Ynot v.

Intermediate Appellate Court

GR No. L-74457, March 20, 1987
FACTS: In 1980 President Marcos amended Executive Order No. 626-A which orders that no carabao and carabeef shall
be transported from one province to another; such violation shall be subject to confiscation and forfeiture by the
government, to be distributed to charitable institutions and other similar institutions as the Chairman of the National
Meat Inspection Commission may see fit for the carabeef and to deserving farmers through dispersal as the Director of
Animal Industry may see fit in the case of the carabaos.
On January 13, 1984, Petitioners 6 carabaos were confiscated by the police station commander of Barotac Nuevo,
Iloilo for having been transported from Masbate to Iloilo in violation of EO 626-A. He issued a writ for replevin,
challenging the constitutionality of said EO. The trial court sustained the confiscation of the animals and declined to
rule on the validity of the law on the ground that it lacked authority to do so. Its decision was affirmed by the IAC.
Hence, this petition for review filed by Petitioner.
ISSUE: Whether police power is properly enforced.
HELD: NO. The protection of the general welfare is the particular function of the police power which both restraints and
is restrained by due process. The police power is simply defined as the power inherent in the State to regulate liberty
and property for the promotion of the general welfare. As long as the activity or the property has some relevance to
the public welfare, its regulation under the police power is not only proper but necessary. In the case at bar, E.O.626-A
has the same lawful subject as the original executive order (E.O. 626 as cited in Toribio case) but NOT the same lawful
method. The reasonable connection between the means employed and the purpose sought to be achieved by the
questioned measure is missing. The challenged measure is an invalid exercise of the police power because the method
employed to conserve the carabaos is not reasonably necessary to the purpose of the law and, worse, is unduly
oppressive.
SOCIAL JUSTICE SOCIETY (SJS ) et al. vs.
HON. JOSE L. ATIENZA, JR., in his capacity as Mayor of the City of Manila

G.R. No. 156052 March 7, 2007

Facts

Ordinance No. 8027 enacted by the Sangguniang Panglungsod of Manila reclassified the area from industrial to
commercial and directed the owners and operators of businesses disallowed to cease and desist from operating their
businesses within six months from the date of effectivity of the ordinance. Among the businesses situated in the area
are the so-called Pandacan Terminals of the oil companies Caltex (Philippines), Inc., Petron Corporation and Pilipinas
Shell Petroleum Corporation.

However, the City of Manila and the Department of Energy (DOE) entered into a memorandum of understanding (MOU)
with the oil companies in which they agreed that the scaling down of the Pandacan Terminals [was] the most viable
and practicable option. In the MOU, the oil companies were required to remove 28 tanks starting with the LPG spheres
and to commence work for the creation of safety buffer and green zones surrounding the Pandacan Terminals. In
exchange, the City Mayor and the DOE will enable the oil companies to continuously operate within the limited area
resulting from joint operations and the scale down program. The Sangguniang Panlungosod ratified the MOU in
Resolution No. 97.

Petitioners pray for a mandamus to be issued against Mayor Atienza to enforce Ordinance No. 8027 and order the
immediate removal of the terminals of the oil companies.

Issue

Whether respondent has the mandatory legal duty to enforce Ordinance No. 8027 and order the removal of the
Pandacan Terminals.

Ruling

Yes. The mayor has the mandatory legal duty to enforce Ordinance No. 8027 because the Local Government Code
imposes upon respondent the duty, as city mayor, to enforce all laws and ordinances relative to the governance of
the city. One of these is Ordinance No. 8027. As the chief executive of the city, he has the duty to enforce Ordinance
No. 8027 as long as it has not been repealed by the Sanggunian or annulled by the courts. He has no other choice. It is
his ministerial duty to do so.

In Dimaporo v. Mitra, Jr., it provides that officers cannot refuse to perform their duty on the ground of an alleged
invalidity of the statute imposing the duty. It might seriously hinder the transaction of public business if these officers
were to be permitted in all cases to question the constitutionality of statutes and ordinances imposing duties upon
them and which have not judicially been declared unconstitutional.

** NOTES: The Supreme Court denied the motions for reconsideration filed by the Department of Energy and oil giants
Chevron, Petron, and Shell; and reiterated its March 7, 2007decisionordering the Manila City mayor to enforce
Ordinance No. 8027 directing the removal of the terminals from Pandacan by the said oil companies. The said
Ordinance reclassified portions of the Manila districts of Pandacan and Sta. Ana from industrial to commercial and
directed certain business owners and operators, including the three oil giants to cease and desist from operating
their businesses there.
Ordinance No. 8027, approved by Manila City Council on November 28, 2001 and effective December 28,
2001, reclassifies portions of Pandacan and Sta. Ana from industrial to commercial and directs the
owners and operators of businesses to cease and desist from operating their businesses within 6 months
from the ordinances effectivity. Among the businesses in the area are the so-called Pandacan Terminals
of Chevron, Petron, and Shell.

Chevron, Petron and Shell, questioned the validity of the said ordinance. They argued that they are
fighting for their right to property alleging that they stand to lose billions of pesos if forced [to] relocate.
Are the contentions of the oil companies tenable?

SUGGESTED ANSWER:
No. The Court described Ordinance No. 8027 as a measure enacted pursuant to the delegated police power of local
government units to promote the order, safety, and health, morals, and general welfare of the society. It explained
that based on the hierarchy of constitutionally protected rights, the right to life enjoys precedence over the right to
property. The reason is obvious: life is irreplaceable, property is not.

When the state or [local government unit] LGUs exercise of police power clashes with a few individuals right to
property, the former should prevail. (GR No. 156052, Social Justice Society, et al. v. Atienza, Jr., February 13, 2008)

Ordinance No. 8027 visit fellester.blogspot.com was enacted right after the Philippines, along with the rest of the
world, witnessed the horror of the September 11, 2001 attack on the Twin Towers of the World Trade Center in New
York City.

The objective of the ordinance is to protect the residents of Manila from the catastrophic devastation that will surely
occur in case of a terrorist attack on the Pandacan Terminals. No reason exists why such a protective measure should
be delayed.

NOTES: In 2007, the SC ruled that the Local Government Code imposes upon Mayor Atienza, to enforce all laws and
ordinances relative to the governance of the city. One of these is Ordinance No. 8027. As the chief executive of the
city, he has the duty to enforce Ordinance No. 8027 as long as it has not been repealed by the Sanggunian or annulled
by the courts.
He has no other choice. (GR No. 156052, Social Justice Society, et al. v. Atienza, Jr., March 7,2007)

In 2008, The Supreme Court denied the motions for reconsideration filed by Chevron, Petron, and Shell, and instead
reiterated its March 7, 2007 decision.(GR No. 156052, Social Justice Society, et al. v. Atienza, Jr., February 13, 2008)

In 2009, the SC recently denied with finality the second motion for reconsideration of the three big oil players. The
Court stressed that the second motion for reconsideration is a prohibited pleading pursuant to sec. 2, Rule 52 of the
Rules of Court. It said that it already passed upon the basic issues in its February 13, 2008 resolution and noted that
the arguments of the oil firms were a mere rehash of their arguments raised in the first motion for reconsideration.
(Min. Res., GR No. 156052, Social Justice Society, et al. v. Atienza, Jr., April 28, 2009)
 BARANGAY SINDALAN, SAN FERNANDO, PAMPANGA rep. by BARANGAY CAPTAIN ISMAEL GUTIERREZ,
Petitioner
vs.
COURT OF APPEALS, JOSE MAGTOTO III,
and PATRICIA SINDAYAN, Respondents
G.R. No. 150640, March 22, 2007
Facts:
Pursuant to a resolution passed by the barangay council, petitioner Barangay Sindalan, San Fernando, Pampanga,
represented by Barangay Captain Ismael Gutierrez, filed a Complaint for eminent domain against respondents spouses
Jose Magtoto III and Patricia Sindayan, the registered owners of a parcel of land covered by Transfer Certificate of Title
No. 117674-R. Petitioner sought to convert a portion of respondents land into Barangay Sindalans feeder road. The
alleged public purposes sought to be served by the expropriation were stated in Barangay Resolution No. 6.

Petitioner claimed that respondents property was the most practical and nearest way to the municipal road. Pending
the resolution of the case at the trial court, petitioner deposited an amount equivalent to the fair market value of the
property.

Respondents alleged that the expropriation of their property was for private use, that is, for the benefit of the
homeowners of Davsan II Subdivision. They contended that petitioner deliberately omitted the name of Davsan II
Subdivision and, instead, stated that the expropriation was for the benefit of the residents of Sitio Paraiso in order to
conceal the fact that the access road being proposed to be built across the respondents land was to serve a privately
owned subdivision and those who would purchase the lots of said subdivision. They also pointed out that under
Presidential Decree No. (PD) 957, it is the subdivision owner who is obliged to provide a feeder road to the subdivision
residents.

Issues:
Whether or not the taking of the land was for a public purpose or use.

Ruling:
The petition lacks merit.

In general, eminent domain is defined as the power of the nation or a sovereign state to take, or to authorize the
taking of, private property for a public use without the owners consent, conditioned upon payment of just
compensation. It is acknowledged as an inherent political right, founded on a common necessity and interest of
appropriating the property of individual members of the community to the great necessities of the whole community.

The exercise of the power of eminent domain is constrained by two constitutional provisions: (1) that private property
shall not be taken for public use without just compensation under Article III (Bill of Rights), Section 9 and (2) that no
person shall be deprived of his/her life, liberty, or property without due process of law under Art. III, Sec. 1.

However, there is no precise meaning of public use and the term is susceptible of myriad meanings depending on
diverse situations. The limited meaning attached to public use is use by the public or public employment, that a
duty must devolve on the person or corporation holding property appropriated by right of eminent domain to furnish
the public with the use intended, and that there must be a right on the part of the public, or some portion of it, or
some public or quasi-public agency on behalf of the public, to use the property after it is condemned. The more
generally accepted view sees public use as public advantage, convenience, or benefit, and that anything which
tends to enlarge the resources, increase the industrial energies, and promote the productive power of any considerable
number of the inhabitants of a section of the state, or which leads to the growth of towns and the creation of new
resources for the employment of capital and labor, which contributes to the general welfare and the prosperity of the
whole community. In this jurisdiction, public use is defined as whatever is beneficially employed for the
community.

It is settled that the public nature of the prospective exercise of expropriation cannot depend on the numerical count
of those to be served or the smallness or largeness of the community to be benefited. The number of people is not
determinative of whether or not it constitutes public use, provided the use is exercisable in common and is not limited
to particular individuals. Thus, the first essential requirement for a valid exercise of eminent domain is for the
expropriator to prove that the expropriation is for a public use. In Municipality of Bian v. Garcia, this Court explicated
that expropriation ends with an order of condemnation declaring that the plaintiff has a lawful right to take the
property sought to be condemned, for the public use or purpose described in the complaint, upon the payment
of just compensation.

In the case at bar, petitioner harps on eminent domain as an inherent power of sovereignty similar to police power and
taxation. As a basic political unit, its Sangguniang Barangay is clothed with the authority to provide barangay roads
and other facilities for public use and welfare.

Petitioners delegated power to expropriate is not at issue. The legal question in this petition, however, is whether the
taking of the land was for a public purpose or use. In the exercise of the power of eminent domain, it is basic that the
taking of private property must be for a public purpose. A corollary issue is whether private property can be taken by
law from one person and given to another in the guise of public purpose.

In this regard, the petition must fail.

The power of eminent domain can only be exercised for public use and with just compensation. Taking an individuals
private property is a deprivation which can only be justified by a higher goodwhich is public useand can only be
counterbalanced by just compensation. Without these safeguards, the taking of property would not only be unlawful,
immoral, and null and void, but would also constitute a gross and condemnable transgression of an individuals basic
right to property as well.

For this reason, courts should be more vigilant in protecting the rights of the property owner and must perform a more
thorough and diligent scrutiny of the alleged public purpose behind the expropriation. Extreme caution is called for in
resolving complaints for condemnation, such that when a serious doubt arises regarding the supposed public use of
property, the doubt should be resolved in favor of the property owner and against the State.
JESUS IS LORD CHRISTIAN SCHOOL FOUNDATION, INC. VS. MUNICIPALITY (NOW CITY) OF PASIG, METRO MANILA

FACTS: Court of Appeals affirmed the lower courts decision of declaring respondent municipality (now city) as having
the right to expropriate petitioners property for the construction of an access road. Petitioner argues that there was no
valid and definite offer made before a complaint for eminent domain was filed as the law requires (Art. 35, Rules and
Regulations Implementing the Local Government Code). Respondent contends that a letter to purchase was offered to
the previous owners and the same was not accepted.
ISSUE: Whether or not a letter to purchase is sufficient enough as a definite and valid offer to expropriate.
HELD: No. Failure to prove compliance with the mandatory requirement of a valid and definite offer will result in the
dismissal of the complaint. The purpose of the mandatory requirement to be first made to the owner is to encourage
settlements and voluntary acquisition of property needed for public purposes in order to avoid the expense and delay
of a court of action.
MIGUEL BELUSO VS. THE MUNICIPALITY OF PANAY (CAPIZ),

G.R. no. 153974 August 7, 2006

Facts: The Sangguniang Bayan of the Municipality of Panay issued Resolution No. 95-29 authorizing the municipal
government through the mayor to initiate expropriation proceedings. A petition for expropriation was thereafter filed
on April 14, 1997 by the respondent Municipality of Panay before the Regional Trial Court (RTC), Branch 18 of Roxas
City. Petitioners filed a Motion to Dismiss alleging that the taking is not for public use but only for the benefit of certain
individuals; that it is politically motivated because petitioners voted against the incumbent mayor and vice-mayor; and
that some of the supposed beneficiaries of the land sought to be expropriated have not actually signed a petition
asking for the property but their signatures were forged or they were misled into signing the same. The trial court
denied petitioners Motion to Dismiss and declared that the expropriation in this case is for "public use" and the
respondent has the lawful right to take the property upon payment of just compensation.
Petitioners then filed a Petition for Certiorari before the CA claiming that they were denied due process when the trial
court declared that the taking was for public purpose without receiving evidence on petitioners claim that the Mayor
of Panay was motivated by politics in expropriating their property and in denying their Motion to Hold in Abeyance the
Hearing of the Court Appointed Commissioners; and that the trial court also committed grave abuse of discretion when
it disregarded the affidavits of persons denying that they signed a petition addressed to the municipal government of
Panay. Then CA rendered its Decision dismissing the Petition for Certiorari. It held that the petitioners were not denied
due process as they were able to file an answer to the complaint and were able to adduce their defenses therein; and
that the purpose of the taking in this case constitutes "public use".
Issue: Whether the Municipal Government of Panay exercise the power of Eminent Domain is being exercised in
accordance with the delegating law under the existence of legislative grant in favor of local governments.

Decision: The petition is granted.

Rationale: The Court in no uncertain terms have pronounced that a local government unit cannot authorize an
expropriation of private property through a mere resolution of its lawmaking body. R.A. No. 7160 otherwise known as
the Local Government Code expressly requires an ordinance for the purpose and a resolution that merely expresses
the sentiment of the municipal council will not suffice.

A resolution will not suffice for an LGU to be able to expropriate private property; and the reason for this is settled: A
municipal ordinance is different from a resolution. An ordinance is a law, but a resolution is merely a declaration of the
sentiment or opinion of a lawmaking body on a specific matter. An ordinance possesses a general and permanent
character, but a resolution is temporary in nature. Additionally, the two are enacted differently -- a third reading is
necessary for an ordinance, but not for a resolution, unless decided otherwise by a majority of all the Sanggunian
members.

If Congress intended to allow LGUs to exercise eminent domain through a mere resolution, it would have simply
adopted the language of the previous Local Government Code. But Congress did not. In a clear divergence from the
previous Local Government Code, Sec. 19 of R.A. [No.] 7160 categorically requires that the local chief executive act
pursuant to an ordinance.

As respondents expropriation in this case was based merely on a resolution, such expropriation is clearly defective.
While the Court is aware of the constitutional policy promoting local autonomy, the court cannot grant judicial sanction
to an LGUs exercise of its delegated power of eminent domain in contravention of the very law giving it such power.
NATIONAL POWER CORPORATION, Petitioner, v. HEIRS OF MACABANGKIT SANGKAY, NAMELY: CEBU,
BATOWA-AN, ET AL., ALL SURNAMED MACABANGKIT, Respondents.

BERSAMIN, J.:

FACTS:

Pursuant to its legal mandate under Republic Act No. 6395 (An Act Revising the Charter of the National Power
Corporation), NPC undertook the Agus River Hydroelectric Power Plant Project in the 1970s to generate electricity for
Mindanao. The project included the construction of several underground tunnels to be used in diverting the water flow
from the Agus River to the hydroelectric plants.

On November 21, 1997, the respondents as the owners of land with an area of 221,573 square meters situated in
Ditucalan, Iligan City, sued NPC in the RTC for the recovery of damages and of the property, with the alternative prayer
for the payment of just compensation. They alleged that they had belatedly discovered that one of the underground
tunnels of NPC that diverted the water flow of the Agus River for the operation of the Hydroelectric Project in Agus V,
Agus VI and Agus VII traversed their land; that their discovery had occurred in 1995 after Atty. Saidali C. Gandamra,
President of the Federation of Arabic Madaris School, had rejected their offer to sell the land because of the danger the
underground tunnel might pose to the proposed Arabic Language Training Center and Muslims Skills Development
Center; that such rejection had been followed by the withdrawal by Global Asia Management and Resource Corporation
from developing the land into a housing project for the same reason; that Al-Amanah Islamic Investment Bank of the
Philippines had also refused to accept their land as collateral because of the presence of the underground tunnel; that
the underground tunnel had been constructed without their knowledge and consent; that the presence of the tunnel
deprived them of the agricultural, commercial, industrial and residential value of their land; and that their land had
also become an unsafe place for habitation because of the loud sound of the water rushing through the tunnel and the
constant shaking of the ground, forcing them and their workers to relocate to safer grounds.

In its answer with counterclaim, NPC countered that the Heirs of Macabangkit had no right to compensation under
section 3(f) of Republic Act No. 6395, under which a mere legal easement on their land was established; that their
cause of action, should they be entitled to compensation, already prescribed due to the tunnel having been
constructed in 1979; and that by reason of the tunnel being an apparent and continuous easement, any action arising
from such easement prescribed in five years.

After trial, the RTC ruled in favor of the plaintiffs (Heirs of Macabangkit).

Earlier, on August 18, 1999, the Heirs of Macabangkit filed an urgent motion for execution of judgment pending
appeal. The RTC granted the motion and issued a writ of execution, prompting NPC to assail the writ by petition for
certiorari in the CA. On September 15, 1999, the CA issued a temporary restraining order (TRO) to enjoin the RTC from
implementing its decision.The Heirs of Macabangkit elevated the ruling of the CA (G.R. No. 141447), but the Court
upheld the CA on May 4, 2006.

On October 5, 2004, the CA affirmed the decision of the RTC.

ISSUE:

1) Whether the CA and the RTC erred in holding that there was an underground tunnel traversing the Heirs of
Macabangkits land constructed by NPC; and

2) Whether the Heirs of Macabangkits right to claim just compensation had prescribed under section 3(i) of Republic
Act No. 6395, or, alternatively, under Article 620 and Article 646 of the Civil Code.

HELD: We uphold the liability of NPC for payment of just compensation.

POLITICAL LAW: five-year prescriptive period under Section 3(i) of Republic Act No. 6395 does not apply
to claims for just compensation

Without necessarily adopting the reasoning of the CA, we uphold its conclusion that prescription did not bar the
present action to recover just compensation.

Section 3 (i) of Republic Act No. 6395, the cited law, relevantly provides:

Section 3.Powers and General Functions of the Corporation. The powers, functions, rights and activities of the
Corporation shall be the following: xxx

(i) To construct works across, or otherwise, any stream, watercourse, canal, ditch, flume, street, avenue, highway or
railway of private and public ownership, as the location of said works may require:Provided, That said works be
constructed in such a manner as not to endanger life or property; And provided, further, That the stream, watercourse,
canal ditch, flume, street, avenue, highway or railway so crossed or intersected be restored as near as possible to their
former state, or in a manner not to impair unnecessarily their usefulness. Every person or entity whose right of way or
property is lawfully crossed or intersected by said works shall not obstruct any such crossings or intersection and shall
grant the Board or its representative, the proper authority for the execution of such work. The Corporation is hereby
given the right of way to locate, construct and maintain such works over and throughout the lands owned by the
Republic of the Philippines or any of its branches and political subdivisions. The Corporation or its representative may
also enter upon private property in the lawful performance or prosecution of its business and purposes, including the
construction of the transmission lines thereon;Provided,that the owner of such property shall be indemnified for any
actual damage caused thereby;Provided, further,That said action for damages is filed within five years after the rights
of way, transmission lines, substations, plants or other facilities shall have been established;Provided, finally, That
after said period, no suit shall be brought to question the said rights of way, transmission lines, substations, plants or
other facilities;

A cursory reading shows that Section 3(i) covers the construction of works across, or otherwise, any stream,
watercourse, canal, ditch, flume, street, avenue, highway or railway of private and public ownership, as the location of
said works may require. It is notable that Section 3(i) includes no limitation except those enumerated after the
termworks. Accordingly, we consider the term works as embracing all kinds of constructions, facilities, and other
developments that can enable or help NPC to meet its objectives of developing hydraulic power expressly provided
under paragraph (g) of Section 3.The CAs restrictive construal of Section 3(i) as exclusive of tunnels was obviously
unwarranted, for the provision applies not only to development works easily discoverable or on the surface of the earth
but also to subterranean works like tunnels. Such interpretation accords with the fundamental guideline in statutory
construction that when the law does not distinguish, so must we not. Moreover, when the language of the statute is
plain and free from ambiguity, and expresses a single, definite, and sensible meaning, that meaning is conclusively
presumed to be the meaning that the Congress intended to convey.

Even so, we still cannot side with NPC.

We rule that the prescriptive period provided under Section 3(i) of Republic Act No. 6395 is applicable only to an action
for damages, and does not extend to an action to recover just compensation like this case. Consequently, NPC cannot
thereby bar the right of the Heirs of Macabangkit to recover just compensation for their land.

POLITICAL LAW: just compensation

The action to recover just compensation from the State or its expropriating agency differs from the action for
damages. The former, also known as inverse condemnation, has the objective to recover the value of property taken in
fact by the governmental defendant, even though no formal exercise of the power of eminent domain has been
attempted by the taking agency.Just compensation is the full and fair equivalent of the property taken from its owner
by the expropriator. The measure is not the takers gain, but the owner's loss. The word just is used to intensify the
meaning of the word compensation in order to convey the idea that the equivalent to be rendered for the property to
be taken shall be real, substantial, full, and ample. On the other hand, the latter action seeks to vindicate a legal
wrong through damages, which may be actual, moral, nominal, temperate, liquidated, or exemplary. When a right is
exercised in a manner not conformable with the norms enshrined in Article 19 and like provisions on human relations
in the Civil Code,and the exercise results to the damage of another, a legal wrong is committed and the wrongdoer is
held responsible.

The two actions are radically different in nature and purpose. The action to recover just compensation is based on the
Constitution while the action for damages is predicated on statutory enactments. Indeed, the former arises from the
exercise by the State of its power of eminent domain against private property for public use, but the latter emanates
from the transgression of a right. The fact that the owner rather than the expropriator brings the former does not
change the essential nature of the suit as an inverse condemnation, for the suit is not based on tort, but on the
constitutional prohibition against the taking of property without just compensation. It would very well be contrary to
the clear language of the Constitution to bar the recovery of just compensation for private property taken for a public
use solely on the basis of statutory prescription.

Due to the need to construct the underground tunnel, NPC should have first moved to acquire the land from the Heirs
of Macabangkit either by voluntary tender to purchase or through formal expropriation proceedings. In either case,
NPC would have been liable to pay to the owners the fair market value of the land, for Section 3(h) of Republic Act No.
6395 expressly requires NPC to pay the fair market value of such property at the time of the taking, thusly:

(h)To acquire, promote, hold, transfer, sell, lease, rent, mortgage, encumber and otherwise dispose of property incident
to, or necessary, convenient or proper to carry out the purposes for which the Corporation was created:Provided, That
in case a right of way is necessary for its transmission lines, easement of right of way shall only be sought:Provided,
however,That in case the property itself shall be acquired by purchase, the cost thereof shall be the fair market value
at the time of the taking of such property.

POLITICAL LAW: NPCs construction of the tunnel constituted taking of the land, and entitled owners to
just compensation

The Court held in National Power Corporation v. Ibrahim that NPC was liable to pay not merely an easement fee but
rather the full compensation for land traversed by the underground tunnels,viz:

In disregarding this procedure and failing to recognize respondents ownership of the sub-terrain portion, petitioner
took a risk and exposed itself to greater liability with the passage of time. It must be emphasized that the acquisition
of the easement is not without expense. The underground tunnels impose limitations on respondents use of the
property for an indefinite period and deprive them of its ordinary use. Based upon the foregoing, respondents are
clearly entitled to the payment of just compensation.Notwithstanding the fact that petitioner only occupies the sub-
terrain portion, it is liable to pay not merely an easement fee but rather the full compensation for land. This is so
because in this case, the nature of the easement practically deprives the owners of its normal beneficial use.
Respondents, as the owner of the property thus expropriated, are entitled to a just compensation which should be
neither more nor less, whenever it is possible to make the assessment, than the money equivalent of said property.

Here, like in National Power Corporation v. Ibrahim,NPC constructed a tunnel underneath the land of the Heirs of
Macabangkit without going through formal expropriation proceedings and without procuring their consent or at least
informing them beforehand of the construction. NPCs construction adversely affected the owners rights and interests
because the subterranean intervention by NPC prevented them from introducing any developments on the surface,
and from disposing of the land or any portion of it, either by sale or mortgage.

We agree with both the RTC and the CA that there was a full taking on the part of NPC, notwithstanding that the
owners were not completely and actually dispossessed. It is settled that the taking of private property for public use,
to be compensable, need not be an actual physical taking or appropriation. Indeed, the expropriators action may be
short of acquisition of title, physical possession, or occupancy but may still amount to a taking. Compensable taking
includes destruction, restriction, diminution, or interruption of the rights of ownership or of the common and necessary
use and enjoyment of the property in a lawful manner, lessening or destroying its value. It is neither necessary that
the owner be wholly deprived of the use of his property, nor material whether the property is removed from the
possession of the owner, or in any respect changes hands.

As a result, NPC should pay just compensation for the entire land. In that regard, the RTC pegged just compensation at
P500.00/square meter based on its finding on what the prevailing market value of the property was at the time of the
filing of the complaint, and the CA upheld the RTC.

POLITICAL LAW: reckoning point of just compensation on the value at the time the owners commenced
these inverse condemnation proceedings is entirely warranted.

We rule that the reckoning value is the value at the time of the filing of the complaint, as the RTC provided in its
decision. Compensation that is reckoned on the market value prevailing at the time either when NPC entered or when
it completed the tunnel, as NPC submits, would not be just, for it would compound the gross unfairness already caused
to the owners by NPCs entering without the intention of formally expropriating the land, and without the prior
knowledge and consent of the Heirs of Macabangkit. NPCs entry denied elementary due process of law to the owners
since then until the owners commenced the inverse condemnation proceedings. The Court is more concerned with the
necessity to prevent NPC from unjustly profiting from its deliberate acts of denying due process of law to the owners.
As a measure of simple justice and ordinary fairness to them, therefore, reckoning just compensation on the value at
the time the owners commenced these inverse condemnation proceedings is entirely warranted.

In National Power Corporation v. Court of Appeals, a case that involved the similar construction of an underground
tunnel by NPC without the prior consent and knowledge of the owners, and in which we held that the basis in fixing
just compensation when the initiation of the action preceded the entry into the property was the time of the filing of
the complaint, not the time of taking, we pointed out that there was no taking when the entry by NPC was made
without intent to expropriate or was not made under warrant or color of legal authority.

WHEREFORE, the Court AFFIRMS the decision promulgated on October 5, 2004 by the Court of Appeals,
subject to the following MODIFICATIONS, to wit:

(a)Interest at the rate of 12%per annum is IMPOSED on the principal amount of P113,532,500.00 as just
compensation, reckoned from the filing of the complaint on November 21, 1997 until the full liability is
paid;

(b)The awards of P30,000.00 as rental fee,P200,000.00 as moral damages, and P200,000.00 as

exemplary damages are DELETED; and

(c) The award of 15% attorneys fees decreed to be paid by National Power Corporation to the Heirs of
Macabangkit is DELETED.

The Court PARTLY GRANTED the motion to register attorney's lien filed by Atty. Macarupung Dibaratun,
and FIXES Atty. Dibaratun's attorney's fees on the basis of quantum meruit at 10% of the principal award
of P113,532,500.00.

The motion to register attorney's lien of Atty. Manuel D.Ballelos is PARTLY GRANTED, and Atty. Ballelos is
DECLARED ENTITLED TO RECOVER from Cebu, Batowa-an, Sayana, Nasser, Manta and Edgar, all surnamed
Macabangkit, the amount of P5,000.00 as attorneys fees on the basis of quantum meruit.
CITY OF MANILA, Petitioner, v. ALEGAR CORPORATION, TEROCEL REALTY CORPORATION, AND FILOMENA
VDA. DE LEGARDA, Respondents.

ABAD, J.:

FACTS:

On March 1, 2001 the City Council of Manila passed Ordinance 8012 that authorized the City Mayor to acquire certain
lots belonging to respondents Alegar Corporation, Terocel Realty Corporation, and Filomena Vda. De Legarda, for use in
the socialized housing project of petitioner City of Manila. The City offered to buy the lots atP1,500.00 per square
meter (sq m) but the owners rejected this as too low with the result that on December 2, 2003 the City filed a
complaint for expropriation against them before the Regional Trial Court (RTC) of Manila.

The City alleged in its complaint that it wanted to acquire the lots for its land-for-the-landless and on-site development
programs involving the residents occupying them. The City offered to acquire the lots for P1,500.00 per sq m but the
owners rejected the offer. The total aggregate value of the lots for taxation purpose was P809,280.00 but the City
deposited P1,500,000.00 with the Land Bank of the Philippines to enable it to immediately occupy the same pending
hearing of the case.

Both Alegar and Terocel questioned the legitimacy of the Citys taking of their lots solely for the benefit of a few long-
time occupants. Alegar also pointed out that, while it declined the Citys initial offer, it did not foreclose the possibility
of selling the lots for the right price. The filing of the suit was premature because the City made no effort in good faith
to negotiate the purchase.

Meantime, on June 9, 2004 the trial court issued a writ of possession in the Citys favor. On December 19, 2006, upon
the joint motion of the parties, the RTC released the P1,500,000.00 deposit to the defendant owners. On October 15,
2007 the parties agreed to forego with the pre-trial, opting instead to simultaneously submit their memoranda on the
issue of whether or not there is necessity for the City to expropriate the subject properties for public use. The owners
of the lots submitted their memorandum but the City did not.

On February 12, 2008 the RTC dismissed the complaint on the ground that the City did not comply with Section 9 of
Republic Act (R.A.) 7279 which set the order of priority in the acquisition of properties for socialized housing. Private
properties ranked last in the order of priorities for such acquisition and the City failed to show that no other properties
were available for the project. The City also failed to comply with Section 10 which authorized expropriation only when
resort to other modes (such as community mortgage, land swapping, and negotiated purchase) had been exhausted.

The trial court pointed out that the City also failed to show that it exhausted all reasonable efforts to acquire the lots
through a negotiated sale. Article 35 of the Rules and Regulations Implementing the Local Government Code provides
that when property owners are willing to sell but for a higher price than that offered, the local chief executive must
confer with them for the possibility of coming to an agreement on the price. Here, after the owners refused to sell the
lots for P1,500.00 per sq m offer, the City did not exert any effort to renegotiate or revise its offer. The RTC also ruled
that the City submitted the issue of genuine necessity to acquire the properties for public purpose or benefit without
presenting evidence on the same.

The City moved for the reconsideration of the order of dismissal but before the RTC could act on it, the City appealed
the case to the Court of Appeals (CA). On February 27, 2009. The CA affirmed the RTCs dismissal of the Citys action,
mainly for the reason that the City failed to comply with the requirements of Sections 9 and 10 of R.A. 7279 which
ranked privately-owned lands last in the order of priority in acquiring lots for socialized housing and which preferred
modes other than expropriation for acquiring them. The CA rejected the Citys claim that the RTC denied it its right to
due process, given that the City agreed to forego with pre-trial and to just submit a memorandum on the threshold
issues raised by the owners answer regarding the propriety of expropriation. The City simply did not submit a
memorandum. Although it moved for the reconsideration of the order of dismissal, the City filed a notice of appeal
before the RTC could resolve the motion.

ISSUES:

1. Whether or not the CA erred in failing to rule that the RTC denied the City its right to due process when it dismissed
the case without hearing the City's side;

2. Whether or not the CA erred in affirming the RTCs ruling that the City failed to comply with the requirements of
Sections 9 and 10 of R.A. 7279 in trying to acquire the subject lots by expropriation;

3. Whether or not the CA erred in failing to set aside the RTCs ruling that the City failed to establish the existence of
genuine necessity in expropriating the subject lots for public use or purpose; and

4.Whether or not the CA erred in failing to rule that the owners withdrawal of its P1.5 million deposit constituted
implied consent to the expropriation of their lots.
HELD:

POLITICAL LAW: expropriation proceeding of private lands

The RTC did not deny the City its right to be heard on its action when that court dismissed the same. An expropriation
proceeding of private lands has two stages: first, the determination of plaintiffs authority to exercise the power of
eminent domain in the context of the facts of the case and, second, if there be such authority, the determination of
just compensation. The first phase ends with either an order of dismissal or a determination that the property is to be
acquired for a public purpose.

Here, the City's action was still in the first stage when the RTC called the parties to a pre-trial conference where,
essentially, their task was to determine how the court may resolve the issue involved in the first stage: the City's
authority to acquire by expropriation the particular lots for its intended purpose. As it happened, the parties opted to
simultaneously submit their memoranda on that issue. There was nothing infirm in this agreement since it may be
assumed that the parties knew what they were doing and since such agreement would facilitate early disposal of the
case.

Unfortunately, the agreement implied that the City was waiving its right to present evidence that it was acquiring the
subject lots by expropriation for a proper public purpose. Counsel for the City may have been confident that its
allegations in the complaint can stand on their own, ignoring the owners challenge to its right to expropriate their lots
for the stated purpose. Parenthetically, the City moved for the reconsideration of the RTCs order of dismissal but
withdrew this remedy by filing a notice of appeal from that order to the CA. Evidently, the City cannot claim that it had
been denied the opportunity of a hearing.

POLITICAL LAW: Section 9, R.A. 7279; priorities in acquisition of land

The CA correctly ruled that the City failed to show that it complied with the requirements of Section 9 of R.A. 7279
which lays down the order of priority in the acquisition through expropriation of lands for socialized housing. This
section provides:

Section 9. Priorities in the acquisition of Land.Lands for socialized housing shall be acquired in the following order:
(a) Those owned by the Government or any of its subdivisions, instrumentalities, or agencies, including government-
owned or controlled corporations and their subsidiaries;
(b) Alienable lands of the public domain;
(c) Unregistered or abandoned and idle lands;
(d) Those within the declared Areas for Priority Development, Zonal Improvement Program sites, and Slum
Improvement and Resettlement Program sites which have not yet been acquired;
(e) Bagong Lipunan Improvement of Sites and Services or BLISS sites which have not yet been acquired; and
(f) Privately-owned lands.
Where on-site development is found more practicable and advantageous to the beneficiaries, the priorities mentioned
in this section shall not apply. The local government units shall give budgetary priority to on-site development of
government lands.

There is a sensible reason for the above. Litigation is costly and protracted. The government should also lead in
avoiding litigations and overburdening its courts.

Indeed, the Court has held that when the property owner rejects the offer but hints for a better price, the government
should renegotiate by calling the property owner to a conference. The government must exhaust all reasonable efforts
to obtain by agreement the land it desires. Its failure to comply will warrant the dismissal of the complaint. Article 35
of the Rules and Regulations Implementing the Local Government Code provides for this procedure. Thus:

Article 35. Offer to Buy and Contract of Sale(a) The offer to buy private property for public use or purpose shall be in
writing. It shall specify the property sought to be acquired, the reasons for its acquisition, and the price offered.

xxxx

(c) If the owner or owners are willing to sell their property but at a price higher than that offered to them, the local
chief executive shall call them to a conference for the purpose of reaching an agreement on the selling price. The
chairman of the appropriation or finance committee of the sanggunian, or in his absence, any member of the
sanggunian duly chosen as its representative, shall participate in the conference. When an agreement is reached by
the parties, a contract of sale shall be drawn and executed.

Here, the City of Manila initially offered P1,500.00 per sq m to the owners for their lots. But after the latter rejected the
offer, claiming that the offered price was even lower than their current zonal value, the City did not bother to
renegotiate or improve its offer. The intent of the law is for the State or the local government to make a reasonable
offer in good faith, not merely a pro forma offer to acquire the property.
The Court cannot treat the requirements of Sections 9 and 10 of R.A. 7279 lightly. It held in Estate or Heirs of the Late
Ex-Justice Jose B.L. Reyes v. City of Manila, that these requirements are strict limitations on the local government's
exercise of the power of eminent domain. They are the only safeguards of property owners against the exercise of that
power. The burden is on the local government to prove that it satisfied the requirements mentioned or that they do not
apply in the particular case.

POLITICAL LAW: advance deposit required under Sec.19 of the LGC

The City insists that it made a deposit of P1.5 million with the RTC by way of advance payment on the lots it sought to
expropriate. By withdrawing this deposit, respondents may be assumed to have given their consent to the
expropriation.

But the advance deposit required under Section 19 of the Local Government Code constitutes an advance payment
only in the event the expropriation prospers. Such deposit also has a dual purpose: as pre-payment if the expropriation
succeeds and as indemnity for damages if it is dismissed. This advance payment, a prerequisite for the issuance of a
writ of possession, should not be confused with payment of just compensation for the taking of property even if it
could be a factor in eventually determining just compensation. If the proceedings fail, the money could be used to
indemnify the owner for damages.

Here, therefore, the owners withdrawal of the deposit that the City made does not amount to a waiver of the defenses
they raised against the expropriation. With the dismissal of the complaint, the amount or a portion of it could be
awarded to the owners as indemnity to cover the expenses they incurred in defending their right.

Notably, the owners neither filed a counterclaim for damages against the City nor did they seek indemnity for their
expenses after the RTC dismissed its action. Consequently, the City government is entitled to the return of the advance
deposit it made and that the owners withdrew. But, considering the expenses that the owners needed to incur in
defending themselves in the appeals that the City instituted before the CA and this Court, an award of P50,000.00 in
attorney's fees against the City is in order. The owners must return the rest of theP1,500,000.00 that they withdrew.

Lastly, the Court must point out that the ruling in this case is without prejudice to the right of the City to re-file the
action after it has complied with the relevant mandatory provisions of R.A. 7279 and Article 35 of the Rules and
Regulations Implementing the Local Government Code.