Republic of the Philippines

SUPREME COURT
Manila

The Special Division is tasked to hear and receive evidence, conclude the
proceedings and submit to this Court a report on its findings and
recommended conclusions within three (3) months from finality of this
Resolution.

EN BANC
G.R. No. 123346

March 31, 2009

MANOTOK REALTY, INC. and MANOTOK ESTATE CORPORATION,

Petitioners,
vs.
CLT REALTY DEVELOPMENT, CORPORATION, Respondent.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 134385

March 31, 2009

ARANETA INSTITUTE OF AGRI-CULTURE, INC., Petitioner,

vs.
HEIRS OF JOSE B. DIMSON, REPRESENTED BY HIS COMPULSORY
HEIRS: HIS SURVIVING SPOUSE, ROQUETA R. DIMSON AND THEIR
CHILDREN, NORMA AND CELSA TIRADO, ALSON AND VIRGINIA
DIMSON, LINDA AND CARLOS LAGMAN, LERMA AND RENE
POLICAR, AND ESPERANZA R. DIMSON; AND THE REGISTER OF
DEEDS OF MALABON, Respondents.
RESOLUTION
TINGA, J.:
In the Courts Resolution dated 14 December 2007,1 the Court constituted a
Special Division of the Court of Appeals to hear the instant case on remand.
The Special Division was composed of three Associate Justices of the Court
of Appeals, with Justice Josefina Guevara-Salonga as Chairperson; Justice
Lucas Bersamin as Senior Member; and Associate Justice Japar B.
Dimaampao as Junior Member. We instructed the Special Division to
proceed as follows:

In ascertaining which of the conflicting claims of title should prevail, the

Special Division is directed to make the following determinations based on
the evidence already on record and such other evidence as may be presented
at the proceedings before it, to wit:
i. Which of the contending parties are able to trace back their claims
of title to OCT No. 994 dated 3 May 1917?
ii. Whether the imputed flaws in the titles of the Manotoks and
Araneta, as recounted in the 2005 Decision, are borne by the
evidence? Assuming they are, are such flaws sufficient to defeat the
claims of title of the Manotoks and Araneta?
iii. Whether the factual and legal bases of 1966 Order of Judge
Muoz-Palma and the 1970 Order of Judge Sayo are true and valid.
Assuming they are, do these orders establish a superior right to the
subject properties in favor of the Dimsons and CLT as opposed to
the claims of Araneta and the Manotoks?
iv. Whether any of the subject properties had been the subject of
expropriation proceedings at any point since the issuance of OCT
No. 994 on 3 May 1917, and if so what are those proceedings, what
are the titles acquired by the Government and whether any of the
parties is able to trace its title to the title acquired by the Government
through expropriation.
v. Such other matters necessary and proper in ascertaining which of
the conflicting claims of title should prevail.
WHEREFORE, the instant cases are hereby REMANDED to the Special
Division of the Court of Appeals for further proceedings in accordance with
Parts VI, VII and VIII of this Resolution.

SO ORDERED.2

I.

The Special Division proceeded to conduct hearings in accordance with the

Resolution. The parties to these cases, namely CLT Realty Development
Corporation (CLT), Manotok Realty Inc. and Manotok Estate Corporation
(the Manotoks), the Heirs of Jose B. Dimson (Heirs of Dimson), and Araneta
Institute of Agriculture, Inc. (Araneta), were directed by the Special Division
to present their respective evidence to the Court of Appeals. Thereafter, the
Special Division rendered a 70-page Report3 (Report) on 26 November 2008.
The Special Division submitted the sealed Report to this Court.

We adopt the succeeding recital of operative antecedents made by the

Special Division in its Report.

Before taking action on the Report itself, we dispose of a preliminary matter.

On February 17, 2009, the Manotoks filed a motion beseeching that copies of
the report be furnished the parties "so that they may submit their comments
and objections thereon in accord with the principle contained in Sec. 10, Rule
32 of the Rules of Court." We deny the motion.

On 18 December 1979, DIMSON filed with the then Court of First Instance
["CFI"] of Rizal a complaint for Recovery of Possession and Damages against
ARANETA. On 7 May 1980, DIMSON amended his complaint and included
Virgilio L. Enriquez ["ENRIQUEZ"] as his co-plaintiff.

It is incorrect to presume that the earlier referral of these cases to the Court of
Appeals for reception of evidence was strictly in accordance with Rule 32.
Notably, Section 1 of said Rule authorizes the referral of the case to a
commissioner "by written consent of both parties," whereas in the cases at
bar, the Court did not endeavor to secure the consent of the parties before
effectuating the remand to the Court of Appeals. Nonetheless, our earlier
advertence to Rule 32 remains proper even if the adopted procedure does
not hew strictly to that Rule, owing to our power under Section 6, Rule 135 to
adopt any suitable process or mode of proceeding which appears
conformable to the spirit of the Rules to carry into effect all auxiliary
processes and other means necessary to carry our jurisdiction into effect.
Moreover, furnishing the parties with copies of the Sealed Report would not
serve any useful purpose. It would only delay the promulgation of the
Courts action on the Sealed Report and the adjudication of these cases. In
any event, the present Resolution quotes extensively from the sealed Report
and discusses its other substantive segments which are not quoted.
The Report is a commendably exhaustive and pellucid analysis of the issues
referred to the Special Division. It is a more than adequate basis for this
Court to make the following final dispositions in these cases.

THE PROCEDURAL ANTECEDENTS

DIMSON v. ARANETA
CA-G.R. CV. NO. 41883 & CA-G.R. SP No. 34819
[SC-G.R. No. 134385]

In said Amended Complaint, DIMSON claimed that he is the absolute owner

of a 50-hectare land located in Bo. Potrero, Malabon, Metro Manila covered
by TCT No. R-15169, [Lot 25-A-2] of the Caloocan Registry of Deeds.
Allegedly, DIMSON had transferred the subject property to ENRIQUEZ by
way of an absolute and irrevocable sale on 14 November 1979. Unfortunately
though, DIMSON and ENRIQUEZ discovered that the subject property was
being occupied by ARANETA wherein an "agricultural school house" is
erected and that despite repeated demands, the latter refused to vacate the
parcel of land and remove the improvements thereon.
ARANETA, for its part, refuted said allegations and countered that it is the
absolute owner of the land being claimed by DIMSON and that the real
properties in the Araneta Compound are "properly documented and validly
titled." It maintained that it had been in possession of the subject parcel of
land since 1974. For this reason, the claims of DIMSON and ENRIQUEZ
were allegedly barred by prescription.
During the trial, counsel for ARANETA marked in evidence, among others,
certifications from the Land Registration Commission attesting that TCTs
Nos. 13574 and 26538, covering the disputed property, are in the names of
ARANETA and Jose Rato, respectively. ARANETA also offered TCT No.

7784 in evidence to prove that it is the registered owner of the land described
therein.
On 28 May 1993, the trial court rendered a Decision upholding the title of
DIMSON over the disputed property xxx
Undaunted, ARANETA interposed an appeal to the Court of Appeals,
docketed as CA-G.R. CV No. 41883, which was later consolidated with CAGR. SP No. 34819 in view of the inter-related issues of the two cases.
In its 30 May 1997 Decision, the Court of Appeals, in CA-G.R. CV No. 41883,
sustained the RTC Decision in favor of DIMSON finding that the title of
ARANETA to the disputed land in a nullity. In CA-GR. SP No. 34819, the
Court of Appeals likewise invalidated the titles of ARANETA, relying on the
Supreme Court ruling in Metropolitan Waterworks and Sewerage System v.
Court of Appeals, which declared null and void the certificates of title derived
from OCT No. 994 registered on 3 may 1917. It was also held that ARANETA
failed to sufficiently show that the Order sought to be nullified was obtained
through extrinsic fraud that would warrant the annulment thereof.
Dissatisfied still, ARANETA filed a Motion for Reconsideration And/Or
New Trial espousing therein as basis for its entreaty the various letters from
different government agencies and Department order No. 137 of the
Department of Justice, among others.
On 16 July 1998, the various Motions of ARANETA were denied by the
Court of Appeals. Nonetheless, the Court ordered DIMSON to maintain
status quo until the finality of the aforesaid judgment.
Consequently, ARANETA filed a petition before the Supreme Court.
Refuting the factual finding of the trial court and the Court of Appeals,
ARANETA contended that there in only one OCT 994 covering the Maysilo
Estate issued on 3 May 1917 pursuant to the Decree No. 36455 issued by the
Court of Land Registration on 19 April 1917 and added that there were
subsequent certifications issued by the government officials, notably from
the LRS, the DOJ Committee Report and the Senate Committees Joint Report
which attested that there is only one OCT 994, that which had been issued on
3 May 1917.1avvphi1

CLT v. MANOTOK
CA-G.R. CV. No. 45255
[SC-G.R. No. 123346]
On 10 August 1992, CLT filed with the Regional Trial Court ["RTC"] A
COMPLAINT FOR Annulment of Transfer Certificates of Title, Recovery of
Possession and Damages against the MANOTOKS and the Registry of Deeds
of Metro Manila District II (Calookan City, Metro Manila) ["CALOOCAN
RD"].
In its Complaint, CLT alleged that it is the registered owner of Lot 26 of the
Maysilo Estate located in Caloocan City and covered by Transfer Certificate
of Title No. T- 177013, a derivative title of OCT No. 994. As a basis of its
proprietary claim, CLT averred that on 10 December 1988, it had acquired
Lot 26 from its former registered owner, Estelita I. Hipolito ["HIPOLITO"],
by virtue of a Deed of Sale with Real Estate Mortgage. HIPOLITOs title was ,
in turn, a direct transfer from DIMSON, the registered owner of TCT No.
15166, the latter having acquired the same by virtue of a Court Order dated
13 June 1966 issued by the Court of First Instance of Rizal in Civil Case No.
4557.
On the other hand, the MANOTOKS maintained the validity of their titles,
which were all derivatives of OCT No. 994 covering over twenty (20) parcels
of land located over a portion of Lot 26 in the Maysilo Estate. In substance, it
was contented that the title of CLT was an offspring of an ineffective grant of
an alleged undisputed portion of Lot 26 by way of attorneys fees to its
predecessor-in- interest, Jose B. Dimson. The MANOTOKS, in this
connection, further contended that the portion of Lot 26, subject of the
present controversy, had long been disposed of in favor of Alejandro Ruiz
and Mariano Leuterio and hence, there was nothing more in said portion of
Lot 26 that could have been validly conveyed to Dimson.
Tracing the legitimacy of their certificates of titles, the MANOTOKS alleged
that TCT No. 4210, which cancelled OCT No. 994, had been issued in the
names of Alejandro Ruiz and Mariano Leuterio on Sept ember 1918 by virtue
of an Escritura De Venta executed by Don Tomas Arguelles and Don Enrique
Lopes on 21 August 1918. TCT No. 4210 allegedly covered an approximate

area of 19,565.43 square meters of Lot 26. On even date, TCT No. 4211 was
transferred to Francisco Gonzales on the strength of an Escritura de Venta
dated 3 March 1920 for which TCT No. T-5261, covering an area of 871,982
square meters was issued in the name of one Francisco Gonzales, married to
Rufina Narciso.
Thereafter, TCT No. T-35485, canceling TCT No. T-5261, was issued to
Rufina Narcisa Vda. de Gonzales which was later replaced with the names of
Gonzales six (6) children. The property was then subdivided and as a result
of which, seven (7) certificates of titles were issued, six (6),under the names
of each of the children while the remaining title was held by all of them as
co-owners.

Adopting the findings contained in the Majority Report, the RTC, on 10 May
1994, rendered a Decision, in favor of CLT and ordered, among others, the
cancellation of the certificates of title issued in the name of the MANOTOKS.
The MANOTOKS elevated the adverse RTC Decision on appeal before the
Court of Appeals. In its Decision dated 28 September 1995, the Court of
Appeals affirmed the RTC Decision, except as to the award of damages
which was deleted. The MANOTOKS then moved for reconsideration, but
said motion was denied by said appellate court in its Resolution dated 8
January 1996. After the denial of their Motion for Reconsideration, the
MANOTOKS filed a Petition for Review before the Supreme Court.
PROCEEDINGS BEFORE THE SUPREME COURT

Eventually, the properties covered by said seven certificates of title were

expropriated by the Republic of the Philippines. These properties were then
later subdivided by the National Housing Authority ["NHA"], into seventyseven (77) lots and thereafter sold to qualified vendees. As it turned out, a
number of said vendees sold nineteen (19) of these lots to Manotok Realty,
Inc. while one (1) lot was purchased by the Manotok Estate Corporation.
During the pre-trial conference, the trial court, upon agreement of the
parties, approved the creation of a commission composed of three
commissioners tasked to resolve the conflict in their respective titles.
Accordingly, the created Commission convened on the matter in dispute.
On 8 October 1993, Ernesto Erive and Avelino San Buenaventura submitted
an exhaustive Joint Final Report ["THE MAJORITY REPORT"] finding that
there were inherent technical infirmities or defects on the face of TCT No.
4211, from which the MANOTOKS derived their titles (also on TCT No.
4210), TCT No. 5261 and TCT No. 35486. Teodoro Victoriano submitted his
Individual Final Report ["THE MINORITY REPORT"] dated 23 October 1993.
After the conduct of a hearing on these reports, the parties filed their
respective comments/objections thereto. Upon order of the trial court, the
parties filed their respective memoranda.

Before the Supreme Court, the Petitioners for Review, separately filed by the
MANOTOKS, ARANETA and Sto. Nio Kapitbahayan Association, Inc.,
["STO. NIO"], were consolidated.
Also submitted for consideration of the Supreme Court were the report of
the Fact Finding Committee dated 28 August 1997 and the Senate Committee
Report No. 1031 dated 25 May 1998 which concluded that there was only one
OCT No. 994 issued, transcribed and registered on 3 May 1917.
THE SUPREME COURT DECISION
In its Decision dated 29 November 2005 ["THE SUPREME COURT 2005
DECISION"], the Supreme Court, through its Third Division, affirmed the
RTC Decision and Resolutions of the Court of Appeals, which declared the
titles of CLT and DIMSON as valid.
In invalidating the respective titles of the MANOTOKS and ARANETA, the
Supreme Court, in turn, relied on the factual and legal findings of the trial
courts, which had heavily hinged on the imputed flaws in said titles.
Considering that these trial court findings had been affirmed by the Court of
Appeals, the Supreme Court highlighted the fact that the same were
accorded the highest degree of respect and, generally, should not be
disturbed on appeal.

Emphasis was also made on the settled rule that because the Supreme Court
was not a trier of facts, it was not within its function to review factual issues
and examine, evaluate or weigh the probative value of the evidence
presented by the parties.
THE SUPEME COURT RESOLUTION
Expectedly, the MANOTOKS and ARANETA filed their respective Motions
for Reconsideration of the Supreme Court 2005 Decision.
Resolving said motions for reconsideration, with the Office of the Solicitor
General ["OSG"] intervening on behalf of the Republic, the Supreme Court,
in its Resolution of 14 December 2007 ["THE SUPREME CCOURT 2007
RESOLUTION"] reversed and nullified its 2005 Decision and categorically
invalidated OCT No. 994 dated 19 April 1917, which was the basis of the
propriety claims of CLT and DIMSON. However, the Supreme Court
resolved to remand the cases to this Special Division of the Court of Appeals
for reception of evidence.
To guide the proceedings before this Special Division of the Court of
Appeals, the Supreme Court made the following binding conclusions:
"First, there is only one OCT 994. As it appears on the record, that
mother title was received for transcription by the Register of Deeds
on 3 May 1917, and that should be the date which should be
reckoned as the ate of registration of the title. It may also be
acknowledged, as appears on the title, that OCT No. 994 resulted
from the issuance of the decree of registration on (19)* April 1917,
although such dated cannot be considered as the date of the title or
the date when the title took effect.
Second. Any title that traces its source to OCT No. 994 dated (19)
April 1917 is void, for such mother title is inexistent. The fact that
the Dimson and CLT titles made specific reference to an OCT No.
994 dated (19) April 1917 casts doubt on the validity of such titles
since they refer to an inexistent OCT. This error alone is, in fact,
sufficient to invalidate the Dimson and CLT claims over the

subject property if singular reliance is placed by them on the dates

appearing on their respective titles.
Third. The decision of this Court in MWSS v. Court of Appeals
and Gonzaga v. Court of Appeals cannot apply to the cases at bar,
especially in regard to their recognition of an OCT No. 994 dated
19 April 1917, a title which we now acknowledge as inexistent.
Neither could the conclusions in MWSS or Gonzaga with respect
to an OCT No. 994 dated 19 April 1917 bind any other case
operating under the factual setting the same as or similar to that at
bar.4
II.
The parties were afforded the opportunity to present their evidence before
the Special Division. The Report names the evidence submitted to the Special
Division for its evaluation:
CLT EVIDENCE
In its Offer of Evidence,5 CLT adopted the documentary exhibits and
testimonial evidence of witnesses submitted in the case filed by CLT against
STO. NIO in Civil Case No. C-15491, ["CLT-STO NIO CASE"]. These
pieces of evidence include, among others, the Majority and Minority Reports,
the Formal Offer of Evidence in the presentation of the evidence-in-chief and
rebuttal evidence in the CLT-STO NIO CASE consisting of various
certificates of titles, plans by geodetic engineer, tax declarations, chemistry
report, specimen signatures and letters of correspondence.
MANOTOKS EVIDENCE
The MANOTOKS sought admission of the following evidence: Senate and
DOJ Committee Reports; certificates of title issued to them and their
vendees/assignees, i.e., Republic of the Philippines, the Gonzalezes,
Alejandro Ruiz and Mariano Leuterio, Isabel Gil del Sola and Estelita
Hipolito; deeds of absolute sale; contracts to sell; tax declarations and real
property tax receipts; the Formal Officer of Evidence of Philville
Development & Housing Corporation; ["PHILVILLE"], in Civil Case No.

15045; this Court of Appeals Decision in CA-G.R. CV. No. 52606 between
CLT and PHILVILLE; the Orders of Judge Palma dated 13 June 1966 and 16
August 1966 in Case No. 4557 and the billing statements of SSHG Law
Office. They also submitted in evidence the Affidavits and Supplemental
Affidavits of Rosa R. Manotok and Luisa T. Padora; Affidavits of Atty. Felix
B. Lerio, Atty. Ma. P.G. Ongkiko and Engineer Jose Marie P. Bernabe; a copy
of a photograph of BM No. 9; certified true copy of coordinates and reference
point of L.M. No. 1 and BM No. 1 to 10 of Piedad Estate and TCT No. 177013
of CLT.6
DIMSON EVIDENCE
In their Consolidated Formal Offer of Evidence,7 DIMSON submitted the
previous decisions and resolutions passed relative to these cases, various
certifications of different government agencies, OCT 994, subdivision plan of
Lot 25-A-2, observations of Geodetic Engineer Reggie P. Garcia showing the
relative positions of properties within Lot 25-A; the Novation of
Contract/Deed of Sale and Mortgage dated 15 January 1948 between Rato,
Don Salvador Araneta and Araneta Institute of Agriculture; copies of various
certificates of titles to dispute some of the titles held by ARANETA; several
letter-requests and official receipts.
ARANETA EVIDENCE
ARANETA, in turn, offered in evidence various certificates of title,
specifically, OCT No. 994, TCT No. 8692; TCT No. 21857; TCT No. 26538;
TCT No. 26539; TCT No. (7784)-738 and TCT no. 13574. It also marked in
evidence the certified true copies of Decree No. 36577; the DOJ and Senate
Reports; letters of correspondence to the Land Registration Commission and
the Register of Deeds of Malabon City; survey plans of Lot 25-A and TCT r15169 of Dimson and; the affidavit of Engineer Felino M. Cortez and his
curriculum vitae. ARANETA also offered the certified true copy of TCT No.
6196 in the name of Victoneta, Inc.; TCT No. 13574 in the name of
ARANETA; certifications issued by Atty. Josephine H. Ponciano, Acting
Register of Deeds of Malabon city-Navotas; certified true copy of Judge
Palmas Order dated 16 August 1966 in Case No. 4557; Circular No. 17
(which pertains to the rules on reconstitution of titles as of 19 February 1947)
and its official receipt and; the owners duplicate copy of OCT No. 994. 89

III.
We now turn to the evaluation of the evidence engaged in by the Special
Division. To repeat, the Special Division was tasked to determine the
following issues based on the evidence:
i. Which of the contending parties are able to trace back their claims
to Original Certificate of Title (OCT) No. 994 dated 3 May 1917:
ii. Whether the respective imputed flaws in the titles of the Manotoks
and Araneta, as recounted in the Supreme Court 2005 Decision, are
borne by the evidence. Assuming they are, are such flaws sufficient
to defeat said claims?
iii. Whether the factual and legal bases of the 1966 Order of Judge
Muoz-Palma and the 1970 Order of Judge Sayo are true and valid.
Assuming they are, do these orders establish a superior right to the
subject properties in favor of the Dimsons and CLT as opposed to
the claims of the Araneta and the Manotoks?
iv. Whether any of the subject properties had been the subject of
expropriation proceedings at any point since the issuance of OCT
No. 994 on 3 May 1917, and if so, what are those proceedings, what
are the titles acquired by the Government, and is any of the parties
able to trace its title acquired by the government through
expropriation?
v. Such other matters necessary and proper in ascertaining which of
the conflicting claims of title should prevail.
The ultimate purpose of the inquiry undertaken by the Court of Appeals was
to ascertain which of the four groups of claimants were entitled to claim
ownership over the subject properties to which they claimed title thereto.
One set of properties was disputed between CLT and the Manotoks, while
the other set was disputed between Araneta and the Heirs of Dimson.
As can be gleaned from the Report, Jose Dimson was able to obtain an order
in 1977 issued by Judge Marcelino Sayo of the Court of First Instance (CFI) of

Caloocan City on the basis of which he was able to register in his name
properties belonging to the Maysilo Estate. Judge Sayos order in turn was
sourced from a 1966 Order issued by Judge (later Supreme Court Associate
Justice) Cecilia Muoz-Palma of the CFI of Rizal. Dimsons titles reflected, as
their mother title, OCT No. 994 dated 19 April 1917.10 Among these
properties was a fifty (50)-hectare property covered by Transfer Certificate of
Title (TCT) No. 151169, which apparently overlapped with the property of
Araneta covered by TCT No. 13574 and 26538. 11 Araneta was then and still is
in possession of the property. The Araneta titles state, as their mother title,
OCT No. 994 dated 3 May 1917. Consequently, Dimson filed an action for
recovery of possession against Araneta.
Another property in Dimsons name, apparently taken from Lot 26 of the
Maysilo Estate, was later sold to Estelita Hipolito, who in turn sold the same
to CLT. Said property was registered by CLT under TCT No. T-177013,
which also reflected, as its mother title, OCT No. 994 dated 19 April 1917. 12
Said property claimed by CLT encroached on property covered by titles in
the name of the Manotoks. The Manotoks traced their titles to TCT Nos. 4210
and 4211, both issued in 1918 and both reflecting, as their mother title, OCT
No. 994 dated 3 May 1917.1avvphi1

Otherwise stated, both DIMSON and CLT bear the onus of proving in this
special proceedings, by way of the evidence already presented before and
such other forms of evidence that are not yet of record, that either there had
only been an error in the course of the transcription or registration of their
derivative titles, or that other factual and legal bases existed to validate or
substantiate their titles aside from the OCT No. 994 issued on 19 April 1917. 13
Were they able to discharge such burden?
A.
We begin with the Heirs of Dimson. The Special Division made it clear that
the Heirs of Dimson were heavily reliant on the OCT No. 994 dated 19 April
1917.
[DIMSON], on the strength of Judge Sayos Order dated 18 October dated 18
October 1977, was issued separate certificates of title, i.e., TCT Nos. 15166,
15167, 15168 and 15169, covering portions of the Maysilo Estate. Pertinently,
with respect to TCT No. 15169 of DIMSON, which covers Lot 25-A-2 of the
said estate, the following were inscribed on the face of the instrument.

It is evident that both the Heirs of Dimson and CLT had primarily relied on
the validity of OCT No. 994 dated 19 April 1917 as the basis of their claim of
ownership. However, the Court in its 2007 Resolution held that OCT No. 994
dated 19 April 1917 was inexistent. The proceedings before the Special
Division afforded the Heirs of Dimson and CLT alike the opportunity to
prove the validity of their respective claims to title based on evidence other
than claims to title the inexistent 19 April 1917 OCT No. 994. Just as much
was observed by the Special Division:

"IT IS FURTHER CERTIFIED that said land was originally registered on the 19th
day of April in the year nineteen hundred and seventeen in the Registration Book of
the Office of the Register of Deeds of Rizal, Volume NA page NA , as Original
Certificate of Title No. 994 pursuant to Decree No. 36455 issued in L.R.C. Case No.
4429 Record No. ______

Nonetheless, while the respective certificates of title of DIMSON and CLT

refer to OCT 994 issued on 19 April 1917 and that their previous postulations
in the present controversies had been anchored on the supposed validity of
their titles, that which emanated from OCT 994 of 19 April 1917, and
conversely the invalidity of the 3 May 1917 OCT 994, the Supreme Court has
yet again allowed them to substantiate their claims on the basis of other
evidentiary proofs:

From the above accounts, it is clear that the mother title of TCT no. 15169, the
certificate of title of DIMSON covering the now disputed Lot 25-A-2, is OCT
No. 994 registered on 19 April 1917. Manifestly, the certificate of title issued
to DIMSON, and as a matter of course, the derivative title later issued to
CLT, should both be voided inasmuch as the OCT which they emanated had
already been declared inexistent.15

This Certificate is a transfer from Original Certificate of Title No. 994/NA, which is
cancelled by virtue hereof in so far as the above-described land is concerned.14

The Special Division noted that the Heirs of Dimson did not offer any
explanation why their titles reflect the erroneous date of 19 April 1917. At the
same time, it rejected CLTs explanation that the transcription of the
erroneous date was a "typographical error."
As can be gleaned from the records, both DIMSON and their successor-ininterest CLT, had failed to present evidence before this Court to prove that
there had been a mere typographical error in the transcription of their
respective titles with regard to the date of registration of OCT No. 994. CLT
specifically harps on this assertion that there had only been a typographical
error in the transcription of its title.16 On the other hand, while DIMSON had
refused to categorically assert that there had been such a typographical error
causing the invalidity of their title, their failure to proffer any reason or
argument which would otherwise justify why their title reflects 19 April 1917
and not 3 May 1917 leads this Court to conclude that they simply had no
basis to support their proprietary claim.
Thus, without proffering any plausible explanation as to what led to the
erroneous entry of the registration dated of OCT 994, DIMSON are left
without any recourse but to substantiate their claim on the basis of other
evidence not presented during the proceedings below, which would
effectively prove that they had a valid proprietary claim over the disputed
properties. This is specifically true because DIMSON had previously placed
reliance on the MWSS doctrine to prove the validity of their title. 17
Absent such explanation, the Heirs of Dimson were particularly constrained
to rely on the 1977 Order of Judge Sayo, which was allegedly sourced from
the 1966 Order of Judge Muoz Palma. On that issue, the Special Division
made the following determinations:
It should be recalled that in their appellees brief in CA-G.R.CV No. 41883,
therein appellee Jose Dimson specifically denied the falsity of TCT No. R15169 alleging that the contention "is already moot and can be determined by a
controlling decision."18 Jose Dimson expounded on his reliance as follows:
"In Metropolitan Waterworks & Sewerage System (for brevity MWSS) case, Jose B.
Dimsons (as private respondent) title TCT No. 15167 issued for Lot 28 on June 8,
1978 derived from OCT No. 994 registered on April 19, 1917, is overlapping with

MWSS title TCT No. 41028 issued on July 29, 1940 derived from the same OCT
994, registered on May 3, 1917.
(Same facts in the case at bar; Jose B. Dimson (plaintiff-appellee) title TCT No. R15169 issued for Lot 25-A-2, on June 8, 1978, is overlapping with defendantappellants title TCT Nos. 13574 and 21343, not derived from OCT No. 994." 19
So viewed, sans any proof of a mechanical error in the transcription or
annotation on their respective certificates of title, the present inquiry then
hinges on whether the Order dated 13 June 1966 issued by then Judge Cecilia
Muoz-Palma of the Court of First Instance of Rizal in Civil Case No. 4557
["PALMA ORDER"] and Judge Sayos Order dated 18 October 1977 ["SAYOS
18 OCTOBER 1977 ORDER"], can be validated and authenticated. It is so
since the brunt of the proprietary claims of both DIMSON and CLT has its
roots on said Orders.
Perforce, in consideration of the foregoing, this leads Us to the THIRD
ISSUE as presented by the Supreme Court, to wit:
"Whether the factual and legal bases of Palmas 13 June 1966 Order and
Sayos 18 October 1977 Order are true and valid. Assuming they are, do these
orders establish a superior right to the subject properties in favor of the
Dimsons and CLT as opposed to the claims of Araneta and the Manotoks?"
As it is, in contending that their certificates of title could be validly traced
from the 3 May 1917 OCT No. 994, DIMSON point out that their title was
issued pursuant to a court order issued by Judge Palma in Case No. 4557 and
entered in the memorandum of Encumbrance of OCT No. 994. DIMSON also
insist that TCT Nos. 8692, 21857 and 26538 were mere microfilmed or
certified copies and, therefore, inadmissible. Lastly, DIMSON reiterated the
flaws and irregularities which voided the titles of the ARANETA in the
previous proceedings and focused on the burden of ARANETA to present
evidence to defeat their titles.
The foregoing contentions of DIMSON find to factual and legal basis. As we
see it, Sayos 18 October 1977 Order, which apparently confirmed Palmas 13
June 1966 Order, raised serious questions as to the validity of the manner by
which it was arrived at.

It is worthy to note that as early as 25 August 1981, counsel for the

ARANETA applied for a subpoena duces tecum addressed to the Clerk of
Court of CFI Pasig for the production of the records of LRC Case No. 4557
for purposes of determining the genuineness and authenticity of the
signature of Judge Palma and also of her Order granting the confirmation. A
certain Atty. Contreras, Officer-in-Charge of the said court, appeared and
manifested in open court that the records pertaining to the petition for
Substitution of names of Bartolome Rivera, et al. could no longer be located
inasmuch as they had passed hands from one court to another.

I did not see the original also. When the records of this case was brought
here, I checked the records, there were so many pages missing and the pages
were re-numbered but then I saw the duplicate original and there is a
certification of a woman clerk of Court, Atty. Molo.

What is perplexing to this Court is not only the loss of the entire records of
Case No. 4557 but the admission of Judge Sayo that he had not seen the
original of the Palma Order. Neither was the signature of Judge Palma on the
Order duly proven because all that was presented was an unsigned duplicate
copy with a stamped notation of "original signed." Equally perplexing is that
while CFI Pasig had a Case No. 4557 on file, said file pertained not to an LRC
case but to a simple civil case.20 Thus:

Court:

"Atty. Directo:
The purpose of this subpoena duces tecum is to present your Honor the
Order Order (sic) of Judge Palma in order to determine the genuineness and
authenticity of the signature of Judge Palma in this court order and which
order was a basis of a petition in this court to be confirmed. That is the
reason why we want to see the genuineness of the signature of Judge Palma.

Atty. Directo:
That is the reason why we want to see this document, we are surprised why
it is missing.

We are surprised also. You better ask Judge Muoz Palma.

Atty. Contreras:
May I make of record that in verifying our records, we found in our original
vault LRC application no. N-4557 but the applications were certain Feliciano
Manuel and Maria Leao involving Navotas property because I was
wondering why they have the same number. There should be only one.
Atty. Directo:
Aside from that, are there other cases of the same number?
Atty. Contreras:

COURT:
No signature of Judge Palma was presented in this court. it was a duplicate
copy not signed. There is a stamp only of original signed.

No, there should be only number for a particular case; that must be a petition
after decree record.
Atty. Ignacio:

Atty. Directo:
This 4557 is not an LRC Case, it is a simple civil case.
That is the reason why we want to see the original.
xxxxxx
Court:
Moreover, both the MANOTOKS and ARANETA insist that Palmas 13 June
1966 Order had been recalled by a subsequent Order dated 16 August 1966,

["RECALL ORDER"],21 wherein the trial court dismissed the motion filed by
DIMSON on the courts findings that " x x x whatever portion of the property
covered by OCT 994 which has not been disposed of by the previous registered
owners have already been assigned and adjudicated to Bartolome Rivera and his
assignees, as a result of which there is no portion that is left to be given to the herein
supposed assignee Jose Dimson."
However, We are reluctant to recognize the existence and due execution of
the Recall Order considering that its original or even a certified true copy
thereof had not been submitted by either of the two parties relying on it
despite having been given numerous opportunities to do so.
Be that as it may, even if We are to consider that no Recall Order was ever
issued by then Judge Palma, the validity of the DIMSON titles over the
properties in the Maysilo Estate becomes doubtful in light of the fact that the
supposed "share" went beyond what was actually due to Jose Dimson under
the Compromise Agreement with Rivera. It should be recalled that Palmas
13 June 1966 Order approved only the conveyance to Jose Dimson of "25% of
whatever share of Bartolome Rivera has over Lots 25, 26, 27, 28-B and 29 of OCT
994 x x x subject to availability of undisposed portion of the said lots."22
In relation to this, We find it significant to note the observations contained in
the Senate Committee Report No. 1031 that, based on the assumption that
the value of the lots were equal, and "(C)onsidering that the share of Maria
de la Concepcion Vidal was only 1-189/1000 percent of the Maysilo Estate,
the Riveras who claimed to be the surviving heirs of Vidal will inherit only
197, 405.26 square meters (16,602,629.53 m2 x 1.1890%) or 19.7 hectares as
their share.23 Even if we are to base the 25% of Jose Dimson on the 19.7
hectares allotted to the Riveras, it would appear that Jose Dimson would
only be entitled to more or less five (5)hectares of the Maysilo Estate.
Obviously, basing only on TCT No. 15169 of Dimson which covered a land
area of 50 hectares (500,000 square meters),24 it is undisputable that the total
properties eventually transferred to Jose Dimson went over and beyond his
supposed 25% share.
What is more, Palmas 13 June 1966 Order specifically required that "x x x
whatever title is to be issued herein in favor of Jose Dimson, the same shall
be based on a subdivision plan duly certified by the Land Registration

Commission as correct and in accordance with previous orders issued in this

proceedings, said plan to be submitted to this court for final approval.
Interestingly however, despite such requirement, DIMSON did not submit
Survey Plan LRC (GLRO) Rec. No. 4429 SWO-5268 which allegedly was the
basis of the segregation of the lands, if only to prove that the same had been
duly approved and certified correct by the Land Registration Commission.
What was submitted before the RTC and this Court was only the Subdivision
Plan of Lot 25-A-2 which notably does not bear the stamp of approval of the
LRC. Even an inspection of the exhibit for CLT does not bear this Survey
Plan, which could have, at the very least, proven the authenticity of the
DIMSON title.
Indeed, We find the absence of this piece of evidence as crucial in proving
the validity of the titles of DIMSON in view of the allegation of contending
parties that since the survey plan upon which the land titles were based
contained the notation "SWO," meaning that the subdivision plan was only a
product of a "special work order," the same could not have passed the LRC.
Neither was it duly certified by the said office.25
In addition, the Special Division took note of other irregularities attending
Dimsons TCT No. R-15169.
[Firstly], OCT No. 994 showed that Lot 25-A of the Maysilo Estate was
originally surveyed on "September 8-27, 1911, October 4-21 and November
17-18, 1911." Yet, in said TCT No. R-15169, the date of the original survey is
reflected as "Sept. 8-27, 1911" and nothing more.26 The variation in date is
revealing considering that DIMSONs titles are all direct transfers from OCT
No. 994 and, as such, would have faithfully adopted the mother lots data.
Unfortunately, no explanation for the variance was ever offered.
Equally worthy of consideration is the fact that TCT No. 15169 indicates that
not only was the date of original registration inexistent, but the remarks
thereon tend to prove that OCT No. 994 had not been presented prior to the
issuance of the said transfer certificate. This manifest from the notations
"NA" on the face of DIMSONs title meaning, "not available." It bears
emphasizing that the issuance of a transfer certificate of title to the purchaser
without the production of the owners duplicate is illegal (Rodriguez v.

Llorente, 49 Phil. 826) and does not confer any right to the purchaser
(Philippine National Bank vs. Fernandez, 61 Phil. 448 [1935]). The Registrar
of Deeds must, therefore, deny registration of any deed or voluntary
instrument if the owners duplicate is not presented in connection therewith.
(Director of Lands vs. Addison, 40 Phil. 19 [1926]; Hodges vs. Treasurer of
the Phil. 50 Phil. 16 [1927].27
In has also been held that, in cases where transfer certificates of title
emanating from one common original certificate of title were issued on
different dates to different persons or entities covering the same land, it
would be safe to conclude that the transfer certificate issued at an earlier date
along the line should prevail, barring anomaly in the process of
registration.28 Thus, "(w)here two certificates purport to include the same
land, the earlier in date prevails. X x x. In successive registration, where more
than one certificate is issued in respect of a particular estate or interest in
land, the person is deemed to hold under the prior certificate who is the
holder or whose claim is derived directly from the person who was the
holder of the earliest certificate issued in respect thereof. x x x" 29
xxx
Still another indication of irregularity of the DIMSON title over Lot No. 25-A
is that the issuance of the Sayo Order allegedly confirming the Palma Order
was in itself suspect. Gleaning from the records, DIMSON filed the Motion
only on 10 October 1977, or eleven (11) years after obtaining the supposed
sanction for the issuance of titles in this name. Besides, what was lodged by
Jose Dimson before the sala of then Judge Palma was not a simple land
registration case wherein the only purpose of Jose Dimson was to establish
his ownership over the subject parcels of land, but, as reflected in the Palma
Order, the subject of the case was the confirmation of Jose Dimsons claim
over the purported rights of Rivera in the disputed properties. The case did
not partake of the nature of a registration proceeding and thus, evidently did
not observe the requirements in land registration cases. Unlike in a land
registration case, therefore, Jose Dimson needed to file an action before Judge
Sayo to seek "confirmation" of Palmas Order dated 13 June 1966.

So viewed the general rule proscribing the application of laches or the statute
of limitations in land registration cases,30 as well as Section 6, Rule 39 of the
Rules of Court, in relation to its provisions on revival of judgment applies
only to ordinary civil actions and not to other or extraordinary proceedings
such as land registration cases, is clearly not applicable in the present case.
The legal consequences of laches as committed by DIMSON and their failure
to observe the provisions of Rule 39 should, therefore, find application in this
case and thus, the confirmation of DIMSONs title, if any, should fail.
Parenthetically, the allegations of DIMSON would further show that they
derive the validity of their certificates of title from the decreased Jose
Dimsons 25% share in the alleged hereditary rights of Bartolome Rivera
["RIVERA"] as an alleged grandson of Maria Concepcion Vidal ["VIDAL"].
However, the records of these cases would somehow negate the rights of
Rivera to claim from Vidal. The Verification Report of the Land Registration
Commission dated 3 August 1981 showed that Rivera was 65 years old on 17
May 1963 (as gathered from the records of Civil Case Nos. 4429 and 4496). 31
It can thus be deduced that, if Rivera was already 65 years old in 1963, then
he must have been born around 1898. On the other hand, Vidal was only
nine (9) years in 1912; hence, she could have been born only on 1905. This
alone creates an unexplained anomalous, if not ridiculous, situation wherein
Vidal, Riveras alleged grandmother, was seven (7) years younger than her
alleged grandson. Serious doubts existed as to whether Rivera was in fact an
heir of Vidal, for him to claim a share in the disputed portions of the Maysilo
Estate.32
These findings are consonant with the observations raised by Justice Renato
Corona in his Concurring and Dissenting Opinion on our 2007 Resolution.
To wit:
TCT No. T-177013 covers Lot 26 of the Maysilo Estate with an area of
891,547.43 sq. m. It was a transfer from TCT No. R-17994 issued in the name
of Estelita I. Hipolito. On the other hand, TCT No. R-17994 was a transfer
from TCT No. R-15166 in the name of Jose B. Dimson which, in turn, was
supposedly a direct transfer from OCT No. 994 registered on April 19, 1917.

Annotations at the back of Hipolito's title revealed that Hipolito acquired

ownership by virtue of a court order dated October 18, 1977 approving the
compromise agreement which admitted the sale made by Dimson in her
favor on September 2, 1976. Dimson supposedly acquired ownership by
virtue of the order dated June 13, 1966 of the CFI of Rizal, Branch 1 in Civil
Case No. 4557 awarding him, as his attorney's fees, 25% of whatever
remained of Lots 25-A, 26, 27, 28 and 29 that were undisposed of in the
intestate estate of the decedent Maria de la Concepcion Vidal, one of the
registered owners of the properties covered by OCT No. 994. This order was
confirmed by the CFI of Caloocan in a decision dated October 13, 1977 and
order dated October 18, 1977 in SP Case No. C-732.
However, an examination of the annotation on OCT No. 994, particularly the
following entries, showed:
AP-6665/0-994 Venta: Queda cancelado el presente Certificado en cuanto
a una extencion superficial de 3,052.93 metros cuadrados y 16,512.50 metros
cuadrados, y descrita en el lote no. 26, vendida a favor de Alejandro Ruiz y
Mariano P Leuterio, el primer casado con Deogracias Quinones el Segundo
con Josefa Garcia y se ha expedido el certificado de Titulo No; 4210, pagina
163 Libro T-22.
Fecha del instrumento Agosto 29, 1918
Fecha de la inscripcion September 9, 1918
10.50 AM
AP-6665/0-994 Venta: Queda cancelado el presente Certficado el
cuanto a una extencion superficial de 871,982.00 metros cuadrados, descrita
en el lote no. 26, vendida a favor de Alejandro Ruiz y Mariano P. Leuterio, el
primer casado con Deogracias Quinones el segundo con Josefa Garcia y se ha
expedido el certificado de Titulo No 4211, pagina 164, Libro T-22.
Fecha del instrumento Agosto 25, 1918
Fecha de la inscripcion September 9, 1918

10:50- AM
Based on the description of Lot No. 26 in OCT No. 994, it has an area of
891,547.43 sq. m. which corresponds to the total area sold in 1918 pursuant to
the above-cited entries. Inasmuch as, at the time the order of the CFI of Rizal
was made on June 13, 1966, no portion of Lot No. 26 remained undisposed
of, there was nothing for the heirs of Maria de la Concepcion Vidal to convey
to Dimson. Consequently, Dimson had nothing to convey to Hipolito who,
by logic, could not transmit anything to CLT.
Moreover, subdivision plan Psd-288152 covering Lot No. 26 of the Maysilo
Estate described in Hipolito's certificate of title was not approved by the
chief of the Registered Land Division as it appeared to be entirely within Pcs1828, Psd-5079, Psd-5080 and Psd-15345 of TCT Nos. 4210 and 4211. How
Hipolito was able to secure TCT No. R-17994 was therefore perplexing, to
say the least.
All these significant facts were conveniently brushed aside by the trial and
appellate courts. The circumstances called for the need to preserve and
protect the integrity of the Torrens system. However, the trial and appellate
courts simply disregarded them.33
The Court thus adopts these findings of the Special Division on the validity
of Jose Dimsons titles, which he obtained consequent to the 1977 Order of
Judge Sayo. Consequently, we cannot give due legal recognition to any and
all titles supposedly covering the Maysilo Estate obtained by Dimson upon
the authority of either the purported 1966 Order of Judge Muoz-Palma or
the 1977 Order of Judge Sayo.
B.
Indubitably, as between the titles of ARANETA and the MANOTOKS and
their predecessors-in-interest, on one hand, and those of DIMSON, on the
other, the titles held by ARANETA and the MANOTOKS must prevail
considering that their titles were issued much earlier than the titles of the
latter.

Our findings regarding the titles of Jose Dimson necessarily affect and even
invalidate the claims of all persons who seek to derive ownership from the
Dimson titles. These include CLT, which acquired the properties they laid
claim on from Estelita Hipolito who in turn acquired the same from Jose
Dimson. Just as much was concluded by the Special Division as it evaluated
CLTs claims.
For its part, CLT contended that even at the trial court level, it maintained
that there was only one OCT No. 994 from where its claim emanates. It
argued that its case against the MANOTOKS, including that of STO. NIO,
was never decided based on the doctrines laid down in Metropolitan
Waterworks and Sewerage System v. Court of Appeals34 and Heirs of
Gonzaga v. Court of Appeals.35
Before this Special Division, CLT insists that the MANOTOKS failed to
submit "new" competent evidence and, therefore, dwelling on the alleged
flaws of the MANOTOKs titles, "the findings and conclusions of the courtappointed commissioners as adopted by the trial court, then upheld by the
Honorable Court in its Decision dated 28 September 1995 and finally
affirmed in the Supreme Courts Decision dated 29 November 2005, therefore
stand, as there is no reason to disturb them."
Furthermore, CLT contends that the Orders of Judge Palma and Judge Sayo
are no longer open to attack in view of their finality. Lastly, CLT asserts that
the properties covered by the MANOTOKS titles and those covered by the
expropriation proceedings did not property pertain to and were different
from Lot 26 owned by CLT. Thus, it maintains that the MANOTOKS cannot
use as basis for the validity of their titles the expropriation undertaken by the
Government as a means of staking their claims.
To restate, CLT claims the 891,547.43 square meters of land covered by TCT
No. T-17701336 located in Malabon, Caloocan City and designated as "Lot 26,
Maysilo Estate, LRC Swo-5268." TCT No. T-177013 shows that its mother
titles is OCT No. 994 registered on 19 April 1917. Tracing said claim, Estelita
Hipoloto executed a Deed of Sale with Real Estate Mortgage in favor of CLT
on 10 December 1988. By virtue of this transfer, Hipolitos TCT No. R-1799437
was cancelled and in lieu thereof, CLTs TCT No. 223677/R-17994 of TCT

No. R-17994. Hipolito, on the other hand, was a transferee of the deceased
Dimson who was allegedly the registered owner of the subject land on the
basis of TCT No. 15166.
In view of the foregoing disquisitions, invalidating the titles of DIMSON, the
title of CLT should also be declared a nullity inasmuch as the nullity of the
titles of DIMSON necessarily upended CLTs propriety claims. As earlier
highlighted, CLT had anchored its claim on the strength of Hipolitos title
and that of DIMSONs TCT No. 15166. Remarkably and curiously though,
TCT No. 15166 was never presented in evidence for purposes of tracing the
validity of titles of CLT. On this basis alone, the present remand proceedings
remain damning to CLTs claim of ownership.
Moreover, considering that the land title of CLT carried annotations identical
to those of DIMSON and consequently included the defects in DIMSONs
title, the fact that whatever typographical errors were not at anytime cured
by subsequent compliance with the administrative requirements or subjected
to administrative correction bolsters the invalidity of the CLT title due to its
complete and sole dependence on the void DIMSON title. 38
IV.
The task of the Special Division was not limited to assessing the claims of the
Heirs of Dimson and CLT. We likewise tasked the Special Division to
ascertain as well the validity of the titles held by the Manotoks and Araneta,
titles which had been annulled by the courts below. Facially, these titles of
the Manotoks and Araneta reflect, as their valid mother title, OCT No. 994
dated 3 May 1917. Nonetheless, particular issues were raised as to the
validity of the Manotok and Araneta titles independent of their reliance on
the 3 May 1917 OCT No. 994 vis--vis the inexistent 19 April 1917 OCT No.
994.
A.
We begin by evaluating the Araneta titles. The Special Division quoted the
observations of the trial court, which upheld Dimsons claim over that of
Araneta, citing the following perceived flaws of TCT Nos. 26538 and 26539,
from which Araneta derived its titles, thus:

Let us now examine TCT 26538 and TCT 26539 both in the name of Jose Ma.
Rato from where defendant was said to have acquired TCT 13574 and TCT
7784 now TCT 21343 in the name of Araneta and the other documents related
thereto:
1) Perusal of TCT 26538 shows that its Decree No. and Record No.
are both 4429. In the same vein, TCT 26539 also shows that it has
Decree No. 4429 and Record No. 4429.
However, Decree No. 4429 was issued by the Court of First Instance,
Province of Isabela (Exhibit I) and Record No. 4429, issued for
Ordinary Land Registration Case, was issued on March 31, 1911 in
CLR No. 5898, Laguna (Exhibit 8, 8-A Bartolome Rivera et al.)
How then could TCT No. 26538 and TCT No. 26539 both have
Decree No. 4429 and Record No. 4429, which were issued in Court of
First Instance, Province of Isabela and issued in Laguna,
respectively.
2) TCT no. 26538 and TCT No. 26539 in the name of Jose Ma. Rato
are not annotated in the Original Certificate of Title 994, where they
were said to have originated.
3) The Escritura de Incorporacion de Philippine Land Improvement
Company (Exhibit I) executed on April 8, 1925 was only registered
and was stamped received by the Office of the Securities and
Exchange Commission only April 29, 1953 when the Deed of Sale &
Mortgage was executed on August 23, 1947 (Exh. 5 defendant) and
the Novation of Contract, Deed of Sale and Mortgage executed on
November 13, 1947 (Exh. M0. So, that when Philippine Land
Improvement was allegedly given a special power of attorney by
Jose Ma. Rato to represent him in the execution of the said two (2)
documents, the said Philippine Land Improvement Company has
not yet been duly registered.
4) TCT 26538 and 26538 and TCT 26539 both in the name of Jose Ma.
Rato, both cancel 21857 which was never presented in Court if only
to have a clear tracing back of the titles of defendant Araneta.

5) If the subject matter of the Deed of Sale & Mortgage (Exhibit 5

defendant) is TCT 26539, why is it that TCT 13574 of defendant
Araneta cancels TCT 6196 instead of TCT 26539. That was never
explained. TCT 6196 was not even presented in Court.
6) How come TCT 26538 of Jose Ma. Rato with an area of 593,606.90
was cancelled by TCT 7784 with an area of only 390,282 sq.m.
7) How was defendant Araneta able to have TCT 7784 issued in its
name, when the registration of the document entitled Novation of
Contract, Deed of Sale & Mortgage (Exhibit M) was
suspended/denied (Exhibit N) and no title was received by the
Register of Deeds of Pasig at the time the said document was filed in
the said Office on March 4, 1948 (Exhibit N and N-1).
Under Sec. 55 of Land Registration Act (Act No. 496) now Sec. 53 of
Presidential Decree No. 1529, no new certificate of title shall be
entered, no memorandum shall be made upon any certificate of title
by the register of deeds, in pursuance of any deed or other voluntary
instrument, unless the owners duplicate certificate is presented for
such endorsement.
8) The sale by Jose Ma. Rato in favor of defendant Araneta is not
reflected on the Memorandum of Encumbrances of TCT 26538
(Exhibit 7-defendant) meaning that TCT 26538 still exists and intact
except for the encumbrances annotated in the Memorandum of
Encumbrances affecting the said title (Exhibits 16, 16-A and 16-N
David & Santos)
9) In the encumbrances annotated at the back of TCT 26539 (Exhibit
4-defendant) there appears under entry No. 450 T 6196 Victoneta,
Incorporated covering parcel of land canceling said title (TCT 26539)
and TCT 6196 was issued ( x x x) which could have referred to the
Deed (sic) of Sale and Mortgage of 8-23-47 (Exhibit 5-defendant)
entered before Entry 5170 T-8692 Convenio Philippine Land
Improvement Company, with Date of Instrument: 1-10-29, and Date
of Inscription: 9-21-29.

In TCT 26838 this Entry 5170 T-8692 Convenio Philippine Land Improvement
Company (Exhibit 16-J-1) appears, but the document, Novation of Contract,
Deed of Sale & Mortgage dated November 13, 1947 (Exhibit M) does not
appear.
Entry marked Exhibit 16-J-1 on TCT 26538 shows only the extent of the value
of P42,000.00 invested by Jose Ma. Rato in the Philippine Land Improvement
Company. Said entry was also entered on TCT 26539.
The Court also wonders why it would seem that all the documents presented
by defendant Araneta are not in possession of said defendant, for according
to witness Zacarias Quintan, the real estate officer of the said defendant
Araneta since 1970, his knowledge of the land now in possession of
defendant Araneta was acquired by him from all its documents marked in
evidence which were obtained only lately when they needed for presentation
before this Court.3940
The Special Division then proceeded to analyze these factual contentions,
and ultimately concluded that the Araneta claim to title was wholly valid.
We adopt in full the following factual findings of the Special Division, thus:
As for the proprietary claim of ARANETA, it maintains that it has
established by direct evidence that its titles were validly derived from OCT
No. 994 dated 3 May 1917. With regard to the imputed flaws, it asseverates
that these were unfounded and thus, labored to refute all of them.
ARANETA further expounded on the nullity of the Palma and Sayo Orders
which was the basis of DIMSONs titles.

"12343/O-994 Auto: Jose Rato y Tuason - - - Queda cancelado el presente

seartificado en cuanto a una estension superficial de 1,405,725.90 metro
Cuadrados mas o menos descrita en el Lote No. 25-A-3, an virtud del auto
dictado por el Juzgado de Primera Instancia de Riza, de fecha 28 de Julio de
1924, y que en au lugar se had expedido el Certificados de Titulo No. 8692,
folio 492 del Tomo T-35 del Libro de Certicadads de Transferencia.
Date of Instrument Julio 28, 1924.
Date of Inscription Agosto 1, 1024 10:19 a.m.
SGD. GLICERIO OPINION, Register of deeds
Agosto 19, 192442
In accordance with the decree, RATO was issued on 1 August 1924, TCT No.
869243 which covers "Lote No. 25 A-3 del plano del subdivision, parte del
Lote No. 25-A, plano Psu-(not legible), "Hacienda de Maysilo," situado en el
Munisipio de Caloocan, Provincia del Rizal x x x." 44 The parcel of land covers
an approximate area of "UN MILLION CUATROCIENTOS CINCO MIL
SETECIENTOS VEINTICINCO metros cuadrados con NOVENTA
decimetros cuadrados (1,405,725.90) mas o menos." As reflected under Entry
No. 14517.T-8692,45 the parcel of land covered under this certificate of title
was subdivided into five (5) lots under subdivision plan Psd-6599 as per
Order of the court of First Instance of Rizal. Consequently, TCT Nos. 21855,
21856, 21857, 21858 and 21859 were issued.

The documentary exhibits it proffered traced its certificates of title to OCT

No. 994 registered on 3 May 1917. From the titles submitted, its predecessorin-interest was Jose Ma. Rato y Tuazon ["RATO"], one of the co-heirs named
in OCT No. 994, who was allotted the share of nine and five hundred twelve
one thousandths (9-512/1000) percent share of the Maysilo Estate.41 For this
reason, to ascertain the legitimacy of the derivative title of ARANETA, the
origin and authenticity of the title of RATO need to be reassessed.

Focusing on TCT No. 21857 issued on 23 May 1932, this certificate of title
issued in RATOs name,46 cancelled TCT No. 869247 with respect to the
property it covers. On its face, TCT No. 21857, 48 was a derivative of OCT No.
994 registered on 3 May 1917. It covers Lot No. 25 A-3-C of subdivision plan
Psd-6589, being a portion of Lot No. 25-A-3, G.L.R.O Record No. 4429.
Thereafter, TCT No. 21857 was cancelled by TCT No. 2653849 and TCT No.
2653950 which were both issued in the name of Jose Ma. Rato y Tuazon on 17
September 1934.

Verily, attesting to RATOs share on the property, Entry No. 12343/O-994 of

the Owners Duplicate Copy of OCT no. 994, records the following:

With respect to TCT No. 26539, the certificate of title showed that it covered a
parcel of land designated as Section No. 2 of the subdivision plan Psd-10114,

being a portion of Lot 25-A-3-C having an approximate area of 581,872

square meters.51 Thereafter, TCT No. 26539 was cancelled by TCT No. 6196 52
whose registered owner appears to be a certain Victoneta, Inc. This parcel of
land has an area of 581,872 square meters designated as section No. 2 of
subdivision plan Psd-10114, being a portion of Lot 25-A-3-C.
As shown on its face, TCT No. 6196 issued on 18 October 1947 in the name of
Victoneta, Inc. and its mother title were traced from OCT No. 994 registered
on 3 May 1917. Later, TCT No. 6196 was cancelled, and in lieu thereof, TCT
No. 13574 was issued in favor of Araneta Institute of Agriculture on 20 May
1949.53 It covers a parcel of land designated as section No. 2 of subdivision
plan Psd-10114, being a portion of Lot 25-A-3-C. It has an aggregate area of
581,872 square meters.
On the other hand, appearing under Entry No. 16086/T-No. 13574 of TCT
No. 6196 is the following:
"Entry No. 16086/T-No. 13574 SALE in favor of the ARANETA
INSTITUTE OF AGRICULTURE, vendee: Conveying the property described
in this certificate of title which is hereby cancelled and issuing in lieu thereof
Transfer Certificate of Title No. 13574, page 74, Book T-345 in the name of the
vendee. (Doc. No. 149, page 98, Book II, S. of 1949 of Notary Public for
Manila, Hospicio B. Bias).

1980 filed in Civil Case No. 8050, a mere copy of TCT No. 21343 showed that
it covers a parcel of land designated as Lot 6-B of the subdivision plan Psd24962 being a portion of Lot 6, described as plan Psd-21943, G.L.R.O. Record
No. 4429 with an approximate area of 333,377 square meters. 59 However, for
reasons unknown, a copy of TCT No. 21343, whether original or certified
true copy thereof, was not submitted before this Court.
In summation, ARANETA had shown that RATO, as one of the co-owners of
the property covered by OCT NO. 994, was assigned Lot No. 25-A-3. His
evidence of ownership is reflected on TCT No. 8692 issued in his name.
RATO held title to these parcels of land even after its subdivision in the
1930s. Further subdividing the property, RATO was again issued TCT No.
21857, and later TCT Nos. 26538 and 26539, still covering Lot No. 25 A-3-C.
In all his certificates of title, including those that ultimately passed
ownership to ARANETA, the designation of the lot as either belonging to or
portions of Lot 25-A-3 was retained, thereby proving identity of the land.
More importantly, the documentary trail of land titles showed that all of
them were derived from OCT No. 994 registered on 3 May 1917. For
purposes of tracing ARANETAs titles to Oct No. 994, it would appear that
the evidence presented ultimately shows a direct link of TCT Nos. 7784 and
13574 to said mother title. Suffice it to state, the origin and legitimacy of the
proprietary claim of ARANETA had been well substantiated by the evidence
on record and on this note, said titles deserve validation.

Date of Instrument May 18, 1949

Date of the Inscription May 30, 1949 at 11:00 a.m.54
TCT No. 2653855 in turn showed on its face that it covers a parcel of land
designated as Section 1 of subdivision plan Psd-10114 being a portion of Lot
25-A-3-C having an area of 592,606.90 square meters. 56
On 4 March 1948, TCT No. 26538 was cancelled by TCT No. 7784, which was
issued in favor of Araneta Institute of Agriculture. TCT No. 7784 covers four
(4) parcels of land with an aggregate area of 390,282 square meters. 57 It
would appear from the records of CA-G.R. SP No. 34819 consolidated with
CA-G.R. CV No. 41883 that TCT No. 7784 was eventually cancelled by TCT
No. 21343.58 As per attachment of ARANETA in its Answer dated 6 march

Under the guidelines set, we shall now proceed to evaluate the imputed
flaws which had been the previous bases of the trial court in invalidating
ARANETAs titles.
One of the flaws observed on the titles of ARANETAs predecessor-ininterest was that TCT No. 26538 and TCT No. 26539 in Ratos name refer to
Decree No. 4429 and Record No. 4429, as basis of their issuance. This is being
questioned inasmuch as Decree No. 4429 refers to a decree issued by the CFI
of Isabela while Record No. 4429 was issued for ordinary Land Registration
Case No. 31 March 1911 in CLR No. 5898 of Laguna.
Explaining this discrepancy, ARANETA insisted that the same was a mere
typographical error and did not have any effect on the validity of their title.

It further contended that the number "4429" was the case number of Decree
No. 36455 and was used interchangeably as the record number.
This Court finds that the incorrect entry with respect to the Decree and
Record Number appearing on the title of ARANETAs predecessor-ininterest cannot, by itself, invalidate the titles of ARANETAs predecessors-ininterest and ultimately, that of ARANETA. To the mind of this Court, the
incorrect entries alluded to would not have the effect of rendering the
previous titles void sans any strong showing of fraudulent or intentional
wrongdoing on the part of the person making such entries. Fraud is never
presumed but must be established by clear and convincing evidence.60 The
strongest suspicion cannot sway judgment or overcome the presumption of
regularity. The sea of suspicion has no shore, and the court that embarks
upon it is without rudder or compass.61
The Supreme Court, in Encinas v. National Bookstore, Inc. 62 acknowledged
that certain defects on a certificate of title, specifically, the interchanging of
numbers, may occur and "it is certainly believable that such variance in the
copying of entries could be merely a typographical or clerical error." In such
cases, citing with approval the decision of the appellate court, the technical
description in the title should prevail over the record number. 63
Thus, what is of utmost importance is that the designation and the technical
description of the land, as stated on the face of the title, had not been shown
to be erroneous or otherwise inconsistent with the source of titles. In
ARANETAs case, all the titles pertaining to Lot No. 25 had been verified to
be an offshoot of Decree No. 36455 and are all located in Tinajeros, Malabon.
At any rate, despite the incorrect entries on the title, the properties, covered
by the subject certificates of title can still be determined with sufficient
certainty.
It was also opined that TCT No. 26538 and TCT No. 26539 in the name of
RATO had not been annotated on OCT No. 994 from which said titles had
supposedly originated. It should be stressed that what partially cancelled
OCT No. 994 with respect to this subject lot were not TCT Nos. 26538 and
26539 but TCT No. 8692 issued on 1 August 1924. In fact, TCT Nos. 26538
and 26539 are not even the immediate predecessors of OCT No. 994 but were

mere derivatives of TCT No. 21857. Logically therefore, these two certificates
of title could not have been annotated on OCT No. 994, they not being the
preceding titles.
In any case, a perusal of OCT No. 994 shows an entry, which pertains to Jose
Ma. Rato but, on account of the physical condition of the copy submitted to
this Court, the entry remains illegible for us to make a definite conclusion.64
On the other hand, Entry No. 12343/O-994 found on the Owners Duplicate
Copy of OCT No. 994 specifically recorded the issuance of TCT No. 8692
over Lot No. 25-A-3.65
The other flaws noted on ARANETAs certificates of title pertained to its
failure to present TCT Nos. 21857, 6196 and 21343. As we have discussed,
ARANETA offered in evidence a certified microfilm copy of TCT No. 21857
and a certified true copy of TCT No. 6196 marked as Exhibits 5-A1A and 19A1A, respectively. However, it failed to submit a copy of said TCT No.
21343. Be that as it may, we will not hasten to declare void TCT No. 7784 as a
consequence of such omission, especially so since TCT No. 21343 appears to
be a mere derivative of TCT No. 7784. Given that the validity of TCT No.
7784 had been preponderantly proven in these proceedings, the authenticity
of said title must be sustained. Besides, ARANETAs failure to submit TCT
No. 21343 had never been put into issue in these proceedings.
With respect to the difference in the area of more than 200,0000 square
meters between TCT No. 7784 and TCT No. 26538, we find that the trial court
failed to consider the several conveyances of portions of TCT No. 26538
before they finally passed on to ARANETA. Thus, on the Memorandum of
Encumbrance of TCT No. 26538, it is apparent that portions of this piece of
land had been sold to various individuals before the same were transferred
to ARANETA on 4 march 1948. Naturally, since the subject land had been
partially cancelled with respect to the portion disposed of, it could not be
expected that the area of TCT No. 26538 will remain the same at the time of
its transfer to ARANETA. Even assuming that the entire area covered by
TCT No. 26538 had been disposed of, this fact alone, cannot lend us to
conclude that the conveyance was irregular. An anomaly exists if the area
covered under the derivative title will be much more than its predecessor-ininterest. Evidently, this is not so in the case before us.

The trial court, relying on Exhibit "N", further asserted that ARANETA
should not have been issued TCT No. 7784 considering that the registration
of the Novation of Contract, deed of Sale & Mortgage was
suspended/denied and no title was received by the Register of Deeds of
Pasig at the time the said document was filed in the said Office on march 4,
1948. A perusal of Exhibit "N" submitted before the trial court, shows that the
suspension or denial was merely conditional considering that the person
seeking registration had give days within which to correct the defects before
final denial thereof. As we see it, the Notice merely contained a warning
regarding the denial of the registration of the voluntary deed but, in no way,
did it affect the vested rights of ARANETA to be land. The fact that the title
to the land was subsequently issued free from any notation of the alluded
defect creates a reasonable presumption that ARANETA was in fact able to
comply with the condition imposed. This is especially true since the notice
itself contained a note, "Just Completed," written across the face of the letter.
Records also reveal the RTCs observation with regard to Aranetas failure to
disprove the result of the plotting made on the subject land (Exhibit K) to the
effect that TCT 26538 overlaps portion of TCT 15159 and TCT 26539 also
overlaps the other portion of said TCT R-15169. The trial court further
noted that "TCT R-15169 (Jose Dimson) and TCT 26539 (Jose Rato) and TCT
21343 (Araneta) are overlapping each other within Lot 25-A. That portion of
TCT R-15169 (Jose Dimson) along bearing distance points to 17 to 18 to 19 to
20 to 21 to 1 and 2 shaded in yellow color in the Plan is not covered by TCT
21343 (Araneta)."66
Scrutinizing Exhibit "K," it becomes apparent that the said evidence relied
upon was only a private survey conducted by Geodetic Engineer Reggie P.
Garcia which had not been duly approved by the Bureau of Lands and was
based only on photocopies of relevant land titles.67 What is more, said
geodetic engineer also failed to adequately explain his observations,
approach and manner of plotting the relative positions of the lots. 68 From all
indications, the conclusions reached by said geodetic engineer were
anchored on unfounded generalizations.
Another defect cited on ARANETAs title was the absence of any entry on
the Memorandum of Encumbrances of TCT No. 26538 of the alleged sale

between RATO and ARANETA. As pointed out by ARANETA, the copy of

TCT No. 26538 submitted to the trial court contained entries only up to the
year 1947, thus, explaining the (1) lack of entry with regard to the issuance of
TCT No. 7784 in favor of ARANETA considering that the same was issued a
year later and; (2) entry pertaining to Convenio Philippine Land
Improvement Company which was entered way back on 21 August 1929.
Nonetheless, it still cannot be denied that Rato and ARANETA together with
Don Salvador Araneta, entered into a voluntary agreement with the
intention of transferring the ownership of the subject property. Moreover, no
conclusion should have been reached regarding the total cancellation of TCT
No. 26538 inasmuch as TCT No. 7784 cancelled the former certificate of title
to the extent only of Three Hundred Ninety Thousand Two Hundred Eighty
Two (390,282) square meters.
Notably also, with the evident intent to discredit and refute the title of
ARANETA, DIMSON submitted TCT Nos. 26538 69 and 21857,70 which are
both derivatives of OCT No. 994 registered on 3 May 1917 and cover parcels
of land located in Malabon, Rizal. However, these certificates of title reflect
different registered owners and designation of the land covered.
Pertinently, Exhibit "M-Dimson" relating to TCT No. 26538, registered on 12
June 1952, points to one Angela Bautista de Alvarez as the registered owner
of a 240 square meter of land designated as Lot No. 19, Block 14 of the
subdivision plan Psd-5254 being a portion of Lot No. 7-A-1-A. This certificate
of title cancels TCT No. 14112/T-348 and refers to a certain TCT No. 30473 on
the inscriptions.
Exhibit "N-Dimson," on the other hand, pertaining to TCT No. 21857 was
issued on 30 March 1951 to one Angela I. Tuason de Perez married to
Antonio Perez. This certificate of Title covers a parcel of land described as
Lot No. 21, Block 16 of the consolidation and subdivision plan Pcs-140,
G.L.R.O. Record No. 4429. It ahs an area of 436 square meters and cancels
TCT No. 21856.
Exhibit "Q-Dimson"71 consisting of TCT No. 8692 covers two parcels of land
designated as Lot Nos. 1 and 2 of Block No. 44 of the consolidation
Subdivision Plan Pcs-188 with a total area of 3,372 square meters. It was

issued to Gregorio Araneta, Incorporated on 7 May 1948. This certificate of

title cancelled TCT No. 46118.
Comparing these titles to those of the ARANETA, it is apparent that no
identity of the land could be found. The Supreme Court, in the case of
Alonso v. Cebu City Country Club, Inc.72 agreeing with the Court of
Appeals dissertation in said case, ruled that there is nothing fraudulent for a
certificate of title to bear the same number as another title to another land.
On this score, the Supreme Court elucidated as follows:
"On the question that TCT No. RT-1310 (T-1151) bears the same number as
another title to another land, we agree with the Court of Appeals that there is
nothing fraudulent with the fact that Cebu Country Club, Inc.s reconstituted
title bears the same number as the title of another parcel of land. This came
about because under General Land Registration Office (GLRO) Circular No.
17, dated February 19, 1947, and Republic Act No. 26 and Circular No. 6, RD
3, dated August 5, 1946, which were in force at the time the title was
reconstituted on July 26, 1946, the titles issued before the inauguration of the
Philippine Republic were numbered consecutively and the titles issued after
the inauguration were numbered also consecutively starting with No. 1, so
that eventually, the titles issued before the inauguration were duplicated by
titles issued after the inauguration of the Philippine Republic x x x."
Parenthetically, in their Motion for Partial Reconsideration of this Courts
Resolution dated 30 October 2008, DIMSON objected to the admissibility of
Exhibits 4-A1A to 7-A1A on the ground that ARANETA failed to submit the
original copies of these certificates of title and contended that the "originals"
contain different "contents" from their own Exhibits M, N and Q. 73 The fact
that the entries contained in ARANETAs pieces of evidence are different
from that of DIMSONs do not automatically make ARANETAs exhibits
inferior replications or a confirmation of their falsity. Interestingly, the
objection regarding the non-submission of the "original copy" had not been
raised by DIMSON in their Comments/Objections to Consolidated Formal
Offer of Evidence (Of Araneta Institute of Agriculture, Inc.). 74 In any case, we
find the objections unwarranted considering that certified true copies or
certified microfilm copies of Exhibits 4-A1A to 7-A1A had been submitted by
ARANETA in these proceedings.

Lastly, on the alleged non-registration of Philippine Land Improvement

Company at the time the special power of attorney was executed by Jose Ma.
Rato to represent him in the execution of the deed of conveyances, the same
only proves that Philippine Land Improvement Company was not yet
registered and this does not go as far as proving the existence or nonexistence of the company at which time it was executed. In effect, the
company was not precluded to enter into contracts and be bound by them
but it will do so at the risk of the adverse effects of non-registration under the
law.
Ultimately, the question of whether the aforesaid certificates of title
constitute as clouds on ARANETAs titles are not for this Court to rule upon
for purposes of the present remand. Needless to state, it is not for the Heirs
of Dimson to rely on the weakness of ARANETAs titles and profit from it.
Rather, they should have focused on the strength of their own titles since it is
not within our office to decide in whose hands the contested lands should
go, our task being merely to trace back the parties claims to OCT No. 994
dated 3 May 1917.75
There is no question that the Araneta titles were derived from OCT No. 994
dated 3 May 1917, particularly from the share of Jose Ma. Rato y Tuazon, one
of the co-heirs named in OCT No. 994. The Special Division correctly
assessed, among others, the reference to Decree No. 4429 and Record No.
4429 in some of the antecedent titles of Araneta76 as mere clerical errors that
could not have invalidated said titles, "4429" being the case number of Decree
No. 36455, and the designation and the technical description of the land on
those titles not having been shown to be erroneous or variant with the source
title. The Special Division also correctly considered that the trial court had
failed to take into account the several conveyances of TCT No. 26538 before it
was ultimately transferred to Araneta in 1948, which explain the difference
in area between TCT No. 7784 and TCT No. 26538. The imputed overlap of
TCT No. 26538 and TCT No. 26539 with the titles held by Dimson was based
on a private survey which had not been duly approved by the Bureau of
Lands. The alleged absence of any entry on the Memorandum of
Encumbrances of TCT No. 26538 of the sale of the property between Rato
and Araneta did not, according to the Special Division, discount the fact that
Rato and Araneta entered into a voluntary agreement with the intention of

transferring the ownership of the subject property. Finally, the Special

Division noted that the titles derived from OCT No. 994, which Dimson had
submitted as evidence to discredit the Araneta claim, pertain to properties
wholly different from those covered by the Araneta titles.
There is no cause to dispute the factual findings and conclusions of the
Special Division on the validity of the Araneta titles, and we affirm the same.
B.
It appears that the claim to title of the Manotoks is somewhat more
controversial. The Special Division did not discount the fact that there could
have been flaws in some of the intervening titles between the 3 May 1917
OCT No. 994 and the present titles of the Manotoks. However, the significant
event was the expropriation proceedings undertaken by the Republic of the
Philippines sometime in 1947. At least some of the titles in the name of the
Manotoks were sourced from the titles issued to and subsequently
distributed by the Republic. The Special Division explained the milieu in full:

"Ap. 6665/O-994-Venta: Queda Cancelado el presente Cerficiado en cuanto a

una extension superficial de 871,982.00 metros cuadrados, descrita en el Lote
No. 26, vendida a favor de Alejandro Ruiz y Mariano P. Leuterio, el primar
casado con Deogracias Quinones y el Segundo con Josefa Garcia y se be
expedido el Certificado de Titulo No. 4211, Pagina 164, Libro T-No. 22.
Date of Instrument Aug. 21, 1918
Date of Inscription Sept. 9, 1918 10:50 a.m.
(SGD.) L. GARDUNIO, Register of Deeds"
As a result, TCT No. 4211 was cancelled by TCT No. 5261 which was issued
in the name of Francisco Gonzales. Inscribed on the "Memorandum of the
Incumbrances Affecting the Property Described in this Certificate" was the
sale executed in favor of
Francisco Gonzales dated 3 March 1920. Thus, on 6 April 1920, TCT No. 5261
was issued in the name of Francisco Gonzales.78

VALIDITY OF THE MANOTOK TITLES

The notation under Entry No. 6655/O-994, found on page 17 of OCT 994 of
the Owners Duplicate Copy, shows that Lot No. 26 had been a subject of
sale in favor of Alejandro Ruiz and Mariano P. Leuterio.77 The notations
reads:
"Ap. 6655/O-994 Venta: Queda Cancelado el presente Certificado en
cuanto a una extension superficial de 3,052.93 Metros cuadrados y 16,512.50
metros Cuadrados y descrita en elLote No. 26 vendida a favor de Alejandro
Ruis y Mariano P. Leuterio, el primar casado con Diogracias Quinones y el
Segundo con Josefa Garcia y se be expedido el Certificado de Titulo No. 4210,
Pagina 163, Libro T-22.
Date of the Instrument Aug. 29, 1918
Date of Inscription Sept. 9, 1918 10:50 a.m.
(GD) L. GARDUNIO, Register of Deeds"

On 22 August 1938, TCT No. 5261 was cancelled by TCT No. 35486 in the
names of Jose Gonzales y Narciso married to Maria P. Gutierrez, Consuelo
Susana Gonzales y Narciso married to Alfonso D. Prescilla; Juana Francisco
Gonzales y Narciso married to Fortunato de Leon; Maria Clara Gonzales y
Narciso married to Delfin Hilario; Francisco Felipe Gonzales y Narciso
married to Pilar Narciso, and Concepcion Andrea Gonzales y Narciso
married to Melquiades M. Virata, Jr.
Appearing on the "Memorandum" of TCT No. 5261 is NOTA: Ap 2111 which
reads as follows:79
"A/2111 Adjudicado el torreno descrito en este certificado de titulo, a
Rufina Narciso Vda. de Gonzales, a cuenta de la participacion de osia esta en
(not legible) los tienes de la eseledad de genanciales. Habida entre la misma
y el finado Francisco J. Gonzales, per una orden del Hon. Fernando Jugo,
Juez del Juzgado de Primera Instancia de Manila Sala II, dienada el 20 de
Septiembre de 19 (not legible), en el Expidiente de intestado del nombrado
Francisco J. Gonzales, No. 49034, se cancela el presente certificado de tituto y

se expide otre a hombre decha Rufina Narciso, con (not legible) No. 35486,
folio 86, Tomo T-168 del libro de transferencias, archivando se la copia de
dicha orden da que se ha heche referencia en al Legajo T-No. 35486.
(SGD) TEODORO GONZALES,
Registrado de Titulos."
The property was later subdivided into seven lots in accordance with
subdivision plan Psd-21154.80 Partitioning the lots among the co-owners,
TCT No. 35486 was eventually cancelled and in lieu thereof six (6) certificates
of titles were individually issued81 to Francisco Gonzaless six (6) children,
specifically, TCT Nos. 1368-1373 while TCT No. 1374 was issued in favor of
all the children.82
As previously mentioned, the properties covered by TCT Nos. 1368-1374
were expropriated by the Republic of the Philippines and were eventually
subdivided and sold to various vendees. Eighteen (18) lots were obtained by
MRI from the years 1965 to 1974, while it acquired the lot covered by TCT
No. 165119 in 1988. On the other hand, MEC acquired from PhilVille
Development Housing Corporation Lot No. 19-B by virtue of Deed of
Exchange executed in its favor for which, TCT No. 232568 was issue don 9
May 1991.
The 20 certificates of titles were traced by the MANOTOKS, as follows:
1) TCT No. 7528 registered in the name of MRI covers Lot No. 2 of
consolidation-subdivision plan (LRC) Pcs-1828 which has an area of
4,988 square meters. MRI purchased this lot from one Basilio Caina
who was issued TCT No. 7526 which cancelled TCT Nos. 36657-62
registered in the name of the Republic of the Philippines. 83
2) TCT No. 7762, covering Lot 1-C, was obtained by MRI from one
Narcisa Buenaventura. The Parcel of land has an approximate area of
2,876 square meters. Buenaventuras ownership was evidenced by
TCT No. 7525,84 deriving the same from TCT No. 36657-63.85
3) TCT No. 8012 in the name of MRI covers Lot No. 12-1 having an
area of 20,000 square meters.86 This certificate of title was traced from

one Filemon Custodio who held TCT No. 7792. Custodio was in turn
a transferee of Guillermo Rivera, the latter having been issued TCT
No. 7760 by virtue of sale between him and then Peoples Homesite
and Housing Corporation ["PHHC"]. The latter title eventually
cancelled TCT No. 36557-63 of the Republic.87
4) TCT No. 9866 issued to MRI covers Lot No. 21 and has an
approximate area of 23,979 square meters. MRIs certificate of title
was derived from TCT No. 9854 registered in the name of Filemon
Custodio, a transferee of Jose Dionisio, who was issued TCT No.
9853. Dionisios title in turn cancelled the Republics TCT No. 3665763.88
5) TCT No. 21107 issued to MRI covers Lot 22 with an approximate
area of 2,557 square meters. MRI acquired the same by virtue of sale
between him and Francisco Custodio, holder of TCT No. 21040.
Francisco Custodio was a transferee of Lorenzo Caina, registered
owner of TCT No. 21039 as evidenced by a Deed of Sale between
Caina and the PHHC, the latters certificate of title canceling TCT
No. 36557-63 of the Republic.89
6) TCT No. 21485 was issued to MRI by virtue of sale between it and
Francisco Custodio, registered owner of TCT No. 21484. The
certificate of title covers Lot 20 with an approximate area of 25,276
square meters Custodio was in turn a transferee of Lorenzo Caina,
the latter being the registered owner of TCT No. 21013 by reason of
sale between him and PHHC.90 Under Entry No. 6277/T-21485, it
would appear that portions of the property covered under TCT No.
21485 and TCT No. 232568 had been subject of an expropriation
proceedings to which the Manotok Estate Corporation, et al.
interposed no objections subject to the payment of just
compensation.91
7) TCT Nos. 2640592 and 26406,93 both registered in the name of MRI,
cancelled TCT Nos. 9773 and 9774, respectively. TCT Nos. 9773 and
9774 were registered in the names of Romulo, Rosalina, Lucila, Felix
and Emilia all surnamed Jacinto, [JACINTOS"], before the same were

transferred to MRI by reason of sale in favor of the latter. The

JACINTOS certificates of title were in turn derived from TCT Nos.
8014 and 8015 issued in the name of Filemon Custodio 94 Both TCT
Nos. 8014 and 8015 cancelled TCT 7792/T-39. However, for purposes
of tracing TCT No. 7792/T-39 to the Republics certificate of titles,
this certificate of title was not submitted in evidence.
8) TCT No. 2640795 issued to MRI was traced back to the title of
Lourdes Mercado Cloribel who was the registered owner of TCT No.
8404 by virtue of sale between the two, thereby transferring
ownership to MRI. On the fact of TCT No. 8404, it would show that it
cancelled TCT No. 8013/T41 but there is no showing in whose name
TCT No. 8013 was registered and what certificate of title it cancelled.
9) TCT No. 3390496 of MRI cancelled TCT No. 8017 of Filemon
Custodio by virtue of sale between the latter and MRI. 97 We note that
TCT No. 8017 cancelled TCT No. 7792/T-39 but there is no showing
whether the same could be traced back to the Republics certificates
of title.
10) TCT No. 34255, covering Lot No. 11-Bm, Psd-75797 with an area
of 11,000 square meters, reflects MRI as the registered owner. This
certificate of title cancels TCT No. 36557-63 of the Republic.98
11) TCT No. 25487599 bears MRI as the registered owner of Lot 55-A
with an area of approximately 1,910 square meters. This certificate of
title cancelled TCT No. 41956 which covers Lot 55, also registered in
the name of MRI. It would appear that MRI acquired the lot covered
under TCT No. 41956 from one Joaquin Caina who was the
registered owner of TCT No. 25715 being a vendee of PHHC. 100
12) TCT No. 53268 of MRI covered Lot No. 15,101 which was
purchased by MRI from one Maria V. Villacorta who held TCT No.
53155. Villacorta in turn acquired the same land from one Eufrocina
Mackay whose TCT No. 7827 was eventually cancelled by
Villacortas land title.102 It would appear that TCT No. 7827 cancelled
TCT No. 7826/T-40 but there is no trace to whom the latter title was
registered and what certificate of title it cancelled.

13) TCT No. 55897 shows MRI as the registered owner of Lot 3 of the
consolidation-subdivision plan (LRC) Pcs-1828 of the Maysilo Estate
covering an area of more or less 20,531 square meters. This certificate
of title cancelled TCT No. 53122 in the names of MRI (19,531 square
meters) and one Silvestre Domingo (1,000 square meters). TCT No.
53122 in turn cancelled TCT No. 21347 registered in the names of
Jesus Hipona (19,531 square meters) and Silvestre Domingo (1,000
square meters). Notably, TCT No. 21347 cancelled TCT No. 21315/T107 but there is no indication to whom TCT No. 21315 was registered
and what certificate of title it cancelled.103
14) TCT No. C-17272 reflects MRI as the registered owner of Lot 6-C
which has an approximate area of 27,850 square meters. MRIs
certificate of title cancelled TCT No. C-17234 registered in the names
of MRI (27,750 square meters), Roberto S. David (3,0000 square
meters) and Jose Madulid (500 square meters). It would appear that
TCT No. C-17234 cancelled TCT No. 53124 registered in the names of
MRI, Spouses Priscila and Antonio Sebastian and Jose Madulid.104
MRI also submitted in evidence a Deed of Partition between itself,
Roberto David and Madulid thereby subdividing the property into
Lots 6-A, 6-B and 6-C as per subdivision plan (LRC) Psd-277091.105
Again, we note that TCT No. 53124 cancelled TCT No. 21350/T-107
but the records are bereft of any indication what certificate of title it
cancelled and to whom the same was registered.
15) TCT No. C-35267, covering Lot 56-B of subdivision plan (LRC)
Psd-292683 with an approximate area of 9,707 square meters, was a
by-product of TCT No. 25146, also registered in the name of MRI,
after the same was subdivided into two lots, namely, Lot Nos. 56-A
and 56-B. TCT No. 25146 cancelled TCT No. 25145 registered in the
name of Quirino Labing-isa by virtue of sale in favor of MRI. In turn,
TCT No. 21545 cancelled TCT Nos. (36557) 12836 to (36563) 12842. 106
16) TCT No. T-121428, registered in the name of MRI covers Lot No.
5-C of subdivision plan (LRC) psd-315272 which has an approximate
area of 4,650 square meters. It was previously registered in the
names of MRI (4,650 square meters), Ricardo Cruz (941 square

meters) and Conchita Umali (1,000 square meters) under TCT No.
53123 by order of the Court of First Instance of Rizal, Caloocan City,
Branch XII and as per agreement of the parties in Civil Case No. C424. TCT No. 53123 in turn cancelled TCT No. 21346 whose
registered owners were Conchita Umali (1,000 square meters),
Ricardo Cruz (941 square meters) and Jesus Hipona (4,650 square
meters).107 Like some of the other titles, TCT No. 21346 cancelled
TCT No. 21316 but there is no trace of this latter certificate of title.
17) TCT No. 163902, registered in the name of MRI, covers Lot No. 4B-2 and has an area of more or less 6,354 square meters and a byproduct of TCT No. 9022, also in the name of MRI, after the same
was subdivided under subdivision plan (LRC) Psd-334454. TCT No.
9022, in turn, cancelled TCT No. 8994/T-45 registered in the name of
Filemon S. Custodio whose ownership thereon was transferred to
MRI by virtue of a voluntary sale.108 TCT No. 8894 cancelled TCT
No. 8846/T-45 but this latter certificate of title was not submitted in
evidence for purposes of tracing back to the Republics title.
18) TCT No. 165119109 was issued to MRI by virtue of a Deed of Sale
between Spouses Francisca Labing-isa and Juan Ignacio [SPOUSES
IGNACIO] and MRI, as a result of which, TCT No. C-36960 of the
SPOUSES IGNACIO was cancelled.110 It would appear that TCT No.
C-39690 cancelled TCT No. 35266/T-173 but TCT No. 35266/T-173
was not submitted in evidence.
19) TCT No. T-232568 of the Manotok Estate Corporation, covering
Lot No. 19-B of subdivision plan Psd-13011152 with an area of 23,206
square meters, was derived from the certificate of title held by
PhiVille Development and Housing Corporation under TCT No.
197357. MEC acquired the subject parcel of land by virtue of Deed of
Exchange between it and PHILVILLE DATED 9 May 1991. 111 TCT
No. 197357 cancelled TCT No. 195730/T-974 but there is no trace
what certificate of title the latter title cancelled.
By and large, all the certificates of title submitted by the MANOTOKS,
including their derivative titles, were all traced to OCT No. 994 registered on

3 May 1917. Likewise, they declared all the lots covered by such titles for
taxation purposes. Without doubt, MRI had successfully traced back some of
their certificates of title to the valid OCT No. 994, they having acquired the
lots from some of the vendees of the PHHC after the same were expropriated
by the Republic from the Gonzalezes.
The fact that these lots were subjected to expropriation proceedings
sometime in 1947 under Commonwealth Act No. 539 for resale to tenants is
beyond question, as also enunciated by the Supreme Court in Republic of the
Philippines v. Jose Leon Gonzales, et al. To bolster this fact, paragraph "r" of
the Majority Report noted that the seven properties covered by TCT Nos.
1368 to 1374 were expropriated by the Republic from the Gonzalezes.
The fact that these lots were subjected to expropriation proceedings
sometime in 1947 under Commonwealth Act No. 539 for resale to tenants is
beyond question, as also enunciated by the Supreme Court in Republic of the
Philippines vs. Jose Leon Gonzaels, et al. To bolster this fact, paragraph "r" of
the Majority Report noted that the seven properties covered by TCT Nos.
1368 to 1374 were expropriated by the Peoples Homesite and Housing
Corporation which were later consolidated and subdivided into 77 lots for
resale to tenants. No sign of protest was ever raised by CLT on this point. 112
The fact of expropriation is extremely significant, for titles acquired by the
State by way of expropriation are deemed cleansed of whatever previous
flaws may have attended these titles. As Justice Vitug explained in Republic
v. Court of Appeals,113 and then Associate Justice (now Chief Justice) Puno
reiterated in Reyes v. NHA:114 "In an rem proceeding, condemnation acts
upon the property. After condemnation, the paramount title is in the public
under a new and independent title; thus, by giving notice to all claimants to
a disputed title, condemnation proceedings provide a judicial process for
securing better title against all the world than may be obtained by voluntary
conveyance."115 This doctrine was derived from the opinion of then Chief
Judge (now U.S. Supreme Court Justice) Stephen Breyer in Cadorette v.
U.S.,116 which in turn cited the pronouncement of the U.S. Supreme Court in
U.S. v. Carmack117 that "[b]y giving notice to all claimants to a disputed title,
condemnation proceedings provide a judicial process for securing better title
against all the world than may be obtained by voluntary conveyance." 118

In annulling the Manotok titles, focus was laid on the alleged defects of TCT
No. 4211 issued in September of 1918. However, TCT No. 4211 was issued
decades before the property was expropriated. Thus, any and all defects that
may have attended that particular title would have been purged when the
property covered by it was subsequently acquired by the State through
eminent domain. The Special Division noted as much:
As it is, the validity of most of MRIs certificates of title should be upheld
because they were derived from the Republics valid certificates of title. In
fact, some of the MANOTOKS titles can be traced back to the Governments
titles as a result of the expropriation in 1947.
Relevantly, the titles of the Republic, as the predecessor-in-interest of the
MANOTOKS, are presumed valid by virtue of their acquisition resulting
from the exercise of its inherent power of eminent domain that need not be
granted even by the fundamental law. Thus, the alleged flaws concerning the
certificates of title issued previous to the exercise of the State of its inherent
power did not affect or render invalid the subsequent transfers after the
forced sale. Indeed, when land has been acquired for public use in fee simple
unconditionally, either by the exercise of eminent domain or by purchase,
the former owner retains no rights in the land, and the public use may be
abandoned, or the land may be devoted to a different use, without any
impairment of the estate or title acquired or any reversion to the former
owner.119
The Special Division also took exception to the majority report of the
Commissioners (Majority Report) who had been tasked by the trial court to
examine the validity of the Manotok titles. The Majority Report
had arrived at several conclusions with respect to the TCTs from which the
Manotok titles were derived.120 The Special Division, however, concluded
that such report was in fact tainted by the fact that it was determined
"outside the scope of the issues framed and agreed upon by the parties." To
wit:
In meeting the issue, the MANOTOKS disproved the "opinion" with regard
to the alleged defects of their titles inasmuch as the majority report
submitted before the trial court was made outside the scope of the tasks

which the trial court confined them to perform. The MANOTOKS also
argued that before this proceeding on remand, CLT failed to introduce
evidence of such flaws neither were the concerned geodetic engineers
presented as witnesses. Moreover, the MANOTOKS further maintained that
CLT failed to submit any factual or legal bases to prove the authenticity and
validity of the Palma and Sayo Orders. They insisted that the Palma Order
was a void one for being conditional and having resulted to the issuance of
"duplicate certificates of land title."
With respect to the imputed flaws on the MANOTOKS titles which were
based on the Majority Report, we find that the bases of the alleged defects
proceeded from unreliable sources thus, tainting the veracity of the said
report.
The records of the case between CLT and the MANOTOKS reveal that the
parties approved the creation of a commission to resolve only these two
issues, to wit:
"x x x
These issues to be resolved by the 3 Commissioners are as follows:
1) Whether or not the property covered by the Transfer Certificates
of Title of defendants pertain to or involve Lot No. 26 of the Maysilo
Estate presently titled in the name of the plaintiff; and
2) Whether or not the property covered by the title of the plaintiff
and the property covered by the titles of the defendants overlap. 121
Scrutinizing the Majority Report upon which the trial courts conclusions
were based, it would appear that the findings therein were outside the scope
of the issues framed and agreed upon by the parties. Specifically, the
deductions with regard to the technical infirmities and defects of TCT Nos.
4211, 4210, 5261 and 35486 do not involve the question of whether or not the
subject properties were identified as Lot No. 26 of the Maysilo estate or
whether there was overlapping of titles. Records bear out that the
MANOTOKS took exception to the procedure taken citing therein the "ultra
vires" acts of the two Commissioners.

In addition, the majority report focused on the alleged flaws and inherent
technical defects of TCT Nos. 4211, 5261 and 35486, ranging from the
language of the technical descriptions, absence of subdivision plan, lot
number and survey plan. Evidently, these defects go only as far as the
certificates of title issued prior to those of the Republic. Remarkably, no
specific flaw was found on the MANOTOKS titles indicating any
irregularity on their issuance. In fact, the Commissioners who signed the
majority report even concluded that only TCT Nos. 4211, 4210, 5261, 35486,
1368 thru 1324 (sic)122 were irregularly and questionably issued without any
reference to the MANOTOKS certificates of title.123 Otherwise stated, the
imputed flaws affect only those certificates of title issued prior to those
registered in the name of the Republic. No flaw had been specifically
identified or established in the proceedings below, which would taint the
titles held by the MANOTOKS in so far as the regularity of their issuance is
concerned.124
At the same time, the Special Division was not prepared to uphold the
validity of all of the Manotok titles. It took issue with the particular titles
which could not be retraced to the titles acquired by the Republic of the
Philippines by way of expropriation.
Although the MANOTOKS had traced their title from the vendees of PHHC,
there are, however, some certificates of title which could not be traced back
to the titles previously held by the Republic specifically, MRIs TCT Nos.
26405 and 26406, 26407, 33904, 53268, 55897, C-17272, T-121428, 163903,
165119 and MECs TCT No. T-232568. As to these certificates of title, the
MANOTOKS failed to make any specific reference to the preceding
certificates of title which they cancelled and to whose names they were
subsequently transferred and registered. Thus, we find no sufficient basis to
make a conclusion as to their origins.125

titles and overcome the onus of proving that said titles are derivatives of
OCT 994 registered on 3 May 1917, and not 19 April 1917, as what is reflected
in their titles. In contrast, the MANOTOKS and ARANETA, both of which
had consistently anchored their proprietary claims on OCT No. 994
registered on 3 May 1917, have, in this remand proceeding, been able to
support their claims of ownership over the respective portions of the Maysilo
Estate. Except in the case of the MANOTOKS which had failed to
substantiate the validity of some of their certificates of title, the MANOTOKS
and ARANETA presented evidence proving the identity, the extent and the
origin of their titles.
Answering the issues assigned by the Supreme Court relative to the
tenability of the respective imputed flaws in the titles of the MANOTOKS
and ARANETA and whether such flaws are sufficient to defeat said claims,
this Court finds that, as discussed above, such flaws are inconsequential and
ineffectual in invalidating the MANOTOKS and ARANETA titles.
Significantly, since the respective certificates of title of herein contending
parties are contradictory to each other and stand to refute the validity of
their opposing titles, it cannot be gainsaid that said certificates of title have
correspondingly been subjected to dispute on the basis of separate and
distinct imputed flaws. Still, the crucial difference between the imputed
flaws allegedly tainting said contending titles, DIMSON and CLT on one
hand, and the MANOTOKS and ARANETA, on the other, is that the
imputed flaws purportedly beleaguering the respective certificates of title of
the MANOTOKS and ARANETA relate to the mechanical and technical
aspect of the transcription of their titles and are therefore inconsequential to
the import and validity thereof. Said imputed flaws do not depart from the
fact that the predecessors-in-interest of the MANOTOKS and ARANETA
had been clothed with the right of ownership over the disputed portions of
the Maysilo Estate.

V.
The Special Division supplied the following precise and concise summary of
its conclusions:
In prcis, the factual milieu of the present controversy and the evidence on
record clearly establish the failure of DIMSON and CLT to substantiate their

On the other hand, the flaws attending the titles of DIMSON and CLT
primarily stem from infirmities attending or otherwise affecting the very
crux of their claim of ownership. Having derived their titles from RIVERA,
whose title is questionable and dubious to the core, DIMSON and CLT
cannot rightly insist on the validity of their titles. Such flaws are hard to

overcome as they delve into the substance of their proprietary claims. As

stated, DIMSON and CLT miserably failed to overcome their onus and
instead opted to hap on the supposed flaws of the adverse parties. For these
reasons, the titles of DIMSON and CLT should be declared a nullity.
xxx
From the foregoing evaluation and in conformity with the Supreme Court
2007 Resolution, this Court arrived at the following conclusions as to the
status of the original title and its subsequent conveyances:
1. As categorically declared by the Supreme Court, there is only one
OCT 994, the registration date of which had already been decisively
settled as 3 May 1917 and not 19 April 1917. OCT 994 which reflects
the date of 19 April 1917 as its registration date is null and void.
2. In view thereof and in addition to other grounds we have already
discussed, the certificates of title of the deceased Jose Dimson and his
successor-in-interest, CLT, having been traced back to OCT 994
dated 19 April 1917, are NULL and VOID and thus vest no legal
right or claim in favor of DIMSON and CLT.
3. The 13 June 1966 Palma Order and the 18 October 1977 Sayo
Order, on which DIMSON and CLT anchor the validity of their
respective titles, do not substantiate their proprietary claims. While
the existence of said Orders are admitted, the legal import thereof
nonetheless fails to confer a semblance of legality on the titles of
DIMSON and consequently, of CLT, more so, a superior right to
defeat the titles of the MANOTOKS and ARANETA, respectively.
4. Portions of Lot No. 26 pertinent to this controversy, particularly
that being disputed by the MANOTOKs and CLT, were expropriated
by the Republic of the Philippines sometime in 1947 under
Commonwealth Act No. 539 for resale to tenants. The MANOTOKS,
thus as successor-in-interest of the Republic, were able to establish
that some of their certificates of title had indeed originated or were
derived from said expropriated parcels of land.

5. The evidence on record confirm that the certificates of title

covering the land being claimed by ARANETA were derived from
OCT NO. 994 registered on 3 May 1917 thereby ultimately showing a
direct link of TCT Nos. 7784 and 13574 to said mother title. By reason
of which, that is either belonging to or portions of Lot 25-A-3 as
previously owned by RATO, had been well substantiated and
proven to be superior to that of DIMSON.
6. For reasons above-stated and in view of the established rights of
ownership of both the MANOTOKS and ARANETA over the
contested properties, we find that the imputed flaws on their titles
cannot defeat the valid claims of the MANOTOKS and ARANETA
over the disputed portions of the Maysilo Estate.126
Inasmuch as we agree with the factual findings and evaluation of the Special
Division, we likewise adopt the above conclusions. As we earlier stated, it
was incumbent on the Heirs of Dimson and/or CLT to establish their claim
to title for reasons other than the fact that OCT No. 994 dated 19 April 1917 is
extant. They failed to do so. It should be noted that the instant cases arose
from separate actions filed by Jose Dimson and CLT seeking the recovery of
possession and/or annulment of title against Araneta and the Manotok
Group. Thus, the burden of evidence was on Dimson and CLT to establish
the strength of their respective claims of ownership, and not merely to rely
upon whatever weaknesses in the claims of the Manotoks and Araneta for
their causes of action to prosper. The well-settled legal principle in actions
for annulment or reconveyance of title is that a party seeking it should
establish not merely by a preponderance of evidence but by clear and
convincing evidence that the land sought to be reconveyed is his. 127 In an
action to recover, the property must be identified, and the plaintiff must rely
on the strength of his title and not on the weakness of the defendant's
claim.128
We now proceed to tackle the recommendations submitted by the Special
Division. They are as follows:
RECOMMENDATIONS

Apropos to said conclusions, this Court hereby respectfully makes the

following recommendations regarding the validity of the conflicting
proprietary claims as interposed by the herein contending parties:
1. To declare with finality that the certificates of title of
DIMSON and CLT including other derivative titles issued to
their successors-in-interest, if any, are NULL and VOID, thus
invalidating their legal claims over the subject parcels of
land.

h) TCT No. 254875 covering Lot 55-A with an area of

approximately 1,910 square meters.
i) TCT No. C-35267 covering Lot 56-B of subdivision
plan (LRC) Psd-292683 with an approximate area of
9,707 square meters.
With regard to the following certificates of title, namely:
3.A. MANOTOK REALTY INC.

2. To declare LEGAL and VALID the proprietary claims the

MANOTOKS over the parcels of land covered by the
following certificates of title:
a) TCT No. 7528 registered in the name of MRI
covers Lot No. 2 of consolidation-subdivision plan
(LRC) Pcs-1828 which has an area of 4,988 square
meters.
b) TCT No. 7762 covering Lot 1-C, with an
approximate area of 2,287 square meters.
c) TCT No. 8012 covering Lot No. 12-1 having an
area of 20,000 square meters.
d) TCT No. 9866 covering Lot No. 21 and has an
approximate area of 23,979 square meters.
e) TCT No. 21107 covering Lot 22 with an
approximate area of 2,557 square meters.
f) TCT No. 21485 covering Lot 20 with an
approximate area of 25,276 square meters.
g) TCT No. 34255 covering Lot No. 11-Bm, Psd75797 with an area of 11,000 square meters.

a) TCT No. 26405 covering Lot No. 12-E with an area

of 1,0000 square meters.
b) TCT No. 26406 covering Lot No. 12-F with an area
of 1,000 square meters.
c) TCT No. 26407 covering Lot No. 12-B with an area
of 1,000 square meters.
d) TCT No. 33904 covering Lot No. 12-H with an
area of 1,802 square meters.
e) TCT No. 53268 covering Lot No. 15 purchased by
MRI from one Maria V. Villacorta with an
approximate area of 3,163 square meters.
f) TCT No. 55897 covering Lot 3 of consolidationsubdivision plan (LRC) Pcs-1828 of the Maysilo
Estate covering an area of more or less 20,531 square
meters.
g) TCT No. C-17272 covering Lot 6-C which has an
approximate area of 27,850 square meters.
h) TCT No. T-121428 covering Lot No. 5-C of
subdivision plan (LRC) psd-315278, which has an
approximate area of 4,650 square meters.

i) TCT No. 163902 covering Lot No. 4-B-2 with an

area of more or less 6,354 square meters allegedly a
by-product of TCT No. 9022, which in turn,
cancelled TCT No. 8994/T-45 registered in the name
of Filemon S Custodio.
j) TCT No. 165119 which allegedly cancelled TCT
No. C-36960 of the SPOUSES IGNACIO by virtue of
a Deed of Sale between said Spouses and MRI.
3.B. MANOTOK ESTATE CORPORATION
a) TCT No. T-232568 covering Lot No. 19-B of
subdivision plan Psd-13011152 with an area of
23,206 square meters.
The foregoing certificates of title (3.A and 3.B),
failing to make specific references to the particular
certificates of title which they cancelled and in
whose name they were registered, may be declared
NULL and VOID, or in the alternative, subject the
same to further technical verification.
4. To declare LEGAL and VALID the title of ARANETA
respecting parcels of land covered by the following
certificates of title:
a) TCT No. 13574 covering a parcel of land
designated as Section No. 2 of subdivision plan Psd10114, being a portion of Lot 25-A-3-C with an
aggregate area of 581,872 square meters;
b) TCT No. 7784 covering four (4) parcels of land
with an aggregate area of 390,383 square meters. 129
The first, second and fourth recommendations are well taken as they
logically arise from the facts and conclusions, as determined by the Special
Division, which this Court adopts.

The third recommendation that eleven (11) of the titles held by the
Manotoks be declared null and void or subjected to further technical
verification warrants some analysis.
The Court has verified that the titles mentioned in the third recommendation
do not, as stated by the Special Division, sufficiently indicate that they could
be traced back to the titles acquired by the Republic when it expropriated
portions of the Maysilo Estate in the 1940s. On the other hand, the Manotok
titles that were affirmed by the Special Division are traceable to the titles of
the Republic and thus have benefited, as they should, from the cleansing
effect the expropriation had on whatever flaws that attached to the previous
titles. However, although the Special Division did not concede the same
benefit to the other Manotok titles named in the third recommendation, at
the same time it did not conclude that such titles were false or fraudulently
acquired. Absent such a finding, we are disinclined to take the ultimate step
of annulling those titles.
Said titles have as their origin what we have acknowledged to be a valid
mother title OCT No. 994 dated 3 May 1917. This is in stark contrast with
the titles of CLT, the oppositors to the Manotoks, which all advert to an
inexistent mother title. On their face, the Manotok titles do not reflect any
error or fraud, and certainly the Special Division do not point to any such
flaw in these titles. Nothing on the face of the titles gives cause for the Court
to annul the same.
It is worth mentioning that the Special Division refused to adopt the Majority
Report earlier rendered in the case between the Manotoks and CLT, said
report having exhaustively listed the perceived flaws in the antecedent TCTs
from which the Manotoks derived their claim. The Special Division
concluded that such findings had been reached by the Commissioners in
excess of their original mandate and, thus, ultra vires. Assuming that such
flaws were extant, they existed on the titles and anteceded the expropriation
of the properties by the Government. As stated earlier, such expropriation
would have cleansed the titles of the prior flaws. But even if the Manotok
titles enumerated in the third recommendation could not be sourced from
the titles acquired by the Republic through expropriation, still the rejection of
the Majority Report signifies that the flaws adverted to therein could not

form the basis for the annulment of the titles involved. Indeed, the Special
Divisions rejection of the Majority Report further diminishes any ground to
annul the Manotok titles referred to in the third recommendation.
Yet, the Court is cognizant that the inability to trace the Manotok titles
specified in the third recommendation to those titles acquired by the
Government through expropriation puts such titles in doubt somehow. In
addition, the Court is aware that the ground utilized by the Special Division
in rejecting the Majority Report that the determinations were made outside
the scope of the issues framed and agreed upon by the parties -- does not
categorically refute the technical findings made therein. Those
circumstances, while insufficient for now to annul the Manotoks titles listed
in the third recommendation, should be sufficiently made public.
Hence, in lieu of annulling the Manotok titles per the Special Divisions third
recommendation, the Court deems it sufficient to require the Registers of
Deeds concerned to annotate this Resolution on said titles so as to
sufficiently notify the public of their unclear status, more particularly the
inability of the Manotoks to trace the titles without any gap back to OCT No.
994 issued on 3 May 1917. If there should be any cause for the annulment of
those titles from a proper partys end, then let the proper case be instituted
before the appropriate court.
WHEREFORE, the Court hereby adopts the Report of the Special Division
and issues the following reliefs:
1) The certificates of title of the DIMSONs and CLT including other
derivative titles issued to their successors-in-interest, if any, are
declared NULL and VOID, thus invalidating their legal claims over
the subject parcels of land;
2. The proprietary claims of the MANOTOKS over the parcels of
land covered by the following certificates of title are declared
LEGAL and VALID, to wit:
a) TCT No. 7528 registered in the name of MRI covers Lot
No. 2 of consolidation-subdivision plan (LRC) Pcs-1828
which has an area of 4,988 square meters.

b) TCT No. 7762 covering Lot 1-C, with an approximate area

of 2,287 square meters.
c) TCT No. 8012 covering Lot No. 12-1 having an area of
20,000 square meters.
d) TCT No. 9866 covering Lot No. 21 and having an
approximate area of 23,979 square meters.
e) TCT No. 21107 covering Lot 22 with an approximate area
of 2,557 square meters.
f) TCT No. 21485 covering Lot 20 with an approximate area
of 25,276 square meters.
g) TCT No. 34255 covering Lot No. 11-Bm, Psd-75797 with
an area of 11,000 square meters.
h) TCT No. 254875 covering Lot 55-A with an area of
approximately 1,910 square meters.
i) TCT No. C-35267 covering Lot 56-B of subdivision plan
(LRC) Psd-292683 with an approximate area of 9,707 square
meters.
3) The following certificates of titles in the name of ARANETA are
hereby declared LEGAL and VALID, to wit:
a) TCT No. 13574 covering a parcel of land designated as
Section No. 2 of subdivision plan Psd-10114, being a portion
of Lot 25-A-3-C with an aggregate area of 581,872 square
meters;
b) TCT No. 7784 covering four (4) parcels of land with an
aggregate area of 390,383 square meters.
4) On the following titles in the name of Manotok Realty, Inc. or
Manotok Estate Corporation, to wit:

a) TCT No. 26405 covering Lot No. 12-E with an area of

1,0000 square meters;
b) TCT No. 26406 covering Lot No. 12-F with an area of 1,000
square meters;
c) TCT No. 26407 covering Lot No. 12-B with an area of 1,000
square meters;
d) TCT No. 33904 covering Lot No. 12-H with an area of
1,802 square meters;
e) TCT No. 53268 covering Lot No. 15 purchased by MRI
from one Maria V. Villacorta with an approximate area of
3,163 square meters;
f) TCT No. 55897 covering Lot 3 of consolidation-subdivision
plan (LRC) Pcs-1828 of the Maysilo Estate covering an area
of more or less 20,531 square meters;
g) TCT No. C-17272 covering Lot 6-C which has an
approximate area of 27,850 square meters;
h) TCT No. T-121428 covering Lot No. 5-C of subdivision
plan (LRC) psd-315278, which has an approximate area of
4,650 square meters;
i) TCT No. 163902 covering Lot No. 4-B-2 with an area of
more or less 6,354 square meters allegedly a by-product of
TCT No. 9022, which in turn, cancelled TCT No. 8994/T-45
registered in the name of Filemon S. Custodio;
j) TCT No. 165119 which allegedly cancelled TCT No. C36960 of the SPOUSES IGNACIO by virtue of a Deed of Sale
between said spouses and MRI;
k) TCT No. T-232568 covering Lot No. 19-B of subdivision
plan Psd-13011152 with an area of 23,206 square meters.

the Registers of Deeds concerned are ordered to annotate that as determined

in the foregoing Resolution, the registered owners of the said titles "failed to
make any specific reference to the preceding certificates of title which they
cancelled and to whose names they were subsequently transferred and
registered," thereby leading the Supreme Court "to find no sufficient basis to
make a conclusion as to their origins."130
Costs against private respondents.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

George M. Baladjay, Mario G. dela Victoria, Olegario Sarmiento, Jr., and Democrito
Barcenas for petitioners.
The Solicitor General for respondent Judge.

EN BANC
F.A. Sugue & Elino B. Lingas for Philippine Tourism Authoirity
G.R. Nos. L-60549, 60553 to 60555 October 26, 1983
HEIRS OF JUANCHO ARDONA (represented by Gloria Ardona)
ANASTACIO C. CABILAO, HEIRS OF CIPRIANO CABILAO
(represented by Jose Cabilao) MODESTA CABILAO, HEIRS OF ROMAN
CABUENAS (represented by Alberto Cabuenas), AGRIPINO GABISAY
and PRUDENCIA MABINI, ANTONIO LABRADOR and LUCIA
GABISAY, GERONIMO MABINI and MARCELINA SABAL,
INOCENCIO MABINI and ARSENIA REYES, PATRICIO MABINI and
GREGORIA BORRES, ANICETO GADAPAN and MAXIMA GABISAY,
BARTOLOME MAGNO and CALINECA E. MAGNO, ALBERTO
CABUENAS, NARCISO CABUENAS and VICTORIA CABUENAS,
EUTIQUIOSENO, HEIRS OF ESPERIDION CABUENAS (represented by
Alberto Cabuenas), MAXIMINA NAVARO, SULPICIO NAVARO,
EDUARDO NAVARO, MARTINIANO ROMA (in representation of
Arcadio Mabini, deceased), MARTIN SENO, FAUSTO ARDA, MAXIMA
CABILAO, ESTRELLA SENO, EDUVEGIS S. CABILAO, ROSARIO
CABILAO, MINORS DANILO, SOCORRO, JOSEFINA and MARITES, all
surnamed Cabilao, JUAN BORRES (represented by Francisca Borres),
RAMON JABADAN, JESUS ALIPAR and LEONILA KABAHAR,
ANTONIO LABRADOR, HEIRS OF NICASIO GABISAY (represented by
Arsenio Gabisay), PACIFICO LABRADOR, DEMETRIO LABRADOR and
FRUCTOSA TABURA, VENANCIO DEL MAR, MARINO DEL MAR,
HEIRS OF TEODORA ARCILLO (represented by Brigida Arcillo)
DIONISIA GABUNADA, HEIRS OF BUENAVENTURA FRANCISCO
(represented by Felicidad Sadaya Francisco), HEIRS OF VICTORIA C.
CABUENAS (represented by Alberto Cabuenas) HEIRS OF CIPRIANO
GABUNADA (represented by Claudio Gabunada), petitioners,
vs.
HON. JUAN Y. REYES, Executive Judge and Presiding Judge of Branch I,
COURT OF FIRST instance OF CEBU, and the PHILIPPINE TOURISM
AUTHORITY, respondents.

GUTIERREZ, JR., J.:

This is a petition for certiorari with preliminary injunction challenging the
constitutionality of Presidential Decree No. 564, the Revised Charter of the
Philippine Tourism Authority, and Proclamation No. 2052 declaring the
barangays of Sibugay, Malubog, Babag and Sirao including the proposed
Lusaran Dam in the City of Cebu and in the municipalities of Argao and
Dalaguete in the province of Cebu as tourist zones. The petitioners ask that
we restrain respondent Court of First Instance of Cebu and the Philippine
Tourism Authority (PTA) from enforcing and implementing the writs of
possession issued in four (4) expropriation cases filed by PTA against the
petitioners: Civil Cases Nos. R-19562, R-19684, R-20701, and R-21608 of the
Court of First Instance of Cebu (Branch 1).
The Philippine Tourism Authority filed four (4) Complaints with the Court
of First Instance of Cebu City for the expropriation of some 282 hectares of
rolling land situated in barangays Malubog and Babag, Cebu City, under
PTA's express authority "to acquire by purchase, by negotiation or by
condemnation proceedings any private land within and without the tourist
zones" for the purposes indicated in Section 5, paragraph B(2), of its Revised
Charter (PD 564), more specifically, for the development into integrated
resort complexes of selected and well-defined geographic areas with
potential tourism value. As uniformly alleged in the complaints, the
purposes of the expropriation are:
xxx xxx xxx
V

Plaintiff, in line with the policy of the government to

promote tourism and development of tourism projects will
construct in Barangays Malubog, Busay and Babag, all of
Cebu City, a sports complex (basketball courts, tennis courts,
volleyball courts, track and field, baseball and softball
diamonds, and swimming pools), clubhouse, gold course,
children's playground and a nature area for picnics and
horseback riding for the use of the public.

In their motions to dismiss, the petitioners alleged, in addition to the issue of

public use, that there is no specific constitutional provision authorizing the
taking of private property for tourism purposes; that assuming that PTA has
such power, the intended use cannot be paramount to the determination of
the land as a land reform area; that limiting the amount of compensation by
Legislative fiat is constitutionally repugnant; and that since the land is under
the land reform program, it is the Court of Agrarian Relations and not the
Court of First Instance that has jurisdiction over the expropriation cases.

The development plan, covering approximately 1,000

hectares, includes the establishment of an electric power grid
in the area by the National Power Corporation, thus
assuring the supply of electricity therein for the benefit of
the whole community. Deep wells will also be constructed to
generate water supply within the area. Likewise, a complex
sewerage and drainage system will be devised and
constructed to protect the tourists and nearby residents from
the dangers of pollution.

The Philippine Tourism Authority having deposited with The Philippine

National Bank, Cebu City Branch, an amount equivalent to 10% of the value
of the properties pursuant to Presidential Decree No. 1533. the lower court
issued separate orders authorizing PTA to take immediate possession of the
premises and directing the issuance of writs of possession.

Complimentary and support facilities for the project will be

constructed, including public rest houses, lockers, dressing
rooms, coffee shops, shopping malls, etc. Said facilities will
create and offer employment opportunities to residents of
the community and further generate income for the whole of
Cebu City.
Plaintiff needs the property above described which is
directly covered by the proposed golf court.

On May 25, 1982, petitioners filed this petition questioning the orders of the
respondent Judge, The respondents have correctly restated the grounds in
the petition as follows:
xxx xxx xxx
A. The complaints for expropriation lack basis because the
Constitution does not provide for the expropriation of
private property for tourism or other related purposes;
B. The writs of possession or orders authorizing PTA to take
immediate possession is premature because the "public use"
character of the taking has not been previously
demonstrated;

xxx xxx xxx

The defendants in Civil Cases Nos. R-20701 and R-21608 filed their
respective Opposition with Motion to Dismiss and/or Reconsideration. The
defendants in Civil Case No. R-19562 filed a manifestation adopting the
answer of defendants in Civil Case No. R-19864. The defendants, now
petitioners, had a common allegation in that the taking is allegedly not
impressed with public use under the Constitution.

C. The taking is not for public use in contemplation of

eminent domain law;
D. The properties in question have been previously declared
a land reform area; consequently, the implementation of the
social justice pro- ,vision of the Constitution on agrarian
reform is paramount to the right of the State to expropriate
for the purposes intended;

E. Proclamation No. 2052 declaring certain barangays in

Cebu City, which include the lands subject of expropriation
as within a tourist zone, is unconstitutional for it impairs the
obligation of contracts; "F. Since the properties are within a
land reform area, it is the Court of Agrarian Relations, not
the lower court, that has jurisdiction pursuant to Pres.
Decree No. 946;
F. The forcible ejectment of defendants from the premises
constitutes a criminal act under Pres. Decree No. 583;
In their memorandum, the petitioners have summarized the issues as
follows:
I. Enforcement of the Writ of Possession is Premature:
II. Presidential Decree 564 Amending Presidential Decree l89
is Constitutionally Repugnant:
III. The Condemnation is not for Public Use, Therefore,
Unconstitutional:
IV. The Expropriation for Tourism Purposes of Lands
Covered by the Land Reform Program Violates the
Constitution:

The petitioners' arguments in their pleadings in support of the above

proposition are subsumed under the following headings:
1. Non-compliance with the "public use" requirement under
the eminent domain provision of the Bill of Rights.
2. Disregard of the land reform nature of the property being
expropriated.
3. Impairment of the obligation of contracts.
There are three provisions of the Constitution which directly provide for the
exercise of the power of eminent domain. Section 2, Article IV states that
private property shall not be taken for public use without just compensation.
Section 6, Article XIV allows the State, in the interest of national welfare or
defense and upon payment of just compensation to transfer to public
ownership, utilities and other private enterprises to be operated by the
government. Section 13, Article XIV states that the Batasang Pambansa may
authorize upon payment of just compensation the expropriation of private
lands to be subdivided into small lots and conveyed at cost to deserving
citizens.

V. Presidential Proclamation 2052 is Unconstitutional:

While not directly mentioning the expropriation of private properties upon

payment of just compensation, the provisions on social justice and agrarian
reforms which allow the exercise of police power together with the power of
eminent domain in the implementation of constitutional objectives are even
more far-reaching insofar as taking of private property is concerned.

VI. Presidential Decree No 1533 is Unconstitutional:

Section 6, Article II provides:

VII. The Court of First Instance has no Jurisdiction:

VIII. The Filing of the Present Petition is not Premature.
The issues raised by the petitioners revolve around the proposition that the
actions to expropriate their properties are constitutionally infirm because
nowhere in the Constitution can a provision be found which allows the
taking of private property for the promotion of tourism.

Sec. 6. The State shall promote social justice to ensure the

dignity, welfare, and security of all the people. Towards its
end, the State shall regulate the acquisition, ownership, use,
enjoyment, and disposition of private property, and
equitably diffuse property ownership and profits.
xxx xxx xxx

Section 12, Article XIV provides:

See. 12. The State shall formulate and implement an agrarian
reform program aimed at emancipating the tenant from the
bondage of the soil and achieving the goals enunciated in
this Constitution.
The equitable diffusion of property ownership in the promotion of social
justice implies the exercise, whenever necessary, of the power to expropriate
private property. Likewise there can be no meaningful agrarian reform
program unless the power to expropriate is utilized.
We cite all the above provisions on the power to expropriate because of the
petitioners' insistence on a restrictive view of the eminent domain provision.
The thrust of all constitutional provisions on expropriation is in the opposite
direction.

sovereignty being essential to the existence of the State and inherent in

government even in its most primitive forms. The only purpose of the
provision in the Bill of Rights is to provide some form of restraint on the
sovereign power. It is not a grant of authority The power of eminent domain does not depend for its
existence on a specific grant in the constitution. It is inherent
in sovereignty and exists in a sovereign state without any
recognition of it in the constitution. The provision found in
most of the state constitutions relating to the taking of
property for the public use do not by implication grant the
power to the government of the state, but limit a power
which would otherwise be without limit.
The constitutional restraints are public use and just compensation.
Do the purposes of the taking in this case constitute "public use"?

As early as 1919, this Court in Visayan Refining Co. v. Samus (40 Phil. 550)
categorized the restrictive view as wholly erroneous and based on a
misconception of fundamentals.
The petitioners look for the word "tourism" in the Constitution.
Understandably the search would be in vain. The policy objectives of the
framers can be expressed only in general terms such as social justice, local
autonomy, conservation and development of the national patrimony, public
interest, and general welfare, among others. The programs to achieve these
objectives vary from time to time and according to place, To freeze specific
programs like Tourism into express constitutional provisions would make
the Constitution more prolix than a bulky code and require of the framers a
prescience beyond Delphic proportions. The particular mention in the
Constitution of agrarian reform and the transfer of utilities and other private
enterprises to public ownership merely underscores the magnitude of the
problems sought to be remedied by these programs. They do not preclude
nor limit the exercise of the power of eminent domain for such purposes like
tourism and other development programs.
In the leading case of Visayan Refining Co. v. Camus (supra), this Court
emphasized that the power of eminent domain is inseparable from

The petitioners ask us to adopt a strict construction and declare that "public
use" means literally use by the public and that "public use" is not
synonymous with "public interest", "public benefit", or "public welfare" and
much less "public convenience. "
The petitioners face two major obstacles. First, their contention which is
rather sweeping in its call for a retreat from the public welfare orientation is
unduly restrictive and outmoded. Second, no less than the lawmaker has
made a policy determination that the power of eminent domain may be
exercised in the promotion and development of Philippine tourism.
The restrictive view of public use may be appropriate for a nation which
circumscribes the scope of government activities and public concerns and
which possesses big and correctly located public lands that obviate the need
to take private property for public purposes. Neither circumstance applies to
the Philippines. We have never been a laissez faire State, And the necessities
which impel the exertion of sovereign power are all too often found in areas
of scarce public land or limited government resources.

Certain aspects of parliamentary government were introduced by the 1973

amendments to the Constitution with further modifications in the 1976 and
1981 amendments. Insofar as the executive and legislative departments are
concerned, the traditional concept of checks and balances in a presidential
form was considerably modified to remove some roadblocks in the
expeditious implementation of national policies. There was no such change
for the judiciary. We remain as a checking and balancing department even as
all strive to maintain respect for constitutional boundaries. At the same time,
the philosophy of coordination in the pursuit of developmental goals implicit
in the amendments also constrains in the judiciary to defer to legislative
discretion iii the judicial review of programs for economic development and
social progress unless a clear case of constitutional infirmity is established.
We cannot stop the legitimate exercise of power on an invocation of grounds
better left interred in a bygone age and time.* As we review the efforts of the
political departments to bring about self-sufficiency, if not eventual
abundance, we continue to maintain the liberal approach because the
primary responsibility and the discretion belong to them.
There can be no doubt that expropriation for such traditions' purposes as the
construction of roads, bridges, ports, waterworks, schools, electric and
telecommunications systems, hydroelectric power plants, markets and
slaughterhouses, parks, hospitals, government office buildings, and flood
control or irrigation systems is valid. However, the concept of public use is
not limited to traditional purposes. Here as elsewhere the Idea that "public
use" is strictly limited to clear cases of "use by the public" has been discarded.
In the United States, the rule was enunciated in Berman v. Parker (348 U.S. 25;
99 L. ed. 27) as follows:
We do not sit to determine whether a particular housing
project is or is not desirable. The concept of the public
welfare is broad and inclusive. See DayBrite Lighting, Inc. v.
Missouri, 342 US 421, 424, 96 L ed 469, 472, 72 S Ct 405. The
values it represents are spiritual as well as physical, aesthetic
as well as monetary. It is within the power of the legislature
to determine that the community should be beautiful as well
as healthy, spacious as well as clean, well-balanced as well

as carefully patrolled. In the present case, the Congress and

its authorized agencies have made determinations that take
into account a wide variety of values. It is not for us to
reappraise them. If those who govern the District of
Columbia decide that the Nation's Capital should be
beautiful as well as sanitary, there is nothing in the Fifth
Amendment that stands in the way.
Once the object is within the authority of Congress, the right
to realize it through the exercise of eminent domain is clear.
For the power of eminent domain is merely the means to the
end. See Luxton v. North River Bridge Co. 153 US 525, 529,
530, 38 L ed 808, 810, 14 S Ct 891; United States v. Gettysburg
Electric R. Co. 160 US 668, 679, 40 L ed 576, 580, 16 S Ct 427.
In an earlier American case, where a village was isolated from the rest of
North Carolina because of the flooding of the reservoir of a dam thus making
the provision of police, school, and health services unjustifiably expensive,
the government decided to expropriate the private properties in the village
and the entire area was made part of an adjoining national park. The district
court and the appellate court ruled against the expropriation or excess
condemnation. The Court of Appeals applied the "use by the public" test and
stated that the only land needed for public use was the area directly flooded
by the reservoir. The village may have been cut off by the dam but to also
condemn it was excess condemnation not valid under the "Public use"
requirement. The U.S. Supreme Court in United States ex rel TVA v. Welch
(327 U.S, 546; 90 L. ed 843) unanimously reversed the lower courts. It stated:
The Circuit Court of Appeals, without expressly relying on a
compelling rule of construction that would give the
restrictive scope to the T.V.A. Act given it by the district
court, also interpreted the statute narrowly. It first analyzed
the facts by segregating the total problem into distinct parts,
and thus came to the conclusion that T.V.A.'s purpose in
condemning the land in question was only one to reduce its
liability arising from the destruction of the highway. The
Court held that use of the lands for that purpose is a

"private" and not a "public use" or, at best, a "public use" not
authorized by the statute. we are unable to agree with the
reasoning and conclusion of the Circuit Court of Appeals.
We think that it is the function of Congress to decide what
type of taking is for a public use and that the agency
authorized to do the taking may do so to the still extent of its
statutory authority, United States v. Gettysburg Electric R.
Co. 160 US 668, 679, 40 L ed 576, 580, 16 S Ct 427. ...
xxx xxx xxx
... But whatever may be the scope of the judicial power to
determine what is a "public use" in Fourteenth Amendment
controversies, this Court has said that when Congress has
spoken on this subject "Its decision is entitled to deference
until it is shown to involve an impossibility." Old Dominion
Land Co. v. United States, 269, US 55, 66, 70 L ed 162, 46 S Ct
39. Any departure from this judicial restraint would result in
courts deciding on what is and is not a governmental
function and in their invalidating legislation on the basis of
their view on that question at the moment of decision, a
practice which has proved impracticable in other fields. See
Case v. Bowles decided February 4, 1946, 437 US 92, 101,
ante, 552, 559, 66 S Ct 438. New York v. United States, 326
US 572 ante 326, 66 S Ct 310). We hold that the T.V.A. took
the tracts here involved for a public purpose, if, as we think
is the case, Congress authorized the Authority to acquire,
hold, and use the lands to carry out the purposes of the
T.V.A. Act.
In the Philippines, Chief Justice Enrique M. Fernando has aptly summarized
the statutory and judicial trend as follows:
The taking to be valid must be for public use. There was a
time when it was felt that a literal meaning should be
attached to such a requirement. Whatever project is
undertaken must be for the public to enjoy, as in the case of

streets or parks. Otherwise, expropriation is not allowable. It

is not any more. As long as the purpose of the taking is
public, then the power of eminent domain comes into play.
As just noted, the constitution in at least two cases, to
remove any doubt, determines what is public use. One is the
expropriation of lands to be subdivided into small lots for
resale at cost to individuals. The other is in the transfer,
through the exercise of this power, of utilities and other
private enterprise to the government. It is accurate to state
then that at present whatever may be beneficially employed
for the general welfare satisfies the requirement of public
use. (Fernando, The Constitution of the Philippines, 2nd ed., pp.
523-524)
The petitioners' contention that the promotion of tourism is not "public use"
because private concessioners would be allowed to maintain various
facilities such as restaurants, hotels, stores, etc. inside the tourist complex is
impressed with even less merit. Private bus firms, taxicab fleets, roadside
restaurants, and other private businesses using public streets end highways
do not diminish in the least bit the public character of expropriations for
roads and streets. The lease of store spaces in underpasses of streets built on
expropriated land does not make the taking for a private purpose. Airports
and piers catering exclusively to private airlines and shipping companies are
still for public use. The expropriation of private land for slum clearance and
urban development is for a public purpose even if the developed area is later
sold to private homeowners, commercial firms, entertainment and service
companies, and other private concerns.
The petitioners have also failed to overcome the deference that is
appropriately accorded to formulations of national policy expressed in
legislation. The rule in Berman u. Parker (supra) of deference to legislative
policy even if such policy might mean taking from one private person and
conferring on another private person applies as well as in the Philippines.
... Once the object is within the authority of Congress, the
means by which it will be attained is also for Congress to
determine. Here one of the means chosen is the use of

private enterprise for redevelopment of the area. Appellants

argue that this makes the project a taking from one
businessman for the benefit of another businessman. But the
means of executing the project are for Congress and
Congress alone to determine, once the public purpose has
been established. Selb Luxton v. North River Bridge Co. (US)
supra; cf. Highland v. Russel Car & Snow Plow Co. 279 US
253, 73 L ed 688, 49 S Ct 314. The public end may be as well
or better served through an agency of private enterprise than
through a department of government-or so the Congress
might conclude. We cannot say that public ownership is the
sole method of promoting the public purposes of
community redevelopment projects. What we have said also
disposes of any contention concerning the fact that certain
property owners in the area may be permitted to repurchase
their properties for redevelopment in harmony with the
over-all plan. That, too, is a legitimate means which
Congress and its agencies may adopt, if they choose.
(Berman v. Parker, 99 L ed 38, 348 US 33, 34)
An examination of the language in the 1919 cases of City of Manila v. Chinese
Community of Manila (40 Phil, 349) and Visayan Refining Co. vs. Camus, earlier
cited, shows that from the very start of constitutional government in our
country judicial deference to legislative policy has been clear and manifest in
eminent domain proceedings.
The expressions of national policy are found in the revised charter of the
Philippine Tourism Authority, Presidential Decree No. 564:
WHEREAS, it is the avowed aim of the government to
promote Philippine tourism and work for its accelerated and
balanced growth as well as for economy and expediency in
the development of the tourism plant of the country;
xxx xxx xxx
SECTION 1. Declaration of Policy. - It is hereby declared to be
the policy of the State to promote, encourage, and develop

Philippine tourism as an instrument in accelerating the

development of the country, of strengthening the country's
foreign exchange reserve position, and of protecting
Philippine culture, history, traditions and natural beauty,
internationally as well as domestically.
The power of eminent domain is expressly provided for under Section 5 B(2)
as follows:
xxx xxx xxx
2. Acquisition of Private Lands, Power of Eminent Domain. To
acquire by purchase, by negotiation or by condemnation
proceedings any private land within and without the tourist
zones for any of the following reasons: (a) consolidation of
lands for tourist zone development purposes, (b) prevention
of land speculation in areas declared as tourist zones, (c)
acquisition of right of way to the zones, (d) protection of
water shed areas and natural assets with tourism value, and
(e) for any other purpose expressly authorized under this
Decree and accordingly, to exercise the power of eminent
domain under its own name, which shall proceed in the
manner prescribed by law and/or the Rules of Court on
condemnation proceedings. The Authority may use any
mode of payment which it may deem expedient and
acceptable to the land owners: Provided, That in case bonds
are used as payment, the conditions and restrictions set forth
in Chapter III, Section 8 to 13 inclusively, of this Decree shall
apply.
xxx xxx xxx
The petitioners rely on the Land Reform Program of the government in
raising their second argument. According to them, assuming that PTA has
the right to expropriate, the properties subject of expropriation may not be
taken for the purposes intended since they are within the coverage of
"operation land transfer" under the land reform program. Petitioners claim
that certificates of land transfer (CLT'S) and emancipation patents have

already been issued to them thereby making the lands expropriated within
the coverage of the land reform area under Presidential Decree No. 2; that
the agrarian reform program occupies a higher level in the order of priorities
than other State policies like those relating to the health and physical wellbeing of the people; and that property already taken for public use may not
be taken for another public use.
We have considered the above arguments with scrupulous and thorough
circumspection. For indeed any claim of rights under the social justice and
land reform provisions of the Constitution deserves the most serious
consideration. The Petitioners, however, have failed to show that the area
being developed is indeed a land reform area and that the affected persons
have emancipation patents and certificates of land transfer.
The records show that the area being developed into a tourism complex
consists of more than 808 hectares, almost all of which is not affected by the
land reform program. The portion being expropriated is 282 hectares of hilly
and unproductive land where even subsistence farming of crops other than
rice and corn can hardly survive. And of the 282 disputed hectares, only
8,970 square meters-less than one hectare-is affected by Operation Land
Transfer. Of the 40 defendants, only two have emancipation patents for the
less than one hectare of land affected. And this 8,970 square meters parcel of
land is not even within the sports complex proper but forms part of the 32
hectares resettlement area where the petitioners and others similarly situated
would be provided with proper housing, subsidiary employment,
community centers, schools, and essential services like water and electricitywhich are non-existent in the expropriated lands. We see no need under the
facts of this petition to rule on whether one public purpose is superior or
inferior to another purpose or engage in a balancing of competing public
interests. The petitioners have also failed to overcome the showing that the
taking of the 8,970 square meters covered by Operation Land Transfer forms
a necessary part of an inseparable transaction involving the development of
the 808 hectares tourism complex. And certainly, the human settlement
needs of the many beneficiaries of the 32 hectares resettlement area should
prevail over the property rights of two of their compatriots.

The invocation of the contracts clause has no merit. The non-impairment

clause has never been a barrier to the exercise of police power and likewise
eminent domain. As stated in Manigault v. Springs (199 U.S. 473) "parties by
entering into contracts may not stop the legislature from enacting laws
intended for the public good."
The applicable doctrine is expressed in Arce v. Genato (69 SCRA 544) which
involved the expropriation of land for a public plaza. The Court stated:
xxx xxx xxx
... What is claimed is that there must be a showing of
necessity for such condemnation and that it was not done in
this case in support of such a view, reliance is placed on City
of Manila v. Arenano Law Colleges. (85 Phil. 663 [1950])
That doctrine itself is based on the earlier case of City of
Manila v. Chinese Community of Manila, (50 Phil. 349) also,
like Camus, a 1919 decision. As could be discerned,
however, in the Arellano Law Colleges decision. it was the
antiquarian view of Blackstone with its sanctification of the
right to one's estate on which such an observation was
based. As did appear in his Commentaries: "So great is the
regard of the law for private property that it will not,
authorize the least violation of it, even for the public good,
unless there exists a very great necessity thereof." Even the
most , cursory glance at such well-nigh absolutist concept of
property would show its obsolete character at least for
Philippine constitutional law. It cannot survive the test of the
1935 Constitution with its mandates on social justice and
protection to labor. (Article II, Section 5 of the 1935
Constitution reads: "The promotion of social justice to
unsure the well-being and economic security of all the
people should be the concern of the State." Article XI, Section
6 of the same Constitution provides: "The State shall afford
protection to labor, especially to working women and
minors, and shall regulate the relation between landowner
and tenant, and between labor and capital in industry and in

agriculture. The State may provide for compulsory

arbitration.") What is more, the present Constitution pays
even less heed to the claims of property and rightly so. After
stating that the State shall promote social justice, it
continues: "Towards this end, the State shall regulate the
acquisition, ownership, use, enjoyment, and disposition of
private property, and equitably diffuse property ownership
and profits." (That is the second sentence of Article II,
Section 6 of the Constitution) If there is any need for explicit
confirmation of what was set forth in Presidential Decree
No. 42, the above provision supplies it. Moreover, that is
merely to accord to what of late has been the consistent
course of decisions of this Court whenever property rights
are pressed unduly. (Cf. Alalayan v. National Power
Corporation, L-24396, July 29, 1968, 24 SCRA 172;
Agricultural Credit and Cooperative Financing
Administration v. Confederation of Unions, L-21484, Nov.
29, 1969, 30 SCRA 649; Edu v. Ericta, L-32096, Oct. 24, 1970,
35 SCRA 481; Phil. Virginia Tobacco Administration v. Court
of Industrial Relations, L-32052, July 25, 1975, 65 SCRA 416)
The statement therefore, that there could be discerned a
constitutional objection to a lower court applying a
Presidential Decree, when it leaves no doubt that a grantee
of the power of eminent domain need not prove the
necessity for the expropriation, carries its own refutation.
xxx xxx xxx
The issue of prematurity is also raised by the petitioners. They claim that
since the necessity for the taking has not been previously established, the
issuance of the orders authorizing the PTA to take immediate possession of
the premises, as well as the corresponding writs of possession was
premature.
Under Presidential Decree No. 42, as amended by Presidential Decree No.
1533, the government, its agency or instrumentality, as plaintiff in an
expropriation proceedings is authorized to take immediate possession,

control and disposition of the property and the improvements, with power
of demolition, notwithstanding the pendency of the issues before the court,
upon deposit with the Philippine National Bank of an amount equivalent to
10% of the value of the property expropriated. The issue of immediate
possession has been settled in Arce v. Genato (supra). In answer to the issue:
... whether the order of respondent Judge in an
expropriation case allowing the other respondent, ... to take
immediate possession of the parcel of land sought to be
condemned for the beautification of its public plaza, without
a prior hearing to determine the necessity for the exercise of
the power of eminent domain, is vitiated by jurisdictional
defect, ...
this Court held that:
... It is not disputed that in issuing such order, respondent
Judge relied on Presidential Decree No. 42 issued on the 9th
of November, 1972. (Presidential Decree No. 42 is entitled
"Authorizing the Plaintiff in Eminent Domain Proceedings to
Take Possession of the Property involved Upon Depositing
the Assessed Value for Purposes of Taxation.") The question
as thus posed does not occasion any difficulty as to the
answer to be given. This petition for certiorari must fail,
there being no showing that compliance with the
Presidential Decree, which under the Transitory Provisions
is deemed a part of the law of the land, (According to Article
XVII, Section 3 par. (2) of the Constitution: "All
proclamations, orders, decrees, instructions and acts
promulgated, issued, or done by the incumbent President
shall be part of the law of the land, and shall remain valid,
legal, binding, and effective even after lifting of martial law
or the ratification of this Constitution, unless modified,
revoked, or superseded by subsequent proclamations.
orders, decrees instructions, or other acts of the incumbent
President, or unless expressly and explicitly modified or
repealed by the regular National Assembly") would be

characterized as either an act in excess of jurisdiction or a

grave abuse of discretion. So we rule.
Likewise in Ramos v. Philippine Tourism Authority (G.R. Nos. 52449-50, June 9,
1980), this Court held:
... condemnation or expropriation proceedings is in the
nature of one that is quasi-in-rem wherein the fact that the
owner of the property is made a party is not essentially
indispensable insofar was least as it conncerns is the
immediate taking of possession of the property and the
preliminary determination of its value, including the amount
to be deposited.
In their last argument, the petitioners claim that a consequence of the
expropriation proceedings would be their forcible ejectment. They contend
that such forcible ejectment is a criminal act under Presidential Decree No.
583. This contention is not valid. Presidential Decree No. 583 prohibits the
taking cognizance or implementation of orders designed to obstruct the land
reform program. It refers to the harassment of tenant- farmers who try to
enforce emancipation rights. It has nothing to do with the expropriation by
the State of lands needed for public purposes. As a matter of fact, the
expropriated area does not appear in the master lists of the Ministry of
Agrarian Reforms as a teranted area. The petitioners' bare allegations have
not been supported with particulars pointing to specific parcels which are
subject of tenancy contracts. The petitioners may be owner-tillers or may
have some form of possessory or ownership rights but there has been no
showing of their being tenants on the disputed lands.
The petitioners have failed to overcome the burden of anyone trying to strike
down a statute or decree whose avowed purpose is the legislative perception
is the public good. A statute has in its favor the presumption of validity. All
reasonable doubts should be resolved in favor of the constitutionality of a
law. The courts will not set aside a law as violative of the Constitution except
in a clear case (People v. Vera, 65 Phil. 56). And in the absence of factual
findings or evidence to rebut the presumption of validity, the presumption

prevails (Ermita-Malate Hotel, etc. v. Mayor of Manila, 20 SCRA 849; Morfe

v. Mutuc, 22 SCRA 424).
The public respondents have stressed that the development of the 808
hectares includes plans that would give the petitioners and other displaced
persons productive employment, higher incomes, decent housing, water and
electric facilities, and better living standards. Our dismissing this petition is,
in part, predicated on those assurances. The right of the PTA to proceed with
the expropriation of the 282 hectares already Identified as fit for the
establishment of a resort complex to promote tourism is, therefore, sustained.
WHEREFORE, the instant petition for certiorari is hereby DISMISSE D for
lack of merit.
SO ORDERED.

SECOND DIVISION
[G.R. No. 137285. January 16, 2001]
ESTATE OF SALUD JIMENEZ, petitioner, vs. PHILIPPINE EXPORT
PROCESSING ZONE, respondent.
DECISION
DE LEON, JR., J.:
Before us is a petition for review on certiorari of the Decisioni[1] and the
Resolutionii[2]of the Court of Appealsiii[3] dated March 25, 1998 and
January 14, 1999, respectively, which ordered the Presiding Judge of the
Regional Trial Court of Cavite City, Branch 17, to proceed with the hearing of
the expropriation proceedings regarding the determination of just
compensation for Lot 1406-B while setting aside the Orders dated August 4,
1997iv[4] and November 3, 1997 of the said Regional Trial Court which
ordered the peaceful turnover to petitioner Estate of Salud Jimenez of said
Lot 1406-B.

In an Orderviii[8] dated October 25, 1991, the trial court reconsidered the
Order dated July 11, 1991 and released Lot 1406-A from expropriation while
the expropriation of Lot 1406-B was maintained. Finding the said order
unacceptable, private respondent PEZA interposed an appeal to the Court of
Appeals.
Meanwhile, petitioner wrote a letter to private respondent offering two (2)
proposals, namely:
1.
Withdrawal of private respondents appeal with respect to Lot 1406A in consideration of the waiver of claim for damages and loss of income for
the possession of said lot by private respondent.
2.
The swap of Lot 1406-B with Lot 434 covered by TCT No. T-14772
since private respondent has no money yet to pay for the lot.
Private respondents Board approved the proposal and the compromise
agreement was signed by private respondent through its then administrator
Tagumpay Jardiniano assisted by Government Corporate Counsel Oscar I.
Garcia. Said compromise agreementix[9] dated January 4, 1993 is quoted
hereunder:

The facts are as follows:

On May 15, 1981, private respondent Philippine Export Processing Zone
(PEZA), then called as the Export Processing Zone Authority (EPZA),
initiated before the Regional Trial Court of Cavite expropriation
proceedingsv[5] on three (3) parcels of irrigated riceland in Rosario, Cavite.
One of the lots, Lot 1406 (A and B) of the San Francisco de Malabon Estate,
with an approximate area of 29,008 square meters, is registered in the name
of Salud Jimenez under TCT No. T-113498 of the Registry of Deeds of Cavite.
More than ten (10) years latervi[6], the said trial court in an Ordervii[7] dated
July 11, 1991 upheld the right of private respondent PEZA to expropriate,
among others, Lot 1406 (A and B). Reconsideration of the said order was
sought by petitioner contending that said lot would only be transferred to a
private corporation, Philippine Vinyl Corp., and hence would not be utilized
for a public purpose.

1.
That plaintiff agrees to withdraw its appeal from the Order of the
Honorable Court dated October 25, 1991 which released lot 1406-A from the
expropriation proceedings. On the other hand, defendant Estate of Salud
Jimenez agrees to waive, quitclaim and forfeit its claim for damages and loss
of income which it sustained by reason of the possession of said lot by
plaintiff from 1981 up to the present.
2.
That the parties agree that defendant Estate of Salud Jimenez shall
transfer lot 1406-B with an area of 13,118 square meters which forms part of
the lot registered under TCT No. 113498 of the Registry of Deeds of Cavite to
the name of the plaintiff and the same shall be swapped and exchanged with
lot 434 with an area of 14,167 square meters and covered by Transfer
Certificate of Title No. 14772 of the Registry of Deeds of Cavite which lot will
be transferred to the name of Estate of Salud Jimenez.

3.
That the swap arrangement recognizes the fact that the lot 1406-B
covered by TCT No. T-113498 of the estate of defendant Salud Jimenez is
considered expropriated in favor of the government based on Order of the
Honorable Court dated July 11, 1991. However, instead of being paid the just
compensation for said lot, the estate of said defendant shall be paid with lot
434 covered by TCT No. T-14772.

dated August 4, 1997 and November 3, 1997 of the trial court. Petitioner filed
its Commentxvii[17]on January 16, 1998.

4.
That the parties agree that they will abide by the terms of the
foregoing agreement in good faith and the Decision to be rendered based on
this Compromise Agreement is immediately final and executory.

A judicial compromise may be enforced by a writ of execution, and if a party

fails or refuses to abide by the compromise, the other party may regard it as
rescinded and insist upon his original demand. This is in accordance with
Article 2041 of the Civil Code which provides:

The Court of Appeals remanded the case to the trial court for the approval of
the said compromise agreement entered into between the parties, consequent
with the withdrawal of the appeal with the Court of Appeals. In the
Orderx[10] dated August 23, 1993, the trial court approved the compromise
agreement.
However, private respondent failed to transfer the title of Lot 434 to
petitioner inasmuch as it was not the registered owner of the covering TCT
No. T-14772 but Progressive Realty Estate, Inc. Thus, on March 13, 1997,
petitioner Estate filed a Motion to Partially Annul the Order dated August
23, 1993.xi[11]
In the Orderxii[12] dated August 4, 1997, the trial court annulled the said
compromise agreement entered into between the parties and directed private
respondent to peacefully turn over Lot 1406-A to the petitioner. Disagreeing
with the said Order of the trial court, respondent PEZA movedxiii[13] for its
reconsideration. The same proved futile since the trial court denied
reconsideration in its Orderxiv[14] dated November 3, 1997.
On December 4, 1997, the trial court, at the instancexv[15] of petitioner,
corrected the Orders dated August 4, 1997 and November 3, 1997 by
declaring that it is Lot 1406-B and not Lot 1406-A that should be surrendered
and returned to petitioner.
On November 27, 1997, respondent interposed before the Court of Appeals a
petition for certiorari and prohibitionxvi[16] seeking to nullify the Orders

Acting on the petition, the Court of Appeals in a Decisionxviii[18]dated

March 25, 1998 upheld the rescission of the compromise agreement,
ratiocinating thus:

If one of the parties fails or refuses to abide by the compromise, the other
party may either enforce the compromise or regard it as rescinded and insist
upon his original demand.
The Supreme Court had the occasion to explain this provision of law in the
case of Leonor v. Sycip (1 SCRA 1215). It ruled that the language of the
abovementioned provision denotes that no action for rescission is required
and that the aggrieved party by the breach of compromise agreement, may
regard the compromise agreement already rescinded, to wit:
It is worthy of notice, in this connection, that, unlike Article 2039 of the same
Code, which speaks of a cause of annulment or rescission of the compromise
and provides that the compromise may be annulled or rescinded for the
cause therein specified, thus suggesting an action for annulment or
rescission, said Article 2041 confers upon the party concerned not a cause for
rescission, or the right to demand rescission, of a compromise, but the
authority, not only to regard it as rescinded, but, also, to insist upon his
original demand. The language of this Article 2041, particularly when
contrasted with that of Article 2039, denotes that no action for rescission is
required in said Article 2041, and that the party aggrieved by the breach of a
compromise agreement may, if he chooses, bring the suit contemplated or
involved in his original demand, as if there had never been any compromise
agreement, without bringing an action for rescission thereof. He need not
seek a judicial declaration of rescission, for he may regard the compromise
agreement already, rescinded.

Nonetheless, it held that:

Having upheld the rescission of the compromise agreement, what is then the
status of the expropriation proceedings? As succinctly discussed in the case
of Leonor v. Sycip, the aggrieved party may insist on his original demand as
if there had never been any compromise agreement. This means that the
situation of the parties will revert back to status before the execution of the
compromise agreement, that is, the second stage of the expropriation proceedings
which is the determination of the just compensation.xix[19]
x

Thus, the appellate court partially granted the petition by setting aside the
order of the trial court regarding the peaceful turn over to the Estate of Salud
Jimenez of Lot No. 1406-B and instead ordered the trial judge to proceed
with the hearing of the expropriation proceedings regarding the
determination of just compensation over Lot 1406-B.xx[20]
Petitioner soughtxxi[21] reconsideration of the Decision dated March 25,
1998. However, public respondent in a Resolutionxxii[22] dated January 14,
1999 denied petitioners motion for reconsideration.
Hence, this petition anchored on the following assignment of errors, to wit:
I

THE COURT OF APPEALS COMMITTED GRAVE AND REVERSIBLE

ERROR IN GIVING DUE COURSE TO THE SPECIAL CIVIL ACTION
FILED BY RESPONDENT PEZA IN CA-G.R. SP. NO. 46112 WHEN IT
WAS MADE A SUBSTITUTE FOR LOST APPEAL IN CLEAR
CONTRAVENTION OF THE HONORABLE COURTS RULING IN
SEMPIO VS. COURT OF APPEALS (263 SCRA 617) AND ONGSITCO
VS. COURT OF APPEALS (255 SCRA 703) AND DESPITE THE FACT
THAT THE ORDER OF THE CAVITE REGIONAL TRIAL COURT IS
ALREADY FINAL AND EXECUTORY.
II

GRANTING IN GRATIA ARGUMENTI THAT THE SPECIAL CIVIL

ACTION OF CERTIORARI IS PROPER, THE COURT OF APPEALS
NEVERTHELESS WRONGLY INTERPRETED THE PHRASE ORIGINAL
DEMAND CONTAINED IN ARTICLE 2041 OF THE CIVIL CODE. THE
ORIGINAL DEMAND OF PETITIONER ESTATE IS THE RETURN OF
THE SUBJECT LOT (LOT 1406-B) WHICH IS SOUGHT TO BE
EXPROPRIATED AND NOT THE DETERMINATION OF JUST
COMPENSATION FOR THE LOT. FURTHERMORE, EVEN IF THE
INTERPRETATION OF THE COURT OF APPEALS OR THE IMPORT OF
THE PHRASE IN QUESTION IS CORRECT, IT IS ARTICLE 2039 OF THE
CIVIL CODE AND NOT ARTICLE 2041 WHICH IS APPLICABLE TO
COMPROMISE AGREEMENTS APPROVED BY THE COURTS.xxiii[23]
We rule in favor of the respondent.
Petitioner contends that the Court of Appeals erred in entertaining the
petition for certiorari filed by respondent under Rule 65 of the Rules of Court,
the same being actually a substitute for lost appeal. It appeared that on
August 11, 1997, respondent received the Order of the trial court dated
August 4, 1997 annulling the compromise agreement. On August 26, 1997,
the last day for the filing of a notice of appeal, respondent filed instead a
motion for reconsideration. The Order of the trial court denying the motion
for reconsideration was received by respondent on November 23, 1997. The
reglementary period to appeal therefore lapsed on November 24, 1997. On
November 27, 1997, however, respondent filed with the Court of Appeals a
petition for certiorari docketed as CA-G.R. SP. No. 46112. Petitioner claims
that appeal is the proper remedy inasmuch as the Order dated August 4,
1997 of the Regional Trial Court is a final order that completely disposes of
the case. Besides, according to petitioner, respondent is estopped in asserting
that certiorari is the proper remedy inasmuch as it invoked the fifteen (15)
day reglementary period for appeal when it filed a motion for
reconsideration on August 26, 1997 and not the sixty (60) day period for
filing a petition for certiorari under Rule 65 of the Rules of Court.
The Court of Appeals did not err in entertaining the petition for certiorari
under Rule 65 of The Rules of Court. A petition for certiorari is the proper
remedy when any tribunal, board, or officer exercising judicial or quasijudicial functions has acted without or in excess of its jurisdiction, or with

grave abuse of discretion amounting to lack or excess of jurisdiction and

there is no appeal, nor any plain, speedy, and adequate remedy at
law.xxiv[24] Grave abuse of discretion is defined as the capricious and
whimsical exercise of judgment as is equivalent to lack of jurisdiction. An
error of judgment committed in the exercise of its legitimate jurisdiction is
not the same as grave abuse of discretion. An abuse of discretion is not
sufficient by itself to justify the issuance of a writ of certiorari. The abuse must
be grave and patent, and it must be shown that the discretion was exercised
arbitrarily and despotically.xxv[25]
As a general rule, a petition for certiorari will not lie if an appeal is the proper
remedy thereto such as when an error of judgment as well as of procedure
are involved. As long as a court acts within its jurisdiction and does not
gravely abuse its discretion in the exercise thereof, any supposed error
committed by it will amount to nothing more than an error of judgment
reviewable by a timely appeal and not assailable by a special civil action of
certiorari. However, in certain exceptional cases, where the rigid application
of such rule will result in a manifest failure or miscarriage of justice, the
provisions of the Rules of Court which are technical rules may be relaxed.
Certiorari has been deemed to be justified, for instance, in order to prevent
irreparable damage and injury to a party where the trial judge has
capriciously and whimsically exercised his judgment, or where there may be
danger of clear failure of justice, or where an ordinary appeal would simply
be inadequate to relieve a party from the injurious effects of the judgment
complained of.xxvi[26]
Expropriation proceedings involve two (2) phases. The first phase ends
either with an order of expropriation (where the right of plaintiff to take the
land and the public purpose to which they are to be devoted are upheld) or
an order of dismissal. Either order would be a final one since it finally
disposes of the case. The second phase concerns the determination of just
compensation to be ascertained by three (3) commissioners. It ends with an
order fixing the amount to be paid to the defendant. Inasmuch as it leaves
nothing more to be done, this order finally disposes of the second stage. To
both orders the remedy therefrom is an appeal.xxvii[27]

In the case at bar, the first phase was terminated when the July 11, 1991 order
of expropriation became final and the parties subsequently entered into a
compromise agreement regarding the mode of payment of just
compensation. When respondent failed to abide by the terms of the
compromise agreement, petitioner filed an action to partially rescind the
same. Obviously, the trial could only validly order the rescission of the
compromise agreement anent the payment of just compensation inasmuch as
that was the subject of the compromise. However, on August 4, 1991, the trial
court gravely abused its discretion when it ordered the return of Lot 1406-B.
It, in effect, annulled the Order of Expropriation dated July 11, 1991 which
was already final and executory.
We affirm the appellate courts reliance on the cases of Aguilar v. Tanxxviii[28]
and Bautista v. Sarmientoxxix[29] wherein it was ruled that the remedies of
certiorari and appeal are not mutually exclusive remedies in certain
exceptional cases, such as when there is grave abuse of discretion, or when
public welfare so requires. The trial court gravely abused its discretion by
setting aside the order of expropriation which has long become final and
executory and by ordering the return of Lot 1406-B to the petitioner. Its
action was clearly beyond its jurisdiction for it cannot modify a final and
executory order. A final and executory order can only be annulled by a
petition to annul the same on the ground of extrinsic fraud and lack of
jurisdictionxxx[30] or a petition for relief from a final order or judgment
under Rule 38 of the Rules of Court. However, no petition to that effect was
filed. Hence, though an order completely and finally disposes of the case, if
appeal is not a plain, speedy and adequate remedy at law or the interest of
substantial justice requires, a petition for certiorari may be availed of upon
showing of lack or excess of jurisdiction or grave abuse of discretion on the
part of the trial court.
According to petitioner the rule that a petition for certiorari can be availed of
despite the fact that the proper remedy is an appeal only applies in cases
where the petition is filed within the reglementary period for appeal.
Inasmuch as the petition in the case at bar was filed after the fifteen (15) day
regulatory period to appeal, said exceptional rule as enshrined in the cases of
Aguilar v. Tanxxxi[31] and Bautista v. Sarmientoxxxii[32] is not applicable. We
find this interpretation too restrictive. The said cases do not set as a condition

sine qua non the filing of a petition for certiorari within the fifteen (15) day
period to appeal in order for the said petition to be entertained by the court.
To espouse petitioners contention would render inutile the sixty (60) day
period to file a petition for certiorari under Rule 65. In Republic v. Court of
Appealsxxxiii[33], which also involved an expropriation case where the
parties entered into a compromise agreement on just compensation, this
Court entertained the petition for certiorari despite the existence of an appeal
and despite its being filed after the lapse of the fifteen (15) day period to
appeal the same. We ruled that the Court has not too infrequently given due
course to a petition for certiorari, even when the proper remedy would have
been an appeal, where valid and compelling considerations would warrant
such a recourse.xxxiv[34] If compelled to return the subject parcel of land,
the respondent would divert its budget already allocated for economic
development in order to pay petitioner the rental payments from the lessee
banks. Re-adjusting its budget would hamper and disrupt the operation of
the economic zone. We believe that the grave abuse of discretion committed
by the trial court and the consequent disruption in the operation of the
economic zone constitutes valid and compelling reasons to entertain the
petition.
Petitioner next argues that the instances cited under Section 1 of Rule 41 of
the Rules of Courtxxxv[35] whereby an appeal is not allowed are exclusive
grounds for a petition for certiorari. Inasmuch as the August 4 1997 Order
rescinding the compromise agreement does not fall under any of the
instances enumerated therein, a petition for certiorari will not prosper. This
reasoning is severely flawed. The said section is not phrased to make the
instances mentioned therein the sole grounds for a petition for certiorari. It
only states that Rule 65 may be availed of under the grounds mentioned
therein, but it never intended said enumeration to be exclusive. It must be
remembered that a wide breadth of discretion is granted a court of justice in
certiorari proceedings.xxxvi[36]
In the second assignment of error, petitioner assails the interpretation by the
Court of Appeals of the phrase original demand in Article 2041 of the New
Civil Code vis-a-vis the case at bar. Article 2041 provides that, If one of the
parties fails or refuses to abide by the compromise, the other party may
either enforce the compromise or regard it as rescinded and insist upon his

original demand. According to petitioner, the appellate court erred in

interpreting original demand as the fixing of just compensation. Petitioner
claims that the original demand is the return of Lot 1406-B as stated in
petitioners motion to dismissxxxvii[37] the complaint for expropriation
inasmuch as the incorporation of the expropriation order in the compromise
agreement subjected the said order to rescission. Since the order of
expropriation was rescinded, the authority of respondent to expropriate and
the purpose of expropriation have again become subject to dispute.
Petitioner cites casesxxxviii[38] which provide that upon the failure to pay by
the lessee, the lessor can ask for the return of the lot and the ejectment of the
former, this being the lessors original demand in the complaint. We find said
cases to be inapplicable to this instant case for the reason that the case at bar
is not a simple ejectment case. This is an expropriation case which involves
two (2) orders: an expropriation order and an order fixing just compensation.
Once the first order becomes final and no appeal thereto is taken, the
authority to expropriate and its public use cannot anymore be questioned.
Contrary to petitioners contention, the incorporation of the expropriation
order in the compromise agreement did not subject said order to rescission
but instead constituted an admission by petitioner of respondents authority
to expropriate the subject parcel of land and the public purpose for which it
was expropriated. This is evident from paragraph three (3) of the
compromise agreement which states that the swap arrangement recognizes
the fact that Lot 1406-B covered by TCT No. T-113498 of the estate of
defendant Salud Jimenez is considered expropriated in favor of the
government based on the Order of the Honorable Court dated July 11, 1991.
It is crystal clear from the contents of the agreement that the parties limited
the compromise agreement to the matter of just compensation to petitioner.
Said expropriation order is not closely intertwined with the issue of payment
such that failure to pay by respondent will also nullify the right of
respondent to expropriate. No statement to this effect was mentioned in the
agreement. The Order was mentioned in the agreement only to clarify what
was subject to payment.
This Court therefore finds that the Court of Appeals did not err in
interpreting original demand to mean the fixing of just compensation. The

authority of respondent and the nature of the purpose thereof have been put
to rest when the Expropriation Order dated July 11, 1991 became final and
was duly admitted by petitioner in the compromise agreement. The only
issue for consideration is the manner and amount of payment due to
petitioner. In fact, aside from the withdrawal of private respondents appeal
to the Court of Appeals concerning Lot 1406-A, the matter of payment of just
compensation was the only subject of the compromise agreement dated
January 4, 1993. Under the compromise agreement, petitioner was supposed
to receive respondents Lot No. 434 in exchange for Lot 1406-B. When
respondent failed to fulfill its obligation to deliver Lot 434, petitioner can
again demand for the payment but not the return of the expropriated Lot
1406-B. This interpretation by the Court of Appeals is in accordance with
Sections 4 to 8, Rule 67 of the Rules of Court.
We also find as inapplicable the ruling in Gatchalian v. Arleguixxxix[39], a
case cited by petitioner, where we held that even a final judgment can still be
compromised so long as it is not fully satisfied. As already stated, the
expropriation order was not the subject of the compromise agreement. It was
only the mode of payment which was the subject of the compromise
agreement. Hence, the Order of Expropriation dated July 11, 1991 can no
longer be annulled.
After having invoked the provisions of Article 2041, petitioner inconsistently
contends that said article does not apply to the case at bar inasmuch as it is
only applicable to cases where a compromise has not been approved by a
court. In the case at bar, the trial court approved the compromise agreement.
Petitioner insists that Articles 2038, 2039 and 1330 of the New Civil Code
should apply. Said articles provide that:
Article 2038. A compromise in which there is mistake, fraud, violence, intimidation,
undue influence, or falsity of documents, is subject to the provisions of Article 1330
of this Code.
However, one of the parties cannot set up a mistake of fact as against the
other if the latter, by virtue of the compromise, has withdrawn from a
litigation already commenced.

Article 2039. When the parties compromise generally on all differences

which they might have with each other, the discovery of documents referring
to one or more but not to all of the questions settled shall not itself be a cause
for annulment or rescission of the compromise, unless said documents have
been concealed by one of the parties.
But the compromise may be annulled or rescinded if it refers only to one thing to
which one of the parties has no right, as shown by the newly discovered
documents.(n)
Article 1330. A contract where consent is given through mistake, violence,
intimidation, undue influence, or fraud is voidable.xl[40]
The applicability of the above-quoted legal provisions will not change the
outcome of the subject of the rescission. Since the compromise agreement
was only about the mode of payment by swapping of lots and not about the
right and purpose to expropriate the subject Lot 1406-B, only the originally
agreed form of compensation that is by cash payment, was rescinded.
This Court holds that respondent has the legal authority to expropriate the
subject Lot 1406-B and that the same was for a valid public purpose. In
Sumulong v. Guerreroxli[41], this Court has ruled that,
the public use requirement for a valid exercise of the power of eminent
domain is a flexible and evolving concept influenced by changing conditions.
In this jurisdiction, the statutory and judicial trend has been summarized as
follows:
this Court has ruled that the taking to be valid must be for public use. There
was a time when it was felt that a literal meaning should be attached to such
a requirement. Whatever project is undertaken must be for the public to
enjoy, as in the case of streets or parks. Otherwise expropriation is not
allowable. It is not anymore. As long as the purpose of the taking is public,
then the power of eminent domain comes into play It is accurate to state then
that at present whatever may be beneficially employed for the general
welfare satisfies the requirement of public use. [Heirs of Juancho Ardona v.
Reyes, 125 SCRA 220 (1983) at 234-235 quoting E. Fernando, the Constitution
of the Philippines 523-4 (2nd Ed. 1977)

The term public use has acquired a more comprehensive coverage. To the
literal import of the term signifying strict use or employment by the public
has been added the broader notion of indirect public benefit or advantage.
In Manosca v. Court of Appeals, this Court has also held that what ultimately
emerged is a concept of public use which is just as broad as public
welfare.xlii[42]

territorial integrity of the Republic, ECOZONE shall be developed, as much

as possible, into a decentralized, self-reliant and self-sustaining industrial,
commercial/trading, agro-industrial, tourist, banking, financial and
investment center with minimum government intervention. Each ECOZONE
shall be provided with transportation, telecommunications and other
facilities needed to generate linkage with industries and employment
opportunities for its own habitants and those of nearby towns and cities.

Respondent PEZA expropriated the subject parcel of land pursuant to

Proclamation No. 1980 dated May 30, 1980 issued by former President
Ferdinand Marcos. Meanwhile, the power of eminent domain of respondent
is contained in its original charter, Presidential Decree No. 66, which
provides that:

The ECOZONE shall administer itself on economic, financial, industrial,

tourism development and such other matters within the exclusive
competence of the national government. (italics supplied)

Section 23. Eminent Domain. For the acquisition of rights of way, or of any
property for the establishment of export processing zones, or of low-cost
housing projects for the employees working in such zones, or for the
protection of watershed areas, or for the construction of dams, reservoirs,
wharves, piers, docks, quays, warehouses and other terminal facilities,
structures and approaches thereto, the Authority shall have the right and power
to acquire the same by purchase, by negotiation, or by condemnation
proceedings. Should the authority elect to exercise the right of eminent
domain, condemnation proceedings shall be maintained by and in the name
of the Authority and it may proceed in the manner provided for by law.
(italics supplied)

Sec. 12. Functions and Powers of PEZA Board. ---- The Philippine Economic
Zone Authority (PEZA) Board shall have the following function and powers:

Accordingly, subject Lot 1406-B was expropriated for the construction of

terminal facilities, structures and approaches thereto. The authority is broad
enough to give the respondent substantial leeway in deciding for what
public use the expropriated property would be utilized. Pursuant to this
broad authority, respondent leased a portion of the lot to commercial banks
while the rest was made a transportation terminal. Said public purposes
were even reaffirmed by Republic Act No. 7916, a law amending respondent
PEZAs original charter, which provides that:
Sec. 7. ECOZONE to be a Decentralized Agro-Industrial, Industrial,
Commercial/Trading, Tourist, Investment and Financial Community. Within the
framework of the Constitution, the interest of national sovereignty and

Among the powers of PEZA enumerated by the same law are:

(a)
Set the general policies on the establishment and operations of the
ECOZONE, Industrial estate, exports processing zones, free trade zones, and
the like;
x

(c)
Regulate and undertake the establishment, operation and
maintenance of utilities, other services and infrastructure in the ECOZONE,
such as heat, light and power, water supply, telecommunications, transport,
toll roads and bridges, port services, etc. and to fix just, reasonable and
competitive rates, fares, charges and fees thereof.xliii[43]
In Manila Railroad Co. v. Mitchelxliv[44], this Court has ruled that in the
exercise of eminent domain, only as much land can be taken as is necessary
for the legitimate purpose of the condemnation. The term necessary, in this
connection, does not mean absolutely indispensable but requires only a
reasonable necessity of the taking for the stated purpose, growth and future
needs of the enterprise. The respondent cannot attain a self-sustaining and
viable ECOZONE if inevitable needs in the expansion in the surrounding
areas are hampered by the mere refusal of the private landowners to part
with their properties. The purpose of creating an ECOZONE and other

facilities is better served if respondent directly owns the areas subject of the
expansion program.
The contention of petitioner that the leasing of the subject lot to banks and
building terminals was not expressly mentioned in the original charter of
respondent PEZA and that it was only after PEZA devoted the lot to said
purpose that Republic Act No. 7916 took effect, is not impressed with merit.
It should be pointed out that Presidential Decree No. 66 created the
respondent PEZA to be a viable commercial, industrial and investment area.
According to the comprehensive wording of Presidential Decree No. 66, the
said decree did not intend to limit respondent PEZA to the establishment of
an export processing zone but it was also bestowed with authority to
expropriate parcels of land for the construction of terminal facilities,
structures and approaches thereto. Republic Act No. 7916 simply
particularized the broad language employed by Presidential Decree No. 66
by specifying the purposes for which PEZA shall devote the condemned lots,
that is, for the construction and operation of an industrial estate, an export
processing zone, free trade zones, and the like. The expropriation of Lot
1406-B for the purpose of being leased to banks and for the construction of a
terminal has the purpose of making banking and transportation facilities
easily accessible to the persons working at the industries located in PEZA.
The expropriation of adjacent areas therefore comes as a matter of necessity
to bring life to the purpose of the law. In such a manner, PEZAs goal of being
a major force in the economic development of the country would be realized.
Furthermore, this Court has already ruled that:
(T)he Legislature may directly determine the necessity for appropriating
private property for a particular improvement for public use, and it may
select the exact location of the improvement. In such a case, it is well-settled
that the utility of the proposed improvement, the existence of the public
necessity for its construction, the expediency of constructing it, the
suitableness of the location selected, are all questions exclusively for the
legislature to determine, and the courts have no power to interfere or to
substitute their own views for those of the representatives of the people.

In the absence of some constitutional or statutory provision to the contrary,

the necessity and expediency of exercising the right of eminent domain are
questions essentially political and not judicial in their character.xlv[45]
Inasmuch as both Presidential Decree No. 66 and Republic Act No. 7916,
bestow respondent with authority to develop terminal facilities and banking
centers, this Court will not question the respondents lease of certain portions
of the expropriated lot to banks, as well as the construction of terminal
facilities.
Petitioner contends that respondent is bound by the representations of its
Chief Civil Engineer when the latter testified before the trial court that the lot
was to be devoted for the construction of government offices. Anent this
issue, suffice it to say that PEZA can vary the purpose for which a
condemned lot will be devoted to, provided that the same is for public use.
Petitioner cannot impose or dictate on the respondent what facilities to
establish for as long as the same are for public purpose.
Lastly, petitioner appeals to the sense of justice and equity to this Court in
restoring the said lot to its possession. From the time of the filing of the
expropriation case in 1981 up to the present, respondent has not yet
remunerated the petitioner although respondent has already received
earnings from the rental payments by lessees of the subject property.
We have ruled that the concept of just compensation embraces not only the
correct determination of the amount to be paid to the owners of the land, but
also the payment of the land within a reasonable time from its taking.
Without prompt payment, compensation cannot be considered just inasmuch
as the property owner is made to suffer the consequences of being
immediately deprived of his land while being made to wait for a decade or
more before actually receiving the amount necessary to cope with his
loss.xlvi[46] Payment of just compensation should follow as a matter of right
immediately after the order of expropriation is issued. Any delay in payment
must be counted from said order. However, the delay to constitute a
violation of due process must be unreasonable and inexcusable; it must be
deliberately done by a party in order to defeat the ends of justice.

We find that respondent capriciously evaded its duty of giving what is due
to petitioner. In the case at bar, the expropriation order was issued by the
trial court in 1991. The compromise agreement between the parties was
approved by the trial court in 1993. However, from 1993 up to the present,
respondent has failed in its obligation to pay petitioner to the prejudice of the
latter. Respondent caused damage to petitioner in making the latter to expect
that it had a good title to the property to be swapped with Lot 1406-B; and
meanwhile, respondent has been reaping benefits from the lease or rental
income of the said expropriated lot. We cannot tolerate this oppressive
exercise of the power of eminent domain by respondent. As we have ruled in
Cosculluela vs. Court of Appeals:xlvii[47]
In the present case, the irrigation project was completed and has been in
operation since 1976. The project is benefiting the farmers specifically and the
community in general. Obviously, the petitioners land cannot be returned to
him. However, it is high time that the petitioner be paid what was due him
eleven years ago. It is arbitrary and capricious for a government agency to
initiate expropriation proceedings, seize a persons property, allow the
judgment of the court to become final and executory and then refuse to pay
on the ground that there are no appropriations for the property earlier taken
and profitably used. We condemn in the strongest possible terms the cavalier
attitude of government officials who adopt such a despotic and irresponsible
stance.
Though the respondent has committed a misdeed to petitioner, we cannot,
however, grant the petitioners prayer for the return of the expropriated Lot
No. 1406-B. The Order of expropriation dated July 11, 1991, has long become
final and executory. Petitioner cited Provincial Government of Sorsogon v. Rosa
E. Vda. De Villaroyaxlviii[48] to support its contention that it is entitled to a
return of the lot where this Court ruled that under ordinary circumstances,
immediate return to the owners of the unpaid property is the obvious
remedy. However, the said statement was not the ruling in that case. As in
other cases where there was no prompt payment by the government, this
Court declared in Sorsogon that the Provincial Government of Sorsogon is
expected to immediately pay as directed. Should any further delay be
encountered, the trial court is directed to seize any patrimonial property or
cash savings of the province in the amount necessary to implement this

decision. However, this Court also stressed and declared in that case that In
cases where land is taken for public use, public interest, however, must be
considered.
In view of all the foregoing, justice and equity dictate that this case be
remanded to the trial court for hearing of the expropriation proceedings on
the determination of just compensation for Lot 1406-B and for its prompt
payment to the petitioner.
WHEREFORE, the instant petition is hereby denied. The Regional Trial
Court of Cavite City is hereby ordered to proceed with the hearing of the
expropriation proceedings, docketed as Civil Case No. N-4029, regarding the
determination of just compensation for Lot 1406-B, covered and described in
TCT No. T-113498-Cavite, and to resolve the same with dispatch.
SO ORDERED.

THIRD DIVISION

NACHURA, and
PERALTA, JJ.

SPOUSES CIRIACO and

G.R. No. 181562-63

ARMINDA ORTEGA,

SPOUSES CIRIACO and

Petitioners,

ARMINDA ORTEGA,

Promulgated:

Respondents.

October 2, 2009

- versus x------------------------------------------------------------------------------------ x
CITY OF CEBU,
Respondent.
x----------------------------x
CITY OF CEBU,

DECISION
G.R. No. 181583-84

Petitioner,

NACHURA, J.:
Present:

YNARES-SANTIAGO, J.,
Chairperson,
- versus -

CHICO-NAZARIO,
VELASCO, JR.,

These are consolidated petitions for review on certiorari filed by

petitioners Ciriaco and Arminda Ortega (Spouses Ortega) in G.R. Nos. 18156263 and petitioner City of Cebu (Cebu City) in G.R. Nos. 181583-84 assailing the
Decision of the Court of Appeals (CA) in the similarly consolidated petitions

docketed as CA-G.R. SP No. 80187 and CA-G.R. SP No. 00147,

respectively.1[1]

The facts, summarized by the CA, follow.

City Appraisal Committee in Resolution No. 19, series of 1994,

dated April 15, 1994.
Pursuant to said ordinance, [Cebu City] filed a
Complaint for Eminent Domain [before the Regional Trial
Court (RTC), Branch 23, Cebu City] against [the spouses
Ortega], docketed as Civil Case No. CEB-16577.

Spouses Ciriaco and Arminda Ortega x x x are the

registered owners of a parcel of land known as Lot No. 310-B,
situated in Hipodromo, Cebu City, with an area of 5,712
square meters and covered by Transfer Certificate of Title No.
113311, issued by the Register of Deeds of the City of Cebu.

On March 13, 1998, the [RTC] issued an order

declaring that [Cebu City] has the lawful right to take the
property subject of the instant case, for public use or purpose
described in the complaint upon payment of just
compensation.

One-half of the above described land is occupied by

squatters. On September 24, 1990, [the Spouses Ortega] filed
an ejectment case against the squatters before the Municipal
Trial Court in Cities (MTCC) of Cebu City, which rendered
decision in favor of [the spouses Ortega]. The case eventually
reached the Supreme Court, which affirmed the decision of
the MTCC. The decision of the MTCC became final and
executory, and a writ of execution was issued on February 1,
1994.

Based on the recommendation of the appointed

Commissioners (one of whom was the City Assessor of [Cebu
City], the [RTC] issued another Order dated May 21, 1999,
fixing the value of the land subject to expropriation at
ELEVEN THOUSAND PESOS (P11,000.00) per square meter
and ordering [Cebu City] to pay [Spouses Ortega] the sum of
THIRTY ONE MILLION AND FOUR HUNDRED SIXTEEN
THOUSAND PESOS (P31,416,000.00) as just compensation
for the expropriated portion of Lot No. 310-B.

On May 23, 1994, the Sangguniang Panglungsod of

[Cebu City] enacted City Ordinance No. 1519, giving
authority to the City Mayor to expropriate one-half (1/2)
portion (2,856 square meters) of [the spouses Ortegas] land
(which is occupied by the squatters), and appropriating for
that purpose the amount of P3,284,400.00 or at the price of
ONE THOUSAND ONE HUNDRED FIFTY PESOS
(P1,150.00) per square meter. The amount will be charged
against Account No. 8-93-310, Continuing Appropriation,
Account No. 101-8918-334, repurchase of lots for various
projects. The value of the land was determined by the Cebu

The Decision of the [RTC] became final and executory

because of [Cebu Citys] failure to perfect an appeal on time,
and a Writ of Execution was issued on September 17, 1999 to
enforce the courts judgment. Upon motion of [the Spouses
Ortega], the [RTC] issued an Order dated March 11, 2002,
quoted as follows:
Reading of the aforestated resolution
shows that the City Council of Cebu
approved Ordinance No. 1519 appropriating
the sum of P3,284,400.00 for payment of the

subject lot chargeable to Account No. 1018918-334.

public policy. The [RTC] issued an Order dated March 8, 2004,

denying said motion. [Cebu Citys] Motion for
Reconsideration was also denied.

In view thereof, the abovementioned sum is now subject for execution

or garnishment for the same is no longer
exempt from execution.

[The Spouses Ortega] filed an Ex-Parte Motion to

Direct the New Manager of Philippine Postal Bank to Release
to the Sheriff the Garnished Amount, which was granted by
the [RTC]. [Cebu City] filed a Motion for Reconsideration, but
the same was denied.

[Cebu City] filed an Omnibus Motion to Stay

Execution, Modification of Judgment and Withdrawal of the
Case, contending that the price set by the [RTC] as just
compensation to be paid to [the Spouses Ortega] is way
beyond the reach of its intended beneficiaries for its socialized
housing program. The motion was denied by the [RTC].
[Cebu Citys] Motion for Reconsideration was likewise
denied.

Hence, [Cebu City] filed another Petition for

Certiorari (CA-G.R. SP NO. 00147) [with the Court of
Appeals].2[2]

Ruling on the petitions for certiorari, the CA disposed of the cases, to

By virtue of the Order of the [RTC], dated July 2, 2003,
x x x Sheriff Benigno B. Reas[,] Jr. served a Notice of
Garnishment to Philippine Postal Bank, P. del Rosario and
Junquera Branch Cebu City, garnishing [Cebu Citys] bank
deposit therein.
Hence, [Cebu City] filed the instant Petition for
Certiorari before [the CA] (CA-G.R. SP NO. 80187).
During the pendency of x x x CA-G.R. SP NO. 80187,
[Cebu City] filed before the [RTC] a Motion to Dissolve,
Quash or Recall the Writ of Garnishment, contending that
Account No. 101-8918-334 mentioned in Ordinance No. 1519
is not actually an existing bank account and that the
garnishment of [Cebu Citys] bank account with Philippine
Postal Bank was illegal, because government funds and
properties may not be seized under writ of execution or
garnishment to satisfy such judgment, on obvious reason of

wit:

WHEREFORE, all the foregoing premises

considered, the instant Petitions for Certiorari are hereby
PARTIALLY GRANTED. The assailed Orders of the [RTC]
[Assailed Orders dated March 11, 2002 and July 2, 2003,
respectively, in CA-G.R SP NO. 80187] are hereby
ANNULLED AND SET ASIDE insofar as they denied [Cebu
Citys] Motion to Stay Execution, but they are hereby
AFFIRMED insofar as they denied [Cebu Citys] Motion to
Modify Judgment and Withdraw from the Expropriation
Proceedings. Furthermore, the assailed Orders of the [RTC
dated March 8, 2004 in CA-G.R. SP NO. 00147] are hereby
ANNULLED AND SET ASIDE. Let the Decision of the [RTC]
be executed in a manner prescribed by applicable law and
jurisprudence.

SO ORDERED.3[3]

Hence, these consolidated appeals by petitioners Cebu City and the

Spouses Ortega positing the following issues:

1.
Whether the CA erred in affirming the RTCs denial of Cebu
Citys Omnibus Motion to Modify Judgment and to be Allowed to Withdraw
from the Expropriation Proceedings.

2.
Whether the deposit of Cebu City with the Philippine Postal
Bank, appropriated for a different purpose by its Sangguniang Panglungsod,
can be subject to garnishment as payment for the expropriated lot covered by
City Ordinance No. 1519.

SEC. 4. Order of expropriation. If the objections to and

the defenses against the right of the plaintiff to expropriate
the property are overruled, or when no party appears to
defend as required by this Rule, the court may issue an order
of expropriation declaring that the plaintiff has a lawful right
to take the property sought to be expropriated, for the public
use or purpose described in the complaint, upon the payment
of just compensation to be determined as of the date of the
taking of the property or the filing of the complaint,
whichever came first.
A final order sustaining the right to expropriate the
property may be appealed by any party aggrieved thereby.
Such appeal, however, shall not prevent the court from
determining the just compensation to be paid.
After the rendition of such an order, the plaintiff shall
not be permitted to dismiss or discontinue the proceeding
except on such terms as the court deems just and equitable.

We deny both petitions.

Plainly, from the aforequoted provision, expropriation proceedings
speak of two (2) stages, i.e.:
On the first issue, the CA did not err in affirming the RTCs Order that
the expropriation case had long been final and executory. Consequently, both
the Order of expropriation and the Order fixing just compensation by the RTC
can no longer be modified. In short, Cebu City cannot withdraw from the
expropriation proceedings.

Section 4, Rule 67 of the Rules of Court on Expropriation provides:

1.
Determination of the authority of the plaintiff
to exercise the power of eminent domain and the propriety of
its exercise in the context of the facts involved in the suit. This
ends with an order, if not of dismissal of the action, of
condemnation [or order of expropriation] declaring that the
plaintiff has the lawful right to take the property sought to be
condemned, for the public use or purpose described in the

complaint, upon the payment of just compensation to be

determined as of the date of the filing of the complaint; and

the judgment, much less, withdraw its complaint, after it failed to appeal even
the first stage of the expropriation proceedings.

2.
Determination by the court of the just
compensation for the property sought to be taken.4[4]

We held in the recent case of Republic v. Phil-Ville Development and

Housing Corporation5[5] that:

[A]n order of expropriation denotes the end of the first stage

of expropriation. Its end then paves the way for the second
stagethe determination of just compensation, and, ultimately,
payment. An order of expropriation puts an end to any
ambiguity regarding the right of the petitioner to condemn
the respondents properties. Because an order of
expropriation merely determines the authority to exercise the
power of eminent domain and the propriety of such exercise,
its issuance does not hinge on the payment of just
compensation. After all, there would be no point in
determining just compensation if, in the first place, the
plaintiffs right to expropriate the property was not first
clearly established.6[6]

Conversely, as is evident from the foregoing, an order by the trial

court fixing just compensation does not affect a prior order of expropriation.
As applied to the case at bar, Cebu City can no longer ask for modification of

Cebu City is adamant, however, that it should be allowed to withdraw

its complaint as the just compensation fixed by the RTC is too high, and the
intended expropriation of the Spouses Ortegas property is dependent on
whether Cebu City would have sufficient funds to pay for the same.

We cannot subscribe to Cebu Citys ridiculous contention.

It is well-settled in jurisprudence that the determination of just

compensation is a judicial prerogative.7[7] In Export Processing Zone Authority
v. Dulay,8[8] we declared:

The determination of just compensation in eminent

domain cases is a judicial function. The executive department
or the legislature may make the initial determinations but
when a party claims a violation of the guarantee in the Bill of
Rights that private property may not be taken for public use
without just compensation, no statute, decree, or executive
order can mandate that its own determination shall prevail
over the courts findings. Much less can the courts be
precluded from looking into the just-ness of the decreed
compensation.

We, therefore, hold that P.D. No. 1533, which

eliminates the courts discretion to appoint commissioners
pursuant to Rule 67 of the Rules of Court, is unconstitutional
and void. To hold otherwise would be to undermine the very
purpose why this Court exists in the first place.

Likewise, in the recent cases of National Power Corporation v. dela

Cruz 9 [9] and Forfom Development Corporation v. Philippine National
Railways, 10 [10] we emphasized the primacy of judicial prerogative in the
ascertainment of just compensation as aided by the appointed commissioners,
to wit:

Though the ascertainment of just compensation is a

judicial prerogative, the appointment of commissioners to
ascertain just compensation for the property sought to be
taken is a mandatory requirement in expropriation cases.
While it is true that the findings of commissioners may be
disregarded and the trial court may substitute its own
estimate of the value, it may only do so for valid reasons; that
is, where the commissioners have applied illegal principles to
the evidence submitted to them, where they have disregarded
a clear preponderance of evidence, or where the amount
allowed is either grossly inadequate or excessive. Thus, trial
with the aid of the commissioners is a substantial right that
may not be done away with capriciously or for no reason at
all.

As regards the second issue raised by the Spouses Ortega, we quote

with favor the CAs disquisition thereon, to wit:

While the claim of [the Spouses Ortega] against [Cebu

City] is valid, the [RTC] cannot, by itself, order the City
Council of [Cebu City] to enact an appropriation ordinance in
order to satisfy its judgment.
The proper remedy of [the Spouses Ortega] is to file a
mandamus case against [Cebu City] in order to compel its
Sangguniang Panglungsod to enact an appropriation
ordinance for the satisfaction of [the Spouses Ortegas] claim.
This remedy is provided in the case of Municipality of Makati
v. Court of Appeals, which provides:
Nevertheless, this is not to say that
private respondent and PSB are left with no
legal recourse. Where a municipality fails or
refuses, without justifiable reason[s], to effect
payment of a final money judgment rendered
against it, the claimant may avail of the
remedy of mandamus in order to compel the
enactment and approval of the necessary
appropriation
ordinance,
and
the
corresponding disbursement of municipal
funds therefor. x x x.
xxxx
The Sangguniang Panglungsod of [Cebu City]
enacted Ordinance No. 1519, appropriating the sum of
P3,284,400.00 for payment of just compensation for the
expropriated land, chargeable to Account No. 101-8918-334.

Pursuant to such ordinance, the [RTC] issued an

order dated March 11, 2002, which was the basis for the
issuance of the Writ of Garnishment, garnishing [Cebu Citys]
bank account with Philippine Postal Bank.
However, Philippine Postal Bank issued a
Certification dated February 7, 2005, certifying that Account
No. 8-93-310 (Continuing Account) and Account No. 1018918-334 intended for purchase of lot for various projects are
not bank account numbers with Philippine Postal Bank.
It is a settled rule that government funds and
properties may not be seized under writs of execution or
garnishment to satisfy judgments, based on obvious
consideration of public policy. Disbursements of public funds
must be covered by the corresponding appropriation as
required by law. The functions and public services rendered
by the State cannot be allowed to be paralyzed or disrupted
by the diversion of public funds from their legitimate and
specific objects, as appropriated by law.
In Municipality of Makati v. Court of Appeals, x x x
where the Municipality of Makati enacted an ordinance
appropriating certain sum of money as payment for the land
the municipality expropriated, chargeable to Account No.
S/A 265-537154-3 deposited in PNB Buendia Branch, the
Supreme Court held that the trial court has no authority to
garnish the Municipalitys other bank account (Account No.
S/A 263-530850-7) in order to cover the deficiency in Account
No. S/A 265-537154-3, even if both accounts are in the same
branch of the PNB. In said case, the Supreme Court held:
Absent any showing that the
municipal council of Makati has passed an

ordinance appropriating from its public

funds an amount corresponding to the
balance due under the RTC decision dated
June 4, 1987, less the sum of P99,743.94
deposited in Account No. S/A 265-537154-3,
no levy under execution may be validly
effected on the public funds of petitioner
deposited in Account No. S/A 263-530850-7.
The foregoing rules find application in the case at bar.
While the Sangguniang Panglungsod of petitioner enacted
Ordinance No. 1519 appropriating the sum of P3,284,400.00
for payment of just compensation for the expropriated land,
such ordinance cannot be considered as a source of authority
for the [RTC] to garnish [Cebu Citys] bank account with
Philippine Postal Bank, which was already appropriated for
another purpose. [Cebu Citys] account with Philippine Postal
Bank was not specifically opened for the payment of just
compensation nor was it specifically appropriated by
Ordinance No. 1519 for such purpose. Said account, therefore,
is exempt from garnishment.
Since the [RTC] has no authority to garnish [Cebu
Citys] other bank accounts in order to satisfy its judgment,
consequently, it has no authority to order the release of [Cebu
Citys] other deposits with Philippine Postal Bank x x x.11[11]

Even assuming that Cebu City Ordinance No. 1519 actually

appropriated the amount of P3,284,400.00 for payment of just compensation
thus, within the reach of a writ of garnishment issued by the trial court12[12]
there remains the inescapable fact that the Philippine Postal Bank account
referred to in the ordinance does not actually exist, as certified to by the Bank.

Accordingly, no writ of garnishment may be validly issued against such nonexistent account with Philippine Postal Bank. This circumstance translates to
a situation where there is no valid appropriation ordinance.

WHEREFORE, the petitions in G.R. Nos. 181562-63 and 181583-84 are

hereby DENIED. The Decision of the Court of Appeals in CA-G.R. SP Nos.
80187 and 00147 is AFFIRMED. No pronouncement as to costs.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC

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

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

ZALDIVAR, J.:p
Appeal from the decision of the Court of First Instance of Pampanga in its
Civil Case No. 1623, an expropriation proceeding.
Plaintiff-appellant, the Republic of the Philippines, (hereinafter referred to as
the Republic) filed, on June 26, 1959, a complaint for eminent domain against
defendant-appellee, Carmen M. Vda. de Castellvi, judicial administratrix of
the estate of the late Alfonso de Castellvi (hereinafter referred to as
Castellvi), over a parcel of land situated in the barrio of San Jose,
Floridablanca, Pampanga, described as follows:
A parcel of land, Lot No. 199-B Bureau of Lands Plan Swo
23666. Bounded on the NE by Maria Nieves Toledo-Gozun;
on the SE by national road; on the SW by AFP reservation,
and on the NW by AFP reservation. Containing an area of
759,299 square meters, more or less, and registered in the

name of Alfonso Castellvi under TCT No. 13631 of the

Register of Pampanga ...;
and against defendant-appellee Maria Nieves Toledo Gozun (hereinafter
referred to as Toledo-Gozun over two parcels of land described as follows:
A parcel of land (Portion Lot Blk-1, Bureau of Lands Plan
Psd, 26254. Bounded on the NE by Lot 3, on the SE by Lot 3;
on the SW by Lot 1-B, Blk. 2 (equivalent to Lot 199-B Swo
23666; on the NW by AFP military reservation. Containing
an area of 450,273 square meters, more or less and registered
in the name of Maria Nieves Toledo-Gozun under TCT No.
8708 of the Register of Deeds of Pampanga. ..., and
A parcel of land (Portion of lot 3, Blk-1, Bureau of Lands
Plan Psd 26254. Bounded on the NE by Lot No. 3, on the SE
by school lot and national road, on the SW by Lot 1-B Blk 2
(equivalent to Lot 199-B Swo 23666), on the NW by Lot 1-B,
Blk-1. Containing an area of 88,772 square meters, more or
less, and registered in the name of Maria Nieves Toledo
Gozun under TCT No. 8708 of the Register of Deeds of
Pampanga, ....
In its complaint, the Republic alleged, among other things, that the fair
market value of the above-mentioned lands, according to the Committee on
Appraisal for the Province of Pampanga, was not more than P2,000 per
hectare, or a total market value of P259,669.10; and prayed, that the
provisional value of the lands be fixed at P259.669.10, that the court
authorizes plaintiff to take immediate possession of the lands upon deposit
of that amount with the Provincial Treasurer of Pampanga; that the court
appoints three commissioners to ascertain and report to the court the just
compensation for the property sought to be expropriated, and that the court
issues thereafter a final order of condemnation.
On June 29, 1959 the trial court issued an order fixing the provisional value
of the lands at P259,669.10.

In her "motion to dismiss" filed on July 14, 1959, Castellvi alleged, among
other things, that the land under her administration, being a residential land,
had a fair market value of P15.00 per square meter, so it had a total market
value of P11,389,485.00; that the Republic, through the Armed Forces of the
Philippines, particularly the Philippine Air Force, had been, despite repeated
demands, illegally occupying her property since July 1, 1956, thereby
preventing her from using and disposing of it, thus causing her damages by
way of unrealized profits. This defendant prayed that the complaint be
dismissed, or that the Republic be ordered to pay her P15.00 per square
meter, or a total of P11,389,485.00, plus interest thereon at 6% per annum
from July 1, 1956; that the Republic be ordered to pay her P5,000,000.00 as
unrealized profits, and the costs of the suit.
By order of the trial court, dated August, 1959, Amparo C. Diaz, Dolores G.
viuda de Gil, Paloma Castellvi, Carmen Castellvi, Rafael Castellvi, Luis
Castellvi, Natividad Castellvi de Raquiza, Jose Castellvi and Consuelo
Castellvi were allowed to intervene as parties defendants. Subsequently,
Joaquin V. Gozun, Jr., husband of defendant Nieves Toledo Gozun, was also
allowed by the court to intervene as a party defendant.
After the Republic had deposited with the Provincial Treasurer of Pampanga
the amount of P259,669.10, the trial court ordered that the Republic be placed
in possession of the lands. The Republic was actually placed in possession of
the lands on August 10,
1959. 1
In her "motion to dismiss", dated October 22, 1959, Toledo-Gozun alleged,
among other things, that her two parcels of land were residential lands, in
fact a portion with an area of 343,303 square meters had already been
subdivided into different lots for sale to the general public, and the
remaining portion had already been set aside for expansion sites of the
already completed subdivisions; that the fair market value of said lands was
P15.00 per square meter, so they had a total market value of P8,085,675.00;
and she prayed that the complaint be dismissed, or that she be paid the
amount of P8,085,675.00, plus interest thereon at the rate of 6% per annum
from October 13, 1959, and attorney's fees in the amount of P50,000.00.

Intervenors Jose Castellvi and Consuelo Castellvi in their answer, filed on

February 11, 1960, and also intervenor Joaquin Gozun, Jr., husband of
defendant Maria Nieves Toledo-Gozun, in his motion to dismiss, dated May
27, 1960, all alleged that the value of the lands sought to be expropriated was
at the rate of P15.00 per square meter.
On November 4, 1959, the trial court authorized the Provincial Treasurer of
Pampanga to pay defendant Toledo-Gozun the sum of P107,609.00 as
provisional value of her lands. 2 On May 16, 1960 the trial Court authorized
the Provincial Treasurer of Pampanga to pay defendant Castellvi the amount
of P151,859.80 as provisional value of the land under her administration, and
ordered said defendant to deposit the amount with the Philippine National
Bank under the supervision of the Deputy Clerk of Court. In another order of
May 16, 1960 the trial Court entered an order of condemnation. 3
The trial Court appointed three commissioners: Atty. Amadeo Yuzon, Clerk
of Court, as commissioner for the court; Atty. Felicisimo G. Pamandanan,
counsel of the Philippine National Bank Branch at Floridablanca, for the
plaintiff; and Atty. Leonardo F. Lansangan, Filipino legal counsel at Clark
Air Base, for the defendants. The Commissioners, after having qualified
themselves, proceeded to the performance of their duties.
On March 15,1961 the Commissioners submitted their report and
recommendation, wherein, after having determined that the lands sought to
be expropriated were residential lands, they recommended unanimously
that the lowest price that should be paid was P10.00 per square meter, for
both the lands of Castellvi and Toledo-Gozun; that an additional P5,000.00 be
paid to Toledo-Gozun for improvements found on her land; that legal
interest on the compensation, computed from August 10, 1959, be paid after
deducting the amounts already paid to the owners, and that no
consequential damages be awarded. 4 The Commissioners' report was
objected to by all the parties in the case by defendants Castellvi and
Toledo-Gozun, who insisted that the fair market value of their lands should
be fixed at P15.00 per square meter; and by the Republic, which insisted that
the price to be paid for the lands should be fixed at P0.20 per square meter. 5

After the parties-defendants and intervenors had filed their respective

memoranda, and the Republic, after several extensions of time, had adopted
as its memorandum its objections to the report of the Commissioners, the
trial court, on May 26, 1961, rendered its decision 6 the dispositive portion of
which reads as follows:
WHEREFORE, taking into account all the foregoing
circumstances, and that the lands are titled, ... the rising
trend of land values ..., and the lowered purchasing power
of the Philippine peso, the court finds that the unanimous
recommendation of the commissioners of ten (P10.00) pesos
per square meter for the three lots of the defendants subject
of this action is fair and just.
xxx xxx xxx
The plaintiff will pay 6% interest per annum on the total
value of the lands of defendant Toledo-Gozun since (sic) the
amount deposited as provisional value from August 10, 1959
until full payment is made to said defendant or deposit
therefor is made in court.
In respect to the defendant Castellvi, interest at 6% per
annum will also be paid by the plaintiff to defendant
Castellvi from July 1, 1956 when plaintiff commenced its
illegal possession of the Castellvi land when the instant
action had not yet been commenced to July 10, 1959 when
the provisional value thereof was actually deposited in
court, on the total value of the said (Castellvi) land as herein
adjudged. The same rate of interest shall be paid from July
11, 1959 on the total value of the land herein adjudged minus
the amount deposited as provisional value, or P151,859.80,
such interest to run until full payment is made to said
defendant or deposit therefor is made in court. All the
intervenors having failed to produce evidence in support of
their respective interventions, said interventions are ordered
dismissed.

The costs shall be charged to the plaintiff.

On June 21, 1961 the Republic filed a motion for a new trial and/or
reconsideration, upon the grounds of newly-discovered evidence, that the
decision was not supported by the evidence, and that the decision was
against the law, against which motion defendants Castellvi and ToledoGozun filed their respective oppositions. On July 8, 1961 when the motion of
the Republic for new trial and/or reconsideration was called for hearing, the
Republic filed a supplemental motion for new trial upon the ground of
additional newly-discovered evidence. This motion for new trial and/or
reconsideration was denied by the court on July 12, 1961.
On July 17, 1961 the Republic gave notice of its intention to appeal from the
decision of May 26, 1961 and the order of July 12, 1961. Defendant Castellvi
also filed, on July 17, 1961, her notice of appeal from the decision of the trial
court.
The Republic filed various ex-parte motions for extension of time within
which to file its record on appeal. The Republic's record on appeal was
finally submitted on December 6, 1961.
Defendants Castellvi and Toledo-Gozun filed not only a joint opposition to
the approval of the Republic's record on appeal, but also a joint
memorandum in support of their opposition. The Republic also filed a
memorandum in support of its prayer for the approval of its record on
appeal. On December 27, 1961 the trial court issued an order declaring both
the record on appeal filed by the Republic, and the record on appeal filed by
defendant Castellvi as having been filed out of time, thereby dismissing both
appeals.
On January 11, 1962 the Republic filed a "motion to strike out the order of
December 27, 1961 and for reconsideration", and subsequently an amended
record on appeal, against which motion the defendants Castellvi and ToledoGozun filed their opposition. On July 26, 1962 the trial court issued an order,
stating that "in the interest of expediency, the questions raised may be
properly and finally determined by the Supreme Court," and at the same
time it ordered the Solicitor General to submit a record on appeal containing
copies of orders and pleadings specified therein. In an order dated

November 19, 1962, the trial court approved the Republic's record on appeal
as amended.
Defendant Castellvi did not insist on her appeal. Defendant Toledo-Gozun
did not appeal.
The motion to dismiss the Republic's appeal was reiterated by appellees
Castellvi and Toledo-Gozun before this Court, but this Court denied the
motion.
In her motion of August 11, 1964, appellee Castellvi sought to increase the
provisional value of her land. The Republic, in its comment on Castellvi's
motion, opposed the same. This Court denied Castellvi's motion in a
resolution dated October 2,1964.
The motion of appellees, Castellvi and Toledo-Gozun, dated October 6, 1969,
praying that they be authorized to mortgage the lands subject of
expropriation, was denied by this Court or October 14, 1969.
On February 14, 1972, Attys. Alberto Cacnio, and Associates, counsel for the
estate of the late Don Alfonso de Castellvi in the expropriation proceedings,
filed a notice of attorney's lien, stating that as per agreement with the
administrator of the estate of Don Alfonso de Castellvi they shall receive by
way of attorney's fees, "the sum equivalent to ten per centum of whatever the
court may finally decide as the expropriated price of the property subject
matter of the case."
--------Before this Court, the Republic contends that the lower court erred:
1. In finding the price of P10 per square meter of the lands
subject of the instant proceedings as just compensation;
2. In holding that the "taking" of the properties under
expropriation commenced with the filing of this action;

3. In ordering plaintiff-appellant to pay 6% interest on the

adjudged value of the Castellvi property to start from July of
1956;
4. In denying plaintiff-appellant's motion for new trial based
on newly discovered evidence.
In its brief, the Republic discusses the second error assigned as the first issue
to be considered. We shall follow the sequence of the Republic's discussion.
1. In support of the assigned error that the lower court erred in holding that
the "taking" of the properties under expropriation commenced with the filing
of the complaint in this case, the Republic argues that the "taking" should be
reckoned from the year 1947 when by virtue of a special lease agreement
between the Republic and appellee Castellvi, the former was granted the
"right and privilege" to buy the property should the lessor wish to terminate
the lease, and that in the event of such sale, it was stipulated that the fair
market value should be as of the time of occupancy; and that the permanent
improvements amounting to more that half a million pesos constructed
during a period of twelve years on the land, subject of expropriation, were
indicative of an agreed pattern of permanency and stability of occupancy by
the Philippine Air Force in the interest of national Security. 7
Appellee Castellvi, on the other hand, maintains that the "taking" of property
under the power of eminent domain requires two essential elements, to wit:
(1) entrance and occupation by condemn or upon the private property for
more than a momentary or limited period, and (2) devoting it to a public use
in such a way as to oust the owner and deprive him of all beneficial
enjoyment of the property. This appellee argues that in the instant case the
first element is wanting, for the contract of lease relied upon provides for a
lease from year to year; that the second element is also wanting, because the
Republic was paying the lessor Castellvi a monthly rental of P445.58; and
that the contract of lease does not grant the Republic the "right and privilege"
to buy the premises "at the value at the time of occupancy." 8
Appellee Toledo-Gozun did not comment on the Republic's argument in
support of the second error assigned, because as far as she was concerned the
Republic had not taken possession of her lands prior to August 10, 1959. 9

In order to better comprehend the issues raised in the appeal, in so far as the
Castellvi property is concerned, it should be noted that the Castellvi property
had been occupied by the Philippine Air Force since 1947 under a contract of
lease, typified by the contract marked Exh. 4-Castellvi, the pertinent portions
of which read:
CONTRACT OF LEASE
This AGREEMENT OF LEASE MADE AND ENTERED into
by and between INTESTATE ESTATE OF ALFONSO DE
CASTELLVI, represented by CARMEN M. DE CASTELLVI,
Judicial Administratrix ... hereinafter called the LESSOR and
THE REPUBLIC OF THE PHILIPPINES represented by
MAJ. GEN. CALIXTO DUQUE, Chief of Staff of the ARMED
FORCES OF THE PHILIPPINES, hereinafter called the
LESSEE,
WITNESSETH:
1. For and in consideration of the rentals hereinafter
reserved and the mutual terms, covenants and conditions of
the parties, the LESSOR has, and by these presents does,
lease and let unto the LESSEE the following described land
together with the improvements thereon and appurtenances
thereof, viz:
Un Terreno, Lote No. 27 del Plano de subdivision Psu 34752,
parte de la hacienda de Campauit, situado en el Barrio de
San Jose, Municipio de Floridablanca Pampanga. ...
midiendo una extension superficial de cuatro milliones once
mil cuatro cientos trienta y cinco (4,001,435) [sic] metros
cuadrados, mas o menos.
Out of the above described property, 75.93 hectares thereof
are actually occupied and covered by this contract. .

Above lot is more particularly described in TCT No. 1016,

province of
Pampanga ...
of which premises, the LESSOR warrants that he/she/they/is/are the
registered owner(s) and with full authority to execute a contract of this
nature.
2. The term of this lease shall be for the period beginning
July 1, 1952 the date the premises were occupied by the
PHILIPPINE AIR FORCE, AFP until June 30, 1953, subject to
renewal for another year at the option of the LESSEE or
unless sooner terminated by the LESSEE as hereinafter
provided.
3. The LESSOR hereby warrants that the LESSEE shall have
quiet, peaceful and undisturbed possession of the demised
premises throughout the full term or period of this lease and
the LESSOR undertakes without cost to the LESSEE to eject
all trespassers, but should the LESSOR fail to do so, the
LESSEE at its option may proceed to do so at the expense of
the LESSOR. The LESSOR further agrees that should
he/she/they sell or encumber all or any part of the herein
described premises during the period of this lease, any
conveyance will be conditioned on the right of the LESSEE
hereunder.
4. The LESSEE shall pay to the LESSOR as monthly rentals
under this lease the sum of FOUR HUNDRED FIFTY-FIVE
PESOS & 58/100 (P455.58) ...
5. The LESSEE may, at any time prior to the termination of
this lease, use the property for any purpose or purposes and,
at its own costs and expense make alteration, install facilities
and fixtures and errect additions ... which facilities or
fixtures ... so placed in, upon or attached to the said premises
shall be and remain property of the LESSEE and may be
removed therefrom by the LESSEE prior to the termination

of this lease. The LESSEE shall surrender possession of the

premises upon the expiration or termination of this lease and
if so required by the LESSOR, shall return the premises in
substantially the same condition as that existing at the time
same were first occupied by the AFP, reasonable and
ordinary wear and tear and damages by the elements or by
circumstances over which the LESSEE has no control
excepted: PROVIDED, that if the LESSOR so requires the
return of the premises in such condition, the LESSOR shall
give written notice thereof to the LESSEE at least twenty (20)
days before the termination of the lease and provided,
further, that should the LESSOR give notice within the time
specified above, the LESSEE shall have the right and
privilege to compensate the LESSOR at the fair value or the
equivalent, in lieu of performance of its obligation, if any, to
restore the premises. Fair value is to be determined as the
value at the time of occupancy less fair wear and tear and
depreciation during the period of this lease.
6. The LESSEE may terminate this lease at any time during
the term hereof by giving written notice to the LESSOR at
least thirty (30) days in advance ...
7. The LESSEE should not be responsible, except under
special legislation for any damages to the premises by reason
of combat operations, acts of GOD, the elements or other
acts and deeds not due to the negligence on the part of the
LESSEE.
8. This LEASE AGREEMENT supersedes and voids any and
all agreements and undertakings, oral or written, previously
entered into between the parties covering the property
herein leased, the same having been merged herein. This
AGREEMENT may not be modified or altered except by
instrument in writing only duly signed by the parties. 10

It was stipulated by the parties, that "the foregoing contract of lease (Exh. 4,
Castellvi) is 'similar in terms and conditions, including the date', with the
annual contracts entered into from year to year between defendant Castellvi
and the Republic of the Philippines (p. 17, t.s.n., Vol. III)". 11 It is undisputed,
therefore, that the Republic occupied Castellvi's land from July 1, 1947, by
virtue of the above-mentioned contract, on a year to year basis (from July 1 of
each year to June 30 of the succeeding year) under the terms and conditions
therein stated.
Before the expiration of the contract of lease on June 30, 1956 the Republic
sought to renew the same but Castellvi refused. When the AFP refused to
vacate the leased premises after the termination of the contract, on July 11,
1956, Castellvi wrote to the Chief of Staff, AFP, informing the latter that the
heirs of the property had decided not to continue leasing the property in
question because they had decided to subdivide the land for sale to the
general public, demanding that the property be vacated within 30 days from
receipt of the letter, and that the premises be returned in substantially the
same condition as before occupancy (Exh. 5 Castellvi). A follow-up letter
was sent on January 12, 1957, demanding the delivery and return of the
property within one month from said date (Exh. 6 Castellvi). On January 30,
1957, Lieutenant General Alfonso Arellano, Chief of Staff, answered the letter
of Castellvi, saying that it was difficult for the army to vacate the premises in
view of the permanent installations and other facilities worth almost
P500,000.00 that were erected and already established on the property, and
that, there being no other recourse, the acquisition of the property by means
of expropriation proceedings would be recommended to the President
(Exhibit "7" Castellvi).
Defendant Castellvi then brought suit in the Court of First Instance of
Pampanga, in Civil Case No. 1458, to eject the Philippine Air Force from the
land. While this ejectment case was pending, the Republic instituted these
expropriation proceedings, and, as stated earlier in this opinion, the Republic
was placed in possession of the lands on August 10, 1959, On November 21,
1959, the Court of First Instance of Pampanga, dismissed Civil Case No. 1458,
upon petition of the parties, in an order which, in part, reads as follows:

1. Plaintiff has agreed, as a matter of fact has already signed

an agreement with defendants, whereby she has agreed to
receive the rent of the lands, subject matter of the instant
case from June 30, 1966 up to 1959 when the Philippine Air
Force was placed in possession by virtue of an order of the
Court upon depositing the provisional amount as fixed by
the Provincial Appraisal Committee with the Provincial
Treasurer of Pampanga;
2. That because of the above-cited agreement wherein the
administratrix decided to get the rent corresponding to the
rent from 1956 up to 1959 and considering that this action is
one of illegal detainer and/or to recover the possession of
said land by virtue of non-payment of rents, the instant case
now has become moot and academic and/or by virtue of the
agreement signed by plaintiff, she has waived her cause of
action in the above-entitled case. 12
The Republic urges that the "taking " of Castellvi's property should be
deemed as of the year 1947 by virtue of afore-quoted lease agreement. In
American Jurisprudence, Vol. 26, 2nd edition, Section 157, on the subject of
"Eminent Domain, we read the definition of "taking" (in eminent domain) as
follows:
Taking' under the power of eminent domain may be defined
generally as entering upon private property for more than a
momentary period, and, under the warrant or color of legal
authority, devoting it to a public use, or otherwise
informally appropriating or injuriously affecting it in such a
way as substantially to oust the owner and deprive him of
all beneficial enjoyment thereof. 13
Pursuant to the aforecited authority, a number of circumstances must be
present in the "taking" of property for purposes of eminent domain.
First, the expropriator must enter a private property. This circumstance is
present in the instant case, when by virtue of the lease agreement the
Republic, through the AFP, took possession of the property of Castellvi.

Second, the entrance into private property must be for more than a
momentary period. "Momentary" means, "lasting but a moment; of but a
moment's duration" (The Oxford English Dictionary, Volume VI, page 596);
"lasting a very short time; transitory; having a very brief life; operative or
recurring at every moment" (Webster's Third International Dictionary, 1963
edition.) The word "momentary" when applied to possession or occupancy of
(real) property should be construed to mean "a limited period" not
indefinite or permanent. The aforecited lease contract was for a period of one
year, renewable from year to year. The entry on the property, under the
lease, is temporary, and considered transitory. The fact that the Republic,
through the AFP, constructed some installations of a permanent nature does
not alter the fact that the entry into the land was transitory, or intended to
last a year, although renewable from year to year by consent of 'The owner of
the land. By express provision of the lease agreement the Republic, as lessee,
undertook to return the premises in substantially the same condition as at the
time the property was first occupied by the AFP. It is claimed that the
intention of the lessee was to occupy the land permanently, as may be
inferred from the construction of permanent improvements. But this
"intention" cannot prevail over the clear and express terms of the lease
contract. Intent is to be deduced from the language employed by the parties,
and the terms 'of the contract, when unambiguous, as in the instant case, are
conclusive in the absence of averment and proof of mistake or fraud the
question being not what the intention was, but what is expressed in the
language used. (City of Manila v. Rizal Park Co., Inc., 53 Phil. 515, 525);
Magdalena Estate, Inc. v. Myrick, 71 Phil. 344, 348). Moreover, in order to
judge the intention of the contracting parties, their contemporaneous and
subsequent acts shall be principally considered (Art. 1371, Civil Code). If the
intention of the lessee (Republic) in 1947 was really to occupy permanently
Castellvi's property, why was the contract of lease entered into on year to
year basis? Why was the lease agreement renewed from year to year? Why
did not the Republic expropriate this land of Castellvi in 1949 when,
according to the Republic itself, it expropriated the other parcels of land that
it occupied at the same time as the Castellvi land, for the purpose of
converting them into a jet air base? 14 It might really have been the intention
of the Republic to expropriate the lands in question at some future time, but
certainly mere notice - much less an implied notice of such intention on
the part of the Republic to expropriate the lands in the future did not, and

could not, bind the landowner, nor bind the land itself. The expropriation
must be actually commenced in court (Republic vs. Baylosis, et al., 96 Phil.
461, 484).
Third, the entry into the property should be under warrant or color of legal
authority. This circumstance in the "taking" may be considered as present in
the instant case, because the Republic entered the Castellvi property as
lessee.
Fourth, the property must be devoted to a public use or otherwise informally
appropriated or injuriously affected. It may be conceded that the
circumstance of the property being devoted to public use is present because
the property was used by the air force of the AFP.
Fifth, the utilization of the property for public use must be in such a way as
to oust the owner and deprive him of all beneficial enjoyment of the
property. In the instant case, the entry of the Republic into the property and
its utilization of the same for public use did not oust Castellvi and deprive
her of all beneficial enjoyment of the property. Castellvi remained as owner,
and was continuously recognized as owner by the Republic, as shown by the
renewal of the lease contract from year to year, and by the provision in the
lease contract whereby the Republic undertook to return the property to
Castellvi when the lease was terminated. Neither was Castellvi deprived of
all the beneficial enjoyment of the property, because the Republic was bound
to pay, and had been paying, Castellvi the agreed monthly rentals until the
time when it filed the complaint for eminent domain on June 26, 1959.
It is clear, therefore, that the "taking" of Catellvi's property for purposes of
eminent domain cannot be considered to have taken place in 1947 when the
Republic commenced to occupy the property as lessee thereof. We find merit
in the contention of Castellvi that two essential elements in the "taking" of
property under the power of eminent domain, namely: (1) that the entrance
and occupation by the condemnor must be for a permanent, or indefinite
period, and (2) that in devoting the property to public use the owner was
ousted from the property and deprived of its beneficial use, were not present
when the Republic entered and occupied the Castellvi property in 1947.

Untenable also is the Republic's contention that although the contract

between the parties was one of lease on a year to year basis, it was "in reality
a more or less permanent right to occupy the premises under the guise of
lease with the 'right and privilege' to buy the property should the lessor wish
to terminate the lease," and "the right to buy the property is merged as an
integral part of the lease relationship ... so much so that the fair market value
has been agreed upon, not, as of the time of purchase, but as of the time of
occupancy" 15 We cannot accept the Republic's contention that a lease on a
year to year basis can give rise to a permanent right to occupy, since by
express legal provision a lease made for a determinate time, as was the lease
of Castellvi's land in the instant case, ceases upon the day fixed, without
need of a demand (Article 1669, Civil Code). Neither can it be said that the
right of eminent domain may be exercised by simply leasing the premises to
be expropriated (Rule 67, Section 1, Rules of Court). Nor can it be accepted
that the Republic would enter into a contract of lease where its real intention
was to buy, or why the Republic should enter into a simulated contract of
lease ("under the guise of lease", as expressed by counsel for the Republic)
when all the time the Republic had the right of eminent domain, and could
expropriate Castellvi's land if it wanted to without resorting to any guise
whatsoever. Neither can we see how a right to buy could be merged in a
contract of lease in the absence of any agreement between the parties to that
effect. To sustain the contention of the Republic is to sanction a practice
whereby in order to secure a low price for a land which the government
intends to expropriate (or would eventually expropriate) it would first
negotiate with the owner of the land to lease the land (for say ten or twenty
years) then expropriate the same when the lease is about to terminate, then
claim that the "taking" of the property for the purposes of the expropriation
be reckoned as of the date when the Government started to occupy the
property under the lease, and then assert that the value of the property being
expropriated be reckoned as of the start of the lease, in spite of the fact that
the value of the property, for many good reasons, had in the meantime
increased during the period of the lease. This would be sanctioning what
obviously is a deceptive scheme, which would have the effect of depriving
the owner of the property of its true and fair market value at the time when
the expropriation proceedings were actually instituted in court. The
Republic's claim that it had the "right and privilege" to buy the property at the
value that it had at the time when it first occupied the property as lessee nowhere

appears in the lease contract. What was agreed expressly in paragraph No. 5 of
the lease agreement was that, should the lessor require the lessee to return
the premises in the same condition as at the time the same was first occupied
by the AFP, the lessee would have the "right and privilege" (or option) of
paying the lessor what it would fairly cost to put the premises in the same
condition as it was at the commencement of the lease, in lieu of the lessee's
performance of the undertaking to put the land in said condition. The "fair
value" at the time of occupancy, mentioned in the lease agreement, does not
refer to the value of the property if bought by the lessee, but refers to the cost
of restoring the property in the same condition as of the time when the lessee
took possession of the property. Such fair value cannot refer to the purchase
price, for purchase was never intended by the parties to the lease contract. It
is a rule in the interpretation of contracts that "However general the terms of
a contract may be, they shall not be understood to comprehend things that
are distinct and cases that are different from those upon which the parties
intended to agree" (Art. 1372, Civil Code).
We hold, therefore, that the "taking" of the Castellvi property should not be
reckoned as of the year 1947 when the Republic first occupied the same
pursuant to the contract of lease, and that the just compensation to be paid
for the Castellvi property should not be determined on the basis of the value
of the property as of that year. The lower court did not commit an error
when it held that the "taking" of the property under expropriation
commenced with the filing of the complaint in this case.
Under Section 4 of Rule 67 of the Rules of Court, 16 the "just compensation" is
to be determined as of the date of the filing of the complaint. This Court has
ruled that when the taking of the property sought to be expropriated
coincides with the commencement of the expropriation proceedings, or takes
place subsequent to the filing of the complaint for eminent domain, the just
compensation should be determined as of the date of the filing of the
complaint. (Republic vs. Philippine National Bank, L-14158, April 12, 1961, 1
SCRA 957, 961-962). In the instant case, it is undisputed that the Republic
was placed in possession of the Castellvi property, by authority of the court,
on August 10, 1959. The "taking" of the Castellvi property for the purposes of
determining the just compensation to be paid must, therefore, be reckoned as
of June 26, 1959 when the complaint for eminent domain was filed.

Regarding the two parcels of land of Toledo-Gozun, also sought to be

expropriated, which had never been under lease to the Republic, the
Republic was placed in possession of said lands, also by authority of the
court, on August 10, 1959, The taking of those lands, therefore, must also be
reckoned as of June 26, 1959, the date of the filing of the complaint for
eminent domain.
2. Regarding the first assigned error discussed as the second issue the
Republic maintains that, even assuming that the value of the expropriated
lands is to be determined as of June 26, 1959, the price of P10.00 per square
meter fixed by the lower court "is not only exhorbitant but also
unconscionable, and almost fantastic". On the other hand, both Castellvi and
Toledo-Gozun maintain that their lands are residential lands with a fair
market value of not less than P15.00 per square meter.
The lower court found, and declared, that the lands of Castellvi and ToledoGozun are residential lands. The finding of the lower court is in consonance
with the unanimous opinion of the three commissioners who, in their report
to the court, declared that the lands are residential lands.
The Republic assails the finding that the lands are residential, contending
that the plans of the appellees to convert the lands into subdivision for
residential purposes were only on paper, there being no overt acts on the
part of the appellees which indicated that the subdivision project had been
commenced, so that any compensation to be awarded on the basis of the
plans would be speculative. The Republic's contention is not well taken. We
find evidence showing that the lands in question had ceased to be devoted to
the production of agricultural crops, that they had become adaptable for
residential purposes, and that the appellees had actually taken steps to
convert their lands into residential subdivisions even before the Republic
filed the complaint for eminent domain. In the case of City of Manila vs.
Corrales (32 Phil. 82, 98) this Court laid down basic guidelines in determining
the value of the property expropriated for public purposes. This Court said:
In determining the value of land appropriated for public
purposes, the same consideration are to be regarded as in a sale of
property between private parties. The inquiry, in such cases, must

be what is the property worth in the market, viewed not

merely with reference to the uses to which it is at the time
applied, but with reference to the uses to which it is plainly
adapted, that is to say, What is it worth from its availability
for valuable uses?
So many and varied are the circumstances to be taken into
account in determining the value of property condemned for
public purposes, that it is practically impossible to formulate
a rule to govern its appraisement in all cases. Exceptional
circumstances will modify the most carefully guarded rule,
but, as a general thing, we should say that the compensation
of the owner is to be estimated by reference to the use for
which the property is suitable, having regard to the existing
business or wants of the community, or such as may be
reasonably expected in the immediate future. (Miss. and
Rum River Boom Co. vs. Patterson, 98 U.S., 403).
In expropriation proceedings, therefore, the owner of the land has the right
to its value for the use for which it would bring the most in the market. 17 The
owner may thus show every advantage that his property possesses, present
and prospective, in order that the price it could be sold for in the market may
be satisfactorily determined. 18 The owner may also show that the property is
suitable for division into village or town lots. 19
The trial court, therefore, correctly considered, among other circumstances,
the proposed subdivision plans of the lands sought to be expropriated in
finding that those lands are residential lots. This finding of the lower court is
supported not only by the unanimous opinion of the commissioners, as
embodied in their report, but also by the Provincial Appraisal Committee of
the province of Pampanga composed of the Provincial Treasurer, the
Provincial Auditor and the District Engineer. In the minutes of the meeting
of the Provincial Appraisal Committee, held on May 14, 1959 (Exh. 13Castellvi) We read in its Resolution No. 10 the following:
3. Since 1957 the land has been classified as residential in
view of its proximity to the air base and due to the fact that it

was not being devoted to agriculture. In fact, there is a plan

to convert it into a subdivision for residential purposes. The
taxes due on the property have been paid based on its
classification as residential land;
The evidence shows that Castellvi broached the idea of subdividing her land
into residential lots as early as July 11, 1956 in her letter to the Chief of Staff
of the Armed Forces of the Philippines. (Exh. 5-Castellvi) As a matter of fact,
the layout of the subdivision plan was tentatively approved by the National
Planning Commission on September 7, 1956. (Exh. 8-Castellvi). The land of
Castellvi had not been devoted to agriculture since 1947 when it was leased
to the Philippine Army. In 1957 said land was classified as residential, and
taxes based on its classification as residential had been paid since then (Exh.
13-Castellvi). The location of the Castellvi land justifies its suitability for a
residential subdivision. As found by the trial court, "It is at the left side of the
entrance of the Basa Air Base and bounded on two sides by roads (Exh. 13Castellvi), paragraphs 1 and 2, Exh. 12-Castellvi), the poblacion, (of
Floridablanca) the municipal building, and the Pampanga Sugar Mills are
closed by. The barrio schoolhouse and chapel are also near (T.S.N. November
23,1960, p. 68)." 20
The lands of Toledo-Gozun (Lot 1-B and Lot 3) are practically of the same
condition as the land of Castellvi. The lands of Toledo-Gozun adjoin the land
of Castellvi. They are also contiguous to the Basa Air Base, and are along the
road. These lands are near the barrio schoolhouse, the barrio chapel, the
Pampanga Sugar Mills, and the poblacion of Floridablanca (Exhs. 1, 3 and 4Toledo-Gozun). As a matter of fact, regarding lot 1-B it had already been
surveyed and subdivided, and its conversion into a residential subdivision
was tentatively approved by the National Planning Commission on July 8,
1959 (Exhs. 5 and 6 Toledo-Gozun). As early as June, 1958, no less than 32
man connected with the Philippine Air Force among them commissioned
officers, non-commission officers, and enlisted men had requested Mr. and
Mrs. Joaquin D. Gozun to open a subdivision on their lands in question
(Exhs. 8, 8-A to 8-ZZ-Toledo-Gozun). 21
We agree with the findings, and the conclusions, of the lower court that the
lands that are the subject of expropriation in the present case, as of August

10, 1959 when the same were taken possession of by the Republic, were
residential lands and were adaptable for use as residential subdivisions.
Indeed, the owners of these lands have the right to their value for the use for
which they would bring the most in the market at the time the same were
taken from them. The most important issue to be resolved in the present case
relates to the question of what is the just compensation that should be paid to
the appellees.
The Republic asserts that the fair market value of the lands of the appellees is
P.20 per square meter. The Republic cites the case of Republic vs. Narciso, et
al., L-6594, which this Court decided on May 18, 1956. The Narciso case
involved lands that belonged to Castellvi and Toledo-Gozun, and to one
Donata Montemayor, which were expropriated by the Republic in 1949 and
which are now the site of the Basa Air Base. In the Narciso case this Court
fixed the fair market value at P.20 per square meter. The lands that are
sought to be expropriated in the present case being contiguous to the lands
involved in the Narciso case, it is the stand of the Republic that the price that
should be fixed for the lands now in question should also be at P.20 per
square meter.
We can not sustain the stand of the Republic. We find that the price of P.20
per square meter, as fixed by this Court in the Narciso case, was based on the
allegation of the defendants (owners) in their answer to the complaint for
eminent domain in that case that the price of their lands was P2,000.00 per
hectare and that was the price that they asked the court to pay them. This
Court said, then, that the owners of the land could not be given more than
what they had asked, notwithstanding the recommendation of the majority
of the Commission on Appraisal which was adopted by the trial court
that the fair market value of the lands was P3,000.00 per hectare. We also
find that the price of P.20 per square meter in the Narciso case was
considered the fair market value of the lands as of the year 1949 when the
expropriation proceedings were instituted, and at that time the lands were
classified as sugar lands, and assessed for taxation purposes at around
P400.00 per hectare, or P.04 per square meter. 22 While the lands involved in
the present case, like the lands involved in the Narciso case, might have a fair
market value of P.20 per square meter in 1949, it can not be denied that ten
years later, in 1959, when the present proceedings were instituted, the value

of those lands had increased considerably. The evidence shows that since
1949 those lands were no longer cultivated as sugar lands, and in 1959 those
lands were already classified, and assessed for taxation purposes, as
residential lands. In 1959 the land of Castellvi was assessed at P1.00 per
square meter. 23
The Republic also points out that the Provincial Appraisal Committee of
Pampanga, in its resolution No. 5 of February 15, 1957 (Exhibit D),
recommended the sum of P.20 per square meter as the fair valuation of the
Castellvi property. We find that this resolution was made by the Republic
the basis in asking the court to fix the provisional value of the lands sought
to be expropriated at P259,669.10, which was approved by the court. 24 It
must be considered, however, that the amount fixed as the provisional value
of the lands that are being expropriated does not necessarily represent the
true and correct value of the land. The value is only "provisional" or
"tentative", to serve as the basis for the immediate occupancy of the property
being expropriated by the condemnor. The records show that this resolution
No. 5 was repealed by the same Provincial Committee on Appraisal in its
resolution No. 10 of May 14, 1959 (Exhibit 13-Castellvi). In that resolution
No. 10, the appraisal committee stated that "The Committee has observed
that the value of the land in this locality has increased since 1957 ...", and
recommended the price of P1.50 per square meter. It follows, therefore, that,
contrary to the stand of the Republic, that resolution No. 5 of the Provincial
Appraisal Committee can not be made the basis for fixing the fair market
value of the lands of Castellvi and Toledo-Gozun.
The Republic further relied on the certification of the Acting Assistant
Provincial Assessor of Pampanga, dated February 8, 1961 (Exhibit K), to the
effect that in 1950 the lands of Toledo-Gozun were classified partly as sugar
land and partly as urban land, and that the sugar land was assessed at P.40
per square meter, while part of the urban land was assessed at P.40 per
square meter and part at P.20 per square meter; and that in 1956 the Castellvi
land was classified as sugar land and was assessed at P450.00 per hectare, or
P.045 per square meter. We can not also consider this certification of the
Acting Assistant Provincial Assessor as a basis for fixing the fair market
value of the lands of Castellvi and Toledo-Gozun because, as the evidence
shows, the lands in question, in 1957, were already classified and assessed

for taxation purposes as residential lands. The certification of the assessor

refers to the year 1950 as far as the lands of Toledo-Gozun are concerned,
and to the year 1956 as far as the land of Castellvi is concerned. Moreover,
this Court has held that the valuation fixed for the purposes of the
assessment of the land for taxation purposes can not bind the landowner
where the latter did not intervene in fixing it. 25
On the other hand, the Commissioners, appointed by the court to appraise
the lands that were being expropriated, recommended to the court that the
price of P10.00 per square meter would be the fair market value of the lands.
The commissioners made their recommendation on the basis of their
observation after several ocular inspections of the lands, of their own
personal knowledge of land values in the province of Pampanga, of the
testimonies of the owners of the land, and other witnesses, and of
documentary evidence presented by the appellees. Both Castellvi and
Toledo-Gozun testified that the fair market value of their respective land was
at P15.00 per square meter. The documentary evidence considered by the
commissioners consisted of deeds of sale of residential lands in the town of
San Fernando and in Angeles City, in the province of Pampanga, which were
sold at prices ranging from P8.00 to P20.00 per square meter (Exhibits 15, 16,
17, 18, 19, 20, 21, 22, 23-Castellvi). The commissioners also considered the
decision in Civil Case No. 1531 of the Court of First Instance of Pampanga,
entitled Republic vs. Sabina Tablante, which was expropriation case filed on
January 13, 1959, involving a parcel of land adjacent to the Clark Air Base in
Angeles City, where the court fixed the price at P18.00 per square meter
(Exhibit 14-Castellvi). In their report, the commissioners, among other things,
said:
... This expropriation case is specially pointed out, because
the circumstances and factors involved therein are similar in
many respects to the defendants' lands in this case. The land
in Civil Case No. 1531 of this Court and the lands in the
present case (Civil Case No. 1623) are both near the air bases,
the Clark Air Base and the Basa Air Base respectively. There
is a national road fronting them and are situated in a firstclass municipality. As added advantage it may be said that
the Basa Air Base land is very near the sugar mill at Del

Carmen, Floridablanca, Pampanga, owned by the Pampanga

Sugar Mills. Also just stone's throw away from the same
lands is a beautiful vacation spot at Palacol, a sitio of the
town of Floridablanca, which counts with a natural
swimming pool for vacationists on weekends. These
advantages are not found in the case of the Clark Air Base.
The defendants' lands are nearer to the poblacion of
Floridablanca then Clark Air Base is nearer (sic) to the
poblacion of Angeles, Pampanga.
The deeds of absolute sale, according to the undersigned
commissioners, as well as the land in Civil Case No. 1531 are
competent evidence, because they were executed during the
year 1959 and before August 10 of the same year. More
specifically so the land at Clark Air Base which
coincidentally is the subject matter in the complaint in said
Civil Case No. 1531, it having been filed on January 13, 1959
and the taking of the land involved therein was ordered by
the Court of First Instance of Pampanga on January 15, 1959,
several months before the lands in this case were taken by
the plaintiffs ....
From the above and considering further that the lowest as
well as the highest price per square meter obtainable in the
market of Pampanga relative to subdivision lots within its
jurisdiction in the year 1959 is very well known by the
Commissioners, the Commission finds that the lowest price
that can be awarded to the lands in question is P10.00 per
square meter. 26
The lower court did not altogether accept the findings of the Commissioners
based on the documentary evidence, but it considered the documentary
evidence as basis for comparison in determining land values. The lower
court arrived at the conclusion that "the unanimous recommendation of the
commissioners of ten (P10.00) pesos per square meter for the three lots of the
defendants subject of this action is fair and just". 27 In arriving at its
conclusion, the lower court took into consideration, among other

circumstances, that the lands are titled, that there is a rising trend of land
values, and the lowered purchasing power of the Philippine peso.
In the case of Manila Railroad Co. vs. Caligsihan, 40 Phil. 326, 328, this Court
said:
A court of first instance or, on appeal, the Supreme Court,
may change or modify the report of the commissioners by
increasing or reducing the amount of the award if the facts
of the case so justify. While great weight is attached to the
report of the commissioners, yet a court may substitute
therefor its estimate of the value of the property as gathered
from the record in certain cases, as, where the
commissioners have applied illegal principles to the
evidence submitted to them, or where they have disregarded
a clear preponderance of evidence, or where the amount
allowed is either palpably inadequate or excessive. 28
The report of the commissioners of appraisal in condemnation proceedings
are not binding, but merely advisory in character, as far as the court is
concerned. 29 In our analysis of the report of the commissioners, We find
points that merit serious consideration in the determination of the just
compensation that should be paid to Castellvi and Toledo-Gozun for their
lands. It should be noted that the commissioners had made ocular
inspections of the lands and had considered the nature and similarities of
said lands in relation to the lands in other places in the province of
Pampanga, like San Fernando and Angeles City. We cannot disregard the
observations of the commissioners regarding the circumstances that make
the lands in question suited for residential purposes their location near the
Basa Air Base, just like the lands in Angeles City that are near the Clark Air
Base, and the facilities that obtain because of their nearness to the big sugar
central of the Pampanga Sugar mills, and to the flourishing first class town of
Floridablanca. It is true that the lands in question are not in the territory of
San Fernando and Angeles City, but, considering the facilities of modern
communications, the town of Floridablanca may be considered practically
adjacent to San Fernando and Angeles City. It is not out of place, therefore,
to compare the land values in Floridablanca to the land values in San

Fernando and Angeles City, and form an idea of the value of the lands in
Floridablanca with reference to the land values in those two other
communities.
The important factor in expropriation proceeding is that the owner is
awarded the just compensation for his property. We have carefully studied
the record, and the evidence, in this case, and after considering the
circumstances attending the lands in question We have arrived at the
conclusion that the price of P10.00 per square meter, as recommended by the
commissioners and adopted by the lower court, is quite high. It is Our
considered view that the price of P5.00 per square meter would be a fair
valuation of the lands in question and would constitute a just compensation
to the owners thereof. In arriving at this conclusion We have particularly
taken into consideration the resolution of the Provincial Committee on
Appraisal of the province of Pampanga informing, among others, that in the
year 1959 the land of Castellvi could be sold for from P3.00 to P4.00 per
square meter, while the land of Toledo-Gozun could be sold for from P2.50
to P3.00 per square meter. The Court has weighed all the circumstances
relating to this expropriations proceedings, and in fixing the price of the
lands that are being expropriated the Court arrived at a happy medium
between the price as recommended by the commissioners and approved by
the court, and the price advocated by the Republic. This Court has also taken
judicial notice of the fact that the value of the Philippine peso has
considerably gone down since the year 1959. 30 Considering that the lands of
Castellvi and Toledo-Gozun are adjoining each other, and are of the same
nature, the Court has deemed it proper to fix the same price for all these
lands.
3. The third issue raised by the Republic relates to the
payment of interest. The Republic maintains that the lower
court erred when it ordered the Republic to pay Castellvi
interest at the rate of 6% per annum on the total amount
adjudged as the value of the land of Castellvi, from July 1,
1956 to July 10, 1959. We find merit in this assignment of
error.

In ordering the Republic to pay 6% interest on the total value of the land of
Castellvi from July 1, 1956 to July 10, 1959, the lower court held that the
Republic had illegally possessed the land of Castellvi from July 1, 1956, after
its lease of the land had expired on June 30, 1956, until August 10, 1959 when
the Republic was placed in possession of the land pursuant to the writ of
possession issued by the court. What really happened was that the Republic
continued to occupy the land of Castellvi after the expiration of its lease on
June 30, 1956, so much so that Castellvi filed an ejectment case against the
Republic in the Court of First Instance of Pampanga. 31 However, while that
ejectment case was pending, the Republic filed the complaint for eminent
domain in the present case and was placed in possession of the land on
August 10, 1959, and because of the institution of the expropriation
proceedings the ejectment case was later dismissed. In the order dismissing
the ejectment case, the Court of First Instance of Pampanga said:
Plaintiff has agreed, as a matter of fact has already signed an
agreement with defendants, whereby she had agreed to
receive the rent of the lands, subject matter of the instant
case from June 30, 1956 up to 1959 when the Philippine Air
Force was placed in possession by virtue of an order of the
Court upon depositing the provisional amount as fixed by
the Provincial Appraisal Committee with the Provincial
Treasurer of
Pampanga; ...
If Castellvi had agreed to receive the rentals from June 30, 1956 to August 10,
1959, she should be considered as having allowed her land to be leased to the
Republic until August 10, 1959, and she could not at the same time be
entitled to the payment of interest during the same period on the amount
awarded her as the just compensation of her land. The Republic, therefore,
should pay Castellvi interest at the rate of 6% per annum on the value of her
land, minus the provisional value that was deposited, only from July 10, 1959
when it deposited in court the provisional value of the land.
4. The fourth error assigned by the Republic relates to the denial by the lower
court of its motion for a new trial based on nearly discovered evidence. We
do not find merit in this assignment of error.

After the lower court had decided this case on May 26, 1961, the Republic
filed a motion for a new trial, supplemented by another motion, both based
upon the ground of newly discovered evidence. The alleged newly
discovered evidence in the motion filed on June 21, 1961 was a deed of
absolute sale-executed on January 25, 1961, showing that a certain Serafin
Francisco had sold to Pablo L. Narciso a parcel of sugar land having an area
of 100,000 square meters with a sugar quota of 100 piculs, covered by P.A.
No. 1701, situated in Barrio Fortuna, Floridablanca, for P14,000, or P.14 per
square meter.
In the supplemental motion, the alleged newly discovered evidence were: (1)
a deed of sale of some 35,000 square meters of land situated at Floridablanca
for P7,500.00 (or about P.21 per square meter) executed in July, 1959, by the
spouses Evelyn D. Laird and Cornelio G. Laird in favor of spouses
Bienvenido S. Aguas and Josefina Q. Aguas; and (2) a deed of absolute sale
of a parcel of land having an area of 4,120,101 square meters, including the
sugar quota covered by Plantation Audit No. 161 1345, situated at
Floridablanca, Pampanga, for P860.00 per hectare (a little less than P.09 per
square meter) executed on October 22, 1957 by Jesus Toledo y Mendoza in
favor of the Land Tenure Administration.
We find that the lower court acted correctly when it denied the motions for a
new trial.
To warrant the granting of a new trial based on the ground of newly
discovered evidence, it must appear that the evidence was discovered after
the trial; that even with the exercise of due diligence, the evidence could not
have been discovered and produced at the trial; and that the evidence is of
such a nature as to alter the result of the case if admitted. 32 The lower court
correctly ruled that these requisites were not complied with.
The lower court, in a well-reasoned order, found that the sales made by
Serafin Francisco to Pablo Narciso and that made by Jesus Toledo to the
Land Tenure Administration were immaterial and irrelevant, because those
sales covered sugarlands with sugar quotas, while the lands sought to be
expropriated in the instant case are residential lands. The lower court also

concluded that the land sold by the spouses Laird to the spouses Aguas was
a sugar land.
We agree with the trial court. In eminent domain proceedings, in order that
evidence as to the sale price of other lands may be admitted in evidence to
prove the fair market value of the land sought to be expropriated, the lands
must, among other things, be shown to be similar.
But even assuming, gratia argumenti, that the lands mentioned in those deeds
of sale were residential, the evidence would still not warrant the grant of a
new trial, for said evidence could have been discovered and produced at the
trial, and they cannot be considered newly discovered evidence as
contemplated in Section 1(b) of Rule 37 of the Rules of Court. Regarding this
point, the trial court said:
The Court will now show that there was no reasonable
diligence employed.
The land described in the deed of sale executed by Serafin
Francisco, copy of which is attached to the original motion,
is covered by a Certificate of Title issued by the Office of the
Register of Deeds of Pampanga. There is no question in the
mind of the court but this document passed through the
Office of the Register of Deeds for the purpose of
transferring the title or annotating the sale on the certificate
of title. It is true that Fiscal Lagman went to the Office of the
Register of Deeds to check conveyances which may be
presented in the evidence in this case as it is now sought to
be done by virtue of the motions at bar, Fiscal Lagman, one
of the lawyers of the plaintiff, did not exercise reasonable
diligence as required by the rules. The assertion that he only
went to the office of the Register of Deeds 'now and then' to
check the records in that office only shows the half-hazard
[sic] manner by which the plaintiff looked for evidence to be
presented during the hearing before the Commissioners, if it
is at all true that Fiscal Lagman did what he is supposed to
have done according to Solicitor Padua. It would have been

the easiest matter for plaintiff to move for the issuance of a

subpoena duces tecum directing the Register of Deeds of
Pampanga to come to testify and to bring with him all
documents found in his office pertaining to sales of land in
Floridablanca adjacent to or near the lands in question
executed or recorded from 1958 to the present. Even this
elementary precaution was not done by plaintiff's numerous
attorneys.
The same can be said of the deeds of sale attached to the
supplementary motion. They refer to lands covered by
certificate of title issued by the Register of Deeds of
Pampanga. For the same reason they could have been easily
discovered if reasonable diligence has been exerted by the
numerous lawyers of the plaintiff in this case. It is
noteworthy that all these deeds of sale could be found in
several government offices, namely, in the Office of the
Register of Deeds of Pampanga, the Office of the Provincial
Assessor of Pampanga, the Office of the Clerk of Court as a
part of notarial reports of notaries public that acknowledged
these documents, or in the archives of the National Library.
In respect to Annex 'B' of the supplementary motion copy of
the document could also be found in the Office of the Land
Tenure Administration, another government entity. Any
lawyer with a modicum of ability handling this
expropriation case would have right away though [sic] of
digging up documents diligently showing conveyances of
lands near or around the parcels of land sought to be
expropriated in this case in the offices that would have
naturally come to his mind such as the offices mentioned
above, and had counsel for the movant really exercised the
reasonable diligence required by the Rule' undoubtedly they
would have been able to find these documents and/or
caused the issuance of subpoena duces tecum. ...

It is also recalled that during the hearing before the Court of

the Report and Recommendation of the Commissioners and
objection thereto, Solicitor Padua made the observation:
I understand, Your Honor, that there was a sale that took
place in this place of land recently where the land was sold
for P0.20 which is contiguous to this land.
The Court gave him permission to submit said document
subject to the approval of the Court. ... This was before the
decision was rendered, and later promulgated on May 26,
1961 or more than one month after Solicitor Padua made the
above observation. He could have, therefore, checked up the
alleged sale and moved for a reopening to adduce further
evidence. He did not do so. He forgot to present the
evidence at a more propitious time. Now, he seeks to
introduce said evidence under the guise of newly-discovered
evidence. Unfortunately the Court cannot classify it as
newly-discovered evidence, because tinder the
circumstances, the correct qualification that can be given is
'forgotten evidence'. Forgotten however, is not newlydiscovered
evidence. 33
The granting or denial of a motion for new trial is, as a general rule,
discretionary with the trial court, whose judgment should not be disturbed
unless there is a clear showing of abuse of discretion. 34 We do not see any
abuse of discretion on the part of the lower court when it denied the motions
for a new trial.
WHEREFORE, the decision appealed from is modified, as follows:
(a) the lands of appellees Carmen Vda. de Castellvi and
Maria Nieves Toledo-Gozun, as described in the complaint,
are declared expropriated for public use;
(b) the fair market value of the lands of the appellees is fixed
at P5.00 per square meter;

(c) the Republic must pay appellee Castellvi the sum of

P3,796,495.00 as just compensation for her one parcel of land
that has an area of 759,299 square meters, minus the sum of
P151,859.80 that she withdrew out of the amount that was
deposited in court as the provisional value of the land, with
interest at the rate of 6% per annum from July 10, 1959 until
the day full payment is made or deposited in court;
(d) the Republic must pay appellee Toledo-Gozun the sum
of P2,695,225.00 as the just compensation for her two parcels
of land that have a total area of 539,045 square meters, minus
the sum of P107,809.00 that she withdrew out of the amount
that was deposited in court as the provisional value of her
lands, with interest at the rate of 6%, per annum from July
10, 1959 until the day full payment is made or deposited in
court; (e) the attorney's lien of Atty. Alberto Cacnio is
enforced; and
(f) the costs should be paid by appellant Republic of the
Philippines, as provided in Section 12, Rule 67, and in
Section 13, Rule 141, of the Rules of Court.
IT IS SO ORDERED.

Republic of the Philippines

SUPREME COURT

HACIENDA LUISITA, INCORPORATED,

Petitioner,

Present:

Baguio City

EN BANC

G.R. No. 171101

LUISITA INDUSTRIAL PARK CORPORATION

and RIZAL COMMERCIAL BANKING
CORPORATION,
Petitioners-in-Intervention,

CORONA, C.J.,
CARPIO,
VELASCO, JR.,

- versus -

LEONARDO-DE CASTRO,
BRION,

PRESIDENTIAL AGRARIAN REFORM

COUNCIL; SECRETARY NASSER
PANGANDAMAN OF THE DEPARTMENT OF
AGRARIAN REFORM; ALYANSA NG MGA
MANGGAGAWANG BUKID NG HACIENDA
LUISITA, RENE GALANG, NOEL MALLARI, and
JULIO SUNIGA13[1] and his SUPERVISORY
GROUP OF THE HACIENDA LUISITA, INC. and
WINDSOR ANDAYA,
Respondents.

PERALTA,
BERSAMIN,
DEL CASTILLO,
ABAD,
VILLARAMA, JR.,
PEREZ,
MENDOZA,
SERENO,
REYES, and
PERLAS-BERNABE, JJ.

RESOLUTION

VELASCO, JR., J.:

Promulgated:
Before the Court are the Motion to Clarify and Reconsider Resolution of
April 24, 2012

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.).

In Our July 5, 2011 Decision14[2] in the above-captioned case, this

Court denied the petition for review filed by HLI and affirmed the assailed
Presidential Agrarian Reform Council (PARC) Resolution No. 2005-32-01
dated December 22, 2005 and PARC Resolution No. 2006-34-01 dated May 3,
2006 with the modification that the original 6,296 qualified farmworkerbeneficiaries of Hacienda Luisita (FWBs) shall have the option to remain as
stockholders of HLI.
x----------------------------------------------------------------------------------------- x
Upon separate motions of the parties for reconsideration, the Court,
by Resolution15[3] of November 22, 2011, recalled and set aside the option

thus granted to the original FWBs to remain as stockholders of HLI, while

maintaining that all the benefits and homelots received by all the FWBs shall
be respected with no obligation to refund or return them.

HLI invokes the following grounds in support of its instant Motion to

Clarify and Reconsider Resolution of November 22, 2011 dated December 16, 2011:

A
WITH DUE RESPECT, THE HONORABLE COURT ERRED
IN RULING THAT IN DETERMINING THE JUST
COMPENSATION, THE DATE OF TAKING IS
NOVEMBER 21, 1989, WHEN PARC APPROVED HLIs
SDP [STOCK DISPTRIBUTION PLAN] 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
BECAUSE:
(1) THE SDP IS PRECISELY A MODALITY WHICH THE
AGRARIAN LAW GIVES THE LANDOWNER AS
ALTERNATIVE TO COMPULSORY COVERAGE IN
WHICH CASE, THEREFORE, THE FWBs CANNOT BE
CONSIDERED AS OWNERS AND POSSESSORS OF THE
AGRICULTURAL LANDS AT THE TIME THE SDP WAS
APPROVED BY PARC;
(2) THE APPROVAL OF THE SDP CANNOT BE AKIN TO A
NOTICE OF COVERAGE IN COMPULSORY COVERAGE
OR ACQUISITION BECAUSE SDP AND COMPULSORY
COVERAGE ARE TWO DIFFERENT MODALITIES WITH
INDEPENDENT
AND
SEPARATE
RULES
AND
MECHANISMS;

(3) THE NOTICE OF COVERAGE OF JANUARY 02, 2006

MAY, AT THE VERY LEAST, BE CONSIDERED AS THE
TIME WHEN THE FWBs CAN BE CONSIDERED TO OWN
AND POSSESS THE AGRICULTURAL LANDS OF
HACIENDA LUISITA BECAUSE THAT IS THE ONLY TIME
WHEN HACIENDA LUISITA WAS PLACED UNDER
COMPULSORY ACQUISITION IN VIEW OF FAILURE OF
HLI TO PERFORM CERTAIN OBLIGATIONS OF THE SDP,
OR
SDOA
[STOCK
DISTRIBUTION
OPTION
AGREEMENT];
(4) INDEED, THE IMMUTABLE RULE AND THE
UNBENDING JURISPRUDENCE IS THAT TAKING
TAKES PLACE WHEN THE OWNER IS ACTUALLY
DEPRIVED OR DISPOSSESSED OF HIS PROPERTY;
(5) TO INSIST THAT THE TAKING IS WHEN THE SDP
WAS APPROVED BY PARC ON NOVEMBER 21, 1989 AND
THAT THE SAME BE CONSIDERED AS THE RECKONING
PERIOD TO DETERMINE THE JUST COMPENSATION IS
DEPRIVATION
OF
LANDOWNERS
PROPERTY
WITHOUT DUE PROCESS OF LAW;
(6) HLI SHOULD BE ENTITLED TO PAYMENT OF
INTEREST ON THE JUST COMPENSATION.
B
WITH DUE RESPECT, THE HONORABLE COURT ERRED
WHEN IT REVERSED ITS DECISION GIVING THE FWBs
THE OPTION TO REMAIN AS HLI STOCKHOLDERS OR
NOT, BECAUSE:
(1) IT IS AN EXERCISE OF A RIGHT OF THE FWB WHICH
THE HONORABLE COURT HAS DECLARED IN ITS
DECISION AND EVEN IN ITS RESOLUTION AND THAT
HAS TO BE RESPECTED AND IMPLEMENTED;
(2) NEITHER THE CONSTITUTION NOR THE CARL
[COMPREHENSIVE
AGRARIAN
REFORM
LAW]
REQUIRES THAT THE FWBs SHOULD HAVE CONTROL
OVER THE AGRICULTURAL LANDS;

(3) THE OPTION HAS NOT BEEN SHOWN TO BE

DETRIMENTAL BUT INSTEAD BENEFICIAL TO THE
FWBs AS FOUND BY THE HONORABLE COURT.
C
WITH DUE RESPECT, THE HONORABLE COURT ERRED
IN RULING THAT THE PROCEEDS FROM THE SALES OF
THE 500-HECTARE CONVERTED LOT AND THE 80.51HECTARE SCTEX CANNOT BE RETAINED BY HLI BUT
RETURNED TO THE FWBs AS BY SUCH MANNER; HLI IS
USING THE CORPORATION CODE TO AVOID ITS
LIABILITY TO THE FWBs FOR THE PRICE IT RECEIVED
FROM THE SALES, BECAUSE:
(1) THE PROCEEDS OF THE SALES BELONG TO THE
CORPORATION AND NOT TO EITHER HLI/TADECO OR
THE FWBs, BOTH OF WHICH ARE STOCKHOLDERS
ENTITLED TO THE EARNINGS OF THE CORPORATION
AND TO THE NET ASSETS UPON LIQUIDATION;
(2) TO ALLOW THE RETURN OF THE PROCEEDS OF THE
SALES TO FWBs IS TO IMPOSE ALL LIABILITIES OF THE
CORPORATION ON HLI/TADECO WHICH IS UNFAIR
AND VIOLATIVE OF THE CORPORATION CODE.

Mallari, et al. similarly put forth the following issues in its Motion for
Reconsideration/Clarification dated December 9, 2011:

I
REPUBLIC ACT NO. 6657 [RA 6657] OR THE
COMPREHENSIVE AGRARIAN REFORM LAW [CARL]
DOES NOT PROVIDE THAT THE FWBs WHO OPT FOR
STOCK DISTRIBUTION OPTION SHOULD RETAIN
MAJORITY SHAREHOLDING OF THE COMPANY TO
WHICH THE AGRICULTURAL LAND WAS GIVEN.
II

IF THE NOVEMBER 22, 2011 DECISION OF THIS

HONORABLE COURT ORDERING LAND DISTRIBUTION
WOULD BE FOLLOWED, THIS WOULD CAUSE MORE
HARM THAN GOOD TO THE LIVES OF THOSE PEOPLE
LIVING
IN
THE
HACIENDA,
AND
MORE
PARTICULARLY TO THE WELFARE OF THE FWBs.
III
ON THE CONCLUSION BY THIS HONORABLE COURT
THAT THE OPERATIVE FACT DOCTRINE IS APPLICABLE
TO THE CASE AT BAR, THEN FWBs WHO MERELY
RELIED ON THE PARC APPROVAL SHOULD NOT BE
PREJUDICED BY ITS SUBSEQUENT NULLIFICATION.
IV
THOSE WHO CHOOSE LAND SHOULD RETURN
WHATEVER THEY GOT FROM THE SDOA [STOCK
DISTRIBUTION OPTION AGREEMENT] AND TURN OVER
THE SAME TO HLI FOR USE IN THE OPERATIONS OF
THE COMPANY, WHICH IN TURN WILL REDOUND TO
THE BENEFIT OF THOSE WHO WILL OPT TO STAY WITH
THE SDO.
V
FOR THOSE WHO CHOOSE LAND, THE TIME OF TAKING
FOR PURPOSES OF JUST COMPENSATION SHOULD BE
AT THE TIME HLI WAS DISPOSSESSED OF CONTROL
OVER THE PROPERTY, AND THAT PAYMENT BY [THE
GOVERNMENT] OF THE LAND SHOULD BE TURNED
OVER TO HLI FOR THE BENEFIT AND USE OF THE
COMPANYS OPERATIONS THAT WILL, IN TURN,
REDOUND TO THE BENEFIT OF FWBs WHO WILL OPT
TO STAY WITH THE COMPANY.

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

HLI, was never deprived of the use and benefit of the agricultural lands of

homelots given to the FWBs.

Hacienda Luisita. Upon this premise, Mallari, et al. claim the date of taking
could not be at the time of the approval of the SDP.18[6]

Payment of just compensation

A view has also been advanced that the date of the taking should
be left to the determination of the Department of Agrarian Reform (DAR) in
HLI contends that since the SDP is a modality which the agrarian
reform law gives the landowner as alternative to compulsory coverage, then

conjunction with its authority to preliminarily determine the just

compensation for the land made subject of CARP.

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.16[4] It
further claims that the approval of the SDP is not akin to a Notice of Coverage

Alyansa ng mga Manggagawang Bukid sa Hacienda Luisita

in compulsory coverage situations because stock distribution option and

(AMBALA), in its Comment/Opposition (to the Motion to Clarify and Reconsider

compulsory acquisition are two (2) different modalities with independent and

Resolution of November 22, 2011) dated January 30, 2012, on the other hand,

separate rules and mechanisms.

Concomitantly, HLI maintains that the

alleges that HLI should not be paid just compensation altogether. 19 [7] It

Notice of Coverage issued on January 2, 2006 may, at the very least, be

argues that when the Court of Appeals (CA) dismissed the case 20[8] the

considered as the date of taking as this was the only time that the

government of then President Ferdinand E. Marcos initially instituted and

agricultural lands of Hacienda Luisita were placed under compulsory

won against Tadeco, the CA allegedly imposed as a condition for its dismissal

acquisition in view of its failure to perform certain obligations under the

of the action that should the stock distribution program fail, the lands should

SDP.17[5]

be distributed to the FWBs, with Tadeco receiving by way of compensation

only the amount of PhP 3,988,000.21[9]

Mallari, et al. are of a similar view. They contend that Tarlac

Development Corporation (Tadeco), having as it were majority control over

AMBALA further contends that if HLI or Tadeco is, at all, entitled to

just compensation, the taking should be reckoned as of November 21, 1989,
the date when the SDP was approved, and the amount of compensation
should be PhP 40,000 per hectare as this was the same value declared in 1989
by Tadeco to ensure that the FWBs will not control the majority stockholdings
in HLI.22[10]
At the outset, it should be noted that Section 2, Rule 52 of the Rules
of Court states, No second motion for reconsideration of a judgment or final
resolution by the same party shall be entertained. A second motion for
reconsideration, as a rule, is prohibited for being a mere reiteration of the
issues assigned and the arguments raised by the parties.23[11]

In the instant case, the issue on just compensation and the grounds
HLI and Mallari, et al. rely upon in support of their respective stance on the
matter had been previously raised by them in their first motion for
reconsideration and fully passed upon by the Court in its November 22, 2011
Resolution. The similarities in the issues then and now presented and the
grounds invoked are at once easily discernible from a perusal of the November
22, 2011 Resolution, the pertinent portions of which read:

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.
In its Motion for Clarification and Partial
Reconsideration, HLI disagrees with the foregoing ruling and
contends that the taking 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, 2006, the date when the
Notice of Coverage was issued by the DAR pursuant to PARC
Resolution No. 2006-34-01 recalling/revoking the approval of
the SDP.
For their part, Mallari, et al. argue that the valuation
of the land cannot be based on November 21, 1989, the date of
approval of the SDP. Instead, they aver that the date of
taking for valuation purposes is a factual issue best left to
the determination of the trial courts.
At the other end of the spectrum, AMBALA alleges
that HLI should no longer be paid just compensation for the
agricultural land that will be distributed to the FWBs, since
the Manila Regional Trial Court (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 contends 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.
Despite the above propositions, We maintain that the
date of taking is November 21, 1989, the date when PARC
approved HLIs SDP per PARC Resolution No. 89-12-2, 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. As this Court
held in Perez-Rosario v. CA:

Considering that the issue on just compensation has already been

passed upon and denied by the Court in its November 22, 2011 Resolution, a
subsequent motion touching on the same issue undeniably partakes of a

It is an established social and economic fact

that the escalation of poverty is the driving force
behind the political disturbances that have in the past
compromised the peace and security of the people as
well as the continuity of the national order. To
subdue these acute disturbances, the legislature over
the course of the history of the nation passed a series
of laws calculated to accelerate agrarian reform,
ultimately to raise the material standards of living
and eliminate discontent. Agrarian reform is a
perceived solution to social instability. The edicts of
social justice found in the Constitution and the public
policies that underwrite them, the extraordinary
national experience, and the prevailing national
consciousness, all command the great departments of
government to tilt the balance in favor of the poor and
underprivileged whenever reasonable doubt arises in
the interpretation of the law. But annexed to the great
and sacred charge of protecting the weak is the
diametric function to put every effort to arrive at an
equitable solution for all parties concerned: the jural
postulates of social justice cannot shield illegal acts,
nor do they sanction false sympathy towards a
certain class, nor yet should they deny justice to the
landowner whenever truth and justice happen to be
on her side. In the occupation of the legal questions
in all agrarian disputes whose outcomes can
significantly
affect
societal
harmony,
the
considerations of social advantage must be weighed,
an inquiry into the prevailing social interests is
necessary in the adjustment of conflicting demands
and expectations of the people, and the social
interdependence of these interests, recognized.
(Emphasis and citations omitted.)

second motion for reconsideration, hence, a prohibited pleading, and as such,

the motion or plea must be denied. Sec. 3 of Rule 15 of the Internal Rules of
the Supreme Court is clear:

SEC. 3. Second motion for reconsideration. The Court

shall not entertain a second motion for reconsideration, and
any exception to this rule can only be granted in the higher
interest of justice by the Court en banc upon a vote of at least
two-thirds of its actual membership. There is reconsideration
in the higher interest of justice when the assailed decision
is not only legally erroneous, but is likewise patently unjust
and potentially capable of causing unwarranted and
irremediable injury or damage to the parties. A second
motion for reconsideration can only be entertained before the
ruling sought to be reconsidered becomes final by operation
of law or by the Courts declaration.
In the Division, a vote of three Members shall be
required to elevate a second motion for reconsideration to the
Court En Banc.

Nonetheless, even if we entertain said motion and examine the

arguments raised by HLI and Mallari, et al. one last time, the result will be the
same.

Sec. 4, Article XIII of the 1987 Constitution expressly provides that the
taking of land for use in the agrarian reform program of the government is
conditioned on the payment of just compensation. As stated:

Comprehensive Agrarian Reform Program (CARP). Taking also occurs

Section 4.
The State shall, by law, undertake an
agrarian reform program founded on the right of farmers and
regular farm workers, who are landless, to own directly or
collectively the lands they till or, in the case of other farm
workers, to receive a just share of the fruits thereof. To this
end, the State shall encourage and undertake the just
distribution of all agricultural lands, subject to such priorities
and reasonable retention limits as the Congress may
prescribe, taking into account ecological, developmental, or
equity considerations, and subject to the payment of just
compensation. (Emphasis supplied.)

Just compensation has been defined as the full and fair equivalent
of the property taken from its owner by the expropriator.24[12] The measure
is not the takers gain, but the owners loss. 25 [13] In determining just
compensation, the price or value of the property at the time it was taken from
the owner and appropriated by the government shall be the basis. If the
government takes possession of the land before the institution of

when agricultural lands are voluntarily offered by a landowner and approved

by PARC for CARP coverage through the stock distribution scheme, as in the
instant case. Thus, HLIs submitting its SDP for approval is an
acknowledgment on its part that the agricultural lands of Hacienda Luisita are
covered by CARP. However, it was the PARC approval which should be
considered as the effective date of taking as it was only during this time
that the government officially confirmed the CARP coverage of these lands.

Indeed, stock distribution option and compulsory land acquisition are

two (2) different modalities under the agrarian reform program. Nonetheless,
both share the same end goal, that is, to have a more equitable distribution
and ownership of land, with due regard to the rights of landowners to just
compensation.28[16]

expropriation proceedings, the value should be fixed as of the time of the

taking of said possession, not of the filing of the complaint.26[14]
The fact that Sec. 31 of Republic Act No. 6657 (RA 6657) gives
corporate landowners the option to give qualified beneficiaries the right to
In Land Bank of the Philippines v. Livioco, the Court held that the time
of taking is the time when the landowner was deprived of the use and benefit
of his property, such as when title is transferred to the Republic.27[15] It
should be noted, however, that taking does not only take place upon the
issuance of title either in the name of the Republic or the beneficiaries of the

avail of a stock distribution or, in the phraseology of the law, the right to
purchase such proportion of the capital stock of the corporation that the
agricultural land, actually devoted to agricultural activities, bears in relation
to the companys total assets, does not detract from the avowed policy of
the agrarian reform law of equitably distributing ownership of land. The

difference lies in the fact that instead of actually distributing the agricultural

upon by them. x x x29[17] On the basis of this statutory provision, Tadeco

lands to the farmer-beneficiaries, these lands are held by the corporation as

could have exacted payment for such shares of stock corresponding to the

part of the capital contribution of the farmer-beneficiaries, not of the

value of the agricultural lands of Hacienda Luisita in relation to the

landowners, under the stock distribution scheme. The end goal of equitably

outstanding capital stock of HLI, but it did not do so.

distributing ownership of land is, therefore, undeniable. And since it is only

upon the approval of the SDP that the agricultural lands actually came under
CARP coverage, such approval operates and takes the place of a notice of
coverage ordinarily issued under compulsory acquisition.

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.

Moreover, precisely because due regard is given to the rights of

landowners to just compensation, the law on stock distribution option

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.

acknowledges that landowners can require payment for the shares of stock
corresponding to the value of the agricultural lands in relation to the
outstanding capital stock of the corporation.

Notwithstanding the foregoing considerations, the suggestion that

there is taking only when the landowner is deprived of the use and benefit
of his property is not incompatible with Our conclusion that taking took
place on November 21, 1989. As mentioned in Our July 5, 2011 Decision, even
from the start, the stock distribution scheme appeared to be Tadecos

Although Tadeco did not require compensation for the shares of stock

preferred option in complying with the CARP when it organized HLI as its

corresponding to the value of the agricultural lands in relation to the

spin-off corporation in order to facilitate stock acquisition by the FWBs. For

outstanding capital stock of HLI, its inability to receive compensation cannot

this purpose, Tadeco assigned and conveyed to HLI the agricultural lands of

be attributed to the government. The second paragraph of Sec. 31 of RA 6657

Hacienda Luisita, set at 4,915.75 hectares, among others. These agricultural

explicitly states that [u]pon certification by DAR, corporations owning

lands constituted as the capital contribution of the FWBs in HLI. In effect,

agricultural lands may give their qualified beneficiaries the right to purchase

Tadeco deprived itself of the ownership over these lands when it transferred

such proportion of the capital stock of the corporation that the agricultural

the same to HLI.

land, actually devoted to agricultural activities, bears in relation to the

companys total assets, under such terms and conditions as may be agreed

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
While it is true that Tadeco has majority control over HLI, the Court

the taking of the agricultural lands of Hacienda Luisita. Although the

cannot subscribe to the view Mallari, et al. espouse that, on the basis of such

transfer of ownership over the agricultural lands was made prior to the SDPs

majority stockholding, Tadeco was never deprived of the use and benefit of

approval, it is this Courts consistent view that these lands officially became

the agricultural lands of Hacienda Luisita it divested itself in favor of HLI.

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

It bears stressing that [o]wnership is defined as a relation in law by

ordinarily issued under compulsory acquisition.

virtue of which a thing pertaining to one person is completely subjected to his

will in everything not prohibited by law or the concurrence with the rights of
another.30[18] The attributes of ownership are: jus utendi or the right to

Further, if We adhere to HLIs view that the Notice of Coverage

possess and enjoy, jus fruendi or the right to the fruits, jus abutendi or the right

issued on January 2, 2006 should, at the very least, be considered as the date

to abuse or consume, jus disponendi or the right to dispose or alienate, and jus

of taking as this was the only time that the agricultural portion of the

vindicandi or the right to recover or vindicate.31[19]

hacienda was placed under compulsory acquisition in view of HLIs failure

to perform certain obligations under the SDP, this Court would, in effect, be
penalizing the qualified FWBs twice for acceding to the adoption of the stock

When the agricultural lands of Hacienda Luisita were transferred by

distribution scheme: first, by depriving the qualified FWBs of the agricultural

Tadeco to HLI in order to comply with CARP through the stock distribution

lands that they should have gotten early on were it not for the adoption of the

option scheme, sealed with the imprimatur of PARC under PARC Resolution

stock distribution scheme of which they only became minority stockholders;

No. 89-12-2 dated November 21, 1989, Tadeco was consequently dispossessed

and second, by making them pay higher amortizations for the agricultural

of the afore-mentioned attributes of ownership. Notably, Tadeco and HLI are

lands that should have been given to them decades ago at a much lower cost

two different entities with separate and distinct legal personalities. Ownership

were it not for the landowners initiative of adopting the stock distribution

by one cannot be considered as ownership by the other.

scheme for free.

Reiterating what We already mentioned in Our November 22, 2011

Resolution, [e]ven if it is the government which will pay the just

court has the right to review with finality the determination

in the exercise of what is admittedly a judicial function.

compensation to HLI, this will also affect the FWBs as they will be paying
higher amortizations to the government if the taking will be considered to
have taken place only on January 2, 2006. As aptly observed by Justice
Leonardo-De Castro in her Concurring Opinion, this will put the land
beyond the capacity of the [FWBs] to pay, which this Court should not
countenance.

As regards the issue on when taking occurred with respect to the

agricultural lands in question, We, however, maintain that this Court can rule,
as it has in fact already ruled on its reckoning date, that is, November 21, 1989,
the date of issuance of PARC Resolution No. 89-12-2, based on the abovementioned disquisitions. The investment on SACs of original and exclusive
jurisdiction over all petitions for the determination of just compensation to
landowners33[21] will not preclude the Court from ruling upon a matter that

Considering the above findings, it cannot be gainsaid that effective

taking took place in the case at bar upon the approval of the SDP, that is,

may already be resolved based on the records before Us. By analogy, Our
ruling in Heirs of Dr. Jose Deleste v. LBP is applicable:

on November 21, 1989.

HLI postulates that just compensation is a question of fact that should

be left to the determination by the DAR, Land Bank of the Philippines (LBP)
or even the special agrarian court (SAC).32[20] As a matter of fact, the Court,
in its November 22, 2011 Resolution, dispositively ordered the DAR and the
LBP to determine the compensation due to HLI. And as indicated in the body
of said Resolution:

The foregoing notwithstanding, it bears stressing that

the DARs land valuation is only preliminary and is not, by
any means, final and conclusive upon the landowner. The
landowner can file an original action with the RTC acting as a
special agrarian court to determine just compensation. The

Indeed, it is the Office of the DAR Secretary which is

vested with the primary and exclusive jurisdiction over all
matters involving the implementation of the agrarian reform
program. However, this will not prevent the Court from
assuming jurisdiction over the petition considering that the
issues raised in it may already be resolved on the basis of
the records before Us. Besides, to allow the matter to remain
with the Office of the DAR Secretary would only cause
unnecessary delay and undue hardship on the parties.
Applicable, by analogy, is Our ruling in the recent Bagong
Pagkakaisa ng Manggagawa ng Triumph International v.
Department of Labor and Employment Secretary, where We held:
But as the CA did, we similarly recognize
that undue hardship, to the point of injustice, would
result if a remand would be ordered under a situation
where we are in the position to resolve the case based
on the records before us. As we said in Roman Catholic
Archbishop of Manila v. Court of Appeals:

[w]e have laid down the rule that the remand

of the case to the lower court for further reception of
evidence is not necessary where the Court is in a
position to resolve the dispute based on the records
before it. On many occasions, the Court, in the public
interest and for the expeditious administration of
justice, has resolved actions on the merits instead of
remanding them to the trial court for further
proceedings, such as where the ends of justice, would
not be subserved by the remand of the case.34[22]
(Emphasis supplied; citations omitted.)

Even though the compensation due to HLI will still be preliminarily

determined by DAR and LBP, subject to review by the RTC acting as a SAC,
the fact that the reckoning point of taking is already fixed at a certain date
should already hasten the proceedings and not further cause undue hardship
on the parties, especially the qualified FWBs.

By a vote of 8-6, the Court affirmed its ruling that the date of
taking in determining just compensation is November 21, 1989 when
PARC approved HLIs stock option plan.

As regards the issue of interest on just compensation, We also leave

this matter to the DAR and the LBP, subject to review by the RTC acting as a
SAC.

Option will not ensure

control over agricultural lands

In Our November 22, 2011 Resolution, this Court held:

After having discussed and considered the different
contentions raised by the parties in their respective motions,
We are now left to contend with one crucial issue in the case
at bar, that is, control over the agricultural lands by the
qualified FWBs.
Upon a review of the facts and circumstances, We
realize that the FWBs will never have control over these
agricultural lands for as long as they remain as stockholders
of HLI. In Our July 5, 2011 Decision, this Court made the
following observations:
There is, thus, nothing unconstitutional in
the formula prescribed by RA 6657. The policy on
agrarian reform is that control over the agricultural
land must always be in the hands of the farmers.
Then it falls on the shoulders of DAR and PARC to
see to it the farmers should always own majority of
the common shares entitled to elect the members of
the board of directors to ensure that the farmers will
have a clear majority in the board. Before the SDP is
approved, strict scrutiny of the proposed SDP must
always be undertaken by the DAR and PARC, such
that the value of the agricultural land contributed to
the corporation must always be more than 50% of the
total assets of the corporation to ensure that the
majority of the members of the board of directors are
composed of the farmers. The PARC composed of the
President of the Philippines and cabinet secretaries

must see to it that control over the board of directors

rests with the farmers by rejecting the inclusion of
non-agricultural assets which will yield the majority
in the board of directors to non-farmers. Any
deviation, however, by PARC or DAR from the
correct application of the formula prescribed by the
second paragraph of Sec. 31 of RA 6675 does not
make said provision constitutionally infirm. Rather,
it is the application of said provision that can be
challenged. Ergo, Sec. 31 of RA 6657 does not trench
on the constitutional policy of ensuring control by the
farmers.
In line with Our finding that control over agricultural
lands must always be in the hands of the farmers, We
reconsider our ruling that the qualified FWBs should be given
an option to remain as stockholders of HLI, inasmuch as these
qualified FWBs will never gain control given the present
proportion of shareholdings in HLI.
A revisit of HLIs Proposal for Stock Distribution
under CARP and the Stock Distribution Option Agreement
(SDOA) upon which the proposal was based reveals that the
total assets of HLI is PhP 590,554,220, while the value of the
4,915.7466 hectares is PhP 196,630,000. Consequently, the
share of the farmer-beneficiaries in the HLI capital stock is
33.296% (196,630,000 divided by 590,554.220); 118,391,976.85
HLI shares represent 33.296%. Thus, even if all the holders of
the 118,391,976.85 HLI shares unanimously vote to remain as
HLI stockholders, which is unlikely, control will never be
placed in the hands of the farmer-beneficiaries. Control, of
course, means the majority of 50% plus at least one share of
the common shares and other voting shares. Applying the
formula to the HLI stockholdings, the number of shares that
will constitute the majority is 295,112,101 shares (590,554,220
divided by 2 plus one [1] HLI share). The 118,391,976.85
shares subject to the SDP approved by PARC substantially fall
short of the 295,112,101 shares needed by the FWBs to acquire
control over HLI. Hence, control can NEVER be attained by
the FWBs. There is even no assurance that 100% of the
118,391,976.85 shares issued to the FWBs will all be voted in

favor of staying in HLI, taking into account the previous

referendum among the farmers where said shares were not
voted unanimously in favor of retaining the SDP. In light of
the foregoing consideration, the option to remain in HLI
granted to the individual FWBs will have to be recalled and
revoked.
Moreover, 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. (Emphasis in the
original.)

HLI, however, takes exception to the above-mentioned ruling and

contends that [t]here is nothing in the Constitution nor in the agrarian laws
which require that control over the agricultural lands must always be in the
hands of the farmers.35[23] Moreover, both HLI and Mallari, et al. claim that
the option given to the qualified FWBs to remain as stockholders of HLI is
neither iniquitous nor prejudicial to the FWBs.36[24]

The Court agrees that the option given to the qualified FWBs whether
to remain as stockholders of HLI or opt for land distribution is neither
iniquitous nor prejudicial to the FWBs. Nonetheless, the Court is not
unmindful of the policy on agrarian reform that control over the agricultural
land must always be in the hands of the farmers. Contrary to the stance of HLI,
both the Constitution and RA 6657 intended the farmers, individually or
collectively, to have control over the agricultural lands of HLI; otherwise, all

these rhetoric about agrarian reform will be rendered for naught. Sec. 4, Art.
XIII of the 1987 Constitution provides:

Section 4. The State shall, by law, undertake an

agrarian reform program founded on the right of farmers
and regular farmworkers who are landless, to own directly
or collectively the lands they till or, in the case of other
farmworkers, to receive a just share of the fruits thereof. To
this end, the State shall encourage and undertake the just
distribution of all agricultural lands, subject to such priorities
and reasonable retention limits as the Congress may
prescribe, taking into account ecological, developmental, or
equity considerations, and subject to the payment of just
compensation. In determining retention limits, the State shall
respect the right of small landowners. The State shall further
provide incentives for voluntary land-sharing. (Emphasis
supplied.)

Pursuant to and as a mechanism to carry out the above-mentioned

constitutional directive, RA 6657 was enacted. In consonance with the
constitutional policy on agrarian reform, Sec. 2 of RA 6657 also states:

SECTION 2. Declaration of Principles and Policies. - It is

the policy of the State to pursue a Comprehensive Agrarian
Reform Program (CARP). The welfare of the landless farmers
and farm workers will receive the highest consideration to
promote social justice and to move the nation towards sound
rural development and industrialization, and the
establishment of owner cultivatorship of economic-sized
farms as the basis of Philippine agriculture.
To this end, a more equitable distribution and
ownership of land, with due regard to the rights of
landowners to just compensation and to the ecological needs
of the nation, shall be undertaken to provide farmers and
farm workers with the opportunity to enhance their dignity

and improve the quality of their lives through greater

productivity of agricultural lands.

The agrarian reform program is founded on the

right of farmers and regular farm workers, who are landless,
to own directly or collectively the lands they till or, in the
case of other farm workers, to receive a share of the fruits
thereof. To this end, the State shall encourage the just
distribution of all agricultural lands, subject to the priorities
and retention limits set forth in this Act, having taken into
account
ecological,
developmental,
and
equity
considerations, and subject to the payment of just
compensation. The State shall respect the right of small
landowners and shall provide incentives for voluntary landsharing.
The State shall recognize the right of farmers, farm
workers and landowners, as well as cooperatives and other
independent farmers organization, to participate in the
planning, organization, and management of the program, and
shall provide support to agriculture through appropriate
technology and research, and adequate financial, production,
marketing and other support services.
The State shall apply the principles of agrarian reform
or stewardship, whenever applicable, in accordance with law,
in the disposition or utilization of other natural resources,
including lands of the public domain, under lease or
concession, suitable to agriculture, subject to prior rights,
homestead rights of small settlers and the rights of
indigenous communities to their ancestral lands.
The State may resettle landless farmers and farm
workers in its own agricultural estates, which shall be
distributed to them in the manner provided by law.
By means of appropriate incentives, the State shall
encourage the formation and maintenance of economic-sized
family farms to be constituted by individual beneficiaries and
small landowners.

The State shall protect the rights of subsistence

fishermen, especially of local communities, to the preferential
use of communal marine and fishing resources, both inland
and offshore. It shall provide support to such fishermen
through appropriate technology and research, adequate
financial, production and marketing assistance and other
services, The State shall also protect, develop and conserve
such resources. The protection shall extend to offshore fishing
grounds of subsistence fishermen against foreign intrusion.
Fishworkers shall receive a just share from their labor in the
utilization of marine and fishing resources.
The State shall be guided by the principles that land
has a social function and land ownership has a social
responsibility. Owners of agricultural land have the
obligation to cultivate directly or through labor
administration the lands they own and thereby make the land
productive.
The State shall provide incentives to landowners to
invest the proceeds of the agrarian reform program to
promote industrialization, employment and privatization of
public sector enterprises. Financial instruments used as
payment for lands shall contain features that shall enhance
negotiability and acceptability in the marketplace.
The State may lease undeveloped lands of the public
domain to qualified entities for the development of capitalintensive farms, traditional and pioneering crops especially
those for exports subject to the prior rights of the beneficiaries
under this Act. (Emphasis supplied.)

Based on the above-quoted provisions, the notion of farmers and

regular farmworkers having the right to own directly or collectively the lands
they till is abundantly clear. We have extensively discussed this ideal in Our
July 5, 2011 Decision:

The wording of the provision is unequivocal the

farmers and regular farmworkers have a right TO OWN
DIRECTLY OR COLLECTIVELY THE LANDS THEY TILL.
The basic law allows two (2) modes of land
distributiondirect and indirect ownership. Direct transfer
to individual farmers is the most commonly used method by
DAR and widely accepted.
Indirect transfer through
collective ownership of the agricultural land is the alternative
to direct ownership of agricultural land by individual
farmers. The aforequoted Sec. 4 EXPRESSLY authorizes
collective ownership by farmers. No language can be found
in the 1987 Constitution that disqualifies or prohibits
corporations or cooperatives of farmers from being the legal
entity through which collective ownership can be exercised.
The word collective is defined as indicating a number of
persons or things considered as constituting one group or
aggregate, while collectively is defined as in a
collective sense or manner; in a mass or body. By using the
word collectively, the Constitution allows for indirect
ownership of land and not just outright agricultural land
transfer. This is in recognition of the fact that land reform
may become successful even if it is done through the medium
of juridical entities composed of farmers.
Collective ownership is permitted in two (2)
provisions of RA 6657. Its Sec. 29 allows workers
cooperatives or associations to collectively own the land,
while the second paragraph of Sec. 31 allows corporations or
associations to own agricultural land with the farmers
becoming stockholders or members. Said provisions read:
SEC. 29.
Farms owned or operated by
corporations or other business associations.In the case
of farms owned or operated by corporations or other
business associations, the following rules shall be
observed by the PARC.
In general, lands shall be distributed directly
to the individual worker-beneficiaries.
In case it is not economically feasible and
sound to divide the land, then it shall be owned

collectively by the worker beneficiaries who shall

form a workers cooperative or association which
will deal with the corporation or business association.
xxx
SEC. 31. Corporate Landowners. x x x
xxxx
Upon certification by the DAR, corporations
owning agricultural lands may give their qualified
beneficiaries the right to purchase such proportion of
the capital stock of the corporation that the
agricultural land, actually devoted to agricultural
activities, bears in relation to the companys total
assets, under such terms and conditions as may be
agreed upon by them.
In no case shall the
compensation received by the workers at the time the
shares of stocks are distributed be reduced. The same
principle shall be applied to associations, with
respect to their equity or participation. x x x
Clearly, workers cooperatives or associations under
Sec. 29 of RA 6657 and corporations or associations under the
succeeding Sec. 31, as differentiated from individual farmers,
are authorized vehicles for the collective ownership of
agricultural land. Cooperatives can be registered with the
Cooperative Development Authority and acquire legal
personality of their own, while corporations are juridical
persons under the Corporation Code. Thus, Sec. 31 is
constitutional as it simply implements Sec. 4 of Art. XIII of the
Constitution that land can be owned COLLECTIVELY by
farmers. Even the framers of the l987 Constitution are in
unison with respect to the two (2) modes of ownership of
agricultural lands tilled by farmersDIRECT and
COLLECTIVE, thus:
MR. NOLLEDO. And when we talk of the phrase to
own directly, we mean the principle of direct
ownership by the tiller?
MR. MONSOD. Yes.

MR. NOLLEDO.
And when we talk of
collectively, we mean communal ownership,
stewardship or State ownership?
MS. NIEVA.
In this section, we conceive of
cooperatives; that is farmers cooperatives owning
the land, not the State.
MR. NOLLEDO.
And when we talk of
collectively, referring to farmers cooperatives,
do the farmers own specific areas of land where they
only unite in their efforts?
MS. NIEVA. That is one way.
MR. NOLLEDO. Because I understand that there are
two basic systems involved: the moshave type of
agriculture and the kibbutz.
So are both
contemplated in the report?
MR. TADEO. Ang dalawa kasing pamamaraan ng
pagpapatupad ng tunay na reporma sa lupa ay ang
pagmamay-ari ng lupa na hahatiin sa individual na
pagmamay-ari directly at ang tinatawag na
sama-samang gagawin ng mga magbubukid. Tulad
sa Negros, ang gusto ng mga magbubukid ay gawin
nila itong cooperative or collective farm. Ang ibig
sabihin ay sama-sama nilang sasakahin.
xxxx
MR. TINGSON. x x x When we speak here of to
own directly or collectively the lands they till, is this
land for the tillers rather than land for the landless?
Before, we used to hear land for the landless, but
now the slogan is land for the tillers. Is that right?
MR. TADEO. Ang prinsipyong umiiral dito ay iyong
land for the tillers. Ang ibig sabihin ng directly
ay tulad sa implementasyon sa rice and corn lands
kung saan inaari na ng mga magsasaka ang lupang
binubungkal nila. Ang ibig sabihin naman ng
collectively ay sama-samang paggawa sa isang

lupain o isang bukid, katulad ng sitwasyon sa

Negros.
As Commissioner Tadeo explained, the farmers will
work on the agricultural land sama-sama or collectively.
Thus, the main requisite for collective ownership of land is
collective or group work by farmers of the agricultural land.
Irrespective of whether the landowner is a cooperative,
association or corporation composed of farmers, as long as
concerted group work by the farmers on the land is present,
then it falls within the ambit of collective ownership scheme.
(Emphasis in the original; underscoring supplied.)

As aforequoted, there is collective ownership as long as there is a

concerted group work by the farmers on the land, regardless of whether the
landowner is a cooperative, association or corporation composed of farmers.
However, this definition of collective ownership should be read in light of the
clear policy of the law on agrarian reform, which is to emancipate the tiller
from the bondage of the soil and empower the common people. Worth noting
too is its noble goal of rectifying the acute imbalance in the distribution of
this precious resource among our people. 37 [25] Accordingly, HLIs
insistent view that control need not be in the hands of the farmers translates
to allowing it to run roughshod against the very reason for the enactment of
agrarian reform laws and leave the farmers in their shackles with sheer lip
service to look forward to.

Notably, it has been this Courts consistent stand that control over
the agricultural land must always be in the hands of the farmers. As We wrote
in Our July 5, 2011 Decision:

There is, thus, nothing unconstitutional in the

formula prescribed by RA 6657. The policy on agrarian
reform is that control over the agricultural land must always
be in the hands of the farmers. Then it falls on the shoulders
of DAR and PARC to see to it the farmers should always own
majority of the common shares entitled to elect the members
of the board of directors to ensure that the farmers will have
a clear majority in the board. Before the SDP is approved,
strict scrutiny of the proposed SDP must always be
undertaken by the DAR and PARC, such that the value of the
agricultural land contributed to the corporation must always
be more than 50% of the total assets of the corporation to
ensure that the majority of the members of the board of
directors are composed of the farmers. The PARC composed
of the President of the Philippines and cabinet secretaries
must see to it that control over the board of directors rests
with the farmers by rejecting the inclusion of nonagricultural assets which will yield the majority in the
board of directors to non-farmers. Any deviation, however,
by PARC or DAR from the correct application of the
formula prescribed by the second paragraph of Sec. 31 of
RA 6675 does not make said provision constitutionally
infirm. Rather, it is the application of said provision that can
be challenged. Ergo, Sec. 31 of RA 6657 does not trench on the
constitutional policy of ensuring control by the farmers.
(Emphasis supplied.)

There is an aphorism that what has been done can no longer be

undone. That may be true, but not in this case. The SDP was approved by
PARC even if the qualified FWBs did not and will not have majority

stockholdings in HLI, contrary to the obvious policy by the government on

as of 1989, the subject 4,915 hectares of Hacienda Luisita were already covered

agrarian reform. Such an adverse situation for the FWBs will not and should

by CARP. Accordingly, the proceeds realized from the sale and/or disposition

not be permitted to stand. For this reason, We maintain Our ruling that the

thereof should accrue for the benefit of the FWBs, less deductions of the 3% of

qualified FWBs will no longer have the option to remain as stockholders of

the proceeds of said transfers that were paid to the FWBs, the taxes and

HLI.

expenses relating to the transfer of titles to the transferees, and the

expenditures incurred by HLI and Centennary Holdings, Inc. for legitimate

FWBs Entitled

corporate purposes, as prescribed in our November 22, 2011 Resolution.

to Proceeds of Sale

Homelots
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.

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.38[26]

This claim is bereft of merit.

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
It cannot be denied that the adverted 500-hectare converted land and
the SCTEX lot once formed part of what would have been agrarian-

business associations owning or operating farms which opted for land

distribution. This is provided under Sec. 30 of RA 6657. Particularly:

distributable lands, in fine subject to compulsory CARP coverage. And, as

stated in our July 5, 2011 Decision, 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,

SEC. 30. Homelots and Farmlots for Members of

Cooperatives. The individual members of the cooperatives
or corporations mentioned in the preceding section shall be

provided with homelots and small farmlots for their family

use, to be taken from the land owned by the cooperative or
corporation. (Italics supplied.)

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.

The preceding section referred to in the above-quoted provision is

The Court, by a unanimous vote, resolved to maintain its ruling that

Sec. 29 of RA 6657, which states:

the FWBs shall retain ownership of the homelots given to them with no
obligation to pay for the value of said lots. However, since the SDP was
SEC. 29. Farms Owned or Operated by Corporations or
Other Business Associations.In the case of farms owned or
operated by corporations or other business associations, the
following rules shall be observed by the PARC.

already revoked with finality, the Court directs the government through the

In general, lands shall be distributed directly to the

individual worker-beneficiaries.

the agrarian reform program is subject to the payment of just

In case it is not economically feasible and sound to

divide the land, then it shall be owned collectively by the
worker-beneficiaries who shall form a workers cooperative
or association which will deal with the corporation or
business association. Until a new agreement is entered into by
and between the workers cooperative or association and the
corporation or business association, any agreement existing at
the time this Act takes effect between the former and the
previous landowner shall be respected by both the workers
cooperative or association and the corporation or business
association.

in view of the Deed of Assignment and Conveyance dated March 22, 1989

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

compensation. Just compensation should be paid to HLI instead of Tadeco

executed between Tadeco and HLI, where Tadeco transferred and conveyed
to HLI the titles over the lots in question. DAR is ordered to compute the just
compensation of the homelots in accordance with existing laws, rules and
regulations.

To recapitulate, the Court voted on the following issues in this

manner:
Since none of the above-quoted 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

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;

Luisita, Inc. and the Motion for Reconsideration/Clarification dated December 9,

2011 filed by private respondents Noel Mallari, Julio Suniga, Supervisory
2.

3.

On the propriety of the revocation of the option of the

Group of Hacienda Luisita, Inc. and Windsor Andaya are hereby DENIED

FWBs to remain as HLI stockholders, the Court, by

with this qualification: the July 5, 2011 Decision, as modified by the November

unanimous vote, agreed to reiterate its ruling in its November

22, 2011 Resolution, is FURTHER MODIFIED in that the government,

22, 2011 Resolution that the option granted to the FWBs stays

through DAR, is ordered to pay Hacienda Luisita, Inc. the just compensation

revoked;

for the 240-square meter homelots distributed to the FWBs.

On the propriety of returning to the FWBs the proceeds of

The July 5, 2011 Decision, as modified by the November 22, 2011

the sale of the 500-hectare converted land and of the 80.51-

Resolution and further modified by this Resolution is declared FINAL and

hectare SCTEX land, the Court unanimously voted to

EXECUTORY. The entry of judgment of said decision shall be made upon the

maintain its ruling to order the payment of the proceeds of

time of the promulgation of this Resolution.

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;
No further pleadings shall be entertained in this case.

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.

WHEREFORE, the Motion to Clarify and Reconsider Resolution of

November 22, 2011 dated December 16, 2011 filed by petitioner Hacienda

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-14355

October 31, 1919

THE CITY OF MANILA, plaintiff-appellant,

vs.
CHINESE COMMUNITY OF MANILA, ET AL., defendants-appellees.
City Fiscal Diaz for appellant.
Crossfield and O'Brien, Williams, Ferrier and Sycip, Delgado and Delgado, Filemon
Sotto, and Ramon Salinas for appellees.

JOHNSON, J.:
The important question presented by this appeal is: In expropriation
proceedings by the city of Manila, may the courts inquire into, and hear
proof upon, the necessity of the expropriation?
That question arose in the following manner:
On the 11th day of December, 1916, the city of Manila presented a petition in
the Court of First Instance of said city, praying that certain lands, therein
particularly described, be expropriated for the purpose of constructing a
public improvement. The petitioner, in the second paragraph of the petition,
alleged:
That for the purpose of constructing a public improvement, namely,
the extension of Rizal Avenue, Manila, it is necessary for the plaintiff to
acquire ownership in fee simple of certain parcels of land situated in the
district of Binondo of said city within Block 83 of said district, and
within the jurisdiction of this court.
The defendant, the Comunidad de Chinos de Manila [Chinese Community of
Manila], answering the petition of the plaintiff, alleged that it was a
corporation organized and existing under and by virtue of the laws of the
Philippine Islands, having for its purpose the benefit and general welfare of

the Chinese Community of the City of Manila; that it was the owner of
parcels one and two of the land described in paragraph 2 of the complaint;
that it denied that it was either necessary or expedient that the said parcels be
expropriated for street purposes; that existing street and roads furnished
ample means of communication for the public in the district covered by such
proposed expropriation; that if the construction of the street or road should
be considered a public necessity, other routes were available, which would
fully satisfy the plaintiff's purposes, at much less expense and without
disturbing the resting places of the dead; that it had a Torrens title for the
lands in question; that the lands in question had been used by the defendant
for cemetery purposes; that a great number of Chinese were buried in said
cemetery; that if said expropriation be carried into effect, it would disturb the
resting places of the dead, would require the expenditure of a large sum of
money in the transfer or removal of the bodies to some other place or site
and in the purchase of such new sites, would involve the destruction of
existing monuments and the erection of new monuments in their stead, and
would create irreparable loss and injury to the defendant and to all those
persons owning and interested in the graves and monuments which would
have to be destroyed; that the plaintiff was without right or authority to
expropriate said cemetery or any part or portion thereof for street purposes;
and that the expropriation, in fact, was not necessary as a public
improvement.
The defendant Ildefonso Tambunting, answering the petition, denied each
and every allegation of the complaint, and alleged that said expropriation
was not a public improvement; that it was not necessary for the plaintiff to
acquire the parcels of land in question; that a portion of the lands in question
was used as a cemetery in which were the graves of his ancestors; that
monuments and tombstones of great value were found thereon; that the land
had become quasi-public property of a benevolent association, dedicated and
used for the burial of the dead and that many dead were buried there; that if
the plaintiff deemed it necessary to extend Rizal Avenue, he had offered and
still offers to grant a right of way for the said extension over other land,
without cost to the plaintiff, in order that the sepulchers, chapels and graves
of his ancestors may not be disturbed; that the land so offered, free of charge,
would answer every public necessity on the part of the plaintiff.
The defendant Feliza Concepcion de Delgado, with her husband, Jose Maria
Delgado, and each of the other defendants, answering separately, presented
substantially the same defense as that presented by the Comunidad de Chinos
de Manila and Ildefonso Tambunting above referred to.

The foregoing parts of the defense presented by the defendants have been
inserted in order to show the general character of the defenses presented by
each of the defendants. The plaintiff alleged that the expropriation was
necessary. The defendants each alleged (a) that no necessity existed for said
expropriation and (b) that the land in question was a cemetery, which had
been used as such for many years, and was covered with sepulchres and
monuments, and that the same should not be converted into a street for
public purposes.
Upon the issue thus presented by the petition and the various answers, the
Honorable Simplicio del Rosario, judge, in a very elucidated opinion, with
very clear and explicit reasons, supported by ambulance of authorities,
decided that there was no necessity for the expropriation of the particular
strip of land in question, and absolved each and all of the defendants from
all liability under the complaint, without any finding as to costs.
From that judgment the plaintiff appealed and presented the above question
as its principal ground of appeal.
The theory of the plaintiff is, that once it has established the fact, under the
law, that it has authority to expropriate land, it may expropriate any land it
may desire; that the only function of the court in such proceedings is to
ascertain the value of the land in question; that neither the court nor the
owners of the land can inquire into the advisible purpose of purpose of the
expropriation or ask any questions concerning the necessities therefor; that
the courts are mere appraisers of the land involved in expropriation
proceedings, and, when the value of the land is fixed by the method adopted
by the law, to render a judgment in favor of the defendant for its value.
That the city of Manila has authority to expropriate private lands for public
purposes, is not denied. Section 2429 of Act No. 2711 (Charter of the city of
Manila) provides that "the city (Manila) . . . may condemn private property
for public use."
The Charter of the city of Manila contains no procedure by which the said
authority may be carried into effect. We are driven, therefore, to the
procedure marked out by Act No. 190 to ascertain how the said authority
may be exercised. From an examination of Act No. 190, in its section 241, we
find how the right of eminent domain may be exercised. Said section 241
provides that, "The Government of the Philippine Islands, or of any province
or department thereof, or of any municipality, and any person, or public or

private corporation having, by law, the right to condemn private property for
public use, shall exercise that right in the manner hereinafter prescribed."
Section 242 provides that a complaint in expropriation proceeding shall be
presented; that the complaint shall state with certainty the right of
condemnation, with a description of the property sought to be condemned
together with the interest of each defendant separately.
Section 243 provides that if the court shall find upon trial that the right to
expropriate the land in question exists, it shall then appoint commissioners.
Sections 244, 245 and 246 provide the method of procedure and duty of the
commissioners. Section 248 provides for an appeal from the judgment of the
Court of First Instance to the Supreme Court. Said section 248 gives the
Supreme Court authority to inquire into the right of expropriation on the part
of the plaintiff. If the Supreme Court on appeal shall determine that no right
of expropriation existed, it shall remand the cause to the Court of First
Instance with a mandate that the defendant be replaced in the possession of
the property and that he recover whatever damages he may have sustained
by reason of the possession of the plaintiff.
It is contended on the part of the plaintiff that the phrase in said section, "and
if the court shall find the right to expropriate exists," means simply that, if the
court finds that there is some law authorizing the plaintiff to expropriate, then
the courts have no other function than to authorize the expropriation and to
proceed to ascertain the value of the land involved; that the necessity for the
expropriation is a legislative and not a judicial question.
Upon the question whether expropriation is a legislative function
exclusively, and that the courts cannot intervene except for the purpose of
determining the value of the land in question, there is much legal legislature.
Much has been written upon both sides of that question. A careful
examination of the discussions pro and con will disclose the fact that the
decisions depend largely upon particular constitutional or statutory
provisions. It cannot be denied, if the legislature under proper authority
should grant the expropriation of a certain or particular parcel of land for some
specified public purpose, that the courts would be without jurisdiction to
inquire into the purpose of that legislation.
If, upon the other hand, however, the Legislature should grant general
authority to a municipal corporation to expropriate private land for public
purposes, we think the courts have ample authority in this jurisdiction,

under the provisions above quoted, to make inquiry and to hear proof, upon
an issue properly presented, concerning whether or not the lands were
private and whether the purpose was, in fact, public. In other words, have no
the courts in this jurisdiction the right, inasmuch as the questions relating to
expropriation must be referred to them (sec. 241, Act No. 190) for final
decision, to ask whether or not the law has been complied with? Suppose in
a particular case, it should be denied that the property is not private property
but public, may not the courts hear proof upon that question? Or, suppose the
defense is, that the purpose of the expropriation is not public but private, or
that there exists no public purpose at all, may not the courts make inquiry
and hear proof upon that question?
The city of Manila is given authority to expropriate private lands for public
purposes. Can it be possible that said authority confers the right to determine
for itself that the land is private and that the purpose is public, and that the
people of the city of Manila who pay the taxes for its support, especially
those who are directly affected, may not question one or the other, or both, of
these questions? Can it be successfully contended that the phrase used in Act
No. 190, "and if the court upon trial shall find that such right exists," means
simply that the court shall examine the statutes simply for the purpose of
ascertaining whether a law exists authorizing the petitioner to exercise the
right of eminent domain? Or, when the case arrives in the Supreme Court,
can it be possible that the phrase, "if the Supreme Court shall determine that
no right of expropriation exists," that that simply means that the Supreme
Court shall also examine the enactments of the legislature for the purpose of
determining whether or not a law exists permitting the plaintiff to
expropriate?
We are of the opinion that the power of the court is not limited to that
question. The right of expropriation is not an inherent power in a municipal
corporation, and before it can exercise the right some law must exist
conferring the power upon it. When the courts come to determine the
question, they must only find (a) that a law or authority exists for the exercise
of the right of eminent domain, but (b) also that the right or authority is
being exercised in accordance with the law. In the present case there are two
conditions imposed upon the authority conceded to the City of Manila: First,
the land must be private; and, second, the purpose must be public. If the
court, upon trial, finds that neither of these conditions exists or that either
one of them fails, certainly it cannot be contended that the right is being
exercised in accordance with law.
Whether the purpose for the exercise of the right of eminent domain is
public, is a question of fact. Whether the land is public, is a question of fact;

and, in our opinion, when the legislature conferred upon the courts of the
Philippine Islands the right to ascertain upon trial whether the right exists for
the exercise of eminent domain, it intended that the courts should inquire
into, and hear proof upon, those questions. Is it possible that the owner of
valuable land in this jurisdiction is compelled to stand mute while his land is
being expropriated for a use not public, with the right simply to beg the city
of Manila to pay him the value of his land? Does the law in this jurisdiction
permit municipalities to expropriate lands, without question, simply for the
purpose of satisfying the aesthetic sense of those who happen for the time
being to be in authority? Expropriation of lands usually calls for public
expense. The taxpayers are called upon to pay the costs. Cannot the owners
of land question the public use or the public necessity?
As was said above, there is a wide divergence of opinion upon the authority
of the court to question the necessity or advisability of the exercise of the
right of eminent domain. The divergence is usually found to depend upon
particular statutory or constitutional provisions.
It has been contended and many cases are cited in support of that
contention, and section 158 of volume 10 of Ruling Case Law is cited as
conclusive that the necessity for taking property under the right of
eminent domain is not a judicial question. But those who cited said section
evidently overlooked the section immediately following (sec. 159), which
adds: "But it is obvious that if the property is taken in the ostensible behalf of
a public improvement which it can never by any possibility serve, it is being
taken for a use not public, and the owner's constitutional rights call for
protection by the courts. While many courts have used sweeping expression in
the decisions in which they have disclaimed the power of supervising the
power of supervising the selection of the sites of public improvements, it may be
safely said that the courts of the various states would feel bound to interfere
to prevent an abuse of the discretion delegated by the legislature, by an attempted
appropriation of land in utter disregard of the possible necessity of its use, or
when the alleged purpose was a cloak to some sinister scheme." (Norwich
City vs. Johnson, 86 Conn., 151; Bell vs. Mattoon Waterworks, etc. Co., 245
Ill., 544; Wheeling, etc. R. R. Co. vs. Toledo Ry. etc. Co., 72 Ohio St., 368; State
vs. Stewart, 74 Wis., 620.)
Said section 158 (10 R. C. L., 183) which is cited as conclusive authority in
support of the contention of the appellant, says:
The legislature, in providing for the exercise of the power of eminent
domain, may directly determine the necessity for appropriating private

property for a particular improvement for public use, and it may

select the exact location of the improvement. In such a case, it is well
settled that the utility of the proposed improvement, the extent of
the public necessity for its construction, the expediency of
constructing it, the suitableness of the location selected and the
consequent necessity of taking the land selected for its site, are all
questions exclusively for the legislature to determine, and the courts
have no power to interfere, or to substitute their own views for those
of the representatives of the people.
Practically every case cited in support of the above doctrine has been
examined, and we are justified in making the statement that in each case the
legislature directly determined the necessity for the exercise of the right of
eminent domain in the particular case. It is not denied that if the necessity for
the exercise of the right of eminent domain is presented to the legislative
department of the government and that department decides that there exists
a necessity for the exercise of the right in a particular case, that then and in
that case, the courts will not go behind the action of the legislature and make
inquiry concerning the necessity. But, in the case of Wheeling, etc. R. R. Co. vs.
Toledo, Ry, etc., Co. (72 Ohio St., 368 [106 Am. St. rep., 622, 628]), which was
cited in support of the doctrine laid down in section 158 above quoted, the
court said:
But when the statute does not designate the property to be taken nor
how may be taken, then the necessity of taking particular property is a
question for the courts. Where the application to condemn or
appropriate is made directly to the court, the question (of necessity)
should be raised and decided in limene.
The legislative department of the government was rarely undertakes to
designate the precise property which should be taken for public use. It has
generally, like in the present case, merely conferred general authority to take
land for public use when a necessity exists therefor. We believe that it can be
confidently asserted that, under such statute, the allegation of the necessity
for the appropriation is an issuable allegation which it is competent for the
courts to decide. (Lynch vs. Forbes, 161 Mass., 302 [42 Am. St. Rep., 402,
407].)
There is a wide distinction between a legislative declaration that a
municipality is given authority to exercise the right of eminent domain, and
a decision by the municipality that there exist a necessity for the exercise of
that right in a particular case. The first is a declaration simply that there exist

reasons why the right should be conferred upon municipal corporation,

while the second is the application of the right to a particular case. Certainly,
the legislative declaration relating to the advisability of granting the power
cannot be converted into a declaration that a necessity exists for its exercise
in a particular case, and especially so when, perhaps, the land in question
was not within the territorial authority was granted.
Whether it was wise, advisable, or necessary to confer upon a municipality
the power to exercise the right of eminent domain, is a question with which
the courts are not concerned. But when that right or authority is exercised for
the purpose of depriving citizens of their property, the courts are authorized,
in this jurisdiction, to make inquiry and to hear proof upon the necessity in
the particular case, and not the general authority.
Volume 15 of the Cyclopedia of Law and Procedure (Cyc.), page 629, is cited
as a further conclusive authority upon the question that the necessity for the
exercise of the right of eminent domain is a legislative and not a judicial
question. Cyclopedia, at the page stated, says:
In the absence of some constitutional or statutory provision to the
contrary, the necessity and expediency of exercising the right of
eminent domain are questions essentially political and not judicial in
their character. The determination of those questions (the necessity
and the expediency) belongs to the sovereign power; the legislative
department is final and conclusive, and the courts have no power to
review it (the necessity and the expediency) . . . . It (the legislature)
may designate the particular property to be condemned, and its
determination in this respect cannot be reviewed by the courts.
The volume of Cyclopedia, above referred to, cites many cases in support of
the doctrine quoted. While time has not permitted an examination of all of
said citations, many of them have been examined, and it can be confidently
asserted that said cases which are cited in support of the assertion that, "the
necessity and expediency of exercising the right of eminent domain are
questions essentially political and not judicial," show clearly and invariably
that in each case the legislature itself usually, by a special law, designated the
particular case in which the right of eminent domain might be exercised by
the particular municipal corporation or entity within the state. (Eastern R.
Co. vs. Boston, etc., R. Co., 11 Mass., 125 [15 Am. Rep., 13]; Brooklyn Park
Com'rs vs. Armstrong, 45 N.Y., 234 [6 Am. Rep., 70]; Hairston vs. Danville,
etc. Ry. Co., 208 U. S. 598; Cincinnati vs. Louisville, etc. Ry. Co., 223 U. S., 390;
U.S. vs. Chandler-Dunbar Water Power Co., 229 U. S., 53; U.S. vs. Gettysburg,

etc. Co., 160 U. S., 668; Traction Co. vs. Mining Co., 196 U.S., 239; Sears vs.
City of Akron, 246 U.S., 351 [erroneously cited as 242 U.S.].)
In the case of Traction Co. vs. Mining Co. (196 U.S., 239), the Supreme Court of
the United States said: "It is erroneous to suppose that the legislature is
beyond the control of the courts in exercising the power of eminent domain,
either as to the nature of the use or the necessity to the use of any particular
property. For if the use be not public or no necessity for the taking exists, the
legislature cannot authorize the taking of private property against the will of
the owner, notwithstanding compensation may be required."
In the case of School Board of Carolina vs. Saldaa (14 Porto Rico, 339, 356), we
find the Supreme Court of Porto Rico, speaking through Justice MacLeary,
quoting approvingly the following, upon the question which we are
discussing: "It is well settled that although the legislature must necessarily
determine in the first instance whether the use for which they
(municipalities, etc.) attempt to exercise the power is a public one or not,
their (municipalities, etc.) determination is not final, but is subject to
correction by the courts, who may undoubtedly declare the statute
unconstitutional, if it shall clearly appear that the use for which it is
proposed to authorize the taking of private property is in reality not public
but private." Many cases are cited in support of that doctrine.
Later, in the same decision, we find the Supreme Court of Porto Rico says:
"At any rate, the rule is quite well settled that in the cases under
consideration the determination of the necessity of taking a particular piece or
a certain amount of land rests ultimately with the courts." (Spring Valley etc.
Co. vs. San Mateo, etc. Co., 64 Cal., 123.) .
In the case of Board of Water Com'rs., etc. vs. Johnson (86 Conn., 571 [41 L. R.
A., N. S., 1024]), the Supreme Court of Connecticut approvingly quoted the
following doctrine from Lewis on Eminent Domain (3d ed.), section 599: "In
all such cases the necessity of public utility of the proposed work or
improvement is a judicial question. In all such cases, where the authority is
to take property necessary for the purpose, the necessity of taking particular
property for a particular purpose is a judicial one, upon which the owner is
entitled to be heard." (Riley vs. Charleston, etc. Co., 71 S. C., 457, 489 [110
Am. St. Rep., 579]; Henderson vs. Lexington 132 Ky., 390, 403.)
The taking of private property for any use which is not required by the
necessities or convenience of the inhabitants of the state, is an unreasonable
exercise of the right of eminent domain, and beyond the power of the

legislature to delegate. (Bennett vs. Marion, 106 Iowa, 628, 633; Wilson vs.
Pittsburg, etc. Co., 222 Pa. St., 541, 545; Greasy, etc. Co. vs. Ely, etc. Co., 132
Ky., 692, 697.)
In the case of New Central Coal Co. vs. George's etc. Co. (37 Md., 537, 564), the
Supreme Court of the State of Maryland, discussing the question before us,
said: "To justify the exercise of this extreme power (eminent domain) where
the legislature has left it to depend upon the necessity that may be found to
exist, in order to accomplish the purpose of the incorporation, as in this case,
the party claiming the right to the exercise of the power should be required
to show at least a reasonable degree of necessity for its exercise. Any rule less
strict than this, with the large and almost indiscriminate delegation of the
right to corporations, would likely lead to oppression and the sacrifice of
private right to corporate power."
In the case of Dewey vs. Chicago, etc. Co. (184 Ill., 426, 433), the court said: "Its
right to condemn property is not a general power of condemnation, but is
limited to cases where a necessity for resort to private property is shown to
exist. Such necessity must appear upon the face of the petition to condemn. If
the necessary is denied the burden is upon the company (municipality) to
establish it." (Highland, etc. Co. vs. Strickley, 116 Fed., 852, 856; Kiney vs.
Citizens' Water & Light Co., 173 Ind., 252, 257 ; Bell vs. Mattoon Waterworks,
etc. Co., 245 Ill., 544 [137 Am. St. Rep. 338].)
It is true that naby decisions may be found asserting that what is a public use
is a legislative question, and many other decisions declaring with equal
emphasis that it is a judicial question. But, as long as there is a constitutional
or statutory provision denying the right to take land for any use other than a
public use, it occurs to us that the question whether any particular use is a
public one or not is ultimately, at least, a judicial question. The legislative
may, it is true, in effect declare certain uses to be public, and, under the
operation of the well-known rule that a statute will not be declared to be
unconstitutional except in a case free, or comparatively free, from doubt, the
courts will certainly sustain the action of the legislature unless it appears that
the particular use is clearly not of a public nature. The decisions must be
understood with this limitation; for, certainly, no court of last resort will be
willing to declare that any and every purpose which the legislative might
happen to designate as a public use shall be conclusively held to be so,
irrespective of the purpose in question and of its manifestly private character
Blackstone in his Commentaries on the English Law remarks that, so great is
the regard of the law for private property that it will not authorize the least
violation of it, even for the public good, unless there exists a very great
necessity therefor.

In the case of Wilkinson vs. Leland (2 Pet. [U.S.], 657), the Supreme Court of
the United States said: "That government can scarcely be deemed free where
the rights of property are left solely defendant on the legislative body,
without restraint. The fundamental maxims of free government seem to
require that the rights of personal liberty and private property should be
held sacred. At least no court of justice in this country would be warranted in
assuming that the power to violate and disregard them a power so
repugnant to the common principles of justice and civil liberty lurked in
any general grant of legislature authority, or ought to be implied from any
general expression of the people. The people ought no to be presumed to
part with rights so vital to their security and well-being without very strong
and direct expression of such intention." (Lewis on Eminent Domain, sec.
603; Lecoul vs. Police Jury 20 La. Ann., 308; Jefferson vs. Jazem, 7 La. Ann.,
182.)

interpretation. (Bensely vs. Mountainlake Water Co., 13 Cal., 306 and cases
cited [73 Am. Dec., 576].)
The statutory power of taking property from the owner without his consent
is one of the most delicate exercise of government authority. It is to be
watched with jealous scrutiny. Important as the power may be to the
government, the inviolable sanctity which all free constitutions attach to the
right of property of the citizens, constrains the strict observance of the
substantial provisions of the law which are prescribed as modes of the
exercise of the power, and to protect it from abuse. Not only must the
authority of municipal corporations to take property be expressly conferred
and the use for which it is taken specified, but the power, with all
constitutional limitation and directions for its exercise, must be strictly pursued.
(Dillon on Municipal Corporations [5th Ed.], sec. 1040, and cases cited;
Tenorio vs. Manila Railroad Co., 22 Phil., 411.)

Blackstone, in his Commentaries on the English Law said that the right to
own and possess land a place to live separate and apart from others to
retain it as a home for the family in a way not to be molested by others is
one of the most sacred rights that men are heirs to. That right has been
written into the organic law of every civilized nation. The Acts of Congress
of July 1, 1902, and of August 29, 1916, which provide that "no law shall be
enacted in the Philippine Islands which shall deprive any person of his
property without due process of law," are but a restatement of the timehonored protection of the absolute right of the individual to his property.
Neither did said Acts of Congress add anything to the law already existing in
the Philippine Islands. The Spaniard fully recognized the principle and
adequately protected the inhabitants of the Philippine Islands against the
encroachment upon the private property of the individual. Article 349 of the
Civil Code provides that: "No one may be deprived of his property unless it
be by competent authority, for some purpose of proven public utility, and
after payment of the proper compensation Unless this requisite (proven
public utility and payment) has been complied with, it shall be the duty of the
courts to protect the owner of such property in its possession or to restore its
possession to him , as the case may be."

It can scarcely be contended that a municipality would be permitted to take

property for some public use unless some public necessity existed therefor.
The right to take private property for public use originates in the necessity,
and the taking must be limited by such necessity. The appellant contends
that inasmuch as the legislature has given it general authority to take private
property for public use, that the legislature has, therefore, settled the
question of the necessity in every case and that the courts are closed to the
owners of the property upon that question. Can it be imagined, when the
legislature adopted section 2429 of Act No. 2711, that it thereby declared that
it was necessary to appropriate the property of Juan de la Cruz, whose
property, perhaps, was not within the city limits at the time the law was
adopted? The legislature, then, not having declared the necessity, can it be
contemplated that it intended that a municipality should be the sole judge of
the necessity in every case, and that the courts, in the face of the provision
that "if upon trial they shall find that a right exists," cannot in that trial
inquire into and hear proof upon the necessity for the appropriation in a
particular case?

The exercise of the right of eminent domain, whether directly by the State, or
by its authorized agents, is necessarily in derogation of private rights, and
the rule in that case is that the authority must be strictly construed. No
species of property is held by individuals with greater tenacity, and none is
guarded by the constitution and laws more sedulously, than the right to the
freehold of inhabitants. When the legislature interferes with that right, and,
for greater public purposes, appropriates the land of an individual without
his consent, the plain meaning of the law should not be enlarged by doubtly

The Charter of the city of Manila authorizes the taking of private property for
public use. Suppose the owner of the property denies and successfully proves
that the taking of his property serves no public use: Would the courts not be
justified in inquiring into that question and in finally denying the petition if
no public purpose was proved? Can it be denied that the courts have a right
to inquire into that question? If the courts can ask questions and decide,
upon an issue properly presented, whether the use is public or not, is not
that tantamount to permitting the courts to inquire into the necessity of the
appropriation? If there is no public use, then there is no necessity, and if

there is no necessity, it is difficult to understand how a public use can

necessarily exist. If the courts can inquire into the question whether a public
use exists or not, then it seems that it must follow that they can examine into
the question of the necessity.
The very foundation of the right to exercise eminent domain is a genuine necessity,
and that necessity must be of a public character. The ascertainment of the necessity
must precede or accompany, and not follow, the taking of the land. (Morrison vs.
Indianapolis, etc. Ry. Co., 166 Ind., 511; Stearns vs. Barre, 73 Vt., 281;
Wheeling, etc. R. R. Co. vs. Toledo, Ry. etc. Co., 72 Ohio St., 368.)
The general power to exercise the right of eminent domain must not be
confused with the right to exercise it in a particular case. The power of the
legislature to confer, upon municipal corporations and other entities within
the State, general authority to exercise the right of eminent domain cannot be
questioned by the courts, but that general authority of municipalities or
entities must not be confused with the right to exercise it in particular
instances. 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 the municipal
corporation or entity is exercising the right in a particular case under the
conditions imposed by the general authority, is a question which the courts
have the right to inquire into.
The conflict in the authorities upon the question whether the necessity for the
exercise of the right of eminent domain is purely legislative and not judicial,
arises generally in the wisdom and propriety of the legislature in authorizing
the exercise of the right of eminent domain instead of in the question of the
right to exercise it in a particular case. (Creston Waterworks Co. vs. McGrath,
89 Iowa, 502.)
By the weight of authorities, 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. (Fairchild vs. City of St. Paul. 48
Minn., 540.)
And, moreover, the record does not show conclusively that the plaintiff has
definitely decided that their exists a necessity for the appropriation of the
particular land described in the complaint. Exhibits 4, 5, 7, and E clearly
indicate that the municipal board believed at one time that other land might

be used for the proposed improvement, thereby avoiding the necessity of

distributing the quiet resting place of the dead.
Aside from insisting that there exists no necessity for the alleged
improvements, the defendants further contend that the street in question
should not be opened through the cemetery. One of the defendants alleges
that said cemetery is public property. If that allegations is true, then, of
course, the city of Manila cannot appropriate it for public use. The city of
Manila can only expropriate private property.
It is a well known fact that cemeteries may be public or private. The former is
a cemetery used by the general community, or neighborhood, or church,
while the latter is used only by a family, or a small portion of the community
or neighborhood. (11 C. J., 50.)
Where a cemetery is open to public, it is a public use and no part of the
ground can be taken for other public uses under a general authority. And
this immunity extends to the unimproved and unoccupied parts which are
held in good faith for future use. (Lewis on Eminent Domain, sec. 434, and
cases cited.)
The cemetery in question seems to have been established under
governmental authority. The Spanish Governor-General, in an order creating
the same, used the following language:
The cemetery and general hospital for indigent Chinese having been
founded and maintained by the spontaneous and fraternal
contribution of their protector, merchants and industrials,
benefactors of mankind, in consideration of their services to the
Government of the Islands its internal administration, government
and regime must necessarily be adjusted to the taste and traditional
practices of those born and educated in China in order that the
sentiments which animated the founders may be perpetually
effectuated.
It is alleged, and not denied, that the cemetery in question may be used by
the general community of Chinese, which fact, in the general acceptation of
the definition of a public cemetery, would make the cemetery in question
public property. If that is true, then, of course, the petition of the plaintiff
must be denied, for the reason that the city of Manila has no authority or
right under the law to expropriate public property.

But, whether or not the cemetery is public or private property, its

appropriation for the uses of a public street, especially during the lifetime of
those specially interested in its maintenance as a cemetery, should be a
question of great concern, and its appropriation should not be made for such
purposes until it is fully established that the greatest necessity exists therefor.
While we do not contend that the dead must not give place to the living, and
while it is a matter of public knowledge that in the process of time
sepulchres may become the seat of cities and cemeteries traversed by streets
and daily trod by the feet of millions of men, yet, nevertheless such sacrifices
and such uses of the places of the dead should not be made unless and until
it is fully established that there exists an eminent necessity therefor. While
cemeteries and sepulchres and the places of the burial of the dead are still
within
the memory and command of the active care of the living; while they are still
devoted to pious uses and sacred regard, it is difficult to believe that even
the legislature would adopt a law expressly providing that such places,
under such circumstances, should be violated.
In such an appropriation, what, we may ask, would be the measure of
damages at law, for the wounded sensibilities of the living, in having the
graves of kindred and loved ones blotted out and desecrated by a common
highway or street for public travel? The impossibility of measuring the
damage and inadequacy of a remedy at law is too apparent to admit of
argument. To disturb the mortal remains of those endeared to us in life
sometimes becomes the sad duty of the living; but, except in cases of
necessity, or for laudable purposes, the sanctity of the grave, the last resting
place of our friends, should be maintained, and the preventative aid of the
courts should be invoked for that object. (Railroad Company vs. Cemetery
Co., 116 Tenn., 400; Evergreen Cemetery Association vs. The City of New
Haven, 43 Conn., 234; Anderson vs. Acheson, 132 Iowa, 744; Beatty vs. Kurtz,
2 Peters, 566.)
In the present case, even granting that a necessity exists for the opening of
the street in question, the record contains no proof of the necessity of
opening the same through the cemetery. The record shows that adjoining
and adjacent lands have been offered to the city free of charge, which will
answer every purpose of the plaintiff.
For all of the foregoing, we are fully persuaded that the judgment of the
lower court should be and is hereby affirmed, with costs against the
appellant. So ordered.

Arellano, C.J., Torres, Araullo and Avancea, JJ., concur.

S E C O N D

LOURDES
MASIKIP,

D I V I S I O N

DE

LA

PAZ

x----------------------------------------------------------------------------------------- x

DECISION

G.R. No. 136349

Petitioner,

Present:
SANDOVAL GUTIERREZ, J.:

- versus PUNO, J., Chairman,

SANDOVAL-GUTIERREZ,
CORONA,
AZCUNA, and
THE CITY OF PASIG, HON.
MARIETTA A. LEGASPI, in her
capacity as Presiding Judge of
the Regional Trial Court of Pasig
City, Branch 165 and THE
COURT OF APPEALS,
Respondents.

GARCIA, JJ.

Where the taking by the State of private property is done for the benefit of a
small community which seeks to have its own sports and recreational facility,
notwithstanding that there is such a recreational facility only a short distance
away, such taking cannot be considered to be for public use. Its expropriation
is not valid. In this case, the Court defines what constitutes a genuine necessity
for public use.

Promulgated:

This petition for review on certiorari assails the Decision[1] of the Court of
Appeals dated October 31, 1997 in CA-G.R. SP No. 41860 affirming the
Order[2] of the Regional Trial Court, Branch 165, Pasig City, dated May 7, 1996
in S.C.A. No. 873. Likewise assailed is the Resolution[3] of the same court

January 23, 2006

dated November 20, 1998 denying petitioners Motion for Reconsideration.

the area of her lot is neither sufficient nor suitable to provide land
opportunities to deserving poor sectors of our community.
The facts of the case are:

In its letter of December 20, 1994, respondent reiterated that the purpose of the
Petitioner Lourdes Dela Paz Masikip is the registered owner of a parcel of land

expropriation of petitioners property is to provide sports and recreational

with an area of 4,521 square meters located at Pag-Asa, Caniogan, Pasig City,

facilities to its poor residents.

Metro Manila.

Subsequently, on February 21, 1995, respondent filed with the trial court a
In a letter dated January 6, 1994, the then Municipality of Pasig, now City of

complaint for expropriation, docketed as SCA No. 873. Respondent prayed

Pasig, respondent, notified petitioner of its intention to expropriate a 1,500

that the trial court, after due notice and hearing, issue an order for the

square meter portion of her property to be used for the sports development

condemnation of the property; that commissioners be appointed for the

and recreational activities of the residents of Barangay Caniogan. This was

purpose of determining the just compensation; and that judgment be rendered

pursuant to Ordinance No. 42, Series of 1993 enacted by the then Sangguniang

based on the report of the commissioners.

Bayan of Pasig.

On April 25, 1995, petitioner filed a Motion to Dismiss the complaint on the
Again, on March 23, 1994, respondent wrote another letter to petitioner, but

following grounds:

this time the purpose was allegedly in line with the program of the Municipal
Government to provide land opportunities to deserving poor sectors of our
community.
I

On May 2, 1994, petitioner sent a reply to respondent stating that the intended
expropriation of her property is unconstitutional, invalid, and oppressive, as

PLAINTIFF HAS NO CAUSE OF ACTION FOR THE

EXERCISE OF THE POWER OF EMINENT
DOMAIN, CONSIDERING THAT:
(A) THERE IS NO GENUINE
NECESSITY FOR THE TAKING OF

THE PROPERTY SOUGHT TO BE

EXPROPRIATED.
(B) PLAINTIFF HAS ARBITRARILY
AND CAPRICIOUSLY CHOSEN
THE PROPERTY SOUGHT TO BE
EXPROPRIATED.
(C) EVEN ASSUMING ARGUENDO
THAT DEFENDANTS PROPERTY
MAY BE EXPROPRIATED BY
PLAINTIFF, THE FAIR MARKET
VALUE OF THE PROPERTY TO BE
EXPROPRIATED FAR EXCEEDS
SEVENTY-EIGHT
THOUSAND
PESOS (P78,000.00)

GOVERNMENT CODE; THUS, THE

INSTANT
EXPROPRIATION
PROCEEDING IS PREMATURE.
III
THE GRANTING OF THE EXPROPRIATION
WOULD VIOLATE SECTION 261 (V) OF THE
OMNIBUS ELECTION CODE.
IV
PLAINTIFF CANNOT TAKE POSSESSION OF THE
SUBJECT PROPERTY BY MERELY DEPOSITING
AN AMOUNT EQUAL TO FIFTEEN PERCENT
(15%) OF THE VALUE OF THE PROPERTY BASED
ON THE CURRENT TAX DECLARATION OF THE
SUBJECT PROPERTY.[4]

On May 7, 1996, the trial court issued an Order denying the Motion to
Dismiss,[5] on the ground that there is a genuine necessity to expropriate the
II

property for the sports and recreational activities of the residents of Pasig.
As to the issue of just compensation, the trial court held that the same is to be
determined in accordance with the Revised Rules of Court.

PLAINTIFFS COMPLAINT IS DEFECTIVE IN

FORM AND SUBSTANCE, CONSIDERING THAT:
(A) PLAINTIFF FAILS TO ALLEGE
WITH CERTAINTY THE PURPOSE
OF THE EXPROPRIATION.
(B) PLAINTIFF HAS FAILED TO
COMPLY
WITH
THE
PREREQUISITES LAID DOWN IN
SECTION 34, RULE VI OF THE
RULES
AND
REGULATIONS
IMPLEMENTING THE LOCAL

Petitioner filed a motion for reconsideration but it was denied by the trial court
in its Order of July 31, 1996. Forthwith, it appointed the City Assessor and City
Treasurer of Pasig City as commissioners to ascertain the just compensation.
This prompted petitioner to file with the Court of Appeals a special civil action
for certiorari, docketed as CA-G.R. SP No. 41860. On October 31, 1997, the

Appellate Court dismissed the petition for lack of merit. Petitioners Motion
for Reconsideration was denied in a Resolution dated November 20, 1998.

Hence, this petition anchored on the following grounds:

THE QUESTIONED DECISION DATED 31

OCTOBER 1997 (ATTACHMENT A) AND
RESOLUTION DATED 20 NOVEMBER 1998
(ATTACHMENT B) ARE CONTRARY TO LAW,
THE RULES OF COURT AND JURISPRUDENCE
CONSIDERING THAT:

A. THERE IS NO EVIDENCE TO
PROVE THAT THERE IS
GENUINE NECESSITY FOR
THE TAKING OF THE
PETITIONERS PROPERTY.
B. THERE IS NO EVIDENCE TO
PROVE THAT THE PUBLIC
USE REQUIREMENT FOR
THE EXERCISE OF THE
POWER OF EMINENT
DOMAIN
HAS
BEEN
COMPLIED WITH.
C. THERE IS NO EVIDENCE TO
PROVE
THAT
RESPONDENT CITY OF
PASIG HAS COMPLIED
WITH ALL CONDITIONS
PRECEDENT FOR THE

EXERCISE OF THE POWER

OF EMINENT DOMAIN.

THE COURT A QUOS ORDER DATED 07 MAY 1996

AND 31 JULY 1996, WHICH WERE AFFIRMED BY
THE COURT OF APPEALS, EFFECTIVELY
AMOUNT TO THE TAKING OF PETITIONERS
PROPERTY WITHOUT DUE PROCESS OF LAW:

II
THE
COURT
OF
APPEALS
GRAVELY ERRED IN APPLYING
OF RULE ON ACTIONABLE
DOCUMENTS
TO
THE
DOCUMENTS ATTACHED TO
RESPONDENT CITY OF PASIGS
COMPLAINT DATED 07 APRIL
1995 TO JUSTIFY THE COURT A
QUOS DENIAL OF PETITIONERS
RESPONSIVE PLEADING TO THE
COMPLAINT
FOR
EXPROPRIATION (THE MOTION
TO DISMISS DATED 21 APRIL
1995).
III
THE
COURT
OF
APPEALS
GRAVELY ERRED IN APPLYING
THE RULE ON HYPOTHETICAL
ADMISSION OF FACTS ALLEGED
IN A COMPLAINT CONSIDERING
THAT THE MOTION TO DISMISS
FILED BY PETITIONER IN THE
EXPROPRIATION CASE BELOW
WAS
THE
RESPONSIVE
PLEADING REQUIRED TO BE
FILED UNDER THE THEN RULE 67

OF THE RULES OF COURT AND

NOT AN ORIDNARY MOTION TO
DISMISS UNDER RULE 16 OF THE
RULES OF COURT.

plaintiff to expropriate the defendants property for the use specified in the
complaint. All that the law requires is that a copy of the said motion be served
on plaintiffs attorney of record. It is the court that at its convenience will set
the case for trial after the filing of the said pleading.[6]

The foregoing arguments may be synthesized into two main issues one
substantive and one procedural. We will first address the procedural issue.

The Court of Appeals therefore erred in holding that the motion to dismiss
filed by petitioner hypothetically admitted the truth of the facts alleged in the
complaint, specifically that there is a genuine necessity to expropriate

Petitioner filed her Motion to Dismiss the complaint for expropriation on April
25, 1995. It was denied by the trial court on May 7, 1996. At that time, the rule
on expropriation was governed by Section 3, Rule 67 of the Revised Rules of
Court which provides:

petitioners property for public use. Pursuant to the above Rule, the motion is
a responsive pleading joining the issues. What the trial court should have done
was to set the case for the reception of evidence to determine whether there is
indeed a genuine necessity for the taking of the property, instead of summarily
making a finding that the taking is for public use and appointing
commissioners to fix just compensation. This is especially so considering that
the purpose of the expropriation was squarely challenged and put in issue by

SEC. 3. Defenses and objections. Within the time specified in the

summons, each defendant, in lieu of an answer, shall present
in a single motion to dismiss or for other appropriate relief,
all his objections and defenses to the right of the plaintiff to
take his property for the use or purpose specified in the
complaint. All such objections and defenses not so presented
are waived. A copy of the motion shall be served on the
plaintiffs attorney of record and filed with the court with
proof of service.

petitioner in her motion to dismiss.

Significantly, the above Rule allowing a defendant in an expropriation case to

file a motion to dismiss in lieu of an answer was amended by the 1997 Rules
of Civil Procedure, which took effect on July 1, 1997. Section 3, Rule 67 now
expressly mandates that any objection or defense to the taking of the property
of a defendant must be set forth in an answer.

The motion to dismiss contemplated in the above Rule clearly constitutes the
responsive pleading which takes the place of an answer to the complaint for
expropriation. Such motion is the pleading that puts in issue the right of the

The fact that the Court of Appeals rendered its Decision in CA-G.R. SP No.
41860 on October 31, after the 1997 Rules of Civil Procedure took effect, is of
no moment. It is only fair that the Rule at the time petitioner filed her motion
to dismiss should govern. The new provision cannot be applied retroactively
to her prejudice.

We now proceed to address the substantive issue.

In the early case of US v. Toribio,[7] this Court defined the power of eminent
domain as the right of a government to take and appropriate private property
to public use, whenever the public exigency requires it, which can be done

SEC. 19. Eminent Domain. A local government unit may,

through its chief executive and acting pursuant to an
ordinance, exercise the power of eminent domain for public
use, purpose or welfare for the benefit of the poor and the
landless, upon payment of just compensation, pursuant to the
provisions of the Constitution and pertinent laws: Provided,
however, That, the power of eminent domain may not be
exercised unless a valid and definite offer has been previously
made to the owner and such offer was not accepted: Provided,
further, That, the local government unit may immediately take
possession of the property upon the filing of expropriation
proceedings and upon making a deposit with the proper
court of at least fifteen percent (15%) of the fair market value
of the property based on the current tax declaration of the
property to be expropriated: Provided, finally, That, the
amount to be paid for expropriated property shall be
determined by the proper court, based on the fair market
value at the time of the taking of the property.

only on condition of providing a reasonable compensation therefor. It has also

been described as the power of the State or its instrumentalities to take private
property for public use and is inseparable from sovereignty and inherent in

Judicial review of the exercise of eminent domain is limited to the following

government.[8]

areas of concern: (a) the adequacy of the compensation, (b) the necessity of the
taking, and (c) the public use character of the purpose of the taking.[11]

The power of eminent domain is lodged in the legislative branch of the

government. It delegates the exercise thereof to local government units, other

In this case, petitioner contends that respondent City of Pasig failed to

public entities and public utility corporations,[9] subject only to Constitutional

establish a genuine necessity which justifies the condemnation of her

limitations. Local governments have no inherent power of eminent domain

property. While she does not dispute the intended public purpose,

and may exercise it only when expressly authorized by statute.[10] Section 19

nonetheless, she insists that there must be a genuine necessity for the proposed

of the Local Government Code of 1991 (Republic Act No. 7160) prescribes the

use and purposes. According to petitioner, there is already an established

delegation by Congress of the power of eminent domain to local government

sports development and recreational activity center at Rainforest Park in Pasig

units and lays down the parameters for its exercise, thus:

City, fully operational and being utilized by its residents, including those from

Barangay Caniogan. Respondent does not dispute this. Evidently, there is no

categorically public. The necessity has not been shown, especially considering

genuine necessity to justify the expropriation.

that there exists an alternative facility for sports development and community
recreation in the area, which is the Rainforest Park, available to all residents of
Pasig City, including those of Caniogan.

The right to take private property for public purposes necessarily originates
from the necessity and the taking must be limited to such necessity. In City of
Manila v. Chinese Community of Manila,[12] we held that the very foundation

The right to own and possess property is one of the most cherished

of the right to exercise eminent domain is a genuine necessity and that

rights of men. It is so fundamental that it has been written into organic law of

necessity must be of a public character. Moreover, the ascertainment of the

every nation where the rule of law prevails. Unless the requisite of genuine

necessity must precede or accompany and not follow, the taking of the land.

necessity for the expropriation of ones property is clearly established, it shall

In City of Manila v. Arellano Law College,[13] we ruled that necessity within the

be the duty of the courts to protect the rights of individuals to their private

rule that the particular property to be expropriated must be necessary, does

property. Important as the power of eminent domain may be, the inviolable

not mean an absolute but only a reasonable or practical necessity, such as

sanctity which the Constitution attaches to the property of the individual

would combine the greatest benefit to the public with the least inconvenience

requires not only that the purpose for the taking of private property be

and expense to the condemning party and the property owner consistent with

specified. The genuine necessity for the taking, which must be of a public

such benefit.

character, must also be shown to exist.

Applying this standard, we hold that respondent City of Pasig has

WHEREFORE, the petition for review is GRANTED. The challenged

failed to establish that there is a genuine necessity to expropriate petitioners

Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 41860 are

property. Our scrutiny of the records shows that the Certification[14] issued

REVERSED. The complaint for expropriation filed before the trial court by

by the Caniogan Barangay Council dated November 20, 1994, the basis for the

respondent City of Pasig, docketed as SCA No. 873, is ordered DISMISSED.

passage of Ordinance No. 42 s. 1993 authorizing the expropriation, indicates

that the intended beneficiary is the Melendres Compound Homeowners
Association, a private, non-profit organization, not the residents of Caniogan.
It can be gleaned that the members of the said Association are desirous of
having their own private playground and recreational facility. Petitioners lot
is the nearest vacant space available. The purpose is, therefore, not clearly and

SO ORDERED.

She prays for such other remedy as the Court may deem just
and equitable in the premises.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-51078 October 30, 1980
CRISTINA DE KNECHT, petitioner,
vs.
HON. PEDRO JL. BAUTISTA, as Judge presiding over Branch III of the
Court of First Instance (Pasay City) and the REPUBLIC OF THE
PHILIPPINES, respondents.

FERNANDEZ, J.:
This is a petition for certiorari and prohibition filed by Cristina de Knecht
against the Honorable Pedro JL. Bautista, as Judge presiding over Branch III
of the Court of First Instance of Rizal (Pasay City), and the Republic of the
Philippines pines seeking the following relief:
WHEREFORE, petitioner respectfully prays that judgment
be rendered annulling the order for immediate possession
issued by respondent court in the expropriation proceedings
and commanding respondents to desist from further
proceedings in the expropriation action or the order for
immediate possession issued in said action, with costs.
Petitioner prays that a restraint order or writ of preliminary
injunction be issued ex-parte enjoining respondents, their
representative representative and agents from enforcing the
here questioned order for mediate posession petitioner
offering to post a bond executed to the parties enjoined in an
amount to be fixed by the Court to the effect that she will
pay to such parties all damages which they may sustain by
reason of the injunction if the Court should finally decide
she is not entitled there

Quezon City for July 1979. 1

The petitioner alleges that than ten (10) years ago, the government through
the Department of Public Workmen's and Communication (now MPH)
prepared a to Epifanio de los Santos Avenue (EDSA) to Roxas Boulevard;
that the proposed extension, an adjunct of building program, the Manila
Cavite Coastal Read Project, would pass through Cuneta Avenue up to
Roxas Boulevard that this route would be a straight one taking into account
the direction of EDSA; that preparation to the implementation of the
aforesaid plan, or on December 13, 1974, then Secretary Baltazar Aquino of
the Department of Public Highways directed the City Engineer of Pasay City
not to issue temporary or permanent permits for the construction and/or
improvement of buildings and other structures located within the proposed
extension through Cuneta Avenue that shortly thereafter the Department of
Public Highways decided to make the proposed extension go through
Fernando Rein and Del Pan Streets which are lined with old substantial
houses; that upon learning of the changed the owners of the residential
houses that would be affected, the herein petitioner being one of them, filed
on April 15, 1977 a formal petition to President Ferdinand E. Marcos asking
him to order the Ministry of Public Highways to adoption, the original plan
of making the extension of EDSA through Araneta Avenue instead of the
new plan going through Fernando Rein and Del Pan Streets; that President
Marcos directed then Minister Baltazar Aquino to explain within twenty-four
(24) hours why the proposed project should not be suspended; that on April
21, 1977 then Minister Aquino submitted his explanation defending the new
proposed route; that the President then referred the matter to the Human
Settlements Commission for investigation and recommendation; that after
formal hearings to which all the parties proponents and oppositors were
given full opportunity to ventilate their views and to present their evidence,
the Settlements Commission submitted a report recommending the reversion
of the extension of EDSA to the original plan passing through Cuneta
Avenue; and that notwithstanding the said report and recommendation, the
Ministry of Public Highways insisted on implementing the plan to make the
extension of EDSA go through Fernando Rein and Del Pan Streets. 2
In February 1979, the government filed in the Court of First Instance of Rizal,
Branch III, Pascual City presided by the respondent Judge, a complaint for
expropriation against the owners of the houses standing along Fernando
Rein and Del Pan Streets, among them the herein petitioner. The complaint

was docketed as Civil Case No. 7001-P and entitled "Republic of the Philippines
vs. Concepcion Cabarrus Vda. de Santos, etc."
The herein petitioner filed a motion to dismiss dated March 19, 1979 on the
following grounds:
(a) court had no jurisdiction over the subject matter of the action because the
complaint failed to allege that the instant project for expropriation bore the
approval of the Ministry of Human Settlements and the Metro Manila
Government nor pursuant to Presidential Decrees Nos. 824, 1396 and 1517;
(b) The choice of properties to be expropriated made by the Ministry of
Public Highways was arbitrary and erroneous;
(c) The complaint was premature as the plaintiff never really had gone
through serious negotiations with the defendant for the purchase of her
property; and
(d) The complaint relied on an arbitrary and erroneous valuation of
properties and disregarded consequential damages.
An urgent motion dated March 28, 1979 for preliminary junction was also
filed.
In June 1979 the Republic of the Philippines filed a motion for the issuance of
a writ of possession of the property sought to be expropriated on the ground
that said Republic had made the required deposit with the Philippine
National Bank.
The respondent judge issued a writ of possession dated June 14, 1979
authorizing the Republic of the Philippines to take and enter upon the
possession of the properties sought be condemned. 3
The petitioner contends that "Respondent court lacked or exceeded its
jurisdiction or gravely abused its discretion in issuing the order to take over
and enter upon the possession of the properties sought to be expropriatedpetitioner having raised a constitutional question which respondent court
must resolve before it can issue an order to take or enter upon the possession
of properties sought to be expropriated." 4
The petitioner assails the choice of the Fernando Rein and Del Pan Streets
route on the following grounds:

The choice of property to be expropriated cannot be without

rhyme or reason. The condemnor may not choose any
property it wants. Where the legislature has delegated a
power of eminent do-main, the question of the necessity for
taking a particular fine for the intended improvement rests
in the discretion of the grantee power subject however to
review by the courts in case of fraud, bad faith or gross
abuse of discretion. The choice of property must be
examined for bad faith, arbitrariness or capriciousness and
due process determination as to whether or not the
proposed location was proper in terms of the public
interests. Even the claim of respondent's Secretary Baltazar
Aquino that there would be a saving of P2 million under his
new plan must be reviewed for it bears no relation to the site
of the proposed EDSA extension As envisioned by the
government, the EDSA extension would be linked to the
Cavite Expressway. Logically then, the proposed extension
must point to the south and not detour to the north.
Also, the equal protection of the law must be accorded, not
on to the motel owners along Cuneta (Fisher) Avenue, but
also to the owners of solid and substantial homes and
quality residential lands occupied for generations. 5
The respondents maintain that the respondent court did not act without
jurisdiction or exceed its jurisdiction or gravel abuse its discretion in issuing
the order dated June 14, 1979 authorizing the Republic of the Philippines to
take over and enter the possession of the properties sought to be
appropriated because the Republic has complied with all the statutory
requirements which entitled it to have immediate possession of the
properties involved. 6
Defending the change of the EDSA extension to pass through Fernando Rein
Del Pan Streets, the respondents aver:
'There was no sudden change of plan in the selection of the
site of the EDSA Extension to Roxas Blvd. As a matter of
fact, when the Ministry of Public Highways decided to
change the site of EDSA Ex- tension to Roxas Boulevard
from Cuneta Avenue to the Del Pan Fernando Item
Streets the residents of Del Pan and Fernando Rein Streets
who were to be adversely affected by the construction of ED

 SA Extension to Roxas Boulevard along Del Pan Fernando Rein Streets were duly notified of such proposed
project. Petitioner herein was one of those notified Annex 1).
It be conceded that the Cuneta Avenue line goes southward
and outward (from the city center while the Del Pan
Fernando Rein Streets line follows northward and inward
direction. It must be stated that both lines, Cuneta Avenue
and Del Pan Fernando Rein Streets lines, meet
satisfactorily planning and design criteria and therefore are
both acceptable. In selecting the Del Pan Fernando Rein
Streets line the Government did not do so because it wanted
to save the motel located along Cuneta Avenue but because
it wanted to minimize the social impact factor or problem
involved. 7
There is no question as to the right of the Republic of the Philippines to take
private property for public use upon the payment of just compensation.
Section 2, Article IV of the Constitution of the Philippines provides: "Private
property shall not be taken for public use without just compensation."
It is recognized, was, that the government may not capriciously or
arbitrarily' choose what private property should be taken. In J. M. Tuazon &
Co., Inc. vs. Land Tenure administration 31 SCRA, 413, 433, the Supreme Court
said:
For the purpose of obtaining a judicial declaration of nullity,
it is enough if the respondents or defendants named be the
government officials who would give operation and effect to
official action allegedly tainted with unconstitutionality.
Thus, where the statute assailed was sought to be enforced
by the Land Tenure Administrative and the Solicitor
General, the two officials may be made respondents in the
action without need of including the Executive Secretary as a
party in the action
The failure to meet tile exacting standard of due process
would likewise constitute a valid objection to the exercise of
this congressional power. That was so intimated in the above
leading Guido Case. There was an earlier pronouncement to
that effect in a decision rendered long before the adoption of
the Constitution under the previous organic law then in

force, while the Philippines was still an unincorporated

territory of the United States.
It is obvious then that a landowner is covered by the mantle
of protection due process affords. It is a mandate of reason.
It frowns on arbitrariness, it is the antithesis of any
governmental act that smacks of whim or caprice. It negates
state power to act in an impressive manner. It is, as had been
stressed so often, the embodiment of the sporting Idea of fair
play. In that sense, it stands as a guaranty of justice. That is
the standard that must be met by any government talk
agency in the exercise of whatever competence is entrusted
to it. As was so emphatically stressed by the present Chief
Justice, 'Acts of Congress, as well as those of the Executive,
can deny due process only under pain of nullity, ...
In the same case the Supreme Court concluded:
With due recognition then of the power of Congress to
designate the particular property to be taken and how much
thereof may be condemned in the exercise of the power of
expropriation, it is still a judicial question whether in the
exercise of such competence, the party adversely affected is
the victim of partiality and prejudice. That the equal
protection clause will not allow. (p. 436)
In the instant case, it is a fact that the Department of Public Highways
originally establish the extension of EDSA along Cuneta Avenue. It is to be
presumed that the Department of Public Highways made studies before
deciding on Cuneta Avenue. It is indeed odd why suddenly the proposed
extension of EDSA to Roxas Boulevard was changed to go through Fernando
Rein-Del Pan Streets which the Solicitor General con- cedes "... the Del Pan
Fernando Rein Streets line follows northward and inward direction. While
admit "that both lines, Cuneta Avenue and Del Pan Fernando Rein Streets
lines, meet satisfactorily planning and design criteria and therefore are both
acceptable ... the Solicitor General justifies the change to Del Pan Fernando
Rein Streets on the ground that the government "wanted to the social impact
factor or problem involved." 8
It is doubtful whether the extension of EDSA along Cuneta Avenue can be
objected to on the ground of social impact. The improvements and buildings
along Cuneta Avenue to be affected by the extension are mostly motels. Even

granting, arguendo, that more people be affected, the Human Setlements

Commission has suggested coordinative efforts of said Commission with the
National Housing Authority and other government agencies in the relocation
and resettlement of those adversely affected. 9

from the larger perspective of the national economy,

considering that, by ad- statistical data, no less than fifty
thousand (50,000) vehicles a day will have to traverse an
extra three (3) meters.

The Human Settlements Commission considered conditionality social impact

and cost. The pertinent portion of its report reads:

B. Social Impact
The following factual data which have a direct bearing on
the issue of social impact were culled from the records of the
case and the evidence presented during the public hearings:

Comparison of Alignment 1 (Cuneta Fisher) and Alignment 2

(Del Pan Fernando Rein) based on the criteria of functionality,
social impact and cost
A. Functionality

(1) Number of property owners:

This issue has to do with the physical design of a highway,

inclusive of engineering factors and management
consideration

Alignment 1

73

Alignment 2

49

From both engineering and traffic management viewpoints,

it is incontestable that the straighter and shorter alignment is
preferable to one which is not. Systematically and
diagramatically, alignment 1 is straighter than alignment 2.
In fact, Director Antonio Goco of the Department of Public
Highways admitted that alignment 2 is three (3) meters
longer than alignment 1. Furthermore, alignment 1 is
definitely the contour conforming alignment to EDSA
whereas alignment 2 affords a greater radius of unnatural
curvature as it hooks slightly northward before finally
joining with Roxas Boulevard. Besides, whichever alignment
is adopted, there will be a need for a grade separator or
interchange at the Roxas Boulevard junction. From the of
highway design, it is imperative to have interchanges as far
apart as possible to avoid traffic from slow down in
negotiating the slope on the interchanges. Up north would
be the future Buendia Avenue- Roxas Boulevard
Interchange. Consequently, alignment 1 which is farther
away from Buendia Avenue than alignment 2 is the better
alignment from the viewpoint of the construction of the
grade separator or interchange, a necessary corollary to the
extension project. Finally, the choice of alignment 2 which is
longer by three (3) meters than alignment 1 could have
serious repercussions on our energy conservation drive and

(2) Incidence of non-resident owner:

Alignment 1

25 (34.3%)

Alignment 2

31 (63.3%)

(3) Number of actually affected residents:

Alignment 1

547

Alignment 2

290 (estimated)

(4) Average income of residents:

Alignment 2:
Below P350 P350 P500 P 500 P 800 P800 Pl000 Over
P1000 16 (28%) 24 (42%) 0 (14%) 5 (9%) 4 (7%)
Alignment 2: Figures not available.
It is evident from the foregoing figures that social impact is
greater on the residents of alignment 1.

C. Cost

It is obvious from the immediately table that the right- ofway acquisition cost difference factor of the two alignment is
only P269,196 and not P2M as alleged by the Department of
Public Highways and P1.2M as claimed by the oppositors.
Consequently, the cost difference factor between the two
alignments is so minimal as to be practically nil in the
consideration of the issues involved in this case. 10

The resolution of the issue of right-of-way acquisition cost

depends to a large extend on the nature of the properties to
be affected and the relative value thereof. A comparison of
alignment 1 and alignment 2 on these two points has
produced the following results:

After considering all the issues and factors, the Human Setlements
Commission made the following recommendations:

(1) Nature and number of properties involved:

Line I Line 2
Lots

Lots

Improvement

Residential

41

46

Commercial

25

24

Industrial

Church

Educational

TOTAL

72

75

11EDSA extension to Roxas

13 Boulevard is necessary and
1. The
desirable from the strictly technical viewpoint and the
overall
1 perspective of the Metro
1 Manila transport system.
2. The
1 right-of-way acquisition
1 cost difference factor is so
minimal as to influence in any way the choice of either
alignment
as the extension of_EDSA to Roxas Boulevard.
_
3. The
51negotiated sale approach
49 to compensation as
proposed should apply to a whichever alignment is selected.

(2) Relative value of properties affected:

Lots

Improvements

Total

Alignment
1

P9,300,136

P5,928,680

Alignment
2

8,314,890

6,644,130

Difference

Weighing in the balance the issues and factors of necessity,

functionality, impact, cost and property valuation as basis
Lots of compensation Improvements
for scheme
to be adopted in the instant
case, the Hearing Board takes cognizance of the following
38
34
points:

4. The factor of functionality states strongly against the

selection of alignment 2 while the factor of great social and
economic impact bears grieviously on the residents of
alignment 1.
P15,228,816
The course of the decision in this case consequently boils
down to the soul-searching and heart-rending choice
between people on one hand and progress and development
14,959,020
on the other. In deciding in favor of the latter, the Hearing
Board is not unmindful that progress and development are
carried out by the State precisely and ultimately for the
P269,796
benefit of its
people and therefore, recommends the
reverend of the extension project to alignment 1. However,
before the Government, through its implementing agencies,

particularly the Department of Public Highways, undertakes

the actual step of appropriating properties on alignment I to
pave the way for the extension the hearing Board
recommends the following as absolute. binding and
imperative preconditions:
1. The preparation, and ignore importantly, the execution of
a comprehensive and detailed plan for the relocation and
resettlement of the adversely and genuinely affected
residents of alignment I which will necessitate the
coordinative efforts of such agencies as the Human
Settlements Commission, the National Housing Authority
and other such governmental agencies. To be concrete, a self
sufficient community or human settlement complete with
infrastructure capture market, school, church and industries
for employment should be set up to enable the affected
residents of alignment 1 to maintain, their present social and
economic standing.
2. The prompt payment of fair and just compensation
through the negotiated sale approach.
Finally, the Hearing Board recommends that the Department
of Public Highways conduct public hearings before
undertaking on future expropriations of private properties
for public use.
Respectfully submitted to the Human Settlements
Commission Commissioners for consideration, final
disposition and endorsement thereof to His Excellency, the
President of the Philippines.
Makati, Metro Manila, July 4, 1977. 11
... From all the foregoing, the facts of record and recommendations of the
Human Settlements Commission, it is clear that the choice of Fernando Rein
Del Pan Streets as the line through which the Epifanio de los Santos
Avenue should be extended to Roxas Boulevard is arbitrary and should not
receive judicial approval. The respondent judge committed a grave abuse of
discretion in allowing the Republic of the Philippines to take immediate
possession of the properties sought to be expropriated.

WHEREFORE, the petition for certiorari and prohibition is hereby granted.

The order of June 14, 1979 authorizing the Republic of the Philippines to take
or enter upon the possession of the properties sought to be condemned is set
aside and the respondent Judge is permanently enjoined from taking any
further action on Civil Case No. 7001-P, entitled "Republic of the Philippines vs.
Concepcion Cabarrus Vda. de Santos, etc." except to dismiss said case.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 87335 February 12, 1990
REPUBLIC OF THE PHILIPPINES, petitioner,
vs.
CRISTINA DE KNECHT AND THE COURT OF APPEALS, respondents.
Villanueva, Talamayan, Nieva, Elegado, and Ante Law Offices for respondent
Cristina de Knecht.

GANCAYCO, J.:
The issue posed in this case is whether an expropriation proceeding that was
determined by a final judgment of this Court may be the subject of a
subsequent legislation for expropriation.
On February 20, 1979 the Republic of the Philippines filed in the Court of
First Instance (CFI) of Rizal in Pasay City an expropriation proceedings
against the owners of the houses standing along Fernando Rein-Del Pan
streets among them Cristina De Knecht (de Knecht for short) together with
Concepcion Cabarrus, and some fifteen other defendants, docketed as Civil
Case No. 7001-P.
On March 19, 1979 de Knecht filed a motion to dismiss alleging lack of
jurisdiction, pendency of appeal with the President of the Philippines,
prematureness of complaint and arbitrary and erroneous valuation of the
properties. On March 29, 1979 de Knecht filed an ex parte urgent motion for
the issuance by the trial court of a restraining order to restrain the Republic
from proceeding with the taking of immediate possession and control of the
property sought to be condemned. In June, 1979 the Republic filed a motion
for the issuance of a writ of possession of the property to be expropriated on
the ground that it had made the required deposit with the Philippine
National Bank (PNB) of 10% of the amount of compensation stated in the
complaint. In an order dated June 14, 1979 the lower court issued a writ of
possession authorizing the Republic to enter into and take possession of the

properties sought to be condemned, and created a Committee of three to

determine the just compensation for the lands involved in the proceedings.
On July 16, 1979 de Knecht filed with this Court a petition for certiorari and
prohibition docketed as G.R. No. L-51078 and directed against the order of
the lower court dated June 14, 1979 praying that the respondent be
commanded to desist from further proceeding in the expropriation action
and from implementing said order. On October 30, 1980 this Court rendered
a decision, the dispositive part of which reads as follows:
WHEREFORE, the petition for certiorari and prohibition is
hereby granted. The order of June 14, 1979 authorizing the
Republic of the Philippines to take c enter upon the
possession of the properties sought to be condemned is set
aside and the respondent Judge is permanently enjoined
from taking any further action on Civil Case No. 7001-P,
entitled 'Republic of the Philippines vs. Concepcion Cabarrus
Vda. de Santos, et al.' except to dismiss said case. 1
On August 8, 1981 defendants Maria Del Carmen Roxas Vda. de Elizalde,
Francisco Elizalde and Antonio Roxas moved to dismiss the expropriation
action in compliance with the dispositive portion of the aforesaid decision of
this Court which had become final and in order to avoid further damage to
same defendants who were denied possession of their properties. The
Republic filed a manifestation on September 7, 1981 stating, among others,
that it had no objection to the said motion to dismiss as it was in accordance
with the aforestated decision.
On September 2, 1983, the Republic filed a motion to dismiss said case due to
the enactment of the Batas Pambansa Blg. 340 expropriating the same
properties and for the same purpose. The lower court in an order of
September 2, 1983 dismissed the case by reason of the enactment of the said
law. The motion for reconsideration thereof was denied in the order of the
lower court dated December 18, 1986.
De Knecht appealed from said order to the Court of Appeals wherein in due
course a decision was rendered on December 28, 1988, 2 the dispositive part
of which reads as follows:
PREMISES CONSIDERED, the order appealed from is
hereby SET ASIDE. As prayed for in the appellant's brief
another Order is hereby issued dismissing the expropriation

proceedings (Civil Case No. 51078) before the lower court on

the ground that the choice of Fernando Rein-Del Pan Streets
as the line through which the Epifanio de los Santos Avenue
should be extended is arbitrary and should not receive
judicial approval.
No pronouncement as to Costs. 3
Hence the Republic filed that herein petition for review of the A aforestated
decision whereby the following issues were raised:
I
WHETHER OR NOT THE ENACTMENT OF BATAS
PAMBANSA BLG. 340 IS THE PROPER GROUND FOR
THE DISMISSAL OF THE EXPROPRIATION CASE.
(PROPERLY PUT, WHETHER OR NOT THE LOWER
COURT COMMITTED GRAVE ABUSE OF DIS CRETION
IN DISMISSING CIVIL CASE NO. 7001-P UPON JUDICIAL
NOTICE OF B.P. BLG. 340).
II
WHETHER OR NOT THE DPWH'S "CHOICE" OF LAND
TO BE EXPROPRIATED IS STILL AN ISSUE UNDER THE
CIRCUMSTANCES, SAID "CHOICE" HAVING BEEN
SUPPLANTED BY THE LEGISLATURE'S CHOICE.
III
WHETHER OR NOT THE LAW OF THE CASE THEORY
SHOULD BE APPLIED TO THE CASE AT BAR. 4
The petition is impressed with merit. There is no question that as early as
1977, pursuant to the Revised Administrative Code, the national
government, through the Department of Public Works and Highways began
work on what was to be the westward extension of Epifanio de los Santos
Avenue (EDSA) outfall (or outlet) of the Manila and suburbs flood control
and drainage project and the Estero Tripa de Gallina. These projects were
aimed at: (1) easing traffic congestion in the Baclaran and outlying areas; (2)
controlling flood by the construction of the outlet for the Estero Tripa de

Gallina (which drains the area of Marikina, Pasay, Manila and Paranaque);
and (3) thus completing the Manila Flood and Control and Drainage Project.
So the petitioner acquired the needed properties through negotiated
purchase starting with the lands from Taft Avenue up to Roxas Boulevard
including the lands in Fernando Rein-Del Pan streets. It acquired through
negotiated purchases about 80 to 85 percent of the lands involved in the
project whose owners did not raise any objection as to arbitrariness on the
choice of the project and of the route. It is only with respect to the remaining
10 to 15 percent along the route that the petitioner cannot negotiate through
a sales agreement with a few land owners, including de Knecht whose
holding is hardly 5% of the whole route area. Thus, as above related on
February 20, 1979 the petitioner filed the expropriation proceedings in the
Court of First Instance.
There is no question that in the decision of this Court dated October 30, 1980
in De Knecht vs. Bautista, G.R. No. L-51078, this Court held that the "choice of
the Fernando Rein-Del Pan streets as the line through which the EDSA
should be extended to Roxas Boulevard is arbitrary and should not receive
judicial approval." 5 It is based on the recommendation of the Human
Settlements Commission that the choice of Cuneta street as the line of the
extension will minimize the social impact factor as the buildings and
improvement therein are mostly motels. 6
In view of the said finding, this Court set aside the order of the trial court
dated June 14, 1979 authorizing the Republic of the Philippines to take
possession of the properties sought to be condemned and enjoined the
respondent judge from taking any further action in the case except to dismiss
the same.
Said decision having become final no action was taken by the lower court on
the said directive of this Court to dismiss the case. Subsequently B.P. Blg. 340
was enacted by the Batasang Pambansa on February 17, 1983. On the basis of
said law petitioner filed a motion to dismiss the case before the trial court
and this was granted.
On appeal by de Knecht to the Court of Appeals the appellate court held that
the decision of the Supreme Court having become final, the petitioner's right
as determined therein should no longer be disturbed and that the same has
become the law of the case between the parties involved. Thus, the appellate
court set aside the questioned order of the trial court and issued another

order dismissing the expropriation proceedings before the lower court

pursuant to the ruling in De Knecht case.
While it is true that said final judgment of this Court on the subject becomes
the law of the case between the parties, it is equally true that the right of the
petitioner to take private properties for public use upon the payment of the
just compensation is so provided in the Constitution and our laws. 7 Such
expropriation proceedings may be undertaken by the petitioner not only by
voluntary negotiation with the land owners but also by taking appropriate
court action or by legislation. 8
When on February 17, 1983 the Batasang Pambansa passed B.P. Blg. 340
expropriating the very properties subject of the present proceedings, and for
the same purpose, it appears that it was based on supervening events that
occurred after the decision of this Court was rendered in De Knecht in 1980
justifying the expropriation through the Fernando Rein-Del Pan Streets.
The social impact factor which persuaded the Court to consider this
extension to be arbitrary had disappeared. All residents in the area have been
relocated and duly compensated. Eighty percent of the EDSA outfall and
30% of the EDSA extension had been completed. Only private respondent
remains as the solitary obstacle to this project that will solve not only the
drainage and flood control problem but also minimize the traffic bottleneck
in the area.
The Solicitor General summarizing the situation said
The construction and completion of the Metro Manila Flood
Control and Drainage Project and the EDSA extension are
essential to alleviate the worsening traffic problem in the
Baclaran and Pasay City areas and the perennial flood
problems. Judicial notice may be taken that these problems
bedevil life and property not only in the areas directly
affected but also in areas much beyond. Batas Pambansa Blg.
340 was enacted to hasten 'The Project' and thus solve these
problems, and its implementation has resulted so far in an
80% completion of the EDSA outfall and a 30% completion of
the EDSA extension, all part of 'The Project'.
This instant case stands in the way of the final solution of the
above-mentioned problems, solely because the single piece
of property I occupied' by De Knecht, although already

expropriated under B.P. Blg. 340, is the only parcel of land

where Government engineers could not enter due to the
'armed' resistance offered by De Knecht, guarded and
surrounded as the lot is perennially by De Knecht's fierce
private security guards. It may thus be said that De Knecht,
without any more legal interest in the land, single-handedly
stands in the way of the completion of 'The Project' essential
to the progress of Metro Manila and surrounding areas.
Without the property she persists in occupying and without
any bloodletting, the EDSA outfall construction on both sides
of the said property cannot be joined together, and the flood
waters of Pasay, Paraaque and Marikina which flow
through the Estero Tripa de Gallina will continue to have no
way or outlet that could drain into Manila Bay. Without said
property, the EDSA extension, already 30% completed, can
in no way be finished, and traffic will continue to clog and
jam the intersections of EDSA and Taft Avenue in Baclaran
and pile up along the airport roads.
In sum, even in the face of BP340, De Knecht holds the Legislative
sovereign will and choice inutile. 9
The Court finds justification in proceeding with the said expropriation
proceedings through the Fernando Rein-Del Pan streets from ESDA to Roxas
Boulevard due to the aforestated supervening events after the rendition of
the decision of this Court in De Knecht.
B.P. Blg. 340 therefore effectively superseded the aforesaid final and
executory decision of this Court. And the trial court committed no grave
abuse of discretion in dismissing the case pending before it on the ground of
the enactment of B.P. Blg. 340.
Moreover, the said decision, is no obstacle to the legislative arm of the
Government in thereafter (over two years later in this case) making its own
independent assessment of the circumstances then prevailing as to the
propriety of undertaking the expropriation of the properties in question and
thereafter by enacting the corresponding legislation as it did in this case. The
Court agrees in the wisdom and necessity of enacting B.P. Blg. 340. Thus the
anterior decision of this Court must yield to this subsequent legislative flat.
WHEREFORE, the petition is hereby GRANTED and the questioned decision
of the Court of Appeals dated December 28, 1988 and its resolution dated

March 9, 1989 are hereby REVERSED and SET ASIDE and the order of
Branch III of the then Court of First Instance of Rizal in Pasay City in Civil
Case No. 7001-P dated September 2, 1983 is hereby reinstated without
pronouncement as to costs.
SO ORDERED.

EN BANC

In his capacity as Presiding CHICO-NAZARIO, and

Judge of the Regional Trial Court, GARCIA, JJ.

REPUBLIC OF THE PHILIPPINES, G.R. No. 166429

Branch 117, Pasay City and

Represented by Executive Secretary

PHILIPPINE INTERNATIONAL AIR

Eduardo R. Ermita, the DEPARTMENT

TERMINALS CO., INC.,

OF TRANSPORTATION AND Present:

Respondents. Promulgated:

COMMUNICATIONS (DOTC), and the

MANILA INTERNATIONAL AIRPORT DAVIDE, JR., C.J.,

December 19, 2005

AUTHORITY (MIAA), PUNO,

Petitioners, PANGANIBAN,

x---------------------------------------------------------------------- x

QUISUMBING,
YNARES-SANTIAGO,
SANDOVAL-GUTIERREZ,

DECISION
TINGA, J.:

CARPIO,
-versus- AUSTRIA-MARTINEZ,
CORONA,
CARPIO-MORALES,

The Ninoy Aquino International Airport Passenger Terminal III (NAIA 3) was
conceived, designed and constructed to serve as the countrys show window
to the world. Regrettably, it has spawned controversies. Regrettably too,
despite the apparent completion of the terminal complex way back it has not
yet been operated. This has caused immeasurable economic damage to the

CALLEJO, SR.,
AZCUNA,
HON. HENRICK F. GINGOYON, TINGA,

country, not to mention its deplorable discredit in the international

community.

In the first case that reached this Court, Agan v. PIATCO,[1] the

reimbursement for its expenses in the construction of the facilities. Still, in his

contracts which the Government had with the contractor were voided for

Separate Opinion, Justice Panganiban, joined by Justice Callejo, declared as

being contrary to law and public policy. The second case now before the Court

follows:

involves the matter of just compensation due the contractor for the terminal
complex it built. We decide the case on the basis of fairness, the same norm
that pervades both the Courts 2004 Resolution in the first case and the latest
expropriation law.

The present controversy has its roots with the promulgation of the Courts
decision in Agan v. PIATCO,[2] promulgated in 2003 (2003 Decision). This

Should government pay at all for reasonable expenses

incurred in the construction of the Terminal? Indeed it should,
otherwise it will be unjustly enriching itself at the expense of
Piatco and, in particular, its funders, contractors and investors
both local and foreign. After all, there is no question that the State
needs and will make use of Terminal III, it being part and parcel
of the critical infrastructure and transportation-related programs
of government.[5]

decision nullified the Concession Agreement for the Build-Operate-andTransfer Arrangement of the Ninoy Aquino International Airport Passenger
Terminal III entered into between the Philippine Government (Government)

PIATCO and several respondents-intervenors filed their respective motions

and the Philippine International Air Terminals Co., Inc. (PIATCO), as well as

for the reconsideration of the 2003 Decision. These motions were denied by

the amendments and supplements thereto. The agreement had authorized

the Court in its Resolution dated 21 January 2004 (2004 Resolution).[6]

PIATCO to build a new international airport terminal (NAIA 3), as well as a

However, the Court this time squarely addressed the issue of the rights of

franchise to operate and maintain the said terminal during the concession

PIATCO to refund, compensation or reimbursement for its expenses in the

period of 25 years. The contracts were nullified, among others, that Paircargo

construction of the NAIA 3 facilities. The holding of the Court on this crucial

Consortium, predecessor of PIATCO, did not possess the requisite financial

point follows:

capacity when it was awarded the NAIA 3 contract and that the agreement
was contrary to public policy.[3]

At the time of the promulgation of the 2003 Decision, the NAIA 3 facilities had
already been built by PIATCO and were nearing completion.[4] However, the
ponencia was silent as to the legal status of the NAIA 3 facilities following the
nullification of the contracts, as well as whatever rights of PIATCO for

This Court, however, is not unmindful of the reality

that the structures comprising the NAIA IPT III facility are
almost complete and that funds have been spent by PIATCO
in their construction. For the government to take over the said
facility, it has to compensate respondent PIATCO as builder
of the said structures. The compensation must be just and in
accordance with law and equity for the government can not
unjustly enrich itself at the expense of PIATCO and its
investors.[7]

After the promulgation of the rulings in Agan, the NAIA 3 facilities

have remained in the possession of PIATCO, despite the avowed intent of the
Government to put the airport terminal into immediate operation. The
Government and PIATCO conducted several rounds of negotiation regarding
the NAIA 3 facilities.[8] It also appears that arbitral proceedings were
commenced before the International Chamber of Commerce International
Court of Arbitration and the International Centre for the Settlement of
Investment Disputes,[9] although the Government has raised jurisdictional
questions before those two bodies.[10]

Then, on 21 December 2004, the Government[11] filed a Complaint for

expropriation with the Pasay City Regional Trial Court (RTC), together with
an Application for Special Raffle seeking the immediate holding of a special
raffle. The Government sought upon the filing of the complaint the issuance
of a writ of possession authorizing it to take immediate possession and control
over the NAIA 3 facilities.

January 2005 Order, now assailed in the present petition, the RTC noted that
its earlier issuance of its writ of possession was pursuant to Section 2, Rule 67
The Government also declared that it had deposited the amount of

of the 1997 Rules of Civil Procedure. However, it was observed that Republic

P3,002,125,000.00[12] (3 Billion)[13] in Cash with the Land Bank of the

Act No. 8974 (Rep. Act No. 8974), otherwise known as An Act to Facilitate the

Philippines, representing the NAIA 3 terminals assessed value for taxation

Acquisition of Right-of-Way, Site or Location for National Government

purposes.[14]

Infrastructure Projects and For Other Purposes and its Implementing Rules
and Regulations (Implementing Rules) had amended Rule 67 in many
respects.

The case[15] was raffled to Branch 117 of the Pasay City RTC, presided
by respondent judge Hon. Henrick F. Gingoyon (Hon. Gingoyon). On the
same day that the Complaint was filed, the RTC issued an Order[16] directing

There are at least two crucial differences between the respective

the issuance of a writ of possession to the Government, authorizing it to take

procedures under Rep. Act No. 8974 and Rule 67. Under the statute, the

or enter upon the possession of the NAIA 3 facilities. Citing the case of City of

Government is required to make immediate payment to the property owner

Manila v. Serrano,[17] the RTC noted that it had the ministerial duty to issue

upon the filing of the complaint to be entitled to a writ of possession, whereas

the writ of possession upon the filing of a complaint for expropriation

in Rule 67, the Government is required only to make an initial deposit with an

sufficient in form and substance, and upon deposit made by the government

authorized government depositary. Moreover, Rule 67 prescribes that the

of the amount equivalent to the assessed value of the property subject to

initial deposit be equivalent to the assessed value of the property for purposes

expropriation. The RTC found these requisites present, particularly noting

of taxation, unlike Rep. Act No. 8974 which provides, as the relevant standard

that [t]he case record shows that [the Government has] deposited the assessed

for initial compensation, the market value of the property as stated in the tax

value of the [NAIA 3 facilities] in the Land Bank of the Philippines, an

declaration or the current relevant zonal valuation of the Bureau of Internal

authorized depositary, as shown by the certification attached to their

Revenue (BIR), whichever is higher, and the value of the improvements

complaint. Also on the same day, the RTC issued a Writ of Possession.

and/or structures using the replacement cost method.

According to PIATCO, the Government was able to take possession over the
NAIA 3 facilities immediately after the Writ of Possession was issued.[18]
Accordingly, on the basis of Sections 4 and 7 of Rep. Act No. 8974 and
Section 10 of the Implementing Rules, the RTC made key qualifications to its
However, on 4 January 2005, the RTC issued another Order designed to

earlier issuances. First, it directed the Land Bank of the Philippines, Baclaran

supplement its 21 December 2004 Order and the Writ of Possession. In the 4

Branch

(LBP-Baclaran),

to

immediately

release

the

amount

of

US$62,343,175.77 to PIATCO, an amount which the RTC characterized as that

superfluous part of the Order prohibiting the plaintiffs from awarding

which the Government specifically made available for the purpose of this

concessions or leasing any part of [NAIA 3] to other parties.[20]

expropriation; and such amount to be deducted from the amount of just

compensation due PIATCO as eventually determined by the RTC. Second, the
Government was directed to submit to the RTC a Certificate of Availability of
Funds signed by authorized officials to cover the payment of just
compensation. Third, the Government was directed to maintain, preserve and
safeguard the NAIA 3 facilities or perform such as acts or activities in
preparation for their direct operation of the airport terminal, pending
expropriation proceedings and full payment of just compensation. However,
the Government was prohibited from performing acts of ownership like
awarding concessions or leasing any part of [NAIA 3] to other parties.[19]

The very next day after the issuance of the assailed 4 January 2005
Order, the Government filed an Urgent Motion for Reconsideration, which was

Thus, the present Petition for Certiorari and Prohibition under Rule 65 was filed
on 13 January 2005. The petition prayed for the nullification of the RTC orders
dated 4 January 2005, 7 January 2005, and 10 January 2005, and for the
inhibition of Hon. Gingoyon from taking further action on the expropriation
case. A concurrent prayer for the issuance of a temporary restraining order
and preliminary injunction was granted by this Court in a Resolution dated 14
January 2005.[21]

The Government, in imputing grave abuse of discretion to the acts of Hon.

Gingoyon, raises five general arguments, to wit:

set for hearing on 10 January 2005. On 7 January 2005, the RTC issued another
Order, the second now assailed before this Court, which appointed three (3)
Commissioners to ascertain the amount of just compensation for the NAIA 3
Complex. That same day, the Government filed a Motion for Inhibition of Hon.

(i) that Rule 67, not Rep. Act No. 8974, governs the present
expropriation proceedings;

Gingoyon.

(ii) that Hon. Gingoyon erred when he ordered the immediate release
The RTC heard the Urgent Motion for Reconsideration and Motion for
Inhibition on 10 January 2005. On the same day, it denied these motions in an
Omnibus Order dated 10 January 2005. This is the third Order now assailed
before this Court. Nonetheless, while the Omnibus Order affirmed the earlier
dispositions in the 4 January 2005 Order, it excepted from affirmance the

of the amount of US$62.3 Million to PIATCO considering that the assessed

value as alleged in the complaint was only P3 Billion;

(iii) that the RTC could not have prohibited the Government from
enjoining the performance of acts of ownership;

This pronouncement contains the fundamental premises which permeate this

decision of the Court. Indeed, Agan, final and executory as it is, stands as
governing law in this case, and any disposition of the present petition must
conform to the conditions laid down by the Court in its 2004 Resolution.

(iv) that the appointment of the three commissioners was erroneous;

and

The 2004 Resolution Which Is

(v) that Hon. Gingoyon should be compelled to inhibit himself from
the expropriation case.[22]

Law of This Case Generally

Permits Expropriation

Before we delve into the merits of the issues raised by the Government, it is
essential to consider the crucial holding of the Court in its 2004 Resolution in
Agan, which we repeat below:

The pronouncement in the 2004 Resolution is especially significant

to this case in two aspects, namely: (i) that PIATCO must receive payment of
just compensation determined in accordance with law and equity; and (ii)
that the government is barred from taking over NAIA 3 until such just
compensation is paid. The parties cannot be allowed to evade the directives

This Court, however, is not unmindful of the reality that

the structures comprising the NAIA IPT III facility are almost
complete and that funds have been spent by PIATCO in their
construction. For the government to take over the said facility, it
has to compensate respondent PIATCO as builder of the said
structures. The compensation must be just and in accordance
with law and equity for the government can not unjustly enrich
itself at the expense of PIATCO and its investors.[23]

laid down by this Court through any mode of judicial action, such as the
complaint for eminent domain.

It cannot be denied though that the Court in the 2004 Resolution

prescribed mandatory guidelines which the Government must observe before

it could acquire the NAIA 3 facilities. Thus, the actions of respondent judge
under review, as well as the arguments of the parties must, to merit
affirmation, pass the threshold test of whether such propositions are in accord
with the 2004 Resolution.

The Government does not contest the efficacy of this pronouncement

in the 2004 Resolution,[24] thus its application

to the case at bar is not a matter of controversy. Of course, questions such as

what is the standard of just compensation and which particular laws and
equitable principles are applicable, remain in dispute and shall be resolved
forthwith.

The Government has chosen to resort to expropriation, a remedy

available under the law, which has the added benefit of an integrated process
for the determination of just compensation and the payment thereof to
PIATCO. We appreciate that the case at bar is a highly unusual case, whereby
the Government seeks to expropriate a building complex constructed on land
which the State already owns.[25] There is an inherent illogic in the resort to
eminent domain on property already owned by the State. At first blush, since
the State already owns the property on which NAIA 3 stands, the proper
remedy should be akin to an action for ejectment.

However, the reason for the resort by the Government to expropriation

proceedings is understandable in this case. The 2004 Resolution, in requiring
the payment of just compensation prior to the takeover by the Government of

NAIA 3, effectively precluded it from acquiring possession or ownership of the

NAIA 3 through the unilateral exercise of its rights as the owner of the ground
on which the facilities stood. Thus, as things stood after the 2004 Resolution,
the right of the Government to take over the NAIA 3 terminal was
preconditioned by lawful order on the payment of just compensation to
PIATCO as builder of the structures.

The determination of just compensation could very well be agreed

upon by the parties without judicial intervention, and it appears that steps
towards that direction had been engaged in. Still, ultimately, the Government
resorted to its inherent power of eminent domain through expropriation
proceedings. Is eminent domain appropriate in the first place, with due regard
not only to the law on expropriation but also to the Courts 2004 Resolution in
Agan?

The right of eminent domain extends to personal and real property,

and the NAIA 3 structures, adhered as they are to the soil, are considered as
real property.[26] The public purpose for the expropriation is also beyond
dispute. It should also be noted that Section 1 of Rule 67 (on Expropriation)
recognizes the possibility that the property sought to be expropriated may be
titled in the name of the

Republic of the Philippines, although occupied by private individuals, and in

It is from these premises that we resolve the first question, whether Rule 67 of

such case an averment to that effect should be made in the complaint. The

the Rules of Court or Rep. Act No. 8974 governs the expropriation proceedings

instant expropriation complaint did aver that the NAIA 3 complex stands on a

in this case.

parcel of land owned by the Bases Conversion Development Authority,

another agency of [the Republic of the Philippines].[27]
Application of Rule 67 Violates

Admittedly, eminent domain is not the sole judicial recourse by which

the 2004 Agan Resolution

the Government may have acquired the NAIA 3 facilities while satisfying the
requisites in the 2004 Resolution. Eminent domain though may be the most

The Government insists that Rule 67 of the Rules of Court governs the

effective, as well as the speediest means by which such goals may be

expropriation proceedings in this case to the exclusion of all other laws. On the

accomplished. Not only does it enable immediate possession after satisfaction

other hand, PIATCO claims that it is Rep. Act No. 8974 which does apply.

of the requisites under the law, it also has a built-in procedure through which

Earlier, we had adverted to the basic differences between the statute and the

just compensation may be ascertained. Thus, there should be no question as to

procedural rule. Further elaboration is in order.

the propriety of eminent domain proceedings in this case.

Rule 67 outlines the procedure under which eminent domain may be exercised
Still, in applying the laws and rules on expropriation in the case at bar,

by the Government. Yet by no means does it serve at present as the solitary

we are impelled to apply or construe these rules in accordance with the Courts

guideline through which the State may expropriate private property. For

prescriptions in the 2004 Resolution to achieve the end effect that the

example, Section 19 of the Local Government Code governs as to the exercise

Government may validly take over the NAIA 3 facilities. Insofar as this case is

by local government units of the power of eminent domain through an

concerned, the 2004 Resolution is effective not only as a legal precedent, but as

enabling ordinance. And then there is Rep. Act No. 8974, which covers

the source of rights and prescriptions that must be guaranteed, if not enforced,

expropriation proceedings intended for national government infrastructure

in the resolution of this petition. Otherwise, the integrity and efficacy of the

projects.

rulings of this Court will be severely diminished.

Rep. Act No. 8974, which provides for a procedure eminently more favorable
to the property owner than Rule 67, inescapably applies in instances when the
national government expropriates property for national government
infrastructure projects.[28] Thus, if expropriation is engaged in by the national
government for purposes other than national infrastructure projects, the
assessed value standard and the deposit mode prescribed in Rule 67 continues
to apply.

SEC. 2. Entry of plaintiff upon depositing value with

authorized government depository. Upon the filing of the
complaint or at any time thereafter and after due notice to the
defendant, the plaintiff shall have the right to take or enter upon
the possession of the real property involved if he deposits with
the authorized government depositary an amount equivalent to
the assessed value of the property for purposes of taxation to be
held by such bank subject to the orders of the court. Such
deposit shall be in money, unless in lieu thereof the court
authorizes the deposit of a certificate of deposit of a government
bank of the Republic of the Philippines payable on demand to
the authorized government depositary.

Under both Rule 67 and Rep. Act No. 8974, the Government commences
expropriation proceedings through the filing of a complaint. Unlike in the case
of local governments which necessitate an authorizing ordinance before

In contrast, Section 4 of Rep. Act No. 8974 relevantly states:

expropriation may be accomplished, there is no need under Rule 67 or Rep.

Act No. 8974 for legislative authorization before the Government may proceed
with a particular exercise of eminent domain. The most crucial difference
between Rule 67 and Rep. Act No. 8974 concerns the particular essential step
the Government has to undertake to be entitled to a writ of possession.

SEC. 4. Guidelines for Expropriation Proceedings. Whenever it is necessary to

acquire real property for the right-of-way, site or location for any
national
government
infrastructure
project
through
expropriation, the appropriate proceedings before the proper
court under the following guidelines:
a) Upon the filing of the complaint, and after due notice
to the defendant, the implementing agency shall
immediately pay the owner of the property the amount
equivalent to the sum of (1) one hundred percent (100%)
of the value of the property based on the current relevant
zonal valuation of the Bureau of Internal Revenue (BIR);
and (2) the value of the improvements and/or structures
as determined under Section 7 hereof;

The first paragraph of Section 2 of Rule 67 provides:

...
c) In case the completion of a government infrastructure
project is of utmost urgency and importance, and there is
no existing valuation of the area concerned, the
implementing agency shall immediately pay the owner of

the property its proffered value taking into consideration

the standards prescribed in Section 5 hereof.

value with an authorized government depositary. Hence, it devotes

considerable effort to point out that Rep. Act No. 8974 does not apply in this
case, notwithstanding the undeniable reality that NAIA 3 is a national

Upon completion with the guidelines abovementioned,

the court shall immediately issue to the implementing agency an
order to take possession of the property and start the
implementation of the project.
Before the court can issue a Writ of Possession, the
implementing agency shall present to the court a certificate of
availability of funds from the proper official concerned.
...

government project. Yet, these efforts fail, especially considering the

controlling effect of the 2004 Resolution in Agan on the adjudication of this
case.

It is the finding of this Court that the staging of expropriation

proceedings in this case with the exclusive use of Rule 67 would allow for the
Government to take over the NAIA 3 facilities in a fashion that directly rebukes
our 2004 Resolution in Agan. This Court cannot sanction deviation from its own
final and executory orders.

As can be gleaned from the above-quoted texts, Rule 67 merely requires the
Government to deposit with an authorized government depositary the
assessed value of the property for expropriation for it to be entitled to a writ of
possession. On the other hand, Rep. Act No. 8974 requires that the Government
make a direct payment to the property owner before the writ may issue.
Moreover, such payment is based on the zonal valuation of the BIR in the case
of land, the value of the improvements or structures under the replacement
cost method,[29] or if no such valuation is available and in cases of utmost
urgency, the proffered value of the property to be seized.

Section 2 of Rule 67 provides that the State shall have the right to take
or enter upon the possession of the real property involved if [the plaintiff]
deposits with the authorized government depositary an amount equivalent to
the assessed value of the property for purposes of taxation to be held by such
bank subject to the orders of the court.[30] It is thus apparent that under the
provision, all the Government need do to obtain a writ of possession is to
deposit the amount equivalent to the assessed value with an authorized
government depositary.

It is quite apparent why the Government would prefer to apply Rule

67 in lieu of Rep. Act No. 8974. Under Rule 67, it would not be obliged to
immediately pay any amount to PIATCO before it can obtain the writ of
possession since all it need do is deposit the amount equivalent to the assessed

Would the deposit under Section 2 of Rule 67 satisfy the requirement

laid down in the 2004 Resolution that [f]or the government to take over the

said facility, it has to compensate respondent PIATCO as builder of the said

structures? Evidently not.

If Section 2 of Rule 67 were to apply, PIATCO would be enjoined from

THE CHAIRMAN (SEN. CAYETANO). x x x Because the Senate

believes that, you know, we have to pay the landowners
immediately not by treasury bills but by cash.
Since we are depriving them, you know, upon payment, no, of
possession, we might as well pay them as much, no, hindi lang
50 percent.

receiving a single centavo as just compensation before the Government takes

xxx

over the NAIA 3 facility by virtue of a writ of possession. Such an injunction

THE CHAIRMAN (REP. VERGARA). Accepted.

squarely contradicts the letter and intent of the 2004 Resolution. Hence, the
position of the Government sanctions its own disregard or violation the
prescription laid down by this Court that there must first be just compensation
paid to PIATCO before the Government may take over the NAIA 3 facilities.

xxx
THE CHAIRMAN (SEN. CAYETANO). Oo. Because this is really
in favor of the landowners, e.
THE CHAIRMAN (REP. VERGARA). Thats why we need to
really secure the availability of funds.
xxx

Thus, at the very least, Rule 67 cannot apply in this case without violating the

requirement in the 2004 Resolution that there must first be payment of just

THE CHAIRMAN (SEN. CAYETANO). No, no. Its the same. It

says here: iyong first paragraph, diba? Iyong zonal talagang
magbabayad muna. In other words, you know, there must be a
payment kaagad. (TSN, Bicameral Conference on the Disagreeing
Provisions of House Bill 1422 and Senate Bill 2117, August 29,
2000, pp. 14-20)

compensation to PIATCO before the Government may take over the property.

xxx

2004 Resolution. Even assuming that Rep. Act No. 8974 does not govern in this
case, it does not necessarily follow that Rule 67 should then apply. After all,
adherence to the letter of Section 2, Rule 67 would in turn violate the Courts

THE CHAIRMAN (SEN. CAYETANO). Okay, okay, no. Unanguna, it is not deposit, no. Its payment.
It is the plain intent of Rep. Act No. 8974 to supersede the system of deposit
under Rule 67 with the scheme of immediate payment in cases involving
national government infrastructure projects. The following portion of the
Senate deliberations, cited by PIATCO in its Memorandum, is worth quoting
to cogitate on the purpose behind the plain meaning of the law:

REP. BATERINA. Its payment, ho, payment. (Id., p. 63)[31]

It likewise bears noting that the appropriate standard of just

compensation is a substantive matter. It is well within the province of the
legislature to fix the standard, which it did through the enactment of Rep. Act
No. 8974. Specifically, this prescribes the new standards in determining the

to the Situation at Bar

and Complements the
2004 Agan Resolution

amount of just compensation in expropriation cases relating to national

government infrastructure projects, as well as the manner of payment thereof.
At the same time, Section 14 of the Implementing Rules recognizes the

Rep. Act No. 8974 is entitled An Act To Facilitate The Acquisition Of

continued applicability of Rule 67 on procedural aspects when it provides all

Right-Of-Way, Site Or Location For National Government Infrastructure

matters regarding defenses and objections to the complaint, issues on

Projects And For Other Purposes. Obviously, the law is intended to cover

uncertain ownership and conflicting claims, effects of appeal on the rights of

expropriation proceedings intended for national government infrastructure

the parties, and such other incidents affecting the complaint shall be resolved

projects. Section 2 of Rep. Act No. 8974 explains what are considered as

under the provisions on expropriation of Rule 67 of the Rules of Court.[32]

national government projects.

Given that the 2004 Resolution militates against the continued use of the norm
under Section 2, Rule 67, is it then possible to apply Rep. Act No. 8974? We find
that it is, and moreover, its application in this case complements rather than
contravenes the prescriptions laid down in the 2004 Resolution.

Sec. 2. National Government Projects. The term national

government projects shall refer to all national government
infrastructure, engineering works and service contracts,
including projects undertaken by government-owned and
controlled corporations, all projects covered by Republic Act No.
6957, as amended by Republic Act No. 7718, otherwise known
as the Build-Operate-and-Transfer Law, and other related and
necessary activities, such as site acquisition, supply and/or
installation of equipment and materials, implementation,
construction,
completion,
operation,
maintenance,
improvement, repair and rehabilitation, regardless of the source
of funding.

As acknowledged in the 2003 Decision, the development of NAIA 3 was made

pursuant to a build-operate-and-transfer arrangement pursuant to Republic
Act No. 6957, as amended,[33] which pertains to infrastructure or development
Rep. Act No. 8974 Fits

projects normally financed by the public sector but which are now wholly or

partly implemented by the private sector.[34] Under the build-operate-and-

soil.[38] Certainly, the NAIA 3 facilities are of such nature that they cannot just

transfer scheme, it is the project proponent which undertakes the construction,

be packed up and transported by PIATCO like a traveling circus caravan.

including the financing, of a given infrastructure facility.[35] In Tatad v.

Garcia,[36] the Court acknowledged that the operator of the EDSA Light Rail
Transit project under a BOT scheme was the owner of the facilities such as the
rail tracks, rolling stocks like the coaches, rail stations, terminals and the power
plant.[37]

Thus, the property subject of expropriation, the NAIA 3 facilities, are

real property owned by PIATCO. This point is critical, considering the
Governments insistence that the NAIA 3 facilities cannot be deemed as the
right-of-way, site or location of a national government infrastructure project,
within the coverage of Rep. Act No. 8974.

There can be no doubt that PIATCO has ownership rights over the facilities
which it had financed and constructed. The 2004 Resolution squarely
recognized that right when it mandated the payment of just compensation to
PIATCO prior to the takeover by the Government of NAIA 3. The fact that the
Government resorted to eminent domain proceedings in the first place is a
concession on its part of PIATCOs ownership. Indeed, if no such right is
recognized, then there should be no impediment for the Government to seize
control of NAIA 3 through ordinary ejectment proceedings.

There is no doubt that the NAIA 3 is not, under any sensible

contemplation, a right-of-way. Yet we cannot agree with the Governments
insistence that neither could NAIA 3 be a site or location. The petition quotes
the definitions provided in Blacks Law Dictionary of location as the specific
place or position of a person or thing and site as pertaining to a place or
location or a piece of property set aside for specific use.[39] Yet even Blacks
Law Dictionary provides that [t]he term [site] does not of itself necessarily
mean a place or tract of land fixed by definite boundaries.[40] One would
assume that the Government, to back up its contention, would be able to point
to a clear-cut rule that a site or location exclusively refers to soil, grass, pebbles
and weeds. There is none.

Since the rights of PIATCO over the NAIA 3 facilities are established, the

Indeed, we cannot accept the Governments proposition that the only

nature of these facilities should now be determined. Under Section 415(1) of

properties that may be expropriated under Rep. Act No. 8974 are parcels of

the Civil Code, these facilities are ineluctably immovable or real property, as

land. Rep. Act No. 8974 contemplates within its coverage such real property

they constitute buildings, roads and constructions of all kinds adhered to the

constituting land, buildings, roads and constructions of all kinds adhered to

purposive distinctions that would justify a variant treatment for purposes of

the soil. Section 1 of Rep. Act No. 8974, which sets the declaration of the laws

expropriation. Both the land itself and the improvements thereupon are

policy, refers to real property acquired for national government infrastructure

susceptible to private ownership independent of each other, capable of

projects are promptly paid just compensation.[41] Section 4 is quite explicit in

pecuniary estimation, and if taken from the owner, considered as a deprivation

stating that the scope of the law relates to the acquisition of real property,

of property. The owner of improvements seized through expropriation suffers

which under civil law includes buildings, roads and constructions adhered to

the same degree of loss as the owner of land seized through similar means.

the soil.

Equal protection demands that all persons or things similarly situated should
be treated alike, both as to rights conferred and responsibilities imposed. For
purposes of expropriation, parcels of land are similarly situated as the
It is moreover apparent that the law and its implementing rules

commonly provide for a rule for the valuation of improvements and/or

structures thereupon separate from that of the land on which such are

buildings or improvements constructed thereon, and a disparate treatment

between those two classes of real property infringes the equal protection
clause.

constructed. Section 2 of Rep. Act No. 8974 itself recognizes that the
improvements or structures on the land may very well be the subject of
expropriation proceedings. Section 4(a), in relation to Section 7 of the law

Even as the provisions of Rep. Act No. 8974 call for that laws

provides for the guidelines for the valuation of the improvements or structures

application in this case, the threshold test must still be met whether its

to be expropriated. Indeed, nothing in the law would prohibit the application

implementation would conform to the dictates of the Court in the 2004

of Section 7, which provides for the valuation method of the improvements

Resolution. Unlike in the case of Rule 67, the application of Rep. Act No. 8974

and or structures in the instances wherein it is necessary for the Government

will not contravene the 2004 Resolution, which requires the payment of just

to expropriate only the improvements or structures, as in this case.

compensation before any takeover of the NAIA 3 facilities by the Government.

The 2004 Resolution does not particularize the extent such payment must be
effected before the takeover, but it unquestionably requires at least some

The law classifies the NAIA 3 facilities as real properties just like the
soil to which they are adhered. Any sub-classifications of real property and
divergent treatment based thereupon for purposes of expropriation must be
based on substantial distinctions, otherwise the equal protection clause of the
Constitution is violated. There may be perhaps a molecular distinction
between soil and the inorganic improvements adhered thereto, yet there are no

degree of payment to the private property owner before a writ of possession

may issue. The utilization of Rep. Act No. 8974 guarantees compliance with
this bare minimum requirement, as it assures the private property owner the
payment of, at the very least, the proffered value of the property to be seized.
Such payment of the proffered value to the owner, followed by the issuance of
the writ of possession in favor of the Government, is precisely the schematic

under Rep. Act No. 8974, one which facially complies with the prescription laid

PIATCO is not the owner of the land on which the NAIA 3 facility is

down in the 2004 Resolution.

constructed, and it should not be entitled to just compensation that is inclusive

of the value of the land itself. It would be highly disingenuous to compensate
PIATCO for the value of land it does not own. Its entitlement to just

Clearly then, we see no error on the part of the RTC when it ruled that
Rep. Act No. 8974 governs the instant expropriation proceedings.

compensation should be limited to the value of the improvements and/or

structures themselves. Thus, the determination of just compensation cannot
include the BIR zonal valuation under Section 4 of Rep. Act No. 8974.

The Proper Amount to be Paid

under Rep. Act No. 8974

Then, there is the matter of the proper amount which should be paid
to PIATCO by the Government before the writ of possession may issue,
consonant to Rep. Act No. 8974.

Under Rep. Act No. 8974, the Government is required to immediately

pay the owner of the property the amount equivalent to the sum of (1) one
hundred percent (100%) of the value of the property based on the current
relevant zonal valuation of the [BIR]; and (2) the value of the improvements
and/or structures as determined under Section 7. As stated above, the BIR
zonal valuation cannot apply in this case, thus the amount subject to immediate

At this juncture, we must address the observation made by the Office

payment should be limited to the value of the improvements and/or structures

of the Solicitor General in behalf of the Government that there could be no BIR

as determined under Section 7, with Section 7 referring to the implementing

zonal valuations on the NAIA 3 facility, as provided in Rep. Act No. 8974, since

rules and regulations for the equitable valuation of the improvements and/or

zonal valuations are only for parcels of land, not for airport terminals. The

structures on the land. Under the present implementing rules in place, the

Court agrees with this point, yet does not see it as an impediment for the

valuation of the improvements/structures are to be based using the

application of Rep. Act No. 8974.

replacement cost method.[42] However, the replacement cost is only one of the
factors to be considered in determining the just compensation.

It must be clarified that PIATCO cannot be reimbursed or justly

compensated for the value of the parcel of land on which NAIA 3 stands.

In addition to Rep. Act No. 8974, the 2004 Resolution in Agan also
mandated that the payment of just compensation should be in accordance with
equity as well. Thus, in ascertaining the ultimate amount of just compensation,
the duty of the trial court is to ensure that such amount conforms not only to
the law, such as Rep. Act No. 8974, but to principles of equity as well.

Admittedly, there is no way, at least for the present, to immediately

ascertain the value of the improvements and structures since such valuation is
a matter for factual determination.[43] Yet Rep. Act No. 8974 permits an
expedited means by which the Government can immediately take possession
of the property without having to await precise determination of the valuation.
Section 4(c) of Rep. Act No. 8974 states that in case the completion of a
government infrastructure project is of utmost urgency and importance, and
there is no existing valuation of the area concerned, the implementing agency
shall immediately pay the owner of the property its proferred value, taking
into consideration the standards prescribed in Section 5 [of the law].[44] The
proffered value may strike as a highly subjective standard based solely on the
intuition of the government, but Rep. Act No. 8974 does provide relevant
standards by which proffered value should be based,[45] as well as the
certainty

under Section 5 of Rep. Act No. 8974, as required for judicial review of the
proffered value.
of judicial determination of the propriety of the proffered value.[46]

The Court notes that in the 10 January 2005 Omnibus Order, the RTC
In filing the complaint for expropriation, the Government alleged to

noted that the concessions agreement entered into between the Government

have deposited the amount of P3 Billion earmarked for expropriation,

and PIATCO stated that the actual cost of building NAIA 3 was not less than

representing the assessed value of the property. The making of the deposit,

US$350 Million.[47] The RTC then proceeded to observe that while Rep. Act

including the determination of the amount of the deposit, was undertaken

No. 8974 required the immediate payment to PIATCO the amount equivalent

under the erroneous notion that Rule 67, and not Rep. Act No. 8974, is the

to 100% of the value of NAIA 3, the amount deposited by the Government

applicable law. Still, as regards the amount, the Court sees no impediment to

constituted only 18% of this value. At this point, no binding import should be

recognize this sum of P3 Billion as the proffered value under Section 4(b) of

given to this observation that the actual cost of building NAIA 3 was not less

Rep. Act No. 8974. After all, in the initial determination of the proffered value,

than US$350 Million, as the final conclusions on the amount of just

the Government is not strictly required to adhere to any predetermined

compensation can come only after due ascertainment in accordance with the

standards, although its proffered value may later be subjected to judicial

standards set under Rep. Act No. 8974, not the declarations of the parties. At

review using the standards enumerated under Section 5 of Rep. Act No. 8974.

the same time, the expressed linkage between the BIR zonal valuation and the
amount of just compensation in this case, is revelatory of erroneous thought on
the part of the RTC.

How should we appreciate the questioned order of Hon. Gingoyon,

which pegged the amount to be immediately paid to PIATCO at around $62.3
Million? The Order dated 4 January 2005, which mandated such amount,

We have already pointed out the irrelevance of the BIR zonal valuation

proves problematic in that regard. While the initial sum of P3 Billion may have

as an appropriate basis for valuation in this case, PIATCO not being the owner

been based on the assessed value, a standard which should not however apply

of the land on which the NAIA 3 facilities stand. The subject order is flawed

in this case, the RTC cites without qualification Section 4(a) of Rep. Act No.

insofar as it fails to qualify that such standard is inappropriate.

8974 as the basis for the amount of $62.3 Million, thus leaving the impression
that the BIR zonal valuation may form part of the basis for just compensation,
which should not be the case. Moreover, respondent judge made no attempt to

It does appear that the amount of US$62.3 Million was based on the

apply the enumerated guidelines for determination of just compensation

certification issued by the LBP-Baclaran that the Republic of the Philippines

maintained a total balance in that branch amounting to such amount. Yet the

dated 5 January 2005 fails to establish such integral fact, and in the absence of

actual representation of the $62.3 Million is not clear. The Land Bank

contravening proof, the proffered value of P3 Billion, as presented by the

Certification expressing such amount does state that it was issued upon

Government, should prevail.

request of the Manila International Airport Authority purportedly as guaranty

deposit for the expropriation complaint.[48] The Government claims in its
Memorandum that the entire amount was made available as a guaranty fund
for the final and executory judgment of the trial court, and not merely for the
issuance of the writ of possession.[49] One could readily conclude that the
entire amount of US$62.3 Million was intended by the Government to answer
for whatever guaranties may be required for the purpose of the expropriation
complaint.

Strikingly, the Government submits that assuming that Rep. Act No.
8974 is applicable, the deposited amount of P3 Billion should be considered as
the proffered value, since the amount was based on comparative values made
by the City Assessor.[51] Accordingly, it should be deemed as having faithfully
complied with the requirements of the statute.[52] While the Court agrees that
P3 Billion should be considered as the correct proffered value, still we cannot
deem the Government as having faithfully complied with Rep. Act No. 8974.
For the law plainly requires direct payment to the property owner, and not a

Still, such intention the Government may have had as to the entire
US$62.3 Million is only inferentially established. In ascertaining the proffered

mere deposit with the authorized government depositary. Without such direct
payment, no writ of possession may be obtained.

value adduced by the Government, the amount of P3 Billion as the amount

deposited characterized in the complaint as to be held by [Land Bank] subject
to the [RTCs] orders,[50] should be deemed as controlling. There is no clear
evidence that the Government intended to offer US$62.3 Million as the initial
payment of just compensation, the wording of the Land Bank Certification
notwithstanding, and credence should be given to the consistent position of

Writ of Possession May Not

Be Implemented Until Actual
Receipt by PIATCO of Proferred

the Government on that aspect.

Value

In any event, for the RTC to be able to justify the payment of US$62.3
Million to PIATCO and not P3 Billion Pesos, he would have to establish that
the higher amount represents the valuation of the structures/improvements,
and not the BIR zonal valuation on the land wherein NAIA 3 is built. The Order

The Court thus finds another error on the part of the RTC. The RTC
authorized the issuance of the writ of possession to the Government
notwithstanding the fact that no payment of any amount had yet been made

to PIATCO, despite the clear command of Rep. Act No. 8974 that there must

the inherent unease attending expropriation proceedings with a position of

first be payment before the writ of possession can issue. While the RTC did

fundamental equity. While expropriation proceedings have always demanded

direct the LBP-Baclaran to immediately release the amount of US$62 Million to

just compensation in exchange for private property, the previous deposit

PIATCO, it should have likewise suspended the writ of possession, nay,

requirement impeded immediate compensation to the private owner,

withdrawn it altogether, until the Government shall have actually paid

especially in cases wherein the determination

PIATCO. This is the inevitable consequence of the clear command of Rep. Act
No. 8974 that requires immediate payment of the initially determined amount

of the final amount of compensation would prove highly disputed. Under the

of just compensation should be effected. Otherwise, the overpowering

new modality prescribed by Rep. Act No. 8974, the private owner sees

intention of Rep. Act No. 8974 of ensuring payment first before transfer of

immediate monetary recompense with the same degree of speed as the taking

repossession would be eviscerated.

of his/her property.

Rep. Act No. 8974 represents a significant change from previous

expropriation laws such as Rule 67, or even Section 19 of the Local Government
Code. Rule 67 and the Local Government Code merely provided that the
Government deposit the initial amounts[53] antecedent to acquiring
possession of the property with, respectively, an authorized

While eminent domain lies as one of the inherent powers of the State,
there is no requirement that it undertake a prolonged procedure, or that the
payment of the private owner be protracted as far as practicable. In fact, the
expedited procedure of payment, as highlighted under Rep. Act No. 8974, is

Government depositary[54] or the proper court.[55] In both cases, the private

inherently more fair, especially to the layperson who would be hard-pressed

owner does not receive compensation prior to the deprivation of property. On

to fully comprehend the social value of expropriation in the first place.

the other hand, Rep. Act No. 8974 mandates immediate payment of the initial

Immediate payment placates to some degree whatever ill-will that arises from

just compensation prior to the issuance of the writ of possession in favor of the

expropriation, as well as satisfies the demand of basic fairness.

Government.

The Court has the duty to implement Rep. Act No. 8974 and to direct
Rep. Act No. 8974 is plainly clear in imposing the requirement of immediate

compliance with the requirement of immediate payment in this case.

prepayment, and no amount of statutory deconstruction can evade such

Accordingly, the Writ of Possession dated 21 December 2004 should be held in

requisite. It enshrines a new approach towards eminent domain that reconciles

abeyance, pending proof of actual payment by the Government to PIATCO of

In deciding this question, the 2004 Resolution in Agan cannot be ignored,

the proffered value of the NAIA 3 facilities, which totals P3,002,125,000.00.

particularly the declaration that [f]or the government to take over the said
facility, it has to compensate respondent PIATCO as builder of the said
structures. The obvious import of this holding is that unless PIATCO is paid
just compensation, the Government is barred from taking over, a phrase which
in the strictest sense could encompass even a bar of physical possession of

Rights of the Government

NAIA 3, much less operation of the facilities.

upon Issuance of the Writ

of Possession
There are critical reasons for the Court to view the 2004 Resolution less
stringently, and thus allow the operation by the Government of NAIA 3 upon
the effectivity of the Writ of Possession. For one, the national prestige is
Once the Government pays PIATCO the amount of the proffered value of P3
Billion, it will be entitled to the Writ of Possession. However, the Government
questions the qualification imposed by the RTC in its 4 January 2005 Order
consisting of the prohibition on the Government from performing acts of
ownership such as awarding concessions or leasing any part of NAIA 3 to other

diminished every day that passes with the NAIA 3 remaining mothballed. For
another, the continued non-use of the facilities contributes to its physical
deterioration, if it has not already. And still for another, the economic benefits
to the Government and the country at large are beyond dispute once the NAIA
3 is put in operation.

parties. To be certain, the RTC, in its 10 January 2005 Omnibus Order, expressly
stated that it was not affirming the superfluous part of the Order [of 4 January
2005] prohibiting the plaintiffs from awarding concessions or leasing any part

Rep. Act No. 8974 provides the appropriate answer for the standard that

of NAIA [3] to other parties.[56] Still, such statement was predicated on the

governs the extent of the acts the Government may be authorized to perform

notion that since the Government was not yet the owner of NAIA 3 until final

upon the issuance of the writ of possession. Section 4 states that the court shall

payment of just compensation, it was obviously incapacitated to perform such

immediately issue to the implementing agency an order to take possession of

acts of ownership.

the property and start the implementation of the project. We hold that
accordingly, once the Writ of Possession is effective, the Government itself is
authorized to perform the acts that are essential to the operation of the NAIA
3 as an international airport terminal upon the effectivity of the Writ of
Possession. These would include the repair, reconditioning and improvement

of the complex, maintenance of the existing facilities and equipment,

At the same time, Tagle conforms to the obvious, that there is no transfer of

installation of new facilities and equipment, provision of services and facilities

ownership as of yet by virtue of the writ of possession. Tagle may concede that

pertaining to the facilitation of air traffic and transport, and other services that

the Government is entitled to exercise more than just the right of possession by

are integral to a modern-day international airport.

virtue of the writ of possession, yet it cannot be construed to grant the

Government the entire panoply of rights that are available to the owner.

The Governments position is more expansive than that adopted by the

Certainly, neither Tagle nor any other case or law, lends support to the

Court. It argues that with the writ of possession, it is enabled to perform acts

Governments proposition that it acquires beneficial or equitable ownership of

de jure on the expropriated property. It cites Republic v. Tagle,[57] as well as the

the expropriated property merely through the writ of possession.

statement therein that the expropriation of real property does not include mere
physical entry or occupation of land, and from them concludes that its mere
physical entry and occupation of the property fall short of the taking of title,
which includes all the rights that may be exercised by an owner over the subject

Indeed, this Court has been vigilant in defense of the rights of the property

property.

owner who has been validly deprived of possession, yet retains legal title over
the expropriated property pending payment of just compensation. We
reiterated the various doctrines of such import in our recent holding in Republic
v. Lim:[60]

This conclusion is indeed lifted directly from statements in Tagle,[58]

but not from the ratio decidendi of that case. Tagle concerned whether a writ of
possession in favor of the Government was still necessary in light of the fact
that it was already in actual possession of the property. In ruling that the
Government was entitled to the writ of possession, the Court in Tagle explains
that such writ vested not only physical possession, but also the legal right to
possess the property. Continues the Court, such legal right to possess was

The recognized rule is that title to the property

expropriated shall pass from the owner to the expropriator only
upon full payment of the just compensation. Jurisprudence on
this settled principle is consistent both here and in other
democratic jurisdictions. In Association of Small Landowners in the
Philippines, Inc. et al., vs. Secretary of Agrarian Reform[[61]], thus:

particularly important in the case, as there was a pending suit against the
Republic for unlawful detainer, and the writ of possession would serve to
safeguard the Government from eviction.[59]

Title to property which is the subject of

condemnation proceedings does not vest the
condemnor until the judgment fixing just
compensation is entered and paid, but the
condemnors title relates back to the date on which
the petition under the Eminent Domain Act, or
the commissioners report under the Local
Improvement Act, is filed.

x x x Although the right to appropriate

and use land taken for a canal is complete at the
time of entry, title to the property taken remains
in the owner until payment is actually made.
(Emphasis supplied.)

Clearly, without full payment of just compensation, there

can be no transfer of title from the landowner to the expropriator.
Otherwise stated, the Republics acquisition of ownership is
conditioned upon the full payment of just compensation within a
reasonable time.

In Kennedy v. Indianapolis, the US Supreme

Court cited several cases holding that title to
property does not pass to the condemnor until
just compensation had actually been made. In
fact, the decisions appear to be uniform to this
effect. As early as 1838, in Rubottom v. McLure, it
was held that actual payment to the owner of the
condemned property was a condition precedent
to the investment of the title to the property in
the State albeit not to the appropriation of it to
public use. In Rexford v. Knight, the Court of
Appeals of New York said that the construction
upon the statutes was that the fee did not vest in
the State until the payment of the compensation
although the authority to enter upon and
appropriate the land was complete prior to the
payment. Kennedy further said that both on
principle and authority the rule is . . . that the
right to enter on and use the property is
complete, as soon as the property is actually
appropriated under the authority of law for a
public use, but that the title does not pass from
the owner without his consent, until just
compensation has been made to him.

Significantly, in Municipality of Bian v. Garcia[[62]] this

Court ruled that the expropriation of lands consists of two stages,
to wit:

Our own Supreme Court has held in

Visayan Refining Co. v. Camus and Paredes, that:

It is only upon the completion of these two stages that

expropriation is said to have been completed. In Error! Hyperlink
reference not valid.[[63]] , we ruled that, the process is not
completed until payment of just compensation. Thus, here, the
failure of the Republic to pay respondent and his predecessors-ininterest for a period of 57 years rendered the expropriation
process incomplete.

If the laws which we have exhibited or

cited in the preceding discussion are attentively
examined it will be apparent that the method of
expropriation adopted in this jurisdiction is
such as to afford absolute reassurance that no
piece of land can be finally and irrevocably
taken from an unwilling owner until
compensation is paid....(Emphasis supplied.)

x x x The first is concerned with the

determination of the authority of the plaintiff to
exercise the power of eminent domain and the
propriety of its exercise in the context of the facts
involved in the suit. It ends with an order, if not
of dismissal of the action, of condemnation
declaring that the plaintiff has a lawful right to
take the property sought to be condemned, for the
public use or purpose described in the complaint,
upon the payment of just compensation to be
determined as of the date of the filing of the
complaint x x x.
The second phase of the eminent domain
action is concerned with the determination by the
court of the just compensation for the property
sought to be taken. This is done by the court with
the assistance of not more than three (3)
commissioners. x x x.

Lim serves fair warning to the Government and its agencies who consistently
refuse to pay just compensation due to the private property owner whose
property had been

In Lim, the Court went as far as to countenance, given the exceptional

circumstances of that case, the reversion of the validly expropriated property

expropriated. At the same time, Lim emphasizes the fragility of the rights of

to private ownership due to the failure of the Government to pay just

the Government as possessor pending the final payment of just compensation,

compensation in that case.[64] It was noted in that case that the Government

without diminishing the potency of such rights. Indeed, the public policy,

deliberately refused to pay just compensation. The Court went on to rule that

enshrined foremost in the Constitution, mandates that the Government must

in cases where the government failed to pay just compensation within five (5)

pay for the private property it expropriates. Consequently, the proper judicial

years from the finality of the judgment in the expropriation proceedings, the

attitude is to guarantee compliance with this primordial right to just

owners concerned shall have the right to recover possession of their

compensation.

property.[65]

Final Determination of Just

Compensation Within 60 Days

Rep. Act No. 8974 mandates a speedy method by which the final
determination of just compensation may be had. Section 4 provides:

The issuance of the writ of possession does not write finis to the expropriation
proceedings. As earlier pointed out, expropriation is not completed until
payment to the property owner of just compensation. The proffered value
stands as merely a provisional determination of the amount of just
compensation, the payment of which is sufficient to transfer possession of the
property to the Government. However, to effectuate the transfer of ownership,
it is necessary for the Government to pay the property owner the final just
compensation.

In the event that the owner of the property contests the

implementing agencys proffered value, the court shall determine
the just compensation to be paid the owner within sixty (60) days
from the date of filing of the expropriation case. When the
decision of the court becomes final and executory, the
implementing agency shall pay the owner the difference between
the amount already paid and the just compensation as determined
by the court.

We hold that this provision should apply in this case. The sixty (60)day period prescribed in Rep. Act No. 8974 gives teeth to the laws avowed
policy to ensure that owners of real property acquired for national government

The next argument for consideration is the claim of the Government that the

infrastructure projects are promptly paid just compensation.[66] In this case,

RTC erred in appointing the three commissioners in its 7 January 2005 Order

there already has been irreversible delay in the prompt payment of PIATCO of

without prior consultation with either the Government or PIATCO, or without

just compensation, and it is no longer possible for the RTC to determine the

affording the Government the opportunity to object to the appointment of

just compensation due PIATCO within sixty (60) days from the filing of the

these commissioners. We can dispose of this argument without complication.

complaint last 21 December 2004, as contemplated by the law. Still, it is feasible

to effectuate the spirit of the law by requiring the trial court to make such
determination within sixty (60) days from finality of this decision, in

It must be noted that Rep. Act No. 8974 is silent on the appointment of

accordance with the guidelines laid down in Rep. Act No. 8974 and its

commissioners tasked with the ascertainment of just compensation.[67] This

Implementing Rules.

protocol though is sanctioned under Rule 67. We rule that the appointment of
commissioners under Rule 67 may be resorted to, even in expropriation
proceedings under Rep. Act No. 8974, since the application of the provisions

Of course, once the amount of just compensation has been finally

of Rule 67 in that regard do not conflict with the statute. As earlier stated,

determined, the Government is obliged to pay PIATCO the said amount. As

Section 14 of the Implementing Rules does allow such other incidents affecting

shown in Lim and other like-minded cases, the Governments refusal to make

the complaint to be resolved under the provisions on expropriation of Rule 67

such payment is indubitably actionable in court.

of the Rules of Court. Even without Rule 67, reference during trial to a
commissioner of the examination of an issue of fact is sanctioned under Rule
32 of the Rules of Court.

But while the appointment of commissioners under the aegis of Rule 67 may
be sanctioned in expropriation proceedings under Rep. Act No. 8974, the
standards to be observed for the determination of just compensation are
provided not in Rule 67 but in the statute. In particular, the governing
standards for the determination of just compensation for the NAIA 3 facilities
Appointment of Commissioners

are found in Section 10 of the Implementing Rules for Rep. Act No. 8974, which

provides for the replacement cost method in the valuation of improvements

and structures.[68]

Nothing in Rule 67 or Rep. Act No. 8974 requires that the RTC consult with the
parties in the expropriation case on who should be appointed as
commissioners. Neither does the Court feel that such a requirement should be
imposed in this case. We did rule in Municipality of Talisay v. Ramirez[69] that
there is nothing to prevent [the trial court] from seeking the recommendations
of the parties on [the] matter [of appointment of commissioners], the better to
ensure their fair representation.[70] At the same time, such solicitation of

Insufficient Ground for Inhibition

of Respondent Judge

recommendations is not obligatory on the part of the court, hence we cannot

impute error on the part of the RTC in its exercise of solitary discretion in the
appointment of the commissioners.

The final argument for disposition is the claim of the Government is that Hon.
Gingoyon has prejudged the expropriation case against the Governments
cause and, thus, should be required to inhibit himself. This grave charge is
predicated on facts which the Government characterizes as undeniable. In

What Rule 67 does allow though is for the parties to protest the appointment
of any of these commissioners, as provided under Section 5 of the Rule. These
objections though must be made filed within ten (10) days from service of the
order of appointment of the commissioners.[71] In this case, the proper
recourse of the Government to challenge the choice of the commissioners is to

particular, the Government notes that the 4 January 2005 Order was issued motu
proprio, without any preceding motion, notice or hearing. Further, such order,
which directed the payment of US$62 Million to PIATCO, was attended with
error in the computation of just compensation. The Government also notes that
the said Order was issued even before summons had been served on PIATCO.

file an objection with the trial court, conformably with Section 5, Rule 67, and
not as it has done, assail the same through a special civil action for certiorari.
Considering that the expropriation proceedings in this case were effectively
halted seven (7) days after the Order appointing the commissioners,[72] it is

The disqualification of a judge is a deprivation of his/her judicial power[73]

permissible to allow the parties to file their objections with the RTC within five

and should not be allowed on the basis of mere speculations and surmises. It

(5) days from finality of this decision.

certainly cannot be predicated on the adverse nature of the judges rulings

towards the movant for inhibition, especially if these rulings are in accord with

law. Neither could inhibition be justified merely on the erroneous nature of the
rulings of the judge. We emphasized in Webb v. People:[74]

To prove bias and prejudice on the part of respondent

judge, petitioners harp on the alleged adverse and erroneous
rulings of respondent judge on their various motions. By
themselves, however, they do not sufficiently prove bias and
prejudice to disqualify respondent judge. To be disqualifying,
the bias and prejudice must be shown to have stemmed from an
extrajudicial source and result in an opinion on the merits on
some basis other than what the judge learned from his
participation in the case. Opinions formed in the course of
judicial proceedings, although erroneous, as long as they are
based on the evidence presented and conduct observed by the
judge, do not prove personal bias or prejudice on the part of the
judge. As a general rule, repeated rulings against a litigant, no
matter how erroneous and vigorously and consistently
expressed, are not a basis for disqualification of a judge on
grounds of bias and prejudice. Extrinsic evidence is required to
establish bias, bad faith, malice or corrupt purpose, in addition
to the palpable error which may be inferred from the decision
or order itself. Although the decision may seem so erroneous as
to raise doubts concerning a judge's integrity, absent extrinsic
evidence, the decision itself would be insufficient to establish a
case against the judge. The only exception to the rule is when
the error is so gross and patent as to produce an ineluctable
inference of bad faith or malice.[75]

The Governments contentions against Hon. Gingoyon are severely undercut

by the fact that the 21 December 2004 Order, which the 4 January 2005 Order
sought to rectify, was indeed severely flawed as it erroneously applied the
provisions of Rule 67 of the Rules of Court, instead of Rep. Act No. 8974, in
ascertaining compliance with the requisites for the issuance of the writ of
possession. The 4 January

respects. Still, at least, the 4 January 2005 Order correctly reformed the most
basic premise of the case that Rep. Act No. 8974 governs the expropriation
2005 Order, which according to the Government establishes Hon. Gingoyons

proceedings.

bias, was promulgated precisely to correct the previous error by applying the
correct provisions of law. It would not speak well of the Court if it sanctions a

Nonetheless, the Government belittles Hon. Gingoyons invocation of Section

judge for wanting or even attempting to correct a previous erroneous order

5(g), Rule 135 as patently without merit. Certainly merit can be seen by the fact

which precisely is the right move to take.

that the 4 January 2005 Order reoriented the expropriation proceedings

towards the correct governing law. Still, the Government claims that the
unilateral act of the RTC did not conform to law or justice, as it was not

Neither are we convinced that the motu proprio issuance of the 4 January 2005

afforded the right to be heard.

Order, without the benefit of notice or hearing, sufficiently evinces bias on the
part of Hon. Gingoyon. The motu proprio amendment by a court of an erroneous
order previously issued may be sanctioned depending on the circumstances,

The Court would be more charitably disposed towards this argument

in line with the long-recognized principle that every court has inherent power

if not for the fact that the earlier order with the 4 January 2005 Order sought to

to do all things reasonably necessary for the administration of justice within

correct was itself issued without the benefit of any hearing. In fact, nothing

the scope of its jurisdiction.[76] Section 5(g), Rule 135 of the Rules of Court

either in Rule 67 or Rep. Act No. 8975 requires the conduct of a hearing prior

further recognizes the inherent power of courts to amend and control its

to the issuance of the writ of possession, which by design is available

process and orders so as to make them conformable to law and justice,[77] a

immediately upon the filing of the complaint provided that the requisites

power which Hon. Gingoyon noted in his 10 January 2005 Omnibus Order.[78]

attaching thereto are present. Indeed, this expedited process for the obtention

This inherent power includes the right of the court to reverse itself, especially

of a writ of possession in expropriation cases comes at the expense of the rights

when in its honest opinion it has committed an error or mistake in judgment,

of the property owner to be heard or to be deprived of possession. Considering

and that to adhere to its decision will cause injustice to a party litigant.[79]

these predicates, it would be highly awry to demand that an order modifying

the earlier issuance of a writ of possession in an expropriation case be barred
until the staging of a hearing, when the issuance of the writ of possession itself

Certainly, the 4 January 2005 Order was designed to make the RTCs previous
order conformable to law and justice, particularly to apply the correct law of
the case. Of course, as earlier established, this effort proved incomplete, as the
4 January 2005 Order did not correctly apply Rep. Act No. 8974 in several

is not subject to hearing. Perhaps the conduct of a hearing under these

circumstances would be prudent. However, hearing is not mandatory, and the
failure to conduct one does not establish the manifest bias required for the
inhibition of the judge.

Indeed, every losing litigant in any case can resort to claiming that the judge
was biased, and he/she will gain a sympathetic ear from friends, family, and
The Government likewise faults Hon. Gingoyon for using the amount of

people who do not understand the judicial process. The test in believing such

US$350 Million as the basis for the 100% deposit under Rep. Act No. 8974. The

a proposition should not be the vehemence of the litigants claim of bias, but

Court has noted that this statement was predicated on the erroneous belief that

the Courts judicious estimation, as people who know better than to believe any

the BIR zonal valuation applies as a standard for determination of just

old cry of wolf!, whether such bias has been irrefutably exhibited.

compensation in this case. Yet this is manifest not of bias, but merely of error
on the part of the judge. Indeed, the Government was not the only victim of
the errors of the RTC in the assailed orders. PIATCO itself was injured by the
issuance by the RTC of the writ of possession, even though the former had yet
to be paid any amount of just compensation. At the same time, the Government
was also prejudiced by the erroneous ruling of the RTC that the amount of
US$62.3 Million, and not P3 Billion, should be released to PIATCO.

The Court acknowledges that it had been previously held that at the
The Court has not been remiss in pointing out the multiple errors
committed by the RTC in its assailed orders, to the prejudice of both parties.
This attitude of error towards all does not ipso facto negate the charge of bias.
Still, great care should be had in requiring the inhibition of judges simply
because the magistrate did err. Incompetence may be a ground for
administrative sanction, but not for inhibition, which requires lack of
objectivity or impartiality to sit on a case.

very first sign of lack of faith and trust in his actions, whether well-grounded
or not, the judge has no other alternative but to inhibit himself from the
case.[80] But this doctrine is qualified by the entrenched rule that a judge may
not be legally prohibited from sitting in a litigation, but when circumstances
appear that will induce doubt to his honest actuations and probity in favor of
either party, or incite such state of mind, he should conduct a careful selfexamination. He should exercise his discretion in a way that the people's faith
in the Courts of Justice is not impaired.[81] And a self-assessment by the judge
that he/she is not impaired to hear the case will be respected by the Court

The Court should necessarily guard against adopting a standard that

a judge should be inhibited from hearing the case if one litigant loses trust in
the judge. Such loss of trust on the part of the Government may be palpable,
yet inhibition cannot be grounded merely on the feelings of the party-litigants.

absent any evidence to the contrary. As held in Chin v. Court of Appeals:

An allegation of prejudgment, without more, constitutes

mere conjecture and is not one of the "just and valid reasons"
contemplated in the second paragraph of Rule 137 of the Rules of
Court for which a judge may inhibit himself from hearing the case.
We have repeatedly held that mere suspicion that a judge is
partial to a party is not enough. Bare allegations of partiality and
prejudgment will not suffice in the absence of clear and
convincing evidence to overcome the presumption that the judge
will undertake his noble role to dispense justice according to law
and evidence and without fear or favor. There should be adequate
evidence to prove the allegations, and there must be showing that
the judge had an interest, personal or otherwise, in the
prosecution of the case. To be a disqualifying circumstance, the
bias and prejudice must be shown to have stemmed from an
extrajudicial source and result in an opinion on the merits on some
basis other than what the judge learned from his participation in
the case.[82]

(2) Rep. Act No. 8974 applies in this case, particularly insofar as it requires the
immediate payment by the Government of at least the proffered value of the
NAIA 3 facilities to PIATCO and provides certain valuation standards or
methods for the determination of just compensation.

(3) Applying Rep. Act No. 8974, the implementation of Writ of Possession in
favor of the Government over NAIA 3 is held in abeyance until PIATCO is
directly paid the amount of P3 Billion, representing the proffered value of
NAIA 3 under Section 4(c) of the law.

The mere vehemence of the Governments claim of bias does not translate to
clear and convincing evidence of impairing bias. There is no sufficient ground

(4) Applying Rep. Act No. 8974, the Government is authorized to start the

to direct the inhibition of Hon. Gingoyon from hearing the expropriation case.

implementation of the NAIA 3 Airport terminal project by performing the acts

that are essential to the operation of the NAIA 3 as an international airport
terminal upon the effectivity of the Writ of Possession, subject to the conditions

In conclusion, the Court summarizes its rulings as follows:

above-stated. As prescribed by the Court, such authority encompasses the

repair, reconditioning and improvement of the complex, maintenance of the
existing facilities and equipment, installation of new facilities and equipment,
provision of services and facilities pertaining to the facilitation of air traffic and

(1) The 2004 Resolution in Agan sets the base requirement that has to be

transport, and other services that are integral to a modern-day international

observed before the Government may take over the NAIA 3, that there must

airport.[83]

be payment to PIATCO of just compensation in accordance with law and

equity. Any ruling in the present expropriation case must be conformable to
the dictates of the Court as pronounced in the Agan cases.

(5) The RTC is mandated to complete its determination of the just

compensation within sixty (60) days from finality of this Decision. In doing so,

the RTC is obliged to comply with law and equity as ordained in Again and the

WHEREFORE, the Petition is GRANTED in PART with respect to the orders

standard set under Implementing Rules of Rep. Act No. 8974 which is the

dated 4 January 2005 and 10 January 2005 of the lower court. Said orders are

replacement cost method as the standard of valuation of structures and

AFFIRMED with the following MODIFICATIONS:

improvements.

1)

The implementation of the Writ of Possession dated 21 December

(6) There was no grave abuse of discretion attending the RTC Order

2005 is HELD IN ABEYANCE, pending payment by petitioners to

appointing the commissioners for the purpose of determining just

PIATCO of the amount of Three Billion Two Million One

compensation. The provisions on commissioners under Rule 67 shall apply

Hundred Twenty Five Thousand Pesos (P3,002,125,000.00),

insofar as they are not inconsistent with Rep. Act No. 8974, its Implementing

representing the proffered value of the NAIA 3 facilities;

Rules, or the rulings of the Court in Agan.

2)

Petitioners, upon the effectivity of the Writ of Possession, are

authorized start the implementation of the Ninoy Aquino
International Airport Pasenger Terminal III project by performing
the acts that are essential to the operation of the said International

(7) The Government shall pay the just compensation fixed in the decision of
the trial court to PIATCO immediately upon the finality of the said decision.

Airport Passenger Terminal project;

3)

RTC Branch 117 is hereby directed, within sixty (60) days from
finality of this Decision, to determine the just compensation to be
paid to PIATCO by the Government.

(8) There is no basis for the Court to direct the inhibition of Hon.
Gingoyon.
The Order dated 7 January 2005 is AFFIRMED in all respects subject to
the qualification that the parties are given ten (10) days from finality of this
All told, the Court finds no grave abuse of discretion on the part of the
RTC to warrant the nullification of the questioned orders. Nonetheless,
portions of these orders should be modified to conform with law and the
pronouncements made by the Court herein.

Decision to file, if they so choose, objections to the appointment of the

commissioners decreed therein.

The Temporary Restraining Order dated 14 January 2005 is hereby

LIFTED.

No pronouncement as to costs.

SO ORDERED.