|Vargas Case Digests|

Republic of the Philippines v. lim

Facts and Controversy

On September 5, 1938, the Republic filed an expropriation case with the CFI which involved Lots 932 and 939
of the Banilad Friar Land Estate to establish a military reservation for the army. These lots were registered
under the Denzons. After depositing P9.5k, the Republic took possession. In 1950, Galeos – an heir of the
Denzons – filed with the National Airports Corporation a claim for rentals of the two lots, but NAC denied
knowledge.

With the Republic failing to pay, the successors Valdehueza and Panerio filed with CFI an action for recovery
of possession with damages. On July 31, 1962, CFI rendered a decision in favor of the successors, stating that
they are owners and retained their right because the Republic failed to pay. Upon appeal to the Supreme
Court, the SC affirmed the CFI decision. No record of Republic paying owners/successors. Despite disbursing
P9.5k, payees were not ascertained. However, the successors in this ruling were not allowed to recover
possession of the lots, but they could only demand fair market value since it was still devoted to public use.

In 1964, the successors mortaged Lot 932 to Lim as security for loans. Failing to pay Lim despite the demand,
Lim foreclosed the mortgage in 1976. In 1992, Lim filed a complaint for “quieting of title” and impleaded the
Republic, where the RTC rendered a decision in favor of Lim.

Republic appealed to the CA, and CA sustained RTC decision. Petitioned for certiorari with SC, stating that
the Republic was still the owner of Lot 932.

ISSUE: Whether or not the Republic has retained ownership of Lot 932, despite its failure to pay the
predecessors just compensation rendered in May 14, 1940.

Decision of the Supreme Court

On the issue of the procedural obstacle, a second motion for reconsideration is prohibited under Sec. 2 Rule
52 of the 1997 Rules of Civil Procedure.

On the issue of retaining ownership, Republic has disregarded Art III Sec 9 when it failed and refused to pay
respondent’s successors. Delay in over 50 years cannot be viewed as fair. If the compensation is not paid for
in a reasonable amount of time (5 years from the finality of the decision), the party may be treated as a
trespasser ab initio. Art III Sec. 9 of the Constitution is not a grant but a limitation of power, strictly interpreted
against expropriator and liberally in favor of property owner.

Recognized rule is that the property expropriated shall pass from owner to expropriator only upon full
payment of just compensation. Expropriation of land consists of two stages: determination of authority of
plaintiff to exercise power of eminent domain and propriety in context of facts; determination of the court
of just compensation for property sought to be taken. Only after these two stages are complete can it be
said that expropriation is completed. Failure of Republic to pay respondent in a period of 57 years rendered
expropriation process incomplete.

Republic: under previous ruling of Valdehueza, respondent is not entitled to recover possession but only fair
market value. Facts of the case do not however, justify its application. Republic deliberately refused to pay
just compensation upon non-compliance with the two orders to pay just compensation. Recovery of
possession can be claimed when: (1) one claiming to act under power of eminent domain has wrongfully
taken/retained property, and (2) rightful entry is made and party condemning refuses to pay compensation
which has been assessed/agreed upon.

Republic: where there have been constructions being used by military, public interest would demand that
the suit should not be sustained. Republic’s statement on reversion being a grave danger is an overstatement
since the lots ceased to operate as an airport and will only affect a handful of people. This is a special
circumstance that entitles respondent to recover possession.

On the issue of bad faith on the part of respondent, it is immaterial since the Republic did not complete the
expropriation process. It would be relevant had the Republic acquired the title over Lot 932.

Just compensation – Correct determination of amount to be paid to property owner and payment within a
reasonable time.

Atty. Galeon specifics:

1. Provincial Government of Sorsogon v. Vda. De Villaroya – similar to this case.
2. Association of Small Land Owners in the Phils v. Secretary of Agrarian Reform; Republic v. Salem
Investment Corporation – transfer of ownership upon full payment of just compensation.
3. Municipality of Biñan v. Garcia – Expropriation of land consists of two stages.