[G.R. No. 127820.

July 20, 1998]

MUNICIPALITY OF PARAAQUE, petitioner, vs. V.M. REALTY CORPORATION, respondent.
DECISION

PANGANIBAN, J.:
A local government unit (LGU), like the Municipality of Paraaque, cannot authorize an expropriation of private property
through a mere resolution of its lawmaking body. The Local Government Code expressly and clearly requires an ordinance or a local
law for the purpose. A resolution that merely expresses the sentiment or opinion of the Municipal Council will not suffice. On the other
hand, the principle of res judicata does not bar subsequent proceedings for the expropriation of the same property when all the legal
requirements for its valid exercise are complied with.
Statement of the Case
These principles are applied by this Court in resolving this petition for review on certiorari of the July 22, 1996 Decision[1] of the Court
of Appeals[2] in CA GR CV No. 48048, which affirmed in toto[3] the Regional Trial Courts August 9, 1994 Resolution.[4] The trial court
dismissed the expropriation suit as follows:
The right of the plaintiff to exercise the power of eminent domain is not disputed. However, such right may be exercised only
pursuant to an Ordinance (Sec. 19, R.A. No. 7160). In the instant case, there is no such ordinance passed by the Municipal Council of
Paraaque enabling the Municipality, thru its Chief Executive, to exercise the power of eminent domain. The complaint, therefore,
states no cause of action.
Assuming that plaintiff has a cause of action, the same is barred by a prior judgment. On September 29, 1987, the plaintiff
filed a complaint for expropriation involving the same parcels of land which was docketed as Civil Case No. 17939 of this Court (page
26, record). Said case was dismissed with prejudice on May 18, 1988 (page 39, record). The order of dismissal was not appealed,
hence, the same became final. The plaintiff can not be allowed to pursue the present action without violating the principle of [r]es
[j]udicata. While defendant in Civil Case No. 17939 was Limpan Investment Corporation, the doctrine of res judicata still applies
because the judgment in said case (C.C. No. 17939) is conclusive between the parties and their successors-in-interest (Vda. de Buncio
vs. Estate of the late Anita de Leon). The herein defendant is the successor-in-interest of Limpan Investment Corporation as shown by
the Deed of Assignment Exchange executed on June 13, 1990.
WHEREFORE, defendants motion for reconsideration is hereby granted. The order dated February 4, 1994 is vacated and set aside.
This case is hereby dismissed. No pronouncement as to costs.
SO ORDERED.
Factual Antecedents
Pursuant to Sangguniang Bayan Resolution No. 93-95, Series of 1993,[6] the Municipality of Paraaque filed on September 20,
1993, a Complaint for expropriation[7] against Private Respondent V.M. Realty Corporation over two parcels of land (Lots 2-A-2 and 2B-1 of Subdivision Plan Psd-17917), with a combined area of about 10,000 square meters, located at Wakas, San Dionisio, Paraaque,
Metro Manila, and covered by Torrens Certificate of Title No. 48700. Allegedly, the complaint was filed for the purpose of alleviating
the living conditions of the underprivileged by providing homes for the homeless through a socialized housing project.[8]
Parenthetically, it was also for this stated purpose that petitioner, pursuant to its Sangguniang Bayan Resolution No. 577, Series of
1991,[9] previously made an offer to enter into a negotiated sale of the property with private respondent, which the latter did not
accept.[10]
Finding the Complaint sufficient in form and substance, the Regional Trial Court of Makati, Branch 134, issued an Order dated
January 10, 1994,[11] giving it due course. Acting on petitioners motion, said court issued an Order dated February 4, 1994,[12]
authorizing petitioner to take possession of the subject property upon deposit with its clerk of court of an amount equivalent to 15
percent of its fair market value based on its current tax declaration.
On February 21, 1994, private respondent filed its Answer containing affirmative defenses and a counterclaim,[13] alleging
in the main that (a) the complaint failed to state a cause of action because it was filed pursuant to a resolution and not to an
ordinance as required by RA 7160 (the Local Government Code); and (b) the cause of action, if any, was barred by a prior judgment or
res judicata. On private respondents motion, its Answer was treated as a motion to dismiss.[14] On March 24, 1994,[15] petitioner
filed its opposition, stressing that the trial courts Order dated February 4, 1994 was in accord with Section 19 of RA 7160, and that the
principle of res judicata was not applicable.
Thereafter, the trial court issued its August 9, 1994 Resolution[16] nullifying its February 4, 1994 Order and dismissing the
case. Petitioners motions for reconsideration and transfer of venue were denied by the trial court in a Resolution dated December 2,
1994.[17] Petitioner then appealed to Respondent Court, raising the following issues:
1. Whether or not the Resolution of the Paraaque Municipal Council No. 93-95, Series of 1993 is a substantial compliance of the
statutory requirement of Section 19, R.A. 7180 [sic] in the exercise of the power of eminent domain by the plaintiff-appellant.
2. Whether or not the complaint in this case states no cause of action.
3. Whether or not the strict adherence to the literal observance to the rule of procedure resulted in technicality standing in the way of
substantial justice.
4. Whether or not the principle of res judicata is applicable to the present case.[18]
As previously mentioned, the Court of Appeals affirmed in toto the trial courts Decision. Respondent Court, in its assailed
Resolution promulgated on January 8, 1997,[19] denied petitioners Motion for Reconsideration for lack of merit.
Hence, this appeal.[20]
The Issues
Before this Court, petitioner posits two issues, viz.:
1. A resolution duly approved by the municipal council has the same force and effect of an ordinance and will not deprive an
expropriation case of a valid cause of action.
2. The principle of res judicata as a ground for dismissal of case is not applicable when public interest is primarily involved.
[21]
The Courts Ruling
The petition is not meritorious.
First Issue:

Resolution Different from an Ordinance

Petitioner contends that a resolution approved by the municipal council for the purpose of initiating an expropriation case
substantially complies with the requirements of the law[22] because the terms ordinance and resolution are synonymous for the
purpose of bestowing authority [on] the local government unit through its chief executive to initiate the expropriation proceedings in
court in the exercise of the power of eminent domain.[23] Petitioner seeks to bolster this contention by citing Article 36, Rule VI of the
Rules and Regulations Implementing the Local Government Code, which provides: If the LGU fails to acquire a private property for
public use, purpose, or welfare through purchase, the LGU may expropriate said property through a resolution of the Sanggunian
authorizing its chief executive to initiate expropriation proceedings.[24] (Italics supplied.)
The Court disagrees. The power of eminent domain is lodged in the legislative branch of government, which may delegate
the exercise thereof to LGUs, other public entities and public utilities.[25] An LGU may therefore exercise the power to expropriate
private property only when authorized by Congress and subject to the latters control and restraints, imposed through the law
conferring the power or in other legislations.[26] In this case, Section 19 of RA 7160, which delegates to LGUs the power of eminent
domain, also lays down the parameters for its exercise. It provides as follows:
Section 19. Eminent Domain. A local government unit may, through its chief executive and acting pursuant to an ordinance,
exercise the power of eminent domain for public use, or purpose, or welfare for the benefit of the poor and the landless, upon
payment of just compensation, pursuant to the provisions of the Constitution and pertinent laws: Provided, however, That the power
of eminent domain may not be exercised unless a valid and definite offer has been previously made to the owner, and such offer was
not accepted: Provided, further, That the local government unit may immediately take possession of the property upon the filing of
the expropriation proceedings and upon making a deposit with the proper court of at least fifteen percent (15%) of the fair market
value of the property based on the current tax declaration of the property to be expropriated: Provided, finally, That, the amount to
be paid for the expropriated property shall be determined by the proper court, based on the fair market value at the time of the
taking of the property. (Emphasis supplied)
Thus, the following essential requisites must concur before an LGU can exercise the power of eminent domain:
1. An ordinance is enacted by the local legislative council authorizing the local chief executive, in behalf of the LGU, to exercise the
power of eminent domain or pursue expropriation proceedings over a particular private property.
2. The power of eminent domain is exercised for public use, purpose or welfare, or for the benefit of the poor and the landless.
3. There is payment of just compensation, as required under Section 9, Article III of the Constitution, and other pertinent laws.
4. A valid and definite offer has been previously made to the owner of the property sought to be expropriated, but said offer was not
accepted.[27]
In the case at bar, the local chief executive sought to exercise the power of eminent domain pursuant to a resolution of the municipal
council. Thus, there was no compliance with the first requisite that the mayor be authorized through an ordinance. Petitioner cites
Camarines Sur vs. Court of Appeals[28] to show that a resolution may suffice to support the exercise of eminent domain by an LGU.
[29] This case, however, is not in point because the applicable law at that time was BP 337,[30] the previous Local Government Code,
which had provided that a mere resolution would enable an LGU to exercise eminent domain. In contrast, RA 7160,[31] the present
Local Government Code which was already in force when the Complaint for expropriation was filed, explicitly required an ordinance
for this purpose.
We are not convinced by petitioners insistence that the terms resolution and ordinance are synonymous. A municipal ordinance is
different from a resolution. An ordinance is a law, but a resolution is merely a declaration of the sentiment or opinion of a lawmaking
body on a specific matter.[32] An ordinance possesses a general and permanent character, but a resolution is temporary in nature.
Additionally, the two are enacted differently -- a third reading is necessary for an ordinance, but not for a resolution, unless decided
otherwise by a majority of all the Sanggunian members.[33]
If Congress intended to allow LGUs to exercise eminent domain through a mere resolution, it would have simply adopted the language
of the previous Local Government Code. But Congress did not. In a clear divergence from the previous Local Government Code,
Section 19 of RA 7160 categorically requires that the local chief executive act pursuant to an ordinance. Indeed, [l]egislative intent is
determined principally from the language of a statute. Where the language of a statute is clear and unambiguous, the law is applied
according to its express terms, and interpretation would be resorted to only where a literal interpretation would be either impossible
or absurd or would lead to an injustice.[34] In the instant case, there is no reason to depart from this rule, since the law requiring an
ordinance is not at all impossible, absurd, or unjust.
Moreover, the power of eminent domain necessarily involves a derogation of a fundamental or private right of the people.[35]
Accordingly, the manifest change in the legislative language -- from resolution under BP 337 to ordinance under RA 7160 -- demands
a strict construction. No species of property is held by individuals with greater tenacity, and is guarded by the Constitution and laws
more sedulously, than the right to the freehold of inhabitants. When the legislature interferes with that right and, for greater public
purposes, appropriates the land of an individual without his consent, the plain meaning of the law should not be enlarged by doubtful
interpretation.[36]
Petitioner relies on Article 36, Rule VI of the Implementing Rules, which requires only a resolution to authorize an LGU to exercise
eminent domain. This is clearly misplaced, because Section 19 of RA 7160, the law itself, surely prevails over said rule which merely
seeks to implement it.[37] It is axiomatic that the clear letter of the law is controlling and cannot be amended by a mere
administrative rule issued for its implementation. Besides, what the discrepancy seems to indicate is a mere oversight in the wording
of the implementing rules, since Article 32, Rule VI thereof, also requires that, in exercising the power of eminent domain, the chief
executive of the LGU must act pursuant to an ordinance.
In this ruling, the Court does not diminish the policy embodied in Section 2, Article X of the Constitution, which provides that
territorial and political subdivisions shall enjoy local autonomy. It merely upholds the law as worded in RA 7160. We stress that an LGU
is created by law and all its powers and rights are sourced therefrom. It has therefore no power to amend or act beyond the authority
given and the limitations imposed on it by law. Strictly speaking, the power of eminent domain delegated to an LGU is in reality not

eminent but inferior domain, since it must conform to the limits imposed by the delegation, and thus partakes only of a share in
eminent domain.[38] Indeed, the national legislature is still the principal of the local government units, which cannot defy its will or
modify or violate it.[39]
Complaint Does Not State a Cause of Action
In its Brief filed before Respondent Court, petitioner argues that its Sanguniang Bayan passed an ordinance on October 11, 1994
which reiterated its Resolution No. 93-35, Series of 1993, and ratified all the acts of its mayor regarding the subject expropriation.[40]
This argument is bereft of merit. In the first place, petitioner merely alleged the existence of such an ordinance, but it did not present
any certified true copy thereof. In the second place, petitioner did not raise this point before this Court. In fact, it was mentioned by
private respondent, and only in passing.[41] In any event, this allegation does not cure the inherent defect of petitioners Complaint
for expropriation filed on September 23, 1993. It is hornbook doctrine that:
x x x in a motion to dismiss based on the ground that the complaint fails to state a cause of action, the question submitted before the
court for determination is the sufficiency of the allegations in the complaint itself. Whether those allegations are true or not is beside
the point, for their truth is hypothetically admitted by the motion. The issue rather is: admitting them to be true, may the court
render a valid judgment in accordance with the prayer of the complaint?[42]
The fact that there is no cause of action is evident from the face of the Complaint for expropriation which was based on a mere
resolution. The absence of an ordinance authorizing the same is equivalent to lack of cause of action. Consequently, the Court of
Appeals committed no reversible error in affirming the trial courts Decision which dismissed the expropriation suit.
Second Issue:
Eminent Domain Not Barred by Res Judicata
As correctly found by the Court of Appeals[43] and the trial court,[44] all the requisites for the application of res judicata are present
in this case. There is a previous final judgment on the merits in a prior expropriation case involving identical interests, subject matter
and cause of action, which has been rendered by a court having jurisdiction over it.
Be that as it may, the Court holds that the principle of res judicata, which finds application in generally all cases and proceedings,[45]
cannot bar the right of the State or its agent to expropriate private property. The very nature of eminent domain, as an inherent
power of the State, dictates that the right to exercise the power be absolute and unfettered even by a prior judgment or res judicata.
The scope of eminent domain is plenary and, like police power, can reach every form of property which the State might need for
public use.[46] All separate interests of individuals in property are held of the government under this tacit agreement or implied
reservation. Notwithstanding the grant to individuals, the eminent domain, the highest and most exact idea of property, remains in
the government, or in the aggregate body of the people in their sovereign capacity; and they have the right to resume the possession
of the property whenever the public interest requires it.[47] Thus, the State or its authorized agent cannot be forever barred from
exercising said right by reason alone of previous non-compliance with any legal requirement.
While the principle of res judicata does not denigrate the right of the State to exercise eminent domain, it does apply to specific
issues decided in a previous case. For example, a final judgment dismissing an expropriation suit on the ground that there was no
prior offer precludes another suit raising the same issue; it cannot, however, bar the State or its agent from thereafter complying with
this requirement, as prescribed by law, and subsequently exercising its power of eminent domain over the same property.[48] By the
same token, our ruling that petitioner cannot exercise its delegated power of eminent domain through a mere resolution will not bar it
from reinstituting similar proceedings, once the said legal requirement and, for that matter, all others are properly complied with.
Parenthetically and by parity of reasoning, the same is also true of the principle of law of the case. In Republic vs De Knecht,[49] the
Court ruled that the power of the State or its agent to exercise eminent domain is not diminished by the mere fact that a prior final
judgment over the property to be expropriated has become the law of the case as to the parties. The State or its authorized agent
may still subsequently exercise its right to expropriate the same property, once all legal requirements are complied with. To rule
otherwise will not only improperly diminish the power of eminent domain, but also clearly defeat social justice.
WHEREFORE, the petition is hereby DENIED without prejudice to petitioners proper exercise of its power of eminent domain over
subject property. Costs against petitioner.
SO ORDERED.
Davide, Jr., (Chairman), Bellosillo, Vitug, and Quisumbing, JJ., concur.

G.R. No. 153974

NATIVIDAD BELUSO, PEDRO BELUSO, ANGELITA BELUSO, RAMON BELUSO, Present: and AMADA DANIEL, substituted by her heirs
represented by TERESITA PANGANIBAN, CJ., Chairperson, ARROBANG, YNARES-SANTIAGO, Petitioners, AUSTRIA-MARTINEZ, CALLEJO,
SR. and - versus - CHICO-NAZARIO, JJ. THE MUNICIPALITY OF PANAY (CAPIZ), represented by its Mayor, VICENTE B. Promulgated:
BERMEJO, August 7, 2006 Respondent.
DECISION
AUSTRIA-MARTINEZ, J.:
Before this Court is a petition for review questioning the Decision[1] of the Court of Appeals (CA) dated March 20, 2002 in CA-G.R. SP
No. 47052, as well the Resolution[2] dated June 11, 2002 denying petitioners Motion for Reconsideration thereof.
The facts are as follows:
Petitioners are owners of parcels of land with a total area of about 20,424 square meters, covered by Free Patent Nos. 7265, 7266,
7267, 7268, 7269, and 7270.[3] On November 8, 1995, the Sangguniang Bayan of the Municipality of Panay issued Resolution No. 9529 authorizing the municipal government through the mayor to initiate expropriation proceedings.[4] A petition for expropriation was
thereafter filed on April 14, 1997 by the Municipality of Panay (respondent) before the Regional Trial Court (RTC), Branch 18 of Roxas
City, docketed as Civil Case No. V-6958.[5]
Petitioners filed a Motion to Dismiss alleging that the taking is not for public use but only for the benefit of certain individuals; that it
is politically motivated because petitioners voted against the incumbent mayor and vice-mayor; and that some of the supposed
beneficiaries of the land sought to be expropriated have not actually signed a petition asking for the property but their signatures
were forged or they were misled into signing the same.[6]
On July 31, 1997, the trial court denied petitioners Motion to Dismiss and declared that the expropriation in this case is for public use
and the respondent has the lawful right to take the property upon payment of just compensation.[7]
Petitioners filed an Answer on August 12, 1997 reasserting the issues they raised in their Motion to Dismiss.[8]
On October 1, 1997, the trial court issued an Order appointing three persons as Commissioners to ascertain the amount of just
compensation for the property.[9] Petitioners filed a Motion to Hold in Abeyance the Hearing of the Court Appointed Commissioners to
Determine Just Compensation and for Clarification of the Courts Order dated October 1, 1997 which was denied by the trial court on
November 3, 1997.[10] Petitioners Motion for Reconsideration was also denied on December 9, 1997.[11]
Petitioners then filed on March 2, 1998 a Petition for Certiorari before the CA claiming that they were denied due process when the
trial court declared that the taking was for public purpose without receiving evidence on petitioners claim that the Mayor of Panay
was motivated by politics in expropriating their property and in denying their Motion to Hold in Abeyance the Hearing of the Court
Appointed Commissioners; and that the trial court also committed grave abuse of discretion when it disregarded the affidavits of
persons denying that they signed a petition addressed to the municipal government of Panay.[12] On January 17, 2001, petitioners
filed a Motion to Admit Attached Memorandum and the Memorandum itself where they argued that based on the Petition for
Expropriation filed by respondent, such expropriation was based only on a resolution and not on an ordinance contrary to Sec. 19 of
Republic Act (R.A.) No. 7160; there was also no valid and definite offer to buy the property as the price offered by respondent to the
petitioners was very low.[13]
On March 20, 2002, the CA rendered its Decision dismissing the Petition for Certiorari. It held that the petitioners were not denied due
process as they were able to file an answer to the complaint and were able to adduce their defenses therein; and that the purpose of
the taking in this case constitutes public use.[14] Petitioners filed a Motion for Reconsideration which was denied on June 11, 2002.
[15]
Thus, the present petition claiming that:
A.
RESPONDENT IS WITHOUT, LACKS AND DOES NOT HAVE THE LAWFUL POWER TO ACQUIRE ANY OR ALL OF THE SUBJECT
PROPERTIES THROUGH EMINENT DOMAIN, IT BEING EXERCISED BY MEANS OF A MERE RESOLUTION, AND NOT THROUGH AN
ORDINANCE AS REQUIRED BY LAW AND APPLICABLE JURISPRUDENCE;
B.
RESPONDENT IS LIKEWISE WITHOUT, LACKS AND DOES NOT HAVE THE LAWFUL POWER TO ACQUIRE ANY OR ALL OF THE
SUBJECT PROPERTIES THROUGH EMINENT DOMAIN, ITS PREVIOUS OFFER TO BUY THEM BEING NOT VALID; and
C.
IT WAS A SERIOUS ERROR ON THE PART OF THE HONORABLE COURT OF APPEALS NOT TO DISCUSS, MUCH LESS RULE ON, BOTH
IN ITS QUESTIONED DECISION AND ITS RESOLUTION PROMULGATED ON 11 JUNE 2002 PETITIONERS ARGUMENTS THAT RESPONDENT
IS WITHOUT, LACKS AND DOES NOT HAVE THE LAWFUL POWER TO ACQUIRE ANY OR ALL OF THE SUBJECT PROPERTIES THROUGH
EMINENT DOMAIN, IT BEING EXERCISED BY MEANS OF A MERE RESOLUTION, AND NOT THROUGH AN ORDINANCE AS REQUIRED BY
LAW AND APPLICABLE JURISPRUDENCE, AND ITS PREVIOUS OFFER TO BUY THEM BEING NOT VALID, DESPITE THE FACT THAT THESE
OBJECTIONS WERE PROPERLY PLEADED IN PETITIONERS MEMORANDUM WHICH WAS DULY ADMITTED IN ITS RESOLUTION
PROMULGATED ON 29 JANUARY 2001; and
D.
PETITIONERS WERE UTTERLY DENIED PROCEDURAL DUE PROCESS OF LAW BY THE COURT A QUO, WHEN IT SIMPLY DECLARED IN
ITS ORDER DATED 31 JULY 1997 THAT THE TAKING BY RESPONDENT OF PETITIONERS PROPERTIES IS PURPORTEDLY FOR PUBLIC
PURPOSE WITHOUT RECEIVING EVIDENCE ON THEIR ASSERTED CLAIM THAT RESPONDENTS MUNICIPAL MAYOR WAS POLITICALLY
MOTIVATED IN SEEKING THE EXPROPRIATION OF THEIR PROPERTIES AND NOT FOR PUBLIC PURPOSE.[16]

Petitioners argue that: contrary to Sec. 19 of R.A. No. 7160 of the Local Government Code, which provides that a local government
may exercise the power of eminent domain only by ordinance, respondents expropriation in this case is based merely on a resolution;
while objection on this ground was neither raised by petitioners in their Motion to Dismiss nor in their Answer, such objection may still
be considered by this Court since the fact upon which it is based is apparent from the petition for expropriation itself; a defense may
be favorably considered even if not raised in an appropriate pleading so long as the facts upon which it is based are undisputed;
courts have also adopted a more censorious attitude in resolving questions involving the proper exercise of local bodies of the
delegated power of expropriation, as compared to instances when it is directly exercised by the national legislature; respondent failed
to give, prior to the petition for expropriation, a previous valid and definite offer to petitioners as the amount offered in this case was
only P10.00 per square meter, when the properties are residential in nature and command a much higher price; the CA failed to
discuss and rule upon the arguments raised by petitioners in their Memorandum; attached to the Motion to Dismiss were affidavits
and death certificates showing that there were people whose names were in the supposed petition asking respondent for land, but
who did not actually sign the same, thus showing that the present expropriation was not for a public purpose but was merely
politically motivated; considering the conflicting claims regarding the purpose for which the properties are being expropriated and
inasmuch as said issue may not be rightfully ruled upon merely on the basis of petitioners Motion to Dismiss and Answer as well as
respondents Petition for Expropriation, what should have been done was for the RTC to conduct hearing where each party is given
ample opportunity to prove its claim.[17]
Respondent for its part contends that its power to acquire private property for public use upon payment of just compensation was
correctly upheld by the trial court; that the CA was correct in finding that the petitioners were not denied due process, even though
no hearing was conducted in the trial court, as petitioners were still able to adduce their objections and defenses therein; and that
petitioners arguments have been passed upon by both the trial court and the CA and were all denied for lack of substantial merit.[18]
Respondent filed a Memorandum quoting at length the decision of the CA to support its position.[19] Petitioners meanwhile opted to
have the case resolved based on the pleadings already filed.[20]
We find the petition to be impressed with merit.
Eminent domain, which is the power of a sovereign state to appropriate private property to particular uses to promote public welfare,
is essentially lodged in the legislature.[21] While such power may be validly delegated to local government units (LGUs), other public
entities and public utilities the exercise of such power by the delegated entities is not absolute.[22] In fact, the scope of delegated
legislative power is narrower than that of the delegating authority and such entities may exercise the power to expropriate private
property only when authorized by Congress and subject to its control and restraints imposed through the law conferring the power or
in other legislations.[23] Indeed, LGUs by themselves have no inherent power of eminent domain.[24] Thus, strictly speaking, the
power of eminent domain delegated to an LGU is in reality not eminent but inferior since it must conform to the limits imposed by the
delegation and thus partakes only of a share in eminent domain.[25] The national legislature is still the principal of the LGUs and the
latter cannot go against the principals will or modify the same.[26]
The exercise of the power of eminent domain necessarily involves a derogation of a fundamental right.[27] It greatly affects a
landowners right to private property which is a constitutionally protected right necessary for the preservation and enhancement of
personal dignity and is intimately connected with the rights to life and liberty.[28] Thus, whether such power is exercised directly by
the State or by its authorized agents, the exercise of such power must undergo painstaking scrutiny.[29]
Indeed, despite the existence of legislative grant in favor of local governments, it is still the duty of the courts to determine whether
the power of eminent domain is being exercised in accordance with the delegating law.
Sec. 19 of R.A. No. 7160, which delegates to LGUs the power of eminent domain expressly provides:
SEC. 19. Eminent Domain. - A local government unit may, through its chief executive and acting pursuant to an ordinance, exercise
the power of eminent domain for public use, or purpose, or welfare for the benefit of the poor and the landless, upon payment of just
compensation, pursuant to the provisions of the Constitution and pertinent laws: Provided, however, That the power of eminent
domain may not be exercised unless a valid and definite offer has been previously made to the owner, and such offer was not
accepted: Provided, further, That the local government unit may immediately take possession of the property upon the filing of the
expropriation proceedings and upon making a deposit with the proper court of at least fifteen percent (15%) of the fair market value
of the property based on the current tax declaration of the property to be expropriated: Provided, finally, That, the amount to be paid
for the expropriated property shall be determined by the proper court, based on the fair market value at the time of the taking of the
property.

It is clear therefore that several requisites must concur before an LGU can exercise the power of eminent domain, to wit:
1.
An ordinance is enacted by the local legislative council authorizing the local chief executive, in behalf of the local government
unit, to exercise the power of eminent domain or pursue expropriation proceedings over a particular private property.
2.

The power of eminent domain is exercised for public use, purpose or welfare, or for the benefit of the poor and the landless.

3.

There is payment of just compensation, as required under Section 9, Article III of the Constitution, and other pertinent laws.

4. A valid and definite offer has been previously made to the owner of the property sought to be expropriated, but said offer was not
accepted.[30]

The Court in no uncertain terms have pronounced that a local government unit cannot authorize an expropriation of private property
through a mere resolution of its lawmaking body.[31] R.A. No. 7160 otherwise known as the Local Government Code expressly
requires an ordinance for the purpose and a resolution that merely expresses the sentiment of the municipal council will not suffice.
[32]
A resolution will not suffice for an LGU to be able to expropriate private property; and the reason for this is settled:
x x x A municipal ordinance is different from a resolution. An ordinance is a law, but a resolution is merely a declaration of the
sentiment or opinion of a lawmaking body on a specific matter. An ordinance possesses a general and permanent character, but a
resolution is temporary in nature. Additionally, the two are enacted differently -- a third reading is necessary for an ordinance, but not
for a resolution, unless decided otherwise by a majority of all the Sanggunian members.
If Congress intended to allow LGUs to exercise eminent domain through a mere resolution, it would have simply adopted the language
of the previous Local Government Code. But Congress did not. In a clear divergence from the previous Local Government Code, Sec.
19 of R.A. [No.] 7160 categorically requires that the local chief executive act pursuant to an ordinance. x x x[33]

As respondents expropriation in this case was based merely on a resolution, such expropriation is clearly defective. While the Court is
aware of the constitutional policy promoting local autonomy, the court cannot grant judicial sanction to an LGUs exercise of its
delegated power of eminent domain in contravention of the very law giving it such power.[34]
The Court notes that petitioners failed to raise this point at the earliest opportunity. Still, we are not precluded from considering the
same. This Court will not hesitate to consider matters even those raised for the first time on appeal in clearly meritorious situations,
[35] such as in this case.
Thus, the Court finds it unnecessary to resolve the other issues raised by petitioners.
It is well to mention however that despite our ruling in this case respondent is not barred from instituting similar proceedings in the
future, provided that it complies with all legal requirements.[36]
WHEREFORE, the petition is GRANTED. The decision of the Court of Appeals in CA-G.R. SP No. 47052 is REVERSED and SET ASIDE. The
Complaint in Civil Action No. V-6958 is DISMISSED without prejudice.
No costs.
SO ORDERED.

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

REPUBLIC OF THE PHILIPPINES, plaintiff-appellant,
vs.
CARMEN M. VDA. DE CASTELLVI, ET AL., defendants-appellees.
Office of the Solicitor General for plaintiff-appellant.
C.A. Mendoza & A. V. Raquiza and Alberto Cacnio & Associates for defendant-appellees.

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 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 Lot 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.
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:
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 newlydiscovered 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 on 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.
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 that 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 condemn or 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 ... hereinafter called the LESSOR and THE REPUBLIC OF THE PHILIPPINES
represented by MAJ. GEN. CALIXTO DUQUE, Chief of Staff of the ARMED FORCES OF THE PHILIPPINES, hereinafter called the LESSEE,
WITNESSETH:
1.
For and in consideration of the rentals hereinafter reserved and the mutual terms, covenants and conditions of the parties,
the LESSOR has, and by these presents does, lease and let unto the LESSEE the following described land together with the
improvements thereon and appurtenances thereof, viz:
Un Terreno, Lote No. 27 del Plano de subdivision Psu 34752, parte de la hacienda de Campauit, situado en el Barrio de San Jose,
Municipio 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 any time 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 errect additions ... which facilities or fixtures ... so placed in,
upon or attached to the said premises shall be and remain property of the LESSEE and may be removed therefrom by the LESSEE
prior to the termination of this lease. The LESSEE shall surrender possession of the premises upon the expiration or termination of this
lease and if so required by the LESSOR, shall return the premises in substantially the same condition as that existing at the time same
were first occupied by the AFP, reasonable and ordinary wear and tear and damages by the elements or by circumstances over which
the LESSEE has no control excepted: PROVIDED, that if the LESSOR so requires the return of the premises in such condition, the
LESSOR shall give written notice thereof to the LESSEE at least twenty (20) days before the termination of the lease and provided,
further, that should the LESSOR give notice within the time specified above, the LESSEE shall have the right and privilege to
compensate the LESSOR at the fair value or the equivalent, in lieu of performance of its obligation, if any, to restore the premises. Fair
value is to be determined as the value at the time of occupancy less fair wear and tear and depreciation during the period of this
lease.
6.
The LESSEE may terminate this lease at any time during the term hereof by giving written notice to the LESSOR at least
thirty (30) days in advance ...
7.
The LESSEE should not be responsible, except under special legislation for any damages to the premises by reason of
combat operations, acts of GOD, the elements or other acts and deeds not due to the negligence on the part of the LESSEE.
8.
This LEASE AGREEMENT supersedes and voids any and all agreements and undertakings, oral or written, previously entered
into between the parties covering the property herein leased, the same having been merged herein. This AGREEMENT may not be
modified or altered except by instrument in writing only duly signed by the parties. 10
It was stipulated by the parties, that "the foregoing contract of lease (Exh. 4, Castellvi) is 'similar in terms and conditions, including
the date', with the annual contracts entered into from year to year between defendant Castellvi and the Republic of the Philippines (p.
17, t.s.n., Vol. III)". 11 It is undisputed, therefore, that the Republic occupied Castellvi's land from July 1, 1947, by virtue of the abovementioned 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 non-payment of rents, the instant case now has become moot and academic and/or by virtue of the agreement signed by plaintiff,
she has waived her cause of action in the above-entitled case. 12
The Republic urges that the "taking " of Castellvi's property should be deemed as of the year 1947 by virtue of afore-quoted lease
agreement. In American Jurisprudence, Vol. 26, 2nd edition, Section 157, on the subject of "Eminent Domain, we read the definition of
"taking" (in eminent domain) as follows:
Taking' under the power of eminent domain may be defined generally as entering upon private property for more than a momentary
period, and, under the warrant or color of legal authority, devoting it to a public use, or otherwise informally appropriating or
injuriously affecting it in such a way as substantially to oust the owner and deprive him of all beneficial enjoyment thereof. 13
Pursuant to the aforecited authority, a number of circumstances must be present in the "taking" of property for purposes of eminent
domain.
First, the expropriator must enter a private property. This circumstance is present in the instant case, when by virtue of the lease
agreement the Republic, through the AFP, took possession of the property of Castellvi.
Second, the entrance into private property must be for more than a momentary period. "Momentary" means, "lasting but a moment;
of but a moment's duration" (The Oxford English Dictionary, Volume VI, page 596); "lasting a very short time; transitory; having a
very brief life; operative or recurring at every moment" (Webster's Third International Dictionary, 1963 edition.) The word
"momentary" when applied to possession or occupancy of (real) property should be construed to mean "a limited period" not

indefinite or permanent. The aforecited lease contract was for a period of one year, renewable from year to year. The entry on the
property, under the lease, is temporary, and considered transitory. The fact that the Republic, through the AFP, constructed some
installations of a permanent nature does not alter the fact that the entry into the land was transitory, or intended to last a year,
although renewable from year to year by consent of 'The owner of the land. By express provision of the lease agreement the
Republic, as lessee, undertook to return the premises in substantially the same condition as at the time the property was first
occupied by the AFP. It is claimed that the intention of the lessee was to occupy the land permanently, as may be inferred from the
construction of permanent improvements. But 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.
It is clear, therefore, that the "taking" of Catellvi'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 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 exhorbitant 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 (32 Phil. 82, 98) this Court laid down basic guidelines in determining the value of the
property expropriated for public purposes. This Court said:
In determining the value of land appropriated for public purposes, the same consideration are to be regarded as in a sale of property
between private parties. The inquiry, in such cases, must be what is the property worth in the market, viewed not merely with
reference to the uses to which it is at the time applied, but with reference to the uses to which it is plainly adapted, that is to say,
What is it worth from its availability for valuable uses?
So many and varied are the circumstances to be taken into account in determining the value of property condemned for public
purposes, that it is practically impossible to formulate a rule to govern its appraisement in all cases. Exceptional circumstances will
modify the most carefully guarded rule, but, as a general thing, we should say that the compensation of the owner is to be estimated
by reference to the use for which the property is suitable, having regard to the existing business or wants of the community, or such
as may be reasonably expected in the immediate future. (Miss. and Rum River Boom Co. vs. Patterson, 98 U.S., 403).
In expropriation proceedings, therefore, the owner of the land has the right to its value for the use for which it would bring the most in
the market. 17 The owner may thus show every advantage that his property possesses, present and prospective, in order that the
price it could be sold for in the market may be satisfactorily determined. 18 The owner may also show that the property is suitable for
division into village or town lots. 19
The trial court, therefore, correctly considered, among other circumstances, the proposed subdivision plans of the lands sought to be
expropriated in finding that those lands are residential lots. This finding of the lower court is supported not only by the unanimous
opinion of the commissioners, as embodied in their report, but also by the Provincial Appraisal Committee of the province of
Pampanga composed of the Provincial Treasurer, the Provincial Auditor and the District Engineer. In the minutes of the meeting of the
Provincial Appraisal Committee, held on May 14, 1959 (Exh. 13-Castellvi) We read in its Resolution No. 10 the following:
3.
Since 1957 the land has been classified as residential in view of its proximity to the air base and due to the fact that it was
not being devoted to agriculture. In fact, there is a plan to convert it into a subdivision for residential purposes. The taxes due on the
property have been paid based on its classification as residential land;
The evidence shows that Castellvi broached the idea of subdividing her land into residential lots as early as July 11, 1956 in her letter
to the Chief of Staff of the Armed Forces of the Philippines. (Exh. 5-Castellvi) As a matter of fact, the layout of the subdivision plan
was tentatively approved by the National Planning Commission on September 7, 1956. (Exh. 8-Castellvi). The land of Castellvi had not
been devoted to agriculture since 1947 when it was leased to the Philippine Army. In 1957 said land was classified as residential, and
taxes based on its classification as residential had been paid since then (Exh. 13-Castellvi). The location of the Castellvi land justifies
its suitability for a residential subdivision. As found by the trial court, "It is at the left side of the entrance of the Basa Air Base and
bounded on two sides by roads (Exh. 13-Castellvi), paragraphs 1 and 2, Exh. 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-ToledoGozun). 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 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 expropriation case
filed on January 13, 1959, involving a parcel of land adjacent to the Clark Air Base in Angeles City, where the court fixed the price at
P18.00 per square meter (Exhibit 14-Castellvi). In their report, the commissioners, among other things, said:
... This expropriation case is specially pointed out, because the circumstances and factors involved therein are similar in many
respects to the defendants' lands in this case. The land in Civil Case No. 1531 of this Court and the lands in the present case (Civil
Case No. 1623) are both near the air bases, the Clark Air Base and the Basa Air Base respectively. There is a national road fronting
them and are situated in a first-class municipality. As added advantage it may be said that the Basa Air Base land is very near the
sugar mill at Del Carmen, Floridablanca, Pampanga, owned by the Pampanga Sugar Mills. Also just stone's throw away from the same
lands is a beautiful vacation spot at Palacol, a sitio of the town of Floridablanca, which counts with a natural swimming pool for
vacationists on weekends. These advantages are not found in the case of the Clark Air Base. The defendants' lands are nearer to the
poblacion of Floridablanca then Clark Air Base is nearer (sic) to the poblacion of Angeles, Pampanga.
The deeds of absolute sale, according to the undersigned commissioners, as well as the land in Civil Case No. 1531 are competent
evidence, because they were executed during the year 1959 and before August 10 of the same year. More specifically so the land at
Clark Air Base which coincidentally is the subject matter in the complaint in said Civil Case No. 1531, it having been filed on January
13, 1959 and the taking of the land involved therein was ordered by the Court of First Instance of Pampanga on January 15, 1959,
several months before the lands in this case were taken by the plaintiffs ....

From the above and considering further that the lowest as well as the highest price per square meter obtainable in the market of
Pampanga relative to subdivision lots within its jurisdiction in the year 1959 is very well known by the Commissioners, the
Commission finds that the lowest price that can be awarded to the lands in question is P10.00 per square meter. 26
The lower court did not altogether accept the findings of the Commissioners based on the documentary evidence, but it considered
the documentary evidence as basis for comparison in determining land values. The lower court arrived at the conclusion that "the
unanimous recommendation of the commissioners of ten (P10.00) pesos per square meter for the three lots of the defendants subject
of this action is fair and just". 27 In arriving at its conclusion, the lower court took into consideration, among other circumstances,
that the lands are titled, that there is a rising trend of land values, and the lowered purchasing power of the Philippine peso.
In the case of Manila Railroad Co. vs. Caligsihan, 40 Phil. 326, 328, this Court said:
A court of first instance or, on appeal, the Supreme Court, may change or modify the report of the commissioners by increasing or
reducing the amount of the award if the facts of the case so justify. While great weight is attached to the report of the commissioners,
yet a court may substitute therefor its estimate of the value of the property as gathered from the record in certain cases, as, where
the commissioners have applied illegal principles to the evidence submitted to them, or where they have disregarded a clear
preponderance of evidence, or where the amount allowed is either palpably inadequate or excessive. 28
The report of the commissioners of appraisal in condemnation proceedings are not binding, but merely advisory in character, as far as
the court is concerned. 29 In our analysis of the report of the commissioners, We find points that merit serious consideration in the
determination of the just compensation that should be paid 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.
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 be 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 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. 161 1345, situated at
Floridablanca, Pampanga, for P860.00 per hectare (a little less than P.09 per square meter) executed on October 22, 1957 by Jesus
Toledo y Mendoza in favor of the Land Tenure Administration.
We find that the lower court acted correctly when it denied the motions for a new trial.
To warrant the granting of a new trial based on the ground of newly discovered evidence, it must appear that the evidence was
discovered after the trial; that even with the exercise of due diligence, the evidence could not have been discovered and produced at
the trial; and that the evidence is of such a nature as to alter the result of the case if admitted. 32 The lower court correctly ruled that
these requisites were not complied with.
The lower court, in a well-reasoned order, found that the sales made by Serafin Francisco to Pablo Narciso and that made by Jesus
Toledo to the Land Tenure Administration were immaterial and irrelevant, because those sales covered sugarlands with sugar quotas,
while the lands sought to be expropriated in the instant case are residential lands. The lower court also concluded that the land sold
by the spouses Laird to the spouses Aguas was a sugar land.
We agree with the trial court. In eminent domain proceedings, in order that evidence as to the sale price of other lands may be
admitted in evidence to prove the fair market value of the land sought to be expropriated, the lands must, among other things, be
shown to be similar.
But even assuming, gratia argumenti, that the lands mentioned in those deeds of sale were residential, the evidence would still not
warrant the grant of a new trial, for said evidence could have been discovered and produced at the trial, and they cannot be
considered newly discovered evidence as contemplated in Section 1(b) of Rule 37 of the Rules of Court. Regarding this point, the trial
court said:
The Court will now show that there was no reasonable diligence employed.
The land described in the deed of sale executed by Serafin Francisco, copy of which is attached to the original motion, is covered by a
Certificate of Title issued by the Office of the Register of Deeds of Pampanga. There is no question in the mind of the court but this
document passed through the Office of the Register of Deeds for the purpose of transferring the title or annotating the sale on the
certificate of title. It is true that Fiscal Lagman went to the Office of the Register of Deeds to check conveyances which may be
presented in the evidence in this case as it is now sought to be done by virtue of the motions at bar, Fiscal Lagman, one of the
lawyers of the plaintiff, did not exercise reasonable diligence as required by the rules. The assertion that he only went to the office of
the Register of Deeds 'now and then' to check the records in that office only shows the half-hazard [sic] manner by which the plaintiff
looked for evidence to be presented during the hearing before the Commissioners, if it is at all true that Fiscal Lagman did what he is
supposed to have done according to Solicitor Padua. It would have been the easiest matter for plaintiff to move for the issuance of a
subpoena duces tecum directing the Register of Deeds of Pampanga to come to testify and to bring with him all documents found in
his office pertaining to sales of land in Floridablanca adjacent to or near the lands in question executed or recorded from 1958 to the
present. Even this elementary precaution was not done by plaintiff's numerous attorneys.
The same can be said of the deeds of sale attached to the supplementary motion. They refer to lands covered by certificate of title
issued by the Register of Deeds of Pampanga. For the same reason they could have been easily discovered if reasonable diligence
has been exerted by the numerous lawyers of the plaintiff in this case. It is noteworthy that all these deeds of sale could be found in
several government offices, namely, in the Office of the Register of Deeds of Pampanga, the Office of the Provincial Assessor of
Pampanga, the Office of the Clerk of Court as a part of notarial reports of notaries public that acknowledged these documents, or in
the archives of the National Library. In respect to Annex 'B' of the supplementary motion copy of the document could also be found in
the Office of the Land Tenure Administration, another government entity. Any lawyer with a modicum of ability handling this
expropriation case would have right away though [sic] of digging up documents diligently showing conveyances of lands near or
around the parcels of land sought to be expropriated in this case in the offices that would have naturally come to his mind such as the
offices mentioned above, and had counsel for the movant really exercised the reasonable diligence required by the Rule' undoubtedly
they would have been able to find these documents and/or caused the issuance of subpoena duces tecum. ...
It is also recalled that during the hearing before the Court of the Report and Recommendation of the Commissioners and objection
thereto, Solicitor Padua made the observation:
I understand, Your Honor, that there was a sale that took place in this place of land recently where the land was sold for P0.20 which
is contiguous to this land.
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 tinder the circumstances, the correct
qualification that can be given is 'forgotten evidence'. Forgotten 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.

G.R. No. L-26400 February 29, 1972

VICTORIA AMIGABLE, plaintiff-appellant,
vs.
NICOLAS CUENCA, as Commissioner of Public Highways and REPUBLIC OF THE PHILIPPINES, defendants-appellees.

MAKALINTAL, J.:p
This is an appeal from the decision of the Court of First Instance of Cebu in its Civil Case No. R-5977, dismissing the plaintiff's
complaint.
Victoria Amigable, the appellant herein, is the registered owner of Lot No. 639 of the Banilad Estate in Cebu City as shown by Transfer
Certificate of Title No. T-18060, which superseded Transfer Certificate of Title No. RT-3272 (T-3435) issued to her by the Register of
Deeds of Cebu on February 1, 1924. No annotation in favor of the government of any right or interest in the property appears at the
back of the certificate. Without prior expropriation or negotiated sale, the government used a portion of said lot, with an area of 6,167
square meters, for the construction of the Mango and Gorordo Avenues.
It appears that said avenues were already existing in 1921 although "they were in bad condition and very narrow, unlike the wide and
beautiful avenues that they are now," and "that the tracing of said roads was begun in 1924, and the formal construction in
1925." *
On March 27, 1958 Amigable's counsel wrote the President of the Philippines, requesting payment of the portion of her lot which had
been appropriated by the government. The claim was indorsed to the Auditor General, who disallowed it in his 9th Indorsement dated
December 9, 1958. A copy of said indorsement was transmitted to Amigable's counsel by the Office of the President on January 7,
1959.
On February 6, 1959 Amigable filed in the court a quo a complaint, which was later amended on April 17, 1959 upon motion of the
defendants, against the Republic of the Philippines and Nicolas Cuenca, in his capacity as Commissioner of Public Highways for the
recovery of ownership and possession of the 6,167 square meters of land traversed by the Mango and Gorordo Avenues. She also
sought the payment of compensatory damages in the sum of P50,000.00 for the illegal occupation of her land, moral damages in the
sum of P25,000.00, attorney's fees in the sum of P5,000.00 and the costs of the suit.
Within the reglementary period the defendants filed a joint answer denying the material allegations of the complaint and interposing
the following affirmative defenses, to wit: (1) that the action was premature, the claim not having been filed first with the Office of the
Auditor General; (2) that the right of action for the recovery of any amount which might be due the plaintiff, if any, had already
prescribed; (3) that the action being a suit against the Government, the claim for moral damages, attorney's fees and costs had no
valid basis since as to these items the Government had not given its consent to be sued; and (4) that inasmuch as it was the province
of Cebu that appropriated and used the area involved in the construction of Mango Avenue, plaintiff had no cause of action against
the defendants.
During the scheduled hearings nobody appeared for the defendants notwithstanding due notice, so the trial court proceeded to
receive the plaintiff's evidence ex parte. On July 29, 1959 said court rendered its decision holding that it had no jurisdiction over the
plaintiff's cause of action for the recovery of possession and ownership of the portion of her lot in question on the ground that the
government cannot be sued without its consent; that it had neither original nor appellate jurisdiction to hear, try and decide plaintiff's
claim for compensatory damages in the sum of P50,000.00, the same being a money claim against the government; and that the
claim for moral damages had long prescribed, nor did it have jurisdiction over said claim because the government had not given its
consent to be sued. Accordingly, the complaint was dismissed. Unable to secure a reconsideration, the plaintiff appealed to the Court
of Appeals, which subsequently certified the case to Us, there being no question of fact involved.
The issue here is whether or not the appellant may properly sue the government under the facts of the case.
In the case of Ministerio vs. Court of First Instance of Cebu, 1 involving a claim for payment of the value of a portion of land used for
the widening of the Gorordo Avenue in Cebu City, this Court, through Mr. Justice Enrique M. Fernando, held that where the
government takes away property from a private landowner for public use without going through the legal process of expropriation or
negotiated sale, the aggrieved party may properly maintain a suit against the government without thereby violating the doctrine of
governmental immunity from suit without its consent. We there said: .
... . If the constitutional mandate that the owner be compensated for property taken for public use were to be respected, as it should,
then a suit of this character should not be summarily dismissed. The doctrine of governmental immunity from suit cannot serve as an
instrument for perpetrating an injustice on a citizen. Had the government followed the procedure indicated by the governing law at
the time, a complaint would have been filed by it, and only upon payment of the compensation fixed by the judgment, or after tender
to the party entitled to such payment of the amount fixed, may it "have the right to enter in and upon the land so condemned, to
appropriate the same to the public use defined in the judgment." If there were an observance of procedural regularity, petitioners
would not be in the sad plaint they are now. It is unthinkable then that precisely because there was a failure to abide by what the law
requires, the government would stand to benefit. It is just as important, if not more so, that there be fidelity to legal norms on the
part of officialdom if the rule of law were to be maintained. It is not too much to say that when the government takes any property for
public use, which is conditioned upon the payment of just compensation, to be judicially ascertained, it makes manifest that it
submits to the jurisdiction of a court. There is no thought then that the doctrine of immunity from suit could still be appropriately
invoked.
Considering that no annotation in favor of the government appears at the back of her certificate of title and that she has not executed
any deed of conveyance of any portion of her lot to the government, the appellant remains the owner of the whole lot. As registered
owner, she could bring an action to recover possession of the portion of land in question at anytime because possession is one of the
attributes of ownership. However, since restoration of possession of said portion by the government is neither convenient nor feasible

at this time because it is now and has been used for road purposes, the only relief available is for the government to make due
compensation which it could and should have done years ago. To determine the due compensation for the land, the basis should be
the price or value thereof at the time of the taking. 2
As regards the claim for damages, the plaintiff is entitled thereto in the form of legal interest on the price of the land from the time it
was taken up to the time that payment is made by the government. 3 In addition, the government should pay for attorney's fees, the
amount of which should be fixed by the trial court after hearing.
WHEREFORE, the decision appealed from is hereby set aside and the case remanded to the court a quo for the determination of
compensation, including attorney's fees, to which the appellant is entitled as above indicated. No pronouncement as to costs.
Concepcion, C.J., Reyes, J.B.L., Zaldivar, Castro, Fernando, Teehankee, Barredo, Villamor and Makasiar JJ., concur.

THIRD DIVISION
[G.R. No. 113194. March 11, 1996]
NATIONAL POWER CORPORATION, petitioner, vs. COURT OF APPEALS and MACAPANTON MANGONDATO, respondents.
DECISION
PANGANIBAN, J.:
At what point in time should the value of the land subject of expropriation be computed: at the date of the taking or the date of the
filing of the complaint for eminent domain? This is the main question posed by the parties in this petition for review on certiorari
assailing the Decision[1] of the Court of Appeals[2] which affirmed in toto the decision of the Regional Trial Court of Marawi City.[3]
The dispositive portion of the decision of the trial court reads:[4]
WHEREFORE, the prayer in the recovery case for Napocors surrender of the property is denied but Napocor is ordered to pay monthly
rentals in the amount of P15,000.00 from 1978 up to July 1992 with 12% interest per annum from which sum the amount of
P2,199,500.00 should be deducted; and the property is condemned in favor of Napocor effective July 1992 upon payment of the fair
market value of the property at One Thousand (P1,000.00) Pesos per square meter or a total of Twenty-One Million Nine Hundred
Ninety-Five Thousand (P21,995,000.00) Pesos.
SO ORDERED. Costs against NAPOCOR.
The Facts
The facts are undisputed by both the petitioner and the private respondent,[5] and are quoted from the Decision of the respondent
Court,[6] as follows:
In 1978, National Power Corporation (NAPOCOR), took possession of a 21,995 square meter land which is a portion of Lot 1 of the
subdivision plan (LRC) Psd-116159 situated in Marawi City, owned by Mangondato, and covered by Transfer Certificate of Title No. T378-A, under the mistaken belief that it forms part of the public land reserved for use by NAPOCOR for hydroelectric power purposes
under Proclamation No. 1354 of the President of the Philippines dated December 3, 1974.
NAPOCOR alleged that the subject land was until then possessed and administered by Marawi City so that in exchange for the citys
waiver and quitclaim of any right over the property, NAPOCOR had paid the city a financial assistance of P40.00 per square meter.
In 1979, when NAPOCOR started building its Agus I HE (Hydroelectric Plant) Project, Mangondato demanded compensation from
NAPOCOR. NAPOCOR refused to compensate insisting that the property is public land and that it had already paid financial assistance
to Marawi City in exchange for the rights over the property.
Mangondato claimed that the subject land is his duly registered private property covered by Transfer Certificate of Title No. T-378-A in
his name, and that he is not privy to any agreement between NAPOCOR and Marawi City and that any payment made to said city
cannot be considered as payment to him.
More than a decade later NAPOCOR acceded to the fact that the property belongs to Mangondato.
At the outset, in March, 1990, NAPOCORs regional legal counsel, pursuant to Executive Order No. 329 dated July 11, 1988 requested
Marawi Citys City Appraisal Committee to appraise the market value of the property in Saduc, Marawi City affected by the
infrastructure projects of NAPOCOR without specifying any particular land-owner. The City Appraisal Committee in its Minutes dated
March 8, 1990, fixed the fair market value as follows:[7]
Land Fair Market Value Per Sq. M.
Price Per Sq. M Price per Sq. M.
Along the City Not in the City
National Highway National Highway
P150 Residential Lot P100
P250 Commercial Lot P180
P300 Industrial Lot P200
(Records, Civil Case No. 610-92, p. 20).
On July 13, 1990, NAPOCORs National Power Board (hereafter NAPOCORs board) passed Resolution No. 90-225 resolving to pay
Mangondato P100.00 per square meter for only a 12,132 square meter portion of the subject property plus 12% interest per annum
from 1978. However, in the August 7, 1990 board meeting, confirmation of said resolution was deferred to allow NAPOCORs regional
legal counsel to determine whether P100.00 per square meter is the fair market value. (Records, Civil Case No. 605-92, p. 45).
On August 14, 1990, NAPOCORs board passed Resolution No. 90-316 resolving that Mangondato be paid the base price of P40.00 per
square meter for the 12,132 square meter portion (P485,280.00) plus 12% interest per annum from 1978 (P698,808.00) pending the
determination whether P100.00 per square meter is the fair market value of the property (id.).
Pursuant to the aforementioned resolution Mangondato was paid P1,184,088.00 (Id., p. 58).
NAPOCORs regional legal counsels findings embodied in 2 memoranda to NAPOCORs general counsel (dated January 29, 1991 and
February 19, 1991) state that Mangondatos property is classified as industrial, that the market value of industrial lots in Marawi City
when NAPOCOR took possession is P300.00 for those along the national highway and P200.00 for those not along the highway and
that on the basis of recent Supreme Court decisions, NAPOCOR has to pay not less than P300.00 per square meter. NAPOCORs
general counsel incorporated the foregoing findings in his report to the board plus the data that the area possessed by NAPOCOR is
21,995 square meters, and that the legal rate of interest per annum from the time of the taking of the property alleged to be in 1978,

is 12%, but recommended to the board that the fair market value of the property is P 100.00 per square meter; NAPOCORs board on
May 17, 1991 passed Resolution No. 91-247 resolving to pay Mangondato P100.00 per square meter for the property excluding 12%
interest per annum (id., pp. 50-52).
In a letter dated December 17, 1991, Mangondato disagreed with the NAPOCOR boards Resolution No. 91-247 pegging the
compensation for his land at P 100.00 per square meter without interest from 1978. Mangondato submitted that the fair market value
of his land is even more than the P300.00 (per) square meter stated in the City Appraisal Report but that for expediency, he is willing
to settle for P300.00 per square meter plus 12% interest per annum from 1978 (id., pp. 53-59).
In another letter dated February 4, 1992, Mangondato reiterated his disagreement to the P100.00 per square meter compensation
without interest. At the same time, to get partial payment, he asked that he be paid in the meantime, P 100.00 per square meter
without prejudice to pursuing his claim for the proper and just compensation plus interest thereon (id., p. 60).
On February 12, 1992, NAPOCORs general counsel filed a memorandum for its president finding no legal impediment if they, in the
meantime were to pay Mangondato P100.00 per square meter without prejudice to the final determination of the proper and just
compensation by the board inasmuch as the regional counsel submitted to him (general counsel) 2 memoranda stating that the
appraisal of industrial lots in Marawi City when NAPOCOR took possession is P300.00 per square meter for those along the national
highway and P200.00 per square meter for those not along the highway, and that NAPOCOR has to pay not less than P300.00 per
square meter plus 12% interest on the basis of recent Supreme Court decisions. Further, the general counsel submitted that since the
board has already set the purchase price at P100.00 per square meter (Resolution No. 91-247), NAPOCOR would not be prejudiced
thereby (id., pp 60-62)
In March, 1992, the parties executed a Deed of Sale Of A Registered Property where NAPOCOR acceded to Mangondatos request of
provisional payment of P100.00 per square meter excluding interest and without prejudice to Mangondatos pursuance of claims for
just compensation and interest. Mangondato was paid P1,015,412.00 in addition to the P1,184,088.00 earlier paid to him by
NAPOCOR which payments total P2,199,500.00 for the 12,995 square meter land (Records, Civil Case No. 610-92, pp. 85-87).
In his letter to NAPOCORs president dated April 20, 1992, Mangondato asked for the payment of P300.00 per square meter plus 12%
interest per annum from 1978. NAPOCORs president, in his memorandum to the board dated April 24, 1992 recommended the
approval of Mangondatos request (Records, Civil Case No. 605-92, pp. 63-69).
On May 25, 1992, NAPOCORs board passed Resolution No. 92-121 granting its president the authority to negotiate for the payment of
P100.00 per square meter for the land plus 12% interest per annum from 1978 less the payments already made to Mangondato and
to Marawi City on the portion of his land and with the provisos that said authorized payment shall be effected only after Agus I HE
Project has been placed in operation and that said payment shall be covered by a deed of absolute sale with a quitclaim executed by
Mangondato (Id., pp. 70-71).
On July 7, 1992, Mangondato filed before the lower court Civil Case No. 605-92 against NAPOCOR seeking to recover the possession of
the property described in the complaint as Lots 1 and 3 of the subdivision plan (LRC) Psd-116159 against NAPOCOR, the payment of a
monthly rent of P15,000.00 from 1978 until the surrender of the property, attorneys fees and costs, and the issuance of a temporary
restraining order and a writ of preliminary mandatory injunction to restrain NAPOCOR from proceeding with any construction and/or
improvements on Mangondatos land or from committing any act of dispossession (id., pp. 1-8).
The temporary restraining order was issued by the lower court. Anent the prayer for the writ of preliminary mandatory injunction,
NAPOCOR filed its Opposition thereto on July 23, 1992 (Id., pp. 17-20).
Before the lower court could resolve the pending incident on the writ of preliminary mandatory injunction, and instead of filing a
motion to dismiss, NAPOCOR, on July 27, 1992, filed also before the lower court, Civil Case No. 610-92 which is a Complaint for
eminent domain against Mangondato over the subject property (Records, Civil Case No. 610-92, pp. 1-3).
On the same date Mangondato filed his Manifestation in Lieu of Answer contending that the negotiations for payment made by
NAPOCOR were virtual dictations on a take it or leave it basis; that he was given the run-around by NAPOCOR for 15 years; so that
there was no agreement reached as to payment because of NAPOCORs insistence of its own determination of the price; that he treats
the P2,199.500.00 so far received by him as partial payment for the rent for the use of his property. Mangondato prayed that he be
compensated in damages for the unauthorized taking and continued possession of his land from 1978 until the filing of the
Complaiant (sic) in the expropriation case; that should the lower court order the expropriation of the subject property, that the just
compensation for the land be reckoned from the time of the filing of the expropriation case; that the expropriation case be
consolidated with the recovery of possession case; that the restraining order issued in the recovery of possession case be maintained
and a writ of preliminary injunction be at once issued against NAPOCOR; and that NAPOCOR be ordered to deposit the value of the
land as provisionally determined by the lower court (id., pp. 4-5).
Upon agreement of the parties, the 2 cases were ordered consolidated and the lower court appointed the following commissioners:
Atty. Saipal Alawi, representing the lower court; Atty. Connie Doromal, representing NAPOCOR; and Mr. Alimbsar A. Ali, from the City
Assessors Office to ascertain and report to the court the just compensation (id., pp. 6-7).
The lower court ordered NAPOCOR to deposit with the Philippine National Bank the amount of P10,997,500.00, provisionally fixing the
value of the land at P500.00 per square meter P100.00 lower than the assessed value of the land appearing in Tax Declaration No.
0873 for 1992 which was used as basis by the lower court (id., p. 8).
In its Motion for Reconsideration of the Order For Provisional Deposit[,] NAPOCOR opposed the provisional value quoted by the lower
court saying that the basis of the provisional value of the land should be the assessed value of the property as of the time of the
taking which in this case is 1978 when the assessed value of the land under Tax Declaration No. 7394 was P100.00 per square meter
(id., pp. 28-32). In reply, Mangondato filed his Opposition To Motion For Reconsideration Of the Order For Provisional Deposit (id., pp.
44-46). However, the lower court did not rule on the provisional value to be deposited and chose to go right into the determination of
just compensation on the ground that the provisional valuation could not be decided without going into the second phase of
expropriation cases which is the determination by the court of the just compensation for the property soguht (sic) to be taken (NPC
vs. Jocson, supra) (Decision, p. 5).

On August 5, 1992, Mangondato filed a Motion To Dismiss in the expropriation case alleging that NAPOCOR filed its Complaint for
eminent domain not for the legitimate aim of pursuing NAPOCORs business and purpose but to legitimize a patently illegal possession
and at the same time continue dictating its own valuation of the property. Said motion was however, later withdrawn by Mangondato
(id., pp. 37-39 and 47).
In the meanwhile, the commissioners filed their respective reports. On July 28, 1992, Commissioner Doromal filed his report
recommending a fair market value of P300.00 per square meter as of November 23, 1978, (Id., pp. 11-27). On August 6, 1992,
Commissioners Alawi and Ali filed their joint report recommending a fair market value of P1,000.00 per square meter as of 1992 (id.,
pp. 40-42).
After the parties filed their respective comments to the commissioners reports, on August 21, 1992, the lower court rendered its
decision denying Mangondato recovery of possession of the property but ordering NAPOCOR to pay a monthly rent of P15,000.00
from 1978 up to July 1992 with 12% interest per annum and condemning the property in favor of NAPOCOR effective July, 1992 upon
the payment of P1,000.00 per square meter or a total of P2 1,995,000.00 as just compensation.
Mangondato filed a Motion For Partial Execution Pending Appeal which was granted by the lower court in an Order dated September
15, 1992 (id., pp. 151-152 and 157-160). However, on appeal by NAPOCOR via a Petition For Certiorari in CA-G.R. SP No. 28971 to this
Court, said Order was annulled and set aside (Rollo, pp. 30-37).
NAPOCOR filed a Motion For Reconsideration of the decision alleging that the fair market value of the property at the time it was
taken allegedly in 1978 is P40.00 per square meter. After Mangondato filed his Opposition To Motion For Reconsideration the lower
court denied NAPOCORs motion for reconsideration in an Order dated September 15, 1992 (Records, Civil Case No. 610-92, pp. 145149).
In the meanwhile, on August 7, 1992, Mangondato filed an Ex-Parte Manifestation To Correct Clerical Error of Description of Property
submitting that Lot 3 which does not form part of the subject property was included in the Complaint because of a clerical error
inadvertently committed by the typist who continuously copied the description of the property covered by Transfer Certificate of Title
No. T-378-A, and thus praying that the portion of the Complaint describing Lot 3 be deleted (Records, Civil Case No. 605-92, p. 22).
On August 12, 1992, the intervenors filed their Motion For Intervention and Intervention claiming interest against each of the parties
on the ground that Lot 3 which is included in the Complaint has since been conveyed by Mangondato to their predecessors-in-interest
and that they are entitled to just compensation from NAPOCOR should the lower court decide that NAPOCOR is entitled to expropriate
the entire area described in the Complaint (id., pp. 23-34).
In an Order dated August 19, 1992 the lower court granted intervenors Motion For Intervention (id., p. 72).
On August 25, 1992, the lower court ordered the deletion of the portion in the Complaint describing Lot 3 and declared that
intervenors Motion For Intervention has become moot (id., p. 82).
On October 13, 1992 the intervenors filed their Motion To Reconsider The Order Of August 25, 1992 and The Decision Dated August
21, 1992 which was however denied by the lower court in an Order dated November 26, 1992 (id., pp. 162-184).
The Issues
Two errors were raised before this Court by the petitioner, thus:[8]
ASSIGNMENT OF ERRORS
THE RESPONDENT COURT ERRED IN AFFIRMING THAT THE JUST COMPENSATION FOR THE PROPERTY IS ITS VALUE IN 1992, WHEN THE
COMPLAINT WAS FILED, AND NOT ITS VALUE IN 1978, WHEN THE PROPERTY WAS TAKEN BY PETITIONER.
THE COURT ERRED IN FIXING THE VALUE OF JUST COMPENSATION AT P 1,000.00 PER SQUARE METER INSTEAD OF P40.00 PER
SQUARE METER.
The petitioner summarized the two issues it raised by asking whether or not the respondent court was justified in deviating from the
well-settled doctrine that just compensation is the equivalent of the value of the property taken for public use reckoned from the time
of taking.[9] In his Comment, private respondent worded the issues as follows:[10]
x x x As stated by the respondent court, Napocor, in its appeal
x x x avers that the taking of the proerty (sic) should not be reckoned as of the year 1992 when NAPOCOR filed its Complaint for
eminent domain but as of the year 1978 when it took possession of the property, and that the just compensation, determined as it
should be, on the basis of the value of the property as of 1978, as P40.00 per square meter.
The petitioner, after failing to persuade both lower courts, reiterated before us its proposition (with cited cases) that when the taking
of property precedes the filing of the judicial proceeding, the value of the property at the time it was taken shall be the basis for the
payment of just compensation.[11]
The First Issue: Date of Taking or Date of Suit?
The general rule in determining just compensation in eminent domain is the value of the property as of the date of the filing of the
complaint, as follows:[12]
Sec. 4. Order of Condemnation. When such a motion is overruled or when any party fails to defend as required by this rule, the court
may enter an order of condemnation declaring that the plaintiff has a lawful right to take the property sought to be condemned, for

the public use or purpose described in the complaint, upon the payment of just compensation to be determined as of the date of the
filing of the complaint x x x (Italics supplied).
Normally, the time of the taking coincides with the filing of the complaint for expropriation. Hence, many rulings of this Court have
equated just compensation with the value of the property as of the time of filing of the complaint consistent with the above provision
of the Rules. So too, where the institution of the action precedes entry into the property, the just compensation is to be ascertained
as of the time of the filing of the complaint.[13]
The general rule, however, admits of an exception: where this Court fixed the value of the property as of the date it was taken and
not at the date of the commencement of the expropriation proceedings.
In the old case of Provincial Government of Rizal vs. Caro de Araullo,[14] the Court ruled that x x x the owners of the land have no
right to recover damages for this unearned increment resulting from the construction of the public improvement (lengthening of Taft
Avenue from Manila to Pasay) for which the land was taken. To permit them to do so would be to allow them to recover more than the
value of the land at the time when it was taken, which is the true measure of the damages, or just compensation, and would
discourage the construction of important public improvements.
In subsequently cases,[15] the Court, following the above doctrine, invariably held that the time of taking is the critical date in
determining lawful or just compensation. Justifying this stance, Mr. Justice (later Chief Justice) Enrique Fernando, speaking for the
Court in Municipality of La Carlota vs. The Spouses Felicidad Baltazar and Vicente Gan,[16] said, x x x the owner as is the
constitutional intent, is paid what he is entitled to according to the value of the property so devoted to public use as of the date of the
taking. From that time, he had been deprived thereof. He had no choice but to submit. He is not, however, to be despoiled of such a
right. No less than the fundamental law guarantees just compensation. It would be an injustice to him certainly if from such a period,
he could not recover the value of what was lost. There could be on the other hand, injustice to the expropriator if by a delay in the
collection, the increment in price would accrue to the owner. The doctrine to which this Court has been committed is intended
precisely to avoid either contingency fraught with unfairness.
Simply stated, the exception finds application where the owner would be given undue incremental advantages arising from the use to
which the government devotes the property expropriated -as for instance, the extension of a main thoroughfare as was the case in
Caro de Araullo. In the instant case, however, it is difficult to conceive of how there could have been an extra-ordinary increase in the
value of the owners land arising from the expropriation, as indeed the records do not show any evidence that the valuation of
P1,000.00 reached in 1992 was due to increments directly caused by petitioners use of the land. Since the petitioner is claiming an
exception to Rule 67, Section 4,[17] it has the burden of proving its claim that its occupancy and use - not ordinary inflation and
increase in land values - was the direct cause of the increase in valuation from 1978 to 1992.
Side Issue: When is There Taking of Property?
But there is yet another cogent reason why this petition should be denied and why the respondent Court should be sustained. An
examination of the undisputed factual environment would show that the taking was not really made in 1978.
This Court has defined the elements of taking as the main ingredient in the exercise of power of eminent domain,[18] in the following
words:
A number of circumstances must be present in the taking of property for purposes of eminent domain: (1) the expropriator must enter
a private property; (2) the entrance into private property must be for more than a momentary period; (3) the entry into the property
should be under warrant or color of legal authority; (4) the property must be devoted to a public use or otherwise informally
appropriated or injuriously affected; and (5) the utilization of the property for public use must be in such a way to oust the owner and
deprive him of all beneficial enjoyment of the property. (Italics supplied)
In this case, the petitioners entrance in 1978 was without intent to expropriate or was not made under warrant or color of legal
authority, for it believed the property was public land covered by Proclamation No. 1354. When the private respondent raised his
claim of ownership sometime in 1979, the petitioner flatly refused the claim for compensation, nakedly insisted that the property was
public land and wrongly justified its possession by alleging it had already paid financial assistance to Marawi City in exchange for the
rights over the property. Only in 1990, after more than a decade of beneficial use, did the petitioner recognize private respondents
ownership and negotiate for the voluntary purchase of the property. A Deed of Sale with provisional payment and subject to
negotiations for the correct price was then executed.
Clearly, this is not the intent nor the expropriation contemplated by law. This is a simple attempt at a voluntary purchase and sale.
Obviously, the petitioner neglected and/or refused to exercise the power of eminent domain.
Only in 1992, after the private respondent sued to recover possession and petitioner filed its Complaint to expropriate, did petitioner
manifest its intention to exercise the power of eminent domain. Thus, the respondent Court correctly held:[19]
If We decree that the fair market value of the land be determined as of 1978, then We would be sanctioning a deceptive scheme
whereby NAPOCOR, for any reason other than for eminent domain would occupy anothers property and when later pressed for
payment, first negotiate for a low price and then conveniently expropriate the property when the land owner refuses to accept its
offer claiming that the taking of the property for the purpose of eminent domain should be reckoned as of the date when it started to
occupy the property and that the value of the property should be computed as of the date of the taking despite the increase in the
meantime in the value of the property.
In Noble vs. City of Manila,[20] the City entered into a lease-purchase agreement of a building constructed by the petitioners
predecessor-in-interest in accordance with the specifications of the former. The Court held that being bound by the said contract, the
City could not expropriate the building. Expropriation could be resorted to only when it is made necessary by the opposition of the
owner to the sale or by the lack of any agreement as to the price. Said the Court:
The contract, therefore, in so far as it refers to the purchase of the building, as we have interpreted it, is in force, not having been
revoked by the parties or by judicial decision. This being the case, the city being bound to buy the building at an agreed price, under

a valid and subsisting contract, and the plaintiff being agreeable to its sale, the expropriation thereof, as sought by the defendant, is
baseless. Expropriation lies only when it is made necessary by the opposition of the owner to the sale or by the lack of any agreement
as to the price. There being in the present case a valid and subsisting contract, between the owner of the building and the city, for
the purchase thereof at an agreed price, there is no reason for the expropriation. (Italics supplied)
In the instant case, petitioner effectively repudiated the deed of sale it entered into with the private respondent when it passed
Resolution No. 92-121 on May 25, 1992 authorizing its president to negotiate, inter alia, that payment shall be effected only after
Agus I HE project has been placed in operation. It was only then that petitioners intent to expropriate became manifest as private
respondent disagreed and, barely a month after, filed suit.
The Second Issue: Valuation
We now come to the issue of valuation.
The fair market value as held by the respondent Court, is the amount of P1,000.00 per square meter. In an expropriation case where
the principal issue is the determination of just compensation, as is the case here, a trial before Commissioners is indispensable to
allow the parties to present evidence on the issue of just compensation.[21] Inasmuch as the determination of just compensation in
eminent domain cases is a judicial function[22] and factual findings of the Court of Appeals are conclusive on the parties and
reviewable only when the case falls within the recognized exceptions,[23] which is not the situation obtaining in this petition, we see
no reason to disturb the factual findings as to valuation of the subject property. As can be gleaned from the records, the court-andthe-parties-appointed commissioners did not abuse their authority in evaluating the evidence submitted to them nor misappreciate
the clear preponderance of evidence. The amount fixed and agreed to by the respondent appellate Court is not grossly exorbitant.
[24] To quote:[25]
Commissioner Ali comes from the Office of the Register of Deeds who may well be considered an expert, with a general knowledge of
the appraisal of real estate and the prevailing prices of land in the vicinity of the land in question so that his opinion on the valuation
of the property cannot be lightly brushed aside.
The prevailing market value of the land is only one of the determinants used by the commissioners report the others being as herein
shown:
xxx xxx xxx
Commissioner Doromals report, recommending P300.00 per square meter, differs from the 2 commissioners only because his report
was based on the valuation as of 1978 by the City Appraisal Committee as clarified by the latters chairman in response to NAPOCORs
general counsels query (id., pp. 128-129).
In sum, we agree with the Court of Appeals that petitioner has failed to show why it should be granted an exemption from the general
rule in determining just compensation provided under Section 4 of Rule 67. On the contrary, private respondent has convinced us
that, indeed, such general rule should in fact be observed in this case.
WHEREFORE, the petition is hereby DISMISSED and the judgment appealed from AFFIRMED, except as to the interest on the monthly
rentals, which is hereby reduced from twelve percent (12%) to the legal rate of six percent (6%) per annum. Costs against the
petitioner.
SO ORDERED.
Narvasa, C.J. (Chairman), Davide, Jr., Melo, and Francisco, JJ., concur.

G.R. No. L-20232

September 30, 1964

MUNICIPALITY OF LA CARLOTA, plaintiff-appellee,

vs.
NATIONAL WATERWORKS and SEWERAGE AUTHORITY (NAWASA), defendant-appellant.
Rodolfo M. Uriarte, Rolando N. Medalla, Ernesto Ma. Uriarte and Abundio B. Huelar for plaintiff-appellee.
Government Corporate Counsel for defendant-appellant.
MAKALINTAL, J.:
The municipality of La Carlota was the owner of the waterworks system serving its inhabitants until the enactment of Republic Act No.
1383 on June 28, 1955, when, by virtue of its provisions, the National Waterworks and Sewerage Authority (NAWASA) assumed
ownership and took over the supervision, administration and control of the said system, including the collection of water rentals from
the consumers. On April 5, 1960 the municipality commenced this action in the Court of First Instance of Negros Occidental against
the NAWASA for recovery and accounting. On September 27, 1961 judgment was rendered as follows:
EN VIRTUD DE LO EXPUESTO, el Juzgado falla esta causa condenando a la demandada para que restituya al demandante el dominio y
titulo, asi como la posesion, supervision, administracion y control del sistema de traida de aguas del Municipio la Carlota.
Se ordena, asimismo, a la demandada para que dentro del plazo de 30 dias a contar desde la fecha en que esta decision quede firme
y ejecutoria, rinda una cuenta detallada de todas las cantidades cobradas por ella de los consumidores del sistema durante el periodo
de tiempo desde que se hizo cargo del sistema hasta la fecha en que actualmente haya restituido al demandante dicho sistema.
Por falta de pruebas, so sobresee la reconvencion interpuesta por la demandada.
Las costas del juicio se tasaran en contra de la demandada.1awphl.nt
In the present appeal by the defendant it assigns one error in the judgment, namely, "in holding that the possession, administration,
supervision and maintenance of the La Carlota water system is vested in the municipality of La Carlota ... even on the assumption
that ownership of said system belongs to the municipality."
The appellant concedes, on the authority of City of Baguio vs. NAWASA, 57 O.G. No. 9, p. 1584, and City of Cebu vs. NAWASA, G.R. No.
12892, April 20, 1960, that in so far as Republic Act No. 1383 transfers ownership of the water system of the appellee to the appellant
the said Act is unconstitutional because it does not provide for the payment of just compensation as required by the Constitution, the
transfer being in the nature of expropriation of private (patrimonial) property. However, it is contended that although ownership may
not thus be transferred, the law (Sec. 1) also authorizes the NAWASA to "have jurisdiction, supervision and control over ... all areas
now served by existing government-owned waterworks and sewarage and drainage systems within the boundaries of cities,
municipalities, and municipal districts in the Philippines ... . On this ground the appellant prays that the judgment appealed from be
reversed in part and that the return to it of the "possession, supervision, administration and control of the La Carlota waterworks
system" be ordered.
In City of Cebu vs. NAWASA, supra, which was an action for declaratory relief, this Court did not squarely pass upon the question of
whether, apart from ownership, the defendant could exercise "jurisdiction, supervision and control" over the Cebu waterworks system
without paying just compensation. It is true that the trial court upheld the exercise of such right in its decision, leaving for future
determination the question of what would constitute acts of ownership and what would be considered as an exercise of jurisdiction,
supervision and control, but this Court on appeal did not treat the particular matter as an issue before it and neither passed upon it
nor rendered a ruling thereon. That case is therefore no authority for the position of the appellant here as presented in its lone
assignment of error. Neither may it find support in the statement in our decision in City of Baguio vs. NAWASA, supra, that "unless this
aspect of the law (concerning payment of just compensation) is clarified and appellee is given its due compensation, appellee cannot
be deprived of its property even if appellant desires to take over the administration in line with the spirit of the law." This Court, in
said decision, took note of the authorities cited by the appellant therein to sustain its contention that Congress has the power,
without impairing vested rights, to transfer property of a municipal corporation from one government agency to another as long as
such property continues to be devoted to its original purpose. But the decision precisely pointed out that those authorities are not in
point, since the transfers involved therein were merely for purposes of administration, the ownership of and benefits from the
property being retained by the municipal corporations concerned, whereas the clear intent of Republic Act No. 1383 "is to effect a real
transfer of the ownership of the waterworks ... and does not merely encompass a transfer of administration."
It is hard to conceive how the jurisdiction, supervision and control of the appellee's waterworks system may be vested in the
appellant without destroying the integrity of the appellee's right of dominion. Ownership is nothing without the inherent rights of
possession, control and enjoyment. Where the owner is deprived of the ordinary and beneficial use of his property or of its value by
its being diverted to public use, there is taking within the constitutional sense. Taada & Fernando, Constitution of the Philippines, 4th
ed., Vol. I, pp. 215-216. Such deprivation would be the certain consequence if, as prayed for by the appellant, it should be allowed to
assume jurisdiction, supervision and control over the waterworks system of the appellee. That would be little less than an assumption
of ownership itself and not of mere administration.
The judgment appealed from is affirmed, with costs.

EN BANC
G.R. No. L-18841

January 27, 1969

REPUBLIC OF THE PHILIPPINES, plaintiff-appellant,

vs.
PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, defendant-appellant.
Office of the Solicitor General Arturo A. Alafriz, Assistant Solicitor General Antonio A. Torres and Solicitor Camilo D. Quiason for
plaintiff-appellant.
Ponce Enrile, Siguion Reyna, Montecillo and Belo for defendant-appellant.
REYES, J.B.L., J.:
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 theretofore issued against the defendant on the interconnection 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:
1awphil.t
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 time calls and other services that may be rendered by said system;
(d) To establish and maintain coastal stations to serve ships at sea or aircrafts and, when public interest so requires, to engage in the
international telecommunication service in agreement with other countries desiring to establish such service with the Republic of the
Philippines; and
(e) To abide by all existing rules and regulations prescribed by the International Telecommunication Convention relative to the
accounting, disposition and exchange of messages handled in the international service, and those that may hereafter be promulgated
by said convention and adhered to by the Government of the Republic of the Philippines. 1
The defendant, Philippine Long Distance Telephone Company (PLDT for short), is a public service corporation holding a legislative
franchise, Act 3426, as amended by Commonwealth Act 407, to install, operate and maintain a telephone system throughout the
Philippines and to carry on the business of electrical transmission of messages within the Philippines and between the Philippines and
the telephone systems of other countries. 2 The RCA Communications, Inc., (which is not a party to the present case but has
contractual relations with the parties) is an American corporation authorized to transact business in the Philippines and is the
grantee, by assignment, of a legislative franchise to operate a domestic station for the reception and transmission of long distance
wireless messages (Act 2178) and to operate broadcasting and radio-telephone and radio-telegraphic communications services (Act
3180). 3
Sometime in 1933, the defendant, PLDT, and the RCA Communications, Inc., entered into an agreement whereby telephone
messages, coming from the United States and received by RCA's domestic station, could automatically be transferred to the lines of
PLDT; and vice-versa, for calls collected by the PLDT for transmission from the Philippines to the United States. The contracting
parties agreed to divide the tolls, as follows: 25% to PLDT and 75% to RCA. The sharing was amended in 1941 to 30% for PLDT and
70% for RCA, and again amended in 1947 to a 50-50 basis. The arrangement was later extended to radio-telephone messages to and
from European and Asiatic countries. Their contract contained a stipulation that either party could terminate it on a 24-month notice
to the other. 4 On 2 February 1956, PLDT gave notice to RCA to terminate their contract on 2 February 1958. 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 inter-connected with the PLDT's facilities,
referring to the rented trunk lines, for the Bureau had used the trunk lines not only for the use of government offices but even to
serve private persons or the general public, in competition with the business of the PLDT; and gave notice that if said violations were
not stopped by midnight of 12 April 1958, the PLDT would sever the telephone connections. 13 When the PLDT received no reply, it
disconnected the trunk lines being rented by the Bureau at midnight on 12 April 1958. 14 The result was the isolation of the
Philippines, on telephone services, from the rest of the world, except the United States. 15
At that time, the Bureau was maintaining 5,000 telephones and had 5,000 pending applications for telephone connection. 16 The
PLDT was also maintaining 60,000 telephones and had also 20,000 pending applications. 17 Through the years, neither of them has
been able to fill up the demand for telephone service.
The Bureau of Telecommunications had proposed to the PLDT on 8 January 1958 that both enter into an interconnecting agreement,
with the government paying (on a call basis) for all calls passing through the interconnecting facilities from the Government
Telephone System to the PLDT. 18 The PLDT replied that it was willing to enter into an agreement on overseas telephone service to
Europe and Asian countries provided that the Bureau would submit to the jurisdiction and regulations of the Public Service
Commission and in consideration of 37 1/2% of the gross revenues. 19 In its memorandum in lieu of oral argument in this Court dated
9 February 1964, on page 8, the defendant reduced its offer to 33 1/3 % (1/3) as its share in the overseas telephone service. The
proposals were not accepted by either party.
On 12 April 1958, plaintiff Republic commenced suit against the defendant, Philippine Long Distance Telephone Company, in the
Court of First Instance of Manila (Civil Case No. 35805), praying in its complaint for judgment commanding the PLDT to execute a
contract with plaintiff, through the Bureau, for the use of the facilities of defendant's telephone system throughout the Philippines
under such terms and conditions as the court might consider reasonable, and for a writ of preliminary injunction against the
defendant company to restrain the severance of the existing telephone connections and/or restore those severed.
Acting on the application of the plaintiff, and on the ground that the severance of telephone connections by the defendant company
would isolate the Philippines from other countries, the court a quo, on 14 April 1958, issued an order for the defendant:
(1) to forthwith reconnect and restore the seventy-eight (78) trunk lines that it has disconnected between the facilities of the
Government Telephone System, including its overseas telephone services, and the facilities of defendant; (2) to refrain from carrying
into effect its threat to sever the existing telephone communication between the Bureau of Telecommunications and defendant, and
not to make connection over its telephone system of telephone calls coming to the Philippines from foreign countries through the said
Bureau's telephone facilities and the radio facilities of RCA Communications, Inc.; and (3) to accept and connect through its telephone
system all such telephone calls coming to the Philippines from foreign countries until further order of this Court.
On 28 April 1958, the defendant company filed its answer, with counterclaims.
It denied any obligation on its part to execute a contrary 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. 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 defendants 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. Nominally, 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 inter-service connection between both
telephone systems is not much different. In either case private property is subjected to a burden for public use and benefit. If, under
section 6, Article XIII, of the Constitution, the State may, in the interest of national welfare, transfer utilities to public ownership upon
payment of just compensation, there is no reason why the State may not require a public utility to render services in the general
interest, provided just compensation is paid therefor. Ultimately, the beneficiary of the interconnecting service would be the users of
both telephone systems, so that the condemnation would be for public use.

The Bureau of Telecommunications, under section 78 (b) of Executive Order No. 94, may operate and maintain wire telephone or
radio telephone communications throughout the Philippines by utilizing existing facilities in cities, towns, and provinces under such
terms and conditions or arrangement with present owners or operators as may be agreed upon to the satisfaction of all concerned;
but there is nothing in this section that would exclude resort to condemnation proceedings where unreasonable or unjust terms and
conditions are exacted, to the extent of crippling or seriously hampering the operations of said Bureau.
A perusal of the complaint shows that the Republic's cause of action is predicated upon the radio telephonic isolation of the Bureau's
facilities from the outside world if the severance of interconnection were to be carried out by the PLDT, thereby preventing the Bureau
of Telecommunications from properly discharging its functions, to the prejudice of the general public. Save for the prayer to compel
the PLDT to enter into a contract (and the prayer is no essential part of the pleading), the averments make out a case for compulsory
rendering of 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 (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 message 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 Mahan 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 right 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 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 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 lines, 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 "parasitically" (sic) with its own telephone services. Considering, however, that the PLDT franchise is nonexclusive; 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, Castro, Fernando, Capistrano, Teehankee and Barredo, JJ., concur.