when the proclamation was issued. The legislative power was then
solely vested in the President of the Philippines, who embodied, as it were, both houses of
Congress.
The argument of some of the petitioners that Proc. No. 131 and E.O. No. 229 should
be invalidated because they do not provide for retention limits as required by Article XIII,
Section 4 of the Constitution is no longer tenable. R.A. No. 6657 does provide for such limits
now in Section 6 of the law, which in fact is one of its most controversial provisions. This
section declares:
Retention Limits. — Except as otherwise provided in this Act, no person
may own or retain, directly or indirectly, any public or private agricultural land,
the size of which shall vary according to factors governing a viable family-sized
farm, such as commodity produced, terrain, infrastructure, and soil fertility as
determined by the Presidential Agrarian Reform Council (PARC) created
hereunder, but in no case shall retention by the landowner exceed five (5)
hectares. Three (3) hectares may be awarded to each child of the landowner,
subject to the following qualifications: (1) that he is at least fifteen (15) years of
age; and (2) that he is actually tilling the land or directly managing the farm;
Provided, That landowners whose lands have been covered by Presidential
Decree No. 27 shall be allowed to keep the area originally retained by them
thereunder, further, That original homestead grantees or direct compulsory heirs
who still own the original homestead at the time of the approval of this Act shall
retain the same areas as long as they continue to cultivate said homestead.
The argument that E.O. No. 229 violates the constitutional requirement that a bill shall
have only one subject, to be expressed in its title, deserves only short attention. It is settled
that the title of the bill does not have to be a catalogue of its contents and will suffice if the
matters embodied in the text are relevant to each other and may be inferred from the title. 20
The Court wryly observes that during the past dictatorship, every presidential
issuance, by whatever name it was called, had the force and effect of law because it came
from President Marcos. Such are the ways of despots. Hence, it is futile to argue, as the
petitioners do in G.R. No. 79744, that LOI 474 could not have repealed P.D. No. 27 because
the former was only a letter of instruction. The important thing is that it was issued by President
Marcos, whose word was law during that time. LexLib
But for all their peremptoriness, these issuances from the President Marcos still had
to comply with the requirement for publication as this Court held in Tañada v.
Tuvera. 21 Hence, unless published in the Official Gazette in accordance with Article 2 of the
Civil Code, they could not have any force and effect if they were among those enactments
successfully challenged in that case. (LOI 474 was published, though, in the Official Gazette
dated November 29, 1976.)
Finally, there is the contention of the public respondent in G.R. No. 78742 that the writ
of mandamus cannot issue to compel the performance of a discretionary act, especially by a
specific department of the government. That is true as a general proposition but is subject to
one important qualification. Correctly and categorically stated, the rule is that mandamus will
lie to compel the discharge of the discretionary duty itself but not to control the discretion to
be exercised. In other words, mandamus can issue to require action only but not specific
action.
Whenever a duty is imposed upon a public official and an unnecessary
and unreasonable delay in the exercise of such duty occurs, if it is a clear duty
imposed by law, the courts will intervene by the extraordinary legal remedy
of mandamus to compel action. If the duty is purely ministerial, the courts will
require specific action. If the duty is purely discretionary, the courts
by mandamus will require action only. For example, if an inferior court, public
official, or board should, for an unreasonable length of time, fail to decide a
particular question to the great detriment of all parties concerned, or a court
should refuse to take jurisdiction of a cause when the law clearly gave it
 94

jurisdiction, mandamus will issue, in the first case to require a decision, and in
the second to require that jurisdiction be taken of the cause. 22
And while it is true that as a rule the writ will not be proper as long as there is still a
plain, speedy and adequate remedy available from the administrative authorities, resort to the
courts may still be permitted if the issue raised is a question of law. 23
III
There are traditional distinctions between the police power and the power of eminent
domain that logically preclude the application of both powers at the same time on the same
subject. In the case of City of Baguio v. NAWASA, 24 for example, where a law required the
transfer of all municipal waterworks systems to the NAWASA in exchange for its assets of
equivalent value, the Court held that the power being exercised was eminent domain because
the property involved was wholesome and intended for a public use. Property condemned
under the police power is noxious or intended for a noxious purpose, such as a building on
the verge of collapse, which should be demolished for the public safety, or obscene materials,
which should be destroyed in the interest of public morals. The confiscation of such property
is not compensable, unlike the taking of property under the power of expropriation, which
requires the payment of just compensation to the owner.
In the case of Pennsylvania Coal Co. v. Mahon, 25 Justice Holmes laid down the limits
of the police power in a famous aphorism: "The general rule at least is that while property may
be regulated to a certain extent, if regulation goes too far it will be recognized as a taking."
The regulation that went "too far" was a law prohibiting mining which might cause the
subsidence of structures for human habitation constructed on the land surface. This was
resisted by a coal company which had earlier granted a deed to the land over its mine but
reserved all mining rights thereunder, with the grantee assuming all risks and waiving any
damage claim. The Court held the law could not be sustained without compensating the
grantor. Justice Brandeis filed a lone dissent in which he argued that there was a valid
exercise of the police power. He said:
Every restriction upon the use of property imposed in the exercise of the
police power deprives the owner of some right theretofore enjoyed, and is, in that
sense, an abridgment by the State of rights in property without making
compensation. But restriction imposed to protect the public health, safety or
morals from dangers threatened is not a taking. The restriction here in question
is merely the prohibition of a noxious use. The property so restricted remains in
the possession of its owner. The state does not appropriate it or make any use
of it. The state merely prevents the owner from making a use which interferes
with paramount rights of the public. Whenever the use prohibited ceases to be
noxious — as it may because of further changes in local or social conditions —
the restriction will have to be removed and the owner will again be free to enjoy
his property as heretofore.
Recent trends, however, would indicate not a polarization but a mingling of the police
power and the power of eminent domain, with the latter being used as an implement of the
former like the power of taxation. The employment of the taxing power to achieve a police
purpose has long been accepted. 26 As for the power of expropriation, Prof. John J. Costonis
of the University of Illinois College of Law (referring to the earlier case of Euclid v. Ambler
Realty Co., 272 US 365, which sustained a zoning law under the police power) makes the
following significant remarks:
Euclid, moreover, was decided in an era when judges located the police
and eminent domain powers on different planets. Generally speaking, they
viewed eminent domain as encompassing public acquisition of private property
for improvements that would be available for "public use," literally construed. To
the police power, on the other hand, they assigned the less intrusive task of
preventing harmful externalities, a point reflected in the Euclid opinion's reliance
on an analogy to nuisance law to bolster its support of zoning. So long as
suppression of a privately authored harm bore a plausible relation to some
legitimate "public purpose," the pertinent measure need have afforded no
compensation whatever. With the progressive growth of government's
involvement in land use, the distance between the two powers has contracted
considerably. Today government often employs eminent domain
interchangeably with or as a useful complement to the police power — a trend
 95

expressly approved in the Supreme Court's 1954 decision in Berman v.

Parker, which broadened the reach of eminent domain's "public use" test to
match that of the police power's standard of "public purpose." 27
The Berman case sustained a redevelopment project and the improvement of blighted
areas in the District of Columbia as a proper exercise of the police power. On the role of
eminent domain in the attainment of this purpose, Justice Douglas declared:
If those who govern the District of Columbia decide that the Nation's
Capital should be beautiful as well as sanitary, there is nothing in the Fifth
Amendment that stands in the way.
Once the object is within the authority of Congress, the right to realize it
through the exercise of eminent domain is clear.
For the power of eminent domain is merely the means to the end. 28
In Penn Central Transportation Co. v. New York City, 29 decided by a 6-3 vote in 1978,
the U.S. Supreme Court sustained the respondent's Landmarks Preservation Law under
which the owners of the Grand Central Terminal had not been allowed to construct a multi-
story office building over the Terminal, which had been designated a historic landmark.
Preservation of the landmark was held to be a valid objective of the police power. The
problem, however, was that the owners of the Terminal would be deprived of the right to use
the airspace above it although other landowners in the area could do so over their respective
properties. While insisting that there was here no taking, the Court nonetheless recognized
certain compensatory rights accruing to Grand Central Terminal which it said would
"undoubtedly mitigate" the loss caused by the regulation. This "fair compensation," as he
called it, was explained by Prof. Costonis in this wise:
In return for retaining the Terminal site in its pristine landmark status,
Penn Central was authorized to transfer to neighboring properties the authorized
but unused rights accruing to the site prior to the Terminal's designation as a
landmark — the rights which would have been exhausted by the 59-story building
that the city refused to countenance atop the Terminal. Prevailing bulk
restrictions on neighboring sites were proportionately relaxed, theoretically
enabling Penn Central to recoup its losses at the Terminal site by constructing
or selling to others the right to construct larger, hence more profitable buildings
on the transferee sites. 30
The cases before us present no knotty complication insofar as the question of
compensable taking is concerned. To the extent that the measures under challenge merely
prescribe retention limits for landowners, there is an exercise of the police power for the
regulation of private property in accordance with the Constitution. But where, to carry out such
regulation, it becomes necessary to deprive such owners of whatever lands they may own in
excess of the maximum area allowed, there is definitely a taking under the power of eminent
domain for which payment of just compensation is imperative. The taking contemplated is not
a mere limitation of the use of the land. What is required is the surrender of the title to and the
physical possession of the said excess and all beneficial rights accruing to the owner in favor
of the farmer-beneficiary. This is definitely an exercise not of the police power but of the power
of eminent domain.
Whether as an exercise of the police power or of the power of eminent domain, the
several measures before us are challenged as violative of the due process and equal
protection clauses.
The challenge to Proc. No. 131 and E.O. Nos. 228 and 299 on the ground that no
retention limits are prescribed has already been discussed and dismissed. It is noted that
although they excited many bitter exchanges during the deliberation of the CARP Law in
Congress, the retention limits finally agreed upon are, curiously enough, not being questioned
in these petitions. We therefore do not discuss them here. The Court will come to the other
claimed violations of due process in connection with our examination of the adequacy of just
compensation as required under the power of expropriation.
The argument of the small farmers that they have been denied equal protection
because of the absence of retention limits has also become academic under Section 6 of R.A.
No. 6657. Significantly, they too have not questioned the area of such limits. There is also the
complaint that they should not be made to share the burden of agrarian reform, an objection
 96

also made by the sugar planters on the ground that they belong to a particular class with
particular interests of their own. However, no evidence has been submitted to the Court that
the requisites of a valid classification have been violated.
Classification has been defined as the grouping of persons or things similar to each
other in certain particulars and different from each other in these same particulars. 31 To be
valid, it must conform to the following requirements: (1) it must be based on substantial
distinctions; (2) it must be germane to the purposes of the law; (3) it must not be limited to
existing conditions only; and (4) it must apply equally to all the members of the class. 32 The
Court finds that all these requisites have been met by the measures here challenged as
arbitrary and discriminatory.
Equal protection simply means that all persons or things similarly situated must be
treated alike both as to the rights conferred and the liabilities imposed.33 The petitioners have
not shown that they belong to a different class and entitled to a different treatment. The
argument that not only landowners but also owners of other properties must be made to share
the burden of implementing land reform must be rejected. There is a substantial distinction
between these two classes of owners that is clearly visible except to those who will not see.
There is no need to elaborate on this matter. In any event, the Congress is allowed a wide
leeway in providing for a valid classification. Its decision is accorded recognition and respect
by the courts of justice except only where its discretion is abused to the detriment of the Bill
of Rights.
It is worth remarking at this juncture that a statute may be sustained under the police
power only if there is a concurrence of the lawful subject and the lawful method. Put otherwise,
the interests of the public generally as distinguished from those of a particular class require
the interference of the State and, no less important, the means employed are reasonably
necessary for the attainment of the purpose sought to be achieved and not unduly oppressive
upon individuals. 34 As the subject and purpose of agrarian reform have been laid down by
the Constitution itself, we may say that the first requirement has been satisfied. What remains
to be examined is the validity of the method employed to achieve the constitutional goal. LLphil
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.
That right covers the person's life, his liberty and his property under Section 1 of Article
III of the Constitution. With regard to his property, the owner enjoys the added protection of
Section 9, which reaffirms the familiar rule that private property shall not be taken for public
use without just compensation.
This brings us now to the power of eminent domain.
IV
Eminent domain is an inherent power of the State that enables it to forcibly acquire
private lands intended for public use upon payment of just compensation to the owner.
Obviously, there is no need to expropriate where the owner is willing to sell under terms also
acceptable to the purchaser, in which case an ordinary deed of sale may be agreed upon by
the parties. 35 It is only where the owner is unwilling to sell, or cannot accept the price or other
conditions offered by the vendee, that the power of eminent domain will come into play to
assert the paramount authority of the State over the interests of the property owner. Private
rights must then yield to the irresistible demands of the public interest on the time-honored
justification, as in the case of the police power, that the welfare of the people is the supreme
law.
But for all its primacy and urgency, the power of expropriation is by no means absolute
(as indeed no power is absolute). The limitation is found in the constitutional injunction that
"private property shall not be taken for public use without just compensation" and in the
abundant jurisprudence that has evolved from the interpretation of this principle. Basically, the
requirements for a proper exercise of the power are: (1) public use and (2) just compensation.
 97

Let us dispose first of the argument raised by the petitioners in G.R. No. 79310 that
the State should first distribute public agricultural lands in the pursuit of agrarian reform
instead of immediately disturbing property rights by forcibly acquiring private agricultural
lands. Parenthetically, it is not correct to say that only public agricultural lands may be covered
by the CARP as the Constitution calls for "the just distribution of all agricultural lands." In any
event, the decision to redistribute private agricultural lands in the manner prescribed by
the CARP was made by the legislative and executive departments in the exercise of their
discretion. We are not justified in reviewing that discretion in the absence of a clear showing
that it has been abused.
A becoming courtesy admonishes us to respect the decisions of the political
departments when they decide what is known as the political question. As explained by Chief
Justice Concepcion in the case of Tañada v. Cuenco: 36
The term "political question" connotes what it means in ordinary parlance,
namely, a question of policy. It refers to "those questions which, under
the Constitution, are to be decided by the people in their sovereign capacity; or
in regard to which full discretionary authority has been delegated to the
legislative or executive branch of the government." It is concerned with issues
dependent upon the wisdom, not legality, of a particular measure.
It is true that the concept of the political question has been constricted with the
enlargement of judicial power, which now includes the authority of the courts "to determine
whether or not there has been a grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of any branch or instrumentality of the Government." 37 Even so, this
should not be construed as a license for us to reverse the other departments simply because
their views may not coincide with ours.
The legislature and the executive have been seen fit, in their wisdom, to include in
the CARP the redistribution of private landholdings (even as the distribution of public
agricultural lands is first provided for, while also continuing space under the Public Land Act
and other cognate laws). The Court sees no justification to interpose its authority, which we
may assert only if we believe that the political decision is not unwise, but illegal. We do not
find it to be so.
In U.S. v. Chandler-Dunbar Water Power Company, 38 it was held:
Congress having determined, as it did by the Act of March 3, 1909 that
the entire St. Mary's river between the American bank and the international line,
as well as all of the upland north of the present ship canal, throughout its entire
length, was "necessary for the purpose of navigation of said waters, and the
waters connected therewith," that determination is conclusive in condemnation
proceedings instituted by the United States under that Act, and there is no room
for judicial review of the judgment of Congress . . .
As earlier observed, the requirement for public use has already been settled for us by
the Constitution itself. No less than the 1987 Charter calls for agrarian reform, which is the
reason why private agricultural lands are to be taken from their owners, subject to the
prescribed maximum retention limits. The purposes specified in P.D. No. 27, Proc. No. 131
and R.A. No. 6657 are only an elaboration of the constitutional injunction that the State adopt
the necessary measures "to encourage and undertake the just distribution of all agricultural
lands to enable farmers who are landless to own directly or collectively the lands they till."
That public use, as pronounced by the fundamental law itself, must be binding on us.
The second requirement, i.e., the payment of just compensation, needs a longer and
more thoughtful examination.
Just compensation is defined as the full and fair equivalent of the property taken from
its owner by the expropriator. 39 It has been repeatedly stressed by this Court that the
measure is not the taker's gain but the owner's loss. 41
It bears repeating that the measures challenged in these petitions contemplate more
than a mere regulation of the use of private lands under the police power. We deal here with
an actual taking of private agricultural lands that has dispossessed the owners of their property
and deprived them of all its beneficial use and enjoyment, to entitle them to the just
compensation mandated by the Constitution.
 98

As held in Republic of the Philippines v. Castellvi, 42 there is compensable taking

when the following conditions concur: (1) the expropriator must enter a private property; (2)
the entry must be for more than a momentary period; (3) the entry must be under warrant or
color of legal authority; (4) the property must be devoted to 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 beneficial enjoyment of the property.
All these requisites are envisioned in the measures before us.
Where the State itself is the expropriator, it is not necessary for it to make a deposit
upon its taking possession of the condemned property, as "the compensation is a public
charge, the good faith of the public is pledged for its payment, and all the resources of taxation
may be employed in raising the amount." 43 Nevertheless, Section 16(e) of the CARP
Law provides that:
Upon receipt by the landowner of the corresponding payment or, in case
of rejection or no response from the landowner, upon the deposit with an
accessible bank designated by the DAR of the compensation in cash or in LBP
bonds in accordance with this Act, the DAR shall take immediate possession of
the land and shall request the proper Register of Deeds to issue a Transfer
Certificate of Title (TCT) in the name of the Republic of the Philippines. The DAR
shall thereafter proceed with the redistribution of the land to the qualified
beneficiaries. cdphil
Objection is raised, however, to the manner of fixing the just compensation, which it is
claimed is entrusted to the administrative authorities in violation of judicial prerogatives.
Specific reference is made to Section 16(d), which provides that in case of the rejection or
disregard by the owner of the offer of the government to buy his land —
. . . the DAR shall conduct summary administrative proceedings to
determine the compensation for the land by requiring the landowner, the LBP
and other interested parties to submit evidence as to the just compensation for
the land, within fifteen (15) days from the receipt of the notice. After the expiration
of the above period, the matter is deemed submitted for decision. The DAR shall
decide the case within thirty (30) days after it is submitted for decision.
To be sure, the determination of just compensation is a function addressed to the
courts of justice and may not be usurped by any other branch or official of the government.
EPZA v. Dulay 44 resolved a challenge to several decrees promulgated by President Marcos
providing that the just compensation for property under expropriation should be either the
assessment of the property by the government or the sworn valuation thereof by the owner,
whichever was lower. In declaring these decrees unconstitutional, the Court held through Mr.
Justice Hugo E. Gutierrez, Jr.:
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 this 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.
xxx xxx xxx
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In the present petition, we are once again confronted with the same
question of whether the courts under P.D. No. 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.
xxx xxx xxx
It is violative of due process to deny the owner the opportunity to prove
that the valuation in the tax documents is unfair or wrong. And it is repulsive to
the 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.
A reading of the aforecited Section 16(d) will readily show that it does not suffer from
the arbitrariness that rendered the challenged decrees constitutionally objectionable. Although
the proceedings are described as summary, the landowner and other interested parties are
nevertheless allowed an opportunity to submit evidence on the real value of the property. But
more importantly, the determination of the just compensation by the DAR is not by any means
final and conclusive upon the landowner or any other interested party, for Section 16(f) clearly
provides:
Any party who disagrees with the decision may bring the matter to the
court of proper jurisdiction for final determination of just compensation.
The determination made by the DAR is only preliminary unless accepted by all parties
concerned. Otherwise, the courts of justice will still have the right to review with finality the
said determination in the exercise of what is admittedly a judicial function.
The second and more serious objection to the provisions on just compensation is not
as easily resolved.
This refers to Section 18 of the CARP Law providing in full as follows:
SEC. 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 the 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.
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:
(a) For lands above fifty (50) hectares, insofar as the excess
hectarage is concerned — Twenty-five percent (25%) cash, the balance
to be paid in government financial instruments negotiable at any time.
(b) For lands above twenty-four (24) hectares and up to fifty (50)
hectares — Thirty percent (30%) cash, the balance to be paid in
government financial instruments negotiable at any time.
(c) For lands twenty-four (24) hectares and below — Thirty-five
percent (35%) cash, the balance to be paid in government financial
instruments negotiable at any time.
(2) Shares of stock in government-owned or controlled corporations, LBP
preferred shares, physical assets or other qualified investments in accordance
with guidelines set by the PARC;
(3) Tax credits which can be used against any tax liability;
(4) LBP bonds, which shall have the following features:
 100

(a) Market interest rates aligned with 91-day treasury bill rates.
Ten percent (10%) of the face value of the bonds shall mature every year
from the date of issuance until the tenth (10th) year: Provided, That
should the landowner choose to forego the cash portion, whether in full
or in part, he shall be paid correspondingly in LBP bonds;
(b) Transferability and negotiability. Such LBP bonds may be
used by the landowner, his successors-in-interest or his assigns, up to
the amount of their face value, for any of the following:
(i) Acquisition of land or other real properties of the
government, including assets under the Asset Privatization
Program and other assets foreclosed by government
financial institutions in the same province or region where
the lands for which the bonds were paid are situated;
(ii) Acquisition of shares of stock of government
owned or controlled corporations or shares of stock owned
by the government in private corporations;
(iii) Substitution for surety or bail bonds for the
provisional release of accused persons, or for performance
bonds;
(iv) Security for loans with any government financial
institution, provided the proceeds of the loans shall be
invested in an economic enterprise, preferably in a small
and medium-scale industry, in the same province or region
as the land for which the bonds are paid;
(v) Payment for various taxes and fees to
government: Provided, That the use of these bonds for
these purposes will be limited to a certain percentage of the
outstanding balance of the financial instruments; Provided,
further, That the PARC shall determine the percentages
mentioned above;
(vi) Payment for tuition fees of the immediate family
of the original bondholder in government universities,
colleges, trade schools, and other institutions;
(vii) Payment for fees of the immediate family of the
original bondholder in government hospital; and
(viii) Such other uses as the PARC may from time to
time allow.
The contention of the petitioners in G.R. No. 79777 is that the above provision is
unconstitutional insofar as it requires the owners of the expropriated properties to accept just
compensation therefor in less than money, which is the only medium of payment allowed. In
support of this contention, they cite jurisprudence holding that:
The fundamental rule in expropriation matters is that the owner of the
property expropriated is entitled to a just compensation, which should be neither
more nor less, whenever it is possible to make the assessment, than the money
equivalent of said property. Just compensation has always been understood to
be the just and complete equivalent of the loss which the owner of the thing
expropriated has to suffer by reason of the expropriation. 45 (Emphasis
supplied.)
In J.M. Tuazon Co. v. Land Tenure Administration, 46 this Court held:
It is well-settled 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. The market value of the
land taken is the just compensation to which the owner of condemned property
is entitled, the market value being that sum of money which a person desirous,
 101

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 for such property. (Emphasis
supplied.)
In the United States, where much of our jurisprudence on the subject has been
derived, the weight of authority is also to the effect that just compensation for property
expropriated is payable only in money and not otherwise. Thus —
The medium of payment of compensation is ready money or cash. The
condemnor cannot compel the owner to accept anything but money, nor can the
owner compel or require the condemnor to pay him on any other basis than the
value of the property in money at the time and in the manner prescribed by
the Constitution and the statutes. When the power of eminent domain is resorted
to, there must be a standard medium of payment, binding upon both parties, and
the law has fixed that standard as money in cash. 47 (Emphasis supplied.)
Part cash and deferred payments are not and cannot, in the nature of
things, be regarded as a reliable and constant standard of compensation. 48
"Just compensation" for property taken by condemnation means a fair
equivalent in money, which must be paid at least within a reasonable time after
the taking, and it is not within the power of the Legislature to substitute for such
payment future obligations, bonds, or other valuable advantage. 49 (Emphasis
supplied.)
It cannot be denied from these cases that the traditional medium 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.
The expropriation before us affects all private agricultural lands whenever found and
of whatever kind as long as they are in excess of the maximum retention limits allowed their
owners. This kind of expropriation is intended for the benefit not only of a particular community
or of a small segment of the population but of the entire Filipino nation, from all levels of our
society, from the impoverished farmer to the land-glutted owner. Its purpose does not cover
only the whole territory of this country but goes beyond in time to the foreseeable future, which
it hopes to secure and edify with the vision and the sacrifice of the present generation of
Filipinos. Generations yet to come are as involved in this program as we are today, although
hopefully only as beneficiaries of a richer and more fulfilling life we will guarantee to them
tomorrow through our thoughtfulness today. And, finally, let it not be forgotten that it is no less
than the Constitution itself that has ordained this revolution in the farms, calling for "a just
distribution" among the farmers of lands that have heretofore been the prison of their dreams
but can now become the key at least to their deliverance.
Such a program will involve not mere millions of pesos. The cost will be tremendous.
Considering the vast areas of land subject to expropriation under the laws before us, we
estimate that hundreds of billions of pesos will be needed, far more indeed than the amount
of P50 billion initially appropriated, which is already staggering as it is by our present
standards. Such amount is in fact not even fully available at this time.
We assume that the framers of the Constitution were aware of this difficulty when they
called for agrarian reform as a top priority project of the government. It is a part of this
assumption that when they envisioned the expropriation that would be needed, they also
intended that the just compensation would have to be paid not in the orthodox way but a less
conventional if more practical method. There can be no doubt that they were aware of the
financial limitations of the government and had no illusions that there would be enough money
to pay in cash and in full for the lands they wanted to be distributed among the farmers. We
may therefore assume that their intention was to allow such manner of payment as is now
provided for by the CARP Law, particularly the payment of the balance (if the owner cannot
be paid fully with money), or indeed of the entire amount of the just compensation, with other
things of value. We may also suppose that what they had in mind was a similar scheme of
payment as that prescribed in P.D. No. 27, which was the law in force at the time they
deliberated on the new Charter and with which they presumably agreed in principle.
 102

The Court has not found in the records of the Constitutional Commission any categorial
agreement among the members regarding the meaning to be given the concept of just
compensation as applied to the comprehensive agrarian reform program being contemplated.
There was the suggestion to "fine tune" the requirement to suit the demands of the project
even as it was also felt that they should "leave it to Congress" to determine how payment
should be made to the landowner and reimbursement required from the farmer-beneficiaries.
Such innovations as "progressive compensation" and "State-subsidized compensation" were
also proposed. In the end, however, no special definition of the just compensation for the
lands to be expropriated was reached by the Commission. 50
On the other hand, there is nothing in the records either that militates against the
assumptions we are making of the general sentiments and intention of the members on the
content and manner of the payment to be made to the landowner in the light of the magnitude
of the expenditure and the limitations of the expropriator.
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 of 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 spectre 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
the 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 forebearance 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.
The complaint against the effects of non-registration of the land under E.O. No.
229 does not seem to be viable any more as it appears that Section 4 of the said Order has
been superseded by Section 14 of the CARP Law. This repeats the requisites of registration
as embodied in the earlier measure but does not provide, as the latter did, that in case of
failure or refusal to register the land, the valuation thereof shall be that given by the provincial
or city assessor for tax purposes. On the contrary, the CARP Law says that the just
compensation shall be ascertained on the basis of the factors mentioned in its Section 17 and
in the manner provided for in Section 16. dctai
The last major challenge to CARP is that the landowner is divested of his property
even before actual payment to him in full of just compensation, in contravention of a well-
accepted principle of eminent domain.
The recognized rule, indeed, 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. Thus:
Title to property which is the subject of condemnation proceedings does
not vest the condemnor until the judgment fixing just compensation is entered
 103

and paid, but the condemnor's title relates back to the date on which the petition
under the Eminent Domain Act, or the commissioner's report under the Local
Improvement Act, is filed. 51
. . . 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. 52 (Emphasis supplied.)
In Kennedy v. Indianapolis, 53 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 uniformly to this effect. As early as 1838, in Rubottom
v. McLure, 54 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, 55 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, 56 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.)
It is true that P.D. No. 27 expressly ordered the emancipation of tenant-farmer as
October 21, 1972 and declared that he shall "be deemed the owner" of a portion of land
consisting of a family-sized farm except that "no title to the land owned by him was to be
actually issued to him unless and until he had become a full-fledged member of a duly
recognized farmers' cooperative." It was understood, however, that full payment of the just
compensation also had to be made first, conformably to the constitutional requirement.
When E.O. No. 228, categorically stated in its Section 1 that:
All qualified farmer-beneficiaries are now deemed full owners as of
October 21, 1972 of the land they acquired by virtue of Presidential Decree No.
27. (Emphasis supplied.)
it was obviously referring to lands already validly acquired under the said decree, after proof
of full-fledged membership in the farmers' cooperatives and full payment of just compensation.
Hence, it was also perfectly proper for the Order to also provide in its Section 2 that the "lease
rentals paid to the landowner by the farmer-beneficiary after October 21, 1972 (pending
transfer of ownership after full payment of just compensation), shall be considered as advance
payment for the land."
The CARP Law, for its part, conditions the transfer of possession and ownership of
the land to the government on receipt by the landowner of the corresponding payment or the
deposit by the DAR of the compensation in cash or LBP bonds with an accessible bank. Until
then, title also remains with the landowner. 57 No outright change of ownership is
contemplated either.
Hence, the argument that the assailed measures violate due process by arbitrarily
transferring title before the land is fully paid for must also be rejected.
It is worth stressing at this point that all rights acquired by the tenant-farmer under P.D.
No. 27, as recognized under E.O. No. 228, are retained by him even now under R.A. No.
6657. This should counterbalance the express provision in Section 6 of the said law that "the
landowners whose lands have been covered by Presidential Decree No. 27 shall be allowed
to keep the area originally retained by them thereunder, further, That original homestead
grantees or direct compulsory heirs who still own the original homestead at the time of the
approval of this Act shall retain the same areas as long as they continue to cultivate said
homestead."
 104

In connection with these retained rights, it does not appear in G.R. No. 78742 that the
appeal filed by the petitioners with the Office of the President has already been resolved.
Although we have said that the doctrine of exhaustion of administrative remedies need not
preclude immediate resort to judicial action, there are factual issues that have yet to be
examined on the administrative level, especially the claim that the petitioners are not covered
by LOI 474 because they do not own other agricultural lands than the subjects of their petition.
Obviously, the Court cannot resolve these issues. In any event, assuming that the
petitioners have not yet exercised their retention rights, if any, under P.D. No. 27, the Court
holds that they are entitled to the new retention rights provided for by R.A. No. 6657, which in
fact are on the whole more liberal than those granted by the decree.
V
The CARP Law and the other enactments also involved in these cases have been the
subject of bitter attack from those who point to the shortcomings of these measures and ask
that they be scrapped entirely. To be sure, these enactments are less than perfect; indeed,
they should be continuously re-examined and rehoned, that they may be sharper instruments
for the better protection of the farmer's rights. But we have to start somewhere. In the pursuit
of agrarian reform, we do not tread on familiar ground but grope on terrain fraught with pitfalls
and expected difficulties. This is inevitable. The CARP Law is not a tried and tested project.
On the contrary, to use Justice Holmes's words, "it is an experiment, as all life is an
experiment," and so we learn as we venture forward, and, if necessary, by our own mistakes.
We cannot expect perfection although we should strive for it by all means. Meantime, we
struggle as best we can in freeing the farmer from the iron shackles that have unconscionably,
and for so long, fettered his soul to the soil. LexLib
By the decision we reach today, all major legal obstacles to the comprehensive
agrarian reform program are removed, to clear the way for the true freedom of the farmer. We
may now glimpse the day he will be released not only from want but also from the exploitation
and disdain of the past and from his own feelings of inadequacy and helplessness. At last his
servitude will be ended forever. At last the farm on which he toils will be his farm. It will be his
portion of the Mother Earth that will give him not only the staff of life but also the joy of living.
And where once it bred for him only deep despair, now can he see in it the fruition of his hopes
for a more fulfilling future. Now at last can he banish from his small plot of earth his insecurities
and dark resentments and "rebuild in it the music and the dream."
WHEREFORE, the Court holds as follows:
1. R.A. No. 6657, P.D. No. 27, Proc. No. 131, and E.O. Nos. 228 and 229 are
SUSTAINED against all the constitutional objections raised in the herein petitions.
2. Title to all expropriated properties shall be transferred to the State only upon full
payment of compensation to their respective owners.
3. All rights previously acquired by the tenant-farmers under P.D. No. 27 are retained
and recognized.
4. Landowners who were unable to exercise their rights of retention under P.D. No.
27 shall enjoy the retention rights granted by R.A. No. 6657 under the conditions therein
prescribed.
5. Subject to the above-mentioned rulings, all the petitions are DISMISSED, without
pronouncement as to costs.
SO ORDERED.
||| (Association of Small Landowners in the Philippines, Inc. v. Secretary of Agrarian Reform, G.R.
Nos. 78742, 79310, 79744 & 79777, [July 14, 1989], 256 PHIL 777-827)

[G.R. No. 118712. October 6, 1995.]

LAND BANK OF THE PHILIPPINES, petitioner, vs. COURT OF APPEALS,
PEDRO L. YAP, HEIRS OF EMILIANO F. SANTIAGO, AGRICULTURAL
MANAGEMENT & DEVELOPMENT CORP., respondents.

||| (Land Bank of the Phils. v. Court of Appeals, G.R. Nos. 118712 & 118745, [October 6, 1995],
319 PHIL 246-262)
 105

ID.; ID.; ID.; FAIR AND IMMEDIATE COMPENSATION MANDATED. — The ruling in the
"Association" case merely recognized the extraordinary nature of the expropriation to be
undertaken under RA 6657 thereby allowing a deviation from the traditional mode of payment of
compensation and recognized payment other than in cash. It did not, however, dispense with the
settled rule that there must be full payment of just compensation before the title to the expropriated
property is transferred. The attempt to make a distinction between the deposit of compensation
under Section 16(e) of RA 6657 and determination of just compensation under Section 18 is
unacceptable. To withhold the right of the landowners to appropriate the amounts already
deposited in their behalf as compensation for their properties simply because they rejected the
DAR's valuation, and notwithstanding that they have already been deprived of the possession
and use of such properties, is an oppressive exercise of eminent domain. The irresistible
expropriation of private respondents' properties was painful enough for them. But petitioner DAR
rubbed it in all the more by withholding that which rightfully belongs to private respondents in
exchange for the taking, under an authority (the "Association" case) that is, however, misplaced.
This is misery twice bestowed on private respondents, which the Court must rectify. Hence, we
find it unnecessary to distinguish between provisional compensation under Section 16(e) and final
compensation under Section 18 of purposes of exercising the landowner's right to appropriate the
same. The immediate effect in both situations is the same, the landowner is deprived of the use
and possession of his property for which he should be fairly and immediately compensated.
Fittingly, we reiterate the cardinal rule that: ". . . within the context of the State's inherent power
of eminent domain, just compensation means not only the correct determination of the 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 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."
DECISION

FRANCISCO, J p:

It has been declared that the duty of the court to protect the weak and the underprivileged
should not be carried out to such an extent as deny justice to the landowner whenever truth and
justice happen to be on his side. 1 As eloquently stated by Justice Isagani Cruz: cdasia
". . . social justice — or any justice for that matter — is for the deserving,
whether he be a millionaire in his mansion or a pauper in his hovel. It is true that,
in case of reasonable doubt, we are called upon to tilt the balance in favor of the
poor, to whom the Constitution fittingly extends its sympathy and compassion.
But never is it justified to prefer the poor simply because they are poor, or to
reject the rich simply because they are rich, for justice must always be served,
for poor and rich alike, according to the mandate of the law." 2
In this agrarian dispute, it is once more imperative that the aforestated principles be
applied in its resolution.
Separate petitions for review were filed by petitioners Department of Agrarian Reform
(DAR) (G.R. No. 118745) and Land Bank of the Philippines (G.R. No. 118712) following the
adverse ruling by the Court of Appeals in CA-G.R. SP No. 33465. However, upon motion filed by
private respondents, the petitions were ordered consolidated. 3
Petitioners assail the decision of the Court of Appeals promulgated on October 20, 1994,
which granted private respondents' Petition for Certiorari and Mandamus and ruled as
follows: cdtai
"WHEREFORE, premises considered, the Petition
for Certiorari and Mandamus is hereby GRANTED:
a) DAR Administrative Order No. 9, Series of 1990 is
declared null and void insofar as it provides for the opening of trust
accounts in lieu of deposits in cash or bonds;
b) Respondent Landbank is ordered to immediately deposit —
not merely 'earmark', 'reserve' or 'deposit in trust' — with an accessible
 106

bank designated by respondent DAR in the names of the following

petitioners the following amounts in cash and in government financial
instruments — within the parameters of Sec. 18 (1) of RA 6657: cdt
P 1,455,207.31 Pedro L. Yap
P 135,482.12 Heirs of Emiliano Santiago
P15,914,127.77 AMADCOR;
c) The DAR-designated bank is ordered to allow the petitioners to
withdraw the above-deposited amounts without prejudice to the final
determination of just compensation by the proper authorities; and
d) Respondent DAR is ordered to
1) immediately conduct summary administrative proceedings to
determine the just compensation for the lands of the petitioners giving the
petitioners 15 days from notice within which to submit evidence and to 2)
decide the cases within 30 days after they are submitted for
decision." 4 aisadc
Likewise, petitioners seek the reversal of the Resolution dated January 18, 1995, 5 denying
their motion for reconsideration.
Private respondents are landowners whose landholdings were acquired by the DAR and
subjected to transfer schemes to qualified beneficiaries under the Comprehensive Agrarian
Reform Law (CARL, Republic Act No. 6657). Aggrieved by the alleged lapses of the DAR and the
Landbank with respect to the valuation and payment of compensation for their land pursuant to
the provisions of RA 6657, private respondents filed with this Court a Petition
for Certiorari and Mandamus with prayer for preliminary mandatory injunction. Private
respondents questioned the validity of DAR Administrative Order No. 6, Series of 1992 6 and
DAR Administrative Order No. 9, Series of 1990, 7 and sought to compel the DAR to expedite the
pending summary administrative proceedings to finally determine the just compensation of their
properties, and the Landbank to deposit in cash and bonds the amounts respectively "earmarked,"
"reserved" and "deposited in trust accounts" for private respondents, and to allow them to
withdraw the same. cdta
Through a Resolution of the Second Division dated February 9, 1994, this Court
referred the petition to respondent Court of Appeals for proper determination and disposition.
As found by respondent court, the following are undisputed:
"Petitioner Pedro Yap alleges that '(o)n 4 September 1992 the transfer
certificates of title (TCTs) of petitioner Yap were totally cancelled by the Registrar
of Deeds of Leyte and were transferred in the names of farmer beneficiaries
collectively, based on the request of the DAR together with a certification of the
Landbank that the sum of P735,337.77 and P719,869.54 have been earmarked
for Landowner Pedro L. Yap for the parcels of lands covered by TCT Nos. 6282
and 6283 respectively, and issued in lieu thereof TC-563 and TC-562,
respectively, in the names of listed beneficiaries (ANNEXES 'C' & 'D') without
notice to petitioner Yap and without complying with the requirement of Section
16 (e) of RA 6657 to deposit the compensation in cash and Landbank bonds in
an accessible bank.' (Rollo, p. 6).
"The above allegations are not disputed by any of the respondents.
"Petitioner Heirs of Emiliano Santiago allege that the heirs of Emiliano F.
Santiago are the owners of a parcel of land located at Laur, NUEVA ECIJA with
an area of 18.5615 hectares covered by TCT No. NT-60359 of the registry of
Deeds of Nueva Ecija, registered in the name of the late Emiliano F. Santiago;
that in November and December 1990, without notice to the petitioners, the
Landbank required and the beneficiaries executed Actual tillers Deed of
Undertaking (ANNEX 'B') to pay rentals to the Landbank for the use of their
farmlots equivalent to at least 25% of the net harvest; that on 24 October 1991
the DAR Regional Director issued an order directing the Landbank to pay the
landowner directly or through the establishment of a trust fund in the amount of
P135,482.12; that on 24 February 1992, the Landbank reserved in trust
P135,482.12 in the name of Emiliano F. Santiago. (ANNEX 'E'; Rollo, p. 7); that
 107

the beneficiaries stopped paying rentals to the landowners after they signed the
Actual Tiller's Deed of Undertaking committing themselves to pay rentals to the
Landbank (Rollo, p. 133).
"The above allegations are not disputed by the respondents except that
respondent Landbank claims 1) that it was respondent DAR, not Landbank which
required the execution of Actual Tillers Deed of Undertaking (ATDU, for brevity);
and 2) that respondent Landbank, although armed with the ATDU, did not collect
any amount as rental from the substituting beneficiaries (Rollo, p. 99). cdasia
"Petitioner Agricultural Management and Development Corporation
(AMADCOR, for brevity) alleges — with respect to its properties located in San
Francisco, Quezon — that the properties of AMADCOR in San Francisco,
Quezon consist of a parcel of land covered by TCT No. 34314 with an area of
209.9215 hectares and another parcel covered by TCT No. 10832 with an area
of 163.6189 hectares; that a summary administrative proceeding to determine
compensation of the property covered by TCT No. 34314 was conducted by the
DARAB in Quezon City without notice to the landowner; that a decision was
rendered on 24 November 1992 (ANNEX 'F') fixing the compensation for the
parcel of land covered by TCT No. 34314 with an area of 209.9215 hectares at
P2,768,326.34 and ordering the Landbank to pay or establish a trust account for
said amount in the name of AMADCOR; and that the trust account in the amount
of P2,768,326.34 fixed in the decision was established by adding P1,986,489.73
to the first trust account established on 19 December 1991 (ANNEX 'G'). With
respect to petitioner AMADCOR's property in Tabaco, Albay, it is alleged that the
property of AMADCOR in Tabaco, Albay is covered by TCT No. T-2466 of the
Register of Deeds of Albay with an area of 1,629.4578 hectares; that
emancipation patents were issued covering an area of 701.8999 hectares which
were registered on 15 February 1988 but no action was taken thereafter by the
DAR to fix the compensation for said land; that on 21 April 1993, a trust account
in the name of AMADCOR was established in the amount of P12,247,217.83,
three notices of acquisition having been previously rejected by AMADCOR.
(Rollo, pp. 8-9)
"The above allegations are not disputed by the respondents except that
respondent Landbank claims that petitioner failed to participate in the DARAB
proceedings (land valuation case) despite due notice to it (Rollo, p. 100)." 8
Private respondents argued that Administrative Order No. 9, Series of 1990 was
issued without jurisdiction and with grave abuse of discretion because it permits the opening
of trust accounts by the Landbank, in lieu of depositing in cash or bonds in an accessible bank
designated by the DAR, the compensation for the land before it is taken and the titles are
cancelled as provided under Section 16(e) of RA 6657. 9 Private respondents also assail the
fact that the DAR and the Landbank merely "earmarked," "deposited in trust" or "reserved"
the compensation in their names as landowners despite the clear mandate that before taking
possession of the property, the compensation must be deposited in cash or in bonds. 10 cdtai
Petitioner DAR, however, maintained that Administrative Order No. 9 is a valid
exercise of its rule-making power pursuant to Section 49 of RA 6657. 11 Moreover, the DAR
maintained that the issuance of the "Certificate of Deposit" by the Landbank was a substantial
compliance with Section 16(e) of RA 6657 and the ruling in the case of Association of Small
Landowners in the Philippines, Inc., et al. vs. Hon. Secretary of Agrarian
Reform, G.R. No. 78742, July 14, 1989 (175 SCRA 343). 12
For its part, petitioner Landbank declared that the issuance of the Certificates of
Deposits was in consonance with Circular Nos. 29, 29-A and 54 of the Land Registration
Authority where the words "reserved/deposited" were also used. 13
On October 20, 1994, the respondent court rendered the assailed decision in favor of
private respondents. 14 Petitioners filed a motion for reconsideration but respondent court
denied the same. 15
Hence, the instant petitions. cdt
On March 20, 1995, private respondents filed a motion to dismiss the petition in G.R.
No. 118745 alleging that the appeal has no merit and is merely intended to delay the finality
 108

of the appealed decision. 16 The Court, however, denied the motion and instead required the
respondents to file their comments. 17
Petitioners submit that respondent court erred in (1) declaring as null and void
DAR Administrative Order No. 9, Series of 1990, insofar as it provides for the opening of trust
accounts in lieu of deposit in cash or in bonds, and (2) in holding that private respondents are
entitled as a matter of right to the immediate and provisional release of the amounts deposited
in trust pending the final resolution of the cases it has filed for just compensation.
Anent the first assignment of error, petitioners maintain that the word "deposit" as used in
Section 16(e) of RA 6657 referred merely to the act of depositing and in no way excluded the
opening of a trust account as a form of deposit. Thus, in opting for the opening of a trust account
as the acceptable form of deposit through Administrative Circular No. 9, petitioner DAR did not
commit any grave abuse of discretion since it merely exercised its power to promulgate rules and
regulations in implementing the declared policies of RA 6657. aisadc
The contention is untenable. Section 16(e) of RA 6657 provides as follows:
"SECTION 16. Procedure for Acquisition of Private Lands. — . . .
(e) Upon receipt by the landowner of the corresponding payment or, in
case of rejection or no response from the landowner, upon the deposit with an
accessible bank designated by the DAR of the compensation in cash or in LBP
bonds in accordance with this Act, the DAR shall take immediate possession of
the land and shall request the proper Register of Deeds to issue a Transfer
Certificate of Title (TCT) in the name of the Republic of the Philippines. . . ."
(Emphasis supplied.)
It is very explicit therefrom that the deposit must be made only in "cash" or in "LBP bonds."
Nowhere does it appear nor can it be inferred that the deposit can be made in any other form. If
it were the intention to include a "trust account" among the valid modes of deposit, that should
have been made express, or at least, qualifying words ought to have appeared from which it can
be fairly deduced that a "trust account" is allowed. In sum, there is no ambiguity in Section 16(e)
of RA 6657 to warrant an expanded construction of the term "deposit." cdta
The conclusive effect of administrative construction is not absolute. Action of an
administrative agency may be disturbed or set aside by the judicial department if there is an error
of law, a grave abuse of power or lack of jurisdiction or grave abuse of discretion clearly conflicting
with either the letter or the spirit of a legislative enactment. 18 In this regard, it must be stressed
that the function of promulgating rules and regulations may be legitimately exercised only for the
purpose of carrying the provisions of the law into effect. The power of administrative agencies is
thus confined to implementing the law or putting it into effect. Corollary to this is that administrative
regulations cannot extend the law and amend a legislative enactment, 19 for settled is the rule
that administrative regulations must be in harmony with the provisions of the law. And in case
there is a discrepancy between the basic law and an implementing rule or regulation, it is the
former that prevails. 20
In the present suit, the DAR clearly overstepped the limits of its power to enact rules and
regulations when it issued Administrative Circular No. 9. There is no basis in allowing the opening
of a trust account in behalf of the landowner as compensation for his property because, as
heretofore discussed, Section 16(e) of RA 6657 is very specific that the deposit must be made
only in "cash" or in "LBP bonds." In the same vein, petitioners cannot invoke LRA Circular Nos.
29, 29-A and 54 because these implementing regulations cannot outweigh the clear provision of
the law. Respondent court therefore did not commit any error in striking down Administrative
Circular No. 9 for being null and void.
Proceeding to the crucial issue of whether or not private respondents are entitled to
withdraw the amounts deposited in trust in their behalf pending the final resolution of the cases
involving the final valuation of their properties, petitioners assert the negative. cdasia
The contention is premised on the alleged distinction between the deposit of
compensation under Section 16(e) of RA 6657 and payment of final compensation as
provided under Section 18 21 of the same law. According to petitioners, the right of the
landowner to withdraw the amount deposited in his behalf pertains only to the final valuation
as agreed upon by the landowner, the DAR and the LBP or that adjudged by the court. It has
no reference to amount deposited in the trust account pursuant to Section 16(e) in case of
rejection by the landowner because the latter amount is only provisional and intended merely
 109

to secure possession of the property pending final valuation. To further bolster the contention
petitioners cite the following pronouncements in the case of "Association of Small Landowners
in the Phil. Inc. vs. Secretary of Agrarian Reform." 22
"The last major challenge to CARP is that the landowner is divested of
his property even before actual payment to him in full of just compensation, in
contravention of a well-accepted principle of eminent domain.
xxx xxx xxx
"The CARP Law, for its part conditions the transfer of possession and
ownership of the land to the government on receipt by the landowner of the
corresponding payment or the deposit by the DAR of the compensation in cash
or LBP bonds with an accessible bank. Until then, title also remains with the
landowner. No outright change of ownership is contemplated either. cdtai
xxx xxx xxx
"Hence the argument that the assailed measures violate due process by
arbitrarily transferring title before the land is fully paid for must also be rejected."
Notably, however, the aforecited case was used by respondent court in discarding
petitioners' assertion as it found that:
". . . despite the 'revolutionary' character of the expropriation envisioned
under RA 6657 which led the Supreme Court, in the case of Association of Small
Landowners in the Phil. Inc. vs. Secretary of Agrarian Reform (175 SCRA 343),
to conclude that 'payments of the just compensation is not always required to be
made fully in money' — even as the Supreme Court admits in the same case
'that the traditional medium for the payment of just compensation is money and
no other' — the Supreme Court in said case did not abandon the 'recognized rule
. . . that title to the property expropriated shall pass from the owner to the
expropriator only upon full payment of the just compensation." 23 (Emphasis
supplied.) aisadc
We agree with the observations of respondent court. The ruling in the "Association"
case merely recognized the extraordinary nature of the expropriation to be undertaken
under RA 6657 thereby allowing a deviation from the traditional mode of payment of
compensation and recognized payment other than in cash. It did not, however, dispense with
the settled rule that there must be full payment of just compensation before the title to the
expropriated property is transferred.
The attempt to make a distinction between the deposit of compensation under Section
16(e) of RA 6657 and determination of just compensation under Section 18 is unacceptable.
To withhold the right of the landowners to appropriate the amounts already deposited in their
behalf as compensation for their properties simply because they rejected the DAR's valuation,
and notwithstanding that they have already been deprived of the possession and use of such
properties, is an oppressive exercise of eminent domain. The irresistible expropriation of
private respondents' properties was painful enough for them. But petitioner DAR rubbed it in
all the more by withholding that which rightfully belongs to private respondents in exchange
for the taking, under an authority (the "Association" case) that is, however, misplaced. This is
misery twice bestowed on private respondents, which the Court must rectify.
Hence, we find it unnecessary to distinguish between provisional compensation under
Section 16(e) and final compensation under Section 18 for purposes of exercising the
landowners' right to appropriate the same. The immediate effect in both situations is the same,
the landowner is deprived of the use and possession of his property for which he should be
fairly and immediately compensated. Fittingly, we reiterate the cardinal rule that: cdta
". . . within the context of the State's inherent power of eminent
domain, just compensation means not only the correct determination of the
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 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." 24 (Emphasis supplied.)
 110

The promulgation of the "Association" decision endeavored to remove all legal

obstacles in the implementation of the Comprehensive Agrarian Reform Program and clear
the way for the true freedom of the farmer. 25 But despite this, cases involving its
implementation continue to multiply and clog the courts' dockets. Nevertheless, we are still
optimistic that the goal of totally emancipating the farmers from their bondage will be attained
in due time. It must be stressed, however, that in the pursuit of this objective, vigilance over
the rights of the landowners is equally important because social justice cannot be invoked to
trample on the rights of property owners, who under our Constitution and laws are also entitled
to protection. 26
WHEREFORE, the foregoing premises considered, the petition is hereby DENIED for
lack of merit and the appealed decision is AFFIRMED in toto. cdasia
SO ORDERED.
||| (Land Bank of the Phils. v. Court of Appeals, G.R. Nos. 118712 & 118745, [October 6, 1995],
319 PHIL 246-262)

G.R. No. 129998. December 29, 1998.]

NATIONAL POWER CORPORATION, petitioner, vs. LOURDES HENSON,

SYLLABUS

1. POLITICAL LAW; INHERENT POWER OF THE STATE; EMINENT DOMAIN; JUST

COMPENSATION; CRITERION IN DETERMINATION THEREOF. — The parcels of land sought
to be expropriated are undeniably idle, undeveloped, raw agricultural land, bereft of any
improvement. Except for the Henson family, all the other respondents were admittedly farmer
beneficiaries under operation land transfer of the Department of Agrarian Reform. However, the
land has been reclassified as residential. The nature and character of the land at the time of its
taking is the principal criterion to determine just compensation to the landowner. cdasia
||| (National Power Corp. v. Henson, G.R. No. 129998, [December 29, 1998], 360 PHIL 922-931)
DECISION

PARDO, J p:

The case is an appeal via certiorari under Rule 45 of the Revised Rules of Court from the
decision of the Court of Appeals, which affirmed with modification the decision of the Regional
Trial Court, San Fernando, Pampanga, in a special civil action for eminent domain, ordering the
National Power Corporation (NPC) to pay respondents landowners/claimants just compensation
for the taking of their five (5) parcels of land, with an area of 63,220 square meters at P400.00,
per square meter, with legal interest from September 11, 1990, plus costs of the
proceedings. Cdpr
On March 21, 1990, the National Power Corporation (NPC) originally instituted with the
Regional Trial Court, Third Judicial District, Branch 46, San Fernando, Pampanga a
complaint 1 for eminent domain, later amended on October 11, 1990, for the taking for public use
of five (5) parcels of land, owned or claimed by respondents, with a total aggregate area of 58,311
square meters, for the expansion of the NPC Mexico Sub-Station. 2
Respondents are the registered owners/claimants of the five (5) parcels of land sought to
be expropriated, situated in San Jose Matulid, Mexico Pampanga, more particularly described as
follows:
"Parcel of rice land, being Lot 1, 2, 3, 4, and 5 of the subdivision plan
Psd-03-017121 (OLT) and being a portion of Lot 212 of Mexico Cadastre,
situated in the Barangay of San Jose Matulid, Municipality of Mexico, province
of Pampanga, Island of Luzon. Bounded on the North by Barangay Road Calle
San Jose; on the East by Lot 6, Psd-03-017121 (OLT) owned by the National
Power Corporation; on the South by Lot 101, Psd-03-017121 (OLT) being an
irrigation ditch; on the West by Lot 100, Psd-03-0017121 (OLT) being an
irrigation ditch and Barrio road, containing an aggregate area of FIFTY EIGHT
 111

THOUSAND THREE HUNDRED ELEVEN (58,311) square meters, which

parcels of land are broken down as follows with claimants;

1. Lot 1-A = 43,532 sq. m. — Henson Family

2. Lot 2-A = 6,823 sq. m. — Alfredo Tanchiatco,
encumbered with
Land Bank of the
Phil. (LBP)
3. Lot 3-A = 3,057 sq. m. — Bienvenido David,
encumbered with LBP
4. Lot 4-A = 1,438 sq. m. — Maria Bondoc
Capili, encumbered
with LBP
5. Lot 5-A = 3,461 sq. m. — Miguel Manoloto
and Henson Family
Total A = 58,311 sq. m."
and cover by Transfer Certificate of Title No. 557 in the name of Henson, et al.; Transfer
Certificate of title No. 7131/Emancipation Patent No. A-277216 in the name of Alfredo
Tanchiatco; Transfer Certificate of Title No. 7111/Emancipation Patent No. A-278086 in the
name of Bienvenido David; Transfer Certificate of Title No. 7108/Emancipation Patent No. A-
278089 in the name of Maria B. Capili; Certificate of Land Transfer No. 4550 in the name of
Miguel C. Manoloto, and Subdivision Plan Psd-03-017121 (OLT), which is a subdivision of Lot
212, Mexico Cadastre as surveyed for Josefina Katigbak, et al. Said five (5) parcels of land
agricultural/riceland covered by Operation Land Transfer (OLT) of the Department of Agrarian
Reform. 3
Petitioner needed the entire area of the five (5) parcels of land, comprising an aggregate
area of 58,311 square meters, for the expansion of its Mexico Subdivision. 4
On March 28, 1990, petitioner filed an urgent motion to fix the provisional value of the
subject parcels of land. 3
On April 20, 1990, respondent filed a motion to dismiss. 4 They did not challenge
petitioner's right to condemn their property, but declared that the fair market value of their property
was from P180.00 to P250.00 per square meter. 5
On July 10, 1990, the trial court denied respondents' motion to dismiss. The court did not
declare that petitioner had a lawful right to take the property sought to be
expropriated. 6 However, the court fixed the provisional value of the land at P100.00 per square
meter, for a total area of 63,220 7 square meters of respondents' property, to be deposited with
the Provisional Treasurer of Pampanga. Petitioner deposited the amount on August 29, 1990. 8
On September 5, 1990, the trial court issued a writ of possession in favor of petitioner,
and, on September 11, 1990, the court's deputy sheriff placed petitioner in possession of the
subject land. 9
On November 22, 1990, and December 20, 1990, the trial court granted the motions of
respondents to withdraw the deposit made by petitioner of the provisional value of their property
amounting to P5,831,100.00, with a balance of P690,900.00, remaining with the Provisional
Treasurer of Pampanga. 10
On April 5, 1991, the trial court issued an order appointing three (3) commissioners to aid
the in the reception of evidence to determine just compensation for the taking of subject property.
After receiving the evidence and conducting an ocular inspection, the commissioners submitted
to the court their individual reports.
Commissioner Mariano C. Tiglao, in his report dated September 10, 1992, recommended
that their fair market value of the entire 63,220 square meters property be fixed at P350.00 per
square meter. Commissioner Arnold P. Atienza, in his report dated February 24, 1993,
recommended that the fair market value be fixed at P375.00 per square meter. Commissioner
Victorino Oracio, in his report dated April 28, 1993, recommended that the fair market value be
fixed at P170.00 per square meter. 11
 112

However, the trial court did not conduct a hearing on any of the reports.
On May 19, 1993, the trial court rendered judgment fixing the amount of just compensation
to be paid by the petitioner for the taking of the entire area of 63,220 squares meters at P400.00
per square meter, with legal interest thereon computed from September 11, 1990, when petitioner
was placed in possession of the land, plus attorney's fees of P20,000.00, and costs of the
proceedings. 12
In due time, petitioner appealed to the Court of Appeals. 13
On July 23, 1997, the Court Appeals rendered decision affirming that of the Regional Trial
Court, except that the award of P20,000.00 as attorney's fees was deleted. 14
Hence, this petition for review. 15
By resolution adopted on October 8, 1997, the Court required respondents to comment
on the petition within ten (10) days from notice. 16 On January 7, 1998, respondents filed their
comment thereon. 17
By resolution adopted on February 2, 1998, the Court required petitioner to file a reply to
the comment. 18 On August 25, 1990, petitioner filed a reply thereto. 19
We now resolve to give due course to the petition. We modify the appealed
decision. cdphil
As respondents did not challenge petitioner's right to expropriate their property, the issue
presented boils down to what is the just compensation for the taking of respondents' property for
the expansion of the NPC's Mexico Sub-station, situated in San Jose Matulid, Mexico, Pampanga.
The parcels of land sought to be expropriated are undeniably idle, undeveloped, raw
agricultural land, bereft of any improvement. Except for the Henson family, all the other
respondents were admittedly farmer beneficiaries under operation land transfer of the Department
of Agrarian Reform. However, the land has been reclassified as residential. The nature and
character of the land at the time of its taking is the principal criterion to determine just
compensation to the landowner. 20
In this case, the trial court and the Court of Appeals fixed the value of the land at P400.00
per square meter, which was the selling price of lots in the adjacent fully developed subdivision,
the Santo Domingo Village Subdivision. The land in question, however, was an undeveloped, idle
land, principally agricultural in character, though reclassified as residential. Unfortunately, the trial
court, after creating a board of commissioners to help it determine the market value of the land
did not conduct a hearing on the report of the commissioners. The trial court fixed the fair market
value of subject land in an amount equal to the value of lots in the adjacent fully developed
subdivision. This finds no support in the evidence. The valuation was even higher than the
recommendation of anyone of the commissioners.
On the other hand, Commissioner Atienza recommended a fair market value of P375.00
per square meter. This appears to be the closest valuation to the market value of lots in the
adjoining fully developed subdivision. Considering that the subject parcels of land are
undeveloped raw land, the price of P375.00 per square meter would appear to the Court as the
just compensation for the taking of such raw land.
Consequently, we agree with Commissioner Atienza's report that the fair market value of
subject parcels of land be fixed at P375.00 per square meter.
We also agree with petitioner that the area of the communal irrigation canal consisting of
4,809 square meters must be excluded from the land to be expropriated. To begin with, it is
excluded in the amended complaint. Hence, the trial court and the Court of Appeals erred in
including the same in the area to be taken.
The trial court erroneously ordered double payment for 3,611 square meters of lot 5
(portion) in the dispositive part of its decision, and, hence, this must be deleted.
The trial court and the Court of Appeals correctly required petitioner to pay legal
interest 21 on the compensation awarded from September 11, 1990, the date petitioner was
placed in possession of the subject land, less the amount respondents had withdrawn from the
deposit that petitioner made with the Provincial Treasurer's Office.
 113

We however, rule that petitioner is under its charter exempt from payment of costs of the
proceedings.
WHEREFORE, the decision of the Court of Appeals and that of the trial court subject of
the appeal are hereby MODIFIED.
We render judgment as follows:
1. The Court fixes the amount of P375.00, per square meter, as the just
compensation to be paid to respondents for the taking of their property
consisting of five (5) parcels of land, with a total area of 58,311 square
meters, described in and covered by Transfer Certificates of Title Nos.
557, 7131, 7111, 7108 and Certificate of Land Transfer No. 4550, which
parcels of land are broken down as follows:
a. Lot 1-A, with an area of 43,532 square meters belonging to Lourdes
Henson, Josefina Henson, Jesusa Henson and Corazon Henson;
b. Lot 2-A, with an area of 6,823 square meters belonging to Alfredo
Tanchiatco;
c. Lot 3-A, with an area of 3,057 square meters belonging to Bienvenido
David (TCT No. 7111)
d. Lot 4-A, with an area of 1,438 square meters belonging to Maria
Bondoc Capili (TCT No. 7108)
e. Lot 5-A, with an area of 3,461 square meters belonging to Miguel
Manaloto (150 square meters), Certificate of Land Transfer No.
4550 and Henson Family (3,311 square meters),
deducting therefrom the amounts they had withdrawn from the deposit of petitioner for the
provisional value of said parcels of land. 22
2. With legal interest thereon at 6% per annum commencing on September 11, 1990, until
the finality of this decision, and at 12% per annum therefrom on the remaining unpaid amount
until full payment.
Let this decision be recorded in the office of the Register of Deeds of Pampanga.
No costs in all instances.
SO ORDERED. dctai
||| (National Power Corp. v. Henson, G.R. No. 129998, [December 29, 1998], 360 PHIL 922-931)

[G.R. No. 152436. June 20, 2003.]

NATIONAL POWER CORPORATION, petitioner, vs. SPOUSES IGMEDIO and
LIWAYWAY CHIONG and the HEIRS OF AGRIFINA ANGELES, represented
by FRANCISCO MERCURIO, respondents.

||| (National Power Corp. v. Spouses Chiong, G.R. No. 152436, [June 20, 2003], 452 PHIL 649-
665)
DECISION

QUISUMBING, J p:

This is a petition for review of the decision 1 of the Court of Appeals, dated October 26,
2001, in CA-G.R. SP No. 60716, affirming the Order of the Regional Trial Court (RTC) of Iba,
Zambales, Branch 71, dated June 7, 2000 in Civil Case No. 1442-1. The trial court directed
petitioner National Power Corporation (NPC) to pay the value of the land expropriated from
respondents herein for use in NPC's Northwestern Luzon Transmission Line Project. Likewise
assailed in this petition is the resolution 2 of the appellate court, dated February 26, 2002, denying
herein petitioner's motion for reconsideration.
 114

The undisputed facts of this case are as follows:

Petitioner is a government owned and controlled corporation, created and existing
pursuant to Republic Act No. 6395, 3 as amended, for the purpose of undertaking the
development of hydroelectric power, the production of electrical power from any source,
particularly by constructing, operating, and maintaining power plants, auxiliary plants, dams,
reservoirs, pipes, mains, transmission lines, power stations, and similar works to tap the power
generated from any river, creek, lake, spring, or waterfall in the country and supplying such power
to the inhabitants thereof. In order to carry out said purposes, NPC is authorized to exercise the
power of eminent domain.
On February 19, 1998, NPC filed a complaint for eminent domain with the RTC of Iba,
Zambales. It sought the acquisition of an easement of right-of-way and certain portions of
agricultural lands owned by Igmedio and Liwayway Chiong and the Heirs of Agrifina 4 Angeles,
as represented by Francisco Mercurio, to be used in its Northwestern Luzon Transmission Line
Project. The complaint, which was docketed as Civil Case No. 1442-I, prayed for the issuance of
a writ of possession and an order of expropriation, the appointment of three (3) commissioners to
determine the just compensation, and to adjudge NPC as having a lawful right to enter, take, and
acquire an easement of right-of-way over portions of the properties owned by herein respondents.
In their answer, the Heirs of Agrifina Angeles did not dispute the purpose of NPC in
instituting the expropriation proceedings. However, they pointed out that NPC had already entered
and taken possession of a portion of their realty with an area of 4,000 square meters, more or
less (Lot "A") and wanted to occupy another 4,000 square meters of the adjacent property (Lot
"B"). Respondents averred that the fair market value for both properties was P1,100.00 per square
meter or a total of P8,800,000.00 and prayed that the trial court direct NPC to pay them said
amount.
On March 31, 1998, NPC filed an ex parte motion for the issuance of a writ of possession,
which the trial court granted.
At the pre-trial conference, the parties agreed that the controversy would be limited to
determining the actual land area taken by NPC and the just compensation to be paid by
petitioner. IATHaS
On September 28, 1999, the trial court appointed as commissioners, Atty. Henry P. Alog,
Atty. Regalado Castillo, and Ms. Roselyn B. Ragadio, Legal Researcher of the trial court, to
determine the fair market value of the land, as well as the total area taken by NPC from
respondents.
On March 9, 2000, Atty. Castillo and Ms. Ragadio submitted their report to the court finding
that the property classified as "unirrigated riceland shall have a fair market value of P500.00 per
square meter" 5 considering that "the property is situated at Baytan, Babali, Lomboy, Sta. Cruz,
Zambales which is more than 900 meters from the town proper." 6
On May 5, 2000, Atty. Alog submitted his report recommending that NPC pay the Heirs of
Agrifina Angeles an easement fee of P20,957.88 and the Spouses Chiong be paid total easement
fees of P9,187.05. 7 The affected properties of the Heirs of Agrifina Angeles were assessed by
Atty. Alog to have a fair market value of P22.50 per square meter, while those of the Spouses
Chiong were assigned a fair market value of P15.75 per square meter. 8
After considering the reports of the Commissioners, the trial court on June 7, 2000 decreed
as follows:
The Commissioner's Report dated March 9, 2000 filed by Commissioner
Roselyn B. Ragadio and Atty. Regalado Castillo is given due course.
WHEREFORE, the plaintiff is directed to pay the defendants Mercurio
their land containing an area of 4,000 square meters at P500.00 per square
meter and an interest of six (6%) percent per annum from April 16, 1998 until
fully paid.
SO ORDERED. 9
Dissatisfied, NPC filed a special civil action for certiorari with the appellate court, docketed
as CA-G.R. SP No. 60716. NPC averred that the trial court committed grave abuse of discretion
amounting to excess or want of jurisdiction when it: (a) directed NPC to pay just compensation
 115

for the land taken without first issuing an order of expropriation; (b) adopted the compensation
recommended by the two commissioners without a hearing; and (c) directed petitioner to pay the
full market value of the property instead of a mere easement fee.
On October 26, 2001, the appellate court decided CA-G.R. SP No. 60716 as follows:
WHEREFORE, in view of the foregoing, the instant petition is hereby
DISMISSED for lack of merit.
SO ORDERED. 10
In holding that NPC was not entitled to a writ of certiorari, the Court of Appeals found that
the trial court did not commit a grave abuse of discretion when it failed to issue an expropriation
order. The appellate court pointed out that as early as the pre-trial, respondents did not question
NPC's right to expropriate their properties. Hence, the only matter to be addressed by the trial
court was the amount of just compensation to be paid. Second, NPC could not claim that it was
denied due process because the trial court issued the order without first conducting a hearing on
the commissioners' report. The court a quo noted that formal-type hearings are not necessary in
expropriation proceedings, as long as the parties are afforded a fair and reasonable opportunity
to be heard before the order to pay compensation is issued. NPC was afforded ample time or
opportunity to object to the commissioners' report before said order was issued. This it failed to
do. It likewise failed to move for reconsideration or to appeal the trial court's order. Hence, NPC
was now estopped from claiming that it had been denied due process. The appellate court likewise
found the assessed value of P500.00 per square meter to be fair as opposed to the NPC-
appointed commissioner's valuation of P22.50 per square meter. Finally, the CA held that as NPC
failed to appeal the trial court's order, certiorari could not be a substitute for a lost or lapsed right
to appeal.
NPC moved for reconsideration, but this was denied by the appellate court in its resolution
of February 26, 2002.
Hence, the instant recourse to this Court, with petitioner submitting the following issues
for our resolution:
I
WHETHER OR NOT THE COURT OF APPEALS COMMITTED A GRAVE
ERROR IN UPHOLDING THE DECISION OF THE COURT A QUO IN
DIRECTING THE PETITIONER TO PAY THE COMPENSATION FOR THE
LAND SOUGHT TO BE EXPROPRIATED WITHOUT FIRST ORDERING ITS
EXPROPRIATION.
II
WHETHER OR NOT THE COURT OF APPEALS COMMITTED A GRAVE
ERROR WHEN IT UPHELD THE DECISION OF THE TRIAL COURT
ADOPTING IN TOTO THE UNSUBSTANTIATED REPORT OF THE
APPOINTED COMMISSIONERS MS. REGARDIO AND ATTY. CASTILLO,
WITHOUT CONSIDERING THE THIRD COMMISSIONER, ATTY. ALOG AND
WITHOUT CONDUCTING A HEARING. DCaEAS
III
WHETHER OR NOT THE COURT OF APPEALS COMMITTED A GRAVE
ERROR WHEN IT UPHELD THE DECISION OF THE TRIAL COURT IN
DIRECTING PETITIONER TO PAY THE FULL MARKET VALUE OF THE LAND
INSTEAD OF THE EASEMENT FEE AS PRAYED FOR IN THE COMPLAINT
AND PROVIDED UNDER REPUBLIC ACT NO. 6395 AS AMENDED, WHICH IS
OTHERWISE KNOWN AS THE REVISED NPC CHARTER. 11
In sum, we find that the pertinent issues before us are the following: (1) whether petitioner
NPC was deprived of due process; and (2) whether the Court of Appeals erred in sustaining the
Order of the RTC of Iba, Zambales, dated June 7, 2000, by dismissing NPC's petition for certiorari.
On the first issue, petitioner contends that the appellate court gravely erred in affirming
the trial court's order directing it to pay the respondent the compensation recommended by the
majority report of the commissioners. Petitioner points out that there were two reports submitted
by the commissioners, with conflicting findings as to the market values of the expropriated
 116

properties. It insists that, given said situation, the trial court should have conducted hearings on
the two reports, as required by Rule 67, Sections 7 12 and 8 13 of the 1997 Rules of Civil
Procedure, before accepting the majority report. In failing to do so, the trial court not only blatantly
violated the Rules; it likewise denied petitioner due process, as the latter was not afforded a
chance to raise its objections to the majority report in a hearing held for that purpose. It was, thus,
grievous error for the appellate court to have sustained the trial court.
The respondents, Heirs of Agrifina Angeles, point out that the petitioner's contentions are
without basis, since it was given ample time and/or opportunity by the trial court to object to the
questioned order. The respondents assert that the petitioner, had it been so minded, could have
moved for reconsideration or filed an appeal therefrom within the reglementary period, but it did
not. Instead, it opted for the wrong remedy by filing a special civil action for certiorari with the
Court of Appeals, after the period to appeal had lapsed. Having made an erroneous choice in its
remedies, petitioner cannot now come to this Tribunal crying that it was denied due process.
On record we find that the majority report of Commissioners Ragadio and Atty. Castillo
was submitted to the trial court on March 9, 2000, while the minority report of Commissioner Atty.
Alog, was submitted on May 5, 2000. It is not disputed that petitioner was furnished copies of said
reports. After petitioner NPC obtained its copy of the majority report, it did nothing. The records
do not disclose any objection thereto or any comment opposing the findings and
recommendations of the two commissioners in their report.
The majority report was submitted on March 9, 2000. The trial court issued its order
adopting the majority report on June 7, 2000. Clearly, petitioner had ample time to make its
objections or ventilate its opposition to the majority report before the trial court. A formal hearing
or trial was not required for the petitioner to avail of its opportunity to object and oppose the
majority report. Petitioner could have filed a motion raising all possible grounds for objecting to
the findings and recommendations of the commissioners. It could have moved the trial court to
remand the report to the commissioners for additional facts. Or it could have moved to expunge
the majority report, for reasons petitioner could muster. Petitioner, however, failed to seize the
opportunity to register its opposition or objections before the trial court. It is a bit too late in the
day now to be asking for a hearing on the pretext that it had not been afforded due process.
The elements of due process are well established, viz:
(1) There must be a court or tribunal clothed with judicial power to hear and
determine the matter before it;
(2) Jurisdiction must be lawfully acquired over the person of the defendant or
property which is the subject of the proceedings;
(3) The defendant must be given an opportunity to be heard; and
(4) Judgment must be rendered upon lawful hearing. 14
What is repugnant to due process is the denial of the opportunity to be heard. 15 As
pointed out that the petitioner was afforded this opportunity is beyond question. Having failed to
make use of this opportunity, the petitioner cannot justifiably claim now that its right to due process
has been violated.
The duty of the court in considering the commissioners' report is to satisfy itself that just
compensation will be made to the defendant by its final judgment in the matter, and in order to
fulfill its duty in this respect, the court will be obliged to exercise its discretion in dealing with the
report as the particular circumstances of the case may require. 16 Rule 67, Section 8, of the 1997
Rules of Civil Procedure clearly shows that the trial court has the discretion to act upon the
commissioners' report in any of the following ways: (1) it may accept the same and render
judgment therewith; or (2) for cause shown, it may: [a] recommit the report to the commissioners
for further report of facts; or [b] set aside the report and appoint new commissioners; or [c] accept
the report in part and reject it in part; and 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 expropriation, and
to the defendant just compensation for the property so taken. 17
From March 9, 2000 to June 7, 2000, petitioner did not object to the majority report. On
record, it did not, at the time, signify its opposition thereto, or specify that not all of the evidence,
pertinent and material thereto, had been considered by the commissioners or presented to the
court. The option of recommitting the report of the commissioners, which petitioner now claims,
was not ventilated before the trial court. No claim appears on record that fraud or prejudice tainted
 117

the majority report. When it still had the opportunity below, herein petitioner did not challenge the
majority report on the ground that the commissioners concerned disregarded the evidence before
them, or used an improper rule of assessment, in their submission to the trial court. As previously
held, where there was no opposition filed to the Commissioners' Report in the lower court, the
findings in said Report will not be disturbed. 18 Absent the objections raised by the petitioner, it
became the duty of the trial court to make a final order and judgment in which the proper award
will be made and thus end the controversy. EHTISC
Moreover, after its receipt of the trial court's order dated June 7, 2000, which decided the
issue of compensation as delineated at the pre-trial, petitioner resorted to a special civil action,
rather than an appeal before the Court of Appeals. As aptly pointed out, petitioner could not
utilize certiorari as a substitute for its lost right of appeal. We also agree that the trial court did not
abuse its discretion in ruling on the very issue of just compensation for the land taken, as
delineated by the party themselves at the pre-trial.
Nevertheless, we shall now take up the matter of valuation and just compensation if only
to avoid any further delay in its resolution.
The fair market value of the 4,000 square meters occupied by the petitioner was fixed by
the trial court in its order of June 7, 2000 at P500.00 per square meter. The appellate court
affirmed the said valuation.
In contesting the valuation, petitioner argues now that the Court of Appeals gravely erred
in upholding the RTC order requiring it to pay the full market value of the expropriated properties,
notwithstanding the fact that the petitioner was only acquiring an easement of right-of-way. The
petitioner points out under Section 3-A 19 of RA No. 6395, where only an easement of right-of-
way shall be acquired, with the principal purpose for which the land is actually devoted is
unimpaired, the compensation should not exceed ten percent (10%) of the market value of the
property. Thus, in sustaining the order of the lower court directing the petitioner to pay the
respondents the full recommended value of their properties, the Court of Appeals completely
violated and disregarded RA No. 6395, as amended.
Petitioner averred in its complaint in Civil Case No. 1442-I, that it sought to acquire "an
easement of right-of-way" over portions of the properties owned by respondents, for a total of
10,950 square meters. 20 However, a perusal of its complaint shows that petitioner also stated
that it would erect structures for its transmission lines on portions of the expropriated property. In
other words, the expropriation was not to be limited for the purpose of "easement of right-of-way."
In fact, in their Answer, the Heirs of Agrifina Angeles, alleged that petitioner had actually occupied
an area of 4,000 square meters wherein it constructed structures for its transmission lines and
was seeking to occupy another 4,000 square meters. 21 Petitioner failed to controvert this
material allegation. Justifiably, the market value of these 4,000 square meters allegedly occupied
by the petitioner has became the very crux of the present case.
In eminent domain or expropriation proceedings, the general rule is that the just
compensation to which the owner of condemned property is entitled to is the market
value. 22 Market value is "that sum of money which a person desires 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." 23 The aforementioned rule, however, is modified where only a part of a certain property
is expropriated. In such a case the owner is not restricted to compensation for the portion actually
taken. In addition to the market value of the portion taken, he is also entitled to recover for the
consequential damage, if any, to the remaining part of the property. At the same time, from the
total compensation must be deducted the value of the consequential benefits. 24
In fixing the valuation at P500.00 per square meter, the Court of Appeals noted that the
trial court had considered the reports of the commissioners and the proofs submitted by the
parties. This included the fair market value of P1,100.00 per square meter proferred by the
respondents. 25 This valuation by owners of the property may not be binding upon the petitioner
or the court, although it should at least set a ceiling price for the compensation to be
awarded. 26 The trial court found that the parcels of land sought to be expropriated are
agricultural land, with minimal improvements. It is the nature and character of the land at the time
of its taking that is the principal criterion to determine just compensation to the
landowner. 27 Hence, the trial court accepted not the owner's valuation of P1,100 per square
meter but only P500 as recommended in the majority report of the commissioners.
 118

As to the price of P22.50 per square meter recommended by the minority report of
Commissioner Atty. Alog, the Court of Appeals found it unconscionably inadequate. It was rightly
rejected by the trial court.
In finding that the trial court did not abuse its authority in evaluating the evidence and the
reports placed before it nor did it misapply the rules governing fair valuation, the Court of Appeals
found the majority report's valuation of P500 per square meter to be fair. Said factual finding of
the Court of Appeals, absent any showing that the valuation is exorbitant or otherwise unjustified,
is binding on the parties as well as this Court.
WHEREFORE, the instant petition is DENIED for lack of merit. The decision of the Court
of Appeals, dated October 26, 2001 as well as its resolution of February 26, 2002, denying the
petitioner's motion for reconsideration, in CA-G.R. SP No. 60716 are AFFIRMED. Costs against
petitioner. STaIHc
SO ORDERED.
||| (National Power Corp. v. Spouses Chiong, G.R. No. 152436, [June 20, 2003], 452 PHIL 649-
665)

[G.R. No. 146062. June 28, 2001.]

SANTIAGO ESLABAN
||| (Eslaban, Jr. v. Vda. de Onorio, G.R. No. 146062, [June 28, 2001], 412 PHIL 667-680)
CONSTITUTIONAL LAW; POWER OF EMINENT DOMAIN; ACQUISITION OF PRIVATE
PROPERTY FOR PUBLIC USE IS SUBJECT TO PAYMENT OF JUST COMPENSATION. —
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. 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.
5. ID.; ID.; JUST COMPENSATION; EXPLAINED. — 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." 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. Nevertheless, as noted in Ansaldo v. Tantuico, Jr., 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.
6. ID.; ID.; ID.; HOW DETERMINED; CASE AT BAR. — The value of the property must
be determined either as of the date of the taking of the property or the filing of the complaint,
"whichever came first." Even before the new rule, however, it was already held in Commissioner
of Public Highways v. Burgos that the price of the land at the time of taking, not its value after the
passage of time, represents the true value to be paid as just compensation. It was, therefore,
error for the Court of Appeals to rule that the just compensation to be paid to respondent should
be determined as of the filing of the complaint in 1990, and not the time of its taking by the NIA in
1981, because petitioner was allegedly remiss in its obligation to pay respondent, and it was
respondent who filed the complaint. In the case of Burgos, it was also the property owner who
brought the action for compensation against the government after 25 years since the taking of his
property for the construction of a road. SATDEI
DECISION

MENDOZA, J p:
 119

This is a petition for review of the decision 1 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 latter's property.
The facts are as follows:
Respondent Clarita Vda. de Enorio is the owner of a lot in Barangay M. Roxas, Sto. Nino,
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.
Respondent's 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 assessor's 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.
 120

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 owner's
 121

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:
xxx xxx xxx
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 pre-existing and 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. DHIcET
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 —
 122

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. (Italics 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. Burgos 11 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. SEcITC
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. Nino, 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 appellee's 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 appellee's
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
 123

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.
SO ORDERED.
||| (Eslaban, Jr. v. Vda. de Onorio, G.R. No. 146062, [June 28, 2001], 412 PHIL 667-680)

[G.R. No. 161656. June 29, 2005.]

REPUBLIC OF THE PHILIPPINES, GENERAL ROMEO ZULUETA,
COMMODORE EDGARDO GALEOS, ANTONIO CABALUNA, DOROTEO
MANTOS & FLORENCIO BELOTINDOS, petitioners, vs. VICENTE G.
LIM, respondent.

RESOLUTION

SANDOVAL-GUTIERREZ, J p:

Justice is the first virtue of social institutions. 1 When the state wields its power of eminent
domain, there arises a correlative obligation on its part to pay the owner of the expropriated
property a just compensation. If it fails, there is a clear case of injustice that must be redressed.
In the present case fifty-seven (57) years have lapsed from the time the Decision in the subject
expropriation proceedings became final, but still the Republic of the Philippines, herein petitioner,
has not compensated the owner of the property. To tolerate such prolonged inaction on its part is
to encourage distrust and resentment among our people — the very vices that corrode the ties of
civility and tempt men to act in ways they would otherwise shun.
A revisit of the pertinent facts in the instant case is imperative.
On September 5, 1938, the Republic of the Philippines (Republic) instituted a special civil
action for expropriation with the Court of First Instance (CFI) of Cebu, docketed as Civil Case No.
781, involving Lots 932 and 939 of the Banilad Friar Land Estate, Lahug, Cebu City, for the
purpose of establishing a military reservation for the Philippine Army. Lot 932 was registered in
the name of Gervasia Denzon under Transfer Certificate of Title (TCT) No. 14921 with an area of
25,137 square meters, while Lot 939 was in the name of Eulalia Denzon and covered by TCT No.
12560 consisting of 13,164 square meters.
After depositing P9,500.00 with the Philippine National Bank, pursuant to the Order of the
CFI dated October 19, 1938, the Republic took possession of the lots. Thereafter, or on May 14,
1940, the CFI rendered its Decision ordering the Republic to pay the Denzons the sum of
P4,062.10 as just compensation.
The Denzons interposed an appeal to the Court of Appeals but it was dismissed on March
11, 1948. An entry of judgment was made on April 5, 1948.
In 1950, Jose Galeos, one of the heirs of the Denzons, filed with the National Airports
Corporation a claim for rentals for the two lots, but it "denied knowledge of the matter." Another
heir, Nestor Belocura, brought the claim to the Office of then President Carlos Garcia who wrote
the Civil Aeronautics Administration and the Secretary of National Defense to expedite action on
said claim. On September 6, 1961, Lt. Manuel Cabal rejected the claim but expressed willingness
to pay the appraised value of the lots within a reasonable time. ETaSDc
For failure of the Republic to pay for the lots, on September 20, 1961, the Denzons'
successors-in-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
 124

acquire said parcels of land, Lots 932 and 939 upon previous payment of a reasonable market
value."
On July 31, 1962, the CFI promulgated its Decision in favor of Valdehueza and Panerio,
holding that they are the owners and have retained their right as such over Lots 932 and 939
because of the Republic's failure to pay the amount of P4,062.10, adjudged in the expropriation
proceedings. However, in view of the annotation on their land titles, they were ordered to execute
a deed of sale in favor of the Republic. In view of "the differences in money value from 1940 up
to the present," the court adjusted the market value at P16,248.40, to be paid with 6% interest
per annum from April 5, 1948, date of entry in the expropriation proceedings, until full payment.
After their motion for reconsideration was denied, Valdehueza and Panerio appealed from
the CFI Decision, in view of the amount in controversy, directly to this Court. The case was
docketed as No. L-21032. 3 On May 19, 1966, this Court rendered its Decision affirming the CFI
Decision. It held that Valdehueza and Panerio are still the registered owners of Lots 932 and 939,
there having been no payment of just compensation by the Republic. Apparently, this Court found
nothing in the records to show that the Republic paid the owners or their successors-in-interest
according to the CFI decision. While it deposited the amount of P9,500.00, and said deposit was
allegedly disbursed, however, the payees could not be ascertained.
Notwithstanding the above finding, this Court still ruled that Valdehueza and Panerio are
not entitled to recover possession of the lots but may only demand the payment of their fair market
value, ratiocinating as follows:
"Appellants would contend that: (1) possession of Lots 932 and 939
should be restored to them as owners of the same; (2) the Republic should be
ordered to pay rentals for the use of said lots, plus attorney's fees; and (3) the
court a quo in the present suit had no power to fix the value of the lots and order
the execution of the deed of sale after payment.
It is true that plaintiffs are still the registered owners of the land, there not
having been a transfer of said lots in favor of the Government. The records do
not show that the Government paid the owners or their successors-in-interest
according to the 1940 CFI decision although, as stated, P9,500.00 was
deposited by it, and said deposit had been disbursed. With the records lost,
however, it cannot be known who received the money (Exh. 14 says: 'It is further
certified that the corresponding Vouchers and pertinent Journal and Cash Book
were destroyed during the last World War, and therefore the names of the
payees concerned cannot be ascertained.') And the Government now admits
that there is no available record showing that payment for the value of the lots in
question has been made (Stipulation of Facts, par. 9, Rec. on Appeal, p.
28). SacDIE
The points in dispute are whether such payment can still be made and, if
so, in what amount. Said lots have been the subject of expropriation
proceedings. By final and executory judgment in said proceedings, they were
condemned for public use, as part of an airport, and ordered sold to the
Government. In fact, the abovementioned title certificates secured by plaintiffs
over said lots contained annotations of the right of the National Airports
Corporation (now CAA) to pay for and acquire them. It follows that both by virtue
of the judgment, long final, in the expropriation suit, as well as the annotations
upon their title certificates, plaintiffs are not entitled to recover possession of their
expropriated lots — which are still devoted to the public use for which they were
expropriated — but only to demand the fair market value of the same."
Meanwhile, in 1964, Valdehueza and Panerio mortgaged Lot 932 to Vicente Lim, herein
respondent, 4 as security for their loans. For their failure to pay Lim despite demand, he had the
mortgage foreclosed in 1976. Thus, TCT No. 23934 was cancelled, and in lieu thereof, TCT No.
63894 was issued in his name.
On August 20, 1992, respondent Lim filed a complaint for quieting of title with the Regional
Trial Court (RTC), Branch 10, Cebu City, against General Romeo Zulueta, as Commander of the
Armed Forces of the Philippines, Commodore Edgardo Galeos, as Commander of Naval District
V of the Philippine Navy, Antonio Cabaluna, Doroteo Mantos and Florencio Belotindos, herein
petitioners. Subsequently, he amended the complaint to implead the Republic.
 125

On May 4, 2001, the RTC rendered a decision in favor of respondent, thus:

"WHEREFORE, judgment is hereby rendered in favor of plaintiff Vicente
Lim and against all defendants, public and private, declaring plaintiff Vicente Lim
the absolute and exclusive owner of Lot No. 932 with all the rights of an absolute
owner including the right to possession. The monetary claims in the complaint
and in the counter claims contained in the answer of defendants are ordered
Dismissed.
Petitioners elevated the case to the Court of Appeals, docketed therein as CA-G.R. CV
No. 72915. In its Decision 5 dated September 18, 2003, the Appellate Court sustained the RTC
Decision, thus:
"Obviously, defendant-appellant Republic evaded its duty of paying what
was due to the landowners. The expropriation proceedings had already become
final in the late 1940's and yet, up to now, or more than fifty (50) years after, the
Republic had not yet paid the compensation fixed by the court while continuously
reaping benefits from the expropriated property to the prejudice of the landowner.
. . . This is contrary to the rules of fair play because the concept of just
compensation embraces not only the correct determination of the amount to be
paid to the owners of the land, but also the payment for the land within a
reasonable time from its taking. Without prompt payment, compensation cannot
be considered "just" for the property owner is made to suffer the consequence of
being immediately deprived of his land while being made to wait for a decade or
more, in this case more than 50 years, before actually receiving the amount
necessary to cope with the loss. To allow the taking of the landowners'
properties, and in the meantime leave them empty-handed by withholding
payment of compensation while the government speculates on whether or not it
will pursue expropriation, or worse, for government to subsequently decide to
abandon the property and return it to the landowners, is undoubtedly an
oppressive exercise of eminent domain that must never be sanctioned. (Land
Bank of the Philippines vs. Court of Appeals, 258 SCRA 404).

xxx xxx xxx

An action to quiet title is a common law remedy for the removal of any
cloud or doubt or uncertainty on the title to real property. It is essential for the
plaintiff or complainant to have a legal or equitable title or interest in the real
property, which is the subject matter of the action. Also the deed, claim,
encumbrance or proceeding that is being alleged as cloud on plaintiff's title must
be shown to be in fact invalid or inoperative despite its prima facie appearance
of validity or legal efficacy (Robles vs. Court of Appeals, 328 SCRA 97). In view
of the foregoing discussion, clearly, the claim of defendant-appellant Republic
constitutes a cloud, doubt or uncertainty on the title of plaintiff-appellee Vicente
Lim that can be removed by an action to quiet title. ESDHCa
WHEREFORE, in view of the foregoing, and finding no reversible error in
the appealed May 4, 2001 Decision of Branch 9, Regional Trial Court of Cebu
City, in Civil Case No. CEB-12701, the said decision is UPHELD AND
AFFIRMED. Accordingly, the appeal is DISMISSED for lack of merit."
Undaunted, petitioners, through the Office of the Solicitor General, filed with this Court a
petition for review on certiorari alleging that the Republic has remained the owner of Lot 932 as
held by this Court in Valdehueza vs. Republic. 6
In our Resolution dated March 1, 2004, we denied the petition outright on the ground that
the Court of Appeals did not commit a reversible error. Petitioners filed an urgent motion for
reconsideration but we denied the same with finality in our Resolution of May 17, 2004.
On May 18, 2004, respondent filed an ex-parte motion for the issuance of an entry of
judgment. We only noted the motion in our Resolution of July 12, 2004.
On July 7, 2004, petitioners filed an urgent plea/motion for clarification, which is actually
asecond motion for reconsideration. Thus, in our Resolution of September 6, 2004, we simply
 126

noted without action the motion considering that the instant petition was already denied with
finality in our Resolution of May 17, 2004.
On October 29, 2004, petitioners filed a very urgent motion for leave to file a motion for
reconsideration of our Resolution dated September 6, 2004 (with prayer to refer the case to the En
Banc). They maintain that the Republic's right of ownership has been settled in Valdehueza.
The basic issue for our resolution is whether the Republic has retained ownership of Lot
932 despite its failure to pay respondent's predecessors-in-interest the just compensation therefor
pursuant to the judgment of the CFI rendered as early as May 14, 1940.
Initially, we must rule on the procedural obstacle.
While we commend the Republic for the zeal with which it pursues the present case, we
reiterate that its urgent motion for clarification filed on July 7, 2004 is actually a second motion for
reconsideration. This motion is prohibited under Section 2, Rule 52, of the 1997 Rules of Civil
Procedure, as amended, which provides:
"Sec. 2. Second motion for reconsideration. — No second motion for
reconsideration of a judgment or final resolution by the same party shall be
entertained."
Consequently, as mentioned earlier, we simply noted without action the motion since
petitioners' petition was already denied with finality.
Considering the Republic's urgent and serious insistence that it is still the owner of Lot
932 and in the interest of justice, we take another hard look at the controversial issue in order to
determine the veracity of petitioner's stance.
One of the basic principles enshrined in our Constitution is that no person shall be
deprived of his private property without due process of law; and in expropriation cases, an
essential element of due process is that there must be just compensation whenever private
property is taken for public use. 7 Accordingly, Section 9, Article III, of our Constitution mandates:
"Private property shall not be taken for public use without just compensation."
The Republic disregarded the foregoing provision when it failed and refused to pay
respondent's predecessors-in-interest the just compensation for Lots 932 and 939. The length of
time and the manner with which it evaded payment demonstrate its arbitrary high-handedness
and confiscatory attitude. The final judgment in the expropriation proceedings (Civil Case No.
781) was entered on April 5, 1948. More than half of a century has passed, yet, to this day, the
landowner, now respondent, has remained empty-handed. Undoubtedly, over 50 years of delayed
payment cannot, in any way, be viewed as fair. This is more so when such delay is accompanied
by bureaucratic hassles. Apparent from Valdehueza is the fact that respondent's predecessors-
in-interest were given a "run around" by the Republic's officials and agents. In 1950, despite the
benefits it derived from the use of the two lots, the National Airports Corporation denied knowledge
of the claim of respondent's predecessors-in-interest. Even President Garcia, who sent a letter to
the Civil Aeronautics Administration and the Secretary of National Defense to expedite the
payment, failed in granting relief to them. And, on September 6, 1961, while the Chief of Staff of
the Armed Forces expressed willingness to pay the appraised value of the lots, nothing
happened. aIcDCH
The Court of Appeals is correct in saying that Republic's delay is contrary to the rules of
fair play, as "just compensation embraces not only the correct determination of the amount to be
paid to the owners of the land, but also the payment for the land within a reasonable time from its
taking. Without prompt payment, compensation cannot be considered 'just.'" In jurisdictions
similar to ours, where an entry to the expropriated property precedes the payment of
compensation, it has been held that if the compensation is not paid in a reasonable time, the party
may be treated as a trespasser ab initio. 8
Corollarily, in Provincial Government of Sorsogon vs. Vda. De Villaroya, 9 similar to the
present case, this Court expressed its disgust over the government's vexatious delay in the
payment of just compensation, thus:
"The petitioners have been waiting for more than thirty years to be paid
for their land which was taken for use as a public high school. As a matter of fair
procedure, it is the duty of the Government, whenever it takes property from
private persons against their will, to supply all required documentation and
 127

facilitate payment of just compensation. The imposition of unreasonable

requirements and vexatious delays before effecting payment is not only galling
and arbitrary but a rich source of discontent with government. There should be
some kind of swift and effective recourse against unfeeling and uncaring acts of
middle or lower level bureaucrats."
We feel the same way in the instant case.
More than anything else, however, it is the obstinacy of the Republic that prompted us to
dismiss its petition outright. As early as May 19, 1966, in Valdehueza, this Court mandated the
Republic to pay respondent's predecessors-in-interest the sum of P16,248.40 as "reasonable
market value of the two lots in question." Unfortunately, it did not comply and allowed several
decades to pass without obeying this Court's mandate. Such prolonged obstinacy bespeaks of
lack of respect to private rights and to the rule of law, which we cannot countenance. It is
tantamount to confiscation of private property. While it is true that all private properties are subject
to the need of government, and the government may take them whenever the necessity or the
exigency of the occasion demands, however, the Constitution guarantees that when this
governmental right of expropriation is exercised, it shall be attended by compensation. 10 From
the taking of private property by the government under the power of eminent domain, there arises
an implied promise to compensate the owner for his loss. 11
Significantly, the above-mentioned provision of Section 9, Article III of the Constitution is
not a grant but a limitation of power. This limiting function is in keeping with the philosophy of the
Bill of Rights against the arbitrary exercise of governmental powers to the detriment of the
individual's rights. Given this function, the provision should therefore be strictly interpreted against
the expropriator, the government, and liberally in favor of the property owner. 12
Ironically, in opposing respondent's claim, the Republic is invoking this Court's Decision
in Valdehueza, a Decision it utterly defied. How could the Republic acquire ownership over Lot
932 when it has not paid its owner the just compensation, required by law, for more than 50 years?
The recognized rule is that title to the property expropriated shall pass from the owner to the
expropriator only upon full payment of the just compensation. Jurisprudence on this settled
principle is consistent both here and in other democratic jurisdictions. In Association of Small
Landowners in the Philippines, Inc. et al., vs. Secretary of Agrarian Reform, 13 thus:
"Title to property which is the subject of condemnation proceedings does
not vest the condemnor until the judgment fixing just compensation is entered
and paid, but the condemnor's title relates back to the date on which the petition
under the Eminent Domain Act, or the commissioner's report under the Local
Improvement Act, is filed.
. . . Although the right to appropriate and use land taken for a canal is
complete at the time of entry, title to the property taken remains in the owner until
payment is actually made. (Emphasis supplied.)
In Kennedy v. Indianapolis, the US Supreme Court cited several cases
holding that title to property does not pass to the condemnor until just
compensation had actually been made. In fact, the decisions appear to be
uniform to this effect. As early as 1838, in Rubottom v. McLure, it was held that
'actual payment to the owner of the condemned property was a condition
precedent to the investment of the title to the property in the State' albeit 'not to
the appropriation of it to public use.' In Rexford v. Knight, the Court of Appeals
of New York said that the construction upon the statutes was that the fee did not
vest in the State until the payment of the compensation although the authority to
enter upon and appropriate the land was complete prior to the payment. Kennedy
further said that 'both on principle and authority the rule is . . . that the right to
enter on and use the property is complete, as soon as the property is actually
appropriated under the authority of law for a public use, but that the title does not
pass from the owner without his consent, until just compensation has been made
to him."
Our own Supreme Court has held in Visayan Refining Co. v. Camus and
Paredes, that:
'If the laws which we have exhibited or cited in the preceding
discussion are attentively examined it will be apparent that the method of
 128

expropriation adopted in this jurisdiction is such as to afford absolute

reassurance that no piece of land can be finally and irrevocably taken
from an unwilling owner until compensation is paid . . .'" (Emphasis
supplied.)
Clearly, without full payment of just compensation, there can be no transfer of title from
the landowner to the expropriator. Otherwise stated, the Republic's acquisition of ownership is
conditioned upon the full payment of just compensation within a reasonable time. 14
Significantly, in Municipality of Biñan v. Garcia 15 this Court ruled that the expropriation of
lands consists of two stages, to wit:
". . . The first is concerned with the determination of the authority of the
plaintiff to exercise the power of eminent domain and the propriety of its exercise
in the context of the facts involved in the suit. It ends with an order, if not of
dismissal of the action, "of condemnation declaring that the plaintiff has a lawful
right to take the property sought to be condemned, for the public use or purpose
described in the complaint, upon the payment of just compensation to be
determined as of the date of the filing of the complaint" . . . ECDaTI
The second phase of the eminent domain action is concerned with the
determination by the court of "the just compensation for the property sought to
be taken." This is done by the court with the assistance of not more than three
(3) commissioners. . . .
It is only upon the completion of these two stages that expropriation is said to have been
completed. In Republic v. Salem Investment Corporation, 16 we ruled that, "the process is not
completed until payment of just compensation." Thus, here, the failure of the Republic to pay
respondent and his predecessors-in-interest for a period of 57 years rendered the expropriation
process incomplete.
The Republic now argues that under Valdehueza, respondent is not entitled to recover
possession of Lot 932 but only to demand payment of its fair market value. Of course, we are
aware of the doctrine that "non-payment of just compensation (in an expropriation proceedings)
does not entitle the private landowners to recover possession of the expropriated lots." This is our
ruling in the recent cases of Republic of the Philippines vs. Court of Appeals, et al., 17 and Reyes
vs. National Housing Authority. 18 However, the facts of the present case do not justify its
application. It bears stressing that the Republic was ordered to pay just compensation twice,
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 Republic's failure to pay just
compensation as a deliberate refusal on its part. Under such circumstance, recovery of
possession is in order. In several jurisdictions, the courts held that recovery of possession may
be had when property has been wrongfully taken or is wrongfully retained by one claiming to act
under the power of eminent domain 19 or where a rightful entry is made and the party condemning
refuses to pay the compensation which has been assessed or agreed upon; 20 or fails or refuses
to have the compensation assessed and paid. 21
The Republic also contends that where there have been constructions being used by the
military, as in this case, public interest demands that the present suit should not be sustained.
It must be emphasized that an individual cannot be deprived of his property for the public
convenience. 22 In Association of Small Landowners in the Philippines, Inc. vs. Secretary of
Agrarian Reform, 23 we ruled:
"One of the basic principles of the democratic system is that where the
rights of the individual are concerned, the end does not justify the means. It is
not enough that there be a valid objective; it is also necessary that the means
employed to pursue it be in keeping with the Constitution. Mere expediency will
not excuse constitutional shortcuts. There is no question that not even the
strongest moral conviction or the most urgent public need, subject only to a few
notable exceptions, will excuse the bypassing of an individual's rights. It is no
exaggeration to say that a person invoking a right guaranteed under Article III of
the Constitution is a majority of one even as against the rest of the nation who
would deny him that right.
 129

The right covers the person's life, his liberty and his property under
Section 1 of Article III of the Constitution. With regard to his property, the owner
enjoys the added protection of Section 9, which reaffirms the familiar rule that
private property shall not be taken for public use without just compensation."
The Republic's assertion that the defense of the State will be in grave danger if we shall
order the reversion of Lot 932 to respondent is an overstatement. First, Lot 932 had ceased to
operate as an airport. What remains in the site is just the National Historical Institute's marking
stating that Lot 932 is the "former location of Lahug Airport." And second, there are only thirteen
(13) structures located on Lot 932, eight (8) of which are residence apartments of military
personnel. Only two (2) buildings are actually used as training centers. Thus, practically speaking,
the reversion of Lot 932 to respondent will only affect a handful of military personnel. It will not
result to "irreparable damage" or "damage beyond pecuniary estimation," as what the Republic
vehemently claims. ETCcSa
We thus rule that the special circumstances prevailing in this case entitle respondent to
recover possession of the expropriated lot from the Republic. Unless this form of swift and
effective relief is granted to him, the grave injustice committed against his predecessors-in-
interest, though no fault or negligence on their part, will be perpetuated. Let this case, therefore,
serve as a wake-up call to the Republic that in the exercise of its power of eminent domain,
necessarily in derogation of private rights, it must comply with the Constitutional limitations. This
Court, as the guardian of the people's right, will not stand still in the face of the Republic's
oppressive and confiscatory taking of private property, as in this case.
At this point, it may be argued that respondent Vicente Lim acted in bad faith in entering
into a contract of mortgage with Valdehueza and Panerio despite the clear annotation in TCT No.
23934 that Lot 932 is "subject to the priority of the National Airports Corporation [to acquire said
parcels of land] . . . upon previous payment of a reasonable market value."
The issue of whether or not respondent acted in bad faith is immaterial considering that
the Republic did not complete the expropriation process. In short, it failed to perfect its title over
Lot 932 by its failure to pay just compensation. The issue of bad faith would have assumed
relevance if the Republic actually acquired title over Lot 932. In such a case, even if respondent's
title was registered first, it would be the Republic's title or right of ownership that shall be
upheld. But now, assuming that respondent was in bad faith can such fact vest upon the Republic
a better title over Lot 932? We believe not. This is because in the first place, the Republic has no
title to speak of.
At any rate, assuming that respondent had indeed knowledge of the annotation, still
nothing would have prevented him from entering into a mortgage contract involving Lot 932 while
the expropriation proceeding was pending. Any person who deals with a property subject of an
expropriation does so at his own risk, taking into account the ultimate possibility of losing the
property in favor of the government. Here, the annotation merely served as a caveat that the
Republic had 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 owner's absolute right over his property pending
completion of the expropriation proceeding, thus:
"It is only upon the completion of these two stages that expropriation is
said to have been completed. Moreover, it is only upon payment of just
compensation that title over the property passes to the government. Therefore,
until the action for expropriation has been completed and terminated, ownership
over the property being expropriated remains with the registered
owner. Consequently, the latter can exercise all rights pertaining to an
owner, including the right to dispose of his property subject to the power of the
State ultimately to acquire it through expropriation.
It bears emphasis that when Valdehueza and Panerio mortgaged Lot 932 to respondent
in 1964, they were still the owners thereof and their title had not yet passed to the petitioner
Republic. In fact, it never did. Such title or ownership was rendered conclusive when we
categorically ruled in Valdehueza that: "It is true that plaintiffs are still the registered owners of the
land, there not having been a transfer of said lots in favor of the Government."
 130

For respondent's part, it is reasonable to conclude that he entered into the contract of
mortgage with Valdehueza and Panerio fully aware of the extent of his right as a mortgagee. A
mortgage is merely an accessory contract intended to secure the performance of the principal
obligation. One of its characteristics is that it is inseparable from the property. It adheres to the
property regardless of who its owner may subsequently be. 25 Respondent must have known that
even if Lot 932 is ultimately expropriated by the Republic, still, his right as a mortgagee is
protected. In this regard, Article 2127 of the Civil Code provides:
"Art. 2127. The mortgage extends to the natural accessions, to the
improvements, growing fruits, and the rents or income not yet received when the
obligation becomes due, and to the amount of the indemnity granted or owing to
the proprietor from the insurers of the property mortgaged, or in virtue of
expropriation for public use, with the declarations, amplifications, and limitations
established by law, whether the estate remains in the possession of the
mortgagor or it passes in the hands of a third person. HcSDIE
In summation, while the prevailing doctrine is that "the non-payment of just compensation
does not entitle the private landowner to recover possession of the expropriated
lots, 26 however, in cases where the government failed to pay just compensation within five
(5) 27 years from the finality of the judgment in the expropriation proceedings, the owners
concerned shall have the right to recover possession of their property. This is in consonance with
the principle that "the government cannot keep the property and dishonor the judgment." 28 To
be sure, the five-year period limitation will encourage the government to pay just compensation
punctually. This is in keeping with justice and equity. After all, it is the duty of the government,
whenever it takes property from private persons against their will, to facilitate the payment of just
compensation. In Cosculluela v. Court of Appeals, 29 we defined just compensation as not only
the correct determination of the amount to be paid to the property owner but also the payment of
the property within a reasonable time. Without prompt payment, compensation cannot be
considered "just."
WHEREFORE, the assailed Decision of the Court of Appeals in CA-G.R. CV No. 72915
is AFFIRMED in toto.
The Republic's motion for reconsideration of our Resolution dated March 1, 2004 is
DENIED with FINALITY. No further pleadings will be allowed.
Let an entry of judgment be made in this case.
SO ORDERED.
||| (Republic v. Lim, G.R. No. 161656 (Resolution), [June 29, 2005], 500 PHIL 652-672)

[G.R. No. L-22061. January 31, 1968.]

DALMACIO URTULA, ET AL., plaintiffs-appellants, vs. REPUBLIC OF THE
PHILIPPINES, (represented by the Land Tenure Administration), defendant-
appellant.
SYLLABUS
1. CONSTITUTIONAL LAW; EMINENT DOMAIN; EXPROPRIATION
PROCEEDINGS; FAILURE OF A FINAL JUDGMENT TO PROVIDE FOR THE PAYMENT
OF INTEREST ON THE INDEMNITY FROM THE TIME PROPERTY IS TAKEN; RES
JUDICATA. — Where a final judgment in an expropriation proceeding failed to provide for the
payment of interest on the indemnity from the time the expropriator takes possession of the
property, res judicata bars a subsequent independent action for the recovery of the same.
Section 3 of Rule 67 of the Revised Rules of Court (Sec. 4, Rule 69 of the old Rules) directs
the defendant in an expropriation case to "present in a single motion to dismiss or for other
appropriate relief, all of his objections and defenses" . . . and if not so presented the same
"are waived." The appealed judgment by allowing the collection of interest, in effect amends
the final judgment in the expropriation case, a procedure abhorrent to orderly judicial
proceedings.
||| (Urtula v. Republic, G.R. No. L-22061, [January 31, 1968], 130 PHIL 449-455)
DECISION
REYES, J.B.L., J p:
Direct appeals, by both the plaintiffs Dalmacio Urtula, et al. and the defendant Republic
of the Philippines, represented by the Land Tenure Administration, now Land Authority, from
a judgment of the Court of First Instance of Camarines Sur, in its Civil Case No. 5306, ordering
 131

the defendant to pay interest upon a sum determined by final judgment as compensation for
the property expropriated in a previous case of eminent domain between the same parties,
Civil Case No. 3837 of the same court.
The facts, as stipulated by the parties, and as found by the court a quo are as follows:
The Court of First Instance had rendered judgment on 16 November 1957 in its Civil
Case No. 3837, for the expropriation of the Hacienda Quitang, owned by Dalmacio Urtula by
the Republic of the Philippines, for the sum of P213,094.00, "and upon making the payment
the plaintiff shall take full possession of the land." The Republic appealed the decision to the
Court of Appeals, raising the sole issue of whether the amount fixed by the trial court was a
just compensation for the property. While the appeal was pending before the Court of Appeals,
the Republic of the Philippines deposited on 29 July 1958, with the Philippine National Bank
the sum of P117,690.00 as provisional value of the land, in accordance with an order of the
trial court dated 3 January 1958, and this deposit was withdrawn by Dalmacio Urtula in August
of 1958.
Thereafter, on 10 September 1958, the Court of Appeals granted the Republic's
petition to be placed in possession of the property; and under a writ of possession issued by
the provincial sheriff of the province, the Land Tenure Administration took actual physical
possession of the land in 11 October 1958.
Subsequently, the Court of Appeals found that the issue between the parties was
purely one of law and thereby elevated the appeal to the Supreme Court. This Court rendered
judgment thereon on 29 November 1960 in case No. L-16028, affirming the appealed
judgment of the Court of First Instance, without modification.
The Supreme Court had affirmed, as aforesaid, the decision of the trial court fixing the
amount of just compensation for P213,094.00; thus, at the time the decision became final, the
balance still due was P95,404.00. Of this balance, the Republic paid Dalmacio Urtula the sum
of P5,404.00 on 17 April 1961; but on the same day, Urtula deposited same amount with the
Land tenure Administration in payment of taxes and penalties for prior years up to 1958 on
the expropriated land and for the surveyor's fee for segregating one hectare donated by
condemnee Urtula for a school site. On liquidation at a later date, an excess in the amount of
P423.38 was found, and the Republic refunded this excess to Urtula on 25 September 1961.
On 3 May 1961, the Republic paid the remaining balance of P90,000.00.
The taxes due and unpaid, including penalties, on the land for the years 1959, 1960
and 70% of 1961 were computed at a total of P3,534.23 as of 28 February 1962. The interest
of 6% on P95,404.00 from 11 October 1958, the date when the condemnor Republic took
possession of the land to May 1961, when the final balance was paid to Urtula was also
computed at a total of P14,633.52.
On 26 January 1961, the plaintiff demanded payment of the said interest (P14,633.52)
but the defendant Republic refused, on the ground that no payment of interest had been
ordered in the decision in Civil Case No. 3837, the expropriation proceedings, or in the
affirmatory decision of the Supreme Court in G.R. No. L-16028.
The parties further stipulated as a fact that the plaintiff had agreed to pay his counsel
10% of the amount recoverable from the defendant, as attorney's fees.
Upon the foregoing stipulated facts, the trial court rendered judgment for plaintiff Urtula
and ordered the defendant Republic to pay P14,633.52 as interest on the balance of
P95,404.00 from 11 October 1958 to 3 May 1961 and to pay the costs, but denied the plaintiff's
claims on the land taxes 1 and attorney's fees.
Both parties were not satisfied with the decision; hence, both appealed to this Court.
Against the defendant Republic's defense that the final judgment in the expropriation
case, which did not provide for interest, operates to bar the present case, by res judicata, the
theory of plaintiff Urtula is that there is no identity of causes of action in the said cases.
Thus, Urtula relates his predicaments as follows: that while the expropriation case was
pending before the trial court, he could not claim interest because the Republic had not as yet
taken possession of the land and the rule is that interest accrues from the time of such taking;
but when the Republic took possession, the case was already on appeal and he could not ask
relief because he was not an appellant nor could he raise the issue of interest for the first time
 132

on appeal, aside from his being impeded by the rule that proof with respect to the taking of
possession had to be adduced before the trial court, not the appellate court.
Urtula's dilemma lies in his mistaken concept of the nature of the interest that he failed
to claim in the expropriation case and which he now claims in this separate case. Said interest
is not contractual, nor based on delict or quasi-delict, but one that —
"runs as a matter of law and follows as a matter of course from the right of the
landowner to be placed in as good a position as money can accomplish, of the
date of the taking" (30 C.J.S. 230).
Understood as such, Urtula, as defendant in the expropriation case, could have raised
the matter of interest before the trial court even if there had been no actual taking yet by the
Republic and the said court could have included the payment of interest in its judgment but
conditioned upon the actual taking, because the rate of interest upon the amount of just
compensation (6%) is a known factor, and it can reasonably be expected that at some future
time, the expropriator would take possession of the property, though the date be not fixed. In
this way, multiple suits would be avoided. Moreover, nothing prevented appellee from calling
the attention of the appellate courts (even by motion to reconsider before judgment became
final) to the subsequent taking of possession by the condemnor, and asking for allowance of
interest on the indemnity, since that followed the taking as a matter of course, and raised no
issue requiring remand of the records to the Court of origin.
As the issue of interest could have been raised in the former case but was not
raised, res judicata blocks the recovery of interest in the present case. (Tejedor vs. Palet, 61
Phil. 494; Phil. Engineering Corp., et al. vs. Ceniza, etc., et al., L-17834, 29 Sept. 1962) It is
settled that a former judgment constitutes a bar, as between the parties, not only as to matters
expressly adjudged, but all matters that could have been adjudged at the time (Rule 39, sec.
49; Corda vs. Maglinti, L-17476, Nov. 30, 1961; Rodriguez vs. Tan, 48 Off. Gaz. 3330) It
follows that interest upon the unrecoverable interest, which plaintiff also seeks, cannot,
likewise, be granted.
It is not amiss to note that Section 3 of Rule 67 of the Revised Rules of Court (Sec. 4,
Rule 69 of the old Rules), in fact, directs the defendant in an expropriation case to "present in
a single motion to dismiss or for other appropriate relief, all of his objections and defenses . .
." and if not so presented "are waived" (emphasis supplied) 2 As it is, the judgment allowing
the collection of interest, now under appeal, in effect amends the final judgment in the
expropriation case, a procedure abhorrent to orderly judicial proceedings.
The Republic took possession on 11 October 1958. From this date, therefore, the
owner, while retaining the naked title, was deprived of the benefits from the land and it is just
and fair that the realty taxes for the years 1959 and onward should be borne by the entity
exercising the right of eminent domain, (City of Manila vs. Roxas, 60 Phil. 215). Costs in cases
of eminent domain, except those of rival claimants litigating their claims, are charged against
the plaintiff (Sec. 12, Rule 67, Rules of Court; Sec. 13, Rule 67 of the old Rules) But the
present case is not one of eminent domain but an ordinary civil action where the Republic of
the Philippines is a party. Section 1 of Rule 142 provides that no costs shall be allowed against
it, unless otherwise provided by law. No provision of law providing the contrary has been cited;
hence, costs should be charged against plaintiff Urtula.
For the foregoing reasons, the appealed judgment is reversed and the case dismissed,
with costs against the plaintiffs Dalmacio Urtula, et al.
Concepcion, C . J ., Dizon, Makalintal, Bengzon, J.P., Zaldivar, Sanchez, Ruiz Castro,
Angeles and Fernando, JJ ., concur.
||| (Urtula v. Republic, G.R. No. L-22061, [January 31, 1968], 130 PHIL 449-455)

[G.R. No. 161836. February 28, 2006.]

MANILA INTERNATIONAL AIRPORT AUTHORITY and FRANCISCO E.
ATAYDE, petitioners, vs. JOAQUIN RODRIGUEZ, respondent.

DECISION
 133

TINGA, J p:

Once again the perennial clash between government taking for public purpose, on one
hand, and individual property rights, on the other, comes to fore, with the present case
rendered interesting by a couple of twists. Apparently the taking was effected without the aegis
of an expropriation case and yet the present owner of the property who is claiming
compensation purchased it knowing that it has long been used as part of the airport runway.
In the early seventies, petitioner Manila International Airport Authority (MIAA), the
government-owned and controlled corporation managing and operating the Ninoy Aquino
International Airport Complex, implemented expansion programs for its runway. This
necessitated the acquisition and occupation of some of the properties surrounding its
premises. Expropriation proceedings were thus initiated over most of the properties.
On 12 January 1996, the MIAA through its then General Manager, petitioner Francisco
Atayde (Atayde), received a letter 1 from respondent Joaquin Rodriguez (Rodriguez)
proposing to sell at P2,350.00 per square meter, one of the lots already occupied by the
expanded runway but assumed as not yet expropriated by the MIAA. The proposal did not
ripen to a deal. Subsequently, on 29 April 1996, Rodriguez bought the bigger lot a portion of
which was occupied by the runway, as well as all the rights to claim reasonable rents and
damages for the occupation, from its owner then, Buck Estate, Inc., for P4,000,000.00. 2 The
property purchased per the covering title 3 has a total area of 9,687 square meters, of which
a portion consisting of 7,687.5 square meters was then already occupied by the runway. This
occupied portion is hereinafter referred to as the subject lot.
In a letter dated 20 January 1997, Rodriguez, through counsel, demanded from the
MIAA full payment for the property and back rentals for 27 years, amounting to
P468,800,000.00. 4 As he did not reach an agreement with the MIAA, Rodriguez filed a case
for accion reinvindicatoria with damages. 5 Finding that the MIAA had illegally taken
possession of the property, the trial court held:
WHEREFORE, judgment is hereby rendered:
1. Ordering defendant to pay plaintiff the amount of P70,868,936.72 as rental for
the property from 1972 to 1998;
2. Ordering defendant to pay P15,000.00 per square meter as purchase price of
the property occupied by it; SacTAC
3. Ordering defendant to pay exemplary damages in the amount of
P1,000,000.00;
4. Ordering defendant to pay attorney's fees equivalent to 5% of the amount due.
SO ORDERED. 6
The MIAA elevated the case to the Court of Appeals, imputing as errors: (i) the award
of rentals commencing from 1972; (ii) the award of exemplary damages; and (iii) the order to
pay P145,305,000.00 as purchase price of the property. 7 In its Decision of 4 July 2003, the
Court of Appeals modified the trial court's Decision, holding that Rodriguez is entitled to back
rentals only from the time he became the registered owner of the property in 1996. According
to the appellate court, the award of rentals was not based on a contract of lease; rather, it was
a grant of damages representing unearned rentals or unrealized profits. Such damages, it
was explained, must have been inflicted directly upon the person seeking the indemnification;
thus, Rodriguez cannot claim damages he did not personally sustain or unrealized profits
before he acquired the property. 8
The parties filed separate motions for reconsideration. 9 On 28 January 2004, the
Court of Appeals issued a Resolution, the dispositive portion of which reads:
WHEREFORE, premises considered, this Court resolves to:
(1) PARTIALLY GRANT plaintiff-appellees' motion for reconsideration by
including the following rate of legal interest in the award of rentals:
"Six (6%) percent per annum to be computed from the time of the
judicial demand and twelve (12%) percent interest, in lieu of the six (6%)
percent, upon the finality of the decision until the payment thereof."
 134

(2) DENY defendant-appellants' motion for reconsideration for lack of merit.

SO ORDERED. 10
Both the MIAA and Atayde, as petitioners, have thus come before this Court. They
claim that Rodriguez was a buyer in bad faith, having purchased the subject lot in a highly
speculative and scheming manner, 11 and in anticipation of a grossly disproportionate
amount of profit at the expense of the Government. 12 This bad faith, according to petitioners,
was made evident by the fact that: (i) Rodriguez knew that the airport had been occupying the
subject property even before he bought it, and he bought it at the very low price of
P4,000,000.00; (ii) three months before he purchased the property, Rodriguez had written to
Atayde, claiming to have the certificate of title in his name and offering to sell the lot to the
MIAA for P2,350.00 per square meter; and (iii) after purchasing the property, Rodriguez
increased his asking price to P9,000.00 per square meter. 13 Since Rodriguez was a buyer
in bad faith, petitioners stress that the decisions of the courts below entitling him to amass
profits of more than P200,000,000.00 is contrary to morals, good customs and public policy,
and would lead to his unjust enrichment. 14
Further, petitioners allege that there is no basis for awarding exemplary damages and
attorney's fees in favor of Rodriguez since the MIAA in fact exerted efforts to negotiate with
Rodriguez. Considering that the Court of Appeals had ruled that Rodriguez could not claim
damages in the form of rentals from 1972 to 1995, the alleged encroachment starting in 1972
should not be used as basis for computing and awarding damages and attorney's fees,
petitioners add. 15
Petitioners posit that compared to Rodriguez's conduct of bad faith, the MIAA acted in
good faith when it occupied the subject lot. They claim that the property, which was then
comprised of two (2) smaller lots owned by one Eugenio Cruz, had already been expropriated
by the Republic of the Philippines as early as the 1970s. Since then, and after the expansion
of the runway in 1972, nobody had attempted to recover the subject lot or to demand
compensation therefor (except Rodriguez). 16
Finally, even assuming that the MIAA is required to pay compensation for the subject
lot once more, the same could not be at the current price of P15,000.00 per square meter as
ruled by the appellate court, but rather in the price at the time of the taking, 17 petitioners
close. HAICET
On the other hand, Rodriguez argues that the instant petition calls for a review of the
finding of facts of the Court of Appeals which is not allowed in a petition for certiorari under
Rule 45. Besides, the appellate court did not commit any reversible error.
Private property shall not be taken for public use without just compensation. 18 This
is a constitutional mandate that we must once more put in force. Pertinently, therefore, the
Court must determine the basis of compensation, as well as the kind and form of damages
due Rodriguez as a consequence of the MIAA's use and occupation of the subject lot.
Likewise, the Court has to decide on the alleged bad faith on the part of Rodriguez in
purchasing the property.
The petition is partly meritorious.
While the instant case stemmed from the accion reinvindicatoria that Rodriguez had
filed, it essentially revolves around the taking of the subject lot by the MIAA. There is "taking"
when the expropriator enters private property not only for a momentary period but for a more
permanent duration, or for the purpose of devoting the property to a public use in such a
manner as to oust the owner and deprive him of all beneficial enjoyment thereof. 19 In this
context, there was taking when the MIAA occupied a portion thereof for its expanded runway.
The instant case is certainly neither unique nor of first impression. Where actual taking
was made without the benefit of expropriation proceedings, and the owner sought recovery of
the possession of the property prior to the filing of expropriation proceedings, the Court has
invariably ruled that it is the value of the property at the time of taking that is controlling for
purposes of compensation.
Thus, in Commissioner of Public Highways v. Burgos, 20 wherein it took the owner of
a parcel of land thirty-five (35) years before she filed a case for recovery of possession taken
by the local government unit for a road-right-of-way purpose, this Court held:
 135

. . . there being no other legal provision cited which would justify a

departure form the rule that just compensation is determined on the basis of the
value of the property at the time of the taking thereof in expropriation by the
Government, the value of the property as it is when the Government took
possession of the land in question, not the increased value resulting from the
passage of time which invariably brings unearned increment to landed
properties, represents the true value to be paid as just compensation for the
property taken. 21
In Ansaldo v. Tantuico, Jr., 22 where the owners of two (2) lots used by the
Government for road widening sought compensation twenty-six (26) years after the lots were
taken, the Court ruled in the same vein, thus:
The sole question thus confronting the Court involves the precise time at
which just compensation should be fixed, whether as of the time of actual taking
of possession by the expropriating entity or, as the Ansaldos maintain, only after
conveyance of title to the expropriator pursuant to expropriation proceedings duly
instituted since it is only at such a time that the constitutional requirements of
due process aside from those of just compensation may be fully met. 23

xxx xxx xxx

It is as of the time of such a taking, to repeat, that the just compensation
for the property is to be established. As stated in Republic v. Philippine National
Bank,
". . . (W)hen plaintiff takes possession before the institution of the
condemnation proceedings, the value should be fixed as of the time of
the taking of said possession, not of filing of the complaint and the latter
should be the basis for the determination of the value, when the taking of
the property involved coincides with or is subsequent to, the
commencement of the proceedings. Indeed, otherwise, the provision of
Rule 69, Section 3, directing that compensation 'be determined as of the
date of the filing of the complaint' would never be operative. As intimated
in Republic v. Lara (supra), said provision contemplates 'normal
circumstances,' under which 'the complaint coincides or even precedes
the taking of the property by the plaintiff.'"
The reason for the rule, as pointed out in Republic v. Lara, is that —
". . . (W)here property is taken ahead of the filing of the
condemnation proceedings, the value thereof may be enchanced by the
public purpose for which it is taken; the entry by the plaintiff upon the
property may have depreciated its value thereby; or, there may have
been a natural increase in the value of the property from the time the
complaint is filed, due to general economic conditions. The owner of
private property should be compensated only for what he actually loses;
it is not intended that his compensation shall extend beyond his loss or
injury. And what he loses is only the actual value of his property at the
time it is taken. This is the only way that compensation to be paid can be
truly just; i.e., 'just not only to the individual whose property is taken,' 'but
to the public, which is to pay for it.'"
Clearly, then, the value of the Ansaldos' property must be ascertained as
of the year 1947, when it was actually taken, and not at the time of the filing of
the expropriation suit, which, by the way, still has to be done. It is as of that time
that the real measure of their loss may fairly be adjudged. The value, once fixed,
shall earn interest at the legal rate until full payment is effected, conformably with
other principles laid down by case law. 24
The ruling was reiterated in Eslaban v. Vda. De Onorio. 25 There, a main irrigation
canal was constructed over a piece of land by the National Irrigation Administration but the
property owner filed the complaint seeking compensation only nine (9) years later. The Court
declared:
 136

Thus, the value of the property must be determined either as of the date
of the taking of the property or the filing of the complaint, "whichever came first."
Even before the new rule, however, it was already held in Commissioner of
Public Highways v. Burgos that the price of the land at the time of taking, not its
value after the passage of time, represents the true value to be paid as just
compensation. It was, therefore, error for the Court of Appeals to rule that the
just compensation to be paid to respondent should be determined as of the filing
of the complaint in 1990, and not the time of its taking by the NIA in 1981,
because petitioner was allegedly remiss in its obligation to pay respondent, and
it was respondent who filed the complaint. In the case of Burgos, it was also the
property owner who brought the action for compensation against the government
after 25 years since the taking of his property for the construction of a
road. IcHTCS
Indeed, the value of the land may be affected by many factors. It may be
enhanced on account of its taking for public use, just as it may depreciate. As
observed in Republic v. Lara:
[W]here property is taken ahead of the filing of the condemnation
proceedings, the value thereof may be enhanced by the public purpose
for which it is taken; the entry by the plaintiff upon the property may have
depreciated its value thereby; or there may have been a natural increase
in the value of the property from the time it is taken to the time the
complaint is filed, due to general economic conditions. The owner of
private property should be compensated only for what he actually loses;
it is not intended that his compensation shall extend beyond his loss or
injury. And what he loses is only the actual value of his property at the
time it is taken. This is the only way that compensation to be paid can be
truly just, i.e., "just" not only to the individual whose property is taken, "but
to the public, which is to pay for it" . . . .
In this case, the proper valuation for the property in question is
P16,047.61 per hectare, the price level for 1982, based on the appraisal report
submitted by the commission (composed of the provincial treasurer, assessor,
and auditor of South Cotabato) constituted by the trial court to make an
assessment of the expropriated land and fix the price thereof on a per hectare
basis. 26
Per the findings of the trial court, 27 the subject lot was occupied as a runway of the
MIAA starting in 1972. Thus, the value of the lot in 1972 should serve as the basis for the
award of compensation to the owner. However, said value does not appear in the record.
Now, the question of actual damages for the occupation of the subject lot.
Undeniably, the MIAA's illegal occupation for more than twenty (20) years has resulted
in pecuniary loss to Rodriguez and his predecessors-in-interest. Such pecuniary loss entitles
him to adequate compensation in the form of actual or compensatory damages, 28 which in
this case should be the legal interest (6%) 29 on the value of the land at the time of taking,
from said point up to full payment by the MIAA. 30 This is based on the principle that interest
"runs as a matter of law and follows from the right of the landowner to be placed in as good
position as money can accomplish, as of the date of the taking." 31
The award of interest renders unwarranted the grant of back rentals as extended by
the courts below. In Republic v. Lara, et al., 32 the Court ruled that the indemnity for rentals
is inconsistent with a property owner's right to be paid legal interest on the value of the
property, for if the condemnor is to pay the compensation due to the owners from the time of
the actual taking of their property, the payment of such compensation is deemed to retroact
to the actual taking of the property; and, hence, there is no basis for claiming rentals from the
time of actual taking. 33 More explicitly, the Court held in Republic v. Garcellano 34 that:
The uniform rule of this Court, however, is that this compensation must
be, not in the form of rentals, but by way of 'interest from the date that the
company [or entity] exercising the right of eminent domain take possession of
the condemned lands, and the amounts granted by the court shall cease to earn
interest only from the moment they are paid to the owners or deposited in court
. . . . 35
 137

Petitioners claim that Rodriguez is a buyer in bad faith since prior to his purchase he
was aware of the MIAA's occupation of the property and therefore proceeded with the
purchase in anticipation of enormous profits from the subsequent sale to the MIAA. The point
is irrelevant. Regardless of whether or not Rodriguez acted in bad faith, all that he will be
entitled to is the value of the property at the time of the taking, with legal interest thereon from
that point until full payment of the compensation by the MIAA. Besides, assuming the question
is of any consequence, the circumstances surrounding Rodriguez's purchase may not even
amount to bad faith. Bad faith has been defined as a state of mind affirmatively operating with
furtive design or with some motive of self-interest or ill will or for an ulterior purpose, and
implies a conscious and intentional design to do a wrongful act for a dishonest purpose or
moral obliquity. 36 There is nothing wrongful or dishonest in expecting to profit from one's
investment. However, Rodriguez can fault but only himself for taking an obvious risk in
purchasing property already being used for a public purpose. It was a self-inflicted misfortune
that his investment did not generate the windfall he had expected. For ostensibly little did he
know that he could not acquire more rights than the previous owners had since the
government taking had taken place earlier. SCIAaT
For more than twenty (20) years, the MIAA occupied the subject lot without the benefit
of expropriation proceedings and without the MIAA exerting efforts to ascertain ownership of
the lot and negotiating with any of the owners of the property. To our mind, these are wanton
and irresponsible acts which should be suppressed and corrected. Hence, the award of
exemplary damages and attorneys fees is in order. However, while Rodriguez is entitled to
such exemplary damages and attorney's fees, the award granted by the courts below should
be equitably reduced. We hold that Rodriguez is entitled only to P200,000.00 as exemplary
damages, and attorney's fees equivalent to one percent (1%) of the amount due.
The MIAA argues that it had already expropriated the subject lot back in the 1970s.
However, the Court cannot pass upon this defense, it having been brought up for the first time.
Points of law, theories, issues and arguments not adequately brought to the attention of the
trial court need not be, and ordinarily will not be, considered by a reviewing court as they
cannot be raised for the first time on appeal. 37 Moreover, this new theory of previous
expropriation is negated by the fact that petitioners negotiated with Rodriguez when the latter
offered the subject property for sale to the MIAA, as evidenced by the correspondence
between the parties. 38 If the MIAA already owned the property, there would be no more need
to negotiate with Rodriguez; petitioners would have asserted such fact as soon as Rodriguez
had offered to sell the property to them.
WHEREFORE, the petition is GRANTED IN PART. The Decision of the Court of
Appeals is MODIFIED as follows:
a. The MIAA is ordered to pay Joaquin Rodriguez just compensation for the
subject lot, the portion actually occupied by the runway consisting of or
based on the value thereof at the time of taking in 1972, with interest
thereon at the legal rate of six percent (6%) per annum from the time of
the taking until full payment is made. For the purpose of determining said
value, the case is remanded to the lower court. Said court is ordered to
make the determination with deliberate dispatch;
b. The award of back rentals as damages is DELETED;
c. The MIAA is ordered to PAY exemplary damages in the reduced amount of
P200,000.00, and attorney's fees equivalent to one percent (1%) of the
amount due.
No pronouncement as to costs. HESAIT
SO ORDERED.
||| (Manila International Airport Authority v. Rodriguez, G.R. No. 161836, [February 28, 2006], 518
PHIL 750-764)

[G.R. No. 179334. July 1, 2013.]

SECRETARY OF THE DEPARTMENT OF PUBLIC WORKS AND HIGHWAY
S and DISTRICT ENGINEER CELESTINO R.
CONTRERAS, petitioners, vs. SPOUSES HERACLEO and RAMONA TECSO
N, respondents.
DECISION
 138

PERALTA, J p:
This is a petition for review on certiorari under Rule 45 of the Rules of Court, assailing the
Court of Appeals (CA) Decision 1 dated July 31, 2007 in CA-G.R. CV No. 77997. The assailed
decision affirmed with modification the Regional Trial Court (RTC) 2 Decision 3 dated March 22,
2002 in Civil Case No. 208-M-95.
The case stemmed from the following factual and procedural antecedents:
Respondent spouses Heracleo and Ramona Tecson (respondents) are co-owners of a
parcel of land with an area of 7,268 square meters located in San Pablo, Malolos,
Bulacan and covered by Transfer Certificate of Title (TCT) No. T-43006 4 of the
Register of Deeds of Bulacan. Said parcel of land was among the properties taken by the
government sometime in 1940 without the owners' consent and without the necessary
expropriation proceedings and used for the construction of the MacArthur Highway. 5
In a letter 6 dated December 15, 1994, respondents demanded the payment of the fair
market value of the subject parcel of land. Petitioner Celestino R. Contreras (petitioner
Contreras), then District Engineer of the First Bulacan Engineering
District of petitioner Department of Public Works and Highways (DPWH), offered to pay the
subject land at the rate of P0.70 per square meter per Resolution of the Provincial Appraisal
Committee (PAC) of Bulacan. 7 Unsatisfied with the offer, respondents demanded for the
return of their property or the payment of compensation at the current fair market
value. 8 TcHCDI
As their demand remained unheeded, respondents filed a Complaint 9 for
recovery of possession with damages against petitioners, praying that they be restored to the
possession of the subject parcel of land and that they be paid attorney's fees. 10 Respondents
claimed that the subject parcel of land was assessed at P2,543,800.00. 11
Instead of filing their Answer, petitioners moved for the dismissal of the complaint on the
following grounds: (1) that the suit is against the State which may not be sued without its consent;
(2) that the case has already prescribed; (3) that respondents have no cause of action for failure
to exhaust administrative remedies; and (4) if respondents are entitled to compensation, they
should be paid only the value of the property in 1940 or 1941. 12
On June 28, 1995, the RTC issued an Order 13 granting respondents' motion to dismiss
based on the doctrine of state immunity from suit. As respondents' claim includes the
recovery of damages, there is no doubt that the suit is against the State for which prior
waiver of immunity is required. When elevated to the CA, 14 the appellate court did not agree with
the RTC and found instead that the doctrine of state immunity from suit is not applicable, because
the recovery of compensation is the only relief available to the landowner. To deny such relief
would undeniably cause injustice to the landowner. Besides, petitioner Contreras, in fact, had
earlier offered the payment of compensation although at a lower rate. Thus, the CA
reversed and set aside the dismissal of the complaint and, consequently, remanded the case to
the trial court for the purpose of determining the just compensation to which respondents are
entitled to recover from the government. 15 With the finality of the aforesaid decision, trial
proceeded in the RTC. EHSTDA
The Branch Clerk of Court was initially appointed as the Commissioner and designated as
the Chairman of the Committee that would determine just compensation, 16 but the case was
later referred to the PAC for the submission of a recommendation report on the value of the
subject property. 17 In PAC Resolution No. 99-007, 18 the PAC recommended the
amount of P1,500.00 per square meter as the just compensation for the subject property.
On March 22, 2002, the RTC rendered a Decision, 19 the dispositive portion of which
reads:
WHEREFORE, premises considered,
the Department of Public Works and Highways or its duly assigned agencies are
hereby directed to pay said Complainants/Appellants the amount of One
Thousand Five Hundred Pesos (P1,500.00) per square meter for the lot subject
matter of this case in accordance with the Resolution of the Provincial Appraisal
Committee dated December 19, 2001.
SO ORDERED. 20
 139

On appeal, the CA affirmed the above decision with the modification that the just
compensation stated above should earn interest of six percent (6%) per annum computed from
the filing of the action on March 17, 1995 until full payment. 21
In its appeal before the CA, petitioners raised the issues of prescription and laches, which
the CA brushed aside on two grounds: first, that the issue had already been raised by petitioners
when the case was elevated before the CA in CA-G.R. CV No. 51454. Although it was not
squarely ruled upon by the appellate court as it did not find any reason to delve further on such
issues, petitioners did not assail said decision barring them now from raising exactly the same
issues; and second, the issues proper for resolution had been laid down in the pre-trial order
which did not include the issues of prescription and laches. Thus, the same can no longer be
further considered. As to the propriety of the property's valuation as determined by the
PAC and adopted by the RTC, while recognizing the rule that the just compensation should be
the reasonable value at the time of taking which is 1940, the CA found it necessary to deviate
from the general rule. It opined that it would be obviously unjust and inequitable if respondents
would be compensated based on the value of the property in 1940 which is P0.70 per sq m, but
the compensation would be paid only today. Thus, the appellate court found it just to award
compensation based on the value of the property at the time of payment. It, therefore, adopted
the RTC's determination of just compensation of P1,500.00 per sq m as recommended by the
PAC. The CA further ordered the payment of interest at the rate of six percent (6%) per annum
reckoned from the time of taking, which is the filing of the complaint on March 17, 1995. IAaCST
Aggrieved, petitioners come before the Court assailing the CA decision based on the
following grounds:
I.
THE COURT OF APPEALS GRAVELY ERRED IN GRANTING JUST
COMPENSATION TO RESPONDENTS CONSIDERING THE HIGHLY
DUBIOUS AND QUESTIONABLE CIRCUMSTANCES OF THEIR ALLEGED
OWNERSHIP OF THE SUBJECT PROPERTY.
II.
THE COURT OF APPEALS GRAVELY ERRED IN AWARDING JUST
COMPENSATION TO RESPONDENTS BECAUSE THEIR COMPLAINT FOR
RECOVERY OF POSSESSION AND DAMAGES IS ALREADY BARRED BY
PRESCRIPTION AND LACHES.
III.
THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE TRIAL
COURT'S DECISION ORDERING THE PAYMENT OF JUST
COMPENSATION BASED ON THE CURRENT MARKET VALUE OF THE
ALLEGED PROPERTY OF RESPONDENTS. 22
Petitioners insist that the action is barred by prescription having been filed fifty-four (54)
years after the accrual of the action in 1940. They explain that the court can motu proprio dismiss
the complaint if it shows on its face that the action had already prescribed. Petitioners likewise
aver that respondents slept on their rights for more than fifty years; hence, they are
guilty of laches. Lastly, petitioners claim that the just compensation should be based on the
value of the property at the time of taking in 1940 and not at the time of payment. 23
The petition is partly meritorious. ATHCDa
The instant case stemmed from an action for recovery of possession with damages filed
by respondents against petitioners. It, however, revolves around the taking of the subject lot by
petitioners for the construction of the MacArthur Highway. There is taking when the expropriator
enters private property not only for a momentary period but for a permanent duration, or for the
purpose of devoting the property to public use in such a manner as to oust the owner and deprive
him of all beneficial enjoyment thereof. 24
It is undisputed that the subject property was taken by petitioners without the
benefit of expropriation proceedings for the construction of the MacArthur Highway. After the
lapse of more than fifty years, the property owners sought recovery of the possession of their
property. Is the action barred by prescription or laches? If not, are the property owners entitled to
recover possession or just compensation?
 140

As aptly noted by the CA, the issues of prescription and laches are not proper issues for
resolution as they were not included in the pre-trial order. We quote with approval the CA's
ratiocination in this wise:
Procedurally, too, prescription and laches are no longer proper issues in
this appeal. In the pre-trial order issued on May 17, 2001, the RTC summarized
the issues raised by the defendants, to wit: (a) whether or not the plaintiffs were
entitled to just compensation; (b) whether or not the valuation would be based
on the corresponding value at the time of the taking or at the time of the
filing of the action; and (c) whether or not the plaintiffs were entitled to damages.
Nowhere did the pre-trial order indicate that prescription and laches were to be
considered in the adjudication of the RTC. 25
To be sure, the pre-trial order explicitly defines and limits the issues to be tried and controls
the subsequent course of the action unless modified before trial to prevent manifest
injustice. 26 ICAcTa
Even if we squarely deal with the issues of laches and prescription, the same must still
fail. Laches is principally a doctrine of equity which is applied to avoid recognizing a right when to
do so would result in a clearly inequitable situation or in an injustice. 27 This doctrine finds no
application in this case, since there is nothing inequitable in giving due course to respondents'
claim. Both equity and the law direct that a property owner should be compensated if his property
is taken for public use. 28 Neither shall prescription bar respondents' claim following the long-
standing rule "that where private property is taken by the Government for public use without first
acquiring title thereto either through expropriation or negotiated sale, the owner's action to recover
the land or the value thereof does not prescribe." 29
When a property is taken by the government for public use, jurisprudence clearly provides
for the remedies available to a landowner. The owner may recover his property if its return is
feasible or, if it is not, the aggrieved owner may demand payment of just compensation for the
land taken. 30 For failure of respondents to question the lack of expropriation proceedings for a
long period of time, they are deemed to have waived and are estopped from assailing the
power of the government to expropriate or the public use for which the power was exercised.
What is left to respondents is the right of compensation. 31 The trial and appellate courts found
that respondents are entitled to compensation. The only issue left for determination is the
propriety of the amount awarded to respondents.
Just compensation is "the fair value of the property as between one who
receives, and one who desires to sell, . . . fixed at the time of the actual taking by the
government." This rule holds true when the property is taken before the filing of an expropriation
suit, and even if it is the property owner who brings the action for compensation. 32
The issue in this case is not novel. TaCDcE
In Forfom Development Corporation [Forfom] v. Philippine National Railways
[PNR], 33 PNR entered the property of Forfom in January 1973 for public use, that is, for railroad
tracks, facilities and appurtenances for use of the Carmona Commuter Service without initiating
expropriation proceedings. 34 In 1990, Forfom filed a complaint for
recovery of possession of real property and/or damages against PNR. In Eusebio v.
Luis, 35 respondent's parcel of land was taken in 1980 by the City of Pasig and used as a
municipal road now known as A. Sandoval Avenue in Pasig City without the appropriate
expropriation proceedings. In 1994, respondent demanded payment of the value of the property,
but they could not agree on its valuation prompting respondent to file a complaint for
reconveyance and/or damages against the city government and the mayor. In Manila
International Airport Authority v. Rodriguez, 36 in the early 1970s, petitioner implemented
expansion programs for its runway necessitating the acquisition and occupation of some of the
properties surrounding its premises. As to respondent's property, no expropriation proceedings
were initiated. In 1997, respondent demanded the payment of the value of the property, but the
demand remained unheeded prompting him to institute a case for accion reivindicatoria with
damages against petitioner. In Republic v. Sarabia, 37 sometime in 1956, the Air Transportation
Office (ATO) took possession and control of a portion of a lot situated in Aklan, registered in the
name of respondent, without initiating expropriation proceedings. Several structures were erected
thereon including the control tower, the Kalibo crash fire rescue station, the Kalibo airport
terminal and the headquarters of the PNP Aviation Security Group. In 1995, several
stores and restaurants were constructed on the remaining portion of the lot. In 1997, respondent
 141

filed a complaint for recovery of possession with damages against the storeowners where ATO
intervened claiming that the storeowners were its lessees.
The Court in the above-mentioned cases was confronted with common factual
circumstances where the government took control and possession of the subject properties
for public use without initiating expropriation proceedings and without payment of just
compensation, while the landowners failed for a long period of time to question such government
act and later instituted actions for recovery of possession with damages. The Court thus
determined the landowners' right to the payment of just compensation and, more importantly, the
amount of just compensation. The Court has uniformly ruled that just compensation is the
value of the property at the time of taking that is controlling for
purposes of compensation. In Forfom, the payment of just compensation was reckoned from
the time of taking in 1973; in Eusebio, the Court fixed the just compensation by determining the
value of the property at the time of taking in 1980; in MIAA, the value of the lot at the
time of taking in 1972 served as basis for the award of compensation to the
owner; and in Republic, the Court was convinced that the taking occurred in 1956 and was thus
the basis in fixing just compensation. As in said cases, just compensation due respondents in this
case should, therefore, be fixed not as of the time of payment but at the time of taking, that is, in
1940.
The reason for the rule has been clearly explained in Republic v. Lara, et
al., 38 and repeatedly held by the Court in recent cases, thus:
. . . "[T]he value of the property should be fixed as of the date when it was
taken and not the date of the filing of the proceedings." For where property is
taken ahead of the filing of the condemnation proceedings, the value thereof
may be enhanced by the public purpose for which it is taken; the entry by the
plaintiff upon the property may have depreciated its value thereby; or, there
may have been a natural increase in the value of the property from the time it
is taken to the time the complaint is filed, due to general economic conditions.
The owner of private property should be compensated only for what he actually
loses; it is not intended that his compensation shall extend beyond his loss or
injury. And what he loses is only the actual value of his property at the time it
is taken . . . . 39
Both the RTC and the CA recognized that the fair market value of the subject property in
1940 was P0.70/sq m. 40 Hence, it should, therefore, be used in determining the amount due
respondents instead of the higher value which is P1,500.00. While disparity in the above amounts
is obvious and may appear inequitable to respondents as they would be receiving such outdated
valuation after a very long period, it is equally true that they too are remiss in guarding against
the cruel effects of belated claim. The concept of just compensation does not imply fairness to the
property owner alone. Compensation must be just not only to the property owner, but also to
the public which ultimately bears the cost of expropriation. 41 SHDAEC
Clearly, petitioners had been occupying the subject property for more than fifty years
without the benefit of expropriation proceedings. In taking respondents' property without the
benefit of expropriation proceedings and without payment of just compensation, petitioners
clearly acted in utter disregard of respondents' proprietary rights which cannot be countenanced
by the Court. 42 For said illegal taking, respondents are entitled to adequate compensation in the
form of actual or compensatory damages which in this case should be the legal interest of six
percent (6%) per annum on the value of the land at the time of taking in 1940 until full
payment. 43 This is based on the principle that interest runs as a matter of law and follows from
the right of the landowner to be placed in as good position as money can accomplish, as of the
date of taking. 44
WHEREFORE, premises considered, the petition is PARTIALLY GRANTED. The
Court of Appeals Decision dated July 31, 2007 in CA-G.R. CV No. 77997 is MODIFIED, in that
the valuation of the subject property owned by respondents shall be P0.70 instead of P1,500.00
per square meter, with interest at six percent (6%) per annum from the date of taking in 1940
instead of March 17, 1995, until full payment.
SO ORDERED.
||| (Secretary of the Department of Public Works and Highways v. Spouses Tecson, G.R. No.
179334, [July 1, 2013], 713 PHIL 55-92)
 142

[G.R. No. 108015. May 20, 1998.]

CRISTINA DE KNECHT and RENE KNECHT

||| (De Knecht v. Court of Appeals, G.R. Nos. 108015 & 109234, [May 20, 1998], 352 PHIL 833-
854)
POLITICAL LAW; POWER OF THE STATE; EMINENT DOMAIN; EXERCISE THEREOF,
CONSTRUED. — The power of eminent domain is exercised by the filing of a complaint which
shall join as defendants all persons owning or claiming to own, or occupying, any part of the
expropriated land or interest therein. If a known owner is not joined as defendant, he is entitled to
intervene in the proceeding; or if he is joined but not served with process and the proceeding is
already closed before he came to know of the condemnation, he may maintain an independent
suit for damages. The defendants in an expropriation case are not limited to the owners of the
property condemned. They include all other persons owning, occupying or claiming to own the
property. When a parcel of land is taken by eminent domain, the owner of the fee is not necessarily
the only person who is entitled to compensation. In the American jurisdiction, the term "owner"
when employed in statutes relating to eminent domain to designate the persons who are to be
made parties to the proceeding, refers, as is the rule in respect of those entitled to compensation,
to all those who have lawful interest in the property to be condemned, including a mortgagee, a
lessee and a vendee in possession under an executory contract. Every person having an estate
or interest at law or in equity in the land taken is entitled to share in the award. If a person claiming
an interest in the land sought to be condemned is not made a party, he is given the right to
intervene and lay claim to the compensation. IcCDAS
DECISION

PUNO, J p:

In G.R. No. 108015, petitioners Cristina de Knecht and Rene Knecht seek to annul and
set aside the decision of the Court of Appeals 1 in CA-G.R. SP No. 28089 dismissing an action
to annul (1) the decision and order of the Regional Trial Court, Branch 112, Pasay City, 2 in LRC
Case No. 2636-P; (2) the order of the Regional Trial Court, Branch 110, Pasay City 3 in LRC
Case No. 2652-P; and (3) the orders of dismissal by Regional Trial Court, Branch 119, Pasay City
in Civil Case No. 2961-P; 4 and (4) the orders and the writ of possession issued by the Regional
Trial Court, Branch 111, Pasay City, 5 in Civil Case No. 7327. LLcd
In G.R. No. 109234, petitioners Cristina de Knecht and Rene Knecht seek to annul the
decision of the Court of Appeals 6 in CA-G.R. SP No. 27817 which dismissed the petition for
certiorari questioning the order of the Regional Trial Court, Branch 111, Pasay City 7 denying its
"Motion for Intervention and to Implead Additional Parties" in Civil Case No. 7327.
The instant case is an unending sequel to several suits commenced almost twenty years
ago over the same subject matter. This involves a parcel of land with an area of 8,102.68 square
meters, more or less, located at the corner of the south end of the E. de los Santos Avenue
(EDSA) 8 and F.B. Harrison in Pasay City. The land was owned by petitioners Cristina de Knecht
and her son, Rene Knecht, under Transfer Certificate of Title (TCT) No. 9032 issued in their
names by the Register of Deeds of Pasay City. On the land, the Knechts constructed eight (8)
houses of strong materials, leased out the seven and occupied one of them as their residence.
In 1979, the Republic of the Philippines initiated Civil Case No. 7001-P for expropriation
against the Knechts' property before the then Court of First Instance of Rizal, Branch 111, Pasay
City. 9 The government sought to utilize the land for the completion of the Manila Flood Control
and Drainage Project and the extension of the EDSA towards Roxas Boulevard.
The CFI issued a writ of possession. On petition of the Knechts, however, this Court, in
G.R. No. L-51078, held that the choice of area for the extension of EDSA was arbitrary. We
annulled the writ of possession and enjoined the trial court from taking further action in Civil Case
No. 7001-P. 10
In 1982, the City Treasurer of Pasay discovered that the Knechts failed to pay real estate
taxes on the property from 1980 to 1982. 11 As a consequence of this deficiency, the City
Treasurer sold the property at public auction on May 27, 1982 for the sum of P63,000.00, the
 143

amount of the deficiency taxes. 12 The highest bidders were respondent Spouses Anastacio and
Felisa Babiera (the Babieras) and respondent Spouses Alejandro and Flor Sangalang (the
Sangalangs).
Petitioners failed to redeem the property within one year from the date of sale. In August
1983, Anastacio Babiera filed with respondent Regional Trial Court, Branch 112, Pasay City, a
petition for registration of his name as co-owner pro-indiviso of the subject land. This case was
docketed as LRC Case No. 2636-P 13 and was filed allegedly without notice to the Knechts. On
September 15, 1983, the trial court ordered the Register of Deeds to register Babiera's name and
the Knechts to surrender to the Register of Deeds the owner's duplicate of the title.
In October 1983, Alejandro Sangalang filed LRC Case No. 2652-P before the Regional
Trial Court, Branch 110, Pasay City. 14 Sangalang also sought to register his name as co-owner
pro-indiviso of the subject property. The proceedings were also conducted allegedly without notice
to the Knechts. The trial court granted the petition and ordered the Register of Deeds, Pasay City
to cancel TCT No. 9032 in the name of the Knechts and issue a new one in the names of Babiera
and Sangalang.
Pursuant to said orders, the Register of Deeds cancelled TCT No. 9032 and issued TCT
No. 86670 in the names of Sangalang and Babiera. The Knechts, who were in possession of the
property, allegedly learned of the auction sale only by the time they received the orders of the
land registration courts.
On March 12, 1985, Sangalang and Babiera sold the land to respondent Salem
Investment Corporation (Salem) for P400,000.00. TCT No. 86670 was cancelled and TCT No.
94059 was issued in the name of Salem.
Meanwhile, on February 17, 1983, the Batasang Pambansa passed B.P. Blg.
340 authorizing the national government to expropriate certain properties in Pasay City for the
EDSA Extension, the EDSA Outfall of the Manila Flood Control and Drainage Project, and the
"Cut-Off" of the Estero Tripa de Gallina which were all projects of the National
Government. 15 The property of the Knechts was part of those expropriated under B.P. Blg. 340.
In view of this Court's previous ruling in G.R. No. L-51078 16 annulling the expropriation
proceedings in Civil Case No. 7001-P, the government apprised this Court of the subsequent
enactment of B.P. Blg. 340. On February 12, 1990, we rendered a decision upholding the validity
of B.P. Blg. 340 in G.R. No. 87335. 17
While G.R. No. 87335 was pending in court, on June 24, 1985, the Knechts filed Civil
Case No. 2961-P before the Regional Trial Court, Branch 119, Pasay City. 18 They prayed for
reconveyance, annulment of the tax sale and the titles of the Babieras and Sangalangs. The
Knechts based their action on lack of the required notices to the tax sale.
In the same case, Salem filed on September 26, 1985 a petition for appointment of a
receiver. The court granted the petition and on November 7, 1985, appointed Metropolitan Bank
and Trust Company as receiver. The Knechts questioned this appointment on a petition for
certiorari before the Court of Appeals in CA-G.R. SP No. 08178. The Court of Appeals dismissed
the petition which this Court affirmed in G.R. No. 75609 on January 28, 1987.
Meanwhile, Civil Case No. 2961-P proceeded before Branch 119. The Knechts presented
their evidence. They, however, repeatedly requested for postponements. 19 At the hearing of
September 13, 1988, they and their counsel failed to appear. Accordingly, the trial court dismissed
the case for "apparent lack of interest of plaintiffs" . . . "considering that the case had been pending
for an unreasonable length of time." 20
The Knechts moved to set aside the order of dismissal. The motion was denied for late
filing and failure to furnish a copy to the other parties. 21 The Knechts questioned the order of
dismissal before the Court of Appeals. The appellate court sustained the trial court. They elevated
the case to this Court in G.R. No. 89862. The petition was denied for late payment of filing fees
and for failure to sufficiently show any reversible error. 22 On January 17, 1990, the petition was
denied with finality 23 and entry of judgment was made on February 19, 1990. 24
Three (3) months later, on May 15, 1990, the Republic of the Philippines, through the
Solicitor General, filed before the Regional Trial Court, Branch 111, Pasay City Civil Case
No. 7327 "[f]or determination of just compensation of lands expropriated under B.P. Blg.
340." 25 In its amended petition, the National Government named as defendants Salem, Maria
del Carmen Roxas de Elizalde, Concepcion Cabarrus Vda. de Santos, Mila de la Rama and
 144

Inocentes de la Rama, the heirs of Eduardo Lesaca and Carmen Padilla. 26 As prayed for, the
trial court issued a writ of possession on August 29, 1990. 27 The following day, August 30, seven
of the eight houses of the Knechts were demolished and the government took possession of the
portion of land on which the houses stood. 28
Meanwhile, Salem conveyed 5,611.92 square meters of the subject property to
respondent spouses Mariano and Anacoreta Nocom for which TCT No. 130323 was issued in
their names. Salem remained the owner of 2,490.69 square meters under TCT Nos. 130434 and
130435.
Since the Knechts refused to vacate their one remaining house, Salem instituted against
them Civil Case No. 85-263 for unlawful detainer before the Municipal Trial Court, Branch 46,
Pasay City. As defense, the Knechts claimed ownership of the land and building. 29 The
Municipal Trial Court, however, granted the complaint and ordered the Knechts' ejectment.
Pursuant to a writ of execution, the last house of the Knechts was demolished on April 6, 1991. 30
The proceedings in Civil Case No. 7327 continued. As prayed for by Salem, the trial court
issued an order on September 13, 1990 for the release of P5,763,650.00 to Salem by the
Philippine National Bank (PNB) as partial payment of just compensation. 31 On June 7, 1991, the
trial court issued another order to the PNB for the release of P15,000,000.00 as another partial
payment to Salem. 32
On September 9, 1991, the trial court issued an order fixing the compensation of all the
lands sought to be expropriated by the government. The value of the subject land was set at
P28,961.00 per square meter. 33 This valuation did not include the improvements. 34
It was after these orders that the Knechts, on September 25, 1991, filed a "Motion for
Intervention and to Implead Additional Parties" in Civil Case No. 7327. They followed this with a
"Motion to Inhibit Respondent Judge Sayo and to Consolidate Civil Case No. 7327 with Civil Case
No. 8423."
Earlier, prior to the "Motion to Inhibit Respondent Judge Sayo and to Consolidate Civil
Case No. 7327 with Civil Case No. 8423," the Knechts instituted Civil Case No. 8423 before the
Regional Trial Court, Branch 117, Pasay City for recovery of ownership and possession of the
property. On January 2, 1992, the trial court dismissed Civil Case No. 8423 on the ground of res
judicata. The Knechts challenged the order of dismissal in G.R. No. 103448 before this Court. On
February 5, 1992, we dismissed the Knechts' "Motion for Extension of Time to File Petition for
Certiorari" for non-compliance with Circular No. 1-88 35 and for late filing of the Petition. 36 Entry
of judgment was made on May 21, 1992. 37
In Civil Case No. 7327, the trial court issued an order on April 14, 1992 denying the
Knechts' "Motion for Intervention and to Implead Additional Parties." The court did not rule on the
"Motion to Inhibit Respondent Judge Sayo and to Consolidate Civil Case No. 7327 with Civil Case
No. 8423," declaring it moot and academic. LLcd
On April 23, 1992, as prayed for by Mariano Nocom, the trial court ordered the release of
P11,526,000.00 as third installment for his 5,611.92 square meters of the subject land. The
Knechts questioned the release of this amount before the Court of Appeals in CA-G.R. SP
No. 27817. The Knechts later amended their petition to limit their cause of action to a review of
the order of April 14, 1992 which denied their "Motion for Intervention and to Implead Additional
Parties."
On March 5, 1993, the Court of Appeals dismissed the petition in CA-G.R. SP No. 27817
and denied the Knechts' intervention in Civil Case No. 7327 after finding that the Knechts had no
legal interest on the subject property after the dismissal of Civil Case No. 2961-P. Hence the
petition in G.R. No. 109234.
On June 9, 1992, while CA-G.R. SP No. 27817 was pending, the Knechts instituted also
before the Court of Appeals an original action for annulment of judgment of the trial courts. This
case was docketed as CA-G.R. SP No. 28089. Therein, the Knechts challenged the validity of the
orders of the land registration courts in the two petitions of the Sangalangs and Babieras for
registration of their names 38 , the reconveyance case 39 and the just compensation
proceedings. 40 The Knechts questioned the validity of the titles of the Babieras and Sangalangs,
and those of Salem and the Nocoms, and prayed for the issuance of new titles in their names.
They also sought to restrain further releases of payment of just compensation to Salem and the
Nocoms in Civil Case No. 7327.
 145

The Court of Appeals dismissed the petition for lack of merit on November 24, 1992.
Hence the filing of G.R. No. 108015. In a Resolution dated February 1, 1993, we denied the
petition finding "no reversible error" committed by the Court of Appeals. The Knechts moved for
reconsideration.
Pending a resolution of this Court on the Knechts' motion for reconsideration, respondents
Nocom moved for consolidation of the two actions. 41 We granted the motion.
In their petition in G.R. No. 109234, the Knechts alleged that:
"I THE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR
OF LAW IN HOLDING THAT CIVIL CASE NO. 7327 IS NOT AN EMINENT
DOMAIN PROCEEDING;
II THE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR
OF LAW IN HOLDING THAT RES JUDICATA HAS SET IN TO BAR THE
MOTION FOR INTERVENTION;
III THE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR
OF LAW IN NOT ORDERING RESPONDENT JUDGE TO RULE ON THE
MOTION FOR INHIBITION." 42
In their Motion for Reconsideration in G.R. No. 108015, the Knechts reiterate that:
"I THE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR
OF LAW IN HOLDING THAT THE PETITION FOR ANNULMENT OF
JUDGMENT IS BARRED BY RES JUDICATA;
II THE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR
OF LAW IN UPHOLDING THE DEFENSE OF RES JUDICATA EVEN AS ITS
APPLICATION INVOLVES THE SACRIFICE OF JUSTICE TO
TECHNICALITY." 43
We rule against the petitioners.
In its decision, the Court of Appeals held that the Knechts had no right to intervene in Civil
Case No. 7327 for lack of any legal right or interest in the property subject of expropriation. The
appellate court declared that Civil Case No. 7327 was not an expropriation proceeding under Rule
67 of the Revised Rules of Court but merely a case for the fixing of just compensation. 44 The
Knechts' right to the land had been foreclosed after they failed to redeem it one year after the sale
at public auction. Whatever right remained on the property vanished after Civil Case No. 2961-P,
the reconveyance case, was dismissed by the trial court. Since the petitions questioning the order
of dismissal were likewise dismissed by the Court of Appeals and this Court, the order of dismissal
became final and res judicata on the issue of ownership of the land. 45
The Knechts urge this Court, in the interest of justice, to take a second look at their case.
They claim that they were deprived of their property without due process of law. They allege that
they did not receive notice of their tax delinquency and that the Register of Deeds did not order
them to surrender their owner's duplicate for annotation of the tax lien prior to the sale. Neither
did they receive notice of the auction sale. After the sale, the certificate of sale was not annotated
in their title nor in the title with the Register of Deeds. In short, they did not know of the tax
delinquency and the subsequent proceedings until 1983 when they received the orders of the
land registration courts in LRC Cases Nos. 2636-P and 2652-P filed by the Babieras and
Sangalangs. 46 This is the reason why they were unable to redeem the property.
It has been ruled that the notices and publication, as well as the legal requirements for a
tax delinquency sale, are mandatory; 47 and the failure to comply therewith can invalidate the
sale. 48 The prescribed notices must be sent to comply with the requirements of due process. 49
The claim of lack of notice, however, is a factual question. This Court is not a trier of facts.
Moreover, this factual question had been raised repeatedly in all the previous cases filed by the
Knechts. These cases have laid to rest the question of notice and all the other factual issues they
raised regarding the property. Res judicata had already set in.
Res judicata is a ground for dismissal of an action. 50 It is a rule that precludes parties
from relitigating issues actually litigated and determined by a prior and final judgment. It pervades
every well-regulated system of jurisprudence, and is based upon two grounds embodied in
various maxims of the common law — one, public policy and necessity, that there should be a
 146

limit to litigation; 51 and another, the individual should not be vexed twice for the same
cause. 52 When a right of fact has been judicially tried and determined by a court of competent
jurisdiction, or an opportunity for such trial has been given, the judgment of the court, so long as
it remains unreversed, should be conclusive upon the parties and those in privity with them in law
or estate. 53 To follow a contrary doctrine would subject the public peace and quiet to the will and
neglect of individuals and prefer the gratification of the litigious disposition of the parties to the
preservation of the public tranquility. 54
Res judicata applies when: (1) the former judgment or order is final; (2) the judgment or
order is one on the merits; (3) it was rendered by a court having jurisdiction over the subject matter
and the parties; (4) there is between the first and second actions, identity of parties, of subject
matter and of cause of action. 55
Petitioners claim that Civil Case No. 2961-P is not res judicata on CA-G.R. SP No. 28089.
They contend that there was no judgment on the merits in Civil Case No. 2961-P , i.e., one
rendered after a consideration of the evidence or stipulations submitted by the parties at the trial
of the case. 56 They stress that Civil Case No. 2961-P was dismissed upon petitioners' failure to
appear at several hearings and was based on "lack of interest."
We are not impressed by petitioners' contention. "Lack of interest" is analogous to "failure
to prosecute." Section 3 of Rule 17 of the Revised Rules of Court provides:
"Section 3. Failure to Prosecute. — If plaintiff fails to appear at the time
of the trial, or to prosecute his action for an unreasonable length of time, or to
comply with these rules or any order of the court, the action may be dismissed
upon motion of the defendant or upon the court's own motion. This dismissal
shall have the effect of an adjudication upon the merits, unless otherwise
provided by court."
An action may be dismissed for failure to prosecute in any of the following instances: (1) if the
plaintiff fails to appear at the time of trial; or (2) if he fails to prosecute the action for an
unreasonable length of time; or (3) if he fails to comply with the Rules of Court or any order of
the court. Once a case is dismissed for failure to prosecute, this has the effect of an
adjudication on the merits and is understood to be with prejudice to the filing of another action
unless otherwise provided in the order of dismissal. 57 In other words, unless there be a
qualification in the order of dismissal that it is without prejudice, the dismissal should be
regarded as an adjudication on the merits and is with prejudice. 58
Prior to the dismissal of Civil Case No. 2961-P, the Knechts were presenting their
evidence. They, however, repeatedly requested for postponements and failed to appear at the
last scheduled hearing. This prompted Salem to move for dismissal of the case. The court ordered
thus:
"ORDER
It appearing that counsel for the plaintiff has been duly notified of today's
hearing but despite notice failed to appear and considering that this case has
been pending for quite a considerable length of time, on motion of counsel for
the defendant Salem Investment joined by Atty. Jesus Paredes for the defendant
City of Pasay, for apparent lack of interest of plaintiffs, let their complaint be
DISMISSED. LLcd
As prayed for, let this case be reset to September 29, 1988 at 8:30 in the
morning for the reception of evidence of defendant's Salem Investment on its
counterclaim.
SO ORDERED." 59
The order of dismissal was based on the following factors: (1) pendency of the complaint
for a considerable length of time; (2) failure of counsel to appear at the scheduled hearing despite
notice; and (3) lack of interest of the petitioners. Under Section 3, Rule 17, a dismissal order which
does not provide that it is without prejudice to the filing of another action is understood to be an
adjudication on the merits. Hence, it is one with prejudice to the filing of another action.
The order of dismissal was questioned before the Court of Appeals and this Court. The
petitions were dismissed and the order affirming dismissal became final in February 1990. Since
the dismissal order is understood to be an adjudication on the merits, then all the elements of res
 147

judicata have been complied with. Civil Case No. 2961-P is therefore res judicata on the issue of
ownership of the land.
The Knechts contend, however, that the facts of the case do not call for the application of
res judicata because this amounts to "a sacrifice of justice to technicality." We cannot sustain this
argument. It must be noted that the Knechts were given the opportunity to assail the tax sale and
present their evidence on its validity in Civil Case No. 2961-P, the reconveyance case. Through
their and their counsel's negligence, however, this case was dismissed. They filed for
reconsideration, but their motion was denied. The Court of Appeals upheld this dismissal. We
affirmed the dismissal not on the basis of a mere technicality. This Court reviewed the merits of
petitioners' case and found that the Court of Appeals committed no reversible error in its
questioned judgment. 60
After years of litigation and several cases raising essentially the same issues, the Knechts
cannot now be allowed to avoid the effects of res judicata. 61 Neither can they be allowed to vary
the form of their action or adopt a different method of presenting their case to escape the operation
of the principle. 62 To grant what they seek will encourage endless litigations and forum-
shopping. Hence, the Court of Appeals correctly dismissed CA-G.R. SP No. 28089.
We find, however, that the Court of Appeals erred in declaring that Civil Case No. 7327
was not an expropriation case. It was precisely in the exercise of the state's power of eminent
domain under B.P. Blg. 340 that expropriation proceedings were instituted against the owners of
the lots sought to be expropriated. B.P. Blg. 340 did not, by itself, lay down the procedure for
expropriation. The law merely described the specific properties expropriated and declared that
just compensation was to be determined by the court. It designated the then Ministry of Public
Works and Highways as the administrator in the "prosecution of the project." Thus, in the absence
of a procedure in the law for expropriation, reference must be made to the provisions on eminent
domain in Rule 67 of the Revised Rules of Court.
Section 1 of Rule 67 of the Revised Rules of Court provides:
"Section 1. The complaint. — The right of eminent domain shall be
exercised by the filing of a complaint which shall state with certainty the right and
purpose of condemnation, describe the real or personal property sought to be
condemned, and join as defendants all persons owning or claiming to own, or
occupying, any part thereof or interest therein, showing, so far as practicable,
the interest of each defendant separately. If the title to any property sought to be
condemned appears to be in the Republic of the Philippines, although occupied
by private individuals, or if the title is otherwise obscure or doubtful so that the
plaintiff cannot with accuracy or certainty specify who are the real owners,
averment to that effect may be made in the complaint."
The power of eminent domain is exercised by the filing of a complaint which shall join as
defendants all persons owning or claiming to own, or occupying, any part of the expropriated land
or interest therein. 63 If a known owner is not joined as defendant, he is entitled to intervene in
the proceeding; or if he is joined but not served with process and the proceeding is already closed
before he came to know of the condemnation, he may maintain an independent suit for
damages. 64
The defendants in an expropriation case are not limited to the owners of the property
condemned. They include all other persons owning, occupying or claiming to own the property.
When a parcel of land is taken by eminent domain, the owner of the fee is not necessarily the
only person who is entitled to compensation. 65 In the American jurisdiction, the term "owner"
when employed in statutes relating to eminent domain to designate the persons who are to be
made parties to the proceeding, refers, as is the rule in respect of those entitled to compensation,
to all those who have lawful interest in the property to be condemned, 66 including a
mortgagee, 67 a lessee 68 and a vendee in possession under an executory contract. 69 Every
person having an estate or interest at law or in equity in the land taken is entitled to share in the
award. 70 If a person claiming an interest in the land sought to be condemned is not made a
party, he is given the right to intervene and lay claim to the compensation. 71
The Knechts insist that although they were no longer the registered owners of the property
at the time Civil Case No. 7327 was filed, they still occupied the property and therefore should
have been joined as defendants in the expropriation proceedings. When the case was filed, all
their eight (8) houses were still standing; seven (7) houses were demolished on August 29, 1990
 148

and the last one on April 6, 1991. They claim that as occupants of the land at the time of
expropriation, they are entitled to a share in the just compensation.
Civil Case No. 7327, the expropriation case, was filed on May 15, 1990. Four months
earlier, in January 1990, Civil Case No. 2961-P for reconveyance was dismissed with finality by
this Court and judgment was entered in February 1990. The Knechts lost whatever right or
colorable title they had to the property after we affirmed the order of the trial court dismissing the
reconveyance case. The fact that the Knechts remained in physical possession cannot give them
another cause of action and resurrect an already settled case. The Knechts' possession of the
land and buildings was based on their claim of ownership, 72 not on any juridical title such as a
lessee, mortgagee, or vendee. Since the issue of ownership was put to rest in Civil Case No.
2961-P, it follows that their physical possession of the property after the finality of said case was
bereft of any legality and merely subsisted at the tolerance of the registered owners. 73 This
tolerance ended when Salem filed Civil Case No. 85-263 for unlawful detainer against the
Knechts. As prayed for, the trial court ordered their ejectment and the demolition of their remaining
house.
Indeed, the Knechts had no legal interest in the property by the time the expropriation
proceedings were instituted. They had no right to intervene and the trial court did not err in denying
their "Motion for Intervention and to Implead Additional Parties." Their intervention having been
denied, the Knechts had no personality to move for the inhibition of respondent Judge Sayo from
the case. The Court of Appeals therefore did not err in dismissing CA-G.R. SP No. 27817.
IN VIEW WHEREOF, the Petition in G.R. No. 109234 is dismissed and the Motion for
Reconsideration in G.R. No. 108015 is denied. The decisions of the Court of Appeals in CA-G.R.
SP No. 27817 and CA-G.R. SP No. 28089 are affirmed.
SO ORDERED. LLcd
||| (De Knecht v. Court of Appeals, G.R. Nos. 108015 & 109234, [May 20, 1998], 352 PHIL 833-
854)

[G.R. No. 17540. July 23, 1921.]

JUAN FERY, petitioner, vs. THE MUNICIPALITY OF CABANATUAN, NUEVA
ECIJA, respondent.

||| (Fery v. Municipality of Cabanatuan, G.R. No. 17540, [July 23, 1921], 42 PHIL 28-31)

SYLLABUS

EMINENT DOMAIN; EXPROPRIATION OF PROPERTY; ABANDONMENT OF USE

OF LAND EXPROPRIATED; EFFECT OF SUCH ABANDONMENT. — When private land is
expropriated for a particular public use, the same does not return to its former owner upon an
abandonment of the particular use for which the land was expropriated. When land has been
acquired for public use in fee simple, unconditionally, either by the exercise of the right of
eminent domain or by purchase, the former owner retains no right in the land, and the public
use may be abandoned, or the land may be devoted to a different use, without any impairment
of the estate or title acquired, or any reversion to the former owner.
DECISION

JOHNSON, J p:

This is an original action for the writ of mandamus, commenced in the Supreme Court.
The respondent presented a demurrer to the petition.
The important facts admitted and found in the petition may be stated as follows:
1. That sometime prior to the 3d day of October, 1913, the municipality of Cabanatuan,
of the Province of Nueva Ecija, commenced an action in the Court of First Instance of said
 149

province, for the purpose of expropriating certain pieces or parcels of land for a public market.
The action was known as No. 950 and was entitled "El Municipio de Cabanatuan vs. Gregorio
Crisostomo y otros."
2. That on the 9th day of July, 1915, the Court of First Instance rendered a final
judgment in said action, granting to said municipality the pieces or parcels of land in question
without condition, and ordered said municipality to pay to the various owners of said parcels
of land the specific amounts which were mentioned in the dispositive part of the decision.
3. That later (the exact date not appearing of record) the said municipality constructed
upon said land houses to be rented.
The petitioner herein now alleges that, in view of the fact that the municipality
expropriated the parcel of land in question for the purpose of a public market and that it
abandoned that purpose, it thereby lost its right to the parcel of land so appropriated. The
petitioner prayed that the writ of mandamus be issued requiring the said municipality to return
said land to its former owner — the petitioner herein. The petitioner further alleged that he has
not been paid the amount due him as the value of his land.
The question presented by the petition and demurrer is this: When private land is
expropriated for a particular public use, and that particular public use is abandoned, does the
land so expropriated return to its former owner?
The answer to that question depends upon the character of the title acquired by the
expropriator, whether it be the State, a province, a municipality, or a corporation which has
the right to acquire property under the power of eminent domain. If, for example, land is
expropriated for a particular purpose, with the condition that when that purpose is ended or
abandoned the property shall return to its former owner, then, of course, when the purpose is
terminated or abandoned the former owner reacquires the property so expropriated. If, for
example, land is expropriated for a public street and the expropriation is granted upon
condition that the city can only use it for a public street, then, of course, when the city
abandons its use as a public street, it returns to the former owner, unless there is some
statutory provision to the contrary. Many other similar examples might be given. If, upon the
contrary, however, the decree of expropriation gives to the entity a fee simple title, then, of
course, the land becomes the absolute property of the expropriator, whether it be the State, a
province, or municipality, and in that case the non-user does not have the effect of defeating
the title acquired by the expropriation proceedings. (10 R. C. L., 240, sec. 202; 20 C. J., 1234,
secs. 593-599, and numerous cases cited; Reichling vs. Covington Lumber Co., 57 Wash.,
225; 13., Am. St. Rep., 976; McConihay vs. Wright, 121 U. S., 201.)
When land has been acquired for public use in fee simple, unconditionally, either by
the exercise of eminent domain or by purchase, the former owner retains no rights in the land,
and the public use may be abandoned, or the land may be devoted to a different use, without
any impairment of the estate or title acquired, or any reversion to the former owner. (Fort
Wayne vs. Lake Shore, etc. Ry. Co., 132 Ind., 558; 18 L. R. A., 367.)
The petitioner having admitted that the municipality of Cabanatuan, in the year 1915,
had acquired a fee simple title to the land in question, it (the municipality) is the owner of the
land in question, notwithstanding the fact that it is making a use of the same other than that
for which it was expropriated.
If the petitioner has not been paid for his land, that is another question, and he has his
remedy by an ordinary action.
For all of the foregoing reasons, the demurrer presented by the prosecuting attorney
of the Province of Nueva Ecija is hereby sustained, and it is hereby ordered that a final decree
be issued in accordance herewith, with costs, unless the petitioner amends his petition within
five days from the notice hereof. So ordered.
 150

Mapa, C.J., Araullo, Street, Avanceña and Villamor, JJ., concur.

||| (Fery v. Municipality of Cabanatuan, G.R. No. 17540, [July 23, 1921], 42 PHIL 28-31)
[G.R. No. 176625. February 25, 2010.]
MACTAN-CEBU INTERNATIONAL AIRPORT AUTHORITY and AIR
TRANSPORTATION OFFICE
||| (Mactan-Cebu International Airport Authority v. Lozada, Sr., G.R. No. 176625, [February 25,
2010], 627 PHIL 434-452)
DECISION
NACHURA, J p:
This is a petition for review on certiorari under Rule 45 of the Rules of Court, seeking
to reverse, annul, and set aside the Decision 1 dated February 28, 2006 and the
Resolution 2 dated February 7, 2007 of the Court of Appeals (CA) (Cebu City), Twentieth
Division, in CA-G.R. CV No. 65796.
The antecedent facts and proceedings are as follows:
Subject of this case is Lot No. 88-SWO-25042 (Lot No. 88), with an area of 1,017
square meters, more or less, located in Lahug, Cebu City. Its original owner was Anastacio
Deiparine when the same was subject to expropriation proceedings, initiated by the Republic
of the Philippines (Republic), represented by the then Civil Aeronautics Administration (CAA),
for the expansion and improvement of the Lahug Airport. The case was filed with the then
Court of First Instance of Cebu, Third Branch, and docketed as Civil Case No. R-1881.
As early as 1947, the lots were already occupied by the U.S. Army. They were turned
over to the Surplus Property Commission, the Bureau of Aeronautics, the National Airport
Corporation and then to the CAA. HSEcTC
During the pendency of the expropriation proceedings, respondent Bernardo L.
Lozada, Sr. acquired Lot No. 88 from Deiparine. Consequently, Transfer Certificate of Title
(TCT) No. 9045 was issued in Lozada's name.
On December 29, 1961, the trial court rendered judgment in favor of the Republic and
ordered the latter to pay Lozada the fair market value of Lot No. 88, adjudged at P3.00 per
square meter, with consequential damages by way of legal interest computed from November
16, 1947 — the time when the lot was first occupied by the airport. Lozada received the
amount of P3,018.00 by way of payment.
The affected landowners appealed. Pending appeal, the Air Transportation Office
(ATO), formerly CAA, proposed a compromise settlement whereby the owners of the lots
affected by the expropriation proceedings would either not appeal or withdraw their respective
appeals in consideration of a commitment that the expropriated lots would be resold at the
price they were expropriated in the event that the ATO would abandon the Lahug Airport,
pursuant to an established policy involving similar cases. Because of this promise, Lozada did
not pursue his appeal. Thereafter, Lot No. 88 was transferred and registered in the name of
the Republic under TCT No. 25057.
The projected improvement and expansion plan of the old Lahug Airport, however,
was not pursued.
Lozada, with the other landowners, contacted then CAA Director Vicente Rivera, Jr.,
requesting to repurchase the lots, as per previous agreement. The CAA replied that there
might still be a need for the Lahug Airport to be used as an emergency DC-3 airport. It
reiterated, however, the assurance that "should this Office dispose and resell the properties
which may be found to be no longer necessary as an airport, then the policy of this Office is
to give priority to the former owners subject to the approval of the President."
On November 29, 1989, then President Corazon C. Aquino issued a Memorandum to
the Department of Transportation, directing the transfer of general aviation operations of the
Lahug Airport to the Mactan International Airport before the end of 1990 and, upon such
transfer, the closure of the Lahug Airport. SATDEI
Sometime in 1990, the Congress of the Philippines passed Republic Act (R.A.) No.
6958, entitled "An Act Creating the Mactan-Cebu International Airport Authority, Transferring
Existing Assets of the Mactan International Airport and the Lahug Airport to the Authority,
Vesting the Authority with Power to Administer and Operate the Mactan International Airport
and the Lahug Airport, and for Other Purposes."
 151

From the date of the institution of the expropriation proceedings up to the present, the
public propose of the said expropriation (expansion of the airport) was never actually initiated,
realized, or implemented. Instead, the old airport was converted into a commercial complex.
Lot No. 88 became the site of a jail known as Bagong Buhay Rehabilitation Complex, while a
portion thereof was occupied by squatters. 3 The old airport was converted into what is now
known as the Ayala I.T. Park, a commercial area.
Thus, on June 4, 1996, petitioners initiated a complaint for the recovery of possession
and reconveyance of ownership of Lot No. 88. The case was docketed as Civil Case No. CEB-
18823 and was raffled to the Regional Trial Court (RTC), Branch 57, Cebu City. The complaint
substantially alleged as follows:
(a) Spouses Bernardo and Rosario Lozada were the registered owners of Lot
No. 88 covered by TCT No. 9045;
(b) In the early 1960's, the Republic sought to acquire by expropriation Lot No.
88, among others, in connection with its program for the improvement
and expansion of the Lahug Airport;
(c) A decision was rendered by the Court of First Instance in favor of the
Government and against the land owners, among whom was Bernardo
Lozada, Sr. appealed therefrom;
(d) During the pendency of the appeal, the parties entered into a compromise
settlement to the effect that the subject property would be resold to the
original owner at the same price when it was expropriated in the event
that the Government abandons the Lahug Airport; HTCISE
(e) Title to Lot No. 88 was subsequently transferred to the Republic of the
Philippines (TCT No. 25057);
(f) The projected expansion and improvement of the Lahug Airport did not
materialize;
(g) Plaintiffs sought to repurchase their property from then CAA Director Vicente
Rivera. The latter replied by giving as assurance that priority would be
given to the previous owners, subject to the approval of the President,
should CAA decide to dispose of the properties;
(h) On November 29, 1989, then President Corazon C. Aquino, through a
Memorandum to the Department of Transportation and Communications
(DOTC), directed the transfer of general aviation operations at the Lahug
Airport to the Mactan-Cebu International Airport Authority;
(i) Since the public purpose for the expropriation no longer exists, the property
must be returned to the plaintiffs. 4 HSacEI
In their Answer, petitioners asked for the immediate dismissal of the complaint. They
specifically denied that the Government had made assurances to reconvey Lot No. 88 to
respondents in the event that the property would no longer be needed for airport operations.
Petitioners instead asserted that the judgment of condemnation was unconditional, and
respondents were, therefore, not entitled to recover the expropriated property notwithstanding
non-use or abandonment thereof.
After pretrial, but before trial on the merits, the parties stipulated on the following set
of facts:
(1) The lot involved is Lot No. 88-SWO-25042 of the Banilad Estate, situated in
the City of Cebu, containing an area of One Thousand Seventeen (1,017)
square meters, more or less;
(2) The property was expropriated among several other properties in Lahug in
favor of the Republic of the Philippines by virtue of a Decision dated
December 29, 1961 of the CFI of Cebu in Civil Case No. R-1881;
(3) The public purpose for which the property was expropriated was for the
purpose of the Lahug Airport; DCASEc
 152

(4) After the expansion, the property was transferred in the name of MCIAA;
[and]
(5) On November 29, 1989, then President Corazon C. Aquino directed the
Department of Transportation and Communication to transfer general
aviation operations of the Lahug Airport to the Mactan-Cebu International
Airport Authority and to close the Lahug Airport after such transfer[.] 5
During trial, respondents presented Bernardo Lozada, Sr. as their lone witness, while
petitioners presented their own witness, Mactan-Cebu International Airport Authority legal
assistant Michael Bacarisas.
On October 22, 1999, the RTC rendered its Decision, disposing as follows:
WHEREFORE, in the light of the foregoing, the Court hereby renders
judgment in favor of the plaintiffs, Bernardo L. Lozada, Sr., and the heirs of
Rosario Mercado, namely, Vicente M. Lozada, Marcia L. Godinez, Virginia L.
Flores, Benardo M. Lozada, Jr., Dolores L. Gacasan, Socorro L. Cafaro and
Rosario M. Lozada, represented by their attorney-in-fact Marcia Lozada
Godinez, and against defendants Cebu-Mactan International Airport Authority
(MCIAA) and Air Transportation Office (ATO):
1. ordering MCIAA and ATO to restore to plaintiffs the possession and
ownership of their land, Lot No. 88 Psd-821 (SWO-23803), upon payment of the
expropriation price to plaintiffs; and
2. ordering the Register of Deeds to effect the transfer of the Certificate
of Title from defendant[s] to plaintiffs on Lot No. [88], cancelling TCT No. 20357
in the name of defendant MCIAA and to issue a new title on the same lot in the
name of Bernardo L. Lozada, Sr. and the heirs of Rosario Mercado, namely:
Vicente M. Lozada, Mario M. Lozada, Marcia L. Godinez, Virginia L. Flores,
Bernardo M. Lozada, Jr., Dolores L. Gacasan, Socorro L. Cafaro and Rosario M.
Lozada. cCTAIE
No pronouncement as to costs.
SO ORDERED. 6
Aggrieved, petitioners interposed an appeal to the CA. After the filing of the necessary
appellate briefs, the CA rendered its assailed Decision dated February 28, 2006, denying
petitioners' appeal and affirming in toto the Decision of the RTC, Branch 57, Cebu City.
Petitioners' motion for reconsideration was, likewise, denied in the questioned CA Resolution
dated February 7, 2007.
Hence, this petition arguing that: (1) the respondents utterly failed to prove that there
was a repurchase agreement or compromise settlement between them and the Government;
(2) the judgment in Civil Case No. R-1881 was absolute and unconditional, giving title in fee
simple to the Republic; and (3) the respondents' claim of verbal assurances from government
officials violates the Statute of Frauds.
The petition should be denied.
Petitioners anchor their claim to the controverted property on the supposition that the
Decision in the pertinent expropriation proceedings did not provide for the condition that
should the intended use of Lot No. 88 for the expansion of the Lahug Airport be aborted or
abandoned, the property would revert to respondents, being its former owners. Petitioners
cite, in support of this position, Fery v. Municipality of Cabanatuan, 7 which declared that the
Government acquires only such rights in expropriated parcels of land as may be allowed by
the character of its title over the properties —
If . . . land is expropriated for a particular purpose, with the condition that
when that purpose is ended or abandoned the property shall return to its former
owner, then, of course, when the purpose is terminated or abandoned the former
owner reacquires the property so expropriated. If . . . land is expropriated for a
public street and the expropriation is granted upon condition that the city
can only use it for a public street, then, of course, when the city abandons its use
as a public street, it returns to the former owner, unless there is some statutory
provision to the contrary. . . . . If, upon the contrary, however, the decree of
 153

expropriation gives to the entity a fee simple title, then, of course, the land
becomes the absolute property of the expropriator, whether it be the State, a
province, or municipality, and in that case the non-user does not have the effect
of defeating the title acquired by the expropriation proceedings. . . . . HECTaA
When land has been acquired for public use in fee
simple, unconditionally, either by the exercise of eminent domain or by purchase,
the former owner retains no right in the land, and the public use may be
abandoned, or the land may be devoted to a different use, without any
impairment of the estate or title acquired, or any reversion to the former owner. .
...8
Contrary to the stance of petitioners, this Court had ruled otherwise in Heirs of Timoteo
Moreno and Maria Rotea v. Mactan-Cebu International Airport Authority, 9 thus —
Moreover, respondent MCIAA has brought to our attention a significant
and telling portion in the Decision in Civil Case No. R-1881 validating our
discernment that the expropriation by the predecessors of respondent was
ordered under the running impression that Lahug Airport would continue in
operation —
As for the public purpose of the expropriation proceeding, it
cannot now be doubted. Although Mactan Airport is being constructed, it
does not take away the actual usefulness and importance of the Lahug
Airport: it is handling the air traffic both civilian and military. From it
aircrafts fly to Mindanao and Visayas and pass thru it on their flights to
the North and Manila. Then, no evidence was adduced to show how soon
is the Mactan Airport to be placed in operation and whether the Lahug
Airport will be closed immediately thereafter. It is up to the other
departments of the Government to determine said matters. The Court
cannot substitute its judgment for those of the said departments or
agencies. In the absence of such showing, the Court will presume that
the Lahug Airport will continue to be in operation (emphasis supplied).
While in the trial in Civil Case No. R-1881 [we] could have simply
acknowledged the presence of public purpose for the exercise of eminent
domain regardless of the survival of Lahug Airport, the trial court in
its Decision chose not to do so but instead prefixed its finding of public purpose
upon its understanding that "Lahug Airport will continue to be in
operation." Verily, these meaningful statements in the body of
the Decision warrant the conclusion that the expropriated properties would
remain to be so until it was confirmed that Lahug Airport was no longer "in
operation." This inference further implies two (2) things: (a) after the Lahug
Airport ceased its undertaking as such and the expropriated lots were not being
used for any airport expansion project, the rights vis-à-vis the expropriated Lots
Nos. 916 and 920 as between the State and their former owners, petitioners
herein, must be equitably adjusted; and (b) the foregoing unmistakable
declarations in the body of the Decision should merge with and become an
intrinsic part of the fallo thereof which under the premises is clearly inadequate
since the dispositive portion is not in accord with the findings as contained in the
body thereof. 10 caCEDA
Indeed, the Decision in Civil Case No. R-1881 should be read in its entirety, wherein
it is apparent that the acquisition by the Republic of the expropriated lots was subject to the
condition that the Lahug Airport would continue its operation. The condition not having
materialized because the airport had been abandoned, the former owner should then be
allowed to reacquire the expropriated property. 11
On this note, we take this opportunity to revisit our ruling in Fery, which involved an
expropriation suit commenced upon parcels of land to be used as a site for a public market.
Instead of putting up a public market, respondent Cabanatuan constructed residential houses
for lease on the area. Claiming that the municipality lost its right to the property taken since it
did not pursue its public purpose, petitioner Juan Fery, the former owner of the lots
expropriated, sought to recover his properties. However, as he had admitted that, in 1915,
respondent Cabanatuan acquired a fee simple title to the lands in question, judgment was
 154

rendered in favor of the municipality, following American jurisprudence, particularly City of Fort
Wayne v. Lake Shore & M.S. RY. Co., 12 McConihay v. Theodore Wright, 13 and Reichling
v. Covington Lumber Co., 14 all uniformly holding that the transfer to a third party of the
expropriated real property, which necessarily resulted in the abandonment of the particular
public purpose for which the property was taken, is not a ground for the recovery of the same
by its previous owner, the title of the expropriating agency being one of fee simple.
Obviously, Fery was not decided pursuant to our now sacredly held constitutional right
that private property shall not be taken for public use without just compensation. 15 It is well
settled that the taking of private property by the Government's power of eminent domain is
subject to two mandatory requirements: (1) that it is for a particular public purpose; and (2)
that just compensation be paid to the property owner. These requirements partake of the
nature of implied conditions that should be complied with to enable the condemnor to keep
the property expropriated. 16 ECcTaS
More particularly, with respect to the element of public use, the expropriator should
commit to use the property pursuant to the purpose stated in the petition for expropriation
filed, failing which, it should file another petition for the new purpose. If not, it is then incumbent
upon the expropriator to return the said property to its private owner, if the latter desires to
reacquire the same. Otherwise, the judgment of expropriation suffers an intrinsic flaw, as it
would lack one indispensable element for the proper exercise of the power of eminent domain,
namely, the particular public purpose for which the property will be devoted. Accordingly, the
private property owner would be denied due process of law, and the judgment would violate
the property owner's right to justice, fairness, and equity.
In light of these premises, we now expressly hold that the taking of private property,
consequent to the Government's exercise of its power of eminent domain, is always subject
to the condition that the property be devoted to the specific public purpose for which it was
taken. Corollarily, if this particular purpose or intent is not initiated or not at all pursued, and is
peremptorily abandoned, then the former owners, if they so desire, may seek the reversion of
the property, subject to the return of the amount of just compensation received. In such a
case, the exercise of the power of eminent domain has become improper for lack of the
required factual justification. 17
Even without the foregoing declaration, in the instant case, on the question of whether
respondents were able to establish the existence of an oral compromise agreement that
entitled them to repurchase Lot No. 88 should the operations of the Lahug Airport be
abandoned, we rule in the affirmative.
It bears stressing that both the RTC, Branch 57, Cebu and the CA have passed upon
this factual issue and have declared, in no uncertain terms, that a compromise agreement
was, in fact, entered into between the Government and respondents, with the former
undertaking to resell Lot No. 88 to the latter if the improvement and expansion of the Lahug
Airport would not be pursued. In affirming the factual finding of the RTC to this effect, the CA
declared — EHSIcT
Lozada's testimony is cogent. An octogenarian widower-retiree and a
resident of Moon Park, California since 1974, he testified that government
representatives verbally promised him and his late wife while the expropriation
proceedings were on-going that the government shall return the property if the
purpose for the expropriation no longer exists. This promise was made at the
premises of the airport. As far as he could remember, there were no expropriation
proceedings against his property in 1952 because the first notice of expropriation
he received was in 1962. Based on the promise, he did not hire a lawyer. Lozada
was firm that he was promised that the lot would be reverted to him once the
public use of the lot ceases. He made it clear that the verbal promise was made
in Lahug with other lot owners before the 1961 decision was handed down,
though he could not name the government representatives who made the
promise. It was just a verbal promise; nevertheless, it is binding. The fact that he
could not supply the necessary details for the establishment of his assertions
during cross-examination, but that "When it will not be used as intended, it will
be returned back, we just believed in the government," does not dismantle the
credibility and truthfulness of his allegation. This Court notes that he was 89
years old when he testified in November 1997 for an incident which happened
decades ago. Still, he is a competent witness capable of perceiving and making
 155

his perception known. The minor lapses are immaterial. The decision of the
competency of a witness rests primarily with the trial judge and must not be
disturbed on appeal unless it is clear that it was erroneous. The objection to his
competency must be made before he has given any testimony or as soon as the
incompetency becomes apparent. Though Lozada is not part of the compromise
agreement, 18 he nevertheless adduced sufficient evidence to support his
claim. 19
As correctly found by the CA, unlike in Mactan Cebu International Airport Authority v.
Court of Appeals, 20 cited by petitioners, where respondent therein offered testimonies which
were hearsay in nature, the testimony of Lozada was based on personal knowledge as the
assurance from the government was personally made to him. His testimony on cross-
examination destroyed neither his credibility as a witness nor the truthfulness of his words.
Verily, factual findings of the trial court, especially when affirmed by the CA, are binding
and conclusive on this Court and may not be reviewed. A petition for certiorari under Rule 45
of the Rules of Court contemplates only questions of law and not of fact. 21 Not one of the
exceptions to this rule is present in this case to warrant a reversal of such findings. AaCEDS
As regards the position of petitioners that respondents' testimonial evidence violates
the Statute of Frauds, suffice it to state that the Statute of Frauds operates only with respect
to executory contracts, and does not apply to contracts which have been completely or
partially performed, the rationale thereof being as follows:
In executory contracts there is a wide field for fraud because unless they
be in writing there is no palpable evidence of the intention of the contracting
parties. The statute has precisely been enacted to prevent fraud. However, if a
contract has been totally or partially performed, the exclusion of parol evidence
would promote fraud or bad faith, for it would enable the defendant to keep the
benefits already delivered by him from the transaction in litigation, and, at the
same time, evade the obligations, responsibilities or liabilities assumed or
contracted by him thereby. 22
In this case, the Statute of Frauds, invoked by petitioners to bar the claim of
respondents for the reacquisition of Lot No. 88, cannot apply, the oral compromise settlement
having been partially performed. By reason of such assurance made in their favor,
respondents relied on the same by not pursuing their appeal before the CA. Moreover,
contrary to the claim of petitioners, the fact of Lozada's eventual conformity to the appraisal
of Lot No. 88 and his seeking the correction of a clerical error in the judgment as to the true
area of Lot No. 88 do not conclusively establish that respondents absolutely parted with their
property. To our mind, these acts were simply meant to cooperate with the government,
particularly because of the oral promise made to them.
The right of respondents to repurchase Lot No. 88 may be enforced based on a
constructive trust constituted on the property held by the government in favor of the former.
On this note, our ruling in Heirs of Timoteo Moreno is instructive, viz.: IcAaEH
Mactan-Cebu International Airport Authority is correct in stating that one
would not find an express statement in the Decision in Civil Case No. R-1881 to
the effect that "the [condemned] lot would return to [the landowner] or that [the
landowner] had a right to repurchase the same if the purpose for which it was
expropriated is ended or abandoned or if the property was to be used other than
as the Lahug Airport." This omission notwithstanding, and while the inclusion of
this pronouncement in the judgment of condemnation would have been ideal,
such precision is not absolutely necessary nor is it fatal to the cause of petitioners
herein. No doubt, the return or repurchase of the condemned properties of
petitioners could be readily justified as the manifest legal effect or consequence
of the trial court's underlying presumption that "Lahug Airport will continue to be
in operation" when it granted the complaint for eminent domain and the airport
discontinued its activities.
The predicament of petitioners involves a constructive trust, one that is
akin to the implied trust referred to in Art. 1454 of the Civil Code, "If an absolute
conveyance of property is made in order to secure the performance of an
obligation of the grantor toward the grantee, a trust by virtue of law is established.
If the fulfillment of the obligation is offered by the grantor when it becomes due,
 156

he may demand the reconveyance of the property to him." In the case at bar,
petitioners conveyed Lots No. 916 and 920 to the government with the latter
obliging itself to use the realties for the expansion of Lahug Airport; failing to keep
its bargain, the government can be compelled by petitioners to reconvey the
parcels of land to them, otherwise, petitioners would be denied the use of their
properties upon a state of affairs that was not conceived nor contemplated when
the expropriation was authorized.
Although the symmetry between the instant case and the situation
contemplated by Art. 1454 is not perfect, the provision is undoubtedly applicable.
For, as explained by an expert on the law of trusts: "The only problem of great
importance in the field of constructive trust is to decide whether in the numerous
and varying fact situations presented to the courts there is a wrongful holding of
property and hence a threatened unjust enrichment of the
defendant." Constructive trusts are fictions of equity which are bound by no
unyielding formula when they are used by courts as devices to remedy any
situation in which the holder of legal title may not in good conscience retain the
beneficial interest. AICDSa
In constructive trusts, the arrangement is temporary and passive in which
the trustee's sole duty is to transfer the title and possession over the property to
the plaintiff-beneficiary. Of course, the "wronged party seeking the aid of a court
of equity in establishing a constructive trust must himself do equity." Accordingly,
the court will exercise its discretion in deciding what acts are required of the
plaintiff-beneficiary as conditions precedent to obtaining such decree and has
the obligation to reimburse the trustee the consideration received from the latter
just as the plaintiff-beneficiary would if he proceeded on the theory of rescission.
In the good judgment of the court, the trustee may also be paid the necessary
expenses he may have incurred in sustaining the property, his fixed costs for
improvements thereon, and the monetary value of his services in managing the
property to the extent that plaintiff-beneficiary will secure a benefit from his acts.
The rights and obligations between the constructive trustee and the
beneficiary, in this case, respondent MCIAA and petitioners over Lots Nos. 916
and 920, are echoed in Art. 1190 of the Civil Code, "When the conditions have
for their purpose the extinguishment of an obligation to give, the parties, upon
the fulfillment of said conditions, shall return to each other what they have
received . . . . In case of the loss, deterioration or improvement of the thing, the
provisions which, with respect to the debtor, are laid down in the preceding article
shall be applied to the party who is bound to return . . . ." 23
On the matter of the repurchase price, while petitioners are obliged to reconvey Lot
No. 88 to respondents, the latter must return to the former what they received as just
compensation for the expropriation of the property, plus legal interest to be computed from
default, which in this case runs from the time petitioners comply with their obligation to
respondents. cDTACE
Respondents must likewise pay petitioners the necessary expenses they may have
incurred in maintaining Lot No. 88, as well as the monetary value of their services in managing
it to the extent that respondents were benefited thereby.
Following Article 1187 24 of the Civil Code, petitioners may keep whatever income or
fruits they may have obtained from Lot No. 88, and respondents need not account for the
interests that the amounts they received as just compensation may have earned in the
meantime.
In accordance with Article 1190 25 of the Civil Code vis-à-vis Article 1189, which
provides that "(i)f a thing is improved by its nature, or by time, the improvement shall inure to
the benefit of the creditor . . .," respondents, as creditors, do not have to pay, as part of the
process of restitution, the appreciation in value of Lot No. 88, which is a natural consequence
of nature and time. 26
WHEREFORE, the petition is DENIED. The February 28, 2006 Decision of the Court
of Appeals, affirming the October 22, 1999 Decision of the Regional Trial Court, Branch 87,
Cebu City, and its February 7, 2007 Resolution are AFFIRMED with MODIFICATION as
follows: SDIACc
 157

1. Respondents are ORDERED to return to petitioners the just compensation

they received for the expropriation of Lot No. 88, plus legal interest, in the
case of default, to be computed from the time petitioners comply with their
obligation to reconvey Lot No. 88 to them;
2. Respondents are ORDERED to pay petitioners the necessary expenses the
latter incurred in maintaining Lot No. 88, plus the monetary value of their
services to the extent that respondents were benefited thereby;
3. Petitioners are ENTITLED to keep whatever fruits and income they may have
obtained from Lot No. 88; and
4. Respondents are also ENTITLED to keep whatever interests the amounts
they received as just compensation may have earned in the meantime,
as well as the appreciation in value of Lot No. 88, which is a natural
consequence of nature and time;
In light of the foregoing modifications, the case is REMANDED to the Regional Trial
Court, Branch 57, Cebu City, only for the purpose of receiving evidence on the amounts that
respondents will have to pay petitioners in accordance with this Court's decision. No
costs. HTAIcD
SO ORDERED.
||| (Mactan-Cebu International Airport Authority v. Lozada, Sr., G.R. No. 176625, [February 25,
2010], 627 PHIL 434-452)

[G.R. No. 1687702. February 9, 2011.]

ANUNCIACION VDA. DE OUANO, , vs. THE REPUBLIC OF THE
PHILIPPINES,
||| (Vda de Ouano v. Republic, G.R. Nos. 168770 & 168812, [February 9, 2011], 657 PHIL 391-
422)
DECISION
VELASCO, JR., J p:
At the center of these two (2) Petitions for Review on Certiorari under Rule 45 is the
issue of the right of the former owners of lots acquired for the expansion of the Lahug Airport
in Cebu City to repurchase or secure reconveyance of their respective properties.
In the first petition, docketed as G.R. No. 1687702, petitioners Anunciacion vda. de
Ouano, Mario Ouano, Leticia Ouano Arnaiz and Cielo Ouano Martinez (the Ouanos) seek to
nullify the Decision 1 dated September 3, 2004 of the Court of Appeals (CA) in CA-G.R. CV
No. 78027, affirming the Order dated December 9, 2002 of the Regional Trial Court (RTC),
Branch 57 in Cebu City, in Civil Case No. CEB-20743, a suit to compel the Republic of the
Philippines and/or the Mactan-Cebu International Airport Authority (MCIAA) to reconvey to the
Ouanos a parcel of land.
The second petition, docketed as G.R. No. 168812, has the MCIAA seeking principally
to annul and set aside the Decision 2 and Resolution 3 dated January 14, 2005 and June 29,
2005, respectively, of the CA in CA-G.R. CV No. 64356, sustaining the RTC, Branch 13 in
Cebu City in its Decision of October 7, 1988 in Civil Case No. CEB-18370.
Per its October 19, 2005 Resolution, the Court ordered the consolidation of both cases.
Except for the names of the parties and the specific lot designation involved, the
relevant factual antecedents which gave rise to these consolidated petitions are, for the most
part, as set forth in the Court's Decision 4 of October 15, 2003, as reiterated in
a Resolution 5 dated August 9, 2005, in G.R. No. 156273 entitled Heirs of Timoteo Moreno
and Maria Rotea v. Mactan-Cebu International Airport Authority (Heirs of Moreno), and in
other earlier related cases. 6
In 1949, the National Airport Corporation (NAC), MCIAA's predecessor agency,
pursued a program to expand the Lahug Airport in Cebu City. Through its team of negotiators,
NAC met and negotiated with the owners of the properties situated around the airport, which
included Lot Nos. 744-A, 745-A, 746, 747, 761-A, 762-A, 763-A, 942, and 947 of the Banilad
Estate. As the landowners would later claim, the government negotiating team, as a
sweetener, assured them that they could repurchase their respective lands should the Lahug
Airport expansion project do not push through or once the Lahug Airport closes or its
 158

operations transferred to Mactan-Cebu Airport. Some of the landowners accepted the

assurance and executed deeds of sale with a right of repurchase. Others, however, including
the owners of the aforementioned lots, refused to sell because the purchase price offered was
viewed as way below market, forcing the hand of the Republic, represented by the then Civil
Aeronautics Administration (CAA), as successor agency of the NAC, to file a complaint for the
expropriation of Lot Nos. 744-A, 745-A, 746, 747, 761-A, 762-A, 763-A, 942, and 947, among
others, docketed as Civil Case No. R-1881 entitled Republic v. Damian Ouano, et al.
On December 29, 1961, the then Court of First Instance (CFI) of Cebu rendered
judgment for the Republic, disposing, in part, as follows:
IN VIEW OF THE FOREGOING, judgment is hereby rendered: aTHASC
1. Declaring the expropriation of Lots Nos. 75, 76, 76, 89, 90, 91, 92, 105,
106, 107, 108, 104, 921-A, 88, 93, 913-B, 72, 77, 916, 777-A, 918, 919, 920,
764-A, 988, 744-A, 745-A, 746, 747, 762-A, 763-A, 951, 942, 720-A, . . . and
947, included in the Lahug Airport, Cebu City, justified in and in lawful exercise
of the right of eminent domain.
xxx xxx xxx
3. After the payment of the foregoing financial obligation to the
landowners, directing the latter to deliver to the plaintiff the corresponding
Transfer Certificates of Title to their respective lots; and upon the presentation of
the said titles to the Register of Deeds, ordering the latter to cancel the same
and to issue, in lieu thereof, new Transfer Certificates of Title in the name of the
plaintiff. 7
In view of the adverted buy-back assurance made by the government, the owners of
the lots no longer appealed the decision of the trial court. 8 Following the finality of the
judgment of condemnation, certificates of title for the covered parcels of land were issued in
the name of the Republic which, pursuant to Republic Act No. 6958, 9 were subsequently
transferred to MCIAA.
At the end of 1991, or soon after the transfer of the aforesaid lots to MCIAA, Lahug
Airport completely ceased operations, Mactan Airport having opened to accommodate
incoming and outgoing commercial flights. On the ground, the expropriated lots were never
utilized for the purpose they were taken as no expansion of Lahug Airport was undertaken.
This development prompted the former lot owners to formally demand from the government
that they be allowed to exercise their promised right to repurchase. The demands went
unheeded. Civil suits followed.
G.R. No. 168812 (MCIAA Petition)
On February 8, 1996, Ricardo L. Inocian and four others (all children of Isabel Limbaga
who originally owned six [6] of the lots expropriated); and Aletha Suico Magat and seven
others, successors-in-interest of Santiago Suico, the original owner of two (2) of the
condemned lots (collectively, the Inocians), filed before the RTC in Cebu City a complaint for
reconveyance of real properties and damages against MCIAA. The complaint, docketed
as Civil Case No. CEB-18370, was eventually raffled to Branch 13 of the court.
On September 29, 1997, one Albert Chiongbian (Chiongbian), alleging to be the owner
of Lot Nos. 761-A and 762-A but which the Inocians were now claiming, moved and was later
allowed to intervene.
During the pre-trial, MCIAA admitted the following facts: ADaEIH
1. That the properties, which are the subject matter of Civil Case No.
CEB-18370, are also the properties involved in Civil Case R-1881;
2. That the purpose of the expropriation was for the expansion of the old
Lahug Airport; that the Lahug Airport was not expanded;
3. That the old Lahug Airport was closed sometime in June 1992;
4. That the price paid to the lot owners in the expropriation case is found
in the decision of the court; and
5. That some properties were reconveyed by the MCIAA because the
previous owners were able to secure express waivers or riders wherein the
 159

government agreed to return the properties should the expansion of the Lahug
Airport not materialize.
During trial, the Inocians adduced evidence which included the testimony of Ricardo
Inocian (Inocian) and Asterio Uy (Uy). Uy, an employee of the CAA, testified that he was a
member of the team which negotiated for the acquisition of certain lots in Lahug for the
proposed expansion of the Lahug Airport. He recalled that he acted as the
interpreter/spokesman of the team since he could speak the Cebuano dialect. He stated that
the other members of the team of negotiators were Atty. Pedro Ocampo, Atty. Lansang, and
Atty. Saligumba. He recounted that, in the course of the negotiation, their team assured the
landowners that their landholdings would be reconveyed to them in the event the Lahug
Airport would be abandoned or if its operation were transferred to the Mactan Airport. Some
landowners opted to sell, while others were of a different bent owing to the inadequacy of the
offered price.
Inocian testified that he and his mother, Isabel Lambaga, attended a meeting called
by the NAC team of negotiators sometime in 1947 or 1949 where he and the other landowners
were given the assurance that they could repurchase their lands at the same price in the event
the Lahug Airport ceases to operate. He further testified that they rejected the NAC's offer.
However, he said that they no longer appealed the decree of expropriation due to the
repurchase assurance adverted to.
The MCIAA presented Michael Bacarizas (Bacarizas), who started working for MCIAA
as legal assistant in 1996. He testified that, in the course of doing research work on the lots
subject of Civil Case No. CEB-18370, he discovered that the same lots were covered by the
decision in Civil Case No. R-1881. He also found out that the said decision did not expressly
contain any condition on the matter of repurchase.
Ruling of the RTC
On October 7, 1998, the RTC rendered a Decision in Civil Case No. CEB-18370, the
dispositive portion of which reads as follows: DHSEcI
WHEREFORE, in view of the foregoing, judgment is hereby rendered
directing defendant Mactan Cebu International Airport Authority (MCIAA) to
reconvey (free from liens and encumbrances) to plaintiffs Ricardo Inocian,
Olimpia E. Esteves, Emilia E. Bacalla, Restituta E. Montana and Raul Inocian
Lots No. 744-A, 745-A, 746, 762-A, 747, 761-A and to plaintiffs Aletha Suico
Magat, Philip M. Suico, Doris S. dela Cruz, James M. Suico, Edward M. Suico,
Roselyn S. Lawsin, Rex M. Suico and Kharla Suico-Gutierrez Lots No. 942 and
947, after plaintiffs shall have paid MCIAA the sums indicated in the decision in
Civil Case No. R-1881. Defendant MCIAA is likewise directed to pay the
aforementioned plaintiffs the sum or P50,000.00 as and for attorney's fees and
P10,000.00 for litigation expenses.
Albert Chiongbian's intervention should be, as it is hereby DENIED for
utter lack of factual basis.
With costs against defendant MCIAA. 10
Therefrom, MCIAA went to the CA on appeal, docketed as CA-G.R. CV No. 64356.
Ruling of the CA
On January 14, 2005, the CA rendered judgment for the Inocians, declaring them
entitled to the reconveyance of the questioned lots as the successors-in-interest of the late
Isabel Limbaga and Santiago Suico, as the case may be, who were the former registered
owners of the said lots. The decretal portion of the CA's Decision reads:
WHEREFORE, in view of the foregoing premises, judgment is hereby
rendered by us DISMISSING the appeal filed in this case and AFFIRMING the
decision rendered by the court a quo on October 7, 1998 in Civil Case No. CEB-
18370.
SO ORDERED.
The CA, citing and reproducing excerpts from Heirs of Moreno, 11 virtually held that
the decision in Civil Case No. R-1881 was conditional, stating "that the expropriation of
[plaintiff-appellees'] lots for the proposed expansion of the Lahug Airport was ordered by the
 160

CFI of Cebu under the impression that Lahug Airport would continue in operation." 12 The
condition, as may be deduced from the CFI's decision, was that should MCIAA, or its precursor
agency, discontinue altogether with the operation of Lahug Airport, then the owners of the lots
expropriated may, if so minded, demand of MCIAA to make good its verbal assurance to allow
the repurchase of the properties. To the CA, this assurance, a demandable agreement of
repurchase by itself, has been adequately established.
On September 21, 2005, the MCIAA filed with Us a petition for review of the CA's
Decision, docketed as G.R. No. 168812. TIaCHA
G.R. No. 1687702 (Ouano Petition)
Soon after the MCIAA jettisoned the Lahug Airport expansion project, informal settlers
entered and occupied Lot No. 763-A which, before its expropriation, belonged to the Ouanos.
The Ouanos then formally asked to be allowed to exercise their right to repurchase the
aforementioned lot, but the MCIAA ignored the demand. On August 18, 1997, the Ouanos
instituted a complaint before the Cebu City RTC against the Republic and the MCIAA for
reconveyance, docketed as Civil Case No. CEB-20743.
Answering, the Republic and MCIAA averred that the Ouanos no longer have
enforceable rights whatsoever over the condemned Lot No. 763-A, the decision in Civil Case
No. R-1881 not having found any reversionary condition.
Ruling of the RTC
By a Decision dated November 28, 2000, the RTC, Branch 57 in Cebu City ruled in
favor of the Ouanos, disposing as follows:
WHEREFORE, in the light of the foregoing, the Court hereby renders
judgment in favor of the plaintiffs, Anunciacion Vda. De Ouano, Mario P. Ouano,
Leticia Ouano Arnaiz and Cielo Ouano Martinez and against the Republic of the
Philippines and Mactan Cebu International Airport Authority (MCIAA) to restore
to plaintiffs, the possession and ownership of their land, Lot No. 763-A upon
payment of the expropriation price to defendants; and
2. Ordering the Register of Deeds to effect the transfer of the Certificate
of Title from defendant Republic of the Philippines on Lot 763-A, canceling TCT
No. 52004 in the name of defendant Republic of the Philippines and to issue a
new title on the same lot in the names of Anunciacion Vda. De Ouano, Mario P.
Ouano, Leticia Ouano Arnaiz and Cielo Ouano Martinez.
No pronouncement as to costs. 13
Acting on the motion of the Republic and MCIAA for reconsideration, however, the
RTC, Branch 57 in Cebu City, presided this time by Judge Enriqueta L. Belarmino, issued, on
December 9, 2002, an Order 14 that reversed its earlier decision of November 28, 2000 and
dismissed the Ouanos' complaint.
Ruling of the CA
In time, the Ouanos interposed an appeal to the CA, docketed as CA-G.R. CV No.
78027. Eventually, the appellate court rendered a Decision 15 dated September 3, 2004,
denying the appeal, thus:
WHEREFORE, premises considered, the Order dated December 9,
2002, of the Regional Trial Court, 7th Judicial Region, Branch 57, Cebu City, in
Civil Case No. CEB-20743, is hereby AFFIRMED. No pronouncement as to
costs. ScaEIT
SO ORDERED.
Explaining its case disposition, the CA stated that the decision in Civil Case No. R-
1881 did not state any condition that Lot No. 763-A of the Ouanos — and all covered lots for
that matter — would be returned to them or that they could repurchase the same property if it
were to be used for purposes other than for the Lahug Airport. The appellate court also went
on to declare the inapplicability of the Court's pronouncement in MCIAA v. Court of Appeals,
RTC, Branch 9, Cebu City, Melba Limbago, et al., 16 to support the Ouanos' cause, since the
affected landowners in that case, unlike the Ouanos, parted with their property not through
expropriation but via a sale and purchase transaction.
 161

The Ouanos filed a motion for reconsideration of the CA's Decision, but was denied
per the CA's May 26, 2005 Resolution. 17 Hence, they filed this petition in G.R. No. 1687702.
The Issues
G.R. No. 168812
GROUNDS FOR ALLOWANCE OF THE PETITION
I. THE ASSAILED ISSUANCES ILLEGALLY STRIPPED THE
REPUBLIC OF ITS ABSOLUTE AND UNCONDITIONAL TITLE TO THE
SUBJECT EXPROPRIATED PROPERTIES. aSEHDA
II. THE IMPUGNED DISPOSITIONS INVALIDLY OVERTURNED THIS
HONORABLE COURT'S FINAL RULINGS IN FERY V. MUNICIPALITY OF
CABANATUAN, MCIAA V. COURT OF APPEALS AND REYES V. NATIONAL
HOUSING AUTHORITY.
III. THE COURT OF APPEALS GRAVELY ERRED IN APPLYING THIS
HONORABLE COURT'S RULING IN MORENO, ALBEIT IT HAS NOT YET
ATTAINED FINALITY. 18
G.R. No. 1687702
Questions of law presented in this Petition
Whether or not the testimonial evidence of the petitioners proving the
promises, assurances and representations by the airport officials and lawyers
are inadmissible under the Statute of Frauds.
Whether or not under the ruling of this Honorable Court in the heirs of
Moreno Case, and pursuant to the principles enunciated therein, petitioners
herein are entitled to recover their litigated property.
Reasons for Allowances of this Petition
Respondents did not object during trial to the admissibility of petitioners'
testimonial evidence under the Statute of Frauds and have thus waived such
objection and are now barred from raising the same. In any event, the Statute of
Frauds is not applicable herein. Consequently, petitioners' evidence is
admissible and should be duly given weight and credence, as initially held by the
trial court in its original Decision. 19
While their respective actions against MCIAA below ended differently, the Ouanos and
the Inocians' proffered arguments presented before this Court run along parallel lines, both
asserting entitlement to recover the litigated property on the strength of the Court's ruling
in Heirs of Moreno. MCIAA has, however, formulated in its Consolidated Memorandum the
key interrelated issues in these consolidated cases, as follows:
I
WHETHER ABANDONMENT OF THE PUBLIC USE FOR WHICH THE
SUBJECT PROPERTIES WERE EXPROPRIATED ENTITLES PETITIONERS
OUANOS, ET AL., AND RESPONDENTS INOCIAN, ET AL., TO REACQUIRE
THEM. aDIHTE
II
WHETHER PETITIONERS OUANOS, ET AL., AND RESPONDENTS INOCIAN,
ET AL., ARE ENTITLED TO RECONVEYANCE OF THE SUBJECT
PROPERTIES SIMPLY ON THE BASIS OF AN ALLEGED VERBAL PROMISE
OR ASSURANCE OF SOME NAC OFFICIALS THAT THE SUBJECT
PROPERTIES WILL BE RETURNED IF THE AIRPORT PROJECT WOULD BE
ABANDONED.
The Court's Ruling
The Republic and MCIAA's petition in G.R. No. 168812 is bereft of merit, while the
Ouano petition in G.R. No. 1687702 is meritorious.
At the outset, three (3) fairly established factual premises ought to be emphasized:
 162

First, the MCIAA and/or its predecessor agency had not actually used the lots subject
of the final decree of expropriation in Civil Case No. R-1881 for the purpose they were
originally taken by the government, i.e., for the expansion and development of Lahug Airport.
Second, the Lahug Airport had been closed and abandoned. A significant portion of it
had, in fact, been purchased by a private corporation for development as a commercial
complex. 20 HCITcA
Third, it has been preponderantly established by evidence that the NAC, through its
team of negotiators, had given assurance to the affected landowners that they would be
entitled to repurchase their respective lots in the event they are no longer used for airport
purposes. 21 "No less than Asterio Uy," the Court noted in Heirs of Moreno, "one of the
members of the CAA Mactan Legal Team, which interceded for the acquisition of the lots for
the Lahug Airport's expansion, affirmed that persistent assurances were given to the
landowners to the effect that as soon as the Lahug Airport is abandoned or transferred to
Mactan, the lot owners would be able to reacquire their properties." 22 In Civil Case No. CEB-
20743, Exhibit "G," the transcript of the deposition 23 of Anunciacion vda. de Ouano covering
the assurance made had been formally offered in evidence and duly considered in the initial
decision of the RTC Cebu City. In Civil Case No. CEB-18370, the trial court, on the basis of
testimonial evidence, and later the CA, recognized the reversionary rights of the suing former
lot owners or their successors in interest 24 and resolved the case accordingly. In point with
respect to the representation and promise of the government to return the lots taken should
the planned airport expansion do not materialize is what the Court said in Heirs of Moreno,
thus:
This is a difficult case calling for a difficult but just solution. To begin with
there exists an undeniable historical narrative that the predecessors of
respondent MCIAA had suggested to the landowners of the properties covered
by the Lahug Airport expansion scheme that they could repurchase their
properties at the termination of the airport's venue. Some acted on this
assurance and sold their properties; other landowners held out and waited for
the exercise of eminent domain to take its course until finally coming to terms
with respondent's predecessors that they would not appeal nor block further
judgment of condemnation if the right of repurchase was extended to them. A
handful failed to prove that they acted on such assurance when they parted with
ownership of their land. 25 (Emphasis supplied; citations omitted.)
For perspective, Heirs of Moreno — later followed by MCIAA v.
Tudtud (Tudtud) 26 and the consolidated cases at bar — is cast under the same factual
setting and centered on the expropriation of privately-owned lots for the public purpose of
expanding the Lahug Airport and the alleged promise of reconveyance given by the
negotiating NAC officials to the private lot owners. All the lots being claimed by the former
owners or successors-in-interest of the former owners in the Heirs of Moreno, Tudtud, and
the present cases were similarly adjudged condemned in favor of the Republic in Civil Case
No. R-1881. All the claimants sought was or is to have the condemned lots reconveyed to
them upon the payment of the condemnation price since the public purpose of the
expropriation was never met. Indeed, the expropriated lots were never used and were, in fact,
abandoned by the expropriating government agencies. DcAaSI
In all then, the issues and supporting arguments presented by both sets of petitioners
in these consolidated cases have already previously been passed upon, discussed at length,
and practically peremptorily resolved in Heirs of Moreno and the November
2008 Tudtud ruling. The Ouanos, as petitioners in G.R. No. 1687702, and the Inocians, as
respondents in G.R. No. 168812, are similarly situated as the heirs of Moreno in Heirs of
Moreno and Benjamin Tudtud in Tudtud. Be that as it may, there is no reason why the ratio
decidendi in Heirs of Moreno and Tudtud should not be made to apply to petitioners Ouanos
and respondents Inocians such that they shall be entitled to recover their or their
predecessors' respective properties under the same manner and arrangement as the heirs of
Moreno and Tudtud. Stare decisis et non quieta movere (to adhere to precedents, and not to
unsettle things which are established). 27
Just like in Tudtud and earlier in Heirs of Moreno, MCIAA would foist the theory that
the judgment of condemnation in Civil Case No. R-1881 was without qualification and was
unconditional. It would, in fact, draw attention to the fallo of the expropriation court's decision
to prove that there is nothing in the decision indicating that the government gave assurance
 163

or undertook to reconvey the covered lots in case the Lahug airport expansion project is
aborted. Elaborating on this angle, MCIAA argues that the claim of the Ouanos and the
Inocians regarding the alleged verbal assurance of the NAC negotiating team that they can
reacquire their landholdings is barred by the Statute of Frauds. 28
Under the rule on the Statute of Frauds, as expressed in Article 1403 of the Civil Code,
a contract for the sale or acquisition of real property shall be unenforceable unless the same
or some note of the contract be in writing and subscribed by the party charged. Subject to
defined exceptions, evidence of the agreement cannot be received without the writing, or
secondary evidence of its contents.
MCIAA's invocation of the Statute of Frauds is misplaced primarily because the statute
applies only to executory and not to completed, executed, or partially consummated
contracts. 29 Carbonnel v. Poncio, et al., quoting Chief Justice Moran, explains the rationale
behind this rule, thusly:
. . . "The reason is simple. In executory contracts there is a wide field for
fraud because unless they may be in writing there is no palpable evidence of the
intention of the contracting parties. The statute has been precisely been enacted
to prevent fraud." . . . However, if a contract has been totally or partially
performed, the exclusion of parol evidence would promote fraud or bad faith, for
it would enable the defendant to keep the benefits already derived by him from
the transaction in litigation, and at the same time, evade the obligations,
responsibilities or liabilities assumed or contracted by him
thereby. 30 (Emphasis in the original.) EacHSA
Analyzing the situation of the cases at bar, there can be no serious objection to the
proposition that the agreement package between the government and the private lot owners
was already partially performed by the government through the acquisition of the lots for the
expansion of the Lahug airport. The parties, however, failed to accomplish the more important
condition in the CFI decision decreeing the expropriation of the lots litigated upon: the
expansion of the Lahug Airport. The project — the public purpose behind the forced property
taking — was, in fact, never pursued and, as a consequence, the lots expropriated were
abandoned. Be that as it may, the two groups of landowners can, in an action to compel
MCIAA to make good its oral undertaking to allow repurchase, adduce parol evidence to prove
the transaction.
At any rate, the objection on the admissibility of evidence on the basis of the Statute
of Frauds may be waived if not timely raised. Records tend to support the conclusion that
MCIAA did not, as the Ouanos and the Inocians posit, object to the introduction of parol
evidence to prove its commitment to allow the former landowners to repurchase their
respective properties upon the occurrence of certain events.
In a bid to deny the lot owners the right to repurchase, MCIAA, citing cases, 31 points
to the dispositive part of the decision in Civil Case R-1881 which, as couched, granted the
Republic absolute title to the parcels of land declared expropriated. The MCIAA is correct
about the unconditional tone of the dispositive portion of the decision, but that actuality would
not carry the day for the agency. Addressing the matter of the otherwise absolute tenor of the
CFI's disposition in Civil Case No. R-1881, the Court, in Heirs of Moreno, after taking stock of
the ensuing portion of the body of the CFI's decision, said:
As for the public purpose of the expropriation proceeding, it cannot now
be doubted. Although Mactan Airport is being constructed, it does not take away
the actual usefulness and importance of the Lahug Airport: it is handling the air
traffic of both civilian and military. From it, aircrafts fly to Mindanao and Visayas
and pass thru it on their flights to the North and Manila. Then, no evidence was
adduced to show how soon is the Mactan Airport to be placed in operation and
whether the Lahug Airport will be closed immediately thereafter. It is up to the
other departments of the Government to determine said matters. The Court
cannot substitute its judgments for those of the said departments or agencies. In
the absence of such showing, the court will presume that the Lahug Airport
will continue to be in operation. 32 (Emphasis supplied.)
We went on to state as follows:
While the trial court in Civil Case No. R-1881 could have simply
acknowledged the presence of public purpose for the exercise of eminent
 164

domain regardless of the survival of the Lahug Airport, the trial court in
its Decision chose not to do so but instead prefixed its finding of public purpose
upon its understanding that 'Lahug Airport will continue to be in operation'. Verily,
these meaningful statements in the body of the Decision warrant the conclusion
that the expropriated properties would remain to be so until it was confirmed that
Lahug Airport was no longer 'in operation'. This inference further implies two (2)
things: (a) after the Lahug Airport ceased its undertaking as such and the
expropriated lots were not being used for any airport expansion project, the rights
vis-Ã -vis the expropriated lots . . . as between the State and their former owners,
petitioners herein, must be equitably adjusted; and (b) the foregoing
unmistakable declarations in the body of the Decision should merge with and
become an intrinsic part of the fallo thereof which under the premises is clearly
inadequate since the dispositive portion is not in accord with the findings as
contained in the body thereof. 33 DEHaTC
Not to be overlooked of course is what the Court said in its Resolution disposing of
MCIAA's motion to reconsider the original ruling in Heirs of Moreno. In that resolution, We
stated that the fallo of the decision in Civil Case R-1881 should be viewed and understood in
connection with the entire text, which contemplated a return of the property taken if the airport
expansion project were abandoned. For ease of reference, following is what the Court wrote:
Moreover, we do not subscribe to the [MCIAA's] contention that since the
possibility of the Lahug Airport's closure was actually considered by the trial
court, a stipulation on reversion or repurchase was so material that it should not
have been discounted by the court a quo in its decision in Civil Case No. R-1881,
if, in fact, there was one. We find it proper to cite, once more, this Court's ruling
that the fallo of the decision in Civil Case No. R-1881 must be read in reference
to the other portions of the decision in which it forms a part. A reading of the
Court's judgment must not be confined to the dispositive portion alone; rather it
should be meaningfully construed in unanimity with the ratio decidendi thereof to
grasp the true intent and meaning of a decision. 34
The Court has, to be sure, taken stock of Fery v. Municipality of Cabanatuan, 35 a
case MCIAA cites at every possible turn, where the Court made these observations:
If, for example, land is expropriated for a particular purpose, with the
condition that when that purpose is ended or abandoned the property shall return
to its former owner, then of course, when the purpose is terminated or
abandoned, the former owner reacquires the property so expropriated. . . . If,
upon the contrary, however the decree of expropriation gives to the entity a fee
simple title, then, of course, the land becomes the absolute property of the
expropriator . . . and in that case the non-user does not have the effect of
defeating the title acquired by the expropriation proceedings . . . .
Fery notwithstanding, MCIAA cannot really rightfully say that it has absolute title to the
lots decreed expropriated in Civil Case No. R-1881. The correct lesson of Fery is captured by
what the Court said in that case, thus: "the government acquires only such rights in
expropriated parcels of land as may be allowed by the character of its title over the properties."
In light of our disposition in Heirs of Moreno and Tudtud, the statement immediately adverted
to means that in the event the particular public use for which a parcel of land is expropriated
is abandoned, the owner shall not be entitled to recover or repurchase it as a matter of right,
unless such recovery or repurchase is expressed in or irresistibly deducible from the
condemnation judgment. But as has been determined below, the decision in Civil Case No.
R-1881 enjoined MCIAA, as a condition of approving expropriation, to allow recovery or
repurchase upon abandonment of the Lahug airport project. To borrow from our underlying
decision in Heirs of Moreno, "[n]o doubt, the return or repurchase of the condemned properties
of petitioners could readily be justified as the manifest legal effect of consequence of the trial
court's underlying presumption that 'Lahug Airport will continue to be in operation' when it
granted the complaint for eminent domain and the airport discontinued its
activities." 36 aIcHSC
Providing added support to the Ouanos and the Inocians' right to repurchase is what
in Heirs of Moreno was referred to as constructive trust, one that is akin to the implied trust
expressed in Art. 1454 of the Civil Code, 37 the purpose of which is to prevent unjust
enrichment. 38 In the case at bench, the Ouanos and the Inocians parted with their respective
 165

lots in favor of the MCIAA, the latter obliging itself to use the realties for the expansion of
Lahug Airport; failing to keep its end of the bargain, MCIAA can be compelled by the former
landowners to reconvey the parcels of land to them, otherwise, they would be denied the use
of their properties upon a state of affairs that was not conceived nor contemplated when the
expropriation was authorized. In effect, the government merely held the properties
condemned in trust until the proposed public use or purpose for which the lots were
condemned was actually consummated by the government. Since the government failed to
perform the obligation that is the basis of the transfer of the property, then the lot owners
Ouanos and Inocians can demand the reconveyance of their old properties after the payment
of the condemnation price.
Constructive trusts are fictions of equity that courts use as devices to remedy any
situation in which the holder of the legal title, MCIAA in this case, may not, in good conscience,
retain the beneficial interest. We add, however, as in Heirs of Moreno, that the party seeking
the aid of equity — the landowners in this instance, in establishing the trust — must himself
do equity in a manner as the court may deem just and reasonable.
The Court, in the recent MCIAA v. Lozada, Sr., revisited and abandoned
the Fery ruling that the former owner is not entitled to reversion of the property even if the
public purpose were not pursued and were abandoned, thus:
On this note, we take this opportunity to revisit our ruling in Fery, which
involved an expropriation suit commenced upon parcels of land to be used as a
site for a public market. Instead of putting up a public market, respondent
Cabanatuan constructed residential houses for lease on the area. Claiming that
the municipality lost its right to the property taken since it did not pursue its public
purpose, petitioner Juan Fery, the former owner of the lots expropriated, sought
to recover his properties. However, as he had admitted that, in 1915, respondent
Cabanatuan acquired a fee simple title to the lands in question, judgment was
rendered in favor of the municipality, following American jurisprudence,
particularly City of Fort Wayne v. Lake Shore & M.S. RY. Co., McConihay v.
Theodore Wright, and Reichling v. Covington Lumber Co., all uniformly holding
that the transfer to a third party of the expropriated real property, which
necessarily resulted in the abandonment of the particular public purpose for
which the property was taken, is not a ground for the recovery of the same by its
previous owner, the title of the expropriating agency being one of fee
simple. cAHDES
Obviously, Fery was not decided pursuant to our now sacredly held
constitutional right that private property shall not be taken for public use without
just compensation. It is well settled that the taking of private property by the
Governments power of eminent domain is subject to two mandatory
requirements: (1) that it is for a particular public purpose; and (2) that just
compensation be paid to the property owner. These requirements partake of the
nature of implied conditions that should be complied with to enable the
condemnor to keep the property expropriated.
More particularly, with respect to the element of public use, the
expropriator should commit to use the property pursuant to the purpose
stated in the petition for expropriation filed, failing which, it should file
another petition for the new purpose. If not, it is then incumbent upon the
expropriator to return the said property to its private owner, if the latter
desires to reacquire the same. Otherwise, the judgment of expropriation
suffers an intrinsic flaw, as it would lack one indispensable element for the proper
exercise of the power of eminent domain, namely, the particular public purpose
for which the property will be devoted. Accordingly, the private property owner
would be denied due process of law, and the judgment would violate the property
owners right to justice, fairness, and equity.
In light of these premises, we now expressly hold that the taking of private
property, consequent to the Governments exercise of its power of eminent
domain, is always subject to the condition that the property be devoted to the
specific public purpose for which it was taken. Corollarily, if this particular
purpose or intent is not initiated or not at all pursued, and is peremptorily
abandoned, then the former owners, if they so desire, may seek the reversion of
 166

the property, subject to the return of the amount of just compensation received.
In such a case, the exercise of the power of eminent domain has become
improper for lack of the required factual justification. 39 (Emphasis supplied.)
Clinging to Fery, specifically the fee simple concept underpinning it, is no longer
compelling, considering the ensuing inequity such application entails. Too, the Court
resolved Fery not under the cover of any of the Philippine Constitutions, each decreeing that
private property shall not be taken for public use without just compensation. The twin elements
of just compensation and public purpose are, by themselves, direct limitations to the exercise
of eminent domain, arguing, in a way, against the notion of fee simple title. The fee does not
vest until payment of just compensation. 40
In esse, expropriation is forced private property taking, the landowner being really
without a ghost of a chance to defeat the case of the expropriating agency. In other words, in
expropriation, the private owner is deprived of property against his will. Withal, the mandatory
requirement of due process ought to be strictly followed, such that the state must show, at the
minimum, a genuine need, an exacting public purpose to take private property, the purpose
to be specifically alleged or least reasonably deducible from the complaint. DTAIaH
Public use, as an eminent domain concept, has now acquired an expansive meaning
to include any use that is of "usefulness, utility, or advantage, or what is productive of general
benefit [of the public]." 41 If the genuine public necessity — the very reason or condition as it
were — allowing, at the first instance, the expropriation of a private land ceases or disappears,
then there is no more cogent point for the government's retention of the expropriated land.
The same legal situation should hold if the government devotes the property to another public
use very much different from the original or deviates from the declared purpose to benefit
another private person. It has been said that the direct use by the state of its power to oblige
landowners to renounce their productive possession to another citizen, who will use it
predominantly for that citizen's own private gain, is offensive to our laws. 42
A condemnor should commit to use the property pursuant to the purpose stated in the
petition for expropriation, failing which it should file another petition for the new purpose. If
not, then it behooves the condemnor to return the said property to its private owner, if the
latter so desires. The government cannot plausibly keep the property it expropriated in any
manner it pleases and, in the process, dishonor the judgment of expropriation. This is not in
keeping with the idea of fair play.
The notion, therefore, that the government, via expropriation proceedings, acquires
unrestricted ownership over or a fee simple title to the covered land, is no longer tenable. We
suggested as much in Heirs of Moreno and in Tudtud and more recently in Lozada,
Sr. Expropriated lands should be differentiated from a piece of land, ownership of which was
absolutely transferred by way of an unconditional purchase and sale contract freely entered
by two parties, one without obligation to buy and the other without the duty to sell. In that case,
the fee simple concept really comes into play. There is really no occasion to apply the "fee
simple concept" if the transfer is conditional. The taking of a private land in expropriation
proceedings is always conditioned on its continued devotion to its public purpose. As a
necessary corollary, once the purpose is terminated or peremptorily abandoned, then the
former owner, if he so desires, may seek its reversion, subject of course to the return, at the
very least, of the just compensation received.
To be compelled to renounce dominion over a piece of land is, in itself, an already
bitter pill to swallow for the owner. But to be asked to sacrifice for the common good and yield
ownership to the government which reneges on its assurance that the private property shall
be for a public purpose may be too much. But it would be worse if the power of eminent domain
were deliberately used as a subterfuge to benefit another with influence and power in the
political process, including development firms. The mischief thus depicted is not at all far-
fetched with the continued application of Fery. Even as the Court deliberates on these
consolidated cases, there is an uncontroverted allegation that the MCIAA is poised to sell, if
it has not yet sold, the areas in question to Cebu Property Ventures, Inc. This provides an
added dimension to abandon Fery.
Given the foregoing disquisitions, equity and justice demand the reconveyance by
MCIAA of the litigated lands in question to the Ouanos and Inocians. In the same token, justice
and fair play also dictate that the Ouanos and Inocian return to MCIAA what they received as
just compensation for the expropriation of their respective properties plus legal interest to be
computed from default, which in this case should run from the time MCIAA complies with the
 167

reconveyance obligation. 43 They must likewise pay MCIAA the necessary expenses it might
have incurred in sustaining their respective lots and the monetary value of its services in
managing the lots in question to the extent that they, as private owners, were benefited
thereby. CSHcDT
In accordance with Art. 1187 of the Civil Code on mutual compensation, MCIAA may
keep whatever income or fruits it may have obtained from the parcels of land expropriated. In
turn, the Ouanos and Inocians need not require the accounting of interests earned by the
amounts they received as just compensation. 44
Following Art. 1189 of the Civil Code providing that "[i]f the thing is improved by its
nature, or by time, the improvement shall inure to the benefit of the creditor . . .," the
Ouanos and Inocians do not have to settle the appreciation of the values of their respective
lots as part of the reconveyance process, since the value increase is merely the natural effect
of nature and time.
Finally, We delete the award of PhP50,000 and PhP10,000, as attorney's fees and
litigation expenses, respectively, made in favor of the Inocians by the Cebu City RTC in its
judgment in Civil Case No. CEB-18370, as later affirmed by the CA. As a matter of sound
policy, no premium should be set on the right to litigate where there is no doubt about the bona
fides of the exercise of such right, 45 as here, albeit the decision of MCIAA to resist the former
landowners' claim eventually turned out to be untenable.
WHEREFORE, the petition in G.R. No. 1687702 is GRANTED. Accordingly, the CA
Decision dated September 3, 2004 in CA-G.R. CV No. 78027 is REVERSED and SET ASIDE.
Mactan-Cebu International Airport Authority is ordered to reconvey subject Lot No. 763-A to
petitioners Anunciacion vda. de Ouano, Mario P. Ouano, Leticia Ouano Arnaiz, and Cielo
Ouano Martinez. The Register of Deeds of Cebu City is ordered to effect the necessary
cancellation of title and transfer it in the name of the petitioners within fifteen (15) days from
finality of judgment.
The petition of the Mactan-Cebu International Airport Authority in G.R. No.
168812 is DENIED, and the CA's Decision and Resolution dated January 14, 2005 and June
29, 2005, respectively, in CA-G.R. CV No. 64356 are AFFIRMED, except insofar as they
awarded attorney's fees and litigation expenses that are hereby DELETED. Accordingly,
Mactan-Cebu International Airport Authority is ordered to reconvey to respondents Ricardo L.
Inocian, Olympia E. Esteves, Emilia E. Bacalla, Restituta E. Montana, and Raul L. Inocian the
litigated Lot Nos. 744-A, 745-A, 746, 762-A, 747, and 761-A; and to respondents Aletha Suico
Magat, Philip M. Suico, Dolores S. dela Cruz, James M. Suico, Edward M. Suico, Roselyn S.
Lawsin, Rex M. Suico, and Kharla Suico-Gutierrez the litigated Lot Nos. 942 and 947. The
Register of Deeds of Cebu City is ordered to effect the necessary cancellation of title and
transfer it in the name of respondents within a period of fifteen (15) days from finality of
judgment.
The foregoing dispositions are subject to QUALIFICATIONS, to apply to these
consolidated petitions, when appropriate, as follows:
(1) Petitioners Ouano, et al., in G.R. No. 1687702 and respondents Ricardo L. Inocian,
et al., in G.R. No. 168812 are ordered to return to the MCIAA the just compensation they or
their predecessors-in-interest received for the expropriation of their respective lots as stated
in Civil Case No. R-1881, within a period of sixty (60) days from finality of judgment;
(2) The MCIAA shall be entitled to RETAIN whatever fruits and income it may have
obtained from the subject expropriated lots without any obligation to refund the same to the
lot owners; and
(3) Petitioners Ouano, et al., in G.R. No. 1687702 and respondents Ricardo L. Inocian,
et al., in G.R. No. 168812 shall RETAIN whatever interests the amounts they received as just
compensation may have earned in the meantime without any obligation to refund the same to
MCIAA.
SO ORDERED.
||| (Vda de Ouano v. Republic, G.R. Nos. 168770 & 168812, [February 9, 2011], 657 PHIL 391-
422)

[G.R. No. 162474. October 13, 2009.]

 168

HON. VICENTE P. EUSEBIO, LORNA A. BERNARDO, VICTOR ENDRIGA,

and the CITY OF PASIG, petitioners, vs. JOVITO M. LUIS, LIDINILA LUIS
SANTOS, ANGELITA CAGALINGAN, ROMEO M. LUIS, and VIRGINIA LUIS-
BELLESTEROS, * respondents.

DECISION

PERALTA, J p:

This resolves the Petition for Review on Certiorari under Rule 45 of the Rules of Court,
praying that the Decision 1 of the Court of Appeals (CA) dated November 28, 2003, affirming
the trial court judgment, and the CA Resolution 2 dated February 27, 2004, denying
petitioners' motion for reconsideration, be reversed and set aside.
The antecedent facts are as follows:
Respondents are the registered owners of a parcel of land covered by Transfer
Certificate of Title Nos. 53591 and 53589 with an area of 1,586 square meters. Said parcel of
land was taken by the City of Pasig sometime in 1980 and used as a municipal road now
known as A. Sandoval Avenue, Barangay Palatiw, Pasig City. On February 1, 1993,
the Sanggunian of Pasig City passed Resolution No. 15 authorizing payments to respondents
for said parcel of land. However, the Appraisal Committee of the City of Pasig, in Resolution
No. 93-13 dated October 19, 1993, assessed the value of the land only at P150.00 per square
meter. In a letter dated June 26, 1995, respondents requested the Appraisal Committee to
consider P2,000.00 per square meter as the value of their land.
One of the respondents also wrote a letter dated November 25, 1994 to Mayor Vicente
P. Eusebio calling the latter's attention to the fact that a property in the same area, as the land
subject of this case, had been paid for by petitioners at the price of P2,000.00 per square
meter when said property was expropriated in the year 1994 also for conversion into a public
road. Subsequently, respondents' counsel sent a demand letter dated August 26, 1996 to
Mayor Eusebio, demanding the amount of P5,000.00 per square meter, or a total of
P7,930,000.00, as just compensation for respondents' property. In response, Mayor Eusebio
wrote a letter dated September 9, 1996 informing respondents that the City of Pasig cannot
pay them more than the amount set by the Appraisal Committee. HaAISC
Thus, on October 8, 1996, respondents filed a Complaint for Reconveyance and/or
Damages (Civil Case No. 65937) against herein petitioners before the Regional Trial Court
(RTC) of Pasig City, Branch 155. Respondents prayed that the property be returned to them
with payment of reasonable rental for sixteen years of use at P500.00 per square meter, or
P793,000.00, with legal interest of 12% per annum from date of filing of the complaint until full
payment, or in the event that said property can no longer be returned, that petitioners be
ordered to pay just compensation in the amount of P7,930,000.00 and rental for sixteen years
of use at P500.00 per square meter, or P793,000.00, both with legal interest of 12% per
annum from the date of filing of the complaint until full payment. In addition, respondents
prayed for payment of moral and exemplary damages, attorney's fees and costs.
After trial, the RTC rendered a Decision 3 dated January 2, 2001, the dispositive
portion of which reads as follows:
WHEREFORE, in view of the foregoing, judgment is hereby rendered in
favor of the plaintiffs and against the defendants:
1. Declaring as ILLEGAL and UNJUST the action of the defendants in
taking the properties of plaintiffs covered by Transfer Certificates
of Title Nos. 53591 and 53589 without their consent and without
the benefit of an expropriation proceedings required by law in the
taking of private property for public use;
2. Ordering the defendants to jointly RETURN the subject properties to
plaintiffs with payment of reasonable rental for its use in the
amount of P793,000.00 with legal interest at the rate of 6% per
annum from the filing of the instant Complaint until full payment is
made;
 169

3. In the event that said properties can no longer be returned to the

plaintiffs as the same is already being used as a public road
known as A. Sandoval Avenue, Pasig City, the defendants are
hereby ordered to jointly pay the plaintiffs the fair and reasonable
value therefore at P5,000.00 per square meter or a total of
P7,930,000.00 with payment of reasonable rental for its use in the
amount of P500.00 per square meter or a total of P793,000.00,
both with legal interest at the rate of 6% per annum from the filing
of the instant Complaint until full payment is made; and
4. Ordering the defendants to jointly pay the plaintiffs attorney's fees in
the amount of P200,000.00.
No pronouncement as to costs.
SO ORDERED. HcDATC
Petitioners then appealed the case to the CA, but the CA affirmed the RTC judgment
in its Decision dated November 28, 2003.
Petitioners' motion for reconsideration of the CA Decision was denied per Resolution
dated February 27, 2004.
Hence, this petition where it is alleged that:
I. PUBLIC RESPONDENT COURT ERRED IN UPHOLDING THE RULING OF
THE LOWER COURT DESPITE THE APPARENT LACK OF
JURISDICTION BY REASON OF PRESCRIPTION OF PRIVATE
RESPONDENTS' CLAIM FOR JUST COMPENSATION;
II. PUBLIC RESPONDENT COURT ERRED IN FIXING THE FAIR AND
REASONABLE COMPENSATION FOR RESPONDENTS' PROPERTY
AT P5,000.00 PER SQUARE METER DESPITE THE GLARING FACT
THAT AT THE TIME OF TAKING IN THE YEAR 1980 THE FAIR
MARKET VALUE WAS PEGGED BY AN APPRAISAL COMMITTEE AT
ONE HUNDRED SIXTY PESOS (PHP160.00);
III. PUBLIC RESPONDENT COURT ERRED IN UPHOLDING THE JUDGMENT
OF THE LOWER COURT AWARDING THE AMOUNT OF P793,000.00
AS REASONABLE RENTAL FOR THE USE OF RESPONDENTS'
PROPERTY IN SPITE OF THE FACT THAT THE SAME WAS
CONVERTED INTO A PUBLIC ROAD BY A PREVIOUSLY ELECTED
MUNICIPAL MAYOR WITHOUT RESPONDENTS' REGISTERING ANY
COMPLAINT OR PROTEST FOR THE TAKING AND DESPITE THE
FACT THAT SUCH TAKING DID NOT PERSONALLY BENEFIT THE
PETITIONERS BUT THE PUBLIC AT LARGE; AND
IV. PUBLIC RESPONDENT COURT OF APPEALS ERRED IN AFFIRMING
THE P200,000.00 AWARD FOR ATTORNEY'S FEES TO THE PRIVATE
RESPONDENTS' COUNSEL DESPITE THE ABSENCE OF
NEGLIGENCE OR INACTION ON THE PART OF PETITIONERS
RELATIVE TO THE INSTANT CLAIM FOR JUST COMPENSATION. 4
At the outset, petitioners must be disabused of their belief that respondents' action for
recovery of their property, which had been taken for public use, or to claim just compensation
therefor is already barred by prescription. In Republic of the Philippines v. Court of
Appeals, 5 the Court emphasized "that where private property is taken by the Government for
public use without first acquiring title thereto either through expropriation or negotiated sale,
the owner's action to recover the land or the value thereof does not prescribe". The Court went
on to remind government agencies not to exercise the power of eminent domain with wanton
disregard for property rights as Section 9, Article III of the Constitution provides that "private
property shall not be taken for public use without just compensation". 6
The remaining issues here are whether respondents are entitled to regain possession
of their property taken by the city government in the 1980's and, in the event that said property
can no longer be returned, how should just compensation to respondents be
determined. SHADEC
 170

These issues had been squarely addressed in Forfom Development Corporation v.

Philippine National Railways, 7 which is closely analogous to the present case. In said earlier
case, the Philippine National Railways (PNR) took possession of the private property in 1972
without going through expropriation proceedings. The San Pedro-Carmona Commuter Line
Project was then implemented with the installation of railroad facilities on several parcels of
land, including that of petitioner Forfom. Said owner of the private property then negotiated
with PNR as to the amount of just compensation. No agreement having been reached, Forfom
filed a complaint for Recovery of Possession of Real Property and/or Damages with the trial
court sometime in August 1990.
In said case, the Court held that because the landowner did not act to question the
lack of expropriation proceedings for a very long period of time and even negotiated with the
PNR as to how much it should be paid as just compensation, said landowner is deemed to
have waived its right and is estopped from questioning the power of the PNR to expropriate
or the public use for which the power was exercised. It was further declared therein that:
. . . recovery of possession of the property by the landowner can no
longer be allowed on the grounds of estoppel and, more importantly, of public
policy which imposes upon the public utility the obligation to continue its services
to the public. The non-filing of the case for expropriation will not necessarily
lead to the return of the property to the landowner. What is left to the
landowner is the right of compensation.
. . . It is settled that non-payment of just compensation does not entitle
the private landowners to recover possession of their expropriated lot. 8
Just like in the Forfom case, herein respondents also failed to question the taking of
their property for a long period of time (from 1980 until the early 1990's) and, when asked
during trial what action they took after their property was taken, witness Jovito Luis, one of the
respondents, testified that "when we have an occasion to talk to Mayor Caruncho we always
asked for compensation". 9 It is likewise undisputed that what was constructed by the city
government on respondents' property was a road for public use, namely, A. Sandoval Avenue
in Pasig City. Clearly, as in Forfom, herein respondents are also estopped from recovering
possession of their land, but are entitled to just compensation.
Now, with regard to the trial court's determination of the amount of just compensation
to which respondents are entitled, the Court must strike down the same for being contrary to
established rules and jurisprudence.
The prevailing doctrine on judicial determination of just compensation is that set forth
in Forfom. 10 Therein, the Court ruled that even if there are no expropriation proceedings
instituted to determine just compensation, the trial court is still mandated to act in accordance
with the procedure provided for in Section 5, Rule 67 of the 1997 Rules of Civil Procedure,
requiring the appointment of not more than three competent and disinterested commissioners
to ascertain and report to the court the just compensation for the subject property. The Court
reiterated its ruling in National Power Corporation v. Dela Cruz 11 that "trial with the aid of
commissioners is a substantial right that may not be done away with capriciously or for no
reason at all". 12 It was also emphasized therein that although ascertainment of just
compensation is a judicial prerogative, the commissioners' findings may only be disregarded
or substituted with the trial court's own estimation of the property's value only if the
commissioners have applied illegal principles to the evidence submitted to them, where they
have disregarded a clear preponderance of evidence, or where the amount allowed is either
grossly inadequate or excessive. Thus, the Court concluded in Forfom that: cda
The judge should not have made a determination of just compensation
without first having appointed the required commissioners who would initially
ascertain and report the just compensation for the property involved. This being
the case, we find the valuation made by the trial court to be ineffectual, not
having been made in accordance with the procedure provided for by the
rules. 13
Verily, the determination of just compensation for property taken for public use must
be done not only for the protection of the landowners' interest but also for the good of the
public. In Republic v. Court of Appeals, 14 the Court explained as follows:
 171

The concept of just compensation, however, does not imply fairness to

the property owner alone. Compensation must be just not only to the
property owner, but also to the public which ultimately bears the cost of
expropriation. 15
It is quite clear that the Court, in formulating and promulgating the procedure provided for in
Sections 5 and 6, Rule 67, found this to be the fairest way of arriving at the just compensation
to be paid for private property taken for public use.
With regard to the time as to when just compensation should be fixed, it is settled
jurisprudence that where property was taken without the benefit of expropriation proceedings,
and its owner files an action for recovery of possession thereof before the commencement of
expropriation proceedings, it is the value of the property at the time of taking that is
controlling. 16 Explaining the reason for this rule in Manila International Airport Authority v.
Rodriguez, 17 the Court, quoting Ansaldo v. Tantuico, Jr., 18 stated, thus:
The reason for the rule, as pointed out in Republic v. Lara, is that —
. . . [w]here property is taken ahead of the filing of the condemnation
proceedings, the value thereof may be enchanced by the public purpose for
which it is taken; the entry by the plaintiff upon the property may have
depreciated its value thereby; or, there may have been a natural increase
in the value of the property from the time the complaint is filed, due to
general economic conditions. The owner of private property should be
compensated only for what he actually loses; it is not intended that his
compensation shall extend beyond his loss or injury. And what he loses is
only the actual value of his property at the time it is taken. This is the only
way that compensation to be paid can be truly just; i.e., 'just not only to the
individual whose property is taken', 'but to the public, which is to pay for it'. 19
In this case, the trial court should have fixed just compensation for the property at its value as
of the time of taking in 1980, but there is nothing on record showing the value of the property
at that time. The trial court, therefore, clearly erred when it based its valuation for the subject
land on the price paid for properties in the same location, taken by the city government only
sometime in the year 1994. DEHaTC
However, in taking respondents' property without the benefit of expropriation
proceedings and without payment of just compensation, the City of Pasig clearly acted in utter
disregard of respondents' proprietary rights. Such conduct cannot be countenanced by the
Court. For said illegal taking, the City of Pasig should definitely be held liable for damages to
respondents. Again, in Manila International Airport Authority v. Rodriguez, 20 the Court held
that the government agency's illegal occupation of the owner's property for a very long period
of time surely resulted in pecuniary loss to the owner. The Court held as follows:
Such pecuniary loss entitles him to adequate compensation in the
form of actual or compensatory damages, which in this case should be the
legal interest (6%) on the value of the land at the time of taking, from said
point up to full payment by the MIAA. This is based on the principle that
interest "runs as a matter of law and follows from the right of the landowner to be
placed in as good position as money can accomplish, as of the date of the
taking".
The award of interest renders unwarranted the grant of back
rentals as extended by the courts below. In Republic v. Lara, et al., the Court
ruled that the indemnity for rentals is inconsistent with a property owner's right to
be paid legal interest on the value of the property, for if the condemnor is to pay
the compensation due to the owners from the time of the actual taking of their
property, the payment of such compensation is deemed to retroact to the actual
taking of the property; and, hence, there is no basis for claiming rentals from the
time of actual taking. More explicitly, the Court held in Republic v.
Garcellano that:
The uniform rule of this Court, however, is that this compensation
must be, not in the form of rentals, but by way of 'interest from the date
that the company [or entity] exercising the right of eminent domain take
possession of the condemned lands, and the amounts granted by the court
 172

shall cease to earn interest only from the moment they are paid to the
owners or deposited in court . . . .
xxx xxx xxx
For more than twenty (20) years, the MIAA occupied the subject lot
without the benefit of expropriation proceedings and without the MIAA exerting
efforts to ascertain ownership of the lot and negotiating with any of the owners
of the property. To our mind, these are wanton and irresponsible acts which
should be suppressed and corrected. Hence, the award of exemplary
damages and attorneys fees is in order. However, while Rodriguez is entitled
to such exemplary damages and attorney's fees, the award granted by the courts
below should be equitably reduced. We hold that Rodriguez is entitled only
to P200,000.00 as exemplary damages, and attorney's fees equivalent to one
percent (1%) of the amount due. 21
Lastly, with regard to the liability of petitioners Vicente P. Eusebio, Lorna A. Bernardo,
and Victor Endriga — all officials of the city government — the Court cannot uphold the ruling
that said petitioners are jointly liable in their personal capacity with the City of Pasig for
payments to be made to respondents. There is a dearth of evidence which would show that
said petitioners were already city government officials in 1980 or that they had any
involvement whatsoever in the illegal taking of respondents' property. Thus, any liability to
respondents is the sole responsibility of the City of Pasig. ADHcTE
IN VIEW OF THE FOREGOING, the petition is PARTIALLY GRANTED. The Decision
of the Court of Appeals dated November 28, 2003 is MODIFIED to read as follows:
1. The valuation of just compensation and award of back rentals made by the
Regional Trial Court of Pasig City, Branch 155 in Civil Case No. 65937
are hereby SET ASIDE. The City of Pasig, represented by its duly-
authorized officials, is DIRECTED to institute the appropriate
expropriation action over the subject parcel of land within fifteen (15) days
from finality of this Decision, for the proper determination of just
compensation due to respondents, with interest at the legal rate of six
(6%) percent per annum from the time of taking until full payment is made.
2. The City of Pasig is ORDERED to pay respondents the amounts of
P200,000.00 as exemplary damages and P200,000.00 as attorney's
fees.
No costs.
SO ORDERED.
||| (Eusebio v. Luis, G.R. No. 162474, [October 13, 2009], 618 PHIL 586-601)

G.R. No. 146587. July 2, 2002.]

REPUBLIC OF THE PHILIPPINES, represented by the General Manager of
the PHILIPPINE INFORMATION AGENCY (PIA), petitioner, vs. THE
HONORABLE COURT OF APPEALS and the HEIRS OF LUIS SANTOS as
herein represented by DR. SABINO SANTOS and PURIFICACION SANTOS
IMPERIAL, respondents.
DECISION
VITUG, J p:
Petitioner instituted expropriation proceedings on 19 September 1969 before the Regional
Trial Court ("RTC") of Bulacan, docketed as Civil Cases No. 3839-M, No. 3840-M, No. 3841-M
and No. 3842-M, covering a total of 544,980 square meters of contiguous land situated along
MacArthur Highway, Malolos, Bulacan, to be utilized for the continued broadcast operation and
use of radio transmitter facilities for the "Voice of the Philippines" project. Petitioner, through the
Philippine Information Agency ("PIA"), took over the premises after the previous lessee, the "Voice
of America," had ceased its operations thereat. Petitioner made a deposit of P517,558.80, the
sum provisionally fixed as being the reasonable value of the property. On 26 February 1979, or
more than nine years after the institution of the expropriation proceedings, the trial court issued
this order — DAHaTc
WHEREFORE, premises considered, judgment is hereby
rendered: IDASHa
 173

"Condemning the properties of the defendants in Civil Cases Nos. 3839-

M to 3842-M located at KM 43, MacArthur Highway, Malolos, Bulacan and
covered by several transfer certificates of title appearing in the Commissioners'
Appraisal Report consisting of the total area of 544,980 square meters, as
indicated in plan, Exhibit A, for plaintiff, also marked as Exhibit I for the
defendants, and as Appendix 'A' attached to the Commissioners' Appraisal
Report, for the purpose stated by the plaintiff in its complaint;
"Ordering the plaintiff to pay the defendants the just compensation for
said property which is the fair market value of the land condemned, computed at
the rate of six pesos (P6.00) per square meter, with legal rate of interest from
September 19, 1969, until fully paid; and
"Ordering the plaintiff to pay the costs of suit, which includes the aforesaid
fees of commissioners, Atty. Victorino P. Evangelista and Mr. Pablo Domingo." 1
The bone of contention in the instant controversy is the 76,589-square meter property
previously owned by Luis Santos, predecessor-in-interest of herein respondents, which forms part
of the expropriated area.
It would appear that the national government failed to pay to herein respondents the
compensation pursuant to the foregoing decision, such that a little over five years later, or on 09
May 1984, respondents filed a manifestation with a motion seeking payment for the expropriated
property. On 07 June 1984, the Bulacan RTC, after ascertaining that the heirs remained unpaid
in the sum of P1,058,655.05, issued a writ of execution served on the plaintiff, through the Office
of the Solicitor General, for the implementation thereof. When the order was not complied with,
respondents again filed a motion urging the trial court to direct the provincial treasurer of Bulacan
to release to them the amount of P72,683.55, a portion of the sum deposited by petitioner at the
inception of the expropriation proceedings in 1969, corresponding to their share of the deposit.
The trial court, in its order of 10 July 1984, granted the motion.
In the meantime, President Joseph Ejercito Estrada issued Proclamation No.
22, 2 transferring 20 hectares of the expropriated property to the Bulacan State University for the
expansion of its facilities and another 5 hectares to be used exclusively for the propagation of the
Philippine carabao. The remaining portion was retained by the PIA. This fact notwithstanding, and
despite the 1984 court order, the Santos heirs remained unpaid, and no action was taken on their
case until 16 September 1999 when petitioner filed its manifestation and motion to permit the
deposit in court of the amount of P4,664,000.00 by way of just compensation for the expropriated
property of the late Luis Santos subject to such final computation as might be approved by the
court. This time, the Santos heirs, opposing the manifestation and motion, submitted a counter-
motion to adjust the compensation from P6.00 per square meter previously fixed in the 1979
decision to its current zonal valuation pegged at P5,000.00 per square meter or, in the alternative,
to cause the return to them of the expropriated property. On 01 March 2000, the Bulacan RTC
ruled in favor of respondents and issued the assailed order, vacating its decision of 26 February
1979 and declaring it to be unenforceable on the ground of prescription —
"WHEREFORE, premises considered, the court hereby:
"1) declares the decision rendered by this Court on February 26, 1979 no
longer enforceable, execution of the same by either a motion or an independent
action having already prescribed in accordance with Section 6, Rule 39 of both
the 1964 Revised Rules of Court and the 1997 Rules of Civil Procedure;
"2) denies the plaintiff's Manifestation and Motion to Permit Plaintiff to
Deposit in Court Payment for Expropriated Properties dated September 16, 1999
for the reason stated in the next preceding paragraph hereof; and
"3) orders the return of the expropriated property of the late defendant
Luis Santos to his heirs conformably with the ruling of the Supreme Court
in Government of Sorsogon vs. Vda. De Villaroya, 153 SCRA 291, without
prejudice to any case which the parties may deem appropriate to institute in
relation with the amount already paid to herein oppositors and the purported
transfer of a portion of the said realty to the Bulacan State University pursuant
to Proclamation No. 22 issued by President Joseph Ejercito." 3
 174

Petitioner brought the matter up to the Court of Appeals but the petition was outrightly
denied. It would appear that the denial was based on Section 4, Rule 65, of the 1997 Rules of
Civil Procedure which provided that the filing of a motion for reconsideration in due time after filing
of the judgment, order or resolution interrupted the running of the sixty-day period within which to
file a petition for certiorari; and that if a motion for reconsideration was denied, the aggrieved party
could file the petition only within the remaining period, but which should not be less than five days
in any event, reckoned from the notice of such denial. The reglementary period, however, was
later modified by A.M. No. 00-2-03 S.C., now reading thusly:
"Sec. 4. When and where petition filed. — The petition shall be filed not
later than sixty (60) days from notice of the judgment, order or resolution. In case
a motion for reconsideration or new trial is timely filed, whether such motion is
required or not, the sixty (60) day period shall be counted from notice of the
denial of said motion."
The amendatory provision, being curative in nature, should be made applicable to all cases
still pending with the courts at the time of its effectivity.
In Narzoles vs. NLRC, 4 the Court has said:
The Court has observed that Circular No. 39-98 has generated
tremendous confusion resulting in the dismissal of numerous cases for late filing.
This may have been because, historically, i.e., even before the 1997 revision to
the Rules of Civil Procedure, a party had a fresh period from receipt of the order
denying the motion for reconsideration to file a petition for certiorari. Were it not
for the amendments brought about by Circular No. 39-98, the cases so dismissed
would have been resolved on the merits. Hence, the Court deemed it wise to
revert to the old rule allowing a party a fresh 60-day period from notice of the
denial of the motion for reconsideration to file a petition for certiorari. . . .
"The latest amendments took effect on September 1, 2000, following its
publication in the Manila Bulletin on August 4, 2000 and in the Philippine Daily
Inquirer on August 7, 2000, two newspapers of general circulation.
"In view of its purpose, the Resolution further amending Section 4, Rule
65, can only be described as curative in nature, and the principles governing
curative statutes are applicable.
"Curative statutes are enacted to cure defects in a prior law or to validate
legal proceedings which would otherwise be void for want of conformity with
certain legal requirements. (Erectors, Inc. vs. National Labor Relations
Commission, 256 SCRA 629 [1996].) They are intended to supply defects,
abridge superfluities and curb certain evils. They are intended to enable persons
to carry into effect that which they have designed or intended, but has failed of
expected legal consequence by reason of some statutory disability or irregularity
in their own action. They make valid that which, before the enactment of the
statute was invalid. Their purpose is to give validity to acts done that would have
been invalid under existing laws, as if existing laws have been complied with.
(Batong Buhay Gold Mines, Inc. vs. Dela Serna, 312 SCRA 22 [1999].) Curative
statutes, therefore, by their very essence, are retroactive. (Municipality of San
Narciso, Quezon vs. Mendez, Sr., 239 SCRA 11 [1994].)" 5
At all events, petitioner has a valid point in emphasizing the "public nature" of the
expropriated property. The petition being imbued with public interest, the Court has resolved to
give it due course and to decide the case on its merits.
Assailing the finding of prescription by the trial court, petitioner here posited that a motion
which respondents had filed on 17 February 1984, followed up by other motions subsequent
thereto, was made within the reglementary period that thereby interrupted the 5-year prescriptive
period within which to enforce the 1979 judgment. Furthermore, petitioner claimed, the receipt by
respondents of partial compensation in the sum of P72,683.55 on 23 July 1984 constituted partial
compliance on the part of petitioners and effectively estopped respondents from invoking
prescription expressed in Section 6, Rule 39, of the Rules of Court. 6
In opposing the petition, respondents advanced the view that pursuant to Section 6, Rule
39, of the Rules of Court, the failure of petitioner to execute the judgment, dated 26 February
 175

1979, within five years after it had become final and executory, rendered it unenforceable by mere
motion. The motion for payment, dated 09 May 1984, as well as the subsequent disbursement to
them of the sum of P72,683.55 by the provincial treasurer of Bulacan, could not be considered as
having interrupted the five-year period, since a motion, to be considered otherwise, should instead
be made by the prevailing party, in this case by petitioner. Respondents maintained that the
P72,683.55 paid to them by the provincial treasurer of Bulacan pursuant to the 1984 order of the
trial court was part of the initial deposit made by petitioner when it first entered possession of the
property in 1969 and should not be so regarded as a partial payment. Respondents further
questioned the right of PIA to transfer ownership of a portion of the property to the Bulacan State
University even while the just compensation due the heirs had yet to be finally settled.
The right of eminent domain is usually understood to be an ultimate right of the sovereign
power to appropriate any property within its territorial sovereignty for a public
purpose. 7 Fundamental to the independent existence of a State, it requires no recognition by the
Constitution, whose provisions are taken as being merely confirmatory of its presence and as
being regulatory, at most, in the due exercise of the power. In the hands of the legislature, the
power is inherent, its scope matching that of taxation, even that of police power itself, in many
respects. It reaches to every form of property the State needs for public use and, as an old case
so puts it, all separate interests of individuals in property are held under a tacit agreement or
implied reservation vesting upon the sovereign the right to resume the possession of the property
whenever the public interest so requires it. 8
The ubiquitous character of eminent domain is manifest in the nature of the expropriation
proceedings. Expropriation proceedings are not adversarial in the conventional sense, for the
condemning authority is not required to assert any conflicting interest in the property. Thus, by
filing the action, the condemnor in effect merely serves notice that it is taking title and possession
of the property, and the defendant asserts title or interest in the property, not to prove a right to
possession, but to prove a right to compensation for the taking. 9
Obviously, however, the power is not without its limits: first, the taking must be for public
use, and second, that just compensation must be given to the private owner of the
property. 10 These twin proscriptions have their origin in the recognition of the necessity for
achieving balance between the State interests, on the one hand, and private rights, upon the other
hand, by effectively restraining the former and affording protection to the latter. 11 In determining
"public use," two approaches are utilized — the first is public employment or the actual use by the
public, and the second is public advantage or benefit. 12 It is also useful to view the matter as
being subject to constant growth, which is to say that as society advances, its demands upon the
individual so increases, and each demand is a new use to which the resources of the individual
may be devoted. 13
The expropriated property has been shown to be for the continued utilization by the PIA,
a significant portion thereof being ceded for the expansion of the facilities of the Bulacan State
University and for the propagation of the Philippine carabao, themselves in line with the
requirements of public purpose. Respondents question the public nature of the utilization by
petitioner of the condemned property, pointing out that its present use differs from the purpose
originally contemplated in the 1969 expropriation proceedings. The argument is of no moment.
The property has assumed a public character upon its expropriation. Surely, petitioner, as the
condemnor and as the owner of the property, is well within its rights to alter and decide the use
of that property, the only limitation being that it be for public use, which, decidedly, it is.
In insisting on the return of the expropriated property, respondents would exhort on the
pronouncement in Provincial Government of Sorsogon vs. Vda. de Villaroya 14 where the unpaid
landowners were allowed the alternative remedy of recovery of the property there in question. It
might be borne in mind that the case involved the municipal government of Sorsogon, to which
the power of eminent domain is not inherent, but merely delegated and of limited application. The
grant of the power of eminent domain to local governments under Republic Act No.
7160 15 cannot be understood as being the pervasive and all-encompassing power vested in the
legislative branch of government. For local governments to be able to wield the power, it must, by
enabling law, be delegated to it by the national legislature, but even then, this delegated power of
eminent domain is not, strictly speaking, a power of eminent, but only of inferior, domain or only
as broad or confined as the real authority would want it to be. 16
Thus, in Valdehueza vs. Republic 17 where the private landowners had remained unpaid
ten years after the termination of the expropriation proceedings, this Court ruled —
 176

"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. . . . 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.
"Said relief may be granted under plaintiffs' prayer for: 'such other
remedies, which may be deemed just and equitable under the premises.'" 18
The Court proceeded to reiterate its pronouncement in Alfonso vs. Pasay City 19 where the
recovery of possession of property taken for public use prayed for by the unpaid landowner
was denied even while no requisite expropriation proceedings were first instituted. The
landowner was merely given the relief of recovering compensation for his property computed
at its market value at the time it was taken and appropriated by the State.
The judgment rendered by the Bulacan RTC in 1979 on the expropriation proceedings
provides not only for the payment of just compensation to herein respondents but likewise
adjudges the property condemned in favor of petitioner over which parties, as well as their privies,
are bound. 20 Petitioner has occupied, utilized and, for all intents and purposes, exercised
dominion over the property pursuant to the judgment. The exercise of such rights vested to it as
the condemnee indeed has amounted to at least a partial compliance or satisfaction of the 1979
judgment, thereby preempting any claim of bar by prescription on grounds of non-execution. In
arguing for the return of their property on the basis of non-payment, respondents ignore the fact
that the right of the expropriatory authority is far from that of an unpaid seller in ordinary sales, to
which the remedy of rescission might perhaps apply. An in rem proceeding, condemnation acts
upon the property. 21 After condemnation, the paramount title is in the public under a new and
independent title; 22 thus, by giving notice to all claimants to a disputed title, condemnation
proceedings provide a judicial process for securing better title against all the world than may be
obtained by voluntary conveyance. 23
Respondents, in arguing laches against petitioner did not take into account that the same
argument could likewise apply against them. Respondents first instituted proceedings for payment
against petitioner on 09 May 1984, or five years after the 1979 judgment had become final. The
unusually long delay in bringing the action to compel payment against herein petitioner would
militate against them. Consistently with the rule that one should take good care of his own
concern, respondents should have commenced the proper action upon the finality of the judgment
which, indeed, resulted in a permanent deprivation of their ownership and possession of the
property. 24
The constitutional limitation of "just compensation" is considered to be the sum equivalent
to the market value of the property, broadly described to be the price fixed by the seller in open
market in the usual and ordinary course of legal action and competition or the fair value of the
property as between one who receives, and one who desires to sell, it fixed at the time of the
actual taking by the government. 25 Thus, if property is taken for public use before compensation
is deposited with the court having jurisdiction over the case, the final compensation must include
interests on its just value to be computed from the time the property is taken to the time when
compensation is actually paid or deposited with the court. 26 In fine, between the taking of the
property and the actual payment, legal interests accrue in order to place the owner in a position
as good as (but not better than) the position he was in before the taking occurred. 27
The Bulacan trial court, in its 1979 decision, was correct in imposing interests on the zonal
value of the property to be computed from the time petitioner instituted condemnation proceedings
and "took" the property in September 1969. This allowance of interest on the amount found to be
the value of the property as of the time of the taking computed, being an effective forbearance, at
12% per annum 28 should help eliminate the issue of the constant fluctuation and inflation of the
value of the currency over time. 29 Article 1250 of the Civil Code, providing that, in case of
extraordinary inflation or deflation, the value of the currency at the time of the establishment of
the obligation shall be the basis for the payment when no agreement to the contrary is stipulated,
has strict application only to contractual obligations. 30 In other words, a contractual agreement
is needed for the effects of extraordinary inflation to be taken into account to alter the value of the
currency. 31
 177

All given, the trial court of Bulacan in issuing its order, dated 01 March 2000, vacating its
decision of 26 February 1979 has acted beyond its lawful cognizance, the only authority left to it
being to order its execution. Verily, private respondents, although not entitled to the return of the
expropriated property, deserve to be paid promptly on the yet unpaid award of just compensation
already fixed by final judgment of the Bulacan RTC on 26 February 1979 at P6.00 per square
meter, with legal interest thereon at 12% per annum computed from the date of "taking" of the
property, i.e., 19 September 1969, until the due amount shall have been fully paid.
WHEREFORE, the petition is GRANTED. The resolution, dated 31 July 2000, of the Court
of Appeals dismissing the petition for certiorari, as well as its resolution of 04 January 2001
denying the motion for reconsideration, and the decision of the Regional Trial Court of Bulacan,
dated 01 March 2000, are SET ASIDE. Let the case be forthwith remanded to the Regional Trial
Court of Bulacan for the proper execution of its decision promulgated on 26 February 1979 which
is hereby REINSTATED. No costs. ITaESD
SO ORDERED.
||| (Republic v. Court of Appeals, G.R. No. 146587, [July 2, 2002], 433 PHIL 106-124)

[G.R. No. 185091. August 9, 2010.]

REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE DEPARTMENT
OF EDUCATION DIVISION OF LIPA CITY (FOR PANINSINGIN PRIMARY
SCHOOL), petitioner, vs. PRIMO MENDOZA and MARIA
LUCERO, respondents.

DECISION
ABAD, J p:
This case is about the propriety of filing an ejectment suit against the Government for
its failure to acquire ownership of a privately owned property that it had long used as a school
site and to pay just compensation for it.
The Facts and the Case
Paninsingin Primary School (PPS) is a public school operated by petitioner Republic
of the Philippines (the Republic) through the Department of Education. PPS has been using
1,149 square meters of land in Lipa City, Batangas since 1957 for its school. But the property,
a portion of Lots 1923 and 1925, were registered in the name of respondents Primo and Maria
Mendoza (the Mendozas) under Transfer Certificate of Title (TCT) T-11410. 1
On March 27, 1962 the Mendozas caused Lots 1923 and 1925 to be consolidated and
subdivided into four lots, as follows:
Lot 1 — 292 square meters in favor of Claudia Dimayuga;
Lot 2 — 292 square meters in favor of the Mendozas;
Lot 3 — 543 square meters in favor of Gervacio Ronquillo; and
Lot 4 — 1,149 square meters in favor of the City Government of Lipa. 2
As a result of subdivision, the Register of Deeds partially cancelled TCT T-11410 and
issued new titles for Lots 1 and 3 in favor of Dimayuga and Ronquillo, respectively. Lot 2
remained in the name of the Mendozas but no new title was issued in the name of the City
Government of Lipa for Lot 4. 3 Meantime, PPS remained in possession of the
property. IaESCH
The Republic claimed that, while no title was issued in the name of the City
Government of Lipa, the Mendozas had relinquished to it their right over the school lot as
evidenced by the consolidation and subdivision plan. Further, the property had long been tax-
declared in the name of the City Government and PPS built significant, permanent
improvements on the same. These improvements had also been tax-declared. 4
The Mendozas claim, on the other hand, that although PPS sought permission from
them to use the property as a school site, they never relinquished their right to it. They allowed
PPS to occupy the property since they had no need for it at that time. Thus, it has remained
registered in their name under the original title, TCT T-11410, which had only been partially
cancelled.
 178

On November 6, 1998 the Mendozas wrote PPS, demanding that it vacate the
disputed property. 5 When PPS declined to do so, on January 12, 1999 the Mendozas filed a
complaint with the Municipal Trial Court in Cities (MTCC) of Lipa City in Civil Case 0002-99
against PPS for unlawful detainer with application for temporary restraining order and writ of
preliminary injunction. 6
On July 13, 1999 the MTCC rendered a decision, dismissing the complaint on ground
of the Republic's immunity from suit. 7 The Mendozas appealed to the Regional Trial Court
(RTC) of Lipa City which ruled that the Republic's consent was not necessary since the action
before the MTCC was not against it. 8
In light of the RTC's decision, the Mendozas filed with the MTCC a motion to render
judgment in the case before it. 9 The MTCC denied the motion, however, saying that
jurisdiction over the case had passed to the RTC upon appeal. 10 Later, the RTC remanded
the case back to the MTCC, 11 which then dismissed the case for insufficiency of
evidence. 12 Consequently, the Mendozas once again appealed to the RTC in Civil Case
2001-0236.
On June 27, 2006 the RTC found in favor of the Mendozas and ordered PPS to vacate
the property. It held that the Mendozas had the better right of possession since they were its
registered owners. PPS, on the other hand, could not produce any document to prove the
transfer of ownership of the land in its favor. 13 PPS moved for reconsideration, but the RTC
denied it.
The Republic, through the Office of the Solicitor General (OSG), appealed the RTC
decision to the Court of Appeals (CA) in CA-G.R. SP 96604 on the grounds that: (1) the
Mendozas were barred by laches from recovering possession of the school lot; (2) sufficient
evidence showed that the Mendozas relinquished ownership of the subject lot to the City
Government of Lipa City for use as school; and (3) Lot 4, Pcs-5019 has long been declared
in the name of the City Government since 1957 for taxation purposes. 14
In a decision dated February 26, 2008, the CA affirmed the RTC
decision. 15 Upholding the Torrens system, it emphasized the indefeasibility of the Mendozas'
registered title and the imprescriptible nature of their right to eject any person occupying the
property. The CA held that, this being the case, the Republic's possession of the property
through PPS should be deemed merely a tolerated one that could not ripen into
ownership. DIEcHa
The CA also rejected the Republic's claim of ownership since it presented no
documentary evidence to prove the transfer of the property in favor of the government.
Moreover, even assuming that the Mendozas relinquished their right to the property in 1957
in the government's favor, the latter never took steps to have the title to the property issued in
its name or have its right as owner annotated on the Mendozas' title. The CA held that, by its
omissions, the Republic may be held in estoppel to claim that the Mendozas were barred by
laches from bringing its action.
With the denial of its motion for reconsideration, the Republic has taken recourse to
this Court via petition for review on certiorari under Rule 45.
The Issue Presented
The issue in this case is whether or not the CA erred in holding that the Mendozas were
entitled to evict the Republic from the subject property that it had used for a public school.
The Court's Ruling
A decree of registration is conclusive upon all persons, including the Government of
the Republic and all its branches, whether or not mentioned by name in the application for
registration or its notice. 16 Indeed, title to the land, once registered, is imprescriptible. 17 No
one may acquire it from the registered owner by adverse, open, and notorious
possession. 18 Thus, to a registered owner under the Torrens system, the right to recover
possession of the registered property is equally imprescriptible since possession is a mere
consequence of ownership.
Here, the existence and genuineness of the Mendozas' title over the property has not
been disputed. While the consolidation and subdivision plan of Lots 1923 and 1925 shows
that a 1,149 square meter lot had been designated to the City Government, the Republic itself
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admits that no new title was issued to it or to any of its subdivisions for the portion that PPS
had been occupying since 1957. 19
That the City Government of Lipa tax-declared the property and its improvements in
its name cannot defeat the Mendozas' title. This Court has allowed tax declarations to stand
as proof of ownership only in the absence of a certificate of title. 20 Otherwise, they have little
evidentiary weight as proof of ownership. 21
The CA erred, however, in ordering the eviction of PPS from the property that it had
held as government school site for more than 50 years. The evidence on record shows that
the Mendozas intended to cede the property to the City Government of Lipa permanently. In
fact, they allowed the city to declare the property in its name for tax purposes. And when they
sought in 1962 to have the bigger lot subdivided into four, the Mendozas earmarked Lot 4,
containing 1,149 square meters, for the City Government of Lipa. Under the circumstances, it
may be assumed that the Mendozas agreed to transfer ownership of the land to the
government, whether to the City Government of Lipa or to the Republic, way back but never
got around to do so and the Republic itself altogether forgot about it. Consequently, the
Republic should be deemed entitled to possession pending the Mendozas' formal transfer of
ownership to it upon payment of just compensation. aHICDc
The Court holds that, where the owner agrees voluntarily to the taking of his property
by the government for public use, he thereby waives his right to the institution of a formal
expropriation proceeding covering such property. Further, as the Court also held in Eusebio
v. Luis, 22 the failure for a long time of the owner to question the lack of expropriation
proceedings covering a property that the government had taken constitutes a waiver of his
right to gain back possession. The Mendozas' remedy is an action for the payment of just
compensation, not ejectment.
In Republic of the Philippines v. Court of Appeals, 23 the Court affirmed the RTC's
power to award just compensation even in the absence of a proper expropriation proceeding.
It held that the RTC can determine just compensation based on the evidence presented before
it in an ordinary civil action for recovery of possession of property or its value and damages.
As to the time when just compensation should be fixed, it is settled that where property was
taken without the benefit of expropriation proceedings and its owner filed an action for
recovery of possession before the commencement of expropriation proceedings, it is the value
of the property at the time of taking that is controlling. 24
Since the MTCC did not have jurisdiction either to evict the Republic from the land it
had taken for public use or to hear and adjudicate the Mendozas' right to just compensation
for it, the CA should have ordered the complaint for unlawful detainer dismissed without
prejudice to their filing a proper action for recovery of such compensation.
WHEREFORE, the Court partially GRANTS the petition, REVERSES the February
26, 2008 decision and the October 20, 2008 resolution of the Court of Appeals in CA-G.R.
96604, and ORDERS the dismissal of respondents Primo and Maria Mendoza's action for
eviction before the Municipal Trial Court in Cities of Lipa City in Civil Case 0002-99 without
prejudice to their filing an action for payment of just compensation against the Republic of the
Philippines or, when appropriate, against the City of Lipa.
SO ORDERED.
||| (Republic v. Mendoza, G.R. No. 185091, [August 9, 2010], 641 PHIL 562-569)