G.R. No.
127820 July 20, 1998
MUNICIPALITY OF PARAAQUE, petitioner,
vs.
V.M. REALTY CORPORATION, respondent.
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 Court's 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, defendant's 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. 5
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 2-B-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 petitioner's 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
respondent's motion, its Answer was treated as a motion to
dismiss. 14 On March 24, 1991, 15 petitioner filed its opposition,
stressing that the trial court's 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. Petitioner's 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 court's Decision. Respondent Court, in its assailed Resolution
promulgated on January 8, 1997, 19 denied petitioner's 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 Court's 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 (Emphasis 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 latter's 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:
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. (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 petitioner's 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 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 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 Sangguniang 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 petitioner's Complaint for
expropriation filed on September 23, 1993. It is hornbook doctrine
that
. . . 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 court's
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
petitioner's proper exercise of its power of eminent domain over
subject property. Costs against petitioner.
SO ORDERED.
Municipality of Paranaque v VM
Realty G.R. No. 127820. July 20,
1998
Facts:
Under a city council resolution, the Municipality of Paraaque filed
on September 20, 1993, a Complaint for expropriation against Private
Respondent V.M. Realty Corporation over two parcels of land of
10,000 square meters. The city previously negotiated for the sale of
the property but VM didnt accept.
The trial court issued an Order dated February 4, 1994, 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.
According to the respondent, 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. Petitioner claimed that res judicata was not applicable.
The trial court dismissed the case. The petitioners MFR was denied.
The CA affirmed.
Issues:
1. WON 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. WON the principle of res judicata as a ground for dismissal of case
is not applicable when public interest is primarily involved.
Held: No to 1st Issue. Yes to 2nd. Petition dismissed.
Ratio:
1. NO. 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 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.
To strengthen this point, the petitioner cited 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.
Court-No. 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. 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.
Sec 19, RA 7160
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.
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.
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.
In Republic vs De Knecht, 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.

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. An ordinance possesses a
general and permanent character, but a resolution is temporary in
nature.

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.

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.

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.

Petitioner relies on Article 36, Rule VI of the Implementing Rules,

which requires only a resolution to authorize an LGU to exercise
eminent domain. 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.

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.

2. As correctly found by the Court of Appeals and the trial court, 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, cannot
bar the right of the State or its agent to expropriate private property.

Eminent Domain can reach every form of property which the State
might need for public use whenever they need it.

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.
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
decision6 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
newly-discovered evidence. This motion for new trial and/or
reconsideration was denied by the court on July 12, 1961.
On July 17, 1961 the Republic gave notice of its intention to appeal
from the decision of May 26, 1961 and the order of July 12, 1961.
Defendant Castellvi also filed, on July 17, 1961, her notice of appeal
from the decision of the trial court.
The Republic filed various ex-parte motions for extension of time
within which to file its record on appeal. The Republic's record on
appeal was finally submitted on December 6, 1961.
Defendants Castellvi and Toledo-Gozun filed not only a joint
opposition to the approval of the Republic's record on appeal, but
also a joint memorandum in support of their opposition. The Republic
also filed a memorandum in support of its prayer for the approval of
its record on appeal. On December 27, 1961 the trial court issued an
order declaring both the record on appeal filed by the Republic, and
the record on appeal filed by defendant Castellvi as having been filed
out of time, thereby dismissing both appeals.
On January 11, 1962 the Republic filed a "motion to strike out the
order of December 27, 1961 and for reconsideration", and
subsequently an amended record 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 above-
mentioned contract, on a year to year basis (from July 1 of each year
to June 30 of the succeeding year) under the terms and conditions
therein stated.
Before the expiration of the contract of lease on June 30, 1956 the
Republic sought to renew the same but Castellvi refused. When the
AFP refused to vacate the leased premises after the termination of
the contract, on July 11, 1956, Castellvi wrote to the Chief of Staff,
AFP, informing the latter that the heirs of the property had decided
not to continue leasing the property in question because they had
decided to subdivide the land for sale to the general public,
demanding that the property be vacated within 30 days from receipt
of the letter, and that the premises be returned in substantially the
same condition as before occupancy (Exh. 5 Castellvi). A follow-up
letter was sent on January 12, 1957, demanding the delivery and
return of the property within one month from said date (Exh. 6
Castellvi). On January 30, 1957, Lieutenant General Alfonso Arellano,
Chief of Staff, answered the letter of Castellvi, saying that it was
difficult for the army to vacate the premises in view of the permanent
installations and other facilities worth almost P500,000.00 that were
erected and already established on the property, and that, there
being no other recourse, the acquisition of the property by means of
expropriation proceedings would be recommended to the President
(Exhibit "7" Castellvi).
Defendant Castellvi then brought suit in the Court of First Instance of
Pampanga, in Civil Case No. 1458, to eject the Philippine Air Force
from the land. While this ejectment case was pending, the Republic
instituted these expropriation proceedings, and, as stated earlier in
this opinion, the Republic was placed in possession of the lands on
August 10, 1959, On November 21, 1959, the Court of First Instance
of Pampanga, dismissed Civil Case No. 1458, upon petition of the
parties, in an order which, in part, reads as follows:
1. Plaintiff has agreed, as a matter of fact has
already signed an agreement with defendants,
whereby she has agreed to receive the rent of
the lands, subject matter of the instant case from
June 30, 1966 up to 1959 when the Philippine Air
Force was placed in possession by virtue of an
order of the Court upon depositing the
provisional amount as fixed by the Provincial
 Appraisal Committee with the Provincial
Treasurer of Pampanga;
2. That because of the above-cited agreement
wherein the administratrix decided to get the
rent corresponding to the rent from 1956 up to
1959 and considering that this action is one of
illegal detainer and/or to recover the possession
of said land by virtue of 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-Toledo-Gozun). 21
We agree with the findings, and the conclusions, of the lower court
that the lands that are the subject of expropriation in the present
case, as of August 10, 1959 when the same were taken possession of
by the Republic, were residential lands and were adaptable for use as
residential subdivisions. Indeed, the owners of these lands have the
right to their value for the use for which they would bring the most in
the market at the time the same were taken from them. The most
important issue to be resolved in the present case relates to the
question of what is the just compensation that should be paid to the
appellees.
The Republic asserts that the fair market value of the lands of the
appellees is P.20 per square meter. The Republic cites the case
of Republic vs. Narciso, et al., L-6594, which this Court decided on
May 18, 1956. The Narciso case involved lands that belonged to
Castellvi and Toledo-Gozun, and to one Donata Montemayor, which
were expropriated by the Republic in 1949 and which are now the
site of the Basa Air Base. In the Narciso case this Court fixed the fair
market value at P.20 per square meter. The lands that are sought to
be expropriated in the present case being contiguous to the lands
involved in the Narciso case, it is the stand of the Republic that the
price that should be fixed for the lands now in question should also
be at P.20 per square meter.
We can not sustain the stand of the Republic. We find that the price
of P.20 per square meter, as fixed by this Court in the Narciso case,
was based on the allegation of the defendants (owners) in their
answer to the complaint for eminent domain in that case that the
price of their lands was P2,000.00 per hectare and that was the price
that they asked the court to pay them. This Court said, then, that the
owners of the land could not be given more than what they had
asked, notwithstanding the recommendation of the majority of the
Commission on Appraisal which was adopted by the trial court
that the fair market value of the lands was P3,000.00 per hectare. We
also find that the price of P.20 per square meter in the Narciso case
was considered the fair market value of the lands as of the year 1949
when the expropriation proceedings were instituted, and at that time
the lands were classified as sugar lands, and assessed for taxation
purposes at around P400.00 per hectare, or P.04 per square 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.
Republic of the Philippines vs. Vda.
De Castellvi (G.R. No. L-20620)
Facts:
In 1947, the republic, through the Armed Forces of the Philippines
(AFP), entered into a lease agreement over a land in Pampanga with
Castellvi on a year-to-year basis. When Castellvi gave notice to
terminate the lease in 1956, the AFP refused because of the
permanent installations and other facilities worth almost
P500,000.00 that were erected and already established on the
property. She then instituted an ejectment proceeding against the
AFP. In 1959, however, the republic commenced the expropriation
proceedings for the land in question.
Issue: Whether or not the compensation should be determined as of
1947 or 1959.
Ruling:
The Supreme Court ruled that the taking should not be reckoned as
of 1947, and that just compensation should not be determined on
the basis of the value of the property that year .
The requisites for taking are:
1. The expropriator must enter a private property;
2. The entry must be for more than a momentary period;
3. It must be under warrant or color of authorities;
4. The property must be devoted for public use or otherwise
informally appropriated or injuriously affected; and
5. The utilization of the property for public use must be such a way as
to oust the owner and deprive him of beneficial enjoyment of the
property.
Only requisites 1, 3 and 4 are present. It is clear, therefore, that the
taking of Castellvis 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.
Requisite number 2 is not present according to the Supreme Court,
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 AFP, constructed some
installations of a permanent nature does not alter the fact that the
entry into the lant 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.
The 5th requirement is also lacking. 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. Cstellvi 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 paing,
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 Castellvis 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, and that the just compensation to be paid for the
Castellvis 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 Sec. 4, Rule 67 of the Rules of Court, just compensation is to

be determined as of the date of the filing of the complaint. The
Supreme 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.
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. 17Through 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 non-exclusive; that it
is well-known that defendant PLDT is unable to adequately cope with
the current demands for telephone service, as shown by the number
of pending applications therefor; and that the PLDT's right to just
compensation for the services rendered to the Government
telephone system and its users is herein recognized and preserved,
the objections of defendant-appellant are without merit. To uphold
the PLDT's contention is to subordinate the needs of the general
public to the right of the PLDT to derive profit from the future
expansion of its services under its non-exclusive franchise.
WHEREFORE, the decision of the Court of First Instance, now under
appeal, is affirmed, except in so far as it dismisses the petition of the
Republic of the Philippines to compel the Philippine Long Distance
Telephone Company to continue servicing the Government
telephone system upon such terms, and for a compensation, that the
trial court may determine to be just, including the period elapsed
from the filing of the original complaint or petition. And for this
purpose, the records are ordered returned to the court of origin for
further hearings and other proceedings not inconsistent with this
opinion. No costs.
REPUBLIC OF THE PHILIPPINES VS.
PLDT
FACTS:
Sometime in 1933, the defendant PLDT entered into an
agreement with RCA Communications Inc., an American corporation,
whereby telephone messages coming from the US and received by
RCAs domestic station, could automatically be transferred to the
lines of PLDT, and vice versa.
The plaintiff through the Bureau of Telecommunications, after
having set up its own Government Telephone System, by utilizing its
own appropriation and equipment and by renting trunk lines of the
PLDT, entered into an agreement with RCA for a joint overseas
telephone service.
Alleging that plaintiff is in competition with them, PLDT
notified the former and receiving no reply, disconnected the trunk
lines being rented by the same; thus, prompting the plaintiff to file a
case before the CFI praying for judgment commanding PLDT to
execute a contract with the Bureau for the use of the facilities of
PLDTs telephone system, and for a writ of preliminary injunction
against the defendant to restrain the severance of the existing trunk
lines and restore those severed.

Public petitioner commenced a suit against private respondent

praying for the right of the Bureau of Telecommunications to demand
interconnection between the Government Telephone System and
that of PLDT, so that the Government Telephone System could make
use of the lines and facilities of the PLDT. Private respondent
contends that it cannot be compelled to enter into a contract where
no agreement is had between them.

CFI: For PLDT - The CFI rendered judgment stating that it could not
compel PLDT to enter into such agreement. Hence this petition.

ISSUE: Whether or not interconnection between PLDT and the

Government Telephone System can be a valid object for
expropriation.

HELD: Yes, in the exercise of the sovereign power of eminent domain,

the Republic may require the telephone company to permit
interconnection as the needs of the government service may require,
subject to the payment of just compensation. The use of lines and
services to allow inter-service connection between the both
telephone systems, through expropriation can be a subject to an
easement of right of way.

Normally, the power of eminent domain results in taking or

appropriation of title to, and possession of, the expropriated party;
but no cogent reason appears why said power may not be availed of
to impose only a burden upon the owner of the condemned
property, without loss of title and possession. x x x the state may, in
the interest of national welfare, transfer utilities to public ownership
upon payment of just compensation, there is no reason why a state
may not require a public utility to render services in the general
interest, provided just compensation is paid therefor.
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 ofMarawi 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.
NATIONAL POWER CORPORATION
vs. CA and MANGONDATO
Facts:
In 1978, National Power Corporation (NAPOCOR), took possession of
a 21, 995 sq.m land, a portion of Lot 1 of the subdivision plan situated
in Marawi City, owned by Mangondato, under the mistaken belief
that it forms part of the public land reserved for use of the NAPOCOR
for hydroelectric power purposes under Proclamation No. 1354 of
the President of the Philippines dated Dec. 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 sq.m. Mangondato
claimed that the subject land is his duly registered private property
and that he is not privy to any agreement between NAPOCOR and
Marawi City and that any payment to the city cannot be considered
as payment to him.
Later NAPOCOR acceded to the fact that the subject property belongs
to Mangondato.
On July 13, 1990, NAPOCORs National Power Board (NAPOCORs
board) passed Resolution No. 90-225 resolving to pay Mangondato
P100.00 per sq.m for only a 12, 132 sq.m portion of the property plus
12% interest per annum from 1978. However, said resolution was
deferred to allow the NAPOCORs regional legal counsel to determine
whether P100.00 per sq.m is the fair market value.
On August 14, 1990, NAPOCORs board passed Resolution No. 90-316
resolving that Mangondato be paid the base price of P40.00 per sq.m
plus 12% from 1978 pending the determination whether P100.00 per
sq.m is the fair market value.
NAPOCORs regional legal counsels findings state that Mandondatos
property is classified as industrial which has a fair market value of
P300.00 for those along the national highway and on the basis of
recent Supreme Court decisions, NAPOCOR has to pay not less than
P300.00 per sq.m. NAPOCORs board on May 17, 1991 passed
Resolution No. 91-247 resolving to pay Mangondato P100.00 per
sq.m for the property excluding 12% interest per annum.
In a letter dated December 17, 1991 and February 4, 1992,
Mandondato disagreed with Resolution No. 91-247. At the same
time, to get partial payment, he asked that he be paid in the
meantime, P100.00 per sq.m without prejudice to pursuing his claim
for the proper and just compensation plus interest thereon.
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 sq.m without
prejudice to the final determination of the proper and just
compensation.
On March, 1991, the parties executed a Deed of Sale where
NAPOCOR paid Mangondato P100.00 per sq.m excluding interest and
without prejudice to Mandondatos pursuance of claims for just
compensation and interest.
In a letter dated April 20, 1992, Mangondato asked for the payment
of P300.00 per sq.m plus 12% interest per annum from 1978.
However, NAPOCORs board passed Resolution No. 92-121 granting
its president the authority to negotiate for the payment of P100.00
per sq.m for the land plus 12% interest per annum from 1978 less
payments already made.
On July 7, 1992, Mangondato filed before the lower court Civil case
against NAPOCOR seeking to recover the possession of the property
described in the complaint as Lots 1 and 3 of the subdivision plan, the
payment of a monthly rent of P15,000.00 from 1978 until the
surrender of the property, and other related costs.
On the other hand, NAPOCOR filed before the lower court a Civil Case
which is a Complaint for eminent domain against Mangondato over
the subject property.
Upon agreement of the parties, the two cases were ordered
consolidated and appointed Atty. Saipal Alawi representing the lower
court, Atty. Connie Doromal for NAPOCOR and Atty. Alimbsar Ali from
City Assessors Office to ascertain and report to the court the just
compensation.
On July 28, 1992, Commissioner Doromal filed his report
recommending a fair market value of P300.00 per sq.m as of
November 23, 1978. On August 6, 1992, Commissioners Alawi and Ali
filed their joint report recommending a fair market value of P1000.00
per sq.m as of 1992.
After receiving the reports and comments from the parties, the court
denied Mangondatos request for recovery of possession of the
property but ordering NAPOCOR to pay 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 payment of P1000.00 per sq.m as a just compensation.
Issues:
1) At what point in time should the value of the land subject of
expropriation be computed: at the date of taking or the date of
filing of the complaint for eminent domain?
Side issue: When is there Taking of Property?
2) What is the fair market value of the property?
Rulings:
1) The general rule in determining "just compensation" in eminent
domain is the value of the property as of the date of the filing of
complaint, as follows:
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.
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 Provincial Government of Rizal vs. Caro de Araullo, the Court ruled
that ". . . 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."
Following the above doctrine, in the case of Municipality of La Carlota
vs. The Spouses Felicidad Baltazar and Vicente Gan, said, ". . 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.
Side issue: This Court has defined the elements of taking as the
main ingredient in the exercise of power of eminent domain, 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.
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.
2) The fair market value as held by the respondent court is the
amount of P1000.00 per sq.m. In an expropriation case where the
principal issue is the determination of just compensation, a trial
before the Commissioners is indispensable to allow the parties to
present the evidence on the issue of just compensation. Inasmuch as
determination of just compensation in eminent domain cases is a
judicial function and factual findings of the Court of Appeals are
conclusive on the parties and reviewable only when the case falls
within the recognized exceptions, which is not the situation in this
petition, we see no reason to disturb the factual findings as to
valuation of the subject property.
NATIONAL POWER G.R. No. 168732 much less pay damages. Respondents further averred that the
CORPORATION, construction of the underground tunnels has endangered their lives
Petitioner, and properties as Marawi City lies in an area of local volcanic and
Present: tectonic activity. Further, these illegally constructed tunnels caused
-versus- them sleepless nights, serious anxiety and shock thereby entitling
them to recover moral damages and that by way of example for the
LUCMAN G. IBRAHIM, OMAR PUNO, C.J., Chairperson, public good, NAPOCOR must be held liable for exemplary damages.
G. MARUHOM, ELIAS G. SANDOVAL-GUTIERREZ,* Disputing respondents claim, NAPOCOR filed an answer with
MARUHOM, BUCAY G. CORONA, counterclaim denying the material allegations of the complaint and
MARUHOM, FAROUK G. AZCUNA, and interposing affirmative and special defenses, namely that (1) there is a
MARUHOM, HIDJARA G. GARCIA, JJ. failure to state a cause of action since respondents seek possession of
MARUHOM, ROCANIA G. the sub-terrain portion when they were never in possession of the
MARUHOM, POTRISAM G. same, (2) respondents have no cause of action because they failed to
MARUHOM, LUMBA G. Promulgated: show proof that they were the owners of the property, and (3) the
MARUHOM, SINAB G. tunnels are a government project for the benefit of all and all private
MARUHOM, ACMAD G. lands are subject to such easement as may be necessary for the
MARUHOM, SOLAYMAN G. June 29, 2007 same.[2]
MARUHOM, MOHAMAD M.
IBRAHIM, and CAIRONESA M. On August 7, 1996, the RTC rendered a Decision, the decretal portion
IBRAHIM, of which reads as follows:
Respondents.
X----------------------------------------------------------------------------------------X WHEREFORE, judgment is hereby
DECISION rendered:

AZCUNA, J.: 1. Denying plaintiffs [private

respondents] prayer for defendant [petitioner]
This is a petition for review on certiorari under Rule 45 of the National Power Corporation to dismantle the
Rules of Court seeking to annul the Decision[1] dated June 8, underground tunnels constructed between the
2005 rendered by the Court of Appeals (CA) in C.A.-G.R. CV No. 57792. lands of plaintiffs in Lots 1, 2, and 3 of Survey Plan
The facts are as follows: FP (VII-5) 2278;

On November 23, 1994, respondent Lucman G. Ibrahim, in 2. Ordering defendant to pay

his personal capacity and in behalf of his co-heirs Omar G. Maruhom, to plaintiffs the fair market value of said 70,000
Elias G. Maruhom, Bucay G. Maruhom, Mamod G. Maruhom, Farouk square meters of land covering Lots 1, 2, and 3 as
G. Maruhom, Hidjara G. Maruhom, Rocania G. Maruhom, Potrisam G. described in Survey Plan FP (VII-5) 2278 less the
Maruhom, Lumba G. Maruhom, Sinab G. Maruhom, Acmad G. area of 21,995 square meters at P1,000.00 per
Maruhom, Solayman G. Maruhom, Mohamad M. Ibrahim and square meter or a total of P48,005,000.00 for the
Caironesa M. Ibrahim, instituted an action against petitioner National remaining unpaid portion of 48,005 square
Power Corporation (NAPOCOR) for recovery of possession of land and meters; with 6% interest per annum from the filing
damages before the Regional Trial Court (RTC) of Lanao del Sur. of this case until paid;

In their complaint, Ibrahim and his co-heirs claimed that they 3. Ordering defendant to pay
were owners of several parcels of land described in Survey Plan FP (VII- plaintiffs a reasonable monthly rental of P0.68 per
5) 2278 consisting of 70,000 square meters, divided into three (3) square meter of the total area of 48,005 square
lots, i.e. Lots 1, 2, and 3 consisting of 31,894, 14,915, and 23,191 meters effective from its occupancy of the
square meters each respectively. Sometime in 1978, NAPOCOR, foregoing area in 1978 or a total of P7,050,974.40.
through alleged stealth and without respondents knowledge and prior
consent, took possession of the sub-terrain area of their lands and 4. Ordering defendant to pay
constructed therein underground tunnels. The existence of the plaintiffs the sum of P200,000.00 as moral
tunnels was only discovered sometime in July 1992 by respondents damages; and
and then later confirmed on November 13, 1992 by NAPOCOR itself
through a memorandum issued by the latters Acting Assistant Project 5. Ordering defendant to pay
Manager. The tunnels were apparently being used by NAPOCOR in the further sum of P200,000.00 as attorneys fees
siphoning the water of Lake Lanao and in the operation of NAPOCORs and the costs.
Agus II, III, IV, V, VI, VII projects located in Saguiran, Lanao del Sur;
Nangca and Balo-i in Lanao del Norte; and Ditucalan and Fuentes SO ORDERED.[3]
in Iligan City.
On August 15, 1996, Ibrahim, joined by his co-heirs, filed an Urgent
On September 19, 1992, respondent Omar G. Maruhom Motion for Execution of Judgment Pending Appeal. On the other hand,
requested the Marawi City Water District for a permit to construct NAPOCOR filed a Notice of Appeal by registered mail on August 19,
and/or install a motorized deep well in Lot 3 located in Saduc, Marawi 1996. Thereafter, NAPOCOR filed a vigorous opposition to the motion
City but his request was turned down because the construction of the for execution of judgment pending appeal with a motion for
deep well would cause danger to lives and property. On October 7, reconsideration of the Decision which it had received on August 9,
1992, respondents demanded that NAPOCOR pay damages and vacate 1996.
the sub-terrain portion of their lands but the latter refused to vacate
 On August 26, 1996, NAPOCOR filed a Manifestation and The RTC granted the petition and rendered a modified
Motion withdrawing its Notice of Appeal purposely to give way to the judgment dated September 8, 1997, thus:
hearing of its motion for reconsideration.
WHEREFORE, a modified judgment is hereby
On August 28, 1996, the RTC issued an Order granting rendered:
execution pending appeal and denying NAPOCORs motion for
reconsideration, which Order was received by NAPOCOR
on September 6, 1996.
1) Reducing the judgment
On September 9, 1996, NAPOCOR filed its Notice of Appeal award of plaintiffs for the fair
by registered mail which was denied by the RTC on the ground of market value
having been filed out of time. Meanwhile, the Decision of the RTC was of P48,005,000.00 by
executed pending appeal and funds of NAPOCOR were garnished by 9,526,000.00 or for a
respondents Ibrahim and his co-heirs. difference by P38,479,000.00
and by the further sum
On October 4, 1996, a Petition for Relief from Judgment was of P33,603,500.00 subject of
filed by respondents Omar G. Maruhom, Elias G. Maruhom, Bucay G. the execution pending appeal
Maruhom, Mamod G. Maruhom, Farouk G. Maruhom, Hidjara G. leaving a difference of
Maruhom, Potrisam G. Maruhom and Lumba G. Maruhom asserting as 4,878,500.00 which may be
follows: the subject of execution upon
the finality of this modified
1) they did not file a motion to judgment with 6% interest per
reconsider or appeal the decision within annum from the filing of the
the reglementary period of fifteen (15) case until paid.
days from receipt of judgment because
they believed in good faith that the 2) Awarding the sum
decision was for damages and rentals of P1,476,911.00 to herein
and attorneys fees only as prayed for in petitioners Omar G.
the complaint: Maruhom, Elias G. Maruhom,
Bucay G. Maruhom, Mahmod
2) it was only on August 26, 1996 that G. Maruhom, Farouk G.
they learned that the amounts awarded Maruhom, Hidjara G.
to the plaintiffs represented not only Maruhom, Portrisam G.
rentals, damages and attorneys fees but Maruhom and Lumba G.
the greatest portion of which was Maruhom as reasonable
payment of just compensation which in rental deductible from the
effect would make the defendant NPC awarded sum
the owner of the parcels of land of P7,050,974.40 pertaining
involved in the case; to plaintiffs.

3) when they learned of the nature of 3) Ordering defendant

the judgment, the period of appeal has
already expired;
4) they were prevented by fraud,
mistake, accident, or excusable
negligence from taking legal steps to
protect and preserve their rights over
their parcels of land in so far as the part
of the decision decreeing just
compensation for petitioners
properties;
5) they would never have agreed to the
alienation of their property in favor of
anybody, considering the fact that the
parcels of land involved in this case were
among the valuable properties they
inherited from their dear father and
they would rather see their land
crumble to dust than sell it to
anybody.[4]
embodied in the August 7,
1996 decision to pay plaintiffs
the sum of P200,000.00 as
moral damages; and further
sum of P200,000.00 as
attorneys fees and costs.
SO ORDERED.[5]
Subsequently, both respondent Ibrahim and NAPOCOR
appealed to the CA.
In the Decision dated June 8, 2005, the CA set aside the
modified judgment and reinstated the original Decision dated August
7, 1996, amending it further by deleting the award of moral damages
and reducing the amount of rentals and attorneys fees, thus:
WHEREFORE, premises considered, herein
Appeals are hereby partially GRANTED, the
Modified Judgment is ordered SET ASIDE and
rendered of no force and effect and the original
Decision of the court a quo dated 7 August 1996 is
hereby RESTORED with the MODIFICATION that
 the award of moral damages is DELETED and the
amounts of rentals and attorneys fees
are REDUCED to P6,888,757.40 and P50,000.00,
respectively.
In this connection, the Clerk of Court of RTC Lanao
del Sur is hereby directed to reassess and
determine the additional filing fee that should be
paid by Plaintiff-Appellant IBRAHIM taking into
consideration the total amount of damages
sought in the complaint vis--vis the actual amount
of damages awarded by this Court. Such additional
filing fee shall constitute a lien on the judgment.
SO ORDERED.[6]
Hence, this petition ascribing the following errors to the CA:
(a) RESPONDENTS WERE NOT DENIED
THE BENEFICIAL USE OF THEIR SUBJECT
PROPERTIES TO ENTITLE THEM TO JUST
COMPENSATION BY WAY OF DAMAGES;
(b) ASSUMING THAT RESPONDENTS ARE
ENTITLED TO JUST COMPENSATION BY
WAY OF DAMAGES, NO EVIDENCE WAS
PRESENTED ANENT THE VALUATION OF
RESPONDENTS PROPERTY AT THE TIME
OF ITS TAKING IN THE YEAR 1978 TO
JUSTIFY THE AWARD OF ONE
THOUSAND SQUARE METERS
(P1000.00/SQ. M.) EVEN AS PAYMENT
OF BACK RENTALS IS ITSELF IMPROPER.
This case revolves around the propriety of paying just compensation
to respondents, and, by extension, the basis for computing the same.
The threshold issue of whether respondents are entitled to just
compensation hinges upon who owns the sub-terrain area occupied
by petitioner.
Petitioner maintains that the sub-terrain portion where the
underground tunnels were constructed does not belong to
respondents because, even conceding the fact that respondents
owned the property, their right to the subsoil of the same does not
extend beyond what is necessary to enable them to obtain all the
utility and convenience that such property can normally give. In any
case, petitioner asserts that respondents were still able to use the
subject property even with the existence of the tunnels, citing as an
example the fact that one of the respondents, Omar G. Maruhom, had
established his residence on a part of the property. Petitioner
concludes that the underground tunnels 115 meters below
respondents property could not have caused damage or prejudice to
respondents and their claim to this effect was, therefore, purely
conjectural and speculative.[7]
The contention lacks merit.
Generally, in an appeal by certiorari under Rule 45 of the Rules of
Court, the Court does not pass upon questions of fact. Absent any
showing that the trial and appellate courts gravely abused their
discretion, the Court will not examine the evidence introduced by the
parties below to determine if they correctly assessed and evaluated
the evidence on record.[8] The jurisdiction of the Court in cases brought
to it from the CA is limited to reviewing and revising the errors of law
imputed to it, its findings of fact being as a rule conclusive and binding
on the Court.
In the present case, petitioner failed to point to any evidence
demonstrating grave abuse of discretion on the part of the CA or to
any other circumstances which would call for the application of the
exceptions to the above rule. Consequently, the CAs findings which
upheld those of the trial court that respondents owned and possessed
the property and that its substrata was possessed by petitioner since
1978 for the underground tunnels, cannot be disturbed. Moreover,
the Court sustains the finding of the lower courts that the sub-terrain
portion of the property similarly belongs to respondents. This
conclusion is drawn from Article 437 of the Civil Code which provides:
ART. 437. The owner of a parcel of land
is the owner of its surface and of everything under
it, and he can construct thereon any works or
make any plantations and excavations which he
may deem proper, without detriment to
servitudes and subject to special laws and
ordinances. He cannot complain of the reasonable
requirements of aerial navigation.
Thus, the ownership of land extends to the surface as well as to the
subsoil under it. In Republic of the Philippines v. Court of Appeals,[9] this
principle was applied to show that rights over lands are indivisible and,
consequently, require a definitive and categorical classification, thus:
The Court of Appeals justified this by saying
there is no conflict of interest between the
owners of the surface rights and the owners of
the sub-surface rights. This is rather strange
doctrine, for it is a well-known principle that the
owner of a piece of land has rights not only to its
surface but also to everything underneath and
the airspace above it up to a reasonable height.
Under the aforesaid ruling, the land is classified
as mineral underneath and agricultural on the
surface, subject to separate claims of title. This is
also difficult to understand, especially in its
practical application.
Under the theory of the respondent
court, the surface owner will be planting on the
land while the mining locator will be boring
tunnels underneath. The farmer cannot dig a
well because he may interfere with the mining
operations below and the miner cannot blast a
tunnel lest he destroy the crops above. How
deep can the farmer, and how high can the
miner go without encroaching on each others
rights? Where is the dividing line between the
surface and the sub-surface rights?
The Court feels that the rights over the
land are indivisible and that the land itself cannot
be half agricultural and half mineral. The
classification must be categorical; the land must
be either completely mineral or completely
agricultural.
Registered landowners may even be ousted of ownership
and possession of their properties in the event the latter are
reclassified as mineral lands because real properties are
characteristically indivisible. For the loss sustained by such owners,
they are entitled to just compensation under the Mining Laws or in
appropriate expropriation proceedings.[10]
Moreover, petitioners argument that the landowners right
extends to the sub-soil insofar as necessary for their practical interests
serves only to further weaken its case. The theory would limit the right
to the sub-soil upon the economic utility which such area offers to the
surface owners. Presumably, the landowners right extends to such
height or depth where it is possible for them to obtain some benefit or
enjoyment, and it is extinguished beyond such limit as there would be
no more interest protected by law.[11]
In this regard, the trial court found that respondents could
have dug upon their property motorized deep wells but were
prevented from doing so by the authorities precisely because of the
construction and existence of the tunnels underneath the surface of
their property. Respondents, therefore, still had a legal interest in the
sub-terrain portion insofar as they could have excavated the same for
the construction of the deep well. The fact that they could not was
appreciated by the RTC as proof that the tunnels interfered with
respondents enjoyment of their property and deprived them of its full
use and enjoyment, thus:
Has it deprived the plaintiffs of the use
of their lands when from the evidence they have
already existing residential houses over said
tunnels and it was not shown that the tunnels
either destroyed said houses or disturb[ed] the
possession thereof by plaintiffs? From the
evidence, an affirmative answer seems to be in
order. The plaintiffs and [their] co-heirs
discovered [these] big underground tunnels in
1992. This was confirmed by the defendant
on November 13, 1992 by the Acting Assistant
Project Manager, Agus 1 Hydro Electric Project
(Exh. K). On September 16, 1992, Atty. Omar
Maruhom (co-heir) requested the Marawi City
Water District for permit to construct a motorized
deep well over Lot 3 for his residential house (Exh.
Q). He was refused the permit because the
construction of the deep well as (sic) the parcels
of land will cause danger to lives and property. He
was informed that beneath your lands are
constructed the Napocor underground tunnel in
connection with Agua Hydroelectric plant (Exh. Q-
2). There in fact exists ample evidence that this
construction of the tunnel without the prior
consent of plaintiffs beneath the latters property
endangered the lives and properties of said
plaintiffs. It has been proved indubitably
that Marawi City lies in an area of local volcanic
and tectonic activity. Lake Lanao has been formed
by extensive earth movements and is considered
to be a drowned basin of volcano/tectonic
origin. In Marawi City, there are a number of
former volcanoes and an extensive amount of
faulting. Some of these faults are still moving.
(Feasibility Report on Marawi City Water District
by Kampsa-Kruger, Consulting Engineers,
Architects and Economists, Exh. R). Moreover, it
has been shown that the underground tunnels
[have] deprived the plaintiffs of the lawful use of
the land and considerably reduced its value.
On March 6, 1995, plaintiffs applied for a two-
million peso loan with the Amanah Islamic Bank
for the expansion of the operation of the Ameer
Construction and Integrated Services to be
secured by said land (Exh. N), but the application
was disapproved by the bank in its letter of April
25, 1995 (Exh. O) stating that:
Apropos to this, we regret to
inform you that we cannot
consider your loan application
due to the following reasons,
to wit:
That per my actual ocular
inspection and verification,
subject property offered as
collateral has an existing
underground tunnel by the
NPC for the Agus I Project,
which tunnel is traversing
underneath your property,
hence, an encumbrance. As a
matter of bank policy,
property with an existing
encumbrance cannot be
considered neither accepted
as collateral for a loan.
All the foregoing evidence and findings
convince this Court that preponderantly plaintiffs
have established the condemnation of their land
covering an area of 48,005 sq. meters located at
Saduc, Marawi City by the defendant National
Power Corporation without even the benefit of
expropriation proceedings or the payment of any
just compensation and/or reasonable monthly
rental since 1978.[12]
In the past, the Court has held that if the government takes property
without expropriation and devotes the property to public use, after
many years, the property owner may demand payment of just
compensation in the event restoration of possession is neither
convenient nor feasible.[13] This is in accordance with the principle that
persons shall not be deprived of their property except by competent
authority and for public use and always upon payment of just
compensation.[14]
Petitioner contends that the underground tunnels in this
case constitute an easement upon the property of respondents which
does not involve any loss of title or possession. The manner in which
the easement was created by petitioner, however, violates the due
process rights of respondents as it was without notice and indemnity
to them and did not go through proper expropriation
proceedings. Petitioner could have, at any time, validly exercised the
power of eminent domain to acquire the easement over respondents
property as this power encompasses not only the taking or
appropriation of title to and possession of the expropriated property
but likewise covers even the imposition of a mere burden upon the
owner of the condemned property.[15] Significantly, though,
landowners cannot be deprived of their right over their land until
expropriation proceedings are instituted in court. The court must then
see to it that the taking is for public use, that there is payment of just
compensation and that there is due process of law.[16]
 In disregarding this procedure and failing to recognize
respondents ownership of the sub-terrain portion, petitioner took a
risk and exposed itself to greater liability with the passage of time. It
must be emphasized that the acquisition of the easement is not
without expense. The underground tunnels impose limitations on
respondents use of the property for an indefinite period and deprive
them of its ordinary use. Based upon the foregoing, respondents are
clearly entitled to the payment of just
compensation.[17] Notwithstanding the fact that petitioner only
occupies the sub-terrain portion, it is liable to pay not merely an
easement fee but rather the full compensation for land. This is so
because in this case, the nature of the easement practically deprives
the owners of its normal beneficial use. Respondents, as the owners of
the property thus expropriated, are entitled to a just compensation
which should be neither more nor less, whenever it is possible to make
the assessment, than the money equivalent of said property.[18]
The entitlement of respondents to just compensation having
been settled, the issue now is on the manner of computing the same.
In this regard, petitioner claims that the basis for the computation of
the just compensation should be the value of the property at the time
it was taken in 1978. Petitioner also impugns the reliance made by the
CA upon National Power Corporation v. Court of Appeals and
Macapanton Mangondato[19] as the basis for computing the amount
of just compensation in this action. The CA found that the award of
damages is not excessive because the P1000 per square meter as the
fair market value was sustained in a case involving a lot adjoining the
property in question which case involved an expropriation by
[petitioner] of portion of Lot 1 of the subdivision plan (LRC) PSD
116159 which is adjacent to Lots 2 and 3 of the same subdivision plan
which is the subject of the instant controversy.[20]
Just compensation has been understood to be the just and
complete equivalent of the loss[21] and is ordinarily determined by
referring to the value of the land and its character at the time it was
taken by the expropriating authority.[22] There is a taking in this sense
when the owners are actually deprived or dispossessed of their
property, where there is a practical destruction or a material
impairment of the value of their property, or when they are deprived
of the ordinary use thereof. There is a taking in this context when the
expropriator enters private property not only for a momentary period
but for more permanent duration, for the purpose of devoting the
property to a public use in such a manner as to oust the owner and
deprive him of all beneficial enjoyment thereof.[23] Moreover, taking of
the property for purposes of eminent domain entails that the entry
into the property must be under warrant or color of legal authority.[24]
Under the factual backdrop of this case, the last element of
taking mentioned, i.e., that the entry into the property is under
warrant or color of legal authority, is patently lacking. Petitioner
justified its nonpayment of the indemnity due respondents upon its
mistaken belief that the property formed part of the public dominion.
This situation is on all fours with that in
the Mangondato case. NAPOCOR in that case took the property of
therein respondents in 1979, using it to build its Aqua I Hydroelectric
Plant Project, without paying any compensation, allegedly under the
mistaken belief that it was public land. It was only in 1990, after more
than a decade of beneficial use, that NAPOCOR recognized therein
respondents ownership and negotiated for the voluntary purchase of
the property.
In Mangondato, this Court held:
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:
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 ruling 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 to the
property, the just compensation is to be
ascertained as of the time of filing of the
complaint.
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 the date of the
commencement of the expropriation proceedings.
In the old case of Provincial Government of Rizal
vs. Caro de Araullo, 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)
from 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 it was taken,
which is the true measure of the damages, or just
compensation, and would discourage the
construction of important public improvements.
In subsequent cases, 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, 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 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
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 the 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 in 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, it has the burden
in 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, in the following words:
A number of circumstances must be present in
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:
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 the 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, 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 effective 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, filed suit.[25]
In the present case, to allow petitioner to use the date it
constructed the tunnels as the date of valuation would be grossly
unfair. First, it did not enter the land under warrant or color of legal
authority or with intent to expropriate the same. In fact, it did not
bother to notify the owners and wrongly assumed it had the right to
dig those tunnels under their property. Secondly, the improvements
introduced by petitioner, namely, the tunnels, in no way contributed
to an increase in the value of the land. The trial court, therefore, as
affirmed by the CA, rightly computed the valuation of the property as
of 1992, when respondents discovered the construction of the huge
underground tunnels beneath their lands and petitioner confirmed the
same and started negotiations for their purchase but no agreement
could be reached.[26]
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.
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.[27]

As to the amount of the valuation, the RTC and the CA both
used as basis the value of the adjacent property, Lot 1 (the property
involved herein being Lots 2 and 3 of the same subdivision plan), which
was valued at P1,000 per sq. meter as of 1990, as sustained by this
Court in Mangondato, thus:
The Second Issue: Valuation
Petitioner has not shown any error on the part of the CA in
reaching such a valuation. Furthermore, these are factual matters that
are not within the ambit of the present review.
WHEREFORE, the petition is DENIED and the Decision of the
Court of Appeals in C.A.-G.R. CV No. 57792 dated June 8, 2005
is AFFIRMED.

We now come to the issue of valuation. No costs.

The fair market value as held by the respondent SO ORDERED.

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 NPC Vs. Ibrahim
compensation. Inasmuch as the determination of
just compensation in eminent domain cases is a
judicial function and factual findings of the Court
of Appeals are conclusive on the parties and
Facts:
reviewable only when the case falls within the
recognized exceptions, which is not the situation
Ibrahim owns a parcel of land located in Lanao del Norte.
obtaining in this petition, we see no reason to
In 1978, NAPOCOR took possession of the sub-terrain area
disturb the factual findings as to valuation of the
of the land and constructed underground tunnels on the said property.
subject property. As can be gleaned from the
The tunnels were apparently being used by NAPOCOR in
records, the court-and-the-parties-appointed
siphoning the water of Lake Lanao and in the operation of NAPOCORs
commissioners did not abuse their authority in
Agus projects.
evaluating the evidence submitted to them nor
In 1991, Maruhom (one of the co-heirs of Ibrahim)
misappreciate the clear preponderance of
requested Marawi City Water District for a permit to construct or
evidence. The amount fixed and agreed to by the
install a motorized deep well on the parcel of land but it was rejected
respondent appellate Court is not grossly
on the grounds that the construction would cause danger to lives and
exorbitant. To quote:
property by reason of the presence of the underground tunnels.
Maruhom demanded NAPOCOR to pay damages and to
Commissioner Ali comes from the Office of the
vacate the sub-terrain portion of the land.
Register of Deeds who may well be considered an
expert, with a general knowledge of the appraisal
Issue: WON Ibrahim is the rightful owner of the sub-terrain
of real estate and the prevailing prices of land in
area of the land.
the vicinity of the land in question so that his
If yes, are they entitled to the payment of just compensation.
opinion on the valuation of the property cannot be
lightly brushed aside.
Held: YES. The sub-terrain portion of the property belongs to
Ibrahim.
The prevailing market value of the land is only one
of the determinants used by the commissioners
The Supreme Court cited Article 437 of the Civil Code which
report the other being as herein shown:
provides that: The owner of a parcel of land is the owner of its surface
and of everything under it, and he can construct thereon any works or
make any plantations and excavations which he may deem proper,
without detriment to servitudes and subject to special laws and
ordinances. xxx

Hence, the ownership of land extends to the surface as well

as to the subsoil under it. Therefore, Ibrahim owns the property as well
as the sub-terrain area of the land where the underground tunnels
were constructed.

On the issue of just compensation, the Supreme Court also

said that Ibrahim should be paid a just compensation.

Ibrahim could have dug upon their property and built

motorized deep wells but was prevented from doing so by the
authorities because of the construction of the tunnels underneath the
surface of the land.

Ibrahim still had a legal interest in the sub-terrain portion

insofar as they could have excavated the same for the construction of
the deep wells. It has been shown that the underground tunnels have
deprived the plaintiffs of the lawful use of the land and considerably
reduced its value.

It was held that: If the government takes property without

expropriation and devotes the property to public use, after many
years, the property owner may demand payment of just compensation
in the event restoration of possession is neither convenient nor
feasible. This is in accordance with the principle that persons shall not
be deprived of their property except by competent authority and for
public use and always upon payment of just compensation.

[G.R. NO. 160656 : June 15, 2007]

 REPUBLIC OF THE PHILIPPINES (Department of Public Works and
Highways), Petitioner, v.ISMAEL ANDAYA, Respondent.
DECISION
QUISUMBING, J.:
This is a Petition for Review of the Decision1 dated October 30, 2003
of the Court of Appeals in CA-G.R. CV No. 65066 affirming with
modification the Decision2 of the Regional Trial Court of Butuan City,
Branch 33 in Civil Case No. 4378, for enforcement of easement of
right-of-way (or eminent domain).
Respondent Ismael Andaya is the registered owner of two parcels of
land in Bading, Butuan City. His ownership is evidenced by Transfer
Certificates of Title Nos. RT-10225 and RT-10646. These properties
are subject to a 60-meter wide perpetual easement for public
highways, irrigation ditches, aqueducts, and other similar works of
the government or public enterprise, at no cost to the government,
except only the value of the improvements existing thereon that may
be affected.
Petitioner Republic of the Philippines (Republic) negotiated with
Andaya to enforce the 60-meter easement of right-of-way. The
easement was for concrete levees and floodwalls for Phase 1, Stage 1
of the Lower Agusan Development Project. The parties, however,
failed to reach an agreement.
On December 13, 1995, the Republic instituted an action before the
Regional Trial Court of Butuan City to enforce the easement of right-
of-way or eminent domain. The trial court issued a writ of possession
on April 26, 1996.3 It also constituted a Board of Commissioners
(Board) to determine the just compensation. Eventually, the trial
court issued an Order of Expropriation upon payment of just
compensation.4 Later, the Board reported that there was a
discrepancy in the description of the property sought to be
expropriated. The Republic thus amended its complaint, reducing the
60-meter easement to 10 meters, or an equivalent of 701 square
meters.
On December 10, 1998, the Board reported that the project would
affect a total of 10,380 square meters of Andaya's properties, 4,443
square meters of which will be for the 60-meter easement. The Board
also reported that the easement would diminish the value of the
remaining 5,937 square meters. As a result, it recommended the
payment of consequential damages amounting to P2,820,430 for the
remaining area.5
Andaya objected to the report because although the Republic
reduced the easement to 10 meters or an equivalent of 701 square
meters, the Board still granted it 4,443 square meters. He contended
that the consequential damages should be based on the remaining
area of 9,679 square meters. Thus, the just compensation should
be P11,373,405. The Republic did not file any comment, opposition,
nor objection.
After considering the Board's report, the trial court decreed on April
29, 1999, as follows:
WHEREFORE, in the light of the foregoing, the Court decides as
follows:
a) That the plaintiff is legally entitled to its inherent right of
expropriation to, viz.: 1) the lot now known as lot 3291-B-1-A, portion
of lot 3291-B-1, (LRC) Psd-255693, covered by TCT No. RT-10225,
with an area of 288 sq. m.; and 2) the lot now known as lot 3293-F-5-
B-1, portion of lot 3293-F-5-B (LRC) Psd-230236, covered by TCT No.
RT-10646, with an area of 413 sq. m., both of the Butuan City
Registry of Deeds, it being shown that it is for public use and purpose
- - - free of charge by reason of the statutory lien of easement of
right-of-way imposed on defendant's titles;
b) That however, the plaintiff is obligated to pay defendant the sum
of TWO MILLION EIGHT HUNDRED TWENTY THOUSAND FOUR
HUNDRED THIRTY (P2,820,430.00) PESOS as fair and reasonable
severance damages;
c) To pay members of the Board of Commissioners, thus: for the
chairman - - - TWENTY THOUSAND (P20,000.00) PESOS and the two
(2) members at FIFTEEN THOUSAND (P15,000.00) PESOS each;
d) To pay defendant's counsel FIFTY THOUSAND (P50,000.00) PESOS
as Attorney's fees; and finally,
e) That the Registry of Deeds of Butuan City is also directed to effect
the issuance of Transfer Certificate of Titles for the aforementioned
two (2) lots in the name of the Republic of the Philippines, following
the technical description as appearing in pages 6, 7, and 8 of the
Commissioner's Report.
NO COSTS.
IT IS SO ORDERED.6
Both parties appealed to the Court of Appeals. The Republic
contested the awards of severance damages and attorney's fees
while Andaya demanded just compensation for his entire property
minus the easement. Andaya alleged that the easement would
prevent ingress and egress to his property and turn it into a catch
basin for the floodwaters coming from the Agusan River. As a result,
his entire property would be rendered unusable and uninhabitable.
He thus demanded P11,373,405 as just compensation based on the
total compensable area of 9,679 square meters.
The Court of Appeals modified the trial court's decision by imposing a
6% interest on the consequential damages from the date of the writ
of possession or the actual taking, and by deleting the attorney's
fees.
Hence, the instant petition. Simply put, the sole issue for resolution
may be stated thus: Is the Republic liable for just compensation if in
enforcing the legal easement of right-of-way on a property, the
remaining area would be rendered unusable and
uninhabitable?cralaw library
It is undisputed that there is a legal easement of right-of-way in favor
of the Republic. Andaya's transfer certificates of title7 contained the
reservation that the lands covered thereby are subject to the
provisions of the Land Registration Act8 and the Public Land
Act.9 Section 11210 of the Public Land Act provides that lands granted
by patent shall be subject to a right-of-way not exceeding 60 meters
in width for public highways, irrigation ditches, aqueducts, and other
similar works of the government or any public enterprise, free of
charge, except only for the value of the improvements existing
thereon that may be affected. In view of this, the Court of Appeals The case is hereby REMANDED to the Regional Trial Court of Butuan
declared that all the Republic needs to do is to enforce such right City, Branch 33 for the determination of the final just compensation
without having to initiate expropriation proceedings and without of the compensable area consisting of 5,937 square meters, with
having to pay any just compensation.11 Hence, the Republic may interest thereon at the legal rate of 6% per annum from the date of
appropriate the 701 square meters necessary for the construction of the writ of possession or actual taking until fully paid.
the floodwalls without paying for it.
No pronouncement as to costs.
We are, however, unable to sustain the Republic's argument that it is
not liable to pay consequential damages if in enforcing the legal SO ORDERED.
easement on Andaya's property, the remaining area would be
rendered unusable and uninhabitable. "Taking," in the exercise of the
power of eminent domain, occurs not only when the government
actually deprives or dispossesses the property owner of his property Republic vs Andaya,
or of its ordinary use, but also when there is a practical destruction or
material impairment of the value of his property.12 Using this
standard, there was undoubtedly a taking of the remaining area of GR 160656, June 15, 2007
Andaya's property. True, no burden was imposed thereon and
Andaya still retained title and possession of the property. But, as
correctly observed by the Board and affirmed by the courts a quo,
the nature and the effect of the floodwalls would deprive Andaya of
the normal use of the remaining areas. It would prevent ingress and
Facts: On December 13, 1995, the Republic instituted an action
egress to the property and turn it into a catch basin for the
floodwaters coming from the Agusan River. before the Regional Trial Court of Butuan City to enforce the
easement of right-of-way or eminent domain. Eventually, the trial
court issued an Order of Expropriation upon payment of just
For this reason, in our view, Andaya is entitled to payment of just
compensation. When the Board (Commissioners) submitted their
compensation, which must be neither more nor less than the
monetary equivalent of the land.13 One of the basic principles report, respondent objected to it claiming that he suffered
enshrined in our Constitution is that no person shall be deprived of consequential damages, his remaining property having been altered
his private property without due process of law; and in expropriation by the easement, becoming a catch basin of the Agusan River.
cases, an essential element of due process is that there must be just
compensation whenever private property is taken for public use.
Noteworthy, Section 9, Article III of our Constitution mandates that
Issue: Is the Republic liable for just compensation if in enforcing
private property shall not be taken for public use without just
the legal easement of right-of-way on a property, the remaining area
compensation.14
would be rendered unusable and uninhabitable?

Finally, we affirm the findings of the Court of Appeals and the trial
court that just compensation should be paid only for 5,937 square
meters of the total area of 10,380 square meters. Admittedly, the
Republic needs only a 10-meter easement or an equivalent of 701
square meters. Yet, it is also settled that it is legally entitled to a 60-
meter wide easement or an equivalent of 4,443 square meters.
Clearly, although the Republic will use only 701 square meters, it
should not be liable for the 3,742 square meters, which constitute
the difference between this area of 701 square meters and the 4,443
square meters to which it is fully entitled to use as easement, free of
charge except for damages to affected existing improvements, if any,
under Section 112 of the Public Land Act.
In effect, without such damages alleged and proved, the Republic is
liable for just compensation of only the remaining areas consisting of
5,937 square meters, with interest thereon at the legal rate of 6% per
annum from the date of the writ of possession or the actual taking
until full payment is made. For the purpose of determining the final
just compensation, the case is remanded to the trial court. Said court
is ordered to make the determination of just compensation payable
to respondent Andaya with deliberate dispatch.
Held: "Taking," in the exercise of the power of eminent domain,
occurs not only when the government actually deprives or
dispossesses the property owner of his property or of its ordinary
use, but also when there is a practical destruction or material
impairment of the value of his property. Using this standard, there
was undoubtedly a taking of the remaining area of Andaya's property.
True, no burden was imposed thereon and Andaya still retained title
and possession of the property. But, as correctly observed by the
Board and affirmed by the courts a quo, the nature and the effect of
the floodwalls would deprive Andaya of the normal use of the
remaining areas. It would prevent ingress and egress to the property
and turn it into a catch basin for the floodwaters coming from the
Agusan River.
CASE DOCTRINE: If the remaining property be rendered useless or its
usefulness substantially impaired, then the value of the whole
property should be the basis of just compensation.

WHEREFORE, the Decision of the Court of Appeals dated October 30,

2003 in CA-G.R. CV No. 65066, modifying the Decision of the Regional
Trial Court of Butuan City, Branch 33 in Civil Case No. 4378, is
AFFIRMED with MODIFICATION as herein set forth.
G.R. No. 166494 June 29, 2007
CARLOS SUPERDRUG CORP., doing business under the name and style
"Carlos Superdrug," ELSIE M. CANO, doing business under the name
and style "Advance Drug," Dr. SIMPLICIO L. YAP, JR., doing business
under the name and style "City Pharmacy," MELVIN S. DELA SERNA,
doing business under the name and style "Botica dela Serna," and
LEYTE SERV-WELL CORP., doing business under the name and style
"Leyte Serv-Well Drugstore," petitioners,
vs.
DEPARTMENT OF SOCIAL WELFARE and DEVELOPMENT (DSWD),
DEPARTMENT OF HEALTH (DOH), DEPARTMENT OF FINANCE (DOF),
DEPARTMENT OF JUSTICE (DOJ), and DEPARTMENT OF INTERIOR and
LOCAL GOVERNMENT (DILG), respondents.
DECISION
AZCUNA, J.:
This is a petition1 for Prohibition with Prayer for Preliminary
Injunction assailing the constitutionality of Section 4(a) of Republic
Act (R.A.) No. 9257,2 otherwise known as the "Expanded Senior
Citizens Act of 2003."
Petitioners are domestic corporations and proprietors operating
drugstores in the Philippines.
Public respondents, on the other hand, include the Department of
Social Welfare and Development (DSWD), the Department of Health
(DOH), the Department of Finance (DOF), the Department of Justice
(DOJ), and the Department of Interior and Local Government (DILG)
which have been specifically tasked to monitor the drugstores
compliance with the law; promulgate the implementing rules and
regulations for the effective implementation of the law; and
prosecute and revoke the licenses of erring drugstore establishments.
The antecedents are as follows:
On February 26, 2004, R.A. No. 9257, amending R.A. No. 7432,3 was
signed into law by President Gloria Macapagal-Arroyo and it became
effective on March 21, 2004. Section 4(a) of the Act states:
SEC. 4. Privileges for the Senior Citizens. The senior citizens shall be
entitled to the following:
(a) the grant of twenty percent (20%) discount from all
establishments relative to the utilization of services in hotels and
similar lodging establishments, restaurants and recreation centers,
and purchase of medicines in all establishments for the exclusive use
or enjoyment of senior citizens, including funeral and burial services
for the death of senior citizens;
...
The establishment may claim the discounts granted under (a), (f), (g)
and (h) as tax deduction based on the net cost of the goods sold or
services rendered: Provided, That the cost of the discount shall be
allowed as deduction from gross income for the same taxable year
that the discount is granted. Provided, further, That the total amount
of the claimed tax deduction net of value added tax if applicable, shall
be included in their gross sales receipts for tax purposes and shall be
subject to proper documentation and to the provisions of the
National Internal Revenue Code, as amended.4
On May 28, 2004, the DSWD approved and adopted the
Implementing Rules and Regulations of R.A. No. 9257, Rule VI, Article
8 of which states:
Article 8. Tax Deduction of Establishments. The establishment may
claim the discounts granted under Rule V, Section 4 Discounts for
Establishments;5 Section 9, Medical and Dental Services in Private
Facilities[,]6 and Sections 107 and 118 Air, Sea and Land
Transportation as tax deduction based on the net cost of the goods
sold or services rendered. Provided, That the cost of the discount
shall be allowed as deduction from gross income for the same taxable
year that the discount is granted; Provided, further, That the total
amount of the claimed tax deduction net of value added tax if
applicable, shall be included in their gross sales receipts for tax
purposes and shall be subject to proper documentation and to the
provisions of the National Internal Revenue Code, as amended;
Provided, finally, that the implementation of the tax deduction shall
be subject to the Revenue Regulations to be issued by the Bureau of
Internal Revenue (BIR) and approved by the Department of Finance
(DOF).9
On July 10, 2004, in reference to the query of the Drug Stores
Association of the Philippines (DSAP) concerning the meaning of a tax
deduction under the Expanded Senior Citizens Act, the DOF, through
Director IV Ma. Lourdes B. Recente, clarified as follows:
1) The difference between the Tax Credit (under the Old Senior
Citizens Act) and Tax Deduction (under the Expanded Senior Citizens
Act).
1.1. The provision of Section 4 of R.A. No. 7432 (the old Senior
Citizens Act) grants twenty percent (20%) discount from all
establishments relative to the utilization of transportation services,
hotels and similar lodging establishment, restaurants and recreation
centers and purchase of medicines anywhere in the country, the
costs of which may be claimed by the private establishments
concerned as tax credit.
Effectively, a tax credit is a peso-for-peso deduction from a taxpayers
tax liability due to the government of the amount of discounts such
establishment has granted to a senior citizen. The establishment
recovers the full amount of discount given to a senior citizen and
hence, the government shoulders 100% of the discounts granted.
It must be noted, however, that conceptually, a tax credit scheme
under the Philippine tax system, necessitates that prior payments of
taxes have been made and the taxpayer is attempting to recover this
tax payment from his/her income tax due. The tax credit scheme
under R.A. No. 7432 is, therefore, inapplicable since no tax payments
have previously occurred.
1.2. The provision under R.A. No. 9257, on the other hand, provides
that the establishment concerned may claim the discounts under
Section 4(a), (f), (g) and (h) as tax deduction from gross income,
based on the net cost of goods sold or services rendered.
Under this scheme, the establishment concerned is allowed to
deduct from gross income, in computing for its tax liability, the
amount of discounts granted to senior citizens. Effectively, the
government loses in terms of foregone revenues an amount
equivalent to the marginal tax rate the said establishment is liable to
pay the government. This will be an amount equivalent to 32% of the
twenty percent (20%) discounts so granted. The establishment
shoulders the remaining portion of the granted discounts.
It may be necessary to note that while the burden on [the]
government is slightly diminished in terms of its percentage share on
the discounts granted to senior citizens, the number of potential
establishments that may claim tax deductions, have however, been
broadened. Aside from the establishments that may claim tax credits
under the old law, more establishments were added under the new
law such as: establishments providing medical and dental services,
diagnostic and laboratory services, including professional fees of
attending doctors in all private hospitals and medical facilities,
operators of domestic air and sea transport services, public railways
and skyways and bus transport services.
A simple illustration might help amplify the points discussed above,
as follows:
Tax Deduction Tax Credit
Gross Sales x x x x x x x x x x x x
Less : Cost of goods sold x x x x x x x x x x
Net Sales x x x x x x x x x x x x
Less: Operating Expenses:
Tax Deduction on Discounts x x x x --
Other deductions: x x x x x x x x
Net Taxable Income x x x x x x x x x x
Tax Due x x x x x x
Less: Tax Credit -- ______x x
Net Tax Due -- x x
As shown above, under a tax deduction scheme, the tax deduction on
discounts was subtracted from Net Sales together with other
deductions which are considered as operating expenses before the
Tax Due was computed based on the Net Taxable Income. On the
other hand, under a tax credit scheme, the amount of discounts
which is the tax credit item, was deducted directly from the tax due
amount.10
Meanwhile, on October 1, 2004, Administrative Order (A.O.) No. 171
or the Policies and Guidelines to Implement the Relevant Provisions of
Republic Act 9257, otherwise known as the "Expanded Senior Citizens
Act of 2003"11was issued by the DOH, providing the grant of twenty
percent (20%) discount in the purchase of unbranded generic
medicines from all establishments dispensing medicines for the
exclusive use of the senior citizens.
On November 12, 2004, the DOH issued Administrative Order No
17712 amending A.O. No. 171. Under A.O. No. 177, the twenty
percent discount shall not be limited to the purchase of unbranded
generic medicines only, but shall extend to both prescription and
non-prescription medicines whether branded or generic. Thus, it
stated that "[t]he grant of twenty percent (20%) discount shall be
provided in the purchase of medicines from all establishments
dispensing medicines for the exclusive use of the senior citizens."
Petitioners assail the constitutionality of Section 4(a) of the Expanded
Senior Citizens Act based on the following grounds:13
1) The law is confiscatory because it infringes Art. III, Sec. 9 of the
Constitution which provides that private property shall not be taken
for public use without just compensation;
2) It violates the equal protection clause (Art. III, Sec. 1) enshrined in
our Constitution which states that "no person shall be deprived of
life, liberty or property without due process of law, nor shall any
person be denied of the equal protection of the laws;" and
3) The 20% discount on medicines violates the constitutional
guarantee in Article XIII, Section 11 that makes "essential goods,
health and other social services available to all people at affordable
cost."14
Petitioners assert that Section 4(a) of the law is unconstitutional
because it constitutes deprivation of private property. Compelling
drugstore owners and establishments to grant the discount will result
in a loss of profit
and capital because 1) drugstores impose a mark-up of only 5% to
10% on branded medicines; and 2) the law failed to provide a scheme
whereby drugstores will be justly compensated for the discount.
Examining petitioners arguments, it is apparent that what petitioners
are ultimately questioning is the validity of the tax deduction scheme
as a reimbursement mechanism for the twenty percent (20%)
discount that they extend to senior citizens.
Based on the afore-stated DOF Opinion, the tax deduction scheme
does not fully reimburse petitioners for the discount privilege
accorded to senior citizens. This is because the discount is treated as
a deduction, a tax-deductible expense that is subtracted from the
gross income and results in a lower taxable income. Stated otherwise,
it is an amount that is allowed by law15 to reduce the income prior to
the application of the tax rate to compute the amount of tax which is
due.16 Being a tax deduction, the discount does not reduce taxes
owed on a peso for peso basis but merely offers a fractional
reduction in taxes owed.
Theoretically, the treatment of the discount as a deduction reduces
the net income of the private establishments concerned. The
discounts given would have entered the coffers and formed part of
the gross sales of the private establishments, were it not for R.A. No.
9257.
The permanent reduction in their total revenues is a forced subsidy
corresponding to the taking of private property for public use or
benefit.17 This constitutes compensable taking for which petitioners
would ordinarily become entitled to a just compensation.
Just compensation is defined as the full and fair equivalent of the
property taken from its owner by the expropriator. The measure is
not the takers gain but the owners loss. The word just is used to
intensify the meaning of the word compensation, and to convey the
idea that the equivalent to be rendered for the property to be taken
shall be real, substantial, full and ample.18
A tax deduction does not offer full reimbursement of the senior
citizen discount. As such, it would not meet the definition of just
compensation.19
Having said that, this raises the question of whether the State, in
promoting the health and welfare of a special group of citizens, can
impose upon private establishments the burden of partly subsidizing
a government program.
The Court believes so.
The Senior Citizens Act was enacted primarily to maximize the
contribution of senior citizens to nation-building, and to grant
benefits and privileges to them for their improvement and well-being
as the State considers them an integral part of our society.20
The priority given to senior citizens finds its basis in the Constitution
as set forth in the law itself. Thus, the Act provides:
SEC. 2. Republic Act No. 7432 is hereby amended to read as follows:
SECTION 1. Declaration of Policies and Objectives. Pursuant to
Article XV, Section 4 of the Constitution, it is the duty of the family to
take care of its elderly members while the State may design programs
of social security for them. In addition to this, Section 10 in the
Declaration of Principles and State Policies provides: "The State shall
provide social justice in all phases of national development." Further,
Article XIII, Section 11, provides: "The State shall adopt an integrated
and comprehensive approach to health development which shall
endeavor to make essential goods, health and other social services
available to all the people at affordable cost. There shall be priority
for the needs of the underprivileged sick, elderly, disabled, women
and children." Consonant with these constitutional principles the
following are the declared policies of this Act:
...
(f) To recognize the important role of the private sector in the
improvement of the welfare of senior citizens and to actively seek their
partnership.21
To implement the above policy, the law grants a twenty percent
discount to senior citizens for medical and dental services, and
diagnostic and laboratory fees; admission fees charged by theaters,
concert halls, circuses, carnivals, and other similar places of culture,
leisure and amusement; fares for domestic land, air and sea travel;
utilization of services in hotels and similar lodging establishments,
restaurants and recreation centers; and purchases of medicines for
the exclusive use or enjoyment of senior citizens. As a form of
reimbursement, the law provides that business establishments
extending the twenty percent discount to senior citizens may claim
the discount as a tax deduction.
The law is a legitimate exercise of police power which, similar to the
power of eminent domain, has general welfare for its object. Police
power is not capable of an exact definition, but has been purposely
veiled in general terms to underscore its comprehensiveness to meet
all exigencies and provide enough room for an efficient and flexible
response to conditions and circumstances, thus assuring the greatest
benefits. 22 Accordingly, it has been described as "the most essential,
insistent and the least limitable of powers, extending as it does to all
the great public needs."23 It is "[t]he power vested in the legislature
by the constitution to make, ordain, and establish all manner of
wholesome and reasonable laws, statutes, and ordinances, either
with penalties or without, not repugnant to the constitution, as they
shall judge to be for the good and welfare of the commonwealth, and
of the subjects of the same."24
For this reason, when the conditions so demand as determined by
the legislature, property rights must bow to the primacy of police
power because property rights, though sheltered by due process,
must yield to general welfare.25
Police power as an attribute to promote the common good would be
diluted considerably if on the mere plea of petitioners that they will
suffer loss of earnings and capital, the questioned provision is
invalidated. Moreover, in the absence of evidence demonstrating the
alleged confiscatory effect of the provision in question, there is no
basis for its nullification in view of the presumption of validity which
every law has in its favor.26
Given these, it is incorrect for petitioners to insist that the grant of
the senior citizen discount is unduly oppressive to their business,
because petitioners have not taken time to calculate correctly and
come up with a financial report, so that they have not been able to
show properly whether or not the tax deduction scheme really works
greatly to their disadvantage.27
In treating the discount as a tax deduction, petitioners insist that they
will incur losses because, referring to the DOF Opinion, for every
1.00 senior citizen discount that petitioners would give, 0.68 will
be shouldered by them as only 0.32 will be refunded by the
government by way of a tax deduction.
To illustrate this point, petitioner Carlos Super Drug cited the anti-
hypertensive maintenance drug Norvasc as an example. According to
the latter, it acquires Norvasc from the distributors at 37.57 per
tablet, and retails it at 39.60 (or at a margin of 5%). If it grants a 20%
discount to senior citizens or an amount equivalent to 7.92, then it
would have to sell Norvasc at 31.68 which translates to a loss from
capital of 5.89 per tablet. Even if the government will allow a tax
deduction, only 2.53 per tablet will be refunded and not the full
amount of the discount which is 7.92. In short, only 32% of the 20%
discount will be reimbursed to the drugstores.28
Petitioners computation is flawed. For purposes of reimbursement,
the law states that the cost of the discount shall be deducted from
gross income,29 the amount of income derived from all sources
before deducting allowable expenses, which will result in net income.
Here, petitioners tried to show a loss on a per transaction basis,
which should not be the case. An income statement, showing an
accounting of petitioners sales, expenses, and net profit (or loss) for
a given period could have accurately reflected the effect of the
discount on their income. Absent any financial statement, petitioners
cannot substantiate their claim that they will be operating at a loss
should they give the discount. In addition, the computation was
erroneously based on the assumption that their customers consisted
wholly of senior citizens. Lastly, the 32% tax rate is to be imposed on
income, not on the amount of the discount.
Furthermore, it is unfair for petitioners to criticize the law because
they cannot raise the prices of their medicines given the cutthroat
nature of the players in the industry. It is a business decision on the
part of petitioners to peg the mark-up at 5%. Selling the medicines
below acquisition cost, as alleged by petitioners, is merely a result of
this decision. Inasmuch as pricing is a property right, petitioners
cannot reproach the law for being oppressive, simply because they
cannot afford to raise their prices for fear of losing their customers to
competition.
The Court is not oblivious of the retail side of the pharmaceutical
industry and the competitive pricing component of the business.
While the Constitution protects property rights, petitioners must
accept the realities of business and the State, in the exercise of police
power, can intervene in the operations of a business which may
result in an impairment of property rights in the process.
Moreover, the right to property has a social dimension. While Article
XIII of the Constitution provides the precept for the protection of
property, various laws and jurisprudence, particularly on agrarian
reform and the regulation of contracts and public utilities,
continuously serve as a reminder that the right to property can be
relinquished upon the command of the State for the promotion of
public good.30
Held: Petition is dismissed. The law is a legitimate exercise of police
power which, similar to the power of eminent domain, has general
welfare for its object.
Accordingly, it has been described as the most essential, insistent
and the least limitable of powers, extending as it does to all the great
public needs. It is the power vested in the legislature by the
constitution to make, ordain, and establish all manner of wholesome
and reasonable laws, statutes, and ordinances, either with penalties
or without, not repugnant to the constitution, as they shall judge to
be for the good and welfare of the commonwealth, and of the
subjects of the same.
For this reason, when the conditions so demand as determined by
the legislature, property rights must bow to the primacy of police
power because property rights, though sheltered by due process,
must yield to general welfare.

Undeniably, the success of the senior citizens program rests largely

on the support imparted by petitioners and the other private
establishments concerned. This being the case, the means employed
in invoking the active participation of the private sector, in order to
achieve the purpose or objective of the law, is reasonably and
directly related. Without sufficient proof that Section 4(a) of R.A. No.
9257 is arbitrary, and that the continued implementation of the same
would be unconscionably detrimental to petitioners, the Court will
refrain from quashing a legislative act.31

WHEREFORE, the petition is DISMISSED for lack of merit.

No costs.

SO ORDERED.

ADOLFO S. AZCUNA
Associate Justice

CARLOS SUPERDRUG VS. DSWD

Facts: Petitioners are domestic corporations and proprietors

operating drugstores in the Philippines. Petitioners assail the
constitutionality of Section 4(a) of RA 9257, otherwise known as the
Expanded Senior Citizens Act of 2003. Section 4(a) of RA 9257
grants twenty percent (20%) discount as privileges for the Senior
Citizens. Petitioner contends that said law is unconstitutional because
it constitutes deprivation of private property.

Issue: Whether or not RA 9257 is unconstitutional

G.R. No. L-48685 September 30, 1987 regardless of size and no
matter how small the area to
LORENZO SUMULONG and EMILIA VIDANES-BALAOING, petitioners, be expropriated;
vs.
HON. BUENAVENTURA GUERRERO and NATIONAL HOUSING b) "Socialized housing" for
AUTHORITY, respondents. the purpose of condemnation
proceeding, as defined in said
CORTES, J.: Decree, is not really for a
public purpose;
On December 5, 1977 the National Housing Authority (NIIA) filed a
complaint for expropriation of parcels of land covering approximately c) The Decree violates
twenty five (25) hectares, (in Antipolo, Rizal) including the lots of procedural due process as it
petitioners Lorenzo Sumulong and Emilia Vidanes-Balaoing with an allows immediate taking of
area of 6,667 square meters and 3,333 square meters respectively. possession, control and
The land sought to be expropriated were valued by the NHA at one disposition of property
peso (P1.00) per square meter adopting the market value fixed by the without giving the owner his
provincial assessor in accordance with presidential decrees day in court;
prescribing the valuation of property in expropriation proceedings.
d) The Decree would allow
Together with the complaint was a motion for immediate possession the taking of private property
of the properties. The NHA deposited the amount of P158,980.00 upon payment of unjust and
with the Philippine National Bank, representing the "total market unfair valuations arbitrarily
value" of the subject twenty five hectares of land, pursuant to fixed by government
Presidential Decree No. 1224 which defines "the policy on the assessors;
expropriation of private property for socialized housing upon
payment of just compensation." e) The Decree would deprive
the courts of their judicial
On January 17, 1978, respondent Judge issued the following Order: discretion to determine what
would be the "just
compensation" in each and
Plaintiff having deposited with the Philippine
every raise of expropriation.
National Bank, Heart Center Extension Office,
Diliman, Quezon City, Metro Manila, the amount
of P158,980.00 representing the total market Indeed, the exercise of the power of eminent domain is subject to
value of the subject parcels of land, let a writ of certain limitations imposed by the constitution, to wit:
possession be issued.
Private property shall not be taken for public use
SO ORDERED. without just compensation (Art. IV, Sec. 9);

Pasig, Metro Manila, January 17, 1978. No person shall be deprived of life, liberty, or
property without due process of law, nor shall
any person be denied the equal protection of the
Petitioners filed a motion for reconsideration on the ground that they
laws (Art. IV, sec. 1).
had been deprived of the possession of their property without due
process of law. This was however, denied.
Nevertheless, a clear case of constitutional infirmity has to be
established for this Court to nullify legislative or executive measures
Hence, this petition challenging the orders of respondent Judge and
adopted to implement specific constitutional provisions aimed at
assailing the constitutionality of Pres. Decree No. 1224, as amended.
promoting the general welfare.
Petitioners argue that:

Petitioners' objections to the taking of their property subsumed

1) Respondent Judge acted without or in excess
under the headings of public use, just compensation, and due
of his jurisdiction or with grave abuse of
process have to be balanced against competing interests of the public
discretion by issuing the Order of January 17,
recognized and sought to be served under declared policies of the
1978 without notice and without hearing and in
constitution as implemented by legislation.
issuing the Order dated June 28, 1978 denying
the motion for reconsideration.
1. Public use
2) Pres. Decree l224, as amended, is
unconstitutional for being violative of the due a) Socialized Housing
process clause, specifically:
Petitioners contend that "socialized housing" as defined in Pres.
a) The Decree would allow Decree No. 1224, as amended, for the purpose of condemnation
the taking of property proceedings is not "public use" since it will benefit only "a handful of
people, bereft of public character."
"Socialized housing" is defined as, "the construction of dwelling units
for the middle and lower class members of our society, including the
construction of the supporting infrastructure and other facilities"
(Pres. Decree No. 1224, par. 1). This definition was later expanded to
include among others:
a) The construction and/or improvement of
dwelling units for the middle and lower income
groups of the society, including the construction
of the supporting infrastructure and other
facilities;
b) Slum clearance, relocation and resettlement of
squatters and slum dwellers as well as the
provision of related facilities and services;
c) Slum improvement which consists basically of
allocating homelots to the dwellers in the area or
property involved, rearrangemeant and re-
alignment of existing houses and other dwelling
structures and the construction and provision of
basic community facilities and services, where
there are none, such as roads, footpaths,
drainage, sewerage, water and power system
schools, barangay centers, community centers,
clinics, open spaces, parks, playgrounds and
other recreational facilities;
d) The provision of economic opportunities,
including the development of commercial and
industrial estates and such other facilities to
enhance the total community growth; and
e) Such other activities undertaken in pursuance
of the objective to provide and maintain housing
for the greatest number of people under
Presidential Decree No, 757, (Pres. Decree No.
1259, sec. 1)
The "public use" requirement for a and exercise of the power of
eminent domain is a flexible and evolving concept influenced by
changing conditions. In this jurisdiction, the statutory and judicial
trend has been summarized as follows:
The taking to be valid must be for public use.
There was a time when it was felt that a literal
meaning should be attached to such a
requirement. Whatever project is undertaken
must be for the public to enjoy, as in the case of
streets or parks. Otherwise, expropriation is not
allowable. It is not anymore. As long as the
purpose of the taking is public, then the power of
eminent domain comes into play. As just noted,
the constitution in at least two cases, to remove
any doubt, determines what is public use. One is
the expropriation of lands to be subdivided into
small lots for resale at cost to individuals. The
other is in the transfer, through the exercise of
this power, of utilities and other private
enterprise to the government. It is accurate to
state then that at present whatever may be
beneficially employed for the general welfare
satisfies the requirement of public use [Heirs of
Juancho Ardona v. Reyes, G.R. Nos. 60549,
60553-60555 October 26, 1983, 125 SCRA 220
(1983) at 234-5 quoting E. FERNANDO, THE
CONSTITUTION OF THE PHILIPPINES 523-4, (2nd
ed., 1977) Emphasis supplied].
The term "public use" has acquired a more comprehensive coverage.
To the literal import of the term signifying strict use or employment
by the public has been added the broader notion of indirect public
benefit or advantage. As discussed in the above cited case of Heirs of
Juancho Ardona:
The restrictive view of public use may be
appropriate for a nation which circumscribes the
scope of government activities and public
concerns and which possesses big and correctly
located public lands that obviate the need to take
private property for public purposes. Neither
circumstance applies to the Philippines. We have
never been a laissez faire State. And the
necessities which impel the exertion of sovereign
power are all too often found in areas of scarce
public land or limited government resources. (p.
231)
Specifically, urban renewal or redevelopment and the construction of
low-cost housing is recognized as a public purpose, not only because
of the expanded concept of public use but also because of specific
provisions in the Constitution. The 1973 Constitution made it
incumbent upon the State to establish, maintain and ensure
adequate social services including housing [Art. 11, sec. 7]. The 1987
Constitution goes even further by providing that:
The State shall promote a just and dynamic social
order that will ensure the prosperity and
independence of the nation and free the people
from poverty through policies that provide
adequate social services, promote full
employment, a rising standard of living and an
improved quality of life for all. [Art. II, sec. 9]
The state shall by law, and for the common good,
undertake, in cooperation with the private sector,
a continuing program of urban land reform and
housing which will make available at affordable
cost decent housing and basic services to
underprivileged and homeless citizens in urban
centers and resettlement areas. It shall also
promote adequate employment opportunities to
such citizens. In the implementation of such
program the State shall respect the rights of small
property owners. (Art. XIII, sec. 9, Emphaisis
supplied)
Housing is a basic human need. Shortage in housing is a matter of
state concern since it directly and significantly affects public health,
safety, the environment and in sum, the general welfare. The public
character of housing measures does not change because units in
housing projects cannot be occupied by all but only by those who
satisfy prescribed qualifications. A beginning has to be made, for it is
not possible to provide housing for are who need it, all at once.
Population growth, the migration to urban areas and the
mushrooming of crowded makeshift dwellings is a worldwide
development particularly in developing countries. So basic and urgent
are housing problems that the United Nations General Assembly
proclaimed 1987 as the "International Year of Shelter for the
Homeless" "to focus the attention of the international community on
those problems". The General Assembly is Seriously concerned that,
despite the efforts of Governments at the national and local levels
and of international organizations, the driving conditions of the
majority of the people in slums and squatter areas and rural
settlements, especially in developing countries, continue to
deteriorate in both relative and absolute terms." [G.A. Res. 37/221,
Yearbook of the United Nations 1982, Vol. 36, p. 1043-4]
In the light of the foregoing, this Court is satisfied that "socialized
housing" fans within the confines of "public use". It is, particularly
important to draw attention to paragraph (d) of Pres. Dec. No. 1224
which opportunities inextricably linked with low-cost housing, or
slum clearance, relocation and resettlement, or slum improvement
emphasize the public purpose of the project.
In the case at bar, the use to which it is proposed to put the subject
parcels of land meets the requisites of "public use". The lands in
question are being expropriated by the NHA for the expansion of
Bagong Nayon Housing Project to provide housing facilities to low-
salaried government employees. Quoting respondents:
1. The Bagong Nayong Project is a housing and
community development undertaking of the
National Housing Authority. Phase I covers about
60 hectares of GSIS property in Antipolo, Rizal;
Phase II includes about 30 hectares for industrial
development and the rest are for residential
housing development.
It is intended for low-salaried government
employees and aims to provide housing and
community services for about 2,000 families in
Phase I and about 4,000 families in Phase II.
It is situated on rugged terrain 7.5 kms. from
Marikina Town proper; 22 Kms. east of Manila;
and is within the Lungs Silangan Townsite
Reservation (created by Presidential
Proclamation No. 1637 on April 18, 1977).
The lands involved in the present petitions are
parts of the expanded/additional areas for the
Bagong Nayon Project totalling 25.9725 hectares.
They likewise include raw, rolling hills. (Rollo, pp.
266-7)
The acute shortage of housing units in the country is of public
knowledge. Official data indicate that more than one third of the
households nationwide do not own their dwelling places. A significant
number live in dwellings of unacceptable standards, such as shanties,
natural shelters, and structures intended for commercial, industrial,
or agricultural purposes. Of these unacceptable dwelling units, more
than one third is located within the National Capital Region (NCR)
alone which lies proximate to and is expected to be the most
benefited by the housing project involved in the case at bar [See,
National Census and Statistics Office, 1980 Census of Population and
Housing].
According to the National Economic and Development Authority at
the time of the expropriation in question, about "50 per cent of
urban families, cannot afford adequate shelter even at reduced rates
and will need government support to provide them with social
housing, subsidized either partially or totally" [NEDA, FOUR YEAR
DEVELOPMENT PLAN For 1974-1977, p. 357]. Up to the present,
housing some remains to be out of the reach of a sizable proportion
of the population" [NEDA, MEDIUM-TERM PHILIPPINE DEVELOPMENT
PLAN 1987-1992, p. 240].
The mushrooming of squatter colonies in the Metropolitan Manila
area as well as in other cities and centers of population throughout
the country, and, the efforts of the government to initiate housing
and other projects are matters of public knowledge [See NEDA, FOUR
YEAR DEVELOPMENT PLAN For 1974-1977, pp. 357-361; NEDA, FIVE-
YEAR PHILIPPINE DEVELOPMENT PLAN 1978-1982, pp. 215-228
NEDA, FIVE YEAR PHILIPPINE DEVELOPMENT PLAN 1983-1987, pp.
109-117; NEDA, MEDIUM TERM PHILIPPINE DEVELOPMENT PLAN
1987-1992, pp. 240-254].
b) Size of Property
Petitioners further contend that Pres. Decree 1224, as amended,
would allow the taking of "any private land" regardless of the size and
no matter how small the area of the land to be expropriated.
Petitioners claim that "there are vast areas of lands in Mayamot,
Cupang, and San Isidro, Antipolo, Rizal hundred of hectares of which
are owned by a few landowners only. It is surprising [therefore] why
respondent National Housing Authority [would] include [their] two
man lots ..."
In J.M. Tuason Co., Inc. vs. Land Tenure Administration [G. R. No. L-
21064, February 18, 1970, 31 SCRA 413 (1970) at 428] this Court
earlier ruled that expropriation is not confined to landed estates. This
Court, quoting the dissenting opinion of Justice J.B.L. Reyes
in Republic vs. Baylosis, [96 Phil. 461 (1955)], held that:
The propriety of exercising the power of eminent
domain under Article XIII, section 4 of our
Constitution cannot be determined on a purely
quantitative or area basis. Not only does the
constitutional provision speak of lands instead of
landed estates, but I see no cogent reason why
the government, in its quest for social justice and
peace, should exclusively devote attention to
conflicts of large proportions, involving a
considerable number of individuals, and eschew
small controversies and wait until they grow into
a major problem before taking remedial action.
The said case of J.M. Tuason Co., Inc. departed from the ruling
in Guido vs. Rural Progress Administration [84 Phil. 847 (1949)] which
held that the test to be applied for a valid expropriation of private
lands was the area of the land and not the number of people who
stood to be benefited. Since then "there has evolved a clear pattern
of adherence to the "number of people to be benefited test" "
[Mataas na Lupa Tenants Association, Inc. v. Dimayuga, G.R. No.
32049, June 25,1984, 130 SCRA 30 (1984) at 39]. Thus, in Pulido vs.
Court of Appeals [G.R. No. 57625, May 3, 1983, 122 SCRA 63 (1983)
at 73], this Court stated that, "[i]t is unfortunate that the petitioner
would be deprived of his landholdings, but his interest and that of his
family should not stand in the way of progress and the benefit of the
greater may only of the inhabitants of the country."
The State acting through the NHA is vested with broad discretion to
designate the particular property/properties to be taken for
socialized housing purposes and how much thereof may be
expropriated. Absent a clear showing of fraud, bad faith, or gross
abuse of discretion, which petitioners herein failed to demonstrate,
the Court will give due weight to and leave undisturbed the NHA's
choice and the size of the site for the project. The property owner
may not interpose objections merely because in their judgment some
other property would have been more suitable, or just as suitable, for
the purpose. The right to the use, enjoyment and disposal of private
property is tempered by and has to yield to the demands of the
common good. The Constitutional provisions on the subject are clear:
The State shall promote social justice in all phases
of national development. (Art. II, sec. 10)
The Congress shall give highest priority to the
enactment of measures that protect and enhance
the right of all the people to human dignity,
reduce social, economic, and political
inequalities, and remove cultural inequities by
equitably diffusing wealth and political power for
the common good. To this end, the State shall
regulate the acquisition, ownership, use and
disposition of property and its increments. (Art,
XIII, sec. 1)
Indeed, the foregoing provisions, which are restatements of the
provisions in the 1935 and 1973 Constitutions, emphasize:
...the stewardship concept, under which private
property is supposed to be held by the individual
only as a trustee for the people in general, who
are its real owners. As a mere steward, the
individual must exercise his rights to the property
not for his own exclusive and selfish benefit but
for the good of the entire community or nation
[Mataas na Lupa Tenants Association,
Inc. supra at 42-3 citing I. CRUZ, PHILIPPINE
POLITICAL LAW, 70 (1983 ed.)].
2. Just Compensation
Petitioners maintain that Pres. Decree No. 1224, as amended, would
allow the taking of private property upon payment of unjust and
unfair valuations arbitrarily fixed by government assessors. In
addition, they assert that the Decree would deprive the courts of
their judicial discretion to determine what would be "just
compensation".
The foregoing contentions have already been ruled upon by this
Court in the case of Ignacio vs. Guerrero (G.R. No. L-49088, May 29,
1987) which, incidentally, arose from the same expropriation
complaint that led to this instant petition. The provisions on just
compensation found in Presidential Decree Nos. 1224, 1259 and
1313 are the same provisions found in Presidential Decree Nos. 76,
464, 794 and 1533 which were declared unconstitutional in Export
Processing Zone All thirty vs. Dulay (G.R. No. 5960 April 29, 1987) for
being encroachments on prerogatives.
This Court abandoned the ruling in National Housing Authority vs.
Reyes [G.R. No. 49439, June 29,1983, 123 SCRA 245 (1983)] which
upheld Pres. Decree No. 464, as amended by - Presidential Decree
Nos. 794, 1224 and 1259.
In said case of Export Processing Zone Authority, this Court pointed
out that:
The basic unfairness of the decrees is readily
apparent.
Just compensation means the value of the
property at the time of the taking. It means a fair
and full equivalent for the loss sustained. ALL the
facts as to the condition of the property and its
surroundings, its improvements and capabilities,
should be considered.
xxx xxx xxx
Various factors can come into play in the
valuation of specific properties singled out for
expropriation. The values given by provincial
assessors are usually uniform for very wide areas
covering several barrios or even an entire total
with the exception of the poblacion. Individual
differences are never taken into account. The
value of land is based on such generalities as its
possible cultivation for rice, corn, coconuts, or
other crops. Very often land described as
directional has been cultivated for generations.
Buildings are described in terms of only two or
three classes of building materials and estimates
of areas are more often inaccurate than correct.
Tax values can serve as guides but cannot be
absolute substitutes for just compensation.
To say that the owners are estopped to question
the valuations made by assessors since they had
the opportunity to protest is illusory. The
overwhelming mass of landowners accept
unquestioningly what is found in the tax
declarations prepared by local assessors or
municipal clerks for them. They do not even look
at, much less analyze, the statements. The Idea of
expropriation simply never occurs until a demand
is made or a case filed by an agency authorized to
do so. (pp. 12-3)
3. Due Process
Petitioners assert that Pres. Decree 1224, as amended, violates
procedural due process as it allows immediate taking of possession,
control and disposition of property without giving the owner his day
in court. Respondent Judge ordered the issuance of a writ of
possession without notice and without hearing.
The constitutionality of this procedure has also been ruled upon in
the Export Processing Zone Authority case, viz:
It is violative of due process to deny to the owner
the opportunity to prove that the valuation in the
tax documents is unfair or wrong. And it is
repulsive to basic concepts of justice and fairness
 to allow the haphazard work of minor bureaucrat
or clerk to absolutely prevail over the judgment
of a court promulgated only after expert
commissioners have actually viewed the
property, after evidence and arguments pro and
con have been presented, and after all factors
and considerations essential to a fair and just
determination have been judiciously evaluated.
(p. 13)
On the matter of the issuance of a writ of possession, the ruling in
the Ignacio case is reiterated, thus:
[I]t is imperative that before a writ of possession
is issued by the Court in expropriation
proceedings, the following requisites must be
met: (1) There must be a Complaint for
expropriation sufficient in form and in substance;
(2) A provisional determination of just
compensation for the properties sought to be
expropriated must be made by the trial court on
the basis of judicial (not legislative or executive)
discretion; and (3) The deposit requirement
under Section 2, Rule 67 must be complied with.
(p. 14)
This Court holds that "socialized housing" defined in Pres. Decree No.
1224, as amended by Pres. Decree Nos. 1259 and 1313, constitutes
"public use" for purposes of expropriation. However, as previously
held by this Court, the provisions of such decrees on just
compensation are unconstitutional; and in the instant case the Court
finds that the Orders issued pursuant to the corollary provisions of
those decrees authorizing immediate taking without notice and
hearing are violative of due process.
WHEREFORE, the Orders of the lower court dated January 17, 1978
and June 28, 1978 issuing the writ of possession on the basis of the
market value appearing therein are annulled for having been issued
in excess of jurisdiction. Let this case be remanded to the court of
origin for further proceedings to determine the compensation the
petitioners are entitled to be paid. No costs.
SO ORDERED.
SUMULONG VS. GUERRERO
FACTS: On December 5, 1977 the National Housing Authority (NIIA)
filed a complaint for expropriation of parcels of land covering
approximately twenty five (25) hectares, (in Antipolo, Rizal) including
the lots of petitioners Lorenzo Sumulong and Emilia Vidanes-Balaoing
with an area of 6,667 square meters and 3,333 square meters
respectively. Together with the complaint was a motion for
immediate possession of the properties. The NHA deposited the
amount of P158,980.00 with the Philippine National Bank,
representing the "total market value" of the subject twenty five
hectares of land, pursuant to Presidential Decree No. 1224 which
defines "the policy on the expropriation of private property for
socialized housing upon payment of just compensation." This was
granted by the court. After denial of petitioners, motion for
reconsideration on the ground that they had been deprived of the
possession of their property without due process of law, thus they
challenged the constitutionality of Pres. Decree No. 1224.
Issue: WON the "Socialized housing" for the purpose of
condemnation proceeding, as defined in said Decree, is for a public
purpose.
HOLDING: Yes.
Petitioners contend that "socialized housing" as defined in Pres.
Decree No. 1224, as amended, for the purpose of condemnation
proceedings is not of "public use" since it will benefit only "a handful
of people, bereft of public character." "Socialized housing" is defined
as, "the construction of dwelling units for the middle and lower class
members of our society, including the construction of the supporting
infrastructure and other facilities" (Pres. Decree No. 1224, par. 1)
Citing the case of Heirs of Juancho Ardona v. Reyes, the term "public
use" has acquired a more comprehensive coverage. To the literal
import of the term signifying strict use or employment by the public
has been added the broader notion of indirect public benefit or
advantage. It is accurate to state then that at present whatever may
be beneficially employed for the general welfare satisfies the
requirement of public use. Specifically, urban renewal or
redevelopment and the construction of low-cost housing is
recognized as a public purpose, not only because of the expanded
concept of public use but also because of specific provisions in the
Constitution.
The 1973 Constitution made it incumbent upon the State to
establish, maintain and ensure adequate social services including
housing [Art. 11, sec. 7]. Housing is a basic human need. Shortage in
housing is a matter of state concern since it directly and significantly
affects public health, safety, the environment and in sum, the general
welfare. In the light of the foregoing, this Court is satisfied that
"socialized housing" fans within the confines of "public use".
Petitioners claim that there are vast areas of lands in Rizal hundreds
of hectares of which are owned by a few landowners only.
Why should the NHA pick their small lots? Expropriation is not
confined to landed estates. The test to be applied for a valid
expropriation of private lands was the area of the land and not the
number of people who stood to be benefitted. The State acting
through the NHA is vested with broad discretion to designate the
property. The property owner may not interpose objections merely
because in their judgment some other property would have been
more suitable. The Court stated that, "[i]t is unfortunate that the
petitioner would be deprived of his landholdings, but his interest and
that of his family should not stand in the way of progress and the
benefit of the greater may only of the inhabitants of the country."
MARINA Z. REYES; ALFREDO A. FRANCISCO; ANGELITA Z. GARCIA;
ALFREDO Z. FRANCISCO, JR; ARMANDO Z. FRANCISCO; ALMA
C. FRANCISCO; EUGENIA Z. LUNA; CLARITA Z. ZABALLERO,
LEONARDO Z. ZABALLERO, JR, and TEODORO Z. ZABALLERO,
in substitution of LEONARDO M. ZABALLERO; AUGUSTO M.
ZABALLERO; FRINE A. ZABALLERO; ELENA FRONDA
ZABALLERO; VICTOR GREGORIO F. ZABALLERO; MARIA ELENA
F. ZABALLERO; LOURDES ZABALLERO-LAVA; SOCORRO EMILIA
ZABALLERO-YAP; and TERESITA F. ZABALLERO, petitioners, vs.
NATIONAL HOUSING AUTHORITY, respondent.
DECISION
PUNO, J.:
This is an appeal by certiorari from the decision of the Court of
Appeals in CA-GR CV No. 51641 dated September 29, 2000[1] affirming
the judgment of the Regional Trial Court of Quezon City, Branch 79
which dismissed the complaint for forfeiture of rights filed by herein
petitioners, as well as the Resolution dated March 13, 2001 denying
petitioners motion for reconsideration.
Records show that in 1977, respondent National Housing
Authority (NHA) filed separate complaints for the expropriation of
sugarcane lands, particularly Lot Nos. 6450, 6448-E, 6198-A and 6199
of the cadastral survey of Dasmarias, Cavite belonging to the
petitioners, before the then Court of First Instance of Cavite, and
docketed as Civil Case Nos. T.G.-392, T.G.-396 and T.G.-417. The stated
public purpose of the expropriation was the expansion of the
Dasmarias Resettlement Project to accommodate the squatters who
were relocated from the Metropolitan Manila area. The trial court
rendered judgment ordering the expropriation of these lots and the
payment of just compensation. This was affirmed by the Supreme
Court in a decision rendered on October 29, 1987 in the case of NHA
vs. Zaballero[2] and which became final on November 26, 1987.[3]
On February 24, 1989, the expropriation court (now Branch 18,
Regional Trial Court of Tagaytay City) issued an Order[4] the dispositive
portion of which reads:
WHEREFORE, and resolving thus, let an Alias Writ of Execution be
immediately issued and that:
(1) The Register of Deeds of the Province of Cavite is hereby ordered
to transfer, in the name of the plaintiff National Housing Authority,
the following:
(a) Transfer Certificate No. RT-638 containing an
area of 79,167 square meters situated in Barrio
Bangkal, Dasmarias, Cavite;
(b) Transfer Certificate of Title No. T-55702
containing an area of 20,872 square meters
situated in Barrio Bangkal, Dasmarias, Cavite;
(c) Transfer Certificate of Title No. RT-639 and RT-
4641 covering Lot Nos. 6198-A and 6199 with
an aggregate area of 159,985 square meters
also situated in Barrio Bangkal, Dasmarias,
Cavite.
(2) Plaintiff National Housing Authority is likewise hereby ordered,
under pain of contempt, to immediately pay the defendants, the
amounts stated in the Writ of Execution as the adjudicated
compensation of their expropriated properties, which process was
received by it according to the records, on September 26, 1988,
segregating therefrom, and in separate check, the lawyers fees in
favor of Atty. Bobby P. Yuseco, in the amount of P322,123.05, as
sustained by their contract as gleaned from the records, with no
other deduction, paying on its own (NHA) account, the necessary
legal expenses incident to the registration or issuance of new
certificates of title, pursuant to the provisions of the Property
Registration Law (PD 1529);
(3) Defendants, however, are directed to pay the corresponding
capital gains tax on the subject properties, directing them
additionally, to coordinate with the plaintiff NHA in this regard, in
order to facilitate the termination of this case, put an end to this
controversy and consign the same to its final rest.
For the alleged failure of respondent NHA to comply with the
above order, petitioners filed on April 28, 1992 a complaint[5] for
forfeiture of rights before the Regional Trial Court of Quezon City,
Branch 79, in Civil Case No. Q-92-12093. They alleged that respondent
NHA had not relocated squatters from the Metropolitan Manila area
on the expropriated lands in violation of the stated public purpose for
expropriation and had not paid the just compensation fixed by the
court. They prayed that respondent NHA be enjoined from disposing
and alienating the expropriated properties and that judgment be
rendered forfeiting all its rights and interests under the expropriation
judgment. In its Answer,[6] respondent NHA averred that it had already
paid a substantial amount to herein petitioners and that the
expropriation judgment could not be executed in view of several issues
raised by respondent NHA before the expropriation court (now Branch
18, RTC, Tagaytay City) concerning capital gains tax, registration fees
and other expenses for the transfer of title to respondent NHA, as well
as the claims for attorneys fees of Atty. Joaquin Yuseco, Jr.,
collaborating counsel for petitioners.
Ocular inspections[7] conducted by the trial court on the subject
properties show that:
1. 80% of Lot No. 6198-A with an area of 120,146 square meters is
already occupied by relocatees whose houses are made of light
materials with very few houses partly made of hollow blocks. The
relocatees were relocated only on (sic) March of 1994;
2. Most of the area covered by Lot No. 2075 is almost occupied by
houses and structures, most of which are made of concrete
materials. These houses are not being occupied by squatters
relocated to the said lot by the defendant NHA;
3. Lot No. 6199 is also occupied by concrete houses and structures
but likewise there are no relocatees in said lot. A large area of the
same is still unoccupied.
On September 29, 1995, the trial court rendered judgment
dismissing the complaint. Finding that the failure of respondent NHA
to pay just compensation and of petitioners to pay capital gains tax are
both unjustified and unreasonable, the trial court held that: (1)
respondent NHA is not deemed to have abandoned the public purpose
for which the subject properties were expropriated because the
relocation of squatters involves a long and tedious process. It ruled
that respondent NHA actually pursued the public purpose of the
expropriation when it entered into a contract with Arceo C. Cruz
involving the construction of low cost housing on the expropriated lots
to be sold to qualified low income beneficiaries; (2) there is no
condition imposed in the expropriation judgment that the subject
properties shall revert back to its original owners in case the purpose
of expropriation is terminated or abandoned; (3) the payment of just
compensation is independent of the obligation of herein petitioners to
pay capital gains tax; and (4) in the payment of just compensation, the
basis should be the value at the time the property was taken. On
appeal, the Court of Appeals affirmed the decision of the trial court.
Petitioners are now before us raising the following assignment
of errors:
1. The Honorable Court of Appeals had decided a
question of substance not in accord with justice
and equity when it ruled that, as the judgment of
the expropriation court did not contain a condition
that should the expropriated property be not used
for the intended purpose it would revert to the
condemnee, the action to declare the forfeiture of
rights under the expropriation judgment can not
prosper;
2. The Honorable Court of Appeals decided a question of
substance not in accord with jurisprudence, justice
and equity when it ruled that the non-payment is
not a ground for forfeiture;
3. The Honorable Court of Appeals erred in not declaring
the judgment of expropriation forfeited in light of
the failure of respondent to use the expropriated
property for the intended purpose but for a totally
different purpose.
The petition is not impressed with merit.
Petitioners contend that respondent NHA violated the stated
public purpose for the expansion of the Dasmarias Resettlement
Project when it failed to relocate the squatters from the Metro Manila
area, as borne out by the ocular inspection conducted by the trial court
which showed that most of the expropriated properties remain
unoccupied. Petitioners likewise question the public nature of the use
by respondent NHA when it entered into a contract for the
construction of low cost housing units, which is allegedly different
from the stated public purpose in the expropriation
proceedings. Hence, it is claimed that respondent NHA has forfeited
its rights and interests by virtue of the expropriation judgment and the
expropriated properties should now be returned to herein
petitioners. We are not persuaded.
The 1987 Constitution explicitly provides for the exercise of the
power of eminent domain over private properties upon payment of
just compensation. More specifically, section 9, Article III states that
private property shall not be taken for public use without just
compensation. The constitutional restraints are public use and just
compensation.
Petitioners cannot insist on a restrictive view of the eminent
domain provision of the Constitution by contending that the contract
for low cost housing is a deviation from the stated public use. It is now
settled doctrine that the concept of public use is no longer limited to
traditional purposes. Here, as elsewhere, the idea that public use is
strictly limited to clear cases of use by the public has been
abandoned. The term public use has now been held to be synonymous
with public interest, public benefit, public welfare, and public
convenience.[8] The rationale for this new approach is well explained
in the case of Heirs of Juancho Ardona, et al. vs. Reyes, et al.,[9] to wit:
The restrictive view of public use may be appropriate for a nation
which circumscribes the scope of government activities and public
concerns and which possesses big and correctly located public lands
that obviate the need to take private property for public
purposes. Neither circumstance applies to the Philippines. We have
never been a laissez faire State. And the necessities which impel the
exertion of sovereign power are all too often found in areas of scarce
public land or limited government resources.
xxxxxxxxx
The taking to be valid must be for public use. There was a time when
it was felt that a literal meaning should be attached to such a
requirement. Whatever project is undertaken must be for the public
to enjoy, as in the case of streets or parks. Otherwise, expropriation is
not allowable. It is not anymore. As long as the purpose of the taking
is public, then the power of eminent domain comes into play. As just
noted, the constitution in at least two cases, to remove any doubt,
determines what is public use. One is the expropriation of lands to be
subdivided into small lots for resale at cost to individuals. The other is
in the transfer, through the exercise of this power, of utilities and
other private enterprise to the government. It is accurate to state
then that at present whatever may be beneficially employed for the
general welfare satisfies the requirement of public use. (emphasis
supplied)
The act of respondent NHA in entering into a contract with a real
estate developer for the construction of low cost housing on the
expropriated lots to be sold to qualified low income beneficiaries
cannot be taken to mean as a deviation from the stated public purpose
of their taking. Jurisprudence has it that the expropriation of private
land for slum clearance and urban development is for a public purpose
even if the developed area is later sold to private homeowners,
commercials firms, entertainment and service companies, and other
private concerns.[10]
Moreover, the Constitution itself allows the State to undertake,
for the common good and in cooperation with the private sector, a
continuing program of urban land reform and housing which will make
at affordable cost decent housing and basic services to underprivileged
and homeless citizens in urban centers and resettlement areas.[11] The
expropriation of private property for the purpose of socialized housing
for the marginalized sector is in furtherance of the social justice
provision under Section 1, Article XIII of the Constitution which
provides that:
SECTION 1. The Congress shall give highest priority to the enactment
of measures that protect and enhance the right of all the people to
human dignity, reduce social, economic, and political inequalities,
and remove cultural inequities by equitably diffusing wealth and
political power for the common good.
To this end, the State shall require the acquisition, ownership, use
and disposition of property and its increments.
It follows that the low cost housing project of respondent NHA
on the expropriated lots is compliant with the public use requirement.
We likewise do not subscribe to petitioners contention that the
stated public purpose was abandoned when respondent NHA failed to
occupy the expropriated lots by relocating squatters from the Metro
Manila area. The expropriation judgment declared that respondent
NHA has a lawful right to take petitioners properties for the public use
or purpose of expanding the Dasmarias Resettlement Project. The
taking here is absolute, without any condition, restriction or
qualification. Contrary to petitioners submission, the ruling
enunciated in the early case of Fery vs. Municipality of
Cabanatuan,[12] is still good and sound doctrine, viz.:
x x x If, for example, land is expropriated for a particular purpose,
with the condition that when that purpose is ended or abandoned
the property shall return to its former owner, then, of course, when
the purpose is terminated or abandoned the former owner
reacquires the property so expropriated. x x x If, upon the contrary,
however, the decree of expropriation gives to the entity a fee simple
title, then, of course, the land becomes the absolute property of the
expropriator x x x.
When land has been acquired for public use in fee simple
unconditionally, either by the exercise of eminent domain or by
purchase, the former owner retains no rights in the land, and the
public use may be abandoned, or the land may be devoted to a
different use, without any impairment of the estate or title acquired,
or any reversion to the former owner.
Petitioners further aver that the continued failure of respondent
NHA to pay just compensation for a long period of time justifies the
forfeiture of its rights and interests over the expropriated lots. They
demand the return of the expropriated lots. Respondent NHA justifies
the delay to pay just compensation by reason of the failure of
petitioners to pay the capital gains tax and to surrender the owners
duplicate certificates of title.
In the recent case of Republic of the Philippines vs. Court of
Appeals, et al.,[13] the Court ruled that non-payment of just
compensation does not entitle the private landowners to recover
possession of their expropriated lots. Thus:
Thus, in Valdehueza vs. Republic where the private landowners had
remained unpaid ten years after the termination of the expropriation
proceedings, this Court ruled
The points in dispute are whether such payment can still be made
and, if so, in what amount. Said lots have been the subject of
expropriation proceedings. By final and executory judgment in said
proceedings, they were condemned for public use, as part of an
airport, and ordered sold to the government. x x x. It follows that
both by virtue of the judgment, long final, in the expropriation suit, as
well as the annotations upon their title certificates, plaintiffs are not
entitled to recover possession of their expropriated lots which are
still devoted to the public use for which they were expropriated but
only to demand the market value of the same.
Said relief may be granted under plaintiffs prayer for such other
remedies, which may be deemed just and equitable under the
premises.
The Court proceeded to reiterate its pronouncement in Alfonso vs.
Pasay City where the recovery of possession of property taken for
public use prayed for by the unpaid landowner was denied even
while no requisite expropriation proceedings were first
instituted. The landowner was merely given the relief of recovering
compensation for his property computed at its market value at the
time it was taken and appropriated by the State.
The judgment rendered by the Bulacan RTC in 1979 on the
expropriation proceedings provides not only for the payment of just
compensation to herein respondents but likewise adjudges the
property condemned in favor of petitioner over which parties, as well
as their privies, are bound. Petitioner has occupied, utilized and, for all
intents and purposes, exercised dominion over the property pursuant
to the judgment. The exercise of such rights vested to it as the
condemnee indeed has amounted to at least a partial compliance or
satisfaction of the 1979 judgment, thereby preempting any claim of
bar by prescription on grounds of non-execution. In arguing for the
return of their property on the basis of non-payment, respondents
ignore the fact that the right of the expropriating authority is far from
that of an unpaid seller in ordinary sales, to which the remedy of
rescission might perhaps apply. An in rem proceeding, condemnation
acts upon the property. After condemnation, the paramount title is in
the public under a new and independent title; thus, by giving notice
to all claimants to a disputed title, condemnation proceedings
provide a judicial process for securing better title against all the world
than may be obtained by voluntary conveyance. (emphasis supplied)
We, however, likewise find the refusal of respondent NHA to pay
just compensation, allegedly for failure of petitioners to pay capital
gains tax and surrender the owners duplicate certificates of title, to be
unfounded and unjustified.
First, under the expropriation judgment the payment of just
compensation is not subject to any condition. Second, it is a
recognized rule that although the right to enter upon and appropriate
the land to public use is completed prior to payment, title to the
property expropriated shall pass from the owner to the expropriator
only upon full payment of the just compensation. In the case
of Association of Small Landowners in the Phils., Inc., et al. vs. Secretary
of Agrarian Reform,[14] it was held that:
Title to property which is the subject of condemnation proceedings
does not vest the condemnor until the judgment fixing just
compensation is entered and paid, but the condemnors title relates
back to the date on which the petition under the Eminent Domain
Act, or the commissioners report under the Local Improvement Act,
is filed.
x x x Although the right to appropriate and use land taken for a canal is
complete at the time of entry, title to the property taken remains in
the owner until payment is actually made.
In Kennedy v. Indianapolis, the US Supreme Court cited several cases
holding that title to property does not pass to the condemnor until
just compensation had actually been made. In fact, the decisions
appear to be uniformly to this effect. As early as 1838, in Rubottom v.
McLure, it was held that actual payment to the owner of the
condemned property was a condition precedent to the investment of
the title to the property in the State albeit not to the appropriation of
it to public use. In Rexford v. Knight, the Court of Appeals of New York
said that the construction upon the statutes was that the fee did not
vest in the State until the payment of the compensation although the
authority to enter upon and appropriate the land was complete prior
to the payment. Kennedy further said that both on principle and
authority the rule is x x x that the right to enter on and use the
property is complete, as soon as the property is actually appropriated
under the authority of law for a public use, but that the title does not
pass from the owner without his consent, until just compensation has
been made to him.
Our own Supreme Court has held in Visayan Refining Co. v. Camus and
Paredes, that:
If the laws which we have exhibited or cited in the preceding
discussion are attentively examined it will be apparent that the
method of expropriation adopted in this jurisdiction is such as to
afford absolute reassurance that no piece of land can be finally and
irrevocably taken from an unwilling owner until compensation is paid.
x x x. (emphasis supplied)
With respect to the amount of the just compensation still due
and demandable from respondent NHA, the lower courts erred in not
awarding interest computed from the time the property is actually
taken to the time when compensation is actually paid or deposited in
court. In Republic, et al. vs. Court of Appeals, et al.,[15] the Court
imposed interest at 12% per annum in order to help eliminate the issue
of the constant fluctuation and inflation of the value of the currency
over time, thus:
The constitutional limitation of just compensation is considered to be
the sum equivalent to the market value of the property, broadly
described to be the price fixed by the seller in open market in the
usual and ordinary course of legal action and competition or the fair
value of the property as between one who receives, and one who
desires to sell, it being fixed at the time of the actual taking by the
government. Thus, if property is taken for public use before
compensation is deposited with the court having jurisdiction over the
case, the final compensation must include interests on its just value
to be computed from the time the property is taken to the time when
compensation is actually paid or deposited with the court. In fine,
between the taking of the property and the actual payment, legal
interests accrue in order to place the owner in a position as good as
(but not better than) the position he was in before the taking
occurred.
x x x This allowance of interest on the amount found to be the value
of the property as of the time of the taking computed, being an
effective forbearance, at 12% per annum should help eliminate the
issue of the constant fluctuation and inflation of the value of the
currency over time. Article 1250 of the Civil Code, providing that, in
case of extraordinary inflation or deflation, the value of the currency
at the time of the establishment of the obligation shall be the basis
for the payment when no agreement to the contrary is stipulated,
has strict application only to contractual obligations. In other words,
a contractual agreement is needed for the effects of extraordinary
inflation to be taken into account to alter the value of the currency.
Records show that there is an outstanding balance
of P1,218,574.35 that ought to be paid to petitioners.[16] It is not
disputed that respondent NHA took actual possession of the
expropriated properties in 1977.[17] Perforce, while petitioners are not
entitled to the return of the expropriated property, they are entitled
to be paid the balance of P1,218,574.35 with legal interest thereon at
12% per annum computed from the taking of the property in 1977
until the due amount shall have been fully paid.
WHEREFORE, the appealed judgment is modified as follows:
1. Ordering respondent National Housing Authority to
pay petitioners the amount of P1,218,574.35 with
legal interest thereon at 12% per annum computed
from the taking of the expropriated properties in
1997 until the amount due shall have been fully paid;
2. Ordering petitioners to pay the capital gains tax; and
3. Ordering petitioners to surrender to respondent
National Housing Authority the owners duplicate
certificates of title of the expropriated properties
upon full payment of just compensation.
REYES VS. NHA
Facts: Respondent National Housing Authority (NHA) filed complaints
for the expropriation of sugarcane lands belonging to the petitioners.
The stated public purpose of the expropriation was the expansion of
the Dasmarias Resettlement Project to accommodate the squatters
who were relocated from the Metropolitan Manila area. The trial
court rendered judgment ordering the expropriation of these lots and
the payment of just compensation. The Supreme Court affirmed the
judgment of the lower court.
A few years later, petitioners contended that respondent NHA
violated the stated public purpose for the expansion of the
Dasmarias Resettlement Project when it failed to relocate the
squatters from the Metro Manila area, as borne out by the
ocular inspection conducted by the trial court which showed that
most of the expropriated properties remain unoccupied. Petitioners
likewise question the public nature of the use by respondent NHA
when it entered into a contract for the construction of low
costhousing units, which is allegedly different from the stated public
purpose in the expropriation proceedings. Hence, it is claimed that
respondent NHA has forfeited its rights and interests by virtue of the
expropriation judgment and the expropriated properties should now
be returned to herein petitioners.
Issue: Whether or not the judgment of expropriation was forfeited in
the light of the failure of respondent NHA to use the expropriated
property for the intended purpose but for a totally different purpose.
Held: The Supreme Court held in favor of the respondent NHA.
Accordingly, petitioners cannot insist on a restrictive view of
the eminent domain provision of the Constitution by contending that
the contract for low cost housing is a deviation from the stated public
use. It is now settleddoctrine that the concept of public use is no
longer limited to traditional purposes. The term "public use" has now
been held to be synonymous with "public interest," "public benefit,"
"public welfare," and "public convenience." Thus, whatever may be
beneficially employed for the general welfare satisfies the
requirement of public use."
In addition, the expropriation of private land for slum clearance and
urban development is for a public purpose even if the developed area
is later sold to private homeowners, commercials firms,
entertainment and service companies, and other private concerns.
Moreover, the Constitution itself allows the State to undertake, for
the common good and in cooperation with the private sector, a
continuing program of urban land reform andhousing which will
make at affordable cost decent housing and basic services to
underprivileged and homeless citizens in urban centers and
resettlement areas. The expropriation of private property for the
purpose of socialized housing for the marginalized sector is in
furtherance of social justice.
ALEJANDRO MANOSCA, ASUNCION MANOSCA and LEONICA
MANOSCA, petitioners, vs. HON. COURT OF APPEALS, HON. BENJAMIN
V. PELAYO, Presiding Judge, RTC-Pasig, Metro Manila, Branch 168,
HON. GRADUACION A. REYES CLARAVAL, Presiding Judge, RTC-Pasig,
Metro Manila, Branch 71, and REPUBLIC OF THE
PHILIPPINES, respondents.
DECISION
VITUG, J.:
In this appeal, via a petition for review on certiorari, from the
decision[1] of the Court of Appeals, dated 15 January 1992, in CA-G.R.
SP No. 24969 (entitled Alejandro Manosca, et al. v. Hon. Benjamin V.
Pelayo, et al.), this Court is asked to resolve whether or not the public
use requirement of Eminent Domain is extant in the attempted
expropriation by the Republic of a 492-square-meter parcel of land so
declared by the National Historical Institute (NHI) as a national
historical landmark.
The facts of the case are not in dispute.
Petitioners inherited a piece of land located at P. Burgos Street,
Calzada, Taguig, Metro Manila, with an area of about four hundred
ninety-two (492) square meters. When the parcel was ascertained by
the NHI to have been the birthsite of Felix Y. Manalo, the founder
of Iglesia Ni Cristo, it passed Resolution No. 1, Series of 1986,
pursuant to Section 4[2] of Presidential Decree No. 260, declaring the
land to be a national historical landmark. The resolution was, on 06
January 1986, approved by the Minister of Education, Culture and
Sports. Later, the opinion of the Secretary of Justice was asked on the
legality of the measure. In his Opinion No. 133, Series of 1987, the
Secretary of Justice replied in the affirmative; he explained:
According to your guidelines, national landmarks are places or
objects that are associated with an event, achievement,
characteristic, or modification that makes a turning point or stage in
Philippine history.Thus, the birthsite of the founder of the Iglesia ni
Cristo, the late Felix Y. Manalo, who, admittedly, had made
contributions to Philippine history and culture has been declared as a
national landmark. It has been held that places invested with unusual
historical interest is a public use for which the power of eminent
domain may be authorized x x x.
In view thereof, it is believed that the National Historical Institute as
an agency of the Government charged with the maintenance and
care of national shrines, monuments and landmarks and the
development of historical sites that may be declared as national
shrines, monuments and/or landmarks, may initiate the institution of
condemnation proceedings for the purpose of acquiring the lot in
question in accordance with the procedure provided for in Rule 67 of
the Revised Rules of Court. The proceedings should be instituted by
the Office of the Solicitor General in behalf of the Republic.
Accordingly, on 29 May 1989, the Republic, through the Office of the
Solicitor-General, instituted a complaint for expropriation[3] before
the Regional Trial Court of Pasig for and in behalf of the NHI
alleging, inter alia, that:
Pursuant to Section 4 of Presidential Decree No. 260, the National
Historical Institute issued Resolution No. 1, Series of 1986, which was
approved on January, 1986 by the then Minister of Education,
Culture and Sports, declaring the above described parcel of land
which is the birthsite of Felix Y. Manalo, founder of the Iglesia ni
Cristo, as a National Historical Landmark. The plaintiff perforce needs
the land as such national historical landmark which is a public
purpose.
At the same time, respondent Republic filed an urgent motion for the
issuance of an order to permit it to take immediate possession of the
property. The motion was opposed by petitioners. After a hearing,
the trial court issued, on 03 August 1989,[4] an order fixing the
provisional market (P54,120.00) and assessed (P16,236.00) values of
the property and authorizing the Republic to take over the property
once the required sum would have been deposited with the
Municipal Treasurer of Taguig, Metro Manila.
Petitioners moved to dismiss the complaint on the main thesis that
the intended expropriation was not for a public purpose and,
incidentally, that the act would constitute an application of public
funds, directly or indirectly, for the use, benefit, or support of Iglesia
ni Cristo, a religious entity, contrary to the provision of Section 29(2),
Article VI, of the 1987 Constitution.[5]Petitioners sought, in the
meanwhile, a suspension in the implementation of the 03rd August
1989 order of the trial court.
On 15 February 1990, following the filing by respondent Republic of
its reply to petitioners motion seeking the dismissal of the case, the
trial court issued its denial of said motion to dismiss.[6] Five (5) days
later, or on 20 February 1990,[7] another order was issued by the trial
court, declaring moot and academic the motion for reconsideration
and/or suspension of the order of 03 August 1989 with the rejection
of petitioners motion to dismiss. Petitioners motion for the
reconsideration of the 20th February 1990 order was likewise denied
by the trial court in its 16th April 1991 order.[8]
Petitioners then lodged a petition for certiorari and prohibition with
the Court of Appeals. In its now disputed 15th January 1992 decision,
the appellate court dismissed the petition on the ground that the
remedy of appeal in the ordinary course of law was an adequate
remedy and that the petition itself, in any case, had failed to show
any grave abuse of discretion or lack of jurisdictional competence on
the part of the trial court. A motion for the reconsideration of the
decision was denied in the 23rd July 1992 resolution of the appellate
court.
We begin, in this present recourse of petitioners, with a few known
postulates.
Eminent domain, also often referred to as expropriation and, with
less frequency, as condemnation, is, like police power and taxation,
an inherent power of sovereignty. It need not be clothed with any
constitutional gear to exist; instead, provisions in our Constitution on
the subject are meant more to regulate, rather than to grant, the
exercise of the power. Eminent domain is generally so described as
the highest and most exact idea of property remaining in the
government that may be acquired for some public purpose through a
method in the nature of a forced purchase by the State.[9] It is a right
to take or reassert dominion over property within the state for public
use or to meet a public exigency. It is said to be an essential part of
governance even in its most primitive form and thus inseparable from
sovereignty.[10] The only direct constitutional qualification is that
private property shall not be taken for public use without just
compensation.[11] This proscription is intended to provide a safeguard
against possible abuse and so to protect as well the individual against
whose property the power is sought to be enforced.
Petitioners assert that the expropriation has failed to meet the
guidelines set by this Court in the case of Guido v. Rural Progress
Administration,[12] to wit: (a) the size of the land expropriated; (b) the
large number of people benefited; and, (c) the extent of social and
economic reform.[13] Petitioners suggest that we confine the concept
of expropriation only to the following public uses,[14] i.e., the -
x x x taking of property for military posts, roads, streets, sidewalks,
bridges, ferries, levees, wharves, piers, public buildings including
schoolhouses, parks, playgrounds, plazas, market places, artesian
wells, water supply and sewerage systems, cemeteries, crematories,
and railroads.
This view of petitioners is much too limitative and restrictive.
The court, in Guido, merely passed upon the issue of the extent of
the Presidents power under Commonwealth Act No. 539 to,
specifically, acquire private lands for subdivision into smaller home
lots or farms for resale to bona fide tenants or occupants. It was in
this particular context of the statute that the Court had made the
pronouncement. The guidelines in Guido were not meant to be
preclusive in nature and, most certainly, the power of eminent
domain should not now be understood as being confined only to the
expropriation of vast tracts of land and landed estates.[15]
The term public use, not having been otherwise defined by the
constitution, must be considered in its general concept of meeting a
public need or a public exigency.[16] Black summarizes the
characterization given by various courts to the term; thus:
Public Use. Eminent domain. The constitutional and statutory basis
for taking property by eminent domain. For condemnation purposes,
public use is one which confers same benefit or advantage to the
public; it is not confined to actual use by public. It is measured in
terms of right of public to use proposed facilities for which
condemnation is sought and, as long as public has right of use,
whether exercised by one or many members of public, a public
advantage or public benefit accrues sufficient to constitute a public
use. Montana Power Co. vs. Bokma, Mont. 457 P. 2d 769, 772, 773.
Public use, in constitutional provisions restricting the exercise of the
right to take private property in virtue of eminent domain, means a
use concerning the whole community as distinguished from particular
individuals. But each and every member of society need not be
equally interested in such use, or be personally and directly affected
by it; if the object is to satisfy a great public want or exigency, that is
sufficient. Rindge Co. vs. Los Angeles County, 262 U.S. 700, 43 S.Ct.
689, 692, 67 L.Ed. 1186. The term may be said to mean public
usefulness, utility, or advantage, or what is productive of general
benefit. It may be limited to the inhabitants of a small or restricted
locality, but must be in common, and not for a particular individual.
The use must be a needful one for the public, which cannot be
surrendered without obvious general loss and inconvenience. A
public use for which land may be taken defies absolute definition for
it changes with varying conditions of society, new appliances in the
sciences, changing conceptions of scope and functions of
government, and other differing circumstances brought about by an
increase in population and new modes of communication and
transportation. Katz v. Brandon, 156 Conn., 521, 245 A.2d 579,586.[17]
The validity of the exercise of the power of eminent domain for
traditional purposes is beyond question; it is not at all to be said,
however, that public use should thereby be restricted to such
traditional uses. The idea that public use is strictly limited to clear
cases of use by the public has long been discarded. This Court in Heirs
of Juancho Ardona v. Reyes,[18] quoting from Berman v. Parker
(348 U.S. 25; 99 L. ed. 27), held:
We do not sit to determine whether a particular housing project is or
is not desirable. The concept of the public welfare is broad and
inclusive. See DayBrite Lighting, Inc. v. Missouri, 342 US 421, 424, 96
L. Ed. 469, 472, 72 S Ct 405. The values it represents are spiritual as
well as physical, aesthetic as well as monetary. It is within the power
of the legislature to determine that the community should be
beautiful as well as healthy, spacious as well as clean, well-balanced
as well as carefully patrolled. In the present case, the Congress and
its authorized agencies have made determinations that take into
account a wide variety of values. It is not for us to reappraise them. If
those who govern the District of Columbia decide that the Nations
Capital should be beautiful as well as sanitary, there is nothing in the
Fifth Amendment that stands in the way.
Once the object is within the authority of Congress, the right to
realize it through the exercise of eminent domain is clear. For the
power of eminent domain is merely the means to the end. See
Luxton v. North River Bridge Co. 153 US 525, 529, 530, 38 L. ed. 808,
810, 14 S Ct 891; United States v. Gettysburg Electric R. Co. 160 US
668, 679, 40 L. ed. 576, 580, 16 S Ct 427.
It has been explained as early as Sea v. Manila Railroad Co.,[19] that:
x x x A historical research discloses the meaning of the term public
use to be one of constant growth. As society advances, its demands
upon the individual increase and each demand is a new use to which
the resources of the individual may be devoted. x x x for whatever is
beneficially employed for the community is a public use.
Chief Justice Enrique M. Fernando states:
The taking to be valid must be for public use. There was a time when
it was felt that a literal meaning should be attached to such a
requirement. Whatever project is undertaken must be for the public
to enjoy, as in the case of streets or parks. Otherwise, expropriation is
not allowable. It is not so any more. As long as the purpose of the
taking is public, then the power of eminent domain comes into play.
As just noted, the constitution in at least two cases, to remove any
doubt, determines what is public use. One is the expropriation of
lands to be subdivided into small lots for resale at cost to individuals.
The other is the transfer, through the exercise of this power, of
utilities and other private enterprise to the government. It is accurate
to state then that at present whatever may be beneficially employed
for the general welfare satisfies the requirement of public use.[20]
Chief Justice Fernando, writing the ponencia in J.M. Tuason &
Co. vs. Land Tenure Administration,[21] has viewed the Constitution a
dynamic instrument and one that is not to be construed narrowly or
pedantically so as to enable it to meet adequately whatever problems
the future has in store. Fr. Joaquin Bernas, a noted constitutionalist
himself, has aptly observed that what, in fact, has ultimately emerged
is a concept of public use which is just as broad as public welfare.[22]
Petitioners ask: But (w)hat is the so-called unusual interest that the
expropriation of (Felix Manalos) birthplace become so vital as to be a
public use appropriate for the exercise of the power of eminent
domain when only members of the Iglesia ni Cristo would
benefit? This attempt to give some religious perspective to the case
deserves little consideration, for what should be significant is the
principal objective of, not the casual consequences that might follow
from, the exercise of the power. The purpose in setting up the
marker is essentially to recognize the distinctive contribution of the
late Felix Manalo to the culture of the Philippines, rather than to
commemorate his founding and leadership of the Iglesia ni
Cristo. The practical reality that greater benefit may be derived by
members of the Iglesia ni Cristo than by most others could well be
true but such a peculiar advantage still remains to be merely
incidental and secondary in nature. Indeed, that only a few would
actually benefit from the expropriation of property does not
necessarily diminish the essence and character of public use.[23]
Petitioners contend that they have been denied due process in the
fixing of the provisional value of their property. Petitioners need
merely to be reminded that what the law prohibits is the lack of
opportunity to be heard;[24] contrary to petitioners argument,
the records of this case are replete with pleadings[25] that could have
dealt, directly or indirectly, with the provisional value of the property.
Issue: Whether or not the expropriation of the land whereat Manalo
was born is valid and constitutional.
Held: Yes. The taking to be valid must be for public use. There was a
time when it was felt that a literal meaning should be attached to
such a requirement. Whatever project is undertaken must be for the
public to enjoy, as in the case of streets or parks. Otherwise,
expropriation is not allowable. It is not so any more. As long as the
purpose of the taking is public, then the power of eminent domain
comes into play. As just noted, the constitution in at least two cases,
to remove any doubt, determines what public use is. One is the
expropriation of lands to be subdivided into small lots for resale at
cost to individuals. The other is the transfer, through the exercise of
this power, of utilities and other private enterprise to the
government. It is accurate to state then that at present whatever
may be beneficially employed for the general welfare satisfies the
requirement of public use.

Petitioners, finally, would fault respondent appellate court in

sustaining the trial courts order which considered inapplicable the
case of Noble v. City of Manila.[26] Both courts held correctly.The
Republic was not a party to the alleged contract of exchange
between the Iglesia ni Cristo and petitioners which (the contracting
parties) alone, not the Republic, could properly be bound.

All considered, the Court finds the assailed decision to be in accord

with law and jurisprudence.

WHEREFORE, the petition is DENIED. No costs.

SO ORDERED.

Manosca vs. CA

G.R. NO. 106440, January 29, 1996

Facts: Petitioners inherited a piece of land when the parcel was

ascertained by the NHI to have been the birth site of Felix Y. Manalo,
the founder of Iglesia Ni Cristo, it passed Resolution No. 1, declaring
the land to be a national historical landmark. Petitioners moved to
dismiss the complaint on the main thesis that the intended
expropriation was not for a public purpose and, incidentally, that the
act would constitute an application of public funds, directly or
indirectly, for the use, benefit, or support of Iglesia ni Cristo, a
religious entity, contrary to the provision of Section 29(2), Article VI,
of the 1987 Constitution.
HEIRS OF TIMOTEO MORENO and MARIA ROTEA, namely: ESPERANZA
R. EDJEC, BERNARDA R. SUELA, RUBY C. ROTEA, BERNARDA R. ROTEA,
ELIA R. VDA. DE LIMBAGA, VIRGINIA R. ARBON, ROSALINDA R.
ARQUISOLA, CORAZON ROTEA, FE R. EBORA, CARIDAD ROTEA,
ANGELES VDA. DE RENACIA, JORGE ROTEA, MARIA LUISA ROTEA-
VILLEGAS, ALFREDO R. ROTEA, represented by his heirs LIZBETH ROTEA
and ELEPETH ROTEA; LUIS ROTEA, represented by his heir JENNIFER
ROTEA; and ROLANDO R. ROTEA, represented by his heir ROLANDO R.
ROTEA JR., petitioners, vs. MACTAN - CEBU INTERNATIONAL AIRPORT
AUTHORITY, respondent.
DECISION
BELLOSILLO, J.:
THE HEIRS OF TIMOTEO MORENO AND MARIA ROTEA, petitioners
herein, are the successors-in-interest of the former registered
owners of two (2) parcels of land situated in Lahug, Cebu City,
designated as Lot No. 916 with an area of 2,355 square meters under
TCT No. RT-7543 (106) T-13694, and Lot No. 920 consisting of 3,097
square meters under TCT No. RT-7544 (107) T-13695.[1]
In 1949 the National Airport Corporation as the predecessor agency
of respondent Mactan-Cebu International Airport Authority (MCIAA)
wanted to acquire Lots Nos. 916 and 920 above described among
other parcels of land for the proposed expansion
of Lahug Airport.[2] To entice the landowners to cede their properties,
the government assured them that they could repurchase their lands
once Lahug Airport was closed or its operations transferred
to Mactan Airport.[3] Some of the landowners executed deeds of sale
with right of repurchase in favor of the government but many others,
including the owners of Lots Nos. 916 and 920 herein mentioned,
refused the offer because the payment was perceived to be way
below the market price.[4]
On 16 April 1952, as the negotiations for the purchase of the lots
necessary for the expansion and improvement of Lahug Airport
irredeemably broke down, the Civil Aeronautics Administration as the
successor agency of the National Airport Corporation filed a
complaint with the Court of First Instance of Cebu, for the
expropriation of Lots Nos. 916 and 920 and other subject realties,
docketed as Civil Case No. R-1881.
On 29 December 1961 the trial court promulgated its Decision in Civil
Case No. R-1881 condemning Lots Nos. 916 and 920 and other lots
for public use upon payment of just compensation.[5] Petitioners
predecessors were paid P7,065.00 for Lot No. 916 and P9,291.00 for
Lot No. 920 with consequential damages by way of legal interest
from 16 November 1947.No appeal was taken from the Decision on
Lots Nos. 916 and 920, and the judgment of condemnation became
final and executory.[6] Thereafter, the certificates of title for these
parcels of land were issued in the name of the Republic of the
Philippines under TCT No. 58691 for Lot No. 916 and TCT No. 58692
for Lot No. 920, which under RA 6958 (1990) were subsequently
transferred in favor of respondent MCIAA.[7]
At the end of 1991, or soon after the transfer of Lots Nos. 916 and
920 to MCIAA, Lahug Airport ceased operations as
the Mactan Airport was opened for incoming and outgoing
flights.[8]Lots Nos. 916 and 920 which had been expropriated for the
extension of Lahug Airport were not utilized.[9] In fact, no expansion
of Lahug Airport was undertaken by MCIAA and its predecessors-in-
interest.[10] Hence, petitioners wrote then President Fidel V. Ramos
and the airport manager begging them for the exercise of their
alleged right to repurchase Lots Nos. 916 and 920.[11] Their pleas
were not heeded.[12]
On 11 March 1997 petitioners filed a complaint for reconveyance and
damages with RTC of Cebu City against respondent MCIAA to compel
the repurchase of Lots Nos. 916 and 920, docketed as Civil Case No.
CEB-20015. In the main, petitioners averred that they had been
convinced by the officers of the predecessor agency of respondent
MCIAA not to oppose the expropriation proceedings since in the
future they could repurchase the properties if the airport expansion
would not push through. MCIAA did not object to petitioners
evidence establishing these allegations.
When the civil case was pending, one Richard E. Enchuan filed
a Motion for Transfer of Interest alleging that he acquired through
deeds of assignment the rights of some of herein petitioners over
Lots Nos. 916 and 920.[13] The Department of Public Works and
Highways (DPWH) also sought to intervene in the civil case claiming
that it leased in good faith Lot No. 920 from the predecessor agencies
of respondent MCIAA and that it built thereon its Regional Equipment
Services and its Region 7 Office.[14]
On 12 April 1999 the trial court found merit in the claims of
petitioners and granted them the right to repurchase the properties
at the amount pegged as just compensation in Civil Case No. R-1881
but subject to the alleged property rights of Richard E. Enchuan and
the leasehold of DPWH.[15] The trial court opined that the
expropriation became illegal or functus officio when the purpose for
which it was intended was no longer there.[16]
Respondent MCIAA appealed the Decision of the trial court to the
Court of Appeals, docketed as CA-G.R. CV No. 64456.
On 20 December 2001 the Court of Appeals reversed the
assailed Decision on the ground that the judgment of condemnation
in Civil Case No. R-1881 was unconditional so that the rights
gained therefrom by respondent MCIAA were indicative of ownership
in fee simple.[17] The appellate court
cited Fery v. Municpality of Cabanatuan[18] which held that mere
deviation from the public purpose for which the power of eminent
domain was exercised does not justify the reversion of the property
to its former owners, and Mactan-Cebu International Airport
Authority v. Court of Appeals[19] which is allegedly stare decisis to the
instant case to prevent the exercise of the right of repurchase as the
former dealt with a parcel of land similarly expropriated under Civil
Case No. R-1881.[20]
On 28 November 2002 reconsideration of the Decision was
denied. [21] Hence, this petition for review.
Petitioners argue that Fery v. Municpality of Cabanatuan does not
apply to the case at bar since what was involved therein was the right
of reversion and not the right of repurchase which they are
invoking. They also differentiate Mactan-Cebu International Airport
Authority v. Court of Appeals[22] from the instant case in that the
landowners in the MCIAA case offered inadmissible evidence to show
their entitlement to a right of repurchase, while petitioners herein
offered evidence based on personal knowledge for which reason
MCIAA did not object and thus waived whatever objection it might
have had to the admissibility thereof. Finally, petitioners allege that
their right to equal protection of the laws would be infringed if some
landowners are given the right to repurchase their former properties
even as they are denied the exercise of such prerogative.
On the other hand, respondent MCIAA clings to our decisions
in Fery v. Municpality of Cabanatuan and Mactan-Cebu International
Airport Authority v. Court of Appeals. According to respondent MCIAA
there is only one instance when expropriated land may be
repurchased by its previous owners, and that is, if the decision of
expropriation itself provides [the] condition for such repurchase.
Respondent asserts that the Decision in Civil Case No. R-1881 is
absolute and without conditions, thus, no repurchase could be validly
exercised.
This is a difficult case calling for a difficult but just solution. To begin
with, there exists an undeniable historical narrative that the
predecessors of respondent MCIAA had suggested to the landowners
of the properties covered by the Lahug Airport expansion scheme
that they could repurchase their properties at the termination of the
airports venture.[23] Some acted on this assurance and sold their
properties;[24] other landowners held out and waited for the exercise
of eminent domain to take its course until finally coming to terms
with respondents predecessors that they would not appeal nor block
further the judgment of condemnation if the same right of
repurchase was extended to them.[25] A handful failed to prove that
they acted on such assurance when they parted with the ownership
of their lands.[26]
In resolving this dispute, we must reckon with the rulings of this
Court in Fery v. Municpality of Cabanatuan and Mactan-
Cebu International Airport Authority v. Court of Appeals, which define
the rights and obligations of landowners whose properties were
expropriated when the public purpose for which eminent domain
was exercised no longer subsists. In Fery, which was cited in the
recent case of Reyes v. Court of Appeals,[27] we declared that the
government acquires only such rights in expropriated parcels of land
as may be allowed by the character of its title over the properties -
If x x x land is expropriated for a particular purpose, with the
condition that when that purpose is ended or abandoned the
property shall return to its former owner, then, of course, when the
purpose is terminated or abandoned the former owner reacquires
the property so expropriated. If x x x land is expropriated for a public
street and the expropriation is granted upon condition that the city
can only use it for a public street, then, of course, when the city
abandons its use as a public street, it returns to the former owner,
unless there is some statutory provision to the contrary x x x x If,
upon the contrary, however, the decree of expropriation gives to the
entity a fee simple title, then, of course, the land becomes the
absolute property of the expropriator, whether it be the State, a
province, or municipality, and in that case the non-user does not
have the effect of defeating the title acquired by the expropriation
proceedings x x x x When land has been acquired for public use in fee
simple, unconditionally, either by the exercise of eminent domain or
by purchase, the former owner retains no rights in the land, and the
public use may be abandoned, or the land may be devoted to a
different use, without any impairment of the estate or title acquired,
or any reversion to the former owner x x x x[28]
In Mactan-Cebu International Airport Authority,
respondent Chiongbian sought to enforce an alleged right of
repurchase over her properties that had been expropriated in Civil
Case No. R-1881. This Court did not allow her to adduce evidence of
her claim, for to do so would unsettle as to her properties the
judgment of condemnation in the eminent domain proceedings. We
also held therein that Chiongbians evidence was both inadmissible
and lacking in probative value -
The terms of the judgment are clear and unequivocal and grant title
to Lot No. 941 in fee simple to the Republic of the Philippines. There
was no condition imposed to the effect that the lot would return to
CHIONGBIAN or that CHIONGBIAN had a right to repurchase the
same if the purpose for which it was expropriated is ended or
abandoned or if the property was to be used other than as
the Lahug Airport.CHIONGBIAN cannot rely on the ruling in Mactan-
Cebu International Airport vs. Court of Appeals wherein the
presentation of parol evidence was allowed to prove the existence of
a written agreement containing the right to repurchase. Said case did
not involve expropriation proceedings but a contract of sale x x x x To
permit CHIONGBIAN to prove the existence of a compromise
settlement which she claims to have entered into with the Republic
of the Philippines prior to the rendition of judgment in the
expropriation case would result in a modification of the judgment of
a court which has long become final and executory x x x x And even
assuming for the sake of argument that CHIONGBIAN could prove the
existence of the alleged written agreement acknowledging her right
to repurchase Lot No. 941 through parol evidence, the Court of
Appeals erred in holding that the evidence presented by
CHIONGBIAN was admissible x x x x Aside from being inadmissible
under the provisions of the Statute of Frauds, [the] testimonies are
also inadmissible for being hearsay in nature x x x x[29]
We adhere to the principles enunciated in Fery and in Mactan-
Cebu International Airport Authority, and do not overrule
them. Nonetheless the weight of their import, particularly our ruling
as regards the properties of respondent Chiongbian in Mactan-
Cebu International Airport Authority, must be commensurate to the
facts that were established therein as distinguished from those
extant in the case at bar. Chiongbian put forth inadmissible and
inconclusive evidence, while in the instant case we have
preponderant proof as found by the trial court of the existence of the
right of repurchase in favor of petitioners.
Moreover, respondent MCIAA has brought to our attention a
significant and telling portion in the Decision in Civil Case No. R-1881
validating our discernment that the expropriation by the
predecessors of respondent was ordered under the running
impression that Lahug Airport would continue in operation -
As for the public purpose of the expropriation proceeding, it cannot
now be doubted. Although Mactan Airport is being constructed, it
does not take away the actual usefulness and importance of
the LahugAirport: it is handling the air traffic both civilian and
military. From it aircrafts fly to Mindanao and Visayas and pass thru it
on their flights to the North and Manila. Then, no evidence was
adduced to show how soon is the Mactan Airport to be placed in
operation and whether the Lahug Airport will be closed immediately
thereafter. It is up to the other departments of the Government to
determine said matters. The Court cannot substitute its judgment for
those of the said departments or agencies. In the absence of such
showing, the Court will presume that the Lahug Airport will continue to
be in operation (emphasis supplied).[30]
While the trial court in Civil Case No. R-1881 could have simply
acknowledged the presence of public purpose for the exercise of
eminent domain regardless of the survival of LahugAirport, the trial
court in its Decision chose not to do so but instead prefixed its finding
of public purpose upon its understanding that Lahug Airport will
continue to be in operation. Verily, these meaningful statements in
the body of the Decision warrant the conclusion that the
expropriated properties would remain to be so until it was confirmed
that Lahug Airport was no longer in operation. This inference further
implies two (2) things: (a) after the Lahug Airport ceased its
undertaking as such and the expropriated lots were not being used
for any airport expansion project, the rights vis--vis the expropriated
Lots Nos. 916 and 920 as between the State and their former owners,
petitioners herein, must be equitably adjusted; and, (b) the foregoing
unmistakable declarations in the body of the Decision should merge
with and become an intrinsic part of the fallo thereof which under
the premises is clearly inadequate since the dispositiveportion is not
in accord with the findings as contained in the body thereof.[31]
Significantly, in light of the discussion above, the admission of
petitioners during the pre-trial of Civil Case No. CEB-20015
for reconveyance and damages that respondent MCIAA was the
absolute owner of Lots Nos. 916 and 920 does not prejudice
petitioners interests. This is as it should be not only because the
admission concerns a legal conclusion fiercely debated by the
parties[32] but more so since respondent was truly the absolute owner
of the realties until it was apparent that Lahug Airport had stopped
doing business.
To sum up what we have said so far, the attendance in the case at
bar of standing admissible evidence validating the claim of petitioners
as well as the portions above-quoted of the Decision in the
expropriation case volunteered no less than by respondent itself,
takes this case away from the ambit of Mactan-Cebu International
Airport Authority v. Court of Appeals[33] but within the principles
enunciated in Fery as mentioned earlier. In addition, there should be
no doubt that our present reading of the fallo of the Decision in Civil
Case No. R-1881 so as to include the statements in the body thereof
afore-quoted is sanctioned by the rule that a final
and executory judgment may nonetheless be clarified by reference to
other portions of the decision of which it forms a part. In Republic v.
De Los Angeles[34] we ruled -
This Court has promulgated many cases x x x wherein it was held that
a judgment must not be read separately but in connection with the
other portions of the decision of which it forms a part. Hence
x x x the decision of the court below should be taken as a whole and
considered in its entirety to get the true meaning and intent of any
particular portion thereof x x x x Neither is this Court inclined to
confine itself to a reading of the said fallo literally. On the contrary,
the judgment portion of a decision should be interpreted and
construed in harmony with the ratio decidendi thereof x x x x As
stated in the case of Policarpiovs. Philippine Veterans Board, et
al., supra, to get the true intent and meaning of a decision, no
specific portion thereof should be resorted to but the same must be
considered in its entirety. Hence, a resolution or ruling may and does
appear in other parts of the decision and not merely in
the fallo thereof x x x x The foregoing pronouncements find support
in the case of Locsin, et al. vs. Paredes, et al., 63 Phil., 87, 91-92,
wherein this Court allowed a judgment that had become final
and executory to be clarified by supplying a word which had been
inadvertently omitted and which, when supplied, in effect changed
the literal import of the original phraseology x x x x This is so because,
in the first place, if an already final judgment can still be amended to
supply an omission committed through oversight, this simply means
that in the construction or interpretation of an already final decision,
the fallo or dispositive portion thereof must be correlated with the
body of such final decision x x x x [I]f an amendment may be allowed
after a decision has already become final x x x such amendment may
consist x x x either in the x x x interpretation of an ambiguous phrase
therein in relation to the body of the decision which gives it life.[35]
We now resolve to harmonize the respective rights of the State and
petitioners to the expropriated Lots Nos. 916 and 920.
Mactan-Cebu International Airport Authority[36] is correct in stating
that one would not find an express statement in the Decision in Civil
Case No. R-1881 to the effect that the [condemned] lot would return
to [the landowner] or that [the landowner] had a right to repurchase
the same if the purpose for which it was expropriated is ended or
abandoned or if the property was to be used other than as
the Lahug Airport. This omission notwithstanding, and while the
inclusion of this pronouncement in the judgment of condemnation
would have been ideal, such precision is not absolutely necessary nor
is it fatal to the cause of petitioners herein. No doubt, the return or
repurchase of the condemned properties of petitioners could be
readily justified as the manifest legal effect or consequence of the
trial courts underlying presumption that Lahug Airport will continue
to be in operation when it granted the complaint for eminent domain
and the airport discontinued its activities.
The predicament of petitioners involves a constructive trust, one that
is akin[37] to the implied trust referred to in Art. 1454 of the Civil
Code, If an absolute conveyance of property is made in order to
secure the performance of an obligation of the grantor toward the
grantee, a trust by virtue of law is established. If the fulfillment of the
obligation is offered by the grantor when it becomes due, he may
demand the reconveyance of the property to him. In the case at bar,
petitioners conveyed Lots Nos. 916 and 920 to the government with
the latter obliging itself to use the realties for the expansion
of Lahug Airport; failing to keep its bargain, the government can be
compelled by petitioners to reconvey the parcels of land to them,
otherwise, petitioners would be denied the use of their properties
upon a state of affairs that was not conceived nor contemplated
when the expropriation was authorized.
Although the symmetry between the instant case and the situation
contemplated by Art. 1454 is not perfect, the provision is
undoubtedly applicable. For, as explained by an expert on the law of
trusts: The only problem of great importance in the field of
constructive trusts is to decide whether in the numerous and varying
fact situations presented to the courts there is a wrongful holding of
property and hence a threatened unjust enrichment of the
defendant.[38] Constructive trusts are fictions of equity which are
bound by no unyielding formula when they are used by courts as
devices to remedy any situation in which the holder of the legal title
may not in good conscience retain the beneficial interest.[39]
In constructive trusts, the arrangement is temporary and passive in
which the trustees sole duty is to transfer the title and possession
over the property to the plaintiff-beneficiary.[40] Of course,
the wronged party seeking the aid of a court of equity in establishing
a constructive trust must himself do equity.[41] Accordingly, the court
will exercise its discretion in deciding what acts are required of the
plaintiff-beneficiary as conditions precedent to obtaining such decree
and has the obligation to reimburse the trustee the consideration
received from the latter just as the plaintiff-beneficiary would if he
proceeded on the theory of rescission.[42] In the good judgment of
the court, the trustee may also be paid the necessary expenses he
may have incurred in sustaining the property, his fixed costs for
improvements thereon, and the monetary value of his services in
managing the property to the extent that plaintiff-beneficiary will
secure a benefit from his acts.[43]
The rights and obligations between the constructive trustee and the
beneficiary, in this case, respondent MCIAA and petitioners over Lots
Nos. 916 and 920, are echoed in Art. 1190 of the Civil Code, When the
conditions have for their purpose the extinguishment of an obligation
to give, the parties, upon the fulfillment of said conditions, shall return
to each other what they have received x x x x In case of the loss,
deterioration or improvement of the thing, the provisions which, with
respect to the debtor, are laid down in the preceding article shall be
applied to the party who is bound to return x x x x
Hence, respondent MCIAA as representative of the State is obliged
to reconvey Lots Nos. 916 and 920 to petitioners who shall hold the
same subject to existing liens thereon, i.e., leasehold right of
DPWH. In return, petitioners as if they were plaintiff-beneficiaries of
a constructive trust must restore to respondent MCIAA what they
received as just compensation for the expropriation of Lots Nos. 916
and 920 in Civil Case No. R-1881, i.e., P7,065.00 for Lot No. 916
and P9,291.00 for Lot No. 920 with consequential damages by way of
legal interest from 16 November 1947. Petitioners must likewise pay
respondent MCIAA the necessary expenses it may have incurred in
sustaining the properties and the monetary value of its services in
managing them to the extent that petitioners will be benefited
thereby. The government however may keep whatever income or
fruits it may have obtained from the parcels of land, in the same way
that petitioners need not account for the interests that the amounts
they received as just compensation may have earned in the
meantime. As a matter of justice and convenience, the law considers
the fruits and interests as the equivalent of each other.[44]
Under Art. 1189 of the Civil Code, If the thing is improved by its
nature, or by time, the improvement shall inure to the benefit of the
creditor x x x, the creditor being the person who stands to receive
something as a result of the process of restitution. Consequently,
petitioners as creditors do not have to settle as part of the process of
restitution the appreciation in value of Lots Nos. 916 and 920 which is
the natural consequence of nature and time.
Petitioners need not also pay for improvements introduced by third
parties, i.e., DPWH, as the disposition of these properties is governed
by existing contracts and relevant provisions of law. As for the
improvements that respondent MCIAA may have made on Lots Nos.
916 and 920, if any, petitioners must pay respondent their prevailing
free market price in case petitioners opt to buy them and respondent
decides to sell. In other words, if petitioners do not want to
appropriate such improvements or respondent does not choose to
sell them, the improvements would have to be removed without any
obligation on the part of petitioners to pay any compensation to
respondent MCIAA for whatever it may have tangibly introduced
therein.[45]
The medium of compensation for the restitution shall be ready
money or cash payable within a period of three hundred sixty five
(365) days from the date that the amount to be returned by
petitioners is determined with finality, unless the parties herein
stipulate and agree upon a different scheme, medium or schedule of
payment. If after the period of three hundred sixty five (365) days or
the lapse of the compromise scheme or schedule of payment such
amount owed is not settled, the right of repurchase of petitioners
and the obligation of respondent MCIAA to reconvey Lots Nos. 916
and 920 and/or the latters improvements as set forth herein shall be
deemed forfeited and the ownership of those parcels of land shall
vest absolutely upon respondent MCIAA.
Finally, we delete the award of P60,000.00 for attorneys fees
and P15,000.00 for litigation expenses in favor of petitioners as
decreed in the assailed Decision of 12 April 1999 of the trial court. It
is not sound public policy to set a premium upon the right to litigate
where such right is exercised in good faith, as in the present case,
albeit the decision to resist the claim is erroneous.[46]
The rule on awards of attorneys fees and litigation expenses is found
in Art. 2208 of the Civil Code -
In the absence of stipulation, attorney's fees and expenses of
litigation, other than judicial costs, cannot be recovered, except:
(1) When exemplary damages are awarded;
(2) When the defendant's act or omission has compelled the plaintiff
to litigate with third persons or to incur expenses to protect his
interests;
(3) In criminal cases of malicious prosecution against the plaintiff;
(4) In case of a clearly unfounded civil action or proceeding against
the plaintiff;
(5) Where the defendant acted in gross and evident bad faith in
refusing to satisfy the plaintiff's valid and demandable claim;
(6) In actions for legal support;
(7) In actions for the recovery of wages of household helpers,
laborers and skilled workers;
(8) In actions for indemnity under workmen's compensation and
employer's liability laws;
(9) In a separate civil action to recover civil liability arising from a
crime;
(10) When at least double judicial costs are awarded;
(11) In any other case where the court deems it just and equitable
that attorney's fees and expenses of litigation should be recovered.
In all cases, the attorney's fees and expenses of litigation must be
reasonable.
As noted in Mirasol v. De la Cruz,[47] Art. 2208 intends to retain the
award of attorneys fees as the exception in our law and the general
rule remains that attorneys fees are not recoverable in the absence
of a stipulation thereto.
In the case at bar, considering the established absence of any
stipulation regarding attorneys fees, the trial court cannot base its
award on any of the exceptions enumerated in Art. 2208.The records
of the instant case do not disclose any proof presented by petitioners
to substantiate that the actuations of respondent MCIAA were clearly
unfounded or purely for the purpose of harassment; neither does the
trial court make any finding to that effect in its appealed Decision.
While Art. 2208, par. (4), allows attorneys fees in cases of clearly
unfounded civil actions, this exception must be understood to mean
those where the defenses are so untenable as to amount to gross
and evident bad faith. Evidence must be presented to the court as to
the facts and circumstances constituting the alleged bad faith,
otherwise, the award of attorneys fees is not justified where there is
no proof other than the bare statement of harassment that a party to
be so adjudged had acted in bad faith. The exercise of judicial
discretion in the award of attorneys fees under Art. 2208, par. (11),
demands a factual, legal or equitable justification that would bring
the case within the exception and justify the grant of such award.
WHEREFORE, the instant Petition for
Review is GRANTED. The Decision of the Court of Appeals in CA-G.R.
CV No. 64456 dated 20 December 2001 and its Resolution of 28
November 2002 denying reconsideration of
the Decision are REVERSED and SET ASIDE.
The Decision of RTC-Br. 19 of Cebu City dated 12 April 1999 in Civil
Case No. CEB-20015 is MODIFIED IN PART by -
(a) ORDERING respondent Mactan-Cebu International Airport
Authority (MCIAA) TO RECONVEY to petitioner Heirs
of Timoteo Moreno and Maria Rotea, namely: Esperanza
R. Edjec, Bernarda R. Suela, Ruby
C. Rotea, Bernarda R. Rotea, Elia R. Vda De Limbaga, Virginia
R. Arbon, Rosalinda R. Arquisola, Corazon Rotea, Fe
R. Ebora, Caridad Rotea, Angeles Vda. De Renacia, Jorge Rotea, Maria
Luisa Rotea-Villegas, Alfredo R. Rotea, represented by his heirs,
namely: Lizbeth Rotea and Elepeth Rotea; Luis Rotea, represented by
his heir Jennifer Rotea; and Rolando R. Rotea, represented by his heir
Rolando R. Rotea Jr., Lot No. 916 with an area of 2,355 square meters
and Lot No. 920 consisting of 3,097 square meters
in Lahug, Cebu City, with all the improvements thereon evolving
through nature or time, but excluding those that were introduced by
third parties, i.e., DPWH, which shall be governed by existing
contracts and relevant provisions of law;
(b) ORDERING petitioner Heirs of Timoteo Moreno and
Maria Rotea TO PAY respondent MCIAA what the former received as
just compensation for the expropriation of Lots Nos. 916 and 920 in
Civil Case No. R-1881, i.e., P7,065.00 for Lot No. 916 and P9,291.00
for Lot No. 920 with consequential damages by way of legal interest
from 16 November 1947. Petitioners must likewise PAY respondent
MCIAA the necessary expenses that the latter may have incurred in
sustaining the properties and the monetary value of its services in
managing the properties to the extent that petitioners will secure a
benefit from such acts. Respondent MCIAA however may keep
whatever income or fruits it may have obtained from the parcels of
land, in the same way that petitioners need not account for the
interests that the amounts they received as just compensation may
have earned in the meantime;
(c) ORDERING respondent MCIAA TO CONVEY to petitioners the
improvements it may have built on Lots Nos. 916 and 920, if any, in
which case petitioners SHALL PAY for these improvements at the
prevailing free market price, otherwise, if petitioners do not want to
appropriate such improvements, or if respondent does not choose to
sell them, respondent MCIAA SHALL REMOVE these
improvements WITHOUT ANY OBLIGATION on the part of petitioners
to pay any compensation to respondent MCIAA for them;
(d) ORDERING petitioners TO PAY the amount so determined under
letter (b) of this dispositive portion as consideration for
the reconveyance of Lots Nos. 916 and 920, as well as the prevailing
free market price of the improvements built thereon by respondent
MCIAA, if any and desired to be bought and sold by the parties, in
ready money or cash PAYABLE within a period of three hundred sixty
five (365) days from the date that the amount under letter (b) above
is determined with finality, unless the parties herein stipulate a
different scheme or schedule of payment, otherwise, after the period
of three hundred sixty five (365) days or the lapse of the compromise
scheme or schedule of payment and the amount so payable is not
settled, the right of repurchase of petitioners and the obligation of
respondent MCIAA to so reconvey Lots Nos. 916 and 920 and/or the
improvements shall be DEEMED FORFEITED and the ownership of
those parcels of land shall VEST ABSOLUTELY upon respondent
MCIAA;
(e) REMANDING the instant case to RTC-Br. 19 of Cebu City for
purposes of determining the amount of compensation for Lots Nos.
916 and 920 to be paid by petitioners as mandated in letter (b)
hereof, and the value of the prevailing free market price of the
improvements built thereon by respondent MCIAA, if any and desired
to be bought and sold by the parties, and in general, securing the
immediate execution of this Decision under the premises;
(f) ORDERING petitioners to respect the right of the Department of
Public Works and Highways to its lease contract until the expiration
of the lease period; and
(g) DELETING the award of P60,000.00 for attorneys fees
and P15,000.00 for litigation expenses against respondent MCIAA
and in favor of petitioners.
This Decision is without prejudice to the claim of intervenor one
Richard E. Enchuan on his allegation that he acquired through deeds
of assignment the rights of some of herein petitioners over Lots Nos.
916 and 920.
No costs.
SO ORDERED.
Heirs of Moreno vs. Mactan Cebu
413 SCRA 502 (2003)
Facts:
National Airport Corporation as the predecessor agency of
respondent Mactan-Cebu International Airport Authority (MCIAA)
wanted to acquire Lots Nos. 916 and 920 situated in Lahug, Cebu City
for the proposed expansion of Lahug Airport.
To entice the landowners to cede their properties, the government
assured them that they could repurchase their lands once Lahug
Airport was closed or its operations transferred to Mactan Airport.
 In 1991, Lahug Airport ceased operations as the Mactan Airport
was opened for incoming and outgoing flights. Hence, petitioners
wrote then President Fidel V. Ramos and the airport manager
begging them for the exercise of their alleged right to repurchase
Lots Nos. 916 and 920, but they were not heeded. Hence, this
petition for review.
government can be compelled by petitioners to reconvey the parcels
of land to them, otherwise, petitioners would be denied the use of
their properties upon a state of affairs that was not conceived nor
contemplated when the expropriation was authorized

Issue: W/N petitioners can exercise the right of repurchase over the
said land.

Held: Of course!

In the case of Reyes vs. CA, Supreme Court ruled that if the land is
expropriated for a particular purpose, with the condition that when
that purpose is ended or abandoned the property shall return to its
former owner, then, of course, when the purpose is terminated or
abandoned the former owner reacquires the property so
expropriated. If it is expropriated for a public street and the
expropriation is granted upon condition that the city can only use it
for a public street, then, of course, when the city abandons its use as
a public street, it returns to the former owner, unless there is some
statutory provision to the contrary. If, upon the contrary, however,
the decree of expropriation gives to the entity a fee simple title, then,
of course, the land becomes the absolute property of the
expropriator, whether it be the State, a province, or municipality, and
in that case the non-user does not have the effect of defeating the
title acquired by the expropriation proceedings. When land has been
acquired for public use in fee simple, unconditionally, either by the
exercise of eminent domain or by purchase, the former owner retains
no rights in the land, and the public use may be abandoned, or the
land may be devoted to a different use, without any impairment of
the estate or title acquired, or any reversion to the former owner
(The above stated are principles. Murag mao ni ang point sa PUBLIC
USE nga topic)

Mactan-Cebu International Airport Authority36 is correct in stating

that one would not find an express statement in the Decision in Civil
Case No. R-1881 to the effect that "the [condemned] lot would
return to [the landowner] or that [the landowner] had a right to
repurchase the same if the purpose for which it was expropriated is
ended or abandoned or if the property was to be used other than as
the Lahug Airport." This omission notwithstanding, and while the
inclusion of this pronouncement in the judgment of condemnation
would have been ideal, such precision is not absolutely necessary nor
is it fatal to the cause of petitioners herein. No doubt, the return or
repurchase of the condemned properties of petitioners could be
readily justified as the manifest legal effect or consequence of the
trial courts underlying presumption that "Lahug Airport will continue
to be in operation" when it granted the complaint for eminent
domain and the airport discontinued its activities.

The predicament of petitioners involves a constructive trust, one

that is akin37 to the implied trust referred to in Art. 1454 of the Civil
Code, "If an absolute conveyance of property is made in order to
secure the performance of an obligation of the grantor toward the
grantee, a trust by virtue of law is established. If the fulfillment of the
obligation is offered by the grantor when it becomes due, he may
demand the reconveyance of the property to him."

In the case at bar, petitioners conveyed Lots Nos. 916 and 920 to
the government with the latter obliging itself to use the realties for
the expansion of Lahug Airport; failing to keep its bargain, the
G.R. No. 156273. August 9, 2005
HEIRS OF TIMOTEO MORENO and MARIA ROTEA, namely, ESPERANZA
R. EDJEC, BERNARDA R. SUELA, RUBY C. ROTEA, BERNARDA R. ROTEA,
ELIA R. VDA. DE LIMBAGA, VIRGINIA R. ARBON, ROSALINDA R.
ARQUISOLA, CORAZON ROTEA, FE R. EBORA, CARIDAD ROTEA,
ANGELES VDA. DE RENACIA, JORGE ROTEA, MARIA LUISA ROTEA-
VILLEGAS, ALFREDO R. ROTEA, represented by his heirs, namely,
LIZBETH ROTEA and ELEPETH ROTEA; LUIS ROTEA, represented by his
heir JENNIFER ROTEA; and ROLANDO R. ROTEA, represented by his heir
ROLANDO R. ROTEA, JR., Petitioners,
vs.
MACTAN-CEBU INTERNATIONAL AIRPORT AUTHORITY, Respondent.
RESOLUTION
CALLEJO, SR., J.:
This is a Motion for Reconsideration dated November 10, 2003 filed
by respondent Mactan-Cebu International Airport Authority (MCIAA),
through the Office of the Solicitor General (OSG), seeking the reversal
of the Decision1dated October 15, 2003,2 the dispositive portion of
which reads:
WHEREFORE, the instant Petition for Review is GRANTED.
The Decision of the Court of Appeals in CA-G.R. CV No. 64456 dated
20 December 2001 and its Resolution of 28 November 2002, denying
reconsideration of the Decision are REVERSED and SET ASIDE.
The Decision of RTC-Br. 19 of Cebu City dated 12 April 1999 in Civil
Case No. CEB 20015 is MODIFIED IN PARTby
(a) ORDERING respondent Mactan-Cebu International Airport
Authority (MCIAA) TO RECONVEY to petitioner Heirs of Timoteo
Moreno and Maria Rotea, namely: Esperanza R. Edjec, Bernarda R.
Suela, Ruby C. Rotea, Bernarda R. Rotea, Elia R. Vda. de Limbaga,
Virginia R. Arbon, Rosalinda R. Arquisola, Corazon Rotea, Fe R. Ebora,
Caridad Rotea, Angeles Vda. de Renacia, Jorge Rotea, Maria Luisa
Rotea-Villegas, Alfredo R. Rotea, represented by his heirs, namely:
Lizbeth Rotea and Elepeth Rotea; Luis Rotea, represented by his heir
Jennifer Rotea; and Rolando R. Rotea, represented by his heir
Rolando R. Rotea, Jr., Lot No. 916 with an area of 2,355 square
meters and Lot No. 920 consisting of 3,097 square meters in Lahug,
Cebu City, with all the improvements thereon evolving through
nature or time, but excluding those that were introduced by third
parties, i.e., DPWH, which shall be governed by existing contracts and
relevant provisions of law;
(b) ORDERING petitioner Heirs of Timoteo Moreno and Maria
Rotea TO PAY respondent MCIAA what the former received as just
compensation for the expropriation of Lot Nos. 916 and 920 in Civil
Case No. R-1881, i.e., 7,065.00 for Lot No. 916 and 9,291.00 for
Lot No. 920 with consequential damages by way of legal interest from
16 November 1947. Petitioners must likewise PAY respondent MCIAA
the necessary expenses that the latter may have incurred in
sustaining the properties and the monetary value of its services in
managing the properties to the extent that petitioners will secure a
benefit from such acts. Respondent MCIAA however may keep
whatever income or fruits it may have obtained from the parcels of
land, in the same way that petitioners need not account for the
interests that the amounts they received as just compensation may
have earned in the meantime;
(c) ORDERING respondent MCIAA TO CONVEY to petitioners the
improvements it may have built on Lot Nos. 916 and 920, if any, in
which case petitioners SHALL PAY for these improvements at the
prevailing free market price, otherwise, if petitioners do not want to
appropriate such improvements, or if respondent does not choose to
sell them, respondent MCIAA SHALL REMOVE these
improvements WITHOUT ANY OBLIGATION on the part of petitioners
to pay any compensation to respondent MCIAA from them;
(d) ORDERING petitioners TO PAY the amount so determined under
letter (b) of this dispositive portion as consideration for the
reconveyance of Lot Nos. 916 and 920, as well as the prevailing free
market price of the improvements built thereon by respondent
MCIAA, if any and desired to be bought and sold by the parties, in
ready money or cash PAYABLE within a period of three hundred sixty-
five (365) days from the date that the amount under letter (b) above
is determined with finality, unless the parties herein stipulate a
different scheme or schedule of payment, otherwise, after the period
of three hundred sixty-five (365) days or the lapse of the compromise
scheme or schedule of payment and the amount so payable is not
settled, the right of repurchase of petitioners and the obligation of
respondent MCIAA to so reconvey Lot Nos. 916 and 920 and/or the
improvements shall be DEEMED FORFEITED and the ownership of
those parcels of land shall VEST ABSOLUTELY upon the respondent
MCIAA;
(e) REMANDING the instant case to RTC-Br. 19 of Cebu City for
purposes of determining the amount of compensation for Lot Nos.
916 and 920 to be paid by petitioners as mandated in letter (b)
hereof, and the value of the prevailing free market price of the
improvements built thereon by respondent MCIAA, if any and desired
to be bought and sold by the parties, and in general, securing the
immediate execution of this Decision under the premises;
(f) ORDERING petitioners to respect the right of the Department of
Public Works and Highways to its lease contract until the expiration
of the lease period; and
(g) DELETING the award of 60,000.00 for attorneys fees and
15,000.00 for litigation expenses against respondent MCIAA and in
favor of petitioners.
This Decision is without prejudice to the claim of intervenor one
Richard E. Enchuan on his allegation that he acquired through deeds
of assignment the rights of some of herein petitioners over Lot Nos.
916 and 920.
No costs.
SO ORDERED.3
A review of the factual milieu of the case reveals that in 1949, the
National Airport Corporation (NAC), as the predecessor of herein
respondent MCIAA, sought to acquire Lot No. 916, having a total area
of 2,355 square meters under Transfer Certificate of Title (TCT) No.
RT-7543 (106) T-13694, and Lot No. 920 containing an area of 3,097
square meters covered by TCT No. RT-7544 (107) T-13695 for the
proposed expansion of the Lahug Airport. The two parcels of land
located in Lahug, Cebu City were owned by the spouses Timoteo
Moreno and Maria Rotea.4 The spouses refused to sell their
properties because the proposed price was unacceptably way below
the market value of the lands at that time. As an incentive for the
other owners to cede their lots adjoining the then existing Lahug
Airport, NAC guaranteed them or their successors-in-interest the
right to repurchase their properties for the same price paid by the
government in the event that these properties were no longer used
for purposes of the airport.5Some landowners executed deeds of
conveyance while others who refused to cede their properties
became defendants in an action for expropriation filed by the
Republic of the Philippines before the Court of First Instance (CFI) of
Cebu, docketed as Civil Case No. R-1881.6 Lot Nos. 916 and 920 were
among those included in the expropriation case.
In a Decision7 rendered by the trial court on December 29, 1961, Lot
Nos. 916 and 920, along with the other adjoining lands, were
condemned for public use after payment of just compensation.8 The
trial court fixed the price at 3.00 per square meter for the two lots
and ordered the payment thereof to the owners in the sum of
7,065.00 for Lot No. 916 and 9,291.00 for Lot No. 920, with
payment of consequential damages by way of legal interest from
November 16, 1947.9 Thereafter, the subject lands were transferred
in the name of the Republic of the Philippines under TCT No.
5869110 for Lot No. 916 and TCT No. 5869211 for Lot No. 920 and
subsequently turned over to MCIAA under Republic Act (Rep. Act) No.
6958 in 1990.12
Subsequently, the Lahug Airport was abandoned and all its functions
and operations were transferred to the Mactan Airport. In two
various letters sent on different dates, the heirs of Timoteo Moreno
and Maria Rotea, the petitioners herein, wrote then President Fidel
V. Ramos13 and the MCIAA General Manager,14 requesting for the
exercise of their supposed right to repurchase Lot Nos. 916 and 920
considering that the said lots intended for the expansion of the Lahug
Airport were not utilized. Their written and verbal demands were
ignored by the respondent.
Consequently, the petitioners filed a complaint for reconveyance and
damages with the Regional Trial Court of Cebu City docketed as Civil
Case No. CEB-20015, against the respondent asserting their right to
reacquire the subject properties. In the complaint, the petitioners
claimed that assurances were given by the NAC officials regarding the
entitlement of the landowners to repurchase their properties for the
same price paid by NAC in the event that the lots were no longer
used for airport purposes.15 The petitioners further added that the
guaranty of right to repurchase was the propelling factor that
persuaded the registered owners to continue with the expropriation
proceedings. The same reason was given by the petitioners for not
opposing and appealing the case later on.16
During the pendency of the case, one Richard E. Unchuan filed a
Motion for Transfer of Interest,17 alleging that some of the petitioners
had already assigned to him their respective rights, interests,
participation, and ownership over the subject properties. Thereafter,
the Department of Public Works and Highways (DPWH), likewise,
sought to intervene alleging that it is the lessee of Lot No. 920 and
would be adversely affected by the outcome of the litigation.18
At the start of the trial, the petitioners presented two witnesses to
support their allegations in the complaint. The first witness was
Esperanza Rotea Edjec, who testified that when she was just 22 years
old, the airport authority representatives called for a meeting with
the landowners affected by the expropriation. The witness was
present during the gathering and attested that the registered owners
of the lots were assured of the return of the expropriated lands
should the same be no longer utilized as an airport.19
The next witness was Asterio Uy, a retired government employee of
the Civil Aeronautics Administration (CAA), who attested that in 1957,
he was sent as part of the legal team to Mactan, Cebu City, tasked to
acquire certain lots for the extension of the Lahug Airport. He added
that when the negotiations broke down, the legal contingent
resorted to expropriation proceedings. Upon instructions from the
central office of CAA in Manila, Atty. Ocampo, the head of the legal
corps which undertook the procurement of the subject lands, gave
the assurance to the landowners that if the airport is transferred to
Mactan, the lots will be returned to their previous owners.20
The respondent, on the other hand, presented on the witness stand
Michael M. Bacarisas, a legal assistant of the MCIAA. The witness
testified that as a consequence of the expropriation proceedings, the
TCTs of Lot Nos. 916 and 920 were cancelled and in lieu thereof, new
ones were issued in the name of the Republic of the Philippines in
1962. He pronounced that the decision in Civil Case No. R-1881 did
not expressly impart that the landowners were guaranteed the
reconveyance of the lots to them if the lands expropriated would not
be used for the purpose. On cross-examination, the witness admitted
that he had no personal knowledge of any agreement between the
airport officials and the previous registered owners of the disputed
properties. His research likewise revealed that a total of 65 lots were
expropriated by the government; 19 lots were the subject of court
litigations concerning their reconveyance; and that out of the 19 lots,
15 lots were already returned to their former owners. Moreover,
Bacarisas alleged that some of the expropriated lots were recovered
by their previous landowners because they were acquired through
negotiated sale wherein the standard contract had an express
provision that should the proposed expansion of the Lahug Airport
not materialize, the landowners may recover their properties.21
On April 12, 1999, the trial court rendered judgment22 in favor of the
petitioners, granting them the right to repurchase the properties at
the amount originally paid by the respondent in Civil Case No. R-
1881, including consequential damages. The trial court ruled that the
public purpose for which the lands were expropriated had ceased to
exist, therefore, it is but logical and in the higher interest of
substantial justice to give back the right of ownership of the subject
lots to the former owners.
Aggrieved, the respondent appealed the decision to the Court of
Appeals (CA). On December 20, 2001, the CA reversed the trial
courts decision on the premise that the judgment affirming the
states right to exercise its power of eminent domain was
unconditional. In maintaining a contrary view, the CA cited Fery v.
Municipality of Cabanatuan,23 which held that when a land has been
acquired for public use unconditionally and in fee simple, the
previous owner retains no right in the land and the title obtained will
not, in any way, be impaired. Another case relied upon by the
appellate court was Mactan-Cebu International Airport Authority v.
Court of Appeals24 which is allegedly stare decisis to the case to
prevent the exercise of the right of repurchase as the former dealt
with a parcel of land similarly expropriated under Civil Case No. R-
1881; hence, the same questions relating to the same event have
already been previously litigated and decided by a competent court.
On February 11, 2002, the petitioners filed a motion for
reconsideration before the CA, which was denied in a Resolution
dated November 28, 2002.
Expectedly, the petitioners filed before this Court a petition for
review of the decision of the CA.
In reversing the decision of the CA, the Court ratiocinated that the
attendance in the case at bar of standing admissible evidence
validating the claim of the petitioners right to repurchase the
expropriated properties took away the instant case from the ambit
of Mactan-Cebu International Airport Authority v. Court of
Appeals, but still within the principles enunciated in
the Fery case.25 This Court moreover added:
Mactan-Cebu International Airport Authority is correct in stating that
one would not find an express statement in the Decision in Civil Case
No. R-1881 to the effect that "the [condemned] lot would return to
[the landowner] or that [the landowner] had a right to repurchase the
same if the purpose for which it was expropriated is ended or
abandoned or if the property was to be used other than as the Lahug
Airport." This omission notwithstanding, and while the inclusion of
this pronouncement in the judgment of condemnation would have
been ideal, such precision is not absolutely necessary nor is it fatal to
the cause of petitioners herein. No doubt, the return or repurchase
of the condemned properties of petitioners could be readily justified
as the manifest legal effect or consequence of the trial courts
underlying presumption that "Lahug Airport will continue to be in
operation" when it granted the complaint for eminent domain and
the airport discontinued its activities.
The predicament of petitioners involves a constructive trust, one that
is akin to the implied trust referred to in Art. 1454 of the Civil
Code, "If an absolute conveyance of property is made in order to
secure the performance of an obligation of the grantor toward the
grantee, a trust by virtue of law is established. If the fulfillment of the
obligation is offered by the grantor when it becomes due, he may
demand the reconveyance of the property to him." In the case at bar,
petitioners conveyed Lot Nos. 916 and 920 to the government with
the latter obliging itself to use the realties for the expansion of Lahug
Airport; failing to keep its bargain, the government can be compelled
by petitioners to reconvey the parcels of land to them, otherwise,
petitioners would be denied the use of their properties upon a state
of affairs that was not conceived nor contemplated when the
expropriation was authorized.26
Respondent MCIAA filed a Motion for Reconsideration27 dated
November 10, 2003 praying that the Courts decision be reconsidered
and set aside. In the said motion, the respondent reiterated its earlier
claim that: (a) the decision of the trial court in Civil Case No. R-1881,
which granted to MCIAA the titles to Lot Nos. 916 and 920 in fee
simple, has long become final and executory; (b) this Courts October
15, 2003 Decision, granting the petitioners right of repurchase,
effectively overturns the rulings in Fery v. Municipality of
Cabanatuan,28 MCIAA v. Court of Appeals,29and Reyes v. National
Housing Authority;30 (c) the petitioners are not entitled to
reconveyance or repurchase of the questioned lots after the closure
of the Lahug Airport; (d) Lot Nos. 916 and 920, which were
expropriated in Civil Case No. R-1881, should not be treated like
those lots sold through negotiated sale with a stipulation for
reconveyance or repurchase; and (e) granting arguendo that
petitioners have a right to repurchase Lot Nos. 916 and 920, the
repurchase price should be the fair market value of the lands.
Additionally, MCIAA filed a Motion to Resolve the Motion for
Reconsideration by the Honorable Court En Banc dated November
11, 2003, alleging that the present case involves novel questions of
law.
On November 20, 2003, the petitioners filed an Opposition to the
respondents Motion for Reconsideration stating that no new
arguments have been proffered by the respondent to warrant the
reversal of the Courts decision.
We remain unpersuaded by the respondents assertions. The merits
of the case have already been discussed at length in the challenged
decision and to linger further on them herein would be inordinate.
Suffice it to say that the Court considered the rulings in Fery v.
Municipality of Cabanatuan and Mactan-Cebu International Airport
Authority v. Court of Appeals which defined the rights and obligations
of landowners, whose properties were expropriated, "when
the public purpose for which the eminent domain was exercised no
longer subsists."31
The respondent insists that the decision effectively overturned the
ruling in the Fery case which requires that for an expropriation to be
conditional, the judgment must clearly spell out said condition. The
respondent is mistaken. We reiterate what we stated in our
decision, to wit:
In Fery, which was cited in the recent case of Reyes v. National
Housing Authority, we declared that the government acquires only
such rights in expropriated parcels of land as may be allowed by the
character of its title over the properties
If x x x land is expropriated for a particular purpose, with the
condition that when that purpose is ended or abandoned the
property shall return to its former owner, then, of course, when the
purpose is terminated or abandoned the former owner reacquires
the property so expropriated. If x x x land is expropriated for a public
street and the expropriation is granted upon condition that the city
can only use it for a public street, it returns to the former owner,
unless there is some statutory provision to the contrary x x x x If,
upon the contrary, however, the decree of expropriation gives to the
entity a fee simple title, then, of course, the land becomes the
absolute property of the expropriator, whether it be the State, a
province, or municipality, and in that case the non-user does not
have the effect of defeating the title acquired by the expropriation
proceedings x x x x When land has been acquired for public use in fee
simple, unconditionally, either by the exercise of eminent domain or
by purchase, the former owner retains no rights in the land, and the
public use may be abandoned, or the land may be devoted to a
different use, without any impairment of the estate or title acquired,
or any reversion to the former owner x x x x32
It must be pointed out that nothing in the Fery case bespeaks that
there should foremost be an express condition in the dispositive
portion of the decision before the condemned property can be
returned to its former owner after the purpose for its taking has been
abandoned or ended. The indisputable certainty in the present case is
that there was a prior promise by the predecessor of the respondent
that the expropriated properties may be recovered by the former
owners once the airport is transferred to Mactan, Cebu. In fact, the
witness for the respondent testified that 15 lots were already
reconveyed to their previous owners. Intervenor DPWH, likewise,
manifested that Lot No. 920 is the subject of a memorandum of
agreement33 with the respondents predecessor-in-interest wherein
the property was leased to DPWH. This belated news further bolsters
the fact that the purpose for which the properties were condemned
has been abandoned.
A more pressing discovery unearthed by this Court is that a significant
portion of the subject properties had been purchased by the Cebu
Property Ventures, Inc. for the development of a commercial
complex.34 The respondent, in its answer, did not deny this allegation
in the petitioners complaint. Section 10, Rule 8 of the Revised Rules
of Court provides:
Specific denial. A defendant must specify each material allegation of
fact the truth of which he does not admit and, whenever practicable,
shall set forth the substance of the matters upon which he relies to
support his denial. Where a defendant desires to deny only a part of
an averment, he shall specify so much of it as is true and material and
shall deny only the remainder. Where a defendant is without
knowledge or information sufficient to form a belief as to the truth of
a material averment made in the complaint, he shall so state, and this
shall have the effect of a denial.
Section 11 of the same Rule likewise states that "[m]aterial averment
in the complaint, shall be deemed admitted when not specifically
denied." The predominant precept is that upon abandonment of real
property condemned for public purpose, the party who originally
condemned the property recovers control of the land if the
condemning party continues to use the property for public purpose;
however, if the condemning authority ceases to use the property for
a public purpose, property reverts to the owner in fee simple.35 The
governments taking of private property, and then transferring it to
private persons under the guise of public use or purpose is the
despotism found in the immense power of eminent
domain.36 Moreover, the direct and unconstitutional states power to
oblige a landowner to renounce his productive and invaluable
possession to another citizen, who will use it predominantly for his
own private gain, is offensive to our laws.37
Next, the respondent asseverates that the Court departed from the
ruling enunciated in Mactan-Cebu International Airport Authority v.
Court of Appeals. We are not convinced. Clearly, the respondents
contention can prevail only if the facts of the present case are
accurately in point with those in the other case. We recapitulate our
rulings that in MCIAA v. CA, respondent Virginia Chiongbian proffered
"inadmissible and inconclusive evidence, while in the present case we
have preponderant proof as found by the trial court of the existence
of the right of repurchase in favor of the petitioners." No less than
Asterio Uy, one of the members of the CAA Mactan Legal Team,
which interceded for the acquisition of the lots for the Lahug
Airports expansion, affirmed that persistent assurances were given
to the landowners to the effect that as soon as the Lahug Airport is
abandoned or transferred to Mactan, the lot owners would be able
to reacquire their properties. Unlike in the case of MCIAA v.
CA, where respondent Chiongbian offered inadmissible evidence for
being hearsay in nature, the petitioners in this case presented a
witness whose testimony was based on his own personal knowledge.
Surely, Uy is a credible witness inasmuch as he was even tasked by
the negotiating panel to directly communicate to the landowners the
instructions from the CAA main office that the properties will be
returned to the original owners once the Lahug Airport is transferred
to Mactan. Likewise, he cannot be considered as a biased witness as
he was a former employee of the respondents predecessor-in-
interest and was merely recalling and informing the court of the
events that transpired during the negotiations for the expropriations
of the lots. Part of Uys testimony is as follows:
Atty. Jacinto
Q: Lahug Airport. In what capacity or what position were you holding
at the time when you were assigned to Cebu for the purpose of
conducting negotiations with the landowners?
Witness
A: I was a member of the CAA Legal Team.
Q: I see, CAA Legal Team. Can you tell the court who were the
members, if you still remember, of that team?
A: I will mention Atty. Ocampo, Atty. Lansang, Atty. Sarigumba and
myself.
Q: You stated that you were sent to Cebu as a member of the CAA
Legal Team to negotiate with the landowners for the acquisition of
lots for purposes, for airport purposes, you are referring of course to
the acquisition of lot in Mactan?
A: Yes, sir.
Q: Now what was the purpose of your negotiations also in Lahug,
what was the purpose of those negotiations?
A: The purpose there was to purchase or buy the property affected
by the Lahug extension.
Q: When you say affected, did you have any specific instructions as to
what Lahug airport would be devoted to? I will reform Your Honor.
Since Lahug airport was already in existence, why did you still have to
negotiate with the adjacent landowners?
A: For the Lahug airport expansion.
Q: Now, how did you conduct the negotiations, in what manner?
A: We convinced the landowners affected by the expansion to sell
their properties and if they refuse, there is another right of eminent
domain of the government to acquire the properties through
expropriation. And with the assurance that these properties, I am
referring to the properties in Lahug, as soon as Lahug airport will be
transferred to Mactan, that will be the time that these properties will
be returned to the landowners at the same price.
Q: Why do you say that there was an assurance given, how did you
come to know about this?
A: The assurance was from the Chief of the team, Atty. Ocampo,
through him and accordingly per instruction from the Central Office in
Manila.
Q: As a member of the legal team, did you gave [sic] the assurance to
the landowners or was it Atty. Ocampo?
A: We, because I was made as the spokesman considering that I am a
Boholano who knows the dialect, Cebuano, and my companions were
Tagalogs, they dont know Cebuano so I participated in the
negotiations.
Q: In short, you were the one who conducted the negotiations?
A: Together with the members of the team, I was there assisting.38

Moreover, we do not subscribe to the respondents contention that

since the possibility of the Lahug Airports closure was actually
considered by the trial court, a stipulation on reversion or repurchase
was so material that it should not have been discounted by the
court a quo in its decision in Civil Case No. R-1881, if, in fact, there
was one. We find it proper to cite, once more, this Courts ruling that
the fallo of the decision in Civil Case No. R-1881 must be read in
reference to the other portions of the decision in which it forms a
part. A reading of the Courts judgment must not be confined to the
dispositive portion alone; rather, it should be meaningfully construed
in unanimity with the ratio decidendi thereof to grasp the true intent
and meaning of a decision.39

On the other hand, we agree with the respondent in asserting that

Lot Nos. 916 and 920 should not be treated like those lands acquired
through negotiated sale with a proviso in their contracts for
reconveyance or repurchase. Be that as it may, we however find that
there is historic as well as rational bases for affording the petitioners
the right of repurchase. We are cognizant of the incontestable fact
that some landowners immediately sold their properties upon the
assurance that they could repurchase them at the cessation of the
Lahug Airports operations. And, indeed, these landowners who
chose to cede their properties were fortunate to have a stipulation in
their contract of sale vouching for their right of repurchase.
Meanwhile, the landowners who found it burdensomely difficult to
part with their cherished lands underwent the costly expropriation
proceedings which lasted for a number of years. Inevitably, justice
and equity dictates the reconveyance of the expropriated lots to their
previous owners. One must never fail to overlook the reality that the
power to condemn property is an awesome power of the State40 and
that to compel a citizen to forcibly surrender his precious property to
the enormous governmental power is too much a sacrifice which
deserves more consideration than those landowners, who, from the
very beginning voluntarily relinquished their ownership.

We now come to the discussion of the amount of repurchase price.

The respondent maintains that the sum to be paid by the petitioners
for Lot Nos. 916 and 920 should be their prevailing market price, and
not the expropriation price which would be grossly unfair considering
that the petitioners were paid just compensation and the lots are
now millions of pesos in value. Our stand on the amount of
repurchase price remains unperturbed. When the State reconveys
land, it should not profit from sudden appreciations in land values.
Any increase or decrease in market value due to the proposed
improvement may not be considered in determining the market
value. Thus, reconveyance to the original owner shall be for whatever
amount he was paid by the government, plus legal interest, whether
or not the consideration was based on the lands highest and best
use when the sale to the State occurred.41

WHEREFORE, the motion for reconsideration is DENIED.

SO ORDERED.
[G.R. No. 135087. March 14, 2000]
HEIRS OF ALBERTO SUGUITAN, petitioner, vs. CITY OF
MANDALUYONG, respondent.
DECISION
GONZAGA_REYES, J.:
In this petition for review on certiorari under Rule 45,
petitioners[1] pray for the reversal of the Order dated July 28, 1998
issued by Branch 155 of the Regional Trial Court of Pasig in SCA No.
875 entitled "City of Mandaluyong v. Alberto S. Suguitan, the
dispositive portion of which reads as follows:
WHEREFORE, in view of the foregoing, the instant Motion to Dismiss
is hereby DENIED and an ORDER OF CONDEMNATION is hereby
issued declaring that the plaintiff, City of Mandaluyong, has a lawful
right to take the subject parcel of land together with existing
improvements thereon more specifically covered by Transfer
Certificate Of Title No. 56264 of the Registry of Deeds for Metro
Manila District II for the public use or purpose as stated in the
Complaint, upon payment of just compensation.
Accordingly, in order to ascertain the just compensation, the parties
are hereby directed to submit to the Court within fifteen (15) days
from notice hereof, a list of independent appraisers from which the
Court t will select three (3) to be appointed as Commissioners,
pursuant to Section 5, Rule 67, Rules of Court.
SO ORDERED.[2]ella
It is undisputed by the parties that on October 13, 1994, the
Sangguniang Panlungsod of Mandaluyong City issued Resolution No.
396, S-1994[3] authorizing then Mayor Benjamin S. Abalos to institute
expropriation proceedings over the property of Alberto Sugui located
at Boni Avenue and Sto. Rosario streets in Mandaluyong City with an
area of 414 square meters and more particularly described under
Transfer Certificate of Title No. 56264 of the Registry of Deeds of
Metro Manila District II. The intended purpose of the expropriation
was the expansion of the Mandaluyong Medical Center.
Mayor Benjamin Abalos wrote Alberto Suguitan a letter dated
January 20, 1995 offering to buy his property, but Suguitan refused to
sell.[4] Consequently, on March 13, 1995, the city of Mandaluyong
filed a complaint[5] for expropriation with the Regional Trial Court of
Pasig. The case was docketed as SCA No. 875. novero
Suguitan filed a motion to dismiss[6] the complaint based on the
following grounds -(1) the power of eminent domain is not being
exercised in accordance with law; (2) there is no public necessity to
warrant expropriation of subject property; (3) the City of
Mandaluyong seeks to expropriate the said property without
payment of just compensation; (4) the City of Mandaluyong has no
budget and appropriation for the payment of the property being
expropriated; and (5) expropriation of Suguitan' s property is but a
ploy of Mayor Benjamin Abalos to acquire the same for his personal
use. Respondent filed its comment and opposition to the motion. On
October 24, 1995, the trial court denied Suguitan's motion to
dismiss.[7]
On November 14, 1995, acting upon a motion filed by the
respondent, the trial court issued an order allowing the City of
Mandaluyong to take immediate possession of Suguitan's property
upon the deposit of P621,000 representing 15% of the fair market
value of the subject property based upon the current tax declaration
of such property. On December 15, 1995, the City of Mandaluyong
assumed possession of the subject property by virtue of a writ of
possession issued by the trial court on December 14, 1995.[8] On July
28, 1998, the court granted the assailed order of expropriation.
Petitioner assert that the city of Mandaluyong may only exercise its
delegated power of eminent domain by means of an ordinance as
required by section 19 of Republic Act (RA) No. 7160,[9]and not by
means of a mere resolution.[10] Respondent contends, however, that
it validly and legally exercised its power of eminent domain; that
pursuant to article 36, Rule VI of the Implementing Rules and
Regulations (IRR) of RA 7160, a resolution is a sufficient antecedent
for the filing of expropriation proceedings with the Regional Trial
Court. Respondent's position, which was upheld by the trial court,
was explained, thus:[11]
...in the exercise of the respondent City of Mandaluyong's power of
eminent domain, a "resolution" empowering the City Mayor to
initiate such expropriation proceedings and thereafter when the
court has already determine[d] with certainty the amount of just
compensation to be paid for the property expropriated, then follows
an Ordinance of the Sanggunian Panlungosd appropriating funds for
the payment of the expropriated property. Admittedly, title to the
property expropriated shall pass from the owner to the expropriator
only upon full payment of the just compensation.[12] novero
Petitioners refute respondent's contention that only a resolution is
necessary upon the initiation of expropriation proceedings and that
an ordinance is required only in order to appropriate the funds for
the payment of just compensation, explaining that the resolution
mentioned in article 36 of the IRR is for purposes of granting
administrative authority to the local chief executive to file the
expropriation case in court and to represent the local government
unit in such case, but does not dispense with the necessity of an
ordinance for the exercise of the power of eminent domain under
section 19 of the Code.[13]
The petition is imbued with merit.
Eminent domain is the right or power of a sovereign state to
appropriate private property to particular uses to promote public
welfare.[14] It is an indispensable attribute of sovereignty; a power
grounded in the primary duty of government to serve the common
need and advance the general welfare.[15] Thus, the right of eminent
domain appertains to every independent government without the
necessity for constitutional recognition.[16] The provisions found in
modern constitutions of civilized countries relating to the taking of
property for the public use do not by implication grant the power to
the government, but limit a power which would otherwise be without
limit.[17] Thus, our own Constitution provides that "[p]rivate property
shall not be taken for public use without just
compensation."[18] Furthermore, the due process and equal
protection clauses[19] act as additional safeguards against the
arbitrary exercise of this governmental power.
Since the exercise of the power of eminent domain affects an
individual's right to private property, a constitutionally-protected
right necessary for the preservation and enhancement of personal
dignity and intimately connected with the rights to life and
liberty,[20] the need for its circumspect operation cannot be
overemphasized. In City of Manila vs. Chinese Community of
Manila we said:[21]
The exercise of the right of eminent domain, whether directly by the
State, or by its authorized agents, is necessarily in derogation of
private rights, and the rule in that case is that the authority must be
strictly construed. No species of property is held by individuals with
greater tenacity, and none is guarded by the constitution and the
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 doubt[ful]
interpretation. (Bensley vs. Mountainlake Water Co., 13 Cal., 306 and
cases cited [73 Am. Dec. 576].)
The statutory power of taking property from the owner without his
consent is one of the most delicate exercise of governmental
authority. It is to be watched with jealous scrutiny. Important as the
power may be to the government, the inviolable sanctity which all
free constitutions attach to the right of property of the citizens,
constrains the strict observance of the substantial provisions of the
law which are prescribed as modes of the exercise of the power, and
to protect it from abuse. ...(Dillon on Municipal Corporations [5th
Ed.], sec. 1040, and cases cited; Tenorio vs. Manila Railroad Co., 22
Phil., 411.)
The power of eminent domain is essentially legislative in nature. It is
firmly settled, however, that such power may be validly delegated to
local government units, other public entities and public utilities,
although the scope of this delegated legislative power is necessarily
narrower than that of the delegating authority and may only be
exercised in strict compliance with the terms of the delegating
law.[22] micks
The basis for the exercise of the power of eminent domain by local
government units is section 19 of RA 7160 which provides that:
A local government unit may, through its chief executive and acting
pursuant to an ordinance, exercise the power of eminent domain for
public use, purpose, or welfare for the benefits 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.
Despite the existence of this 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.[23] In fact, the courts have adopted a more
censorious attitude in resolving questions involving the proper
exercise of this delegated power by local bodies, as compared to
instances when it is directly exercised by the national legislature.[24]
The courts have the obligation to determine whether the following
requisites have been complied with by the local government unit
concerned:
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 .calr
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.[25]
In the present case, the City of Mandaluyong seeks to exercise the
power of eminent domain over petitioners' property by means of a
resolution, in contravention of the first requisite. The law in this case
is clear and free from ambiguity. Section 19 of the Code requires an
ordinance, not a resolution, for the exercise of the power of eminent
domain. We reiterate our ruling in Municipality of Paraaque v. V.M.
Realty Corporation[26] regarding the distinction between an ordinance
and a resolution. In that 1998 case we held that:miso
We are not convinced by petitioner's 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. 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.
We cannot uphold respondent's contention that an ordinance is
needed only to appropriate funds after the court has determined the
amount of just compensation. An examination of the applicable law
will show that an ordinance is necessary to authorize the filing of a
complaint with the proper court since, beginning at this point, the
power of eminent domain is already being exercised.
Rule 67 of the 1997 Revised Rules of Court reveals that expropriation
proceedings are comprised of two stages:
(1) the first is concerned with the determination of the authority of
the plaintiff to exercise the power of eminent domain and the
propriety of its exercise in the context of the facts involved in the
suit; it ends with an order, if not in a dismissal of the action, of
condemnation declaring that the plaintiff has a lawful right to take
the property sought to be condemned, for the public use or purpose
described in the complaint, upon the payment of just compensation
to be determined as of the date of the filing of the complaint;
(2) the second phase is concerned with the determination by the
court of the just compensation for the property sought to be taken;
this is done by the court with the assistance of not more than three
(3) commissioners.[27]
Clearly, although the determination and award of just compensation
to the defendant is indispensable to the transfer of ownership in
favor of the plaintiff, it is but the last stage of the expropriation
proceedings, which cannot be arrived at without an initial finding by
the court that the plaintiff has a lawful right to take the property
sought to be expropriated, for the public use or purpose described in
the complaint. An order of condemnation or dismissal at this stage
would be final, resolving the question of whether or not the plaintiff
has properly and legally exercised its power of eminent domain.
Also, it is noted that as soon as the complaint is filed the plaintiff shall
already have the right to enter upon the possession of the real
property involved upon depositing with the court 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.[28] Therefore, an ordinance promulgated by the local
legislative body authorizing its local chief executive to exercise the
power of eminent domain is necessary prior to the filing by the latter
of the complaint with the proper court, and not only after the court
has determined the amount of just compensation to which the
defendant is entitled.basra
HEIRS OF ALBERTO SUGUITAN
vs. CITY OF MANDALUYONG
FACTS: The Sangguniang Panglungsod of Mandaluyong City issued a
resolution authorizing Mayor Abalos to institute expropriation
proceedings over the property of Suguitan. The city filed a complaint
for expropriation when Suguitan refused to sell the property. The city
later assumed possession of the property by virtue of a writ of
possession issued by the trial court. The court later issued an order of
expropriation. Petitioners argue that the local government units
delegated power of eminent domain must be exercised through the
issuance of an ordinance, not by mere resolution.
ISSUE: Whether or not the City of Mandaluyong must exercise its
delegated power of eminent domain by means of an ORDINANCE as
required by 19 RA 7160, and not by means of a mere RESOLUTION.

Neither is respondent's position improved by its reliance upon Article
36 (a), Rule VI of the IRR which provides that:
If the LGU fails to acquire a private property for public use, purpose,
or welfare through purchase, LGU may expropriate said property
through a resolution of the sanggunian authorizing its chief executive
to initiate expropriation proceedings.
HELD: YES. The law may delegate the power of eminent domain to
local government units that shall exercise the same through an
ordinance. The local government unit failed to comply with this
requirement when they exercised their power of eminent domain
through a resolution. The Local Government Codes requirement of
an ordinance prevails over the Implementing Rules and Regulations
requiring the issuance of a resolution.

The Court has already discussed this inconsistency between the Code
and the IRR, which is more apparent than real, in Municipality of
Paraaque vs. V.M. Realty Corporation,[29] which we quote hereunder:

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. 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.

Therefore, while we remain conscious of the constitutional policy of

promoting local autonomy, we cannot grant judicial sanction to a
local government unit's exercise of its delegated power of eminent
domain in contravention of the very law giving it such power.

It should be noted, however, that our ruling in this case will not
preclude the City of Mandaluyong from enacting the necessary
ordinance and thereafter reinstituting expropriation proceedings, for
so long as it has complied with all other legal requirements.[30]

WHEREFORE, the petition is hereby GRANTED. The July 28, 1998

decision of Branch 155 of the Regional Trial Court of Pasig in SCA No.
875 is hereby REVERSED and SET ASIDE.akin

SO ORDERED.