American Print Works v. Lawrence, 23 N.J.L.

590
Facts:
The mayor of New York was sued for damages by the owner of a
building which he had ordered blasted to stay the great fire of
1853. The plaintiff contended that the action is one of expropriation
for which he was entitled to payment of just compensation.
Issue: WON the action of the mayor is considered as expropriation.
Held: The destruction of the property in question does not come
under the right of eminent domain, but under the right of necessity,
or self-preservation. The right of eminent domain is a public right; it
arises from the laws of society and is vested in the state or its
grantee, acting under the right and power of the state, or benefit of
the state, those acting under it. The right of necessity arises under
the laws of the society or society itself. It is the right of selfdefense, of self-preservation, whether applied to persons or to
property. It is a private right vested in the individual, and with
which the right of the state or state necessity has nothing to do. In
the case at bar, the petitioner cannot claim just compensation
because the destruction is not a form of taking contemplated in the
exercise of power of eminent domain. However, he can recover
indemnification for damages from those who benefited.

La Orden de PP. Benedictinos de Filipinas, a domestic religious

corporation that owns the San Beda College, a private educational
institution situated on Mendiola street. Not having been able to
reach an agreement on the matter with the owner, the Government
instituted the present expropriation proceedings.
On May 27, 1957 the trial court, upon application of the
Government hereinafter referred to as appellant issued an
order fixing the provisional value of the property in question at
P270,000.00 and authorizing appellant to take immediate
possession thereof upon depositing said amount. The deposit
having been made with the City Treasurer of Manila, the trial court
issued the corresponding order directing the Sheriff of Manila to
place appellant in possession of the property aforesaid.
On June 8, 1957, as directed by the Rules of Court, the herein
appellee, in lieu of an answer, filed a motion to dismiss the
complaint based on the following grounds:
I. That the property sought to be expropriated is already dedicated
to public use and therefore is not subject to expropriation.
II. That there is no necessity for the proposed expropriation.

REPUBLIC OF THE PHILIPPINES, plaintiff-appellant, vs. LA

ORDEN DE PP. BENEDICTINOS DE FILIPINAS, defendant-appellee.

III. That the proposed Azcarraga Extension could pass through a

different site which would entail less expense to the Government
and which would not necessitate the expropriation of a property
dedicated to education.

Office of the Solicitor General for plaintiff-appellant. Ledesma, Puno,

Guytingco, Antonio and Associates for defendant-appellee.

IV. That the present action filed by the plaintiff against the
defendant is discriminatory.

DIZON, J.:

V. That the herein plaintiff does not count with sufficient funds to
push through its project of constructing the proposed Azcarraga
Extension and to allow the plaintiff to expropriate defendant's
property at this time would be only to needlessly deprive the latter
of the use of its property.".

To ease and solve the daily traffic congestion on Legarda Street, the
Government drew plans to extend Azcarraga street from its junction
with Mendiola street, up to the Sta. Mesa Rotonda, Sampaloc,
Manila. To carry out this plan it offered to buy a portion of
approximately 6,000 square meters of a bigger parcel belonging to

The government filed a written opposition to the motion to dismiss

(Record on Appeal, pp. 30-37) while appellee filed a reply thereto

(Id., pp. 38-48). On July 29, 1957, without receiving evidence upon
the questions of fact arising from the complaint, the motion to
dismiss and the opposition thereto filed, the trial court issued the
appealed order dismissing the case.
The appealed order shows that the trial court limited itself to
deciding the point of whether or not the expropriation of the
property in question is necessary (Rec. on Ap., p. 50) and, having
arrived at the conclusion that such expropriation was not of
extreme necessity, dismissed the proceedings.
It is to be observed that paragraph IV of the complaint expressly
alleges that appellant needs, among other properties, the portion
of appellee's property in question for the purpose of constructing
the Azcarraga street extension, and that paragraph VII of the same
complaint expressly alleges that, in accordance with Section 64(b)
of the Revised Administrative Code, the President of the Philippines
had authorized the acquisition, thru condemnation proceedings, of
the aforesaid parcel of land belonging to appellee, as evidenced by
the third indorsement dated May 15, 1957 of the Executive
Secretary, Office of the President of the Philippines, a copy of which
was attached to the complaint as Annex "C" and made an integral
part thereof. In denial of these allegations appellee's motion to
dismiss alleged that "there is no necessity for the proposed
expropriation". Thus, the question of fact decisive of the whole case
arose.
It is the rule in this jurisdiction that private property may be
expropriated for public use and upon payment of just
compensation; that condemnation of private property is justified
only if it is for the public good and there is a genuine necessity
therefor of a public character. Consequently, the courts have the
power to inquire into the legality of the exercise of the right of
eminent domain and to determine whether or not there is a
genuine necessity therefor (City of Manila vs. Chinese Community,
40 Phil. 349; Manila Railroad Company vs. Hacienda Benito, Inc., 37
O.G. 1957).
Upon the other hand, it does not need extended argument to show
that whether or not the proposed opening of the Azcarraga

extension is a necessity in order to relieve the daily congestion of

traffic on Legarda St., is a question of fact dependent not only upon
the facts of which the trial court very liberally took judicial notice
but also up on other factors that do not appear of record and must,
therefore, be established by means of evidence. We are, therefore,
of the opinion that the parties should have been given an
opportunity to present their respective evidence upon these factors
and others that might be of direct or indirect help in determining
the vital question of fact involved, namely, the need to open the
extension of Azcarraga street to ease and solve the traffic
congestion on Legarda street.
WHEREFORE, the appealed order of dismissal is set aside and the
present case is remanded to the trial court for further proceedings
in accordance with this decision. Without costs
CITY OF MANILA VS. CHINESE COMMUNITY [40 Phil 349; No.
14355; 31 Oct 1919]
Saturday, January 31, 2009 Posted by Coffeeholic Writes
Labels: Case Digests, Political Law

Facts: The

City

of

Manila,

plaintiff

herein,

prayed

for

the

expropriation of a portion private cemetery for the conversion into

an extension of Rizal Avenue. Plaintiff claims that it is necessary
that such public improvement be made in the said portion of the
private cemetery and that the said lands are within their
jurisdiction.

Defendants herein answered that the said expropriation was not

necessary because other routes were available. They further
claimed that the expropriation of the cemetery would create
irreparable loss and injury to them and to all those persons owing
and interested in the graves and monuments that would have to be

destroyed.

The lower court ruled that the said public improvement was not
necessary on the particular-strip of land in question. Plaintiff herein
assailed that they have the right to exercise the power of eminent
domain and that the courts have no right to inquire and determine
the necessity of the expropriation. Thus, the same filed an appeal.

Issue: Whether or not the courts may inquire into, and hear proof
of

the

necessity

of

the

expropriation.

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.
ISSUE:

Held: The courts have the power of restricting the exercise of

eminent domain to the actual reasonable necessities of the case
and for the purposes designated by the law. The moment the
municipal corporation or entity attempts to exercise the authority
conferred, it must comply with the conditions accompanying the
authority. The necessity for conferring the authority upon a
municipal corporation to exercise the right of eminent domain is
admittedly within the power of the legislature. But whether or not

Whether or not the defendant PLDT can be compelled to

enter into a contract with the plaintiff.
HELD:
x x x 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.

the municipal corporation or entity is exercising the right in a

particular case under the conditions imposed by the general
authority, is a question that the courts have the right to inquire to.
Republic vs. PLDT
(1969)
FACTS:

Republic v PLDT
Facts:
PLDT and RCA Communications Inc (which is not a party to this
case but has contractual relations with e parties) entered into an
agreement where telephone messages, coming from the US and
received by RCA's domestic station could automatically be
transferred
to
the
lines
of
PLDT
and
vice
versa.

The Bureau of Telecommunications set up its own Government

Telephone System (GTS) by renting the trunk lines of PLDT to
enable government offices to call private parties. One of the many
rules prohibits the use of the service for his private use.
Republic of the Philippines entered into an agreement with RCA for
a joint overseas telephone service where the Bureau would convey
radio-telephone overseas calls received by the RCA's station to and
from
local
residents.
PLDT complained that the Bureau was violating the conditions for
using the trunk lines not only for the use of government offices but
even to serve private persons or the general public. PLDT gave a
notice that if violations were not stopped, PLDT would sever the
connections
-which
PLDT
did.
Republic sued PLDT commanding PLDT to execute a contract,
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
finds
it
reasonable.
Issue:
Whether or not Republic can command PLDT to execute the
contract.
Held:
No. The Bureau was created in pursuance of a state policy
reorganizing the government offices to meet the exigencies
attendant upon the establishment of a free Gov't of the Phil.
When the Bureau 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.
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, 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.

To uphold PLDT's contention is to subordinate the needs of the

general public.
PLDT vs NTC
G.R. No. 88404
October 18, 1990

FACTS:
a. Petitioner assails two (2) orders of public respondent
National Telecommunications Commission granting private
respondent Express Telecommunications (ETCI) provisional
authority to install, operate and maintain a Cellular Mobile
Telephone System in Metro Manila now ETCI in accordance
with specific conditions on the following grounds;
1. ETCI is not capacitated or qualified under its
legislative franchise to operate a system-wide
telephone or network of telephone service such as
the one proposed in its application;
2. ETCI lacks the facilities needed and indispensable to
the successful operation of the proposed cellular
mobile telephone system;
3. PLDT has its pending application with NTC Case No
86-86, to install and operate a Cellular Mobile
Telephone System for domestic and international
service not only in Manila but also in the provinces
and that under the prior operator or protection of
investment doctrine, PLDT has the priority
preference in the operation of such service; and
4. the provisional authority, if granted, will result in
needless, uneconomical, and harmful duplication,
among others.
b. After evaluating the consideration sought by the PLDT, the
NTC, maintained its ruling that liberally construed,
applicants franchise carries with it the privilege to operate
and maintain a cellular mobile telephone service.
Subsequently,
PLDT
alleged
essentially
that
the
interconnection ordered was in violation of due process and
that the grant of provisional authority was jurisdictionally
and procedurally infirm. However, NTC denied the
reconsideration.

f.
ISSUES: Whether or not the contention of PLDT is tenable.
RULING:
a. Petition is dismissed for lack of merit.
b. There can be no question that the NTC is the regulatory
agency of the national government with jurisdiction over all
telecommunications entities. It is legally clothed with
authority and given ample discretion to grant a provisional
permit or authority. In fact, NTC may, on its own initiative,
grant such relief even in the absence of a motion from an
applicant.
c. Rep. Act No. 2090 grants ETCI (formerly FACI) "the right and
privilege of constructing, installing, establishing and
operating in the entire Philippines radio stations for
reception and transmission of messages on radio stations in
the foreign and domestic public fixed point-to-point and
public base, aeronautical and land mobile stations, ... with
the corresponding relay stations for the reception and
transmission of wireless messages on radiotelegraphy
and/or radiotelephony
d. A franchise is a property right and cannot be revoked or
forfeited without due process of law. The determination of
the right to the exercise of a franchise, or whether the right
to enjoy such privilege has been forfeited by non-user, is
more properly the subject of the prerogative writ of quo
warranto, the right to assert which, as a rule, belongs to the
State "upon complaint or otherwise" (Sections 1, 2 and 3,
Rule 66, Rules of Court), 2 the reason being that the abuse
of a franchise is a public wrong and not a private injury. A
forfeiture of a franchise will have to be declared in a direct
proceeding for the purpose brought by the State because a
franchise is granted by law and its unlawful exercise is
primarily a concern of Government.
e. Transfers of shares of a public utility corporation need only
NTC approval, not Congressional authorization. What
transpired in ETCI were a series of transfers of shares
starting in 1964 until 1987. The approval of the NTC may be

deemed to have been met when it authorized the issuance

of the provisional authority to ETCI.
PLDT cannot justifiably refuse to interconnect. Rep. Act No.
6849, or the Municipal Telephone Act of 1989, approved on 8
February 1990, mandates interconnection providing as it
does that "all domestic telecommunications carriers or
utilities ... shall be interconnected to the public switch
telephone network." Such regulation of the use and
ownership of telecommunications systems is in the exercise
of the plenary police power of the State for the promotion of
the general welfare. The 1987 Constitution recognizes the
existence of that power when it provides.

Republic of the Philippines vs. Carmen M. Vda. De Castellvi,

et al.
G.R. No. L-20620 August 15, 1974
Case Digest

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 as of that year.

The requisites for taking are:

1.
2.
3.
4.

The expropriator must enter a private property;

The entry must be for more than a momentary period;
It must be under warrant or color of authorities;
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 were present. 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.

Causby (plaintiff) owned a dwelling and a chicken farm near

a municipal airport in Greensboro, NC. In 1942, the United States
(defendant) began using this airport for frequent and regular
military flights, which passed directly over Causbys property at 83
feet, which was 67 feet above the house, 63 feet above the barn
and 18 feet above the highest tree. They frequently came so close
to respondents' property that they barely missed the tops of trees,
the noise was startling, and the glare from their landing lights
lighted the place up brightly at night. This led to the death of 150
chickens which destroyed the use of the property as a chicken farm
and caused loss of sleep, nervousness, and fright on the part of
respondents. They sued in the Court of Claims to recover for an
alleged taking of their property and for damages to their poultry
business. The court of claims held that the United States had taken
an easement over the property, and granted an award of $2,000 for
the easement and resulting property damage. However it made no
finding as to the precise nature or duration of the easement.
Issue:
Whether or not Causby was owed compensation under the
Takings Clause (U.S. Constitutional Amendment V)
Ruling:

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.

In the instant case, it is undisputed that the Republic was placed in

possession of the Castellvi property, by authority of 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.
United States v. Causby, 328 U.S. 256 (1946)
Facts

Yes. The majority opinion cited the law (49 U.S.C. 180)
where Congress defined the "navigable airspace" in the public
domain, as that above the "minimum safe altitude" which varies
from 500 to 1000 feet depending on time of day, aircraft, and type
of terrain. Since the aircraft passing over Causby's property were at
83 feet, the court determined the flight path was an easement, a
form of property right. Because the government had taken the
easement through private property, Causby was owed
compensation under the Takings Clause (U.S. Constitutional
Amendment V)
Amendment V:
No person shall be held to answer for a capital, or
otherwise infamous crime, unless on a presentment
or indictment of a grand jury, except in cases arising
in the land or naval forces, or in the militia, when in
actual service in time of war or public danger; nor
shall any person be subject for the same offense to
be twice put in jeopardy of life or limb; nor shall be
compelled in any criminal case to be a witness
against himself, nor be deprived of life, liberty, or

property, without due process of law; nor shall

private property be taken for public use, without just
compensation.
Flights of aircraft over private land which are so low and frequent
as to be a direct and immediate interference with the enjoyment
and use of the land are as much an appropriation of the use of the
land as a more conventional entry upon it. Pp. 328 U. S. 261-262,
328 U. S. 264-267.
Physical invasion of the property was not necessary where there
was an intrusion so immediate and direct as to subtract from
respondents' full enjoyment and use of the property.
Further, the damages were not merely consequential; they were
the product of a direct invasion of respondents' domain.
The United States Supreme Court reversed and remanded the
action; however, on the basis that the record was not clear whether
the easement taken was temporary or permanent. The court
remanded the case for a determination of the necessary findings
regarding the nature of the easement.
NPC vs Aguirre Paderanga

et al. at P516.66 per square meter. However, NPC filed an

opposition assailing the correctness of the appraisal for failing to
take into account Republic Act No. 6395 which provides that the
just compensation for right-of-way easement shall be equivalent to
ten percent (10%) of the market value of the property. NPC
asserted that Digao, et al. could still use the traversed land for
agricultural purposes, subject only to its easement. It added that
the lots were of no use to its operations except for its transmission
lines.

The RTC rendered its decision ordering NPC to pay fair market value
at P516.66 per square meter. NPC appealed but the same was
denied due to failure to file and perfect its appeal within the
prescribed period. A motion for execution of judgment was
subsequently filed by Dilao, et al. which was granted by the lower
court. On appeal, the CA affirmed the lower courts decision. Hence,
this petition.

ISSUE:

FACTS:

National Power Corporation (NPC) filed a case for expropriation

against Petrona O. Dilao, et al. before Regional Trial Court of Cebu,
involving parcels of land located in Cebu. Expropriation was
instituted to implement Leyte-Cebu Interconnection Project.

A day after the complaint was filed, NPC filed an urgent ex parte
motion for the issuance of writ of possession of the lands.

The RTC issued an order granting NPCs motion. It appointed 3

Board of Commissioners to determine just compensation. The
board recommended appraisal of parcel of land co-owned by Dilao,

Whether or not RTC abused its authority by misapplying the rules

governing fair valuation

HELD:

In finding that the trial court did not abuse its authority in
evaluating the evidence and the reports placed before it nor did it
misapply the rules governing fair valuation, the Court of Appeals
found the majority reports valuation of P500 per square meter to
be fair. Said factual finding of the Court of Appeals, absent any
showing that the valuation is exorbitant or otherwise unjustified, is
binding on the parties as well as this Court.

OF PRIVATE MEMORIAL TYPE CEMETERY OR BURIAL GROUND

Indeed, expropriation is not limited to the acquisition of real
property with a corresponding transfer of title or possession. The
right-of-way easement resulting in a restriction or limitation on
property rights over the land traversed by transmission lines, as in
the present case, also falls within the ambit of the term
expropriation.

WITHIN THE JURISDICTION OF QUEZON CITY AND PROVIDING

PENALTIES FOR THE VIOLATION THEREOF. The law basically
provides that at least six (6) percent of the total area of the
memorial park cemetery shall be set aside for charity burial of
deceased persons who are paupers and have been residents of
Quezon City for at least 5 years prior to their death, to be
determined by competent City Authorities. QC justified the law by

From the Commissioners report it cannot be gainsaid that NPCs

complaint merely involves a simple case of mere passage of
transmission lines over Dilao et al.s property. Aside from the actual
damage done to the property traversed by the transmission lines,
the agricultural and economic activity normally undertaken on the
entire property is unquestionably restricted and perpetually
hampered as the environment is made dangerous to the occupants
life and limb.

invoking police power.

Petitioners argue that the taking of the respondents property is a
valid and reasonable exercise of police power and that the land is
taken for a public use as it is intended for the burial ground of
paupers. They further argue that the Quezon City Council is
authorized under its charter, in the exercise of local police power,
to make such further ordinances and resolutions not repugnant to

The determination of just compensation in expropriation

proceedings being a judicial function, the Court finds the
commissioners recommendation of P516.66 per square meter,
which was approved by the trial court, to be just and reasonable
compensation for the expropriated property of Dilao and her
siblings.

law as may be necessary to carry into effect and discharge the

powers and duties conferred by this Act and such as it shall deem
necessary and proper to provide for the health and safety, promote
the prosperity, improve the morals, peace, good order, comfort and
convenience of the city and the inhabitants thereof, and for the
protection of property therein.
ISSUE: Whether or not the ordinance is valid.
HELD: The SC held the law as an invalid exercise of police power.It

City of Quezon v. Ericta, 122 SCRA 759

seems to the court that Section 9 of Ordinance No. 6118, Series of

1964 of Quezon City is not a mere police regulation but an outright
confiscation. It deprives a person of his private property without

FACTS:

due process of law, nay, even without compensation.There is no

ORDINANCE

reasonable relation between the setting aside of at least six (6)

REGULATING THE ESTABLISHMENT, MAINTENANCE AND OPERATION

percent of the total area of all private cemeteries for charity burial

Quezon

City

enacted

an

ordinance

entitled

grounds of deceased paupers and the promotion of health, morals,

good order, safety, or the general welfare of the people. The

ordinance is actually a taking without compensation of a certain
area from a private cemetery to benefit paupers who are charges of
the municipal corporation. Instead of building or maintaining a
public cemetery for this purpose, the city passes the burden to
private cemeteries.

In their petition before the Court of Appeals, the San Joaquins

asked: (a) that Resolution of the Sangguniang Panlalawigan be
declared null and void; (b) that the complaints for expropriation be
dismissed; and (c) that the order denying the motion to dismiss and
allowing the Province of Camarines Sur to take possession of the
property subject of the expropriation and the order dated February
26, 1990, denying the motion to admit the amended motion to
dismiss, be set aside. They also asked that an order be issued to
restrain the trial court from enforcing the writ of possession, and
thereafter to issue a writ of injunction.

TOPIC: Public Use

C26 Province of Camarines Sur v. CA, 222 SCRA 173
Facts:
Sangguniang Panlalawigan (SP) of the Province of Camarines Sur
passed a Resolution No. 129 authorizing the Provincial Governor to
purchase or expropriate property in order to establish a pilot farm
for non-food and non-traditional agricultural crops and a housing
project for provincial government employees. By virtue of this
resolution, the Province of Camarines Sur, through its Governor,
filed two separate cases for expropriation against private
respondents (the San Joaquins), at the Regional Trial Court, Pili,
Camarines Sur.
The San Joaquins moved to dismiss the complaints on the ground of
inadequacy of the price offered for their property. In an order, the
trial court denied the motion to dismiss and authorized the Province
of Camarines Sur to take possession of the property upon the
deposit with the Clerk of Court the amount provisionally fixed by
the trial court to answer for damages that private respondents may
suffer in the event that the expropriation cases do not prosper.
The San Joaquins filed a motion for relief from the order,
authorizing the Province of Camarines Sur to take possession of
their property and a motion to admit an amended motion to
dismiss. Both motions were denied in the order dated February 26,
1990.

Asked by the Court of Appeals to give his Comment to the petition,

the Solicitor General stated that under Section 9 of the Local
Government Code (B.P. Blg. 337), there was no need for the
approval by the Office of the President of the exercise by the
Sangguniang Panlalawigan of the right of eminent domain.
However, the Solicitor General expressed the view that the
Province of Camarines Sur must first secure the approval of the
Department of Agrarian Reform of the plan to expropriate the lands
of petitioners for use as a housing project.
The Court of Appeals set aside the order of the trial court, allowing
the Province of Camarines Sur to take possession of private
respondents' lands and the order denying the admission of the
amended motion to dismiss. It also ordered the trial court to
suspend the expropriation proceedings until after the Province of
Camarines Sur shall have submitted the requisite approval of the
Department of Agrarian Reform to convert the classification of the
property of the private respondents from agricultural to nonagricultural land.

Issue:
1) Whether or not the resolution is null and void. Corollary to
this issue is whether or not the expropriation is for a public
use.

2) Whether or not the exercise of the power of eminent domain

in this case is restricted by the Comprehensive Agrarian
Reform Law (R.A. No. 6657).

subjecting expropriation by LGUs

Department of Agrarian Reform.

to

the

control

of

3) Whether or not the complaint for expropriation may be

dismissed on the ground of inadequacy of the compensation
offered.

Moreover, Sec 65 of R.A. No. 6657 is not in point because it

is applicable only to lands previously placed under the
agrarian reform program. This is limited only to applications
for reclassification submitted by land owners or tenant
beneficiaries.

Ruling:
1) The expropriation is for a public purpose; hence the
resolution is authorized and valid.

Statutes conferring power of eminent domain to political

subdivisions cannot be broadened or constricted by
implication.

SC explained that there had been a shift from the old to the
new concept of public purpose: Old concept is that the
property must actually be used by the general public. The
new concept, on the other hand, means public advantage,
convenience or benefit, which tends to contribute to the
general welfare and the prosperity of the whole community.

3) Fears of private respondents that they will be paid on the

basis of the valuation declared in the tax declarations of
their property, are unfounded.

In this case, the proposed pilot development center would

inure to the direct benefit and advantage of the people of
the Province of Camarines Sur. Once operational, the center
would make available to the community invaluable
information and technology on agriculture, fishery and the
cottage industry. Ultimately, the livelihood of the farmers,
fishermen and craftsmen would be enhanced. The housing
project also satisfies the public purpose requirement of the
Constitution.
2) No, (citing Ardana vs Reyes, SC here said that the
implication of the Ardana case is that) the power of
expropriation is superior to the power to distribute lands
under the land reform program.
Old Local Government Code does not intimate in the least
that Local Government Units (LGUs) must first secure
approval of the Department of Land Reform for conversion
of agriculture to non-agriculture use. Likewise, no provision
in the Comprehensive Agrarian Reform (R.A. No. 6657)

It is unconstitutional to fix just compensation in

expropriation cases based on the value given either by the
owners or the assessor. Rules for determining just
compensation are those laid down in Rule 67 ROC, evidence
must be submitted to justify what they consider is the just
compensation.

WHEREFORE, the petition is GRANTED and the questioned decision

of the Court of Appeals is set aside insofar as it (a) nullifies the trial
court's order allowing the Province of Camarines Sur to take
possession of private respondents' property; (b) orders the trial
court to suspend the expropriation proceedings; and (c) requires
the Province of Camarines Sur to obtain the approval of the
Department of Agrarian Reform to convert or reclassify private
respondents' property from agricultural to non-agricultural use.
The decision of the Court of Appeals is AFFIRMED insofar as it sets
aside the order of the trial court, denying the amended motion to
dismiss of the private respondents.

ESLABAN V DE ONORIO

G.R. No. 146062

June 28, 2001
CASE DIGEST:
Facts: Clarita Vda. De Onorio is the owner of the land in Barangay
M. Roxas, Sto. Nino, South Cotabato. Such land is the subject for
the construction of an irrigation canal of the National Irrigation
Administration (NIA). Mr. Santiago Eslaban Jr. is the project manager
of NIA. The parties agreed to the construction of the canal provided
that the government will pay for the area that has been taken. A
right-of-way agreement was entered into by the parties in which
respondent was paid the amount of P4, 180.00 as right of way
damages. Subsequently, respondent executed an Affidavit of
Waiver of Rights and Fees which waives her rights for the damage
to the crops due to construction of the right of way. After which,
respondent demands that petitioner pay P111, 299.55 for taking
her property but the petitioner refused. Petitioner states that the
government had not consented to be sued and that the respondent
is not entitled for compensation by virtue of the homestead patent
under CA no. 141. The RTC held that the NIA should pay respondent
the amount of P107, 517.60 as just compensation for the 24,660 sq
meters that have been used for the construction of the canal. The
Court of Appeals also affirmed the decision of the RTC.

Issue: Whether or Not the CA erred in affirming the decision of the

RTC.

Held: The CA is correct in affirming the decision of the RTC but

modifications shall be made regarding the value of the just
compensation. The following are the points to be considered in
arriving in this decision.

First, Rule 7 par 5 of the Rule of Civil Procedure provides that the
certification against forum shopping should only be executed by
the plaintiff or the principal. The petition for review was filed by Mr.

Eslaban jr. while the verification or certification were signed by Mr.

Cesar Gonzales, an administrator of the agency. Neither of the two
has the authority to sign such certificate for they are not the
plaintiff or principal. Such case is a sufficient ground for dismissing
this petition.

Second, PD NO. 1529 provides that the owner is required to

recognize in favor of the government the easement of a public
highway, way, private way established by law, or any government
canal where the certificate of title does not state that the
boundaries thereof have been pre-determined. In the case at bar,
the irrigation canal was constructed on Oct 1981 after the property
had been registered in May of 1976. In this case, prior expropriation
proceedings must be filed and just compensation shall be paid to
the owner before the land could be taken for public use.

Third, In this case, just compensation is defined as not only the

correct amount to be paid but the reasonable time for the
Government to pay the owner. The CA erred in this point by stating
that the market value (just compensation) of the land is determined
in the filing of the complaint in 1991.The determination of such
value should be from the time of its taking by the NIA in 1981.

Lastly, the petitioner cannot argue that the Affidavit of waiver of

rights and fees executed by the respondent pertains to the
payment of the value of the land therefore exempting NIA to pay
the value of the land taken. Such waiver pertains only to the crops
and improvements that were damage due to the construction of the
right-of-way not the value of the land.

Wherefore, decision of CA affirmed with modification regarding the

just compensation in the amount of P16, 047.61 per hectare.

PHILIPPINE PRESS INSTITUTE, INC., for and in behalf of 139

members, represented by its President, Amado P. Macasaet and its

Executive Director Ermin F. Garcia, Jr., petitioner vs. COMMISSION

ON ELECTIONS, respondent G.R. No. L-119694 May 22, 1995
Facts:
Respondent Comelec promulgated Resolution No. 2772 directing
newspapers to provide free Comelec space of not less than one-half
page for the common use of political parties and candidates. The
Comelec space shall be allocated by the Commission, free of
charge, among all candidates to enable them to make known their
qualifications, their stand on public Issue and their platforms of
government. The Comelec space shall also be used by the
Commission for dissemination of vital election information.
Petitioner Philippine Press Institute, Inc. (PPI), a non-profit
organization of newspaper and magazine publishers, asks the
Supreme Court to declare Comelec Resolution No. 2772
unconstitutional and void on the ground that it violates the
prohibition imposed by the Constitution upon the government
against the taking of private property for public use without just
compensation. On behalf of the respondent Comelec, the Solicitor
General claimed that the Resolution is a permissible exercise of the
power of supervision (police power) of the Comelec over the
information operations of print media enterprises during the
election period to safeguard and ensure a fair, impartial and
credible election.

but not without payment of just compensation. Also Resolution No.

2772 does not constitute a valid exercise of the police power of the
state. In the case at bench, there is no showing of existence of a
national emergency to take private property of newspaper or
magazine publishers.

EPZA VS. DULAY [148 SCRA 305; G.R. No. L-59603; 29 Apr 1987]

Facts: The four parcels of land which are the subject of this case is
where the Mactan Export Processing Zone Authority in Cebu (EPZA)
is to be constructed. Private respondent San Antonio Development
Corporation (San Antonio, for brevity), in which these lands are
registered under, claimed that the lands were expropriated to the
government without them reaching the agreement as to the
compensation. Respondent Judge Dulay then issued an order for
the appointment of the commissioners to determine the just
compensation. It was later found out that the payment of the
government to San Antonio would be P15 per square meter, which
was objected to by the latter contending that under PD 1533, the

Issue:
Whether or not Comelec Resolution No. 2772 is unconstitutional.

basis of just compensation shall be fair and according to the fair

market value declared by the owner of the property sought to be
expropriated, or by the assessor, whichever is lower. Such objection

Held:

and the subsequent Motion for Reconsideration were denied and

The Supreme Court declared the Resolution as unconstitutional. It

held that to compel print media companies to donate Comelec
space amounts to taking of private personal property without
payment of the just compensation required in expropriation cases.
Moreover, the element of necessity for the taking has not been
established by respondent Comelec, considering that the
newspapers were not unwilling to sell advertising space. The taking
of private property for public use is authorized by the constitution,

hearing was set for the reception of the commissioners report.

EPZA then filed this petition for certiorari and mandamus enjoining
the

respondent

from

further

hearing

the

case.

Issue: Whether or Not the exclusive and mandatory mode of

determining just compensation in PD 1533 is unconstitutional.

expropriation is for the expansion of the Dasmarinas Resettlement

Project to accommodate the squatters who were relocated from
Manila.

Held: The Supreme Court ruled that the mode of determination of

just

compensation

in

PD

1533

is

The

trial

court

rendered

judgment

ordering

the

expropriation of these lots with payment of just compensation. It

was affirmed by the Supreme Court.

unconstitutional.
The petitioners Reyes alleged the failure of the respondents to

The

method

of

ascertaining

just

compensation

constitutes

impermissible encroachment to judicial prerogatives. It tends to

render the courts inutile in a matter in which under the Constitution
is reserved to it for financial determination. The valuation in the

comply with the Supreme Court order, so they filed a complaint for
forfeiture of their rights before the RTC of Quezon City. They also
said that NHA did not relocate squatters from Manila on the
expropriated lands which violate the reason for public purpose. The
petitioners prayed that NHA be enjoined from disposing and

decree may only serve as guiding principle or one of the factors in

alienating the expropriated properties and that judgment be

determining just compensation, but it may not substitute the

rendered

courts own judgment as to what amount should be awarded and

expropriation judgment.

how

to

arrive at

such amount.

The determination

of just

compensation is a judicial function. The executive department or

the legislature may make the initial determination but when a party

forfeiting

all

its

rights

and

interests

under

the

In the answer of NHA, they already paid a substantial amount to

the petitioners. Thus, several issues are already raised in the
expropriation court.

claims a violation of the guarantee in the Bill of Rights that the

private party may not be taken for public use without just

The trial court dismissed the case. It held that NHA did not abandon

compensation, no statute, decree, or executive order can mandate

the public purpose because the relocation of squatters involves a

that its own determination shall prevail over the courts findings.
Much less can the courts be precluded from looking into the
justness of the decreed compensation.

long and tedious process. It also entered into a contract with a

developer for the construction of a low-cost housing to be sold to
qualified

low

income

beneficiaries.

The

payment

of

just

compensation is independent of the obligation of the petitioners to

pay capital gains tax. Lastly, the payment of just compensation is
based on the value at the time the property was taken.

NHA VS REYES
Facts: National

Housing

Authority

filed

several

expropriation

complaints on the sugarland owned by the petitioners Reyes. The

land is located in Dasmarinas, Cavite. The purpose of the

The Court of Appeals affirmed the decision.

Issue: Whether or not the property expropriated is taking for public

When land has been acquired for public use in fee simple

purpose.

unconditionally, either by the exercise of eminent domain or by

purchase, the former owner retains no rights in the land, and the

Held: The decision appealed is modified.

public use may be abandoned, or the land may be devoted to a

different use, without any impairment of the estate or title

The 1987 Constitution explicitly provides for the exercise of the

power of eminent domain over the private properties upon
payment of just compensation. Sec. 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.
The expropriation judgment declared that NHA has a lawful right to
take petitioners properties for the public use or purpose of
expanding the Dasmarinas Resettlement Project.
The public use is synonymous with public interest, public
benefit, public welfare, and public convenience. The act of
NHA in entering a contract with a real estate developer for the
construction of low cost housing cannot be taken to mean as a
deviation from the stated public purpose of their taking.
Expropriation of private lands for slum clearance and urban
development is for a public purpose even if the developed area is
later sold to private homeowners, commercial firms, entertainment
and service companies and other private concerns.
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.

acquired, or any reversion to the former owner.

Hacienda Luisita Inc. (HLI) v. Presidential Agrarian Reform

Council (PARC), et al., G.R. No. 171101, July 5, 2011
DECISION
I.

VELASCO, JR., J.:

THE FACTS
In 1958, the Spanish owners of Compaia General de Tabacos de
Filipinas (Tabacalera) sold Hacienda Luisita and the Central
Azucarera de Tarlac, the sugar mill of the hacienda, to the Tarlac
Development Corporation (Tadeco), then owned and controlled by
the Jose Cojuangco Sr. Group. The Central Bank of the Philippines
assisted Tadeco in obtaining a dollar loan from a US bank. Also, the
GSIS extended a PhP5.911 million loan in favor of Tadeco to pay the
peso price component of the sale, with the condition that the lots
comprising the Hacienda Luisita be subdivided by the applicantcorporation and sold at cost to the tenants, should there be any,
and whenever conditions should exist warranting such action under
the provisions of the Land Tenure Act. Tadeco however did not
comply with this condition.
On May 7, 1980, the martial law administration filed a suit before
the Manila RTC against Tadeco, et al., for them to surrender
Hacienda Luisita to the then Ministry of Agrarian Reform (MAR) so
that the land can be distributed to farmers at cost. Responding,
Tadeco alleged that Hacienda Luisita does not have tenants,
besides which sugar lands of which the hacienda consisted are
not covered by existing agrarian reform legislations(PD 27-rice and
corn). The Manila RTC rendered judgment ordering Tadeco to
surrender Hacienda Luisita to the MAR. Therefrom, Tadeco appealed
to the CA.
On March 17, 1988, during the administration of President Corazon
Cojuangco Aquino, the Office of the Solicitor General moved to
withdraw the governments case against Tadeco, et al. The CA
dismissed the case, subject to the PARCs approval of Tadecos
proposed stock distribution plan (SDP) in favor of its farmworkers.
[Under EO 229 (Sec10) and later RA 6657(Sec31), Tadeco had the
option of availing stock distribution as an alternative modality to
actual land transfer to the farmworkers.] On August 23,
1988, Tadeco organized a spin-off corporation, herein petitioner HLI,
as vehicle to facilitate stock acquisition by the farmworkers. For this
purpose, Tadeco conveyed to HLI the agricultural land portion
(4,915.75 hectares) and other farm-related properties of Hacienda
Luisita in exchange for HLI shares of stock.

On May 9, 1989, some 93% of the then farmworker-beneficiaries

(FWBs) complement of Hacienda Luisita signified in a referendum
their acceptance of the proposed HLIs Stock Distribution Option
Plan (SODP). On May 11, 1989, the SDOA was formally entered into
by Tadeco, HLI, and the 5,848 qualified FWBs. This attested to by
then DAR Secretary Philip Juico. The SDOA embodied the basis and
mechanics of HLIs SDP, which was eventually approved by the
PARC after a follow-up referendum conducted by the DAR on
October 14, 1989, in which 5,117 FWBs, out of 5,315 who
participated, opted to receive shares in HLI.
As may be gleaned from the SDOA, included as part of the
distribution plan are: (a) production-sharing equivalent to three
percent (3%) of gross sales from the production of the agricultural
land payable to the FWBs in cash dividends or incentive bonus; and
(b) distribution of free homelots of not more than 240 square
meters each to family-beneficiaries. The production-sharing, as the
SDP indicated, is payable "irrespective of whether [HLI] makes
money or not," implying that the benefits do not partake the nature
of dividends, as the term is ordinarily understood under corporation
law. (5,117 out of 5315 = shares; 132 = land distribution)
Prior to approval, DAR Secretary Miriam Defensor-Santiago
proposed that the SDP be revised, along the following lines:
1. That over the implementation period of the [SDP],
[Tadeco]/HLI shall ensure that there will be no dilution in the
shares of stocks of individual [FWBs];
2. That a safeguard shall be provided by [Tadeco]/HLI against
the dilution of the percentage shareholdings of the [FWBs], i.e.,
that the 33% shareholdings of the [FWBs] will be maintained at
any given time
November 21, 1989 - the PARC, under then Sec. Defensor-Santiago,
issued Resolution No. 89-12-2, approving the SDP of
Tadeco/HLI.
From 1989 to 2005, HLI claimed to have extended the following
benefits to the FWBs:
(a) 3 billion pesos (P3,000,000,000) worth of salaries, wages
and fringe benefits
(b) 59 million shares of stock distributed for free to the FWBs;
(c) 150 million pesos (P150,000,000) representing 3% of the
gross produce;
(d) 37.5 million pesos (P37,500,000) representing 3% from the
sale of 500 hectares of converted agricultural land of Hacienda
Luisita;
(e) 240-square meter homelots distributed for free;

(f) 2.4 million pesos (P2,400,000) representing 3% from the sale

of 80 hectares at 80 million pesos (P80,000,000) for the SCTEX;
(g) Social service benefits, such as but not limited to free
hospitalization/medical/maternity
services,
old
age/death
benefits and no interest bearing salary/educational loans and
rice sugar accounts.
Two separate groups subsequently contested this claim of HLI. (the
petitions/protets)
CONVERSION PROPER
On August 15, 1995, HLI applied for the conversion of 500 hectares
of land of the hacienda from agricultural to industrial use, pursuant
to Sec. 65 of RA 6657. The DAR approved the application on August
14, 1996, subject to payment of three percent (3%) of the gross
selling price to the FWBs and to HLIs continued compliance with its
undertakings under the SDP, among other conditions.
On December 13, 1996, HLI, in exchange for subscription of
12,000,000 shares of stocks of Centennary Holdings, Inc.
(Centennary), ceded 300 hectares of the converted area to the
latter. Subsequently, Centennary sold the entire 300 hectares for
PhP750 million to Luisita Industrial Park Corporation (LIPCO), which
used it in developing an industrial complex. From this area was
carved out 2 parcels(180 has and 4 has), for which 2 separate titles
were issued in the name of LIPCO. Later, LIPCO transferred these 2
parcels to the Rizal Commercial Banking Corporation (RCBC) in
payment of LIPCOs PhP431,695,732.10 loan obligations to
RCBC(dacion en pago). LIPCOs titles were cancelled and new ones
were issued to RCBC.
The other 200 has was transferred to Luisita Realty Corporation
(LRC) in two separate transactions in 1997 and 1998, both
uniformly involving 100 hectares for PhP 250 million each.
Apart from the 500 hectares, another 80.51 hectares were later
detached from Hacienda Luisita and acquired by the government as
part of the Subic-Clark-Tarlac Expressway (SCTEX) complex. Thus,
4,335.75 hectares remained of the original 4,915 hectares Tadeco
ceded to HLI.
Such, was the state of things when two separate petitions reached
the DAR in the latter part of 2003. The first was filed by the
Supervisory Group of HLI (Supervisory Group), praying for a
renegotiation of the SDOA, or, in the alternative, its revocation. The
second petition, praying for the revocation and nullification of the
SDOA and the distribution of the lands in the hacienda, was filed
by Alyansa ng mga Manggagawang Bukid ng Hacienda
Luisita (AMBALA). The DAR then constituted a Special Task Force
(STF) to attend to issues relating to the SDP of HLI. After

investigation and evaluation, the STF found that HLI has not
complied with its obligations under RA 6657 despite the
implementation of the SDP, AND RECOMMENDED. On December
22, 2005, the PARC issued the assailed Resolution No. 2005-32-01,
recalling/revoking the SDO plan of Tadeco/HLI. It further resolved
that the subject lands be forthwith placed under the compulsory
coverage or mandated land acquisition scheme of the CARP.
From the foregoing resolution, HLI sought reconsideration. Its
motion notwithstanding, HLI also filed a petition before the
Supreme Court in light of what it considers as the DARs hasty
placing of Hacienda Luisita under CARP even before PARC could rule
or even read the motion for reconsideration. PARC would eventually
deny HLIs motion for reconsideration via Resolution No. 2006-3401 dated May 3, 2006.
II. THE ISSUES
(1) Does the PARC possess jurisdiction to recall or revoke HLIs SDP?
(2) [Issue raised by intervenor FARM (group of farmworkers)] Is Sec.
31 of RA 6657, which allows stock transfer in lieu of outright land
transfer, unconstitutional?
(3) Is the revocation of the HLIs SDP valid? [Did PARC gravely abuse
its discretion in revoking the subject SDP and placing the hacienda
under CARPs compulsory acquisition and distribution scheme?]
(4) Should those portions of the converted land within Hacienda
Luisita that RCBC and LIPCO acquired by purchase be excluded
from the coverage of the assailed PARC resolution? [Did the PARC
gravely abuse its discretion when it included LIPCOs and RCBCs
respective properties that once formed part of Hacienda Luisita
under the CARP compulsory acquisition scheme via the assailed
Notice of Coverage?]
III. THE RULING
HLI: PARC has no authority to revoke the SDP; it has the power to
disapprove, but not to recall its previous approval of the SDP. It is
the court which has jurisdiction and authority to order the
revocation or rescission of the PARC-approved SDP
(1) YES, the PARC has jurisdiction to revoke HLIs SDP
under the doctrine of necessary implication.
Under Sec. 31 of RA 6657, as implemented by DAO 10, the
authority to approve the plan for stock distribution of the corporate
landowner belongs to PARC. Contrary to petitioner HLIs posture,
PARC also has the power to revoke the SDP which it previously
approved. It may be, as urged, that RA 6657 or other executive

issuances on agrarian reform do not explicitly vest the PARC with

the power to revoke/recall an approved SDP. Such power or
authority, however, is deemed possessed by PARC under
the principle of necessary implication, a basic postulate that what is
implied in a statute is as much a part of it as that which is
expressed.
Following the doctrine of necessary implication, it may be stated
that the conferment of express power to approve a plan for stock
distribution of the agricultural land of corporate owners necessarily
includes the power to revoke or recall the approval of the plan. To
deny PARC such revocatory power would reduce it into a toothless
agency of CARP, because the very same agency tasked to ensure
compliance by the corporate landowner with the approved SDP
would be without authority to impose sanctions for non-compliance
with it.
HLI: the parties to the SDOA should now look to the Corporation
Code, instead of to RA 6657, in determining their rights, obligations
and remedies. The Code should be the applicable law on the
disposition of the agricultural land of HLI.
SC: NO! the rights, obligations and remedies of the parties to the
SDOA embodying the SDP are primarily governed by RA 6657. It
should abundantly be made clear that HLI was precisely created in
order to comply with RA 6657, which the OSG aptly described as
the "mother law" of the SDOA and the SDP. It is, thus, paradoxical
for HLI to shield itself from the coverage of CARP by invoking
exclusive applicability of the Corporation Code under the guise of
being a corporate entity.
(2) NO, Sec. 31 of RA 6657 is not unconstitutional.
[The Court actually refused to pass upon the constitutional
question because it was not raised at the earliest opportunity
and because the resolution thereof is not the lis mota of the
case. Moreover, the issue has been rendered moot and academic
since SDO is no longer one of the modes of acquisition under RA
9700.]
While there is indeed an actual case or controversy, intervenor
FARM, composed of a small minority of 27 farmers, has yet to
explain its failure to challenge the constitutionality of Sec. 31 of RA
6657 as early as November 21, 1989 when PARC approved the SDP
of Hacienda Luisita or at least within a reasonable time thereafter,
and why its members received benefits from the SDP without so
much of a protest. It was only on December 4, 2003 or 14 years
after approval of the SDP that said plan and approving resolution

were sought to be revoked, but not, to stress, by FARM or any of its

members, but by petitioner AMBALA. Furthermore, the AMBALA
petition did NOT question the constitutionality of Sec. 31 of RA
6657, but concentrated on the purported flaws and gaps in the
subsequent implementation of the SDP. Even the public
respondents, as represented by the Solicitor General, did not
question the constitutionality of the provision. On the other hand,
FARM, whose 27 members formerly belonged to AMBALA, raised
the constitutionality of Sec. 31 only on May 3, 2007 when it filed its
Supplemental Comment with the Court. Thus, it took FARM some
eighteen (18) years from November 21, 1989 before it challenged
the constitutionality of Sec. 31 of RA 6657 which is quite too late in
the day. The FARM members slept on their rights and even
accepted benefits from the SDP with nary a complaint on the
alleged unconstitutionality of Sec. 31 upon which the benefits were
derived. The Court cannot now be goaded into resolving a
constitutional issue that FARM failed to assail after the lapse of a
long period of time and the occurrence of numerous events and
activities which resulted from the application of an alleged
unconstitutional legal provision.
The last but the most important requisite that the constitutional
issue must be the very lis mota of the case does not likewise
obtain. The lis mota aspect is not present, the constitutional issue
tendered not being critical to the resolution of the case. If some
other grounds exist by which judgment can be made without
touching the constitutionality of a law, such recourse is favored.
The lis mota in this case, proceeding from the basic positions
originally taken by AMBALA (to which the FARM members
previously belonged) and the Supervisory Group, is the alleged
non-compliance by HLI with the conditions of the SDP to support a
plea for its revocation. And before the Court, the lis mota is
whether or not PARC acted in grave abuse of discretion when it
ordered the recall of the SDP for such non-compliance and the fact
that the SDP, as couched and implemented, offends certain
constitutional and statutory provisions. To be sure, any of these key
issues may be resolved without plunging into the constitutionality
of Sec. 31 of RA 6657. Moreover, looking deeply into the underlying
petitions of AMBALA, et al., it is not the said section per se that is
invalid, but rather it is the alleged application of the said provision
in the SDP that is flawed.
It may be well to note at this juncture that Sec. 5 of RA
9700, amending Sec. 7 of RA 6657, has all but superseded Sec. 31
of RA 6657 vis--vis the stock distribution component of said Sec.

31. In its pertinent part, Sec. 5 of RA 9700 provides: [T]hat after

June 30, 2009, the modes of acquisition shall be limited to
voluntary offer to sell and compulsory acquisition. Thus, for
all intents and purposes, the stock distribution scheme under Sec.
31 of RA 6657 is no longer an available option under existing law.
The question of whether or not it is unconstitutional should be a
moot issue.
(3) YES, the revocation of the HLIs SDP valid. [NO, the
PARC did NOT gravely abuse its discretion in revoking the
subject SDP and placing the hacienda under CARPs
compulsory acquisition and distribution scheme.]
The revocation of the approval of the SDP is valid: (1) the
mechanics and timelines of HLIs stock distribution violate DAO 10
because the minimum individual allocation of each original FWB of
18,804.32 shares was diluted as a result of the use of man days
and the hiring of additional farmworkers; (2) the 30-year timeframe
for HLI-to-FWBs stock transfer is contrary to what Sec. 11 of DAO
10 prescribes.
In our review and analysis of par. 3 of the SDOA on the mechanics
and timelines of stock distribution, We find that it violates two (2)
provisions of DAO 10. Par. 3 of the SDOA states:
3. At the end of each fiscal year, for a period of 30 years, the
SECOND PARTY [HLI] shall arrange with the FIRST PARTY [TDC]
the acquisition and distribution to the THIRD PARTY [FWBs] on
the basis of number of days worked and at no cost to them of
one-thirtieth (1/30) of 118,391,976.85 shares of the capital
stock of the SECOND PARTY that are presently owned and held
by the FIRST PARTY, until such time as the entire block of
118,391,976.85 shares shall have been completely acquired
and distributed to the THIRD PARTY.
[I]t is clear as day that the original 6,296 FWBs, who were qualified
beneficiaries at the time of the approval of the SDP, suffered from
watering down of shares. As determined earlier, each original FWB
is entitled to 18,804.32 HLI shares. The original FWBs got less than
the guaranteed 18,804.32 HLI shares per beneficiary, because the
acquisition and distribution of the HLI shares were based on man
days or number of days worked by the FWB in a years time. As
explained by HLI, a beneficiary needs to work for at least 37 days in
a fiscal year before he or she becomes entitled to HLI shares. If it
falls below 37 days, the FWB, unfortunately, does not get any share
at year end. The number of HLI shares distributed varies

depending on the number of days the FWBs were allowed to work

in one year. Worse, HLI hired farmworkers in addition to the
original 6,296 FWBs, such that, as indicated in the Compliance
dated August 2, 2010 submitted by HLI to the Court, the total
number of farmworkers of HLI as of said date stood at 10,502. All
these farmworkers, which include the original 6,296 FWBs, were
given shares out of the 118,931,976.85 HLI shares representing the
33.296% of the total outstanding capital stock of HLI. Clearly, the
minimum individual allocation of each original FWB of 18,804.32
shares was diluted as a result of the use of man days and the
hiring of additional farmworkers.
Going into another but related matter, par. 3 of the SDOA expressly
providing for a 30-year timeframe for HLI-to-FWBs stock transfer is
an arrangement contrary to what Sec. 11 of DAO 10
prescribes. Said Sec. 11 provides for the implementation of the
approved stock distribution plan within three (3) months from
receipt by the corporate landowner of the approval of the plan by
PARC. In fact, based on the said provision, the transfer of the shares
of stock in the names of the qualified FWBs should be recorded in
the stock and transfer books and must be submitted to the SEC
within sixty (60) days from implementation.
To the Court, there is a purpose, which is at once discernible as it is
practical, for the three-month threshold. Remove this timeline and
the corporate landowner can veritably evade compliance with
agrarian reform by simply deferring to absurd limits the
implementation of the stock distribution scheme. the reason
underpinning the 30-year accommodation does not apply to
corporate landowners in distributing shares of stock to the qualified
beneficiaries, as the shares may be issued in a much shorter period
of time.
Taking into account the above discussion, the revocation of the SDP
by PARC should be upheld [because of violations of] DAO 10. It
bears stressing that under Sec. 49 of RA 6657, the PARC and the
DAR have the power to issue rules and regulations, substantive or
procedural. Being a product of such rule-making power, DAO 10 has
the force and effect of law and must be duly complied with. The
PARC is, therefore, correct in revoking the SDP. Consequently, the
PARC Resolution No. 89-12-2 dated November 21, l989 approving
the HLIs SDP is nullified and voided.
(4) YES, those portions of the converted land within
Hacienda Luisita that RCBC and LIPCO acquired by purchase

should be excluded from the coverage of the assailed PARC

resolution.
[T]here are two (2) requirements before one may be considered a
purchaser in good faith, namely: (1) that the purchaser buys the
property of another without notice that some other person has a
right to or interest in such property; and (2) that the purchaser
pays a full and fair price for the property at the time of such
purchase or before he or she has notice of the claim of another.
It can rightfully be said that both LIPCO and RCBC are purchasers in
good faith for value entitled to the benefits arising from such
status.
First, at the time LIPCO purchased the entire three hundred (300)
hectares of industrial land, there was no notice of any supposed
defect in the title of its transferor, Centennary, or that any other
person has a right to or interest in such property. In fact, at the
time LIPCO acquired said parcels of land, only the following
annotations appeared on the TCT in the name of Centennary: the
Secretarys Certificate in favor of Teresita Lopa, the Secretarys
Certificate in favor of Shintaro Murai, and the conversion of the
property from agricultural to industrial and residential use.
The same is true with respect to RCBC. At the time it acquired
portions of Hacienda Luisita, only the following general annotations
appeared on the TCTs of LIPCO: the Deed of Restrictions, limiting its
use solely as an industrial estate; the Secretarys Certificate in
favor of Koji Komai and Kyosuke Hori; and the Real Estate Mortgage
in favor of RCBC to guarantee the payment of PhP 300 million.
To be sure, intervenor RCBC and LIPCO knew that the lots they
bought were subjected to CARP coverage by means of a stock
distribution plan, as the DAR conversion order was annotated at the
back of the titles of the lots they acquired. However, they are of
the honest belief that the subject lots were validly converted to
commercial or industrial purposes and for which said lots were
taken out of the CARP coverage subject of PARC Resolution No. 8912-2 and, hence, can be legally and validly acquired by them. After
all, Sec. 65 of RA 6657 explicitly allows conversion and disposition
of agricultural lands previously covered by CARP land acquisition
after the lapse of five (5) years from its award when the land
ceases to be economically feasible and sound for agricultural
purposes or the locality has become urbanized and the land will
have a greater economic value for residential, commercial or
industrial purposes. Moreover, DAR notified all the affected
parties, more particularly the FWBs, and gave them the opportunity
to comment or oppose the proposed conversion. DAR, after going

through the necessary processes, granted the conversion of 500

hectares of Hacienda Luisita pursuant to its primary jurisdiction
under Sec. 50 of RA 6657 to determine and adjudicate agrarian
reform matters and its original exclusive jurisdiction over all
matters involving the implementation of agrarian reform. The DAR
conversion order became final and executory after none of the
FWBs interposed an appeal to the CA. In this factual setting, RCBC
and LIPCO purchased the lots in question on their honest and wellfounded belief that the previous registered owners could legally sell
and convey the lots though these were previously subject of CARP
coverage. Ergo, RCBC and LIPCO acted in good faith in acquiring
the subject lots.
And second, both LIPCO and RCBC purchased portions of Hacienda
Luisita for value. Undeniably, LIPCO acquired 300 hectares of land
from Centennary for the amount of PhP750 million pursuant to a
Deed of Sale dated July 30, 1998. On the other hand, in a Deed of
Absolute Assignment dated November 25, 2004, LIPCO conveyed
portions of Hacienda Luisita in favor of RCBC by way of dacion en
pago to pay for a loan of PhP431,695,732.10.
In relying upon the above-mentioned approvals, proclamation and
conversion order, both RCBC and LIPCO cannot be considered at
fault for believing that certain portions of Hacienda Luisita are
industrial/commercial lands and are, thus, outside the ambit of
CARP. The PARC, and consequently DAR, gravely abused its
discretion when it placed LIPCOs and RCBCs property
which once formed part of Hacienda Luisita under the CARP
compulsory acquisition scheme via the assailed Notice of
Coverage.
[The Court went on to apply the operative fact doctrine to
determine what should be done in the aftermath of its disposition
of the above-enumerated issues:
While We affirm the revocation of the SDP on Hacienda Luisita
subject of PARC Resolution Nos. 2005-32-01 and 2006-34-01, the
Court cannot close its eyes to certain operative facts that had
occurred in the interim. Pertinently, the operative fact doctrine
realizes that, in declaring a law or executive action null and void,
or, by extension, no longer without force and effect, undue
harshness and resulting unfairness must be avoided. This is as it
should realistically be, since rights might have accrued in favor of
natural or juridical persons and obligations justly incurred in the
meantime. The actual existence of a statute or executive act is,
prior to such a determination, an operative fact and may have
consequences which cannot justly be ignored; the past cannot
always be erased by a new judicial declaration.

While the assailed PARC resolutions effectively nullifying the

Hacienda Luisita SDP are upheld, the revocation must, by
application of the operative fact principle, give way to the
right of the original 6,296 qualified FWBs to choose
whether they want to remain as HLI stockholders or
not. The Court cannot turn a blind eye to the fact that in 1989,
93% of the FWBs agreed to the SDOA (or the MOA), which became
the basis of the SDP approved by PARC per its Resolution No. 8912-2 dated November 21, 1989. From 1989 to 2005, the FWBs
were said to have received from HLI salaries and cash benefits,
hospital and medical benefits, 240-square meter homelots, 3% of
the gross produce from agricultural lands, and 3% of the proceeds
of the sale of the 500-hectare converted land and the 80.51hectare lot sold to SCTEX. HLI shares totaling 118,391,976.85 were
distributed as of April 22, 2005. On August 6, 20l0, HLI and private
respondents submitted a Compromise Agreement, in which HLI
gave the FWBs the option of acquiring a piece of agricultural land
or remain as HLI stockholders, and as a matter of fact, most FWBs
indicated their choice of remaining as stockholders. These facts
and circumstances tend to indicate that some, if not all, of the
FWBs may actually desire to continue as HLI shareholders. A
matter best left to their own discretion.]
The dissents in the July 5, 2011 decision
The dissents of the minority justices were on the other fine points
of the decision.
Chief Justice Corona dissented insofar as the majority refused to
declare Sec. 31 of RA 6657 unconstitutional. The provision grants to
corporate landowners the option to give qualified FWBs the right to
own capital stock of the corporation in lieu of actual land
distribution. The Chief Justice was of the view that by allowing the
distribution of capital stock, and not land, as compliance with
agrarian reform, Sec. 31 of RA 6657 contravenes Sec. 4, Article XIII
of the Constitution, which, he argued, requires that the law
implementing the agrarian reform program should employ [actual]
land redistribution mechanism. Under Sec. 31 of RA 6657, he noted,
the corporate landowner remains to be the owner of the
agricultural land. Qualified beneficiaries are given ownership only
of shares of stock, not [of] the lands they till. He concluded that
since an unconstitutional provision cannot be the basis of a
constitutional act, the SDP of petitioner HLI based on Section 31 of
RA 6657 is also unconstitutional.
Justice Mendoza fully concurred with Chief Justice Coronas position
that Sec. 31 of RA 6657 is unconstitutional. He however agreed
with the majority that the FWBs be given the option to remain as
shareholders of HLI. He also joined Justice Brions proposal that that

the reckoning date for purposes of just compensation should

be May 11, 1989, when the SDOA was executed by Tadeco, HLI and
the FWBs. Finally, he averred that considering that more than 10
years have elapsed from May 11, 1989, the qualified FWBs, who
can validly dispose of their due shares, may do so, in favor of LBP
or other qualified beneficiaries. The 10-year period need not be
counted from the issuance of the Emancipation Title (EP) or
Certificate of Land Ownership Award CLOA) because, under the
SDOA, shares, not land, were to be awarded and distributed.
Justice Brions dissent centered on the consequences of the
revocation of HLIs SDP/SDOA. He argued that that the operative
fact doctrine only applies in considering the effects of a declaration
of unconstitutionality of a statute or a rule issued by the Executive
Department that is accorded the status of a statute. The
SDOA/SDP is neither a statute nor an executive issuance but a
contract between the FWBs and the landowners; hence, the
operative fact doctrine is not applicable. A contract stands on a
different plane than a statute or an executive issuance. When a
contract is contrary to law, it is deemed void ab initio. It produces
no legal effects whatsoever. Thus, Justice Brion questioned the
option given by the majority to the FWBs to remain as stockholders
in an almost-bankrupt corporation like HLI. He argued that the
nullity of HLIs SDP/SDOA goes into its very existence, and the
parties to it must generally revert to their respective situations
prior to its execution. Restitution, he said, is therefore in order. With
the SDP being void, the FWBs should return everything they are
proven to have received pursuant to the terms of the SDOA/SDP.
Justice Brion then proposed that all aspects of the implementation
of the mandatory CARP coverage be determined by the DAR by
starting with a clean slate from [May 11,] 1989, the point in time
when the compulsory CARP coverage should start, and proceeding
to adjust the relations of the parties with due regard to the events
that intervened [thereafter]. He also held that the time of the
taking (when the computation of just compensation shall be
reckoned) shall be May 11, 1989, when the SDOA was executed by
Tadeco, HLI and the FWBs.
Justice Sereno dissented with respect to how the majority modified
the questioned PARC Resolutions (i.e., no immediate land
distribution, give first the original qualified FWBs the option to
either remain as stockholders of HLI or choose actual land
distribution) and the applicability of the operative fact doctrine. She
would instead order the DAR to forthwith determine the area of
Hacienda Luisita that must be covered by the compulsory coverage
and monitor the land distribution to the qualified FWBs.
Erroneous interpretation of the Courts decision

The High Tribunal actually voted unanimously (11-0) to

DISMISS/DENY the petition of HLI and to AFFIRM the PARC
resolutions. This is contrary to media reports that the Court voted
6-4 to dismiss the HLI petition. The five (not four) minority justices
(Chief Justice Corona, and Justices Brion, Villarama, Mendoza, and
Sereno) only partially dissented from the decision of the majority
of six (Justice Velasco Jr., Leonardo-De Castro, Bersamin, Del
Castillo, Abad, and Perez). Justice Antonio Carpio took no part in the
deliberations and in the voting, while Justice Diosdado Peralta was
on official leave. The 14th and 15th seats in the Court were earlier
vacated by the retirements of Justices Eduardo Antonio Nachura
(June 13, 2011) and Conchita Carpio-Morales (June 19, 2011).
Another misinterpretation came from no less than the Supreme
Court administrator and spokesperson, Atty. Midas Marquez. In a
press conference called after the promulgation of the Courts
decision, Marquez initially used the term referendum in
explaining the High Courts ruling. This created confusion among
the parties and the interested public since a referendum implies
that the FWBs will have to vote on a common mode by which to
pursue their claims over Hacienda Luisita. The decision was thus
met with cries of condemnation by the misinformed farmers and
the various peoples organizations and militant groups supportive
of their cause.
Marquez would later correct himself in a subsequent press briefing.
But since by then the parties had already filed their respective
motions for reconsideration, he called upon everyone to just wait
for the final resolution of the motion[s], which is forthcoming
anyway. The resolution of the consolidated motions for
reconsideration came relatively early on November 22, 2011, or
less than five months from the promulgation of the decision.

G.R. No. 171101

November 22, 2011

(1) Motion for Clarification and Partial Reconsideration dated July 21,
2011 filed by petitioner Hacienda Luisita, Inc. (HLI);
- it is not proper to distribute the proceeds of the conversion
sale to the FWBs the proceeds of the sale belong to the
corporation for having sold its asset, and the distribution would
be considered dissolution of HLI
- the actual taking is NOT November 21, 1989, but should be
reckoned from finality of the Decision of this Court, or at the
very least, the reckoning period may be tacked to January 2,

(2)
(3)
-

(4)
(5)

(6)

2006, the date when the Notice of Coverage was issued by the
DAR
Motion for Partial Reconsideration dated July 20, 2011 filed by
PARC and DAR
Doctrine of Operative fact does not apply because no law was
declared void.
Motion for Reconsideration dated July 19, 2011 filed by AMBALA
RA 6657 is unconstitutional
"operative fact doctrine" does not apply. the option given to
the farmers to remain as stockholders of HLI is equivalent to
an option for HLI to retain land in direct violation of the CARL,
the SDP having been revoked. It should not apply if it would
result to inequity
CA erred in holding that improving the economic status of
FWBs is not among the legal obligations of HLI under the SDP
and an imperative imposition by RA 6657 and DAO 10
CA erred in holding that LIPCO and RCBC were purchasers for
value
Motion for Reconsideration dated July 21, 2011 filed by
respondent-intervenor Farmworkers Agrarian Reform Movement,
Inc. (FARM);
same with AMBALA
issue of constitutionality is the lis mota of the case which must
be decided upon
Motion for Reconsideration dated July 21, 2011 filed by private
respondents Noel Mallari, Julio Suniga, Supervisory Group of
Hacienda Luisita, Inc. (Supervisory Group) and Windsor Andaya
(collectively referred to as "Mallari, et al."); and
Motion for Reconsideration dated July 22, 2011 filed by private
respondents Rene Galang and

ISSUES:
(1) applicability of the operative fact doctrine;
(2) constitutionality of Sec. 31 of RA 6657 or the Comprehensive
Agrarian Reform Law of 1988;
(3) coverage of compulsory acquisition;
(4) just compensation;
(5) sale to third parties;
(6) the violations of HLI; and
(7) control over agricultural lands (revocation of SDP)
OPERATIVE FACT DOCTRINE (not much related)

Bearing in mind that PARC Resolution No. 89-12-2 an executive

actwas declared invalid in the instant case, the operative fact
doctrine is clearly applicable.
it should be recognized that SC, in its July 5, 2011 Decision,
affirmed the revocation of Resolution No. 89-12-2 and ruled for the
compulsory coverage of the agricultural lands of Hacienda Luisita in
view of HLIs violation of the SDP and DAO 10. By applying the
doctrine, this Court merely gave the qualified FWBs the option to
remain as stockholders of HLI and ruled that they will retain the
homelots and other benefits which they received from HLI by virtue
of the SDP.
The application of the doctrine is favorable to the FWBs because
not only were the FWBs allowed to retain the benefits and homelots
they received under the stock distribution scheme, they were also
given the option to choose for themselves whether they want to
remain as stockholders of HLI or not.
CONSTITUTIONALITY
(Upheld previous ruling)
FARM is, therefore, remiss in belatedly questioning the
constitutionality of Sec. 31 of RA 6657. The second requirement
that the constitutional question should be raised at the earliest
possible opportunity is clearly wanting.
The last but the most important requisite that the constitutional
issue must be the very lis mota of the case does not likewise
obtain. The lis mota aspect is not present, the constitutional issue
tendered not being critical to the resolution of the case.
COVERAGE OF COMPULSORY ACQUISITION
FARM argues that this Court ignored certain material facts when it
limited the maximum area to be covered to 4,915.75 hectares,
whereas the area that should, at the least, be covered is 6,443
hectares, which is the agricultural land allegedly covered by RA
6657 and previously held by Tarlac Development Corporation
(Tadeco).
We cannot subscribe to this view. Since what is put in issue before
the Court is the propriety of the revocation of the SDP, which only
involves 4,915.75 has. of agricultural land and not 6,443 has., then
We are constrained to rule only as regards the 4,915.75 has. of
agricultural land.
DAR, however, contends that the declaration of the area to be
awarded to each FWB is too restrictive. It stresses that in
agricultural landholdings like Hacienda Luisita, there are roads,

irrigation canals, and other portions of the land that are considered
commonly-owned by farmworkers, and this may necessarily result
in the decrease of the area size that may be awarded per FWB. DAR
also argues that the July 5, 2011 Decision does not give it any
leeway in adjusting the area that may be awarded per FWB in case
the number of actual qualified FWBs decreases.
The argument is meritorious. In order to ensure the proper
distribution of the agricultural lands of Hacienda Luisita per
qualified FWB, and considering that matters involving strictly the
administrative implementation and enforcement of agrarian reform
laws are within the jurisdiction of the DAR, it is the latter which
shall determine the area with which each qualified FWB will be
awarded.
500 HECTARES
RCBC and LIPCO knew that the lots they bought were subjected to
CARP coverage by means of a stock distribution plan, as the DAR
conversion order was annotated at the back of the titles of the lots
they acquired. However, they are of the honest belief that the
subject lots were validly converted to commercial or industrial
purposes and for which said lots were taken out of the CARP
coverage subject of PARC Resolution No. 89-12-2 and, hence, can
be legally and validly acquired by them.
PROCEEDS OF SALE
Considering that the 500-hectare converted land, as well as the
80.51-hectare SCTEX lot, should have been included in the
compulsory coverage were it not for their conversion and valid
transfers, then it is only but proper that the price received for the
sale of these lots should be given to the qualified FWBs. In effect,
the proceeds from the sale shall take the place of the lots.
JUST COMPENSATION - TAKING
In Our July 5, 2011 Decision, We stated that "HLI shall be paid just
compensation for the remaining agricultural land that will be
transferred to DAR for land distribution to the FWBs." We also ruled
that the date of the "taking" is November 21, 1989, when PARC
approved HLIs SDP per PARC Resolution No. 89-12-2.
Mallari, et al. argued that the valuation of the land cannot be based
on November 21, 1989. Instead, they aver that the date of "taking"
for valuation purposes is a factual issue best left to the
determination of the trial courts.
AMBALA alleged that HLI should no longer be paid just
compensation for the agricultural land that will be distributed to the
FWBs, since the RTC already rendered a decision ordering "the

Cojuangcos to transfer the control of Hacienda Luisita to the

Ministry of Agrarian Reform, which will distribute the land to small
farmers after compensating the landowners P3.988 million." In the
event, however, that this Court will rule that HLI is indeed entitled
to compensation, AMBALA contended that it should be pegged at
forty thousand pesos (PhP 40,000) per hectare, since this was the
same value that Tadeco declared in 1989 to make sure that the
farmers will not own the majority of its stocks.
SC: the date of "taking" is November 21, 1989, the date when PARC
approved HLIs SDP in view of the fact that this is the time that the
FWBs were considered to own and possess the agricultural lands in
Hacienda Luisita. To be precise, these lands became subject of the
agrarian reform coverage through the stock distribution scheme
only upon the approval of the SDP, that is, November 21, 1989.
Thus, such approval is akin to a notice of coverage ordinarily issued
under compulsory acquisition. Further, any doubt should be
resolved in favor of the FWBs.
SALE TO THIRD PARTIES
There is a view that since the agricultural lands in Hacienda Luisita
were placed under CARP coverage through the SDOA scheme on
May 11, 1989, then the 10-year period prohibition on the transfer of
awarded lands under RA 6657 lapsed on May 10, 1999, and,
consequently, the qualified FWBs should already be allowed to sell
these lands with respect to their land interests to third parties,
including HLI, regardless of whether they have fully paid for the
lands or not.
The proposition is erroneous. If the land has not yet been fully paid
by the beneficiary, the right to the land may be transferred or
conveyed, with prior approval of the DAR, to any heir of the
beneficiary or to any other beneficiary who, as a condition for such
transfer or conveyance, shall cultivate the land himself. Failing
compliance herewith, the land shall be transferred to the LBP which
shall give due notice of the availability of the land in the manner
specified in the immediately preceding paragraph.
In the event of such transfer to the LBP, the latter shall compensate
the beneficiary in one lump sum for the amounts the latter has
already paid, together with the value of improvements he has
made on the land.
Without a doubt, under RA 6657 and DAO 1, the awarded lands
may only be transferred or conveyed after ten (10) years from the
issuance and registration of the emancipation patent (EP) or
certificate of land ownership award (CLOA). Considering that the
EPs or CLOAs have not yet been issued to the qualified FWBs in the

instant case, the 10-year prohibitive period has not even started.
Significantly, the reckoning point is the issuance of the EP or CLOA,
and not the placing of the agricultural lands under CARP coverage.
if We maintain the position that the qualified FWBs should be
immediately allowed the option to sell or convey the agricultural
lands in Hacienda Luisita, then all efforts at agrarian reform would
be rendered nugatory by this Court, since, at the end of the day,
these lands will just be transferred to persons not entitled to land
distribution under CARP.
CONTROL OVER AGRICULTURAL LANDS
SC realized that the FWBs will never have control over these
agricultural lands for as long as they remain as stockholders of HLI.
bearing in mind that with the revocation of the approval of the SDP,
HLI will no longer be operating under SDP and will only be treated
as an ordinary private corporation; the FWBs who remain as
stockholders of HLI will be treated as ordinary stockholders and will
no longer be under the protective mantle of RA 6657.
In addition to the foregoing, in view of the operative fact doctrine,
all the benefits and homelots80 received by all the FWBs shall be
respected with no obligation to refund or return them, since, as We
have mentioned in our July 5, 2011 Decision, "the benefits x x x
were received by the FWBs as farmhands in the agricultural
enterprise of HLI and other fringe benefits were granted to them
pursuant to the existing collective bargaining agreement with
Tadeco."
One last point, the HLI land shall be distributed only to the 6,296
original FWBs. The remaining 4,206 FWBs are not entitled to any
portion of the HLI land, because the rights to said land were vested
only in the 6,296 original FWBs pursuant to Sec. 22 of RA 6657.
With these, PARC/DARs, AMBALAs, and FARMs Motions
GRANTED.
The order giving option to the FWBs to choose whether or not to
stay
as
shareholders
was
thereby
recalled.

G.R. No. 171101

April 24, 2012

Before the Court are the Motion to Clarify and Reconsider

Resolution of November 22, 2011 dated December 16, 2011 filed
by petitioner Hacienda Luisita, Inc. (HLI) and the Motion for
Reconsideration/Clarification dated December 9, 2011 filed by
private respondents Noel Mallari, Julio Suniga, Supervisory Group of
Hacienda Luisita, Inc. and Windsor Andaya (collectively referred to
as "Mallari, et al.").
Basically, the issues raised by HLI and Mallari, et al. boil down to
the following: (1) determination of the date of "taking"; (2)
propriety of the revocation of the option on the part of the original
FWBs to remain as stockholders of HLI; (3) propriety of distributing
to the qualified FWBs the proceeds from the sale of the converted
land and of the 80.51-hectare Subic-Clark-Tarlac Expressway
(SCTEX ) land; and (4) just compensation for the homelots given to
the FWBs.
PAYMENT OF JUST COMPENSATION
HLI contends that since the SDP is a modality which the agrarian
reform law gives the landowner as alternative to compulsory
coverage, then the FWBs cannot be considered as owners and
possessors of the agricultural lands of Hacienda Luisita at the time
the SDP was approved by PARC. It further claims that the approval
of the SDP is not akin to a Notice of Coverage in compulsory
coverage situations because stock distribution option and
compulsory acquisition are two (2) different modalities with
independent and separate rules and mechanisms. Concomitantly,
HLI maintains that the Notice of Coverage issued on January 2,
2006 may, at the very least, be considered as the date of "taking"
as this was the only time that the agricultural lands of Hacienda
Luisita were placed under compulsory acquisition in view of its
failure to perform certain obligations under the SDP.
UPHELD PREVIOUS DECISION: taking was effected on November 21,
1989
What is notable, however, is that the divestment by Tadeco of the
agricultural lands of Hacienda Luisita and the giving of the shares
of stock for free is nothing but an enticement or incentive for the
FWBs to agree with the stock distribution option scheme and not
further push for land distribution. And the stubborn fact is that the
"man days" scheme of HLI impelled the FWBs to work in the
hacienda in exchange for such shares of stock.
When the agricultural lands of Hacienda Luisita were transferred by
Tadeco to HLI in order to comply with CARP through the stock
distribution option scheme, sealed with the imprimatur of PARC

under PARC Resolution No. 89-12-2 dated November 21, 1989,

Tadeco was consequently dispossessed of the afore-mentioned
attributes of ownership. Notably, Tadeco and HLI are two different
entities with separate and distinct legal personalities. Ownership by
one cannot be considered as ownership by the other.
Corollarily, it is the official act by the government, that is, the
PARCs approval of the SDP, which should be considered as the
reckoning point for the "taking" of the agricultural lands of
Hacienda Luisita. Although the transfer of ownership over the
agricultural lands was made prior to the SDPs approval, it is this
Courts consistent view that these lands officially became subject of
the agrarian reform coverage through the stock distribution scheme
only upon the approval of the SDP. And as We have mentioned in
Our November 22, 2011 Resolution, such approval is akin to a
notice of coverage ordinarily issued under compulsory acquisition.
FWBS ENTITLED TO PROCEEDS OF SALE
HLI reiterates its claim over the proceeds of the sales of the 500
hectares and 80.51 hectares of the land as corporate owner and
argues that the return of said proceeds to the FWBs is unfair and
violative of the Corporation Code.
This claim is bereft of merit.
UPHELD PREVIOUS RULING - were it not for the approval of the SDP
by PARC, these large parcels of land would have been distributed
and ownership transferred to the FWBs, subject to payment of just
compensation, given that, as of 1989, the subject 4,915 hectares of
Hacienda Luisita were already covered by CARP.
HOMELOTS
In the present recourse, HLI also harps on the fact that since the
homelots given to the FWBs do not form part of the 4,915.75
hectares covered by the SDP, then the value of these homelots
should, with the revocation of the SDP, be paid to Tadeco as the
landowner.
We disagree. As We have explained in Our July 5, 2011 Decision,
the distribution of homelots is required under RA 6657 only for
corporations or business associations owning or operating farms
which opted for land distribution. This is provided under Sec. 30 of
RA 6657.
Since none of the provisions made reference to corporations which
opted for stock distribution under Sec. 31 of RA 6657, then it is
apparent that said corporations are not obliged to provide for
homelots. Nonetheless, HLI undertook to "subdivide and allocate
for free and without charge among the qualified family-

beneficiaries x x x residential or homelots of not more than 240 sq.

m. each, with each family beneficiary being assured of receiving
and owning a homelot in the barrio or barangay where it actually
resides." In fact, HLI was able to distribute homelots to some if not
all of the FWBs.
Thus, in our November 22, 2011 Resolution, We declared that the
homelots already received by the FWBs shall be respected with no
obligation to refund or to return them. However, since the SDP was
already revoked with finality, the Court directs the government
through the DAR to pay HLI the just compensation for said
homelots in consonance with Sec. 4, Article XIII of the 1987
Constitution that the taking of land for use in the agrarian reform
program is "subject to the payment of just compensation."
To recapitulate, the Court voted on the following issues in this
manner:
1) In determining the date of "taking," the Court voted 8-6 to
maintain the ruling fixing November 21, 1989 as the date of
"taking," the value of the affected lands to be determined by the
LBP and the DAR;
2) On the propriety of the revocation of the option of the FWBs to
remain as HLI stockholders, the Court, by unanimous vote,
agreed to reiterate its ruling in its November 22, 2011 Resolution
that the option granted to the FWBs stays revoked;
3) On the propriety of returning to the FWBs the proceeds of the
sale of the 500-hectare converted land and of the 80.51-hectare
SCTEX land, the Court unanimously voted to maintain its ruling
to order the payment of the proceeds of the sale of the said land
to the FWBs less the 3% share, taxes and expenses specified in
the fallo of the November 22, 2011 Resolution;
4) On the payment of just compensation for the homelots to HLI,
the Court, by unanimous vote, resolved to amend its July 5, 2011
Decision and November 22, 2011 Resolution by ordering the
government, through the DAR, to pay to HLI the just
compensation for the homelots thus distributed to the FWBS.
the government, through DAR, is ordered to pay Hacienda Luisita,
Inc. the just compensation for the 240-square meter homelots
distributed to the FWBs.

FACTS:
These are consolidated cases involving common legal questions
including serious challenges to the constitutionality of R.A. No.
6657 also known as the "Comprehensive Agrarian Reform Law of
1988"
In G.R. No. 79777, the petitioners are questioning the P.D No. 27
and E.O Nos. 228 and 229 on the grounds inter alia of separation of
powers, due process, equal protection and the constitutional
limitation that no private property shall be taken for public use
without just compensation.
In G.R. No. 79310, the petitioners in this case claim that the power
to provide for a Comprehensive Agrarian Reform Program as
decreed by the Constitution belongs to the Congress and not to the
President, the also allege that Proclamation No. 131 and E.O No.
229 should be annulled for violation of the constitutional provisions
on just compensation, due process and equal protection. They
contended that the taking must be simultaneous with payment of
just compensation which such payment is not contemplated in
Section 5 of the E.O No. 229.
In G.R. No. 79744, the petitioner argues that E.O Nos. 228 and 229
were invalidly issued by the President and that the said executive
orders violate the constitutional provision that no private property
shall be taken without due process or just compensation which was

ASSOCIATION OF SMALL LANDOWNERS V. SECRETARY OF DAR

CRUZ, J.:

denied to the petitioners.

In G.R. No 78742 the petitioners claim that they cannot eject their
tenants and so are unable to enjoy their right of retention because

the Department of Agrarian Reform has so far not issued the

implementing rules of the decree. They therefore ask the Honorable
Court for a writ of mandamus to compel the respondents to issue
the said rules.
ISSUE:
Whether or not the laws being challenged is a valid exercise of
Police power or Power of Eminent Domain.
RULING:
Police Power through the Power of Eminent Domain, though there
are traditional distinction between the police power and the power
of eminent domain, property condemned under police power is
noxious or intended for noxious purpose, the compensation for the
taking of such property is not subject to compensation, unlike the
taking of the property in Eminent Domain or the power of
expropriation which requires the payment of just compensation to
the owner of the property expropriated.
DALMACIO
URTULA,
ET
AL., plaintiffs-appellants,
vs.
REPUBLIC OF THE PHILIPPINES, (represented by the Land
Tenure Administration), defendant-appellant.
Luciano
M.
Maggay
for
plaintiffs-appellants.
Judicial Cases Division of Land Tenure Administration for defendantappellant.
REYES, J.B.L., J.:
Direct appeals, by both the plaintiffs, Dalmacio Urtula, et al. and
the defendant Republic of the Philippines, represented by the Land

Tenure Administration, now Land Authority, from a judgment of the

Court of First Instance of Camarines Sur, in its Civil Case No. 5306,
ordering the defendant to pay interest upon a sum determined by
final judgment as compensation for the property expropriated in a
previous case of eminent domain between the same parties, Civil
Case No. 3837 of the same court.
The facts, as stipulated by the parties, and as found by the court a
quo are as follows:
The Court of First Instance had rendered judgment on 16 November
1957 in its Civil Case No. 3837, for the expropriation of the
Hacienda Quitang, owned by Dalmacio Urtula by the Republic of the
Philippines, for the sum of P213,094.00, "and upon making the
payment the plaintiff shall take full possession of the land." The
Republic appealed the decision to the Court of Appeals, raising the
sole issue of whether the amount fixed by the trial court was a just
compensation for the property. While the appeal was pending
before the Court of Appeals, the Republic of the Philippines
deposited on 29 July 1958, with the Philippine National Bank the
sum of P117,690.00 as provisional value of the land, in accordance
with an order of the trial court dated 3 January 1958, and this
deposit was withdrawn by Dalmacio Urtula in August of 1958.
Thereafter, on 10 September 1958, the Court of Appeals granted
the Republic's petition to be placed in possession of the property;
and under a writ of possession issued by the provincial sheriff of
the province, the Land Tenure Administration took actual physical
possession of the land on 11 October 1958.
Subsequently, the Court of Appeals found that the issue between
the parties was purely one of law and thereby elevated the appeal
to the Supreme Court. This Court rendered judgment thereon on 29
November 1960 in case No. L-16028, affirming the appealed
judgment of the Court of First Instance, without modification.
The Supreme Court had affirmed, as aforesaid, the decision of the
trial court fixing the amount of just compensation for P213,094.00;
thus, at the time the decision became final, the balance still due
was P95,404.00. Of this balance, the Republic paid Dalmacio Urtula

the sum of P5,404.00 on 17 April 1961; but on the same day, Urtula
deposited same amount with the Land Tenure Administration in
payment of taxes and penalties for prior years up to 1958 on the
expropriated land and for the surveyor's fee for segregating one
hectare donated by condemnee Urtula for a school site. On
liquidation at a later date, an excess in the amount of P423.38 was
found, and the Republic refunded this excess to Urtula on 25
September 1961. On 3 May 1961, the Republic paid the remaining
balance of P90,000.00.
The taxes due and unpaid, including penalties, on the land for the
years 1959, 1960 and 70% of 1961 were computed at a total of
P3,534.23 as of 28 February 1962. The interest of 6% on
P95,404.00 from 11 October 1958, the date when the condemnor
Republic took possession of the land to May 1961, when the final
balance was paid to Urtula was also computed at a total of
P14,633.52.
On 26 January 1961, the plaintiff demanded payment of said
interest (P14,633.52) but the defendant Republic refused, on the
ground that no payment of interest had been ordered in the
decision in Civil Case No. 3837, the expropriation proceedings, or in
the affirmatory decision of the Supreme Court in G.R. No. L-16028.
The parties further stipulated as a fact that the plaintiff had agreed
to pay his counsel 10% of the amount recoverable from the
defendant, as attorney's fees.
Upon the foregoing stipulated facts, the trial court rendered
judgment for plaintiff Urtula and ordered the defendant Republic to
pay P14,633.52 as interest on the balance of P95,404.00 from 11
October 1958 to 3 May 1961 and to pay the costs, but denied the
plaintiff's claim on the land taxes 1 and attorney's fees.
Both parties were not satisfied with the decision; hence, both
appealed to this Court.1wph1.t
Against the defendant Republic's defense that the final judgment in
the expropriation case, which did not provide for interest, operates
to bar the present case, by res judicata, the theory of plaintiff

Urtula is that there is no identity of causes of action in the said

cases.
Thus, Urtula relates his predicaments as follows: that while the
expropriation case was pending before the trial court, he could not
claim interest because the Republic had not as yet taken
possession of the land and the rule is that interest accrues from the
time of such taking; but when the Republic took possession, the
case was already on appeal and he could not ask relief because he
was not an appellant nor could he raise the issue of interest for the
first time on appeal, aside from his being impeded by the rule that
proof with respect to the taking of possession had to be adduced
before the trial court, not the appellate court.
Urtula's dilemma lies in his mistaken concept of the nature of the
interest that he failed to claim in the expropriation case and which
he now claims in this separate case. Said interest is not
contractual, nor based on delict or quasi-delict, but one that
runs as a matter of law and follows as a matter of course
from the right of the landowner to be placed in as good a
position as money can accomplish, as of the date of the
taking (30 C.J.S. 230).
Understood as such, Urtula, as defendant in the expropriation case,
could have raised the matter of interest before the trial court even
if there had been no actual taking yet by the Republic and the said
court could have included the payment of interest in its
judgment but conditioned upon the actual taking, because the rate
of interest upon the amount of just compensation (6%) is a known
factor, and it can reasonably be expected that at some future time,
the expropriator would take possession of the property, though the
date be not fixed. In this way, multiple suits would be avoided.
Moreover, nothing prevented appellee from calling the attention of
the appellate courts (even by motion to reconsider before judgment
became final) to the subsequent taking of possession by the
condemnor, and asking for allowance of interest on the indemnity,
since that followed the taking as a matter of course, and raised no
issue requiring remand of the records to the Court of origin.

As the issue of interest could have been raised in the former case
but was not raised, res judicata blocks the recovery of interest in
the present case. (Tejedor vs. Palet, 61 Phil. 494; Phil. Engineering
Corp., et al. vs. Ceniza, etc., et al., L-17834, 29 Sept. 1962). It is
settled that a former judgment constitutes a bar, as between the
parties, not only as to matters expressly adjudged, but all matters
that could have been adjudged at the time (Rule 39, sec. 49; Corda
vs. Maglinti, L-17476, Nov. 30, 1961; Rodriguez vs. Tan, 48 Off. Gaz.
3330). It follows that interest upon the unrecoverable interest,
which plaintiff also seeks, cannot, likewise, be granted.
It is not amiss to note that Section 3 of Rule 67 of the Revised Rules
of Court (Sec. 4, Rule 69 of the old Rules), in fact, directs the
defendant in an expropriation case to "present in a single motion to
dismiss or for other appropriate relief, all of his objections and
defenses . . ." and if not so presented "are waived." (Emphasis
Supplied.) 2 As it is, the judgment allowing the collection of interest,
now under appeal in effect amends the final judgment in the
expropriation case, a procedure abhorrent to orderly judicial
proceedings.
The Republic took possession on 11 October 1958. From this date,
therefore, the owner, while retaining the naked title, was deprived
of the benefits from the land and it is just and fair that realty taxes
for the years 1959 and onward should be borne by the entity
exercising the right of eminent domain. (City of Manila vs. Roxas,
60 Phil. 215).
Costs in cases of eminent domain, except those of rival claimants
litigating their claims, are charged against the plaintiff. (Sec. 12,
Rule 67, Rules of Court; Sec. 13, Rule 67 of the old Rules.) But the
present case is not one of eminent domain but an ordinary civil
action where the Republic of the Philippines is a party. Section 1 of
Rule 142 provides that no costs shall be allowed against it, unless
otherwise provided by law. No provision of law providing the
contrary has been cited; hence, costs should be charged against
Urtula.

FOR THE FOREGOING REASONS, the appealed judgment is reversed

and the case dismissed, with costs against the plaintiffs Dalmacio
Urtula, et al.
KNECHT VS. COURT OF APPEALS [290 SCRA 223; G.R. NO.
108015, 20 MAY 1998]
Saturday, January 31, 2009 Posted by Coffeeholic Writes
Labels: Case Digests, Political Law

Facts: The instant case is an unending sequel to several suits

commenced almost twenty years ago involving a parcel of land
located at the corner of the south end of EDSA and F.B. Harrison in
Pasay City. The land was owned by petitioners Cristina de Knecht
and her son, Rene Knecht. On the land, the Knechts constructed
eight houses, leased out the seven and occupied one of them as
their residence. In 1979, the government filed for the expropriation
of Knechts property. The government wanted to use the land for
the completion of the Manila Flood Control and Drainage Project
and the extension of the EDSA towards Roxas Boulevard. In 1982,
the City Treasurer of Pasay discovered that the Knechts failed to
pay real estate taxes on the property from 1980 to 1982. As a
consequence of this deficiency, the City Treasurer sold the property
at public auction for the same amount of their deficiency taxes. The
highest bidders were respondent Spouses Anastacio and Felisa
Babiera (the Babieras) and respondent Spouses Alejandro and Flor
Sangalang (the Sangalangs). Subsequently, Sangalang and Babiera
sold the land to respondent Salem Investment Corporation. On
February 17, 1983, the Batasang Pambansa passed B.P. Blg. 340
authorizing

the

national

government

to

expropriate

certain

properties in Pasay City for the EDSA Extension. The property of the

Knechts was part of those expropriated under B.P. Blg. 340. The

previously raised in the cases which have been already set aside.

government gave out just compensation for the lands expropriated

The court is not a trier of facts. Res judicata has already set it. The

under B.P. Blg. 340. Salem was included and received partial

Knechts therefore are not the lawful owners of the land and are not

payment. Seven of the eight houses of the Knechts were

any longer accountable for just compensation given by the

demolished and the government took possession of the portion of

government.

land on which the houses stood. Since the Knechts refused to

vacate their one remaining house, Salem filed a case against them

Note: Res judicata is a ground for dismissal of an action. It is a rule

for unlawful detainer. As defense, the Knechts claimed ownership of

that precludes parties from relitigating Issue actually litigated and

the land and building. The Municipal Trial Court however ordered

determined by a prior and final judgment. It pervades every well-

the Knechts' ejectment thus their residence was demolished.

regulated system of jurisprudence, and is based upon two grounds

embodied in various maxims of the common law one, public

The Knechts continuously claimed ownership of the property and

policy and necessity, that there should be a limit to litigation; and

allege

another, the individual should not be vexed twice for the same

that

they

must

be

given

just

compensation.

cause. When a right of fact has been judicially tried and determined
by a court of competent jurisdiction, or an opportunity for such trial
Issue: Whether or not Knechts are the lawful owners of the land at

has been given, the judgment of the court, so long as it remains

subject.

unreversed, should be conclusive upon the parties and those in

privity with them in law or estate. To follow a contrary doctrine
would subject the public peace and quiet to the will and neglect of

Held: The Supreme Court held that the Knechts were not the

individuals and prefer the gratification of the litigious disposition of

owners anymore of the said land. The Knechts' right to the land had

the

parties

to

the

preservation

of

the

public

tranquility.

been foreclosed after they failed to redeem it one year after the
sale at public auction. Since the petitions questioning the order of

Res judicata applies when: (1) the former judgment or order is final;

dismissal were likewise dismissed by the Court of Appeals and this

(2) the judgment or order is one on the merits; (3) it was rendered

Court, the order of dismissal became final and res judicata on the

by a court having jurisdiction over the subject matter and the

issue of ownership of the land. Petitioners contended that they did

parties; (4) there is between the first and second actions, identity

not receive notice of their tax delinquency. Neither did they receive

of parties, of subject matter and of cause of action.

notice of the auction sale. However, this question has been