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G.R. No.

L-3491 June 24, 1983


CITY GOVERNMENT OF QUEZON CITY and CITY COUNCIL OF QUEZON
CITY, petitioners,
vs.
HON. JUDGE VICENTE G. ERICTA as Judge of the Court of First Instance of
Rizal, Quezon City, Branch XVIII; HIMLAYANG PILIPINO, INC., respondents.
Facts:
Section 9 of Ordinance No. 6118, S-64 provides that at least 6% of the total area of
the memorial park cemetery shall be set aside for the charity burial of deceased
persons who are paupers and have been residents of Quezon City for at least 5
years prior to their death. As such, the Quezon City engineer required the
respondent, Himlayang Pilipino Inc, to stop any further selling and/or transaction of
memorial park lots in Quezon City where the owners thereof have failed to donate
the required 6% space intended for paupers burial.

The then Court of First Instance and its judge, Hon. Ericta, declared Section 9 of
Ordinance No. 6118, S-64 null and void.

Petitioners argued that the taking of the respondents property is a valid and
reasonable exercise of police power and that the land is taken for a public use as it
is intended for the burial ground of paupers. They further argued that the Quezon
City Council is authorized under its charter, in the exercise of local police power,
to make such further ordinances and resolutions not repugnant to law as may be
necessary to carry into effect and discharge the powers and duties conferred by
this Act and such as it shall deem necessary and proper to provide for the health
and safety, promote the prosperity, improve the morals, peace, good order,
comfort and convenience of the city and the inhabitants thereof, and for the
protection of property therein.

On the otherhand, respondent Himlayang Pilipino, Inc. contended that the taking or
confiscation of property was obvious because the questioned ordinance
permanently restricts the use of the property such that it cannot be used for any
reasonable purpose and deprives the owner of all beneficial use of his property.

Issue:
Is Section 9 of the ordinance in question a valid exercise of the police power?
Held:
No. The Sec. 9 of the ordinance is not a valid exercise of the police power.

Occupying the forefront in the bill of rights is the provision which states that no
person shall be deprived of life, liberty or property without due process of law (Art.
Ill, Section 1 subparagraph 1, Constitution). On the other hand, there are three
inherent powers of government by which the state interferes with the property
rights, namely-. (1) police power, (2) eminent domain, (3) taxation. These are said
to exist independently of the Constitution as necessary attributes of sovereignty.

An examination of the Charter of Quezon City (Rep. Act No. 537), does not reveal
any provision that would justify the ordinance in question except the provision
granting police power to the City. Section 9 cannot be justified under the power
granted to Quezon City to tax, fix the license fee, and regulate such other
business, trades, and occupation as may be established or practised in the City.
The power to regulate does not include the power to prohibit or confiscate. The
ordinance in question not only confiscates but also prohibits the operation of a
memorial park cemetery.

Police power is defined by Freund as the power of promoting the public welfare by
restraining and regulating the use of liberty and property. It is usually exerted in
order to merely regulate the use and enjoyment of property of the owner. If he is
deprived of his property outright, it is not taken for public use but rather to destroy
in order to promote the general welfare. In police power, the owner does not
recover from the government for injury sustained in consequence thereof.

Under the provisions of municipal charters which are known as the general welfare
clauses, a city, by virtue of its police power, may adopt ordinances to the peace,
safety, health, morals and the best and highest interests of the municipality. It is a
well-settled principle, growing out of the nature of well-ordered and society, that
every holder of property, however absolute and may be his title, holds it under the
implied liability that his use of it shall not be injurious to the equal enjoyment of
others having an equal right to the enjoyment of their property, nor injurious to the
rights of the community. A property in the state is held subject to its general
regulations, which are necessary to the common good and general welfare. Rights
of property, like all other social and conventional rights, are subject to such
reasonable limitations in their enjoyment as shall prevent them from being
injurious, and to such reasonable restraints and regulations, established by law, as
the legislature, under the governing and controlling power vested in them by the
constitution, may think necessary and expedient. The state, under the police
power, is possessed with plenary power to deal with all matters relating to the
general health, morals, and safety of the people, so long as it does not contravene
any positive inhibition of the organic law and providing that such power is not
exercised in such a manner as to justify the interference of the courts to prevent
positive wrong and oppression.

However, in the case at hand, there is no reasonable relation between the setting
aside of at least six (6) percent of the total area of an private cemeteries for
charity burial grounds of deceased paupers and the promotion of health, morals,
good order, safety, or the general welfare of the people. The ordinance is actually
a taking without compensation of a certain area from a private cemetery to benefit
paupers who are charges of the municipal corporation. Instead of building or
maintaining a public cemetery for this purpose, the city passes the burden to
private cemeteries.

The expropriation without compensation of a portion of private cemeteries is not


covered by Section 12(t) of Republic Act 537, the Revised Charter of Quezon City
which empowers the city council to prohibit the burial of the dead within the center
of population of the city and to provide for their burial in a proper place subject to
the provisions of general law regulating burial grounds and cemeteries. When the
Local Government Code, Batas Pambansa Blg. 337 provides in Section 177 (q) that
a Sangguniang panlungsod may provide for the burial of the dead in such place
and in such manner as prescribed by law or ordinance it simply authorizes the
city to provide its own city owned land or to buy or expropriate private properties
to construct public cemeteries. This has been the law and practise in the past. It
continues to the present. Expropriation, however, requires payment of just
compensation. The questioned ordinance is different from laws and regulations
requiring owners of subdivisions to set aside certain areas for streets, parks,
playgrounds, and other public facilities from the land they sell to buyers of
subdivision lots. The necessities of public safety, health, and convenience are very
clear from said requirements which are intended to insure the development of
communities with salubrious and wholesome environments. The beneficiaries of
the regulation, in turn, are made to pay by the subdivision developer when
individual lots are sold to home-owners.

WHEREFORE, the petition for review is hereby DISMISSED. The decision of the
respondent court is affirmed.
NATIONAL POWER CORPORATION, petitioner, vs. COURT OF APPEALS and MACAPANTON
MANGONDATO, respondents. [G.R. No. 113194. March 11, 1996]

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. T-378-A, under the mistaken belief that it forms part of the public land reserved for use
by NAPOCOR for hydroelectric power purposes under Proclamation No. 1354 of the
President of the Philippines dated December 3, 1974.
NAPOCOR alleged that the subject land was until then possessed and administered
by Marawi City so that in exchange for the 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. 145-149).
In the meanwhile, on August 7, 1992, Mangondato filed an Ex-Parte Manifestation To
Correct Clerical Error of Description of Property submitting that Lot 3 which does not form
part of the subject property was included in the Complaint because of a clerical error
inadvertently committed by the typist who continuously copied the description of the
property covered by Transfer Certificate of Title No. T-378-A, and thus praying that the
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-and-the-
parties-appointed commissioners did not abuse their authority in evaluating the evidence
submitted to them nor misappreciate the clear preponderance of evidence. The amount
fixed and agreed to by the respondent appellate Court is not grossly exorbitant. [24] To
quote:[25]
Commissioner Ali comes from the Office of the Register of Deeds who may well be
considered an expert, with a general knowledge of the appraisal of real estate and the
prevailing prices of land in the vicinity of the land in question so that his opinion on the
valuation of the property cannot be lightly brushed aside.
The prevailing market value of the land is only one of the determinants used by the
commissioners report the others being as herein shown:
xxx xxx xxx
Commissioner 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.

THE OFFICE OF THE SOLICITOR GENERAL, Petitioner, vs.


AYALA LAND INCORPORATED, ROBINSONS LAND CORPORATION, SHANGRI-LA
PLAZA CORPORATION and SM PRIME HOLDINGS, INC.,Respondents.
G.R. No. 177056 September 18, 2009

Facts:
This is a Petition for Review on Certiorari, under Rule 45 of the Revised Rules of
Court, filed by petitioner seeking the reversal and setting aside of the decision of CA which
affirmed the decision of RTC, which denied the Motion for Reconsideration of OSG. The RTC
adjudged that respondents Ayala Land Incorporated (Ayala Land), Robinsons Land
Corporation (Robinsons), Shangri-la Plaza Corporation (Shangri-la), and SM Prime Holdings,
Inc. (SM Prime) could not be obliged to provide free parking spaces in their malls to their
patrons and the general public.
The Senate Committee on Trade and Commerce found that the collection of parking
fees by shopping malls is contrary to National Building Code and figuratively speaking, the
Code has expropriated the land for parking. Also, Committee stated that the collection of
parking fees would be against Article II of RA 9734 (Consumer Act of the Philippines) as to
the States policy of protecting the interest of consumers. Moreover, Section 201 of the
National Building Code gives the responsibility for the administration and enforcement of
the provisions of the Code, including the imposition of penalties for administrative violations
thereof to the Secretary of Public Works. This is not being strictly followed as the LGUs are
tasked to discharge the regulatory powers of DPWH instead of DPWH instead.
As such, Senate Committee recommended that: 1) Office of Solicitor General should
institute the action to enjoin the collction of parking fees and enforce the sanctions for
violation of National Building Code; 2) DTI pursuant to RA 7394 should enforce the
provisions of Code relative to parking; and 3) Congress should amend and update the
National Building Code to prohibit the collection of parking fees and its waiver of liability.
Respondent SM Prime assailed the recommendation of the Committee and filed a
Petition for Declaratory Relief under Rule 63 of the Revised Rules of Court against DPWH
and local building officials, contending that: 1) Rule XIX of Implementing Rules and
Regulations of National Building Code is unconstitutional and void; 2) respondent has the
legal right to lease parking spaces; and 3) National Building Code IRR is ineffective as it was
not published for 3 consecutive weeks in newspaper of general circulation as mandated by
Section 211 of PD 1096.
OSG then filed a Petition for Declaratory Relief and Injunction (with Prayer for Temporary
Restraining Order and Writ of Preliminary Injunction) to the RTC against respondents,
prohibiting them from collecting parking fees and contending that their practice of charging
parking fees is violative of National Building Code.
The RTC held that: 1) OSG has the capacity to institute the proceeding it being a
controversy of public welfare; 2) a petition for declaratory relief is proper since all the
requisites are present; 3) the Building Code with its IRR does not necessarily impose that
parking spaces shall be free of charge and providing parking spaces for free can be
considered as unlawful taking of property right without just compensation; and 4) there was
no sufficient evidence to justify any award for damages. They deemed that the respondents
are not obligated to provide parking spaces free of charge.
OSG appealed the decision to CA, saying that RTC erred in holding that the National
Building Code did not intend the parking spaces to be free of charge. On the otherhand,
respondent SM filed a separate appeal to the CA, contending that: 1) RTC erred in failing to
declare Rule XIX of IRR as unconstitutional; 2) RTC erred in failing to declare IRR ineffective
for not having been published as required by law; 3) RTC erred in dismissing the OSGs
petition for failure to exhaust administrative remedies; and 4) RTC erred in failing to declare
that OSG has no legal standing as it is not a real party-in-interest.
CA denied the appeals of both petitioners and respondents on the following grounds:
1) OSG did not fail to exhaust administrative remedies and that an administrative review is
not a condition precedent to judicial relief where the question in dispute is purely a legal
one and nothing of an administrative nature is to be or can be done; 2) the validity of
National Building Code IRR cannot be proceeded as it was not discussed in RTC and the
controversy could be settled on other grounds without touching the issue of validity since
the courts should refrain from passing upon the constitutionality of a law; and 3) Section
803 of National Building Code and Rule XIX of IRR are clear that they are only intended to
control the occupancy of areas and structures, and in the absence of provision of law,
respondents could not be obliged to provide parking spaces free of charge.
As such, OSG presented itself to SC for the instant Petition for Review.

Issues:
1. Whether the CA erred in affirming the ruling of RTC that respondents are not obliged to
provide free parking spaces to their customers or the public.
2. Whether the petition of OSG for prohibiting the collection of parking fees is a valid
exercise of the police power of State.

Held:
1. No. The CA was correct in affirming the ruling of RTC, and the respondents are not
obliged to provide free parking spaces. SC found no merit in the OSGs petition:
Sec 803 of National Building Code.
Percentage of Site Occupancy states that maximum site occupancy shall be governed by
the use, type of construction, and height of the building and the use, area, nature, and
location of the site; and subject to the provisions of the local zoning requirements and in
accordance with the rules and regulations promulgated by the Secretary.
RULE XIX PARKING AND LOADING SPACE REQUIREMENTS
Pursuant to Section 803 of the National Building Code (PD 1096) providing for maximum
site occupancy, the following provisions on parking and loading space requirements shall be
observed:
1. The parking space ratings listed below are minimum off-street requirements for specific
uses/occupancies for buildings/structures:
1.1 The size of an average automobile parking slot shall be computed as 2.4 meters by 5.00
meters for perpendicular or diagonal parking, 2.00 meters by 6.00 meters for parallel
parking. A truck or bus parking/loading slot shall be computed at a minimum of 3.60 meters
by 12.00 meters. The parking slot shall be drawn to scale and the total number of which
shall be indicated on the plans and specified whether or not parking accommodations, are
attendant-managed. (See Section 2 for computation of parking requirements).
x x x x
1.7 Neighborhood shopping center 1 slot/100 sq. m. of shopping floor area
SECTION 102. Declaration of Policy
It is hereby declared to be the policy of the State to safeguard life, health, property, and
public welfare, consistent with the principles of sound environmental management and
control; and to this end, make it the purpose of this Code to provide for all buildings and
structures, a framework of minimum standards and requirements to regulate and control
their location, site, design, quality of materials, construction, use, occupancy, and
maintenance.
The requirement of free-of-charge parking, the OSG argues, greatly contributes to the aim
of safeguarding life, health, property, and public welfare, consistent with the principles of
sound environmental management and control. Adequate parking spaces would contribute
greatly to alleviating traffic congestion when complemented by quick and easy access
thereto because of free-charge parking. Moreover, the power to regulate and control the
use, occupancy, and maintenance of buildings and structures carries with it the power to
impose fees and, conversely, to control partially or, as in this case, absolutely the
imposition of such fees.
The explicit directive of the above is that respondents, as operators/lessors of
neighborhood shopping centers, should provide parking and loading spaces with the
minimum ratio of one slot per 100 square meters of shopping floor area. There is nothing
therein pertaining to the collection (or non-collection) of parking fees by respondents. In
fact, the term parking fees cannot even be found at all in the entire National Building
Code and its IRR. One rule of statutory construction is that if a statute is clear and
unequivocal, it must be given its literal meaning and applied without any attempt at
interpretation. Since Section 803 of the National Building Code and Rule XIX of its IRR do
not mention parking fees, then simply, said provisions do not regulate the collection of the
same
The OSG cannot rely on Section 102 of the National Building Code to expand the
coverage of Section 803 of the same Code and Rule XIX of the IRR, so as to include the
regulation of parking fees. The OSG limits its citation to the first part of Section 102 of the
National Building Code declaring the policy of the State to safeguard life, health, property,
and public welfare, consistent with the principles of sound environmental management and
control; but totally ignores the second part of said provision, which reads, and to this end,
make it the purpose of this Code to provide for all buildings and structures, a framework of
minimum standards and requirements to regulate and control their location, site, design,
quality of materials, construction, use, occupancy, and maintenance. While the first part of
Section 102 of the National Building Code lays down the State policy, it is the second part
thereof that explains how said policy shall be carried out in the Code. Section 102 of the
National Building Code is not an all-encompassing grant of regulatory power to the DPWH
Secretary and local building officials in the name of life, health, property, and public
welfare. On the contrary, it limits the regulatory power of said officials to ensuring that the
minimum standards and requirements for all buildings and structures, as set forth in the
National Building Code, are complied with.
Consequently, the OSG cannot claim that in addition to fixing the minimum
requirements for parking spaces for buildings, Rule XIX of the IRR also mandates that such
parking spaces be provided by building owners free of charge. If Rule XIX is not covered by
the enabling law, then it cannot be added to or included in the implementing rules. The
rule-making power of administrative agencies must be confined to details for regulating the
mode or proceedings to carry into effect the law as it has been enacted, and it cannot be
extended to amend or expand the statutory requirements or to embrace matters not
covered by the statute. Administrative regulations must always be in harmony with the
provisions of the law because any resulting discrepancy between the two will always be
resolved in favor of the basic law.

2. No. The petition of OSG to prohibit collection of parking fees is not a valid exercise of the
police power of State.
It is not sufficient for the OSG to claim that the power to regulate and control the use,
occupancy, and maintenance of buildings and structures carries with it the power to impose
fees and, conversely, to control, partially or, as in this case, absolutely, the imposition of
such fees. Firstly, the fees within the power of regulatory agencies to impose are
regulatory fees. It has been settled law in this jurisdiction that this broad and all-
compassing governmental competence to restrict rights of liberty and property carries with
it the undeniable power to collect a regulatory fee. It looks to the enactment of specific
measures that govern the relations not only as between individuals but also as between
private parties and the political society. True, if the regulatory agencies have the power to
impose regulatory fees, then conversely, they also have the power to remove the same.
Even so, it is worthy to note that the present case does not involve the imposition by the
DPWH Secretary and local building officials of regulatory fees upon respondents; but the
collection by respondents of parking fees from persons who use the mall parking facilities.
Secondly, assuming arguendo that the DPWH Secretary and local building officials do have
regulatory powers over the collection of parking fees for the use of privately owned parking
facilities, they cannot allow or prohibit such collection arbitrarily or whimsically. Whether
allowing or prohibiting the collection of such parking fees, the action of the DPWH Secretary
and local building officials must pass the test of classic reasonableness and propriety of the
measures or means in the promotion of the ends sought to be accomplished.
Without using the term outright, the OSG is actually invoking police power to justify the
regulation by the State, through the DPWH Secretary and local building officials, of privately
owned parking facilities, including the collection by the owners/operators of such facilities
of parking fees from the public for the use thereof. The Court finds, however, that in totally
prohibiting respondents from collecting parking fees, the State would be acting beyond the
bounds of police power.
Police power is the power of promoting the public welfare by restraining and
regulating the use of liberty and property. It is usually exerted in order to merely regulate
the use and enjoyment of the property of the owner. The power to regulate, however, does
not include the power to prohibit. A fortiori, the power to regulate does not include the
power to confiscate. Police power does not involve the taking or confiscation of property,
with the exception of a few cases where there is a necessity to confiscate private property
in order to destroy it for the purpose of protecting peace and order and of promoting the
general welfare; for instance, the confiscation of an illegally possessed article, such as
opium and firearms.
When there is a taking or confiscation of private property for public use, the State is
no longer exercising police power, but another of its inherent powers, namely, eminent
domain. Eminent domain enables the State to forcibly acquire private lands intended for
public use upon payment of just compensation to the owner.
Normally, of course, the power of eminent domain results in the taking or appropriation of
title to, and possession of, the expropriated property; but no cogent reason appears why
the said power may not be availed of only to impose a burden upon the owner of
condemned property, without loss of title and possession. It is a settled rule that neither
acquisition of title nor total destruction of value is essential to taking. It is usually in cases
where title remains with the private owner that inquiry should be made to determine
whether the impairment of a property is merely regulated or amounts to a compensable
taking. A regulation that deprives any person of the profitable use of his property
constitutes a taking and entitles him to compensation, unless the invasion of rights is so
slight as to permit the regulation to be justified under the police power. Similarly, a police
regulation that unreasonably restricts the right to use business property for business
purposes amounts to a taking of private property, and the owner may recover therefor.
Although in the present case, title to and/or possession of the parking facilities
remain/s with respondents, the prohibition against their collection of parking fees from the
public, for the use of said facilities, is already tantamount to a taking or confiscation of their
properties. The State is not only requiring that respondents devote a portion of the latters
properties for use as parking spaces, but is also mandating that they give the public access
to said parking spaces for free. Such is already an excessive intrusion into the property
rights of respondents. Not only are they being deprived of the right to use a portion of their
properties as they wish, they are further prohibited from profiting from its use or even just
recovering therefrom the expenses for the maintenance and operation of the required
parking facilities.
In conclusion, the total prohibition against the collection by respondents of parking
fees from persons who use the mall parking facilities has no basis in the National Building
Code or its IRR. The State also cannot impose the same prohibition by generally invoking
police power, since said prohibition amounts to a taking of respondents property without
payment of just compensation.

WHEREFORE, the instant Petition for Review on Certiorari is hereby DENIED. The
Decision dated 25 January 2007 and Resolution dated 14 March 2007 of the Court of
Appeals in CA-G.R. CV No. 76298, affirming in toto the Joint Decision dated 29 May 2002 of
the Regional Trial Court of Makati City, Branch 138, in Civil Cases No. 00-1208 and No. 00-
1210 are hereby AFFIRMED. No costs.

MASIKIP vs. CITY OF PASIG G.R. No. 136349, January 23,


2006
-the power of eminent domain is not inherent in LGU and must be expressly provided for by
statute

FACTS:
Lourdes Dela Paz Masikip is the registered owner of a parcel of land, which the City of
Pasig sought to expropriate a portion thereof for the sports development and recreational
activities of the residents of Barangay Caniogan. This was in January 1994. Masikip
refused.
On March 23, 1994, City of Pasig sought again to expropriate said portion of land for
the alleged purpose that it was in line with the program of the Municipal Government to
provide land opportunities to deserving poor sectors of our community.
Petitioner protested, so City of Pasig filed with the trial court a complaint for
expropriation. The Motion to Dismiss filed by Masikip was dismissed by the rial court on the
ground that there was genuine necessity to expropriate the property. Case was elevated to
the Court of Appeals, which dismissed petition for lack of merit.
Hence, this petition.

ISSUE:
W/N there was genuine necessity to expropriate the property
HELD:
Eminent domain is the right of a government to take and appropriate private
property to the public use, whenever the public exigency requires it, which can be done
only on condition of providing a reasonably compensation therefor. It is the power of the
State or its instrumentalities to take private property for public use and is inseparable from
sovereignty and inherent in government.

This power is lodged in the legislative branch of government. It delegates the power
thereof to the LGUs, other public entities and public utility corporations, subject only to
constitutional limitations. LGUs have no inherent power of eminent domain and may
exercise it only when expressly authorized by statute.

Sec. 19, LGC: LGU may, through its chief executive and acting pursuant to an
ordinance, exercise the power of eminent domain for public use, purpose or welfare for the
benefit of the poor and landless, upon payment of just compensation, pursuant to the
provisions of the Constitution and pertinent laws.

Provided:
(1) 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;
(2) LGU may immediately take possession of the property upon the filing of
expropriation proceedings and upon making a deposit with the proper court of at least 15%
fair market value of the property based on the current tax declaration; and
(3) amount to be paid for expropriated property shall be determined by the proper
court, based on the fair market value at the time of the taking of the property

There is already an established sports development and recreational activity center


at Rainforest Park in Pasig City. Evidently, there is no genuine necessity to justify the
expropriation. The records show that the Certification issued by the Caniogan Barangay
Council which became the basis for the passage of Ordinance No. 4, authorizing the
expropriation, indicates that the intended beneficiary is the Melendres Compound
Homeowners Association, a private, non-profit organization, not the residents of Caniogan.