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 becomequasi-
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 forpublic 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
thestatutes 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 improvementwhich 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. Saldaña (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.)

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 time-honored 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 theduty 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."

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 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.)

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 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 aparticular 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.

[G.R. No. 107916. February 20, 1997]

PERCIVAL MODAY, ZOTICO MODAY (deceased) and LEONORA MODAY, petitioners, vs.
COURT OF APPEALS, JUDGE EVANGELINE S. YUIPCO OF BRANCH 6,
REGIONAL TRIAL COURT, AGUSAN DEL SUR AND MUNICIPALITY OF
BUNAWAN, respondents.

DECISION
ROMERO, J.:

The main issue presented in this case is whether a municipality may expropriate private
property by virtue of a municipal resolution which was disapproved by the Sangguniang
Panlalawigan. Petitioner seeks the reversal of the Court of Appeals decision and resolution,
promulgated on July 15, 1992 and October 22, 1992 respectively[1], and a declaration that
Municipal Resolution No. 43-89 of the Bunawan Sangguniang Bayan is null and void.
On July 23, 1989, the Sangguniang Bayan of the Municipality of Bunawan in Agusan del
Sur passed Resolution No. 43-89, "Authorizing the Municipal Mayor to Initiate the Petition for
Expropriation of a One (1) Hectare Portion of Lot No. 6138-Pls-4 along the National Highway
Owned by Percival Moday for the Site of Bunawan Farmers Center and Other Government
Sports Facilities."[2]
In due time, Resolution No. 43-89 was approved by then Municipal Mayor Anuncio C.
Bustillo and transmitted to the Sangguniang Panlalawigan for its approval. On September 11,
1989, the Sangguniang Panlalawigan disapproved said Resolution and returned it with the
comment that "expropriation is unnecessary considering that there are still available lots in
Bunawan for the establishment of the government center."[3]
 The Municipality of Bunawan, herein public respondent, subsequently filed a Petition for
Eminent Domain against petitioner Percival Moday before the Regional Trial Court at
Prosperidad, Agusan del Sur.[4] The complaint was later amended to include the registered
owners, Percival Moday's parents, Zotico and Leonora Moday, as party defendants.
On March 6, 1991, public respondent municipality filed a Motion to Take or Enter Upon the
Possession of Subject Matter of This Case stating that it had already deposited with the
municipal treasurer the necessary amount in accordance with Section 2, Rule 67 of the Revised
Rules of Court and that it would be in the government's best interest for public respondent to be
allowed to take possession of the property.
Despite petitioners' opposition and after a hearing on the merits, the Regional Trial Court
granted respondent municipality's motion to take possession of the land. The lower court held
that the Sangguniang Panlalawigan's failure to declare the resolution invalid leaves it effective.
It added that the duty of the Sangguniang Panlalawigan is merely to review the ordinances and
resolutions passed by the Sangguniang Bayan under Section 208 (l) of B.P. Blg. 337, old Local
Government Code and that the exercise of eminent domain is not one of the two acts
enumerated in Section 19 thereof requiring the approval of the Sangguniang
Panlalawigan.[5] The dispositive portion of the lower court's Order dated July 2, 1991 reads:

"WHEREFORE, it appearing that the amount of P632.39 had been deposited as per Official
Receipt No. 5379647 on December 12, 1989 which this Court now determines as the
provisional value of the land, the Motion to Take or Enter Upon the Possession of the Property
filed by petitioner through counsel is hereby GRANTED. The Sheriff of this Court is ordered to
forthwith place the plaintiff in possession of the property involved.

Let the hearing be set on August 9, 1991 at 8:30 o'clock in the morning for the purpose of
ascertaining the just compensation or fair market value of the property sought to be taken, with
notice to all the parties concerned.

SO ORDERED."[6]

Petitioners' motion for reconsideration was denied by the trial court on October 31, 1991.
Petitioners elevated the case in a petition for certiorari alleging grave abuse of discretion on
the part of the trial court, but the same was dismissed by respondent appellate court on July 15,
1992.[7] The Court of Appeals held that the public purpose for the expropriation is clear from
Resolution No. 43-89 and that since the Sangguniang Panlalawigan of Agusan del Sur did not
declare Resolution No. 43-89 invalid, expropriation of petitioners' property could proceed.
Respondent appellate court also denied petitioners' motion for reconsideration on October
22, 1992.[8]
Meanwhile, the Municipality of Bunawan had erected three buildings on the subject
property: the Association of Barangay Councils (ABC) Hall, the Municipal Motorpool, both
wooden structures, and the Bunawan Municipal Gymnasium, which is made of concrete.
In the instant petition for review filed on November 23, 1992, petitioner seeks the reversal of
the decision and resolution of the Court of Appeals and a declaration that Resolution No. 43-89
of the Municipality of Bunawan is null and void.
On December 8, 1993, the Court issued a temporary restraining order enjoining and
restraining public respondent Judge Evangeline Yuipco from enforcing her July 2, 1991 Order
and respondent municipality from using and occupying all the buildings constructed and from
further constructing any building on the land subject of this petition.[9]
Acting on petitioners' Omnibus Motion for Enforcement of Restraining Order and for
Contempt, the Court issued a Resolution on March 15, 1995, citing incumbent municipal mayor
Anuncio C. Bustillo for contempt, ordering him to pay the fine and to demolish the "blocktiendas"
which were built in violation of the restraining order.[10]
Former Mayor Anuncio C. Bustillo paid the fine and manifested that he lost in the May 8,
1995 election.[11] The incumbent Mayor Leonardo Barrios, filed a Manifestation, Motion to
Resolve "Urgent Motion for Immediate Dissolution of the Temporary Restraining Order" and
Memorandum on June 11, 1996 for the Municipality of Bunawan.[12]
Petitioners contend that the Court of Appeals erred in upholding the legality of the
condemnation proceedings initiated by the municipality. According to petitioners, the
expropriation was politically motivated and Resolution No. 43-89 was correctly disapproved by
the Sangguniang Panlalawigan, there being other municipal properties available for the
purpose. Petitioners also pray that the former Mayor Anuncio C. Bustillo be ordered to pay
damages for insisting on the enforcement of a void municipal resolution.
The Court of Appeals declared that the Sangguniang Panlalawigan's reason for
disapproving the resolution "could be baseless, because it failed to point out which and where
are 'those available lots.' Respondent court also concluded that since the Sangguniang
Panlalawigan did not declare the municipal board's resolution as invalid, expropriation of
petitioners' property could proceed.[13]
The Court finds no merit in the petition and affirms the decision of the Court of Appeals.
Eminent domain, the power which the Municipality of Bunawan exercised in the instant
case, is a fundamental State power that is inseparable from sovereignty.[14] It is government's
right to appropriate, in the nature of a compulsory sale to the State, private property for public
use or purpose.[15] Inherently possessed by the national legislature, the power of eminent
domain may be validly delegated to local governments, other public entities and public
utilities.[16] For the taking of private property by the government to be valid, the taking must be
for public use and there must be just compensation.[17]
The Municipality of Bunawan's power to exercise the right of eminent domain is not
disputed as it is expressly provided for in Batas Pambansa Blg. 337, the Local Government
Code[18] in force at the time expropriation proceedings were initiated. Section 9 of said law
states:

"Section 9. Eminent Domain. A local government unit may, through its head and acting pursuant
to a resolution of its sanggunian, exercise the right of eminent domain and institute
condemnation proceedings for public use or purpose."

What petitioners question is the lack of authority of the municipality to exercise this right
since the Sangguniang Panlalawigan disapproved Resolution No. 43-89.
Section 153 of B.P. Blg. 337 provides:

"Sec. 153. Sangguniang Panlalawigan Review. (1) Within thirty days after receiving copies of
approved ordinances, resolutions and executive orders promulgated by the municipal mayor,
the sangguniang panlalawigan shall examine the documents or transmit them to the provincial
attorney, or if there be none, to the provincial fiscal, who shall examine them promptly and
inform the sangguniang panlalawigan in writing of any defect or impropriety which he may
discover therein and make such comments or recommendations as shall appear to him proper.

(2) If the sangguniang panlalawigan shall find that any municipal ordinance, resolution or
executive order is beyond the power conferred upon the sangguniang bayan or the mayor,
it shall declare such ordinance, resolution or executive order invalid in whole or in part,
entering its actions upon the minutes and advising the proper municipal authorities thereof. The
effect of such an action shall be to annul the ordinance, resolution or executive order in question
in whole or in part. The action of the sangguniang panlalawigan shall be final.

xxx xxx xxx." (Emphasis supplied.)

The Sangguniang Panlalawigan's disapproval of Municipal Resolution No. 43-89 is an

infirm action which does not render said resolution null and void. The law, as expressed in
Section 153 of B.P. Blg. 337, grants the Sangguniang Panlalawigan the power to declare a
municipal resolution invalid on the sole ground that it is beyond the power of the Sangguniang
Bayan or the Mayor to issue. Although pertaining to a similar provision of law but different
factual milieu then obtaining, the Court's pronouncements in Velazco v. Blas,[19] where we cited
significant early jurisprudence, are applicable to the case at bar.

"The only ground upon which a provincial board may declare any municipal resolution,
ordinance, or order invalid is when such resolution, ordinance, or order is 'beyond the powers
conferred upon the council or president making the same.' Absolutely no other ground is
recognized by the law. A strictly legal question is before the provincial board in its consideration
of a municipal resolution, ordinance, or order. The provincial (board's) disapproval of any
resolution, ordinance, or order must be premised specifically upon the fact that such resolution,
ordinance, or order is outside the scope of the legal powers conferred by law. If a provincial
board passes these limits, it usurps the legislative functions of the municipal council or
president. Such has been the consistent course of executive authority."[20]

Thus, the Sangguniang Panlalawigan was without the authority to disapprove Municipal
Resolution No. 43-89 for the Municipality of Bunawan clearly has the power to exercise the right
of eminent domain and its Sangguniang Bayan the capacity to promulgate said resolution,
pursuant to the earlier-quoted Section 9 of B.P. Blg. 337. Perforce, it follows that Resolution No.
43-89 is valid and binding and could be used as lawful authority to petition for the condemnation
of petitioners' property.
As regards the accusation of political oppression, it is alleged that Percival Moday incurred
the ire of then Mayor Anuncio C. Bustillo when he refused to support the latter's candidacy for
mayor in previous elections. Petitioners claim that then incumbent Mayor C. Bustillo used the
expropriation to retaliate by expropriating their land even if there were other properties
belonging to the municipality and available for the purpose. Specifically, they allege that the
municipality owns a vacant seven-hectare property adjacent to petitioners' land, evidenced by a
sketch plan.[21]
The limitations on the power of eminent domain are that the use must be public,
compensation must be made and due process of law must be observed.[22] The Supreme Court,
taking cognizance of such issues as the adequacy of compensation, necessity of the taking and
the public use character or the purpose of the taking [23], has ruled that the necessity of
exercising eminent domain must be genuine and of a public character.[24] Government may not
capriciously choose what private property should be taken.
 After a careful study of the records of the case, however, we find no evidentiary support for
petitioners' allegations. The uncertified photocopy of the sketch plan does not conclusively
prove that the municipality does own vacant land adjacent to petitioners' property suited to the
purpose of the expropriation. In the questioned decision, respondent appellate court similarly
held that the pleadings and documents on record have not pointed out any of respondent
municipality's "other available properties available for the same purpose.[25] " The accusations of
political reprisal are likewise unsupported by competent evidence. Consequently, the Court
holds that petitioners' demand that the former municipal mayor be personally liable for damages
is without basis.
WHEREFORE, the instant petition is hereby DENIED. The questioned Decision and
Resolution of the Court of Appeals in the case of "Percival Moday, et al. v. Municipality of
Bunawan, et al." (CA G.R. SP No. 26712) are AFFIRMED. The Temporary Restraining Order
issued by the Court on December 8, 1993 is LIFTED.

G.R. No. L-18841 January 27, 1969

REPUBLIC OF THE PHILIPPINES, plaintiff-appellant,

vs.
PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, defendant-appellant.

Office of the Solicitor General Arturo A. Alafriz, Assistant Solicitor General Antonio A. Torres
and Solicitor Camilo D. Quiason for plaintiff-appellant.
Ponce Enrile, Siguion Reyna, Montecillo and Belo for defendant-appellant.

REYES, J.B.L., J.:

Direct appeals, upon a joint record on appeal, by both the plaintiff and the defendant from the
dismissal, after hearing, by the Court of First Instance of Manila, in its Civil Case No. 35805, of
their respective complaint and counterclaims, but making permanent a preliminary mandatory
injunction theretofore issued against the defendant on the interconnection of telephone facilities
owned and operated by said parties.

The plaintiff, Republic of the Philippines, is a political entity exercising governmental powers
through its branches and instrumentalities, one of which is the Bureau of Telecommunications.
That office was created on 1 July 1947, under Executive Order No. 94, with the following
powers and duties, in addition to certain powers and duties formerly vested in the Director of
Posts: 1awphil.ñêt

SEC. 79. The Bureau of Telecommunications shall exercise the following powers and duties:

(a) To operate and maintain existing wire-telegraph and radio-telegraph offices, stations,
and facilities, and those to be established to restore the pre-war telecommunication
service under the Bureau of Posts, as well as such additional offices or stations as may
hereafter be established to provide telecommunication service in places requiring such
service;

(b) To investigate, consolidate, negotiate for, operate and maintain wire-telephone or

radio telephone communication service throughout the Philippines by utilizing such
existing facilities in cities, towns, and provinces as may be found feasible and under
 such terms and conditions or arrangements with the present owners or operators thereof
as may be agreed upon to the satisfaction of all concerned;

(c) To prescribe, subject to approval by the Department Head, equitable rates of charges
for messages handled by the system and/or for time calls and other services that may be
rendered by said system;

(d) To establish and maintain coastal stations to serve ships at sea or aircrafts and,
when public interest so requires, to engage in the international telecommunication
service in agreement with other countries desiring to establish such service with the
Republic of the Philippines; and

(e) To abide by all existing rules and regulations prescribed by the International
Telecommunication Convention relative to the accounting, disposition and exchange of
messages handled in the international service, and those that may hereafter be
promulgated by said convention and adhered to by the Government of the Republic of
the Philippines. 1

The defendant, Philippine Long Distance Telephone Company (PLDT for short), is a public
service corporation holding a legislative franchise, Act 3426, as amended by Commonwealth
Act 407, to install, operate and maintain a telephone system throughout the Philippines and to
carry on the business of electrical transmission of messages within the Philippines and between
the Philippines and the telephone systems of other countries. 2 The RCA Communications, Inc.,
(which is not a party to the present case but has contractual relations with the parties) is an
American corporation authorized to transact business in the Philippines and is the grantee, by
assignment, of a legislative franchise to operate a domestic station for the reception and
transmission of long distance wireless messages (Act 2178) and to operate broadcasting and
radio-telephone and radio-telegraphic communications services (Act 3180). 3

Sometime in 1933, the defendant, PLDT, and the RCA Communications, Inc., entered into an
agreement whereby telephone messages, coming from the United States and received by
RCA's domestic station, could automatically be transferred to the lines of PLDT; and vice-versa,
for calls collected by the PLDT for transmission from the Philippines to the United States. The
contracting parties agreed to divide the tolls, as follows: 25% to PLDT and 75% to RCA. The
sharing was amended in 1941 to 30% for PLDT and 70% for RCA, and again amended in 1947
to a 50-50 basis. The arrangement was later extended to radio-telephone messages to and from
European and Asiatic countries. Their contract contained a stipulation that either party could
terminate it on a 24-month notice to the other.4 On 2 February 1956, PLDT gave notice to RCA
to terminate their contract on 2 February 1958. 5

Soon after its creation in 1947, the Bureau of Telecommunications set up its own Government
Telephone System by utilizing its own appropriation and equipment and by renting trunk lines of
the PLDT to enable government offices to call private parties. 6 Its application for the use of
these trunk lines was in the usual form of applications for telephone service, containing a
statement, above the signature of the applicant, that the latter will abide by the rules and
regulations of the PLDT which are on file with the Public Service Commission. 7 One of the many
rules prohibits the public use of the service furnished the telephone subscriber for his private
use. 8 The Bureau has extended its services to the general public since 1948, 9 using the same
trunk lines owned by, and rented from, the PLDT, and prescribing its (the Bureau's) own
schedule of rates. 10 Through these trunk lines, a Government Telephone System (GTS)
subscriber could make a call to a PLDT subscriber in the same way that the latter could make a
call to the former.

On 5 March 1958, the plaintiff, through the Director of Telecommunications, entered into an
agreement with RCA Communications, Inc., for a joint overseas telephone service whereby the
Bureau would convey radio-telephone overseas calls received by RCA's station to and from
local residents. 11 Actually, they inaugurated this joint operation on 2 February 1958, under a
"provisional" agreement. 12

On 7 April 1958, the defendant Philippine Long Distance Telephone Company, complained to
the Bureau of Telecommunications that said bureau was violating the conditions under which
their Private Branch Exchange (PBX) is inter-connected with the PLDT's facilities, referring to
the rented trunk lines, for the Bureau had used the trunk lines not only for the use of
government offices but even to serve private persons or the general public, in competition with
the business of the PLDT; and gave notice that if said violations were not stopped by midnight
of 12 April 1958, the PLDT would sever the telephone connections. 13 When the PLDT received
no reply, it disconnected the trunk lines being rented by the Bureau at midnight on 12 April
1958. 14 The result was the isolation of the Philippines, on telephone services, from the rest of
the world, except the United States. 15

At that time, the Bureau was maintaining 5,000 telephones and had 5,000 pending applications
for telephone connection. 16 The PLDT was also maintaining 60,000 telephones and had also
20,000 pending applications. 17Through the years, neither of them has been able to fill up the
demand for telephone service.

The Bureau of Telecommunications had proposed to the PLDT on 8 January 1958 that both
enter into an interconnecting agreement, with the government paying (on a call basis) for all
calls passing through the interconnecting facilities from the Government Telephone System to
the PLDT. 18 The PLDT replied that it was willing to enter into an agreement on overseas
telephone service to Europe and Asian countries provided that the Bureau would submit to the
jurisdiction and regulations of the Public Service Commission and in consideration of 37 1/2% of
the gross revenues. 19 In its memorandum in lieu of oral argument in this Court dated 9 February
1964, on page 8, the defendant reduced its offer to 33 1/3 % (1/3) as its share in the overseas
telephone service. The proposals were not accepted by either party.

On 12 April 1958, plaintiff Republic commenced suit against the defendant, Philippine Long
Distance Telephone Company, in the Court of First Instance of Manila (Civil Case No. 35805),
praying in its complaint for judgment commanding the PLDT to execute a contract with plaintiff,
through the Bureau, for the use of the facilities of defendant's telephone system throughout the
Philippines under such terms and conditions as the court might consider reasonable, and for a
writ of preliminary injunction against the defendant company to restrain the severance of the
existing telephone connections and/or restore those severed.

Acting on the application of the plaintiff, and on the ground that the severance of telephone
connections by the defendant company would isolate the Philippines from other countries, the
court a quo, on 14 April 1958, issued an order for the defendant:

(1) to forthwith reconnect and restore the seventy-eight (78) trunk lines that it has
disconnected between the facilities of the Government Telephone System, including its
overseas telephone services, and the facilities of defendant; (2) to refrain from carrying
 into effect its threat to sever the existing telephone communication between the Bureau
of Telecommunications and defendant, and not to make connection over its telephone
system of telephone calls coming to the Philippines from foreign countries through the
said Bureau's telephone facilities and the radio facilities of RCA Communications, Inc.;
and (3) to accept and connect through its telephone system all such telephone calls
coming to the Philippines from foreign countries — until further order of this Court.

On 28 April 1958, the defendant company filed its answer, with counterclaims.

It denied any obligation on its part to execute a contrary of services with the Bureau of
Telecommunications; contested the jurisdiction of the Court of First Instance to compel it to
enter into interconnecting agreements, and averred that it was justified to disconnect the trunk
lines heretofore leased to the Bureau of Telecommunications under the existing agreement
because its facilities were being used in fraud of its rights. PLDT further claimed that the Bureau
was engaging in commercial telephone operations in excess of authority, in competition with,
and to the prejudice of, the PLDT, using defendants own telephone poles, without proper
accounting of revenues.

After trial, the lower court rendered judgment that it could not compel the PLDT to enter into an
agreement with the Bureau because the parties were not in agreement; that under Executive
Order 94, establishing the Bureau of Telecommunications, said Bureau was not limited to
servicing government offices alone, nor was there any in the contract of lease of the trunk lines,
since the PLDT knew, or ought to have known, at the time that their use by the Bureau was to
be public throughout the Islands, hence the Bureau was neither guilty of fraud, abuse, or misuse
of the poles of the PLDT; and, in view of serious public prejudice that would result from the
disconnection of the trunk lines, declared the preliminary injunction permanent, although it
dismissed both the complaint and the counterclaims.

Both parties appealed.

Taking up first the appeal of the Republic, the latter complains of the action of the trial court in
dismissing the part of its complaint seeking to compel the defendant to enter into an
interconnecting contract with it, because the parties could not agree on the terms and conditions
of the interconnection, and of its refusal to fix the terms and conditions therefor.

We agree with the court below that parties can not be coerced to enter into a contract where
no agreement is had between them as to the principal terms and conditions of the contract.
Freedom to stipulate such terms and conditions is of the essence of our contractual system, and
by express provision of the statute, a contract may be annulled if tainted by violence,
intimidation, or undue influence (Articles 1306, 1336, 1337, Civil Code of the Philippines). But
the court a quo has apparently overlooked that while the Republic may not compel the PLDT to
celebrate a contract with it, the Republic may, in the exercise of the sovereign power of eminent
domain, require the telephone company to permit interconnection of the government telephone
system and that of the PLDT, as the needs of the government service may require, subject to
the payment of just compensation to be determined by the court. Nominally, of course, the
power of eminent domain results in the taking or appropriation of title to, and possession of, the
expropriated property; but no cogent reason appears why the said power may not be availed of
to impose only a burden upon the owner of condemned property, without loss of title and
possession. It is unquestionable that real property may, through expropriation, be subjected to
an easement of right of way. The use of the PLDT's lines and services to allow inter-service
connection between both telephone systems is not much different. In either case private
property is subjected to a burden for public use and benefit. If, under section 6, Article XIII, of
the Constitution, the State may, in the interest of national welfare, transfer utilities to public
ownership upon payment of just compensation, there is no reason why the State may not
require a public utility to render services in the general interest, provided just compensation is
paid therefor. Ultimately, the beneficiary of the interconnecting service would be the users of
both telephone systems, so that the condemnation would be for public use.

The Bureau of Telecommunications, under section 78 (b) of Executive Order No. 94, may
operate and maintain wire telephone or radio telephone communications throughout the
Philippines by utilizing existing facilities in cities, towns, and provinces under such terms and
conditions or arrangement with present owners or operators as may be agreed upon to the
satisfaction of all concerned; but there is nothing in this section that would exclude resort to
condemnation proceedings where unreasonable or unjust terms and conditions are exacted, to
the extent of crippling or seriously hampering the operations of said Bureau.

A perusal of the complaint shows that the Republic's cause of action is predicated upon the
radio telephonic isolation of the Bureau's facilities from the outside world if the severance of
interconnection were to be carried out by the PLDT, thereby preventing the Bureau of
Telecommunications from properly discharging its functions, to the prejudice of the general
public. Save for the prayer to compel the PLDT to enter into a contract (and the prayer is no
essential part of the pleading), the averments make out a case for compulsory rendering of
inter-connecting services by the telephone company upon such terms and conditions as the
court may determine to be just. And since the lower court found that both parties "are practically
at one that defendant (PLDT) is entitled to reasonable compensation from plaintiff for the
reasonable use of the former's telephone facilities" (Decision, Record on Appeal, page 224), the
lower court should have proceeded to treat the case as one of condemnation of such services
independently of contract and proceeded to determine the just and reasonable compensation
for the same, instead of dismissing the petition.

This view we have taken of the true nature of the Republic's petition necessarily results in
overruling the plea of defendant-appellant PLDT that the court of first instance had no
jurisdiction to entertain the petition and that the proper forum for the action was the Public
Service Commission. That body, under the law, has no authority to pass upon actions for the
taking of private property under the sovereign right of eminent domain. Furthermore, while the
defendant telephone company is a public utility corporation whose franchise, equipment and
other properties are under the jurisdiction, supervision and control of the Public Service
Commission (Sec. 13, Public Service Act), yet the plaintiff's telecommunications network is a
public service owned by the Republic and operated by an instrumentality of the National
Government, hence exempt, under Section 14 of the Public Service Act, from such jurisdiction,
supervision and control. The Bureau of Telecommunications was created in pursuance of a
state policy reorganizing the government offices —

to meet the exigencies attendant upon the establishment of the free and independent
Government of the Republic of the Philippines, and for the purpose of promoting
simplicity, economy and efficiency in its operation (Section 1, Republic Act No. 51) —

and the determination of state policy is not vested in the Commission (Utilities Com. vs.
Bartonville Bus Line, 290 Ill. 574; 124 N.E. 373).
 Defendant PLDT, as appellant, contends that the court below was in error in not holding that
the Bureau of Telecommunications was not empowered to engage in commercial telephone
business, and in ruling that said defendant was not justified in disconnecting the telephone trunk
lines it had previously leased to the Bureau. We find that the court a quo ruled correctly in
rejecting both assertions.

Executive Order No. 94, Series of 1947, reorganizing the Bureau of Telecommunications,
expressly empowered the latter in its Section 79, subsection (b), to "negotiate for, operate and
maintain wire telephone or radio telephone communication service throughout the Philippines",
and, in subsection (c), "to prescribe, subject to approval by the Department Head, equitable
rates of charges for messages handled by the system and/or for time calls and other services
that may be rendered by the system". Nothing in these provisions limits the Bureau to non-
commercial activities or prevents it from serving the general public. It may be that in its original
prospectuses the Bureau officials had stated that the service would be limited to government
offices: but such limitations could not block future expansion of the system, as authorized by the
terms of the Executive Order, nor could the officials of the Bureau bind the Government not to
engage in services that are authorized by law. It is a well-known rule that erroneous application
and enforcement of the law by public officers do not block subsequent correct application of the
statute (PLDT vs. Collector of Internal Revenue, 90 Phil. 676), and that the Government is never
estopped by mistake or error on the part of its agents (Pineda vs. Court of First Instance of
Tayabas, 52 Phil. 803, 807; Benguet Consolidated Mining Co. vs. Pineda, 98 Phil. 711, 724).

The theses that the Bureau's commercial services constituted unfair competition, and that the
Bureau was guilty of fraud and abuse under its contract, are, likewise, untenable.

First, the competition is merely hypothetical, the demand for telephone service being very
much more than the supposed competitors can supply. As previously noted, the PLDT had
20,000 pending applications at the time, and the Bureau had another 5,000. The telephone
company's inability to meet the demands for service are notorious even now. Second, the
charter of the defendant expressly provides:

SEC. 14. The rights herein granted shall not be exclusive, and the rights and power to
grant to any corporation, association or person other than the grantee franchise for the
telephone or electrical transmission of message or signals shall not be impaired or
affected by the granting of this franchise: — (Act 3436)

And third, as the trial court correctly stated, "when the Bureau of Telecommunications
subscribed to the trunk lines, defendant knew or should have known that their use by the
subscriber was more or less public and all embracing in nature, that is, throughout the
Philippines, if not abroad" (Decision, Record on Appeal, page 216).

The acceptance by the defendant of the payment of rentals, despite its knowledge that the
plaintiff had extended the use of the trunk lines to commercial purposes, continuously since
1948, implies assent by the defendant to such extended use. Since this relationship has been
maintained for a long time and the public has patronized both telephone systems, and their
interconnection is to the public convenience, it is too late for the defendant to claim misuse of its
facilities, and it is not now at liberty to unilaterally sever the physical connection of the trunk
lines.
 ..., but there is high authority for the position that, when such physical connection has
been voluntarily made, under a fair and workable arrangement and guaranteed by
contract and the continuous line has come to be patronized and established as a great
public convenience, such connection shall not in breach of the agreement be severed by
one of the parties. In that case, the public is held to have such an interest in the
arrangement that its rights must receive due consideration. This position finds approval
in State ex rel. vs. Cadwaller, 172 Ind. 619, 636, 87 N.E. 650, and is stated in the
elaborate and learned opinion of Chief Justice Myers as follows: "Such physical
connection cannot be required as of right, but if such connection is voluntarily made by
contract, as is here alleged to be the case, so that the public acquires an interest in its
continuance, the act of the parties in making such connection is equivalent to a
declaration of a purpose to waive the primary right of independence, and it imposes
upon the property such a public status that it may not be disregarded" — citing Mahan v.
Mich. Tel. Co., 132 Mich. 242, 93 N.W. 629, and the reasons upon which it is in part
made to rest are referred to in the same opinion, as follows: "Where private property is
by the consent of the owner invested with a public interest or privilege for the benefit of
the public, the owner can no longer deal with it as private property only, but must hold it
subject to the right of the public in the exercise of that public interest or privilege
conferred for their benefit." Allnut v. Inglis (1810) 12 East, 527. The doctrine of this early
case is the acknowledged law. (Clinton-Dunn Tel. Co. v. Carolina Tel. & Tel. Co., 74
S.E. 636, 638).

It is clear that the main reason for the objection of the PLDT lies in the fact that said appellant
did not expect that the Bureau's telephone system would expand with such rapidity as it has
done; but this expansion is no ground for the discontinuance of the service agreed upon.

The last issue urged by the PLDT as appellant is its right to compensation for the use of its
poles for bearing telephone wires of the Bureau of Telecommunications. Admitting that section
19 of the PLDT charter reserves to the Government —

the privilege without compensation of using the poles of the grantee to attach one ten-
pin cross-arm, and to install, maintain and operate wires of its telegraph system
thereon; Provided, however, That the Bureau of Posts shall have the right to place
additional cross-arms and wires on the poles of the grantee by paying a compensation,
the rate of which is to be agreed upon by the Director of Posts and the grantee; —

the defendant counterclaimed for P8,772.00 for the use of its poles by the plaintiff, contending
that what was allowed free use, under the aforequoted provision, was one ten-pin cross-arm
attachment and only for plaintiff's telegraph system, not for its telephone system; that said
section could not refer to the plaintiff's telephone system, because it did not have such
telephone system when defendant acquired its franchise. The implication of the argument is that
plaintiff has to pay for the use of defendant's poles if such use is for plaintiff's telephone system
and has to pay also if it attaches more than one (1) ten-pin cross-arm for telegraphic purposes.

As there is no proof that the telephone wires strain the poles of the PLDT more than the
telegraph wires, nor that they cause more damage than the wires of the telegraph system, or
that the Government has attached to the poles more than one ten-pin cross-arm as permitted by
the PLDT charter, we see no point in this assignment of error. So long as the burden to be
borne by the PLDT poles is not increased, we see no reason why the reservation in favor of the
telegraph wires of the government should not be extended to its telephone lines, any time that
the government decided to engage also in this kind of communication.

In the ultimate analysis, the true objection of the PLDT to continue the link between its network
and that of the Government is that the latter competes "parasitically" (sic) with its own telephone
services. Considering, however, that the PLDT franchise is non-exclusive; that it is well-known
that defendant PLDT is unable to adequately cope with the current demands for telephone
service, as shown by the number of pending applications therefor; and that the PLDT's right to
just compensation for the services rendered to the Government telephone system and its users
is herein recognized and preserved, the objections of defendant-appellant are without merit. To
uphold the PLDT's contention is to subordinate the needs of the general public to the right of the
PLDT to derive profit from the future expansion of its services under its non-exclusive franchise.

WHEREFORE, the decision of the Court of First Instance, now under appeal, is affirmed,
except in so far as it dismisses the petition of the Republic of the Philippines to compel the
Philippine Long Distance Telephone Company to continue servicing the Government telephone
system upon such terms, and for a compensation, that the trial court may determine to be just,
including the period elapsed from the filing of the original complaint or petition. And for this
purpose, the records are ordered returned to the court of origin for further hearings and other
proceedings not inconsistent with this opinion. No costs.

[G.R. No. 138896. June 20, 2000]

BARANGAY SAN ROQUE, TALISAY, CEBU, petitioner, vs. Heirs of FRANCISCO PASTOR,
namely: EUGENIO SYLIANCO, TEODORO SYLIANCO, ISABEL SYLIANCO, EUGENIA S.
ONG, LAWRENCE SYLIANCO, LAWSON SYLIANCO, LAWINA S. NOTARIO, LEONARDO
SYLIANCO JR. and LAWFORD SYLIANCO, respondents.

DECISION

PANGANIBAN, J.:

An expropriation suit is incapable of pecuniary estimation. Accordingly, it falls within the

jurisdiction of the regional trial courts, regardless of the value of the subject property.

The Case

Before us is a Petition for Review on Certiorari assailing the March 29, 1999 Order[1] of the
Regional Trial Court (RTC) of Cebu City (Branch 58) in Civil Case No. CEB-21978, in which it
dismissed a Complaint for eminent domain. It ruled as follows:

"Premises considered, the motion to dismiss is hereby granted on the ground

that this Court has no jurisdiction over the case. Accordingly, the Orders dated
February 19, 1999 and February 26, 1999, as well as the Writ of Possession
issued by virtue of the latter Order are hereby recalled for being without force and
effect."[2]

Petitioner also challenges the May 14, 1999 Order of the RTC denying reconsideration.
The Facts

Petitioner filed before the Municipal Trial Court (MTC) of Talisay, Cebu (Branch 1) [3] a Complaint
to expropriate a property of the respondents. In an Order dated April 8, 1997, the MTC
dismissed the Complaint on the ground of lack of jurisdiction. It reasoned that "[e]minent domain
is an exercise of the power to take private property for public use after payment of just
compensation. In an action for eminent domain, therefore, the principal cause of action is the
exercise of such power or right. The fact that the action also involves real property is merely
incidental. An action for eminent domain is therefore within the exclusive original jurisdiction of
the Regional Trial Court and not with this Court."[4]

Assailed RTC Ruling

The RTC also dismissed the Complaint when filed before it, holding that an action for eminent
domain affected title to real property; hence, the value of the property to be expropriated would
determine whether the case should be filed before the MTC or the RTC. Concluding that the
action should have been filed before the MTC since the value of the subject property was less
than P20,000, the RTC ratiocinated in this wise:

"The instant action is for eminent domain. It appears from the current Tax
Declaration of the land involved that its assessed value is only One Thousand
Seven Hundred Forty Pesos (P1,740.00). Pursuant to Section 3, paragraph (3),
of Republic Act No. 7691, all civil actions involving title to, or possession of, real
property with an assessed value of less than P20,000.00 are within the exclusive
original jurisdiction of the Municipal Trial Courts. In the case at bar, it is within the
exclusive original jurisdiction of the Municipal Trial Court of Talisay, Cebu, where
the property involved is located.

"The instant action for eminent domain or condemnation of real property is a real
action affecting title to or possession of real property, hence, it is the assessed
value of the property involved which determines the jurisdiction of the court. That
the right of eminent domain or condemnation of real property is included in a real
action affecting title to or possession of real property, is pronounced by retired
Justice Jose Y. Feria, thus, Real actions are those affecting title to or possession
of real property. These include partition or condemnation of, or foreclosures of
mortgage on, real property. x x x"[5]

Aggrieved, petitioner appealed directly to this Court, raising a pure question of law. [6] In a
Resolution dated July 28, 1999, the Court denied the Petition for Review "for being posted out
of time on July 2, 1999, the due date being June 2, 1999, as the motion for extension of time to
file petition was denied in the resolution of July 14, 1999."[7] In a subsequent Resolution dated
October 6, 1999, the Court reinstated the Petition.[8]

Respondents, on the other hand, contend that the Complaint for Eminent Domain affects the
title to or possession of real property. Thus, they argue that the case should have been brought
before the MTC, pursuant to BP 129 as amended by Section 3 (3) of RA 7691. This law
provides that MTCs shall have exclusive original jurisdiction over all civil actions that involve title
to or possession of real property, the assessed value of which does not exceed twenty thousand
pesos or, in civil actions in Metro Manila, fifty thousand pesos exclusive of interest, damages of
whatever kind, attorneys fees, litigation expenses and costs.

We agree with the petitioner that an expropriation suit is incapable of pecuniary estimation. The
test to determine whether it is so was laid down by the Court in this wise:

"A review of the jurisprudence of this Court indicates that in determining whether
an action is one the subject matter of which is not capable of pecuniary
estimation, this Court has adopted the criterion of first ascertaining the nature of
the principal action or remedy sought. If it is primarily for the recovery of a sum of
money, the claim is considered capable of pecuniary estimation, and whether
jurisdiction is in the municipal courts or in the courts of first instance would
depend on the amount of the claim. However, where the basic issue is something
other than the right to recover a sum of money, or where the money claim is
purely incidental to, or a consequence of, the principal relief sought, like in suits
to have the defendant perform his part of the contract (specific performance) and
in actions for support, or for annulment of a judgment or to foreclose a mortgage,
this Court has considered such actions as cases where the subject of the
litigation may not be estimated in terms of money, and are cognizable exclusively
by courts of first instance. The rationale of the rule is plainly that the second class
cases, besides the determination of damages, demand an inquiry into other
factors which the law has deemed to be more within the competence of courts of
first instance, which were the lowest courts of record at the time that the first
organic laws of the Judiciary were enacted allocating jurisdiction (Act 136 of the
Philippine Commission of June 11, 1901)."10

In the present case, an expropriation suit does not involve the recovery of a sum of money.
Rather, it deals with the exercise by the government of its authority and right to take private
property for public use.11 In National Power Corporation v. Jocson,12 the Court ruled that
expropriation proceedings have two phases:

"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. An order of dismissal, if this be ordained, would
be a final one, of course, since it finally disposes of the action and leaves nothing
more to be done by the Court on the merits. So, too, would an order of
condemnation be a final one, for thereafter as the Rules expressly state, in the
proceedings before the Trial Court, no objection to the exercise of the right of
condemnation (or the propriety thereof) shall be filed or heard.

"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. The order fixing the just compensation on the basis of the
 evidence before, and findings of, the commissioners would be final, too. It would
finally dispose of the second stage of the suit, and leave nothing more to be done
by the Court regarding the issue. x x x"

It should be stressed that the primary consideration in an expropriation suit is whether the
government or any of its instrumentalities has complied with the requisites for the taking of
private property. Hence, the courts determine the authority of the government entity, the
necessity of the expropriation, and the observance of due process.13 In the main, the subject of
an expropriation suit is the governments exercise of eminent domain, a matter that is incapable
of pecuniary estimation.

True, the value of the property to be expropriated is estimated in monetary terms, for the court is
duty-bound to determine the just compensation for it. This, however, is merely incidental to the
expropriation suit. Indeed, that amount is determined only after the court is satisfied with the
propriety of the expropriation.

Verily, the Court held in Republic of the Philippines v. Zurbano that "condemnation proceedings
are within the jurisdiction of Courts of First Instance,"14 the forerunners of the regional trial
courts. The said case was decided during the effectivity of the Judiciary Act of 1948 which, like
BP 129 in respect to RTCs, provided that courts of first instance had original jurisdiction over "all
civil actions in which the subject of the litigation is not capable of pecuniary estimation."15 The
1997 amendments to the Rules of Court were not intended to change these jurisprudential
precedents.

We are not persuaded by respondents argument that the present action involves the title to or
possession of a parcel of land. They cite the observation of retired Justice Jose Y. Feria, an
eminent authority in remedial law, that condemnation or expropriation proceedings are
examples of real actions that affect the title to or possession of a parcel of land.16

Their reliance is misplaced. Justice Feria sought merely to distinguish between real and
personal actions. His discussion on this point pertained to the nature of actions, not to the
jurisdiction of courts. In fact, in his pre-bar lectures, he emphasizes that jurisdiction over
eminent domain cases is still within the RTCs under the 1997 Rules.

To emphasize, the question in the present suit is whether the government may expropriate
private property under the given set of circumstances. The government does not dispute
respondents title to or possession of the same. Indeed, it is not a question of who has a better
title or right, for the government does not even claim that it has a title to the property. It merely
asserts its inherent sovereign power to "appropriate and control individual property for the public
benefit, as the public necessity, convenience or welfare may demand."17

WHEREFORE, the Petition is hereby GRANTED and the assailed Orders SET ASIDE. The
Regional Trial Court is directed to HEAR the case. No costs.
G.R. No. L-20620 August 15, 1974

REPUBLIC OF THE PHILIPPINES, plaintiff-appellant,

vs.
CARMEN M. VDA. DE CASTELLVI, ET AL., defendants-appellees.

Office of the Solicitor General for plaintiff-appellant.

C.A. Mendoza & A. V. Raquiza and Alberto Cacnio & Associates for defendant-appellees.

ZALDIVAR, J.:

Appeal from the decision of the Court of First Instance of Pampanga in its Civil Case No. 1623,
an expropriation proceeding.

Plaintiff-appellant, the Republic of the Philippines, (hereinafter referred to as the Republic) filed,
on June 26, 1959, a complaint for eminent domain against defendant-appellee, Carmen M. Vda.
de Castellvi, judicial administratrix of the estate of the late Alfonso de Castellvi (hereinafter
referred to as Castellvi), over a parcel of land situated in the barrio of San Jose, Floridablanca,
Pampanga, described as follows:

A parcel of land, Lot No. 199-B Bureau of Lands Plan Swo 23666. Bounded on
the NE by Maria Nieves Toledo-Gozun; on the SE by national road; on the SW
by AFP reservation, and on the NW by AFP reservation. Containing an area of
759,299 square meters, more or less, and registered in the name of Alfonso
Castellvi under TCT No. 13631 of the Register of Pampanga ...;

and against defendant-appellee Maria Nieves Toledo Gozun (hereinafter referred to as Toledo-
Gozun over two parcels of land described as follows:

A parcel of land (Portion Lot Blk-1, Bureau of Lands Plan Psd, 26254. Bounded
on the NE by Lot 3, on the SE by Lot 3; on the SW by Lot 1-B, Blk. 2 (equivalent
to Lot 199-B Swo 23666; on the NW by AFP military reservation. Containing an
area of 450,273 square meters, more or less and registered in the name of Maria
Nieves Toledo-Gozun under TCT No. 8708 of the Register of Deeds of
Pampanga. ..., and

A parcel of land (Portion of lot 3, Blk-1, Bureau of Lands Plan Psd 26254.
Bounded on the NE by Lot No. 3, on the SE by school lot and national road, on
the SW by Lot 1-B Blk 2 (equivalent to Lot 199-B Swo 23666), on the NW by Lot
1-B, Blk-1. Containing an area of 88,772 square meters, more or less, and
registered in the name of Maria Nieves Toledo Gozun under TCT No. 8708 of the
Register of Deeds of Pampanga, ....

In its complaint, the Republic alleged, among other things, that the fair market value of the
above-mentioned lands, according to the Committee on Appraisal for the Province of
Pampanga, was not more than P2,000 per hectare, or a total market value of P259,669.10; and
prayed, that the provisional value of the lands be fixed at P259.669.10, that the court authorizes
plaintiff to take immediate possession of the lands upon deposit of that amount with the
Provincial Treasurer of Pampanga; that the court appoints three commissioners to ascertain and
report to the court the just compensation for the property sought to be expropriated, and that the
court issues thereafter a final order of condemnation.

On June 29, 1959 the trial court issued an order fixing the provisional value of the lands at
P259,669.10.

In her "motion to dismiss" filed on July 14, 1959, Castellvi alleged, among other things, that the
land under her administration, being a residential land, had a fair market value of P15.00 per
square meter, so it had a total market value of P11,389,485.00; that the Republic, through the
Armed Forces of the Philippines, particularly the Philippine Air Force, had been, despite
repeated demands, illegally occupying her property since July 1, 1956, thereby preventing her
from using and disposing of it, thus causing her damages by way of unrealized profits. This
defendant prayed that the complaint be dismissed, or that the Republic be ordered to pay her
P15.00 per square meter, or a total of P11,389,485.00, plus interest thereon at 6% per annum
from July 1, 1956; that the Republic be ordered to pay her P5,000,000.00 as unrealized profits,
and the costs of the suit.

By order of the trial court, dated August, 1959, Amparo C. Diaz, Dolores G. viuda de Gil,
Paloma Castellvi, Carmen Castellvi, Rafael Castellvi, Luis Castellvi, Natividad Castellvi de
Raquiza, Jose Castellvi and Consuelo Castellvi were allowed to intervene as parties
defendants. Subsequently, Joaquin V. Gozun, Jr., husband of defendant Nieves Toledo Gozun,
was also allowed by the court to intervene as a party defendant.

After the Republic had deposited with the Provincial Treasurer of Pampanga the amount of
P259,669.10, the trial court ordered that the Republic be placed in possession of the lands. The
Republic was actually placed in possession of the lands on August 10,
1959.1

In her "motion to dismiss", dated October 22, 1959, Toledo-Gozun alleged, among other things,
that her two parcels of land were residential lands, in fact a portion with an area of 343,303
square meters had already been subdivided into different lots for sale to the general public, and
the remaining portion had already been set aside for expansion sites of the already completed
subdivisions; that the fair market value of said lands was P15.00 per square meter, so they had
a total market value of P8,085,675.00; and she prayed that the complaint be dismissed, or that
she be paid the amount of P8,085,675.00, plus interest thereon at the rate of 6% per annum
from October 13, 1959, and attorney's fees in the amount of P50,000.00.

Intervenors Jose Castellvi and Consuelo Castellvi in their answer, filed on February 11, 1960,
and also intervenor Joaquin Gozun, Jr., husband of defendant Maria Nieves Toledo-Gozun, in
his motion to dismiss, dated May 27, 1960, all alleged that the value of the lands sought to be
expropriated was at the rate of P15.00 per square meter.

On November 4, 1959, the trial court authorized the Provincial Treasurer of Pampanga to pay
defendant Toledo-Gozun the sum of P107,609.00 as provisional value of her lands.2 On May
16, 1960 the trial Court authorized the Provincial Treasurer of Pampanga to pay defendant
Castellvi the amount of P151,859.80 as provisional value of the land under her administration,
and ordered said defendant to deposit the amount with the Philippine National Bank under the
supervision of the Deputy Clerk of Court. In another order of May 16, 1960 the trial Court
entered an order of condemnation.3

The trial Court appointed three commissioners: Atty. Amadeo Yuzon, Clerk of Court, as
commissioner for the court; Atty. Felicisimo G. Pamandanan, counsel of the Philippine National
Bank Branch at Floridablanca, for the plaintiff; and Atty. Leonardo F. Lansangan, Filipino legal
counsel at Clark Air Base, for the defendants. The Commissioners, after having qualified
themselves, proceeded to the performance of their duties.

On March 15,1961 the Commissioners submitted their report and recommendation, wherein,
after having determined that the lands sought to be expropriated were residential lands, they
recommended unanimously that the lowest price that should be paid was P10.00 per square
meter, for both the lands of Castellvi and Toledo-Gozun; that an additional P5,000.00 be paid to
Toledo-Gozun for improvements found on her land; that legal interest on the compensation,
computed from August 10, 1959, be paid after deducting the amounts already paid to the
owners, and that no consequential damages be awarded.4 The Commissioners' report was
objected to by all the parties in the case — by defendants Castellvi and Toledo-Gozun, who
insisted that the fair market value of their lands should be fixed at P15.00 per square meter; and
by the Republic, which insisted that the price to be paid for the lands should be fixed at P0.20
per square meter.5

After the parties-defendants and intervenors had filed their respective memoranda, and the
Republic, after several extensions of time, had adopted as its memorandum its objections to the
report of the Commissioners, the trial court, on May 26, 1961, rendered its decision6 the
dispositive portion of which reads as follows:

WHEREFORE, taking into account all the foregoing circumstances, and that the
lands are titled, ... the rising trend of land values ..., and the lowered purchasing
power of the Philippine peso, the court finds that the unanimous recommendation
of the commissioners of ten (P10.00) pesos per square meter for the three lots of
the defendants subject of this action is fair and just.

xxx xxx xxx

The plaintiff will pay 6% interest per annum on the total value of the lands of
defendant Toledo-Gozun since (sic) the amount deposited as provisional value
from August 10, 1959 until full payment is made to said defendant or deposit
therefor is made in court.

In respect to the defendant Castellvi, interest at 6% per annum will also be paid
by the plaintiff to defendant Castellvi from July 1, 1956 when plaintiff commenced
its illegal possession of the Castellvi land when the instant action had not yet
been commenced to July 10, 1959 when the provisional value thereof was
actually deposited in court, on the total value of the said (Castellvi) land as herein
adjudged. The same rate of interest shall be paid from July 11, 1959 on the total
value of the land herein adjudged minus the amount deposited as provisional
value, or P151,859.80, such interest to run until full payment is made to said
defendant or deposit therefor is made in court. All the intervenors having failed to
produce evidence in support of their respective interventions, said interventions
are ordered dismissed.
 The costs shall be charged to the plaintiff.

On June 21, 1961 the Republic filed a motion for a new trial and/or reconsideration, upon the
grounds of newly-discovered evidence, that the decision was not supported by the evidence,
and that the decision was against the law, against which motion defendants Castellvi and
Toledo-Gozun filed their respective oppositions. On July 8, 1961 when the motion of the
Republic for new trial and/or reconsideration was called for hearing, the Republic filed a
supplemental motion for new trial upon the ground of additional newly-discovered evidence.
This motion for new trial and/or reconsideration was denied by the court on July 12, 1961.

On July 17, 1961 the Republic gave notice of its intention to appeal from the decision of May 26,
1961 and the order of July 12, 1961. Defendant Castellvi also filed, on July 17, 1961, her notice
of appeal from the decision of the trial court.

The Republic filed various ex-parte motions for extension of time within which to file its record
on appeal. The Republic's record on appeal was finally submitted on December 6, 1961.

Defendants Castellvi and Toledo-Gozun filed not only a joint opposition to the approval of the
Republic's record on appeal, but also a joint memorandum in support of their opposition. The
Republic also filed a memorandum in support of its prayer for the approval of its record on
appeal. On December 27, 1961 the trial court issued an order declaring both the record on
appeal filed by the Republic, and the record on appeal filed by defendant Castellvi as having
been filed out of time, thereby dismissing both appeals.

On January 11, 1962 the Republic filed a "motion to strike out the order of December 27, 1961
and for reconsideration", and subsequently an amended record on appeal, against which motion
the defendants Castellvi and Toledo-Gozun filed their opposition. On July 26, 1962 the trial
court issued an order, stating that "in the interest of expediency, the questions raised may be
properly and finally determined by the Supreme Court," and at the same time it ordered the
Solicitor General to submit a record on appeal containing copies of orders and pleadings
specified therein. In an order dated November 19, 1962, the trial court approved the Republic's
record on appeal as amended.

Defendant Castellvi did not insist on her appeal. Defendant Toledo-Gozun did not appeal.

The motion to dismiss the Republic's appeal was reiterated by appellees Castellvi and Toledo-
Gozun before this Court, but this Court denied the motion.

In her motion of August 11, 1964, appellee Castellvi sought to increase the provisional value of
her land. The Republic, in its comment on Castellvi's motion, opposed the same. This Court
denied Castellvi's motion in a resolution dated October 2,1964.

The motion of appellees, Castellvi and Toledo-Gozun, dated October 6, 1969, praying that they
be authorized to mortgage the lands subject of expropriation, was denied by this Court or
October 14, 1969.

On February 14, 1972, Attys. Alberto Cacnio, and Associates, counsel for the estate of the late
Don Alfonso de Castellvi in the expropriation proceedings, filed a notice of attorney's lien,
stating that as per agreement with the administrator of the estate of Don Alfonso de Castellvi
they shall receive by way of attorney's fees, "the sum equivalent to ten per centum of whatever
the court may finally decide as the expropriated price of the property subject matter of the case."

---------

Before this Court, the Republic contends that the lower court erred:

1. In finding the price of P10 per square meter of the lands subject of the instant
proceedings as just compensation;

2. In holding that the "taking" of the properties under expropriation commenced

with the filing of this action;

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

Castellvi property to start from July of 1956;

4. In denying plaintiff-appellant's motion for new trial based on newly discovered

evidence.

In its brief, the Republic discusses the second error assigned as the first issue to be considered.
We shall follow the sequence of the Republic's discussion.

1. In support of the assigned error that the lower court erred in holding that the "taking" of the
properties under expropriation commenced with the filing of the complaint in this case, the
Republic argues that the "taking" should be reckoned from the year 1947 when by virtue of a
special lease agreement between the Republic and appellee Castellvi, the former was granted
the "right and privilege" to buy the property should the lessor wish to terminate the lease, and
that in the event of such sale, it was stipulated that the fair market value should be as of the
time of occupancy; and that the permanent improvements amounting to more that half a million
pesos constructed during a period of twelve years on the land, subject of expropriation, were
indicative of an agreed pattern of permanency and stability of occupancy by the Philippine Air
Force in the interest of national Security.7

Appellee Castellvi, on the other hand, maintains that the "taking" of property under the power of
eminent domain requires two essential elements, to wit: (1) entrance and occupation by
condemn or upon the private property for more than a momentary or limited period, and (2)
devoting it to a public use in such a way as to oust the owner and deprive him of all beneficial
enjoyment of the property. This appellee argues that in the instant case the first element is
wanting, for the contract of lease relied upon provides for a lease from year to year; that the
second element is also wanting, because the Republic was paying the lessor Castellvi a
monthly rental of P445.58; and that the contract of lease does not grant the Republic the "right
and privilege" to buy the premises "at the value at the time of occupancy."8

Appellee Toledo-Gozun did not comment on the Republic's argument in support of the second
error assigned, because as far as she was concerned the Republic had not taken possession of
her lands prior to August 10, 1959.9

In order to better comprehend the issues raised in the appeal, in so far as the Castellvi property
is concerned, it should be noted that the Castellvi property had been occupied by the Philippine
Air Force since 1947 under a contract of lease, typified by the contract marked Exh. 4-Castellvi,
the pertinent portions of which read:

CONTRACT OF LEASE

This AGREEMENT OF LEASE MADE AND ENTERED into by and between

INTESTATE ESTATE OF ALFONSO DE CASTELLVI, represented by CARMEN
M. DE CASTELLVI, Judicial Administratrix ... hereinafter called the LESSOR and
THE REPUBLIC OF THE PHILIPPINES represented by MAJ. GEN. CALIXTO
DUQUE, Chief of Staff of the ARMED FORCES OF THE PHILIPPINES,
hereinafter called the LESSEE,

WITNESSETH:

1. For and in consideration of the rentals hereinafter reserved and the mutual
terms, covenants and conditions of the parties, the LESSOR has, and by these
presents does, lease and let unto the LESSEE the following described land
together with the improvements thereon and appurtenances thereof, viz:

Un Terreno, Lote No. 27 del Plano de subdivision Psu 34752, parte de la

hacienda de Campauit, situado en el Barrio de San Jose, Municipio de
Floridablanca Pampanga. ... midiendo una extension superficial de cuatro
milliones once mil cuatro cientos trienta y cinco (4,001,435) [sic] metros
cuadrados, mas o menos.

Out of the above described property, 75.93 hectares thereof are actually
occupied and covered by this contract. .

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

Pampanga ...

of which premises, the LESSOR warrants that he/she/they/is/are the registered owner(s) and
with full authority to execute a contract of this nature.

2. The term of this lease shall be for the period beginning July 1, 1952 the date
the premises were occupied by the PHILIPPINE AIR FORCE, AFP until June 30,
1953, subject to renewal for another year at the option of the LESSEE or unless
sooner terminated by the LESSEE as hereinafter provided.

3. The LESSOR hereby warrants that the LESSEE shall have quiet, peaceful and
undisturbed possession of the demised premises throughout the full term or
period of this lease and the LESSOR undertakes without cost to the LESSEE to
eject all trespassers, but should the LESSOR fail to do so, the LESSEE at its
option may proceed to do so at the expense of the LESSOR. The LESSOR
further agrees that should he/she/they sell or encumber all or any part of the
herein described premises during the period of this lease, any conveyance will be
conditioned on the right of the LESSEE hereunder.

4. The LESSEE shall pay to the LESSOR as monthly rentals under this lease the
sum of FOUR HUNDRED FIFTY-FIVE PESOS & 58/100 (P455.58) ...
 5. The LESSEE may, at any time prior to the termination of this lease, use the
property for any purpose or purposes and, at its own costs and expense make
alteration, install facilities and fixtures and errect additions ... which facilities or
fixtures ... so placed in, upon or attached to the said premises shall be and
remain property of the LESSEE and may be removed therefrom by the LESSEE
prior to the termination of this lease. The LESSEE shall surrender possession of
the premises upon the expiration or termination of this lease and if so required by
the LESSOR, shall return the premises in substantially the same condition as
that existing at the time same were first occupied by the AFP, reasonable and
ordinary wear and tear and damages by the elements or by circumstances over
which the LESSEE has no control excepted: PROVIDED, that if the LESSOR so
requires the return of the premises in such condition, the LESSOR shall give
written notice thereof to the LESSEE at least twenty (20) days before the
termination of the lease and provided, further, that should the LESSOR give
notice within the time specified above, the LESSEE shall have the right and
privilege to compensate the LESSOR at the fair value or the equivalent, in lieu of
performance of its obligation, if any, to restore the premises. Fair value is to be
determined as the value at the time of occupancy less fair wear and tear and
depreciation during the period of this lease.

6. The LESSEE may terminate this lease at any time during the term hereof by
giving written notice to the LESSOR at least thirty (30) days in advance ...

7. The LESSEE should not be responsible, except under special legislation for
any damages to the premises by reason of combat operations, acts of GOD, the
elements or other acts and deeds not due to the negligence on the part of the
LESSEE.

8. This LEASE AGREEMENT supersedes and voids any and all agreements and
undertakings, oral or written, previously entered into between the parties
covering the property herein leased, the same having been merged herein. This
AGREEMENT may not be modified or altered except by instrument in writing only
duly signed by the parties. 10

It was stipulated by the parties, that "the foregoing contract of lease (Exh. 4, Castellvi) is 'similar
in terms and conditions, including the date', with the annual contracts entered into from year to
year between defendant Castellvi and the Republic of the Philippines (p. 17, t.s.n., Vol. III)". 11 It
is undisputed, therefore, that the Republic occupied Castellvi's land from July 1, 1947, by virtue
of the above-mentioned contract, on a year to year basis (from July 1 of each year to June 30 of
the succeeding year) under the terms and conditions therein stated.

Before the expiration of the contract of lease on June 30, 1956 the Republic sought to renew the
same but Castellvi refused. When the AFP refused to vacate the leased premises after the
termination of the contract, on July 11, 1956, Castellvi wrote to the Chief of Staff, AFP, informing
the latter that the heirs of the property had decided not to continue leasing the property in
question because they had decided to subdivide the land for sale to the general public,
demanding that the property be vacated within 30 days from receipt of the letter, and that the
premises be returned in substantially the same condition as before occupancy (Exh. 5 —
Castellvi). A follow-up letter was sent on January 12, 1957, demanding the delivery and return
of the property within one month from said date (Exh. 6 Castellvi). On January 30, 1957,
Lieutenant General Alfonso Arellano, Chief of Staff, answered the letter of Castellvi, saying that
it was difficult for the army to vacate the premises in view of the permanent installations and
other facilities worth almost P500,000.00 that were erected and already established on the
property, and that, there being no other recourse, the acquisition of the property by means of
expropriation proceedings would be recommended to the President (Exhibit "7" — Castellvi).

Defendant Castellvi then brought suit in the Court of First Instance of Pampanga, in Civil Case
No. 1458, to eject the Philippine Air Force from the land. While this ejectment case was
pending, the Republic instituted these expropriation proceedings, and, as stated earlier in this
opinion, the Republic was placed in possession of the lands on August 10, 1959, On November
21, 1959, the Court of First Instance of Pampanga, dismissed Civil Case No. 1458, upon
petition of the parties, in an order which, in part, reads as follows:

1. Plaintiff has agreed, as a matter of fact has already signed an agreement with
defendants, whereby she has agreed to receive the rent of the lands, subject
matter of the instant case from June 30, 1966 up to 1959 when the Philippine Air
Force was placed in possession by virtue of an order of the Court upon
depositing the provisional amount as fixed by the Provincial Appraisal Committee
with the Provincial Treasurer of Pampanga;

2. That because of the above-cited agreement wherein the administratrix decided

to get the rent corresponding to the rent from 1956 up to 1959 and considering
that this action is one of illegal detainer and/or to recover the possession of said
land by virtue of non-payment of rents, the instant case now has become moot
and academic and/or by virtue of the agreement signed by plaintiff, she has
waived her cause of action in the above-entitled case. 12

The Republic urges that the "taking " of Castellvi's property should be deemed as of the year
1947 by virtue of afore-quoted lease agreement. In American Jurisprudence, Vol. 26, 2nd
edition, Section 157, on the subject of "Eminent Domain, we read the definition of "taking" (in
eminent domain) as follows:

Taking' under the power of eminent domain may be defined generally as entering
upon private property for more than a momentary period, and, under the warrant
or color of legal authority, devoting it to a public use, or otherwise informally
appropriating or injuriously affecting it in such a way as substantially to oust the
owner and deprive him of all beneficial enjoyment thereof. 13

Pursuant to the aforecited authority, a number of circumstances must be present in the "taking"
of property for purposes of eminent domain.

First, the expropriator must enter a private property. This circumstance is present in the instant
case, when by virtue of the lease agreement the Republic, through the AFP, took possession of
the property of Castellvi.

Second, the entrance into private property must be for more than a momentary period.
"Momentary" means, "lasting but a moment; of but a moment's duration" (The Oxford English
Dictionary, Volume VI, page 596); "lasting a very short time; transitory; having a very brief life;
operative or recurring at every moment" (Webster's Third International Dictionary, 1963 edition.)
The word "momentary" when applied to possession or occupancy of (real) property should be
construed to mean "a limited period" — not indefinite or permanent. The aforecited lease
contract was for a period of one year, renewable from year to year. The entry on the property,
under the lease, is temporary, and considered transitory. The fact that the Republic, through the
AFP, constructed some installations of a permanent nature does not alter the fact that the entry
into the land was transitory, or intended to last a year, although renewable from year to year by
consent of 'The owner of the land. By express provision of the lease agreement the Republic, as
lessee, undertook to return the premises in substantially the same condition as at the time the
property was first occupied by the AFP. It is claimed that the intention of the lessee was to
occupy the land permanently, as may be inferred from the construction of permanent
improvements. But this "intention" cannot prevail over the clear and express terms of the lease
contract. Intent is to be deduced from the language employed by the parties, and the terms 'of
the contract, when unambiguous, as in the instant case, are conclusive in the absence of
averment and proof of mistake or fraud — the question being not what the intention was, but
what is expressed in the language used. (City of Manila v. Rizal Park Co., Inc., 53 Phil. 515,
525); Magdalena Estate, Inc. v. Myrick, 71 Phil. 344, 348). Moreover, in order to judge the
intention of the contracting parties, their contemporaneous and subsequent acts shall be
principally considered (Art. 1371, Civil Code). If the intention of the lessee (Republic) in 1947
was really to occupy permanently Castellvi's property, why was the contract of lease entered
into on year to year basis? Why was the lease agreement renewed from year to year? Why did
not the Republic expropriate this land of Castellvi in 1949 when, according to the Republic itself,
it expropriated the other parcels of land that it occupied at the same time as the Castellvi land,
for the purpose of converting them into a jet air base? 14 It might really have been the intention
of the Republic to expropriate the lands in question at some future time, but certainly mere
notice - much less an implied notice — of such intention on the part of the Republic to
expropriate the lands in the future did not, and could not, bind the landowner, nor bind the land
itself. The expropriation must be actually commenced in court (Republic vs. Baylosis, et al., 96
Phil. 461, 484).

Third, the entry into the property should be under warrant or color of legal authority. This
circumstance in the "taking" may be considered as present in the instant case, because the
Republic entered the Castellvi property as lessee.

Fourth, the property must be devoted to a public use or otherwise informally appropriated or
injuriously affected. It may be conceded that the circumstance of the property being devoted to
public use is present because the property was used by the air force of the AFP.

Fifth, the utilization of the property for public use must be in such a way as to oust the owner
and deprive him of all beneficial enjoyment of the property. In the instant case, the entry of the
Republic into the property and its utilization of the same for public use did not oust Castellvi and
deprive her of all beneficial enjoyment of the property. Castellvi remained as owner, and was
continuously recognized as owner by the Republic, as shown by the renewal of the lease
contract from year to year, and by the provision in the lease contract whereby the Republic
undertook to return the property to Castellvi when the lease was terminated. Neither was
Castellvi deprived of all the beneficial enjoyment of the property, because the Republic was
bound to pay, and had been paying, Castellvi the agreed monthly rentals until the time when it
filed the complaint for eminent domain on June 26, 1959.

It is clear, therefore, that the "taking" of Catellvi's property for purposes of eminent domain
cannot be considered to have taken place in 1947 when the Republic commenced to occupy the
property as lessee thereof. We find merit in the contention of Castellvi that two essential
elements in the "taking" of property under the power of eminent domain, namely: (1) that the
entrance and occupation by the condemnor must be for a permanent, or indefinite period, and
(2) that in devoting the property to public use the owner was ousted from the property and
deprived of its beneficial use, were not present when the Republic entered and occupied the
Castellvi property in 1947.

Untenable also is the Republic's contention that although the contract between the parties was
one of lease on a year to year basis, it was "in reality a more or less permanent right to occupy
the premises under the guise of lease with the 'right and privilege' to buy the property should the
lessor wish to terminate the lease," and "the right to buy the property is merged as an integral
part of the lease relationship ... so much so that the fair market value has been agreed upon,
not, as of the time of purchase, but as of the time of occupancy" 15 We cannot accept the
Republic's contention that a lease on a year to year basis can give rise to a permanent right to
occupy, since by express legal provision a lease made for a determinate time, as was the lease
of Castellvi's land in the instant case, ceases upon the day fixed, without need of a demand
(Article 1669, Civil Code). Neither can it be said that the right of eminent domain may be
exercised by simply leasing the premises to be expropriated (Rule 67, Section 1, Rules of
Court). Nor can it be accepted that the Republic would enter into a contract of lease where its
real intention was to buy, or why the Republic should enter into a simulated contract of lease
("under the guise of lease", as expressed by counsel for the Republic) when all the time the
Republic had the right of eminent domain, and could expropriate Castellvi's land if it wanted to
without resorting to any guise whatsoever. Neither can we see how a right to buy could be
merged in a contract of lease in the absence of any agreement between the parties to that
effect. To sustain the contention of the Republic is to sanction a practice whereby in order to
secure a low price for a land which the government intends to expropriate (or would eventually
expropriate) it would first negotiate with the owner of the land to lease the land (for say ten or
twenty years) then expropriate the same when the lease is about to terminate, then claim that
the "taking" of the property for the purposes of the expropriation be reckoned as of the date
when the Government started to occupy the property under the lease, and then assert that the
value of the property being expropriated be reckoned as of the start of the lease, in spite of the
fact that the value of the property, for many good reasons, had in the meantime increased
during the period of the lease. This would be sanctioning what obviously is a deceptive scheme,
which would have the effect of depriving the owner of the property of its true and fair market
value at the time when the expropriation proceedings were actually instituted in court. The
Republic's claim that it had the "right and privilege" to buy the property at the value that it had at
the time when it first occupied the property as lessee nowhere appears in the lease contract.
What was agreed expressly in paragraph No. 5 of the lease agreement was that, should the
lessor require the lessee to return the premises in the same condition as at the time the same
was first occupied by the AFP, the lessee would have the "right and privilege" (or option) of
paying the lessor what it would fairly cost to put the premises in the same condition as it was at
the commencement of the lease, in lieu of the lessee's performance of the undertaking to put
the land in said condition. The "fair value" at the time of occupancy, mentioned in the lease
agreement, does not refer to the value of the property if bought by the lessee, but refers to the
cost of restoring the property in the same condition as of the time when the lessee took
possession of the property. Such fair value cannot refer to the purchase price, for purchase was
never intended by the parties to the lease contract. It is a rule in the interpretation of contracts
that "However general the terms of a contract may be, they shall not be understood to
comprehend things that are distinct and cases that are different from those upon which the
parties intended to agree" (Art. 1372, Civil Code).
We hold, therefore, that the "taking" of the Castellvi property should not be reckoned as of the
year 1947 when the Republic first occupied the same pursuant to the contract of lease, and that
the just compensation to be paid for the Castellvi property should not be determined on the
basis of the value of the property as of that year. The lower court did not commit an error when
it held that the "taking" of the property under expropriation commenced with the filing of the
complaint in this case.

Under Section 4 of Rule 67 of the Rules of Court, 16 the "just compensation" is to be determined
as of the date of the filing of the complaint. This Court has ruled that when the taking of the
property sought to be expropriated coincides with the commencement of the expropriation
proceedings, or takes place subsequent to the filing of the complaint for eminent domain, the
just compensation should be determined as of the date of the filing of the complaint. (Republic
vs. Philippine National Bank, L-14158, April 12, 1961, 1 SCRA 957, 961-962). In the instant
case, it is undisputed that the Republic was placed in possession of the Castellvi property, by
authority of the court, on August 10, 1959. The "taking" of the Castellvi property for the
purposes of determining the just compensation to be paid must, therefore, be reckoned as of
June 26, 1959 when the complaint for eminent domain was filed.

Regarding the two parcels of land of Toledo-Gozun, also sought to be expropriated, which had
never been under lease to the Republic, the Republic was placed in possession of said lands,
also by authority of the court, on August 10, 1959, The taking of those lands, therefore, must
also be reckoned as of June 26, 1959, the date of the filing of the complaint for eminent domain.

2. Regarding the first assigned error — discussed as the second issue — the Republic
maintains that, even assuming that the value of the expropriated lands is to be determined as of
June 26, 1959, the price of P10.00 per square meter fixed by the lower court "is not only
exhorbitant but also unconscionable, and almost fantastic". On the other hand, both Castellvi
and Toledo-Gozun maintain that their lands are residential lands with a fair market value of not
less than P15.00 per square meter.

The lower court found, and declared, that the lands of Castellvi and Toledo-Gozun are
residential lands. The finding of the lower court is in consonance with the unanimous opinion of
the three commissioners who, in their report to the court, declared that the lands are residential
lands.

The Republic assails the finding that the lands are residential, contending that the plans of the
appellees to convert the lands into subdivision for residential purposes were only on paper,
there being no overt acts on the part of the appellees which indicated that the subdivision
project had been commenced, so that any compensation to be awarded on the basis of the
plans would be speculative. The Republic's contention is not well taken. We find evidence
showing that the lands in question had ceased to be devoted to the production of agricultural
crops, that they had become adaptable for residential purposes, and that the appellees had
actually taken steps to convert their lands into residential subdivisions even before the Republic
filed the complaint for eminent domain. In the case of City of Manila vs. Corrales (32 Phil. 82,
98) this Court laid down basic guidelines in determining the value of the property expropriated
for public purposes. This Court said:

In determining the value of land appropriated for public purposes, the same
consideration are to be regarded as in a sale of property between private parties.
The inquiry, in such cases, must be what is the property worth in the market,
 viewed not merely with reference to the uses to which it is at the time applied, but
with reference to the uses to which it is plainly adapted, that is to say, What is it
worth from its availability for valuable uses?

So many and varied are the circumstances to be taken into account in

determining the value of property condemned for public purposes, that it is
practically impossible to formulate a rule to govern its appraisement in all cases.
Exceptional circumstances will modify the most carefully guarded rule, but, as a
general thing, we should say that the compensation of the owner is to be
estimated by reference to the use for which the property is suitable, having
regard to the existing business or wants of the community, or such as may be
reasonably expected in the immediate future. (Miss. and Rum River Boom Co.
vs. Patterson, 98 U.S., 403).

In expropriation proceedings, therefore, the owner of the land has the right to its value for the
use for which it would bring the most in the market. 17 The owner may thus show every
advantage that his property possesses, present and prospective, in order that the price it could
be sold for in the market may be satisfactorily determined. 18 The owner may also show that the
property is suitable for division into village or town lots. 19

The trial court, therefore, correctly considered, among other circumstances, the proposed
subdivision plans of the lands sought to be expropriated in finding that those lands are
residential lots. This finding of the lower court is supported not only by the unanimous opinion of
the commissioners, as embodied in their report, but also by the Provincial Appraisal Committee
of the province of Pampanga composed of the Provincial Treasurer, the Provincial Auditor and
the District Engineer. In the minutes of the meeting of the Provincial Appraisal Committee, held
on May 14, 1959 (Exh. 13-Castellvi) We read in its Resolution No. 10 the following:

3. Since 1957 the land has been classified as residential in view of its proximity
to the air base and due to the fact that it was not being devoted to agriculture. In
fact, there is a plan to convert it into a subdivision for residential purposes. The
taxes due on the property have been paid based on its classification as
residential land;

The evidence shows that Castellvi broached the idea of subdividing her land into residential lots
as early as July 11, 1956 in her letter to the Chief of Staff of the Armed Forces of the
Philippines. (Exh. 5-Castellvi) As a matter of fact, the layout of the subdivision plan was
tentatively approved by the National Planning Commission on September 7, 1956. (Exh. 8-
Castellvi). The land of Castellvi had not been devoted to agriculture since 1947 when it was
leased to the Philippine Army. In 1957 said land was classified as residential, and taxes based
on its classification as residential had been paid since then (Exh. 13-Castellvi). The location of
the Castellvi land justifies its suitability for a residential subdivision. As found by the trial court,
"It is at the left side of the entrance of the Basa Air Base and bounded on two sides by roads
(Exh. 13-Castellvi), paragraphs 1 and 2, Exh. 12-Castellvi), the poblacion, (of Floridablanca) the
municipal building, and the Pampanga Sugar Mills are closed by. The barrio schoolhouse and
chapel are also near (T.S.N. November 23,1960, p. 68)." 20

The lands of Toledo-Gozun (Lot 1-B and Lot 3) are practically of the same condition as the land
of Castellvi. The lands of Toledo-Gozun adjoin the land of Castellvi. They are also contiguous to
the Basa Air Base, and are along the road. These lands are near the barrio schoolhouse, the
barrio chapel, the Pampanga Sugar Mills, and the poblacion of Floridablanca (Exhs. 1, 3 and 4-
Toledo-Gozun). As a matter of fact, regarding lot 1-B it had already been surveyed and
subdivided, and its conversion into a residential subdivision was tentatively approved by the
National Planning Commission on July 8, 1959 (Exhs. 5 and 6 Toledo-Gozun). As early as
June, 1958, no less than 32 man connected with the Philippine Air Force among them
commissioned officers, non-commission officers, and enlisted men had requested Mr. and Mrs.
Joaquin D. Gozun to open a subdivision on their lands in question (Exhs. 8, 8-A to 8-ZZ-Toledo-
Gozun). 21

We agree with the findings, and the conclusions, of the lower court that the lands that are the
subject of expropriation in the present case, as of August 10, 1959 when the same were taken
possession of by the Republic, were residential lands and were adaptable for use as residential
subdivisions. Indeed, the owners of these lands have the right to their value for the use for
which they would bring the most in the market at the time the same were taken from them. The
most important issue to be resolved in the present case relates to the question of what is the
just compensation that should be paid to the appellees.

The Republic asserts that the fair market value of the lands of the appellees is P.20 per square
meter. The Republic cites the case of Republic vs. Narciso, et al., L-6594, which this Court
decided on May 18, 1956. The Narciso case involved lands that belonged to Castellvi and
Toledo-Gozun, and to one Donata Montemayor, which were expropriated by the Republic in
1949 and which are now the site of the Basa Air Base. In the Narciso case this Court fixed the
fair market value at P.20 per square meter. The lands that are sought to be expropriated in the
present case being contiguous to the lands involved in the Narciso case, it is the stand of the
Republic that the price that should be fixed for the lands now in question should also be at P.20
per square meter.

We can not sustain the stand of the Republic. We find that the price of P.20 per square meter,
as fixed by this Court in the Narciso case, was based on the allegation of the defendants
(owners) in their answer to the complaint for eminent domain in that case that the price of their
lands was P2,000.00 per hectare and that was the price that they asked the court to pay them.
This Court said, then, that the owners of the land could not be given more than what they had
asked, notwithstanding the recommendation of the majority of the Commission on Appraisal —
which was adopted by the trial court — that the fair market value of the lands was P3,000.00 per
hectare. We also find that the price of P.20 per square meter in the Narciso case was
considered the fair market value of the lands as of the year 1949 when the expropriation
proceedings were instituted, and at that time the lands were classified as sugar lands, and
assessed for taxation purposes at around P400.00 per hectare, or P.04 per square meter. 22
While the lands involved in the present case, like the lands involved in the Narciso case, might
have a fair market value of P.20 per square meter in 1949, it can not be denied that ten years
later, in 1959, when the present proceedings were instituted, the value of those lands had
increased considerably. The evidence shows that since 1949 those lands were no longer
cultivated as sugar lands, and in 1959 those lands were already classified, and assessed for
taxation purposes, as residential lands. In 1959 the land of Castellvi was assessed at P1.00 per
square meter. 23

The Republic also points out that the Provincial Appraisal Committee of Pampanga, in its
resolution No. 5 of February 15, 1957 (Exhibit D), recommended the sum of P.20 per square
meter as the fair valuation of the Castellvi property. We find that this resolution was made by the
Republic the basis in asking the court to fix the provisional value of the lands sought to be
expropriated at P259,669.10, which was approved by the court. 24 It must be considered,
however, that the amount fixed as the provisional value of the lands that are being expropriated
does not necessarily represent the true and correct value of the land. The value is only
"provisional" or "tentative", to serve as the basis for the immediate occupancy of the property
being expropriated by the condemnor. The records show that this resolution No. 5 was repealed
by the same Provincial Committee on Appraisal in its resolution No. 10 of May 14, 1959 (Exhibit
13-Castellvi). In that resolution No. 10, the appraisal committee stated that "The Committee has
observed that the value of the land in this locality has increased since 1957 ...", and
recommended the price of P1.50 per square meter. It follows, therefore, that, contrary to the
stand of the Republic, that resolution No. 5 of the Provincial Appraisal Committee can not be
made the basis for fixing the fair market value of the lands of Castellvi and Toledo-Gozun.

The Republic further relied on the certification of the Acting Assistant Provincial Assessor of
Pampanga, dated February 8, 1961 (Exhibit K), to the effect that in 1950 the lands of Toledo-
Gozun were classified partly as sugar land and partly as urban land, and that the sugar land
was assessed at P.40 per square meter, while part of the urban land was assessed at P.40 per
square meter and part at P.20 per square meter; and that in 1956 the Castellvi land was
classified as sugar land and was assessed at P450.00 per hectare, or P.045 per square meter.
We can not also consider this certification of the Acting Assistant Provincial Assessor as a basis
for fixing the fair market value of the lands of Castellvi and Toledo-Gozun because, as the
evidence shows, the lands in question, in 1957, were already classified and assessed for
taxation purposes as residential lands. The certification of the assessor refers to the year 1950
as far as the lands of Toledo-Gozun are concerned, and to the year 1956 as far as the land of
Castellvi is concerned. Moreover, this Court has held that the valuation fixed for the purposes of
the assessment of the land for taxation purposes can not bind the landowner where the latter
did not intervene in fixing it. 25

On the other hand, the Commissioners, appointed by the court to appraise the lands that were
being expropriated, recommended to the court that the price of P10.00 per square meter would
be the fair market value of the lands. The commissioners made their recommendation on the
basis of their observation after several ocular inspections of the lands, of their own personal
knowledge of land values in the province of Pampanga, of the testimonies of the owners of the
land, and other witnesses, and of documentary evidence presented by the appellees. Both
Castellvi and Toledo-Gozun testified that the fair market value of their respective land was at
P15.00 per square meter. The documentary evidence considered by the commissioners
consisted of deeds of sale of residential lands in the town of San Fernando and in Angeles City,
in the province of Pampanga, which were sold at prices ranging from P8.00 to P20.00 per
square meter (Exhibits 15, 16, 17, 18, 19, 20, 21, 22, 23-Castellvi). The commissioners also
considered the decision in Civil Case No. 1531 of the Court of First Instance of Pampanga,
entitled Republic vs. Sabina Tablante, which was expropriation case filed on January 13, 1959,
involving a parcel of land adjacent to the Clark Air Base in Angeles City, where the court fixed
the price at P18.00 per square meter (Exhibit 14-Castellvi). In their report, the commissioners,
among other things, said:

... This expropriation case is specially pointed out, because the circumstances
and factors involved therein are similar in many respects to the defendants' lands
in this case. The land in Civil Case No. 1531 of this Court and the lands in the
present case (Civil Case No. 1623) are both near the air bases, the Clark Air
Base and the Basa Air Base respectively. There is a national road fronting them
and are situated in a first-class municipality. As added advantage it may be said
 that the Basa Air Base land is very near the sugar mill at Del Carmen,
Floridablanca, Pampanga, owned by the Pampanga Sugar Mills. Also just stone's
throw away from the same lands is a beautiful vacation spot at Palacol, a sitio of
the town of Floridablanca, which counts with a natural swimming pool for
vacationists on weekends. These advantages are not found in the case of the
Clark Air Base. The defendants' lands are nearer to the poblacion of
Floridablanca then Clark Air Base is nearer (sic) to the poblacion of Angeles,
Pampanga.

The deeds of absolute sale, according to the undersigned commissioners, as

well as the land in Civil Case No. 1531 are competent evidence, because they
were executed during the year 1959 and before August 10 of the same year.
More specifically so the land at Clark Air Base which coincidentally is the subject
matter in the complaint in said Civil Case No. 1531, it having been filed on
January 13, 1959 and the taking of the land involved therein was ordered by the
Court of First Instance of Pampanga on January 15, 1959, several months before
the lands in this case were taken by the plaintiffs ....

From the above and considering further that the lowest as well as the highest
price per square meter obtainable in the market of Pampanga relative to
subdivision lots within its jurisdiction in the year 1959 is very well known by the
Commissioners, the Commission finds that the lowest price that can be awarded
to the lands in question is P10.00 per square meter. 26

The lower court did not altogether accept the findings of the Commissioners based on the
documentary evidence, but it considered the documentary evidence as basis for comparison in
determining land values. The lower court arrived at the conclusion that "the unanimous
recommendation of the commissioners of ten (P10.00) pesos per square meter for the three lots
of the defendants subject of this action is fair and just". 27 In arriving at its conclusion, the lower
court took into consideration, among other circumstances, that the lands are titled, that there is
a rising trend of land values, and the lowered purchasing power of the Philippine peso.

In the case of Manila Railroad Co. vs. Caligsihan, 40 Phil. 326, 328, this Court said:

A court of first instance or, on appeal, the Supreme Court, may change or modify
the report of the commissioners by increasing or reducing the amount of the
award if the facts of the case so justify. While great weight is attached to the
report of the commissioners, yet a court may substitute therefor its estimate of
the value of the property as gathered from the record in certain cases, as, where
the commissioners have applied illegal principles to the evidence submitted to
them, or where they have disregarded a clear preponderance of evidence, or
where the amount allowed is either palpably inadequate or excessive. 28

The report of the commissioners of appraisal in condemnation proceedings are not binding, but
merely advisory in character, as far as the court is concerned. 29 In our analysis of the report of
the commissioners, We find points that merit serious consideration in the determination of the
just compensation that should be paid to Castellvi and Toledo-Gozun for their lands. It should
be noted that the commissioners had made ocular inspections of the lands and had considered
the nature and similarities of said lands in relation to the lands in other places in the province of
Pampanga, like San Fernando and Angeles City. We cannot disregard the observations of the
commissioners regarding the circumstances that make the lands in question suited for
residential purposes — their location near the Basa Air Base, just like the lands in Angeles City
that are near the Clark Air Base, and the facilities that obtain because of their nearness to the
big sugar central of the Pampanga Sugar mills, and to the flourishing first class town of
Floridablanca. It is true that the lands in question are not in the territory of San Fernando and
Angeles City, but, considering the facilities of modern communications, the town of
Floridablanca may be considered practically adjacent to San Fernando and Angeles City. It is
not out of place, therefore, to compare the land values in Floridablanca to the land values in San
Fernando and Angeles City, and form an idea of the value of the lands in Floridablanca with
reference to the land values in those two other communities.

The important factor in expropriation proceeding is that the owner is awarded the just
compensation for his property. We have carefully studied the record, and the evidence, in this
case, and after considering the circumstances attending the lands in question We have arrived
at the conclusion that the price of P10.00 per square meter, as recommended by the
commissioners and adopted by the lower court, is quite high. It is Our considered view that the
price of P5.00 per square meter would be a fair valuation of the lands in question and would
constitute a just compensation to the owners thereof. In arriving at this conclusion We have
particularly taken into consideration the resolution of the Provincial Committee on Appraisal of
the province of Pampanga informing, among others, that in the year 1959 the land of Castellvi
could be sold for from P3.00 to P4.00 per square meter, while the land of Toledo-Gozun could
be sold for from P2.50 to P3.00 per square meter. The Court has weighed all the circumstances
relating to this expropriations proceedings, and in fixing the price of the lands that are being
expropriated the Court arrived at a happy medium between the price as recommended by the
commissioners and approved by the court, and the price advocated by the Republic. This Court
has also taken judicial notice of the fact that the value of the Philippine peso has considerably
gone down since the year 1959. 30 Considering that the lands of Castellvi and Toledo-Gozun are
adjoining each other, and are of the same nature, the Court has deemed it proper to fix the
same price for all these lands.

3. The third issue raised by the Republic relates to the payment of interest. The
Republic maintains that the lower court erred when it ordered the Republic to pay
Castellvi interest at the rate of 6% per annum on the total amount adjudged as
the value of the land of Castellvi, from July 1, 1956 to July 10, 1959. We find
merit in this assignment of error.

In ordering the Republic to pay 6% interest on the total value of the land of Castellvi from July 1,
1956 to July 10, 1959, the lower court held that the Republic had illegally possessed the land of
Castellvi from July 1, 1956, after its lease of the land had expired on June 30, 1956, until August
10, 1959 when the Republic was placed in possession of the land pursuant to the writ of
possession issued by the court. What really happened was that the Republic continued to
occupy the land of Castellvi after the expiration of its lease on June 30, 1956, so much so that
Castellvi filed an ejectment case against the Republic in the Court of First Instance of
Pampanga. 31 However, while that ejectment case was pending, the Republic filed the complaint
for eminent domain in the present case and was placed in possession of the land on August 10,
1959, and because of the institution of the expropriation proceedings the ejectment case was
later dismissed. In the order dismissing the ejectment case, the Court of First Instance of
Pampanga said:
 Plaintiff has agreed, as a matter of fact has already signed an agreement with
defendants, whereby she had agreed to receive the rent of the lands, subject
matter of the instant case from June 30, 1956 up to 1959 when the Philippine Air
Force was placed in possession by virtue of an order of the Court upon
depositing the provisional amount as fixed by the Provincial Appraisal Committee
with the Provincial Treasurer of
Pampanga; ...

If Castellvi had agreed to receive the rentals from June 30, 1956 to August 10, 1959, she should
be considered as having allowed her land to be leased to the Republic until August 10, 1959,
and she could not at the same time be entitled to the payment of interest during the same period
on the amount awarded her as the just compensation of her land. The Republic, therefore,
should pay Castellvi interest at the rate of 6% per annum on the value of her land, minus the
provisional value that was deposited, only from July 10, 1959 when it deposited in court the
provisional value of the land.

4. The fourth error assigned by the Republic relates to the denial by the lower court of its motion
for a new trial based on nearly discovered evidence. We do not find merit in this assignment of
error.

After the lower court had decided this case on May 26, 1961, the Republic filed a motion for a
new trial, supplemented by another motion, both based upon the ground of newly discovered
evidence. The alleged newly discovered evidence in the motion filed on June 21, 1961 was a
deed of absolute sale-executed on January 25, 1961, showing that a certain Serafin Francisco
had sold to Pablo L. Narciso a parcel of sugar land having an area of 100,000 square meters
with a sugar quota of 100 piculs, covered by P.A. No. 1701, situated in Barrio Fortuna,
Floridablanca, for P14,000, or P.14 per square meter.

In the supplemental motion, the alleged newly discovered evidence were: (1) a deed of sale of
some 35,000 square meters of land situated at Floridablanca for P7,500.00 (or about P.21 per
square meter) executed in July, 1959, by the spouses Evelyn D. Laird and Cornelio G. Laird in
favor of spouses Bienvenido S. Aguas and Josefina Q. Aguas; and (2) a deed of absolute sale
of a parcel of land having an area of 4,120,101 square meters, including the sugar quota
covered by Plantation Audit No. 161 1345, situated at Floridablanca, Pampanga, for P860.00
per hectare (a little less than P.09 per square meter) executed on October 22, 1957 by Jesus
Toledo y Mendoza in favor of the Land Tenure Administration.

We find that the lower court acted correctly when it denied the motions for a new trial.

To warrant the granting of a new trial based on the ground of newly discovered evidence, it
must appear that the evidence was discovered after the trial; that even with the exercise of due
diligence, the evidence could not have been discovered and produced at the trial; and that the
evidence is of such a nature as to alter the result of the case if admitted. 32 The lower court
correctly ruled that these requisites were not complied with.

The lower court, in a well-reasoned order, found that the sales made by Serafin Francisco to
Pablo Narciso and that made by Jesus Toledo to the Land Tenure Administration were
immaterial and irrelevant, because those sales covered sugarlands with sugar quotas, while the
lands sought to be expropriated in the instant case are residential lands. The lower court also
concluded that the land sold by the spouses Laird to the spouses Aguas was a sugar land.
We agree with the trial court. In eminent domain proceedings, in order that evidence as to the
sale price of other lands may be admitted in evidence to prove the fair market value of the land
sought to be expropriated, the lands must, among other things, be shown to be similar.

But even assuming, gratia argumenti, that the lands mentioned in those deeds of sale were
residential, the evidence would still not warrant the grant of a new trial, for said evidence could
have been discovered and produced at the trial, and they cannot be considered newly
discovered evidence as contemplated in Section 1(b) of Rule 37 of the Rules of Court.
Regarding this point, the trial court said:

The Court will now show that there was no reasonable diligence employed.

The land described in the deed of sale executed by Serafin Francisco, copy of
which is attached to the original motion, is covered by a Certificate of Title issued
by the Office of the Register of Deeds of Pampanga. There is no question in the
mind of the court but this document passed through the Office of the Register of
Deeds for the purpose of transferring the title or annotating the sale on the
certificate of title. It is true that Fiscal Lagman went to the Office of the Register
of Deeds to check conveyances which may be presented in the evidence in this
case as it is now sought to be done by virtue of the motions at bar, Fiscal
Lagman, one of the lawyers of the plaintiff, did not exercise reasonable diligence
as required by the rules. The assertion that he only went to the office of the
Register of Deeds 'now and then' to check the records in that office only shows
the half-hazard [sic] manner by which the plaintiff looked for evidence to be
presented during the hearing before the Commissioners, if it is at all true that
Fiscal Lagman did what he is supposed to have done according to Solicitor
Padua. It would have been the easiest matter for plaintiff to move for the
issuance of a subpoena duces tecum directing the Register of Deeds of
Pampanga to come to testify and to bring with him all documents found in his
office pertaining to sales of land in Floridablanca adjacent to or near the lands in
question executed or recorded from 1958 to the present. Even this elementary
precaution was not done by plaintiff's numerous attorneys.

The same can be said of the deeds of sale attached to the supplementary
motion. They refer to lands covered by certificate of title issued by the Register of
Deeds of Pampanga. For the same reason they could have been easily
discovered if reasonable diligence has been exerted by the numerous lawyers of
the plaintiff in this case. It is noteworthy that all these deeds of sale could be
found in several government offices, namely, in the Office of the Register of
Deeds of Pampanga, the Office of the Provincial Assessor of Pampanga, the
Office of the Clerk of Court as a part of notarial reports of notaries public that
acknowledged these documents, or in the archives of the National Library. In
respect to Annex 'B' of the supplementary motion copy of the document could
also be found in the Office of the Land Tenure Administration, another
government entity. Any lawyer with a modicum of ability handling this
expropriation case would have right away though [sic] of digging up documents
diligently showing conveyances of lands near or around the parcels of land
sought to be expropriated in this case in the offices that would have naturally
come to his mind such as the offices mentioned above, and had counsel for the
movant really exercised the reasonable diligence required by the Rule'
 undoubtedly they would have been able to find these documents and/or caused
the issuance of subpoena duces tecum. ...

It is also recalled that during the hearing before the Court of the Report and
Recommendation of the Commissioners and objection thereto, Solicitor Padua
made the observation:

I understand, Your Honor, that there was a sale that took place in this place of
land recently where the land was sold for P0.20 which is contiguous to this land.

The Court gave him permission to submit said document subject to the approval
of the Court. ... This was before the decision was rendered, and later
promulgated on May 26, 1961 or more than one month after Solicitor Padua
made the above observation. He could have, therefore, checked up the alleged
sale and moved for a reopening to adduce further evidence. He did not do so. He
forgot to present the evidence at a more propitious time. Now, he seeks to
introduce said evidence under the guise of newly-discovered evidence.
Unfortunately the Court cannot classify it as newly-discovered evidence, because
tinder the circumstances, the correct qualification that can be given is 'forgotten
evidence'. Forgotten however, is not newly-discovered
evidence. 33

The granting or denial of a motion for new trial is, as a general rule, discretionary with the trial
court, whose judgment should not be disturbed unless there is a clear showing of abuse of
discretion. 34 We do not see any abuse of discretion on the part of the lower court when it
denied the motions for a new trial.

WHEREFORE, the decision appealed from is modified, as follows:

(a) the lands of appellees Carmen Vda. de Castellvi and Maria Nieves Toledo-
Gozun, as described in the complaint, are declared expropriated for public use;

(b) the fair market value of the lands of the appellees is fixed at P5.00 per square
meter;

(c) the Republic must pay appellee Castellvi the sum of P3,796,495.00 as just
compensation for her one parcel of land that has an area of 759,299 square
meters, minus the sum of P151,859.80 that she withdrew out of the amount that
was deposited in court as the provisional value of the land, with interest at the
rate of 6% per annum from July 10, 1959 until the day full payment is made or
deposited in court;

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

G.R. No. L-34915 June 24, 1983

CITY GOVERNMENT OF QUEZON CITY and CITY COUNCIL OF QUEZON

CITY, petitioners,
vs.
HON. JUDGE VICENTE G. ERICTA as Judge of the Court of First Instance of Rizal,
Quezon City, Branch XVIII; HIMLAYANG PILIPINO, INC., respondents.

City Fiscal for petitioners.

Manuel Villaruel, Jr. and Feliciano Tumale for respondents.

GUTIERREZ, JR., J.:

This is a petition for review which seeks the reversal of the decision of the Court of First
Instance of Rizal, Branch XVIII declaring Section 9 of Ordinance No. 6118, S-64, of the Quezon
City Council null and void.

Section 9 of Ordinance No. 6118, S-64, entitled "ORDINANCE REGULATING THE

ESTABLISHMENT, MAINTENANCE AND OPERATION OF PRIVATE MEMORIAL TYPE
CEMETERY OR BURIAL GROUND WITHIN THE JURISDICTION OF QUEZON CITY AND
PROVIDING PENALTIES FOR THE VIOLATION THEREOF" provides:

Sec. 9. At least six (6) percent of the total area of the memorial park cemetery
shall be set aside for charity burial of deceased persons who are paupers and
have been residents of Quezon City for at least 5 years prior to their death, to be
determined by competent City Authorities. The area so designated shall
immediately be developed and should be open for operation not later than six
months from the date of approval of the application.

For several years, the aforequoted section of the Ordinance was not enforced by city authorities
but seven years after the enactment of the ordinance, the Quezon City Council passed the
following resolution:

RESOLVED by the council of Quezon assembled, to request, as it does hereby

request the City Engineer, Quezon City, to stop any further selling and/or
transaction of memorial park lots in Quezon City where the owners thereof have
failed to donate the required 6% space intended for paupers burial.

Pursuant to this petition, the Quezon City Engineer notified respondent Himlayang Pilipino, Inc.
in writing that Section 9 of Ordinance No. 6118, S-64 would be enforced

Respondent Himlayang Pilipino reacted by filing with the Court of First Instance of Rizal Branch
XVIII at Quezon City, a petition for declaratory relief, prohibition and mandamus with preliminary
injunction (Sp. Proc. No. Q-16002) seeking to annul Section 9 of the Ordinance in question The
respondent alleged that the same is contrary to the Constitution, the Quezon City Charter, the
Local Autonomy Act, and the Revised Administrative Code.

There being no issue of fact and the questions raised being purely legal both petitioners and
respondent agreed to the rendition of a judgment on the pleadings. The respondent court,
therefore, rendered the decision declaring Section 9 of Ordinance No. 6118, S-64 null and void.

A motion for reconsideration having been denied, the City Government and City Council filed
the instant petition.

Petitioners argue that the taking of the respondent's property is a valid and reasonable exercise
of police power and that the land is taken for a public use as it is intended for the burial ground
of paupers. They further argue that the Quezon City Council is authorized under its charter, in
the exercise of local police power, " to make such further ordinances and resolutions not
repugnant to law as may be necessary to carry into effect and discharge the powers and duties
conferred by this Act and such as it shall deem necessary and proper to provide for the health
and safety, promote the prosperity, improve the morals, peace, good order, comfort and
convenience of the city and the inhabitants thereof, and for the protection of property therein."

On the other hand, respondent Himlayang Pilipino, Inc. contends that the taking or confiscation
of property is obvious because the questioned ordinance permanently restricts the use of the
property such that it cannot be used for any reasonable purpose and deprives the owner of all
beneficial use of his property.

The respondent also stresses that the general welfare clause is not available as a source of
power for the taking of the property in this case because it refers to "the power of promoting the
public welfare by restraining and regulating the use of liberty and property." The respondent
points out that if an owner is deprived of his property outright under the State's police power, the
property is generally not taken for public use but is urgently and summarily destroyed in order to
promote the general welfare. The respondent cites the case of a nuisance per se or the
destruction of a house to prevent the spread of a conflagration.

We find the stand of the private respondent as well as the decision of the respondent Judge to
be well-founded. We quote with approval the lower court's ruling which declared null and void
Section 9 of the questioned city ordinance:

The issue is: Is Section 9 of the ordinance in question a valid exercise of the
police power?

An examination of the Charter of Quezon City (Rep. Act No. 537), does not
reveal any provision that would justify the ordinance in question except the
provision granting police power to the City. Section 9 cannot be justified under
the power granted to Quezon City to tax, fix the license fee, and regulate such
other business, trades, and occupation as may be established or practised in the
City.' (Subsections 'C', Sec. 12, R.A. 537).

The power to regulate does not include the power to prohibit (People vs.
Esguerra, 81 PhiL 33, Vega vs. Municipal Board of Iloilo, L-6765, May 12, 1954;
39 N.J. Law, 70, Mich. 396). A fortiori, the power to regulate does not include the
power to confiscate. The ordinance in question not only confiscates but also
prohibits the operation of a memorial park cemetery, because under Section 13
of said ordinance, 'Violation of the provision thereof is punishable with a fine
and/or imprisonment and that upon conviction thereof the permit to operate and
maintain a private cemetery shall be revoked or cancelled.' The confiscatory
clause and the penal provision in effect deter one from operating a memorial park
cemetery. Neither can the ordinance in question be justified under sub- section
"t", Section 12 of Republic Act 537 which authorizes the City Council to-

'prohibit the burial of the dead within the center of population of

the city and provide for their burial in such proper place and in
such manner as the council may determine, subject to the
provisions of the general law regulating burial grounds and
cemeteries and governing funerals and disposal of the dead.'
(Sub-sec. (t), Sec. 12, Rep. Act No. 537).

There is nothing in the above provision which authorizes confiscation or as

euphemistically termed by the respondents, 'donation'

We now come to the question whether or not Section 9 of the ordinance in

question is a valid exercise of police power. The police power of Quezon City is
defined in sub-section 00, Sec. 12, Rep. Act 537 which reads as follows:

(00) To make such further ordinance and regulations not

repugnant to law as may be necessary to carry into effect and
discharge the powers and duties conferred by this act and such as
it shall deem necessary and proper to provide for the health and
safety, promote, the prosperity, improve the morals, peace, good
order, comfort and convenience of the city and the inhabitants
thereof, and for the protection of property therein; and enforce
obedience thereto with such lawful fines or penalties as the City
Council may prescribe under the provisions of subsection (jj) of
this section.

We start the discussion with a restatement of certain basic principles. Occupying

the forefront in the bill of rights is the provision which states that 'no person shall
be deprived of life, liberty or property without due process of law' (Art. Ill, Section
1 subparagraph 1, Constitution).

On the other hand, there are three inherent powers of government by which the
state interferes with the property rights, namely-. (1) police power, (2) eminent
domain, (3) taxation. These are said to exist independently of the Constitution as
necessary attributes of sovereignty.

Police power is defined by Freund as 'the power of promoting the public welfare
by restraining and regulating the use of liberty and property' (Quoted in Political
Law by Tanada and Carreon, V-11, p. 50). It is usually exerted in order to merely
regulate the use and enjoyment of property of the owner. If he is deprived of his
property outright, it is not taken for public use but rather to destroy in order to
promote the general welfare. In police power, the owner does not recover from
 the government for injury sustained in consequence thereof (12 C.J. 623). It has
been said that police power is the most essential of government powers, at times
the most insistent, and always one of the least limitable of the powers of
government (Ruby vs. Provincial Board, 39 PhiL 660; Ichong vs. Hernandez,
1,7995, May 31, 1957). This power embraces the whole system of public
regulation (U.S. vs. Linsuya Fan, 10 PhiL 104). The Supreme Court has said that
police power is so far-reaching in scope that it has almost become impossible to
limit its sweep. As it derives its existence from the very existence of the state
itself, it does not need to be expressed or defined in its scope. Being coextensive
with self-preservation and survival itself, it is the most positive and active of all
governmental processes, the most essential insistent and illimitable Especially it
is so under the modern democratic framework where the demands of society and
nations have multiplied to almost unimaginable proportions. The field and scope
of police power have become almost boundless, just as the fields of public
interest and public welfare have become almost all embracing and have
transcended human foresight. Since the Courts cannot foresee the needs and
demands of public interest and welfare, they cannot delimit beforehand the
extent or scope of the police power by which and through which the state seeks
to attain or achieve public interest and welfare. (Ichong vs. Hernandez, L-7995,
May 31, 1957).

The police power being the most active power of the government and the due
process clause being the broadest station on governmental power, the conflict
between this power of government and the due process clause of the
Constitution is oftentimes inevitable.

It will be seen from the foregoing authorities that police power is usually
exercised in the form of mere regulation or restriction in the use of liberty or
property for the promotion of the general welfare. It does not involve the taking or
confiscation of property with the exception of a few cases where there is a
necessity to confiscate private property in order to destroy it for the purpose of
protecting the peace and order and of promoting the general welfare as for
instance, the confiscation of an illegally possessed article, such as opium and
firearms.

It seems to the court that Section 9 of Ordinance No. 6118, Series of 1964 of
Quezon City is not a mere police regulation but an outright confiscation. It
deprives a person of his private property without due process of law, nay, even
without compensation.

In sustaining the decision of the respondent court, we are not unmindful of the heavy burden
shouldered by whoever challenges the validity of duly enacted legislation whether national or
local As early as 1913, this Court ruled in Case v. Board of Health (24 PhiL 250) that the courts
resolve every presumption in favor of validity and, more so, where the ma corporation asserts
that the ordinance was enacted to promote the common good and general welfare.

In the leading case of Ermita-Malate Hotel and Motel Operators Association Inc. v. City Mayor of
Manila (20 SCRA 849) the Court speaking through the then Associate Justice and now Chief
Justice Enrique M. Fernando stated
 Primarily what calls for a reversal of such a decision is the a of any evidence to
offset the presumption of validity that attaches to a statute or ordinance. As was
expressed categorically by Justice Malcolm 'The presumption is all in favor of
validity. ... The action of the elected representatives of the people cannot be
lightly set aside. The councilors must, in the very nature of things, be familiar with
the necessities of their particular ... municipality and with all the facts and lances
which surround the subject and necessitate action. The local legislative body, by
enacting the ordinance, has in effect given notice that the regulations are
essential to the well-being of the people. ... The Judiciary should not lightly set
aside legislative action when there is not a clear invasion of personal or property
rights under the guise of police regulation. (U.S. v. Salaveria (1918], 39 Phil. 102,
at p. 111. There was an affirmation of the presumption of validity of municipal
ordinance as announced in the leading Salaveria decision in Ebona v. Daet,
[1950]85 Phil. 369.)

We have likewise considered the principles earlier stated in Case v. Board of

Health supra :

... Under the provisions of municipal charters which are known as the general
welfare clauses, a city, by virtue of its police power, may adopt ordinances to the
peace, safety, health, morals and the best and highest interests of the
municipality. It is a well-settled principle, growing out of the nature of well-ordered
and society, that every holder of property, however absolute and may be his title,
holds it under the implied liability that his use of it shall not be injurious to the
equal enjoyment of others having an equal right to the enjoyment of their
property, nor injurious to the rights of the community. An property in the state is
held subject to its general regulations, which are necessary to the common good
and general welfare. Rights of property, like all other social and conventional
rights, are subject to such reasonable limitations in their enjoyment as shall
prevent them from being injurious, and to such reasonable restraints and
regulations, established by law, as the legislature, under the governing and
controlling power vested in them by the constitution, may think necessary and
expedient. The state, under the police power, is possessed with plenary power to
deal with all matters relating to the general health, morals, and safety of the
people, so long as it does not contravene any positive inhibition of the organic
law and providing that such power is not exercised in such a manner as to justify
the interference of the courts to prevent positive wrong and oppression.

but find them not applicable to the facts of this case.

There is no reasonable relation between the setting aside of at least six (6) percent of the total
area of an private cemeteries for charity burial grounds of deceased paupers and the promotion
of health, morals, good order, safety, or the general welfare of the people. The ordinance is
actually a taking without compensation of a certain area from a private cemetery to benefit
paupers who are charges of the municipal corporation. Instead of building or maintaining a
public cemetery for this purpose, the city passes the burden to private cemeteries.

The expropriation without compensation of a portion of private cemeteries is not covered by

Section 12(t) of Republic Act 537, the Revised Charter of Quezon City which empowers the city
council to prohibit the burial of the dead within the center of population of the city and to provide
for their burial in a proper place subject to the provisions of general law regulating burial
grounds and cemeteries. When the Local Government Code, Batas Pambansa Blg. 337
provides in Section 177 (q) that a Sangguniang panlungsod may "provide for the burial of the
dead in such place and in such manner as prescribed by law or ordinance" it simply authorizes
the city to provide its own city owned land or to buy or expropriate private properties to construct
public cemeteries. This has been the law and practise in the past. It continues to the present.
Expropriation, however, requires payment of just compensation. The questioned ordinance is
different from laws and regulations requiring owners of subdivisions to set aside certain areas
for streets, parks, playgrounds, and other public facilities from the land they sell to buyers of
subdivision lots. The necessities of public safety, health, and convenience are very clear from
said requirements which are intended to insure the development of communities with salubrious
and wholesome environments. The beneficiaries of the regulation, in turn, are made to pay by
the subdivision developer when individual lots are sold to home-owners.

As a matter of fact, the petitioners rely solely on the general welfare clause or on implied powers
of the municipal corporation, not on any express provision of law as statutory basis of their
exercise of power. The clause has always received broad and liberal interpretation but we
cannot stretch it to cover this particular taking. Moreover, the questioned ordinance was passed
after Himlayang Pilipino, Inc. had incorporated. received necessary licenses and permits and
commenced operating. The sequestration of six percent of the cemetery cannot even be
considered as having been impliedly acknowledged by the private respondent when it accepted
the permits to commence operations.

WHEREFORE, the petition for review is hereby DISMISSED. The decision of the respondent
court is affirmed.

G.R. No. L-12172 August 29, 1958

THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee,

vs.
JUAN F. FAJARDO, ET AL., defendants-appellants.

Assistant Solicitor General Esmeraldo Umali and Higinio V. Catalan for appellee.
Prila, Pardalis and Pejo for appellants.

REYES, J. B. L., J.:

Appeal from the decision of the Court of First Instance of Camarines Sur convicting defendants-
appellants Juan F. Fajardo and Pedro Babilonia of a violation of Ordinance No. 7, Series of
1950, of the Municipality of Baao, Camarines Sur, for having constructed without a permit from
the municipal mayor a building that destroys the view of the public plaza.

It appears that on August 15, 1950, during the incumbency of defendant-appellant Juan F.
Fajardo as mayor of the municipality of Baao, Camarines Sur, the municipal council passed the
ordinance in question providing as follows:

SECTION 1. Any person or persons who will construct or repair a building should, before
constructing or repairing, obtain a written permit from the Municipal Mayor.
 SEC. 2. A fee of not less than P2.00 should be charged for each building permit and
P1.00 for each repair permit issued.

SEC. 3. PENALTY — Any violation of the provisions of the above, this ordinance, shall
make the violation liable to pay a fine of not less than P25 nor more than P50 or
imprisonment of not less than 12 days nor more than 24 days or both, at the discretion of
the court. If said building destroys the view of the Public Plaza or occupies any public
property, it shall be removed at the expense of the owner of the building or house.

SEC. 4. EFFECTIVITY — This ordinance shall take effect on its approval. (Orig. Recs.,
P. 3)

Four years later, after the term of appellant Fajardo as mayor had expired, he and his son in-
law, appellant Babilonia, filed a written request with the incumbent municipal mayor for a permit
to construct a building adjacent to their gasoline station on a parcel of land registered in
Fajardo's name, located along the national highway and separated from the public plaza by a
creek (Exh. D). On January 16, 1954, the request was denied, for the reason among others that
the proposed building would destroy the view or beauty of the public plaza (Exh. E). On January
18, 1954, defendants reiterated their request for a building permit (Exh. 3), but again the request
was turned down by the mayor. Whereupon, appellants proceeded with the construction of the
building without a permit, because they needed a place of residence very badly, their former
house having been destroyed by a typhoon and hitherto they had been living on leased
property.

On February 26, 1954, appellants were charged before and convicted by the justice of the
peace court of Baao, Camarines Sur, for violation of the ordinance in question. Defendants
appealed to the Court of First Instance, which affirmed the conviction, and sentenced appellants
to pay a fine of P35 each and the costs, as well as to demolish the building in question because
it destroys the view of the public plaza of Baao, in that "it hinders the view of travelers from the
National Highway to the said public plaza." From this decision, the accused appealed to the
Court of Appeals, but the latter forwarded the records to us because the appeal attacks the
constitutionality of the ordinance in question.

We find that the appealed conviction can not stand.

A first objection to the validity of the ordinance in question is that under it the mayor has
absolute discretion to issue or deny a permit. The ordinance fails to state any policy, or to set up
any standard to guide or limit the mayor's action. No purpose to be attained by requiring the
permit is expressed; no conditions for its grant or refusal are enumerated. It is not merely a case
of deficient standards; standards are entirely lacking. The ordinance thus confers upon the
mayor arbitrary and unrestricted power to grant or deny the issuance of building permits, and it
is a settled rule that such an undefined and unlimited delegation of power to allow or prevent an
activity, per se lawful, is invalid (People vs. Vera, 65 Phil., 56; Primicias vs. Fugoso, 80 Phil., 71;
Schloss Poster Adv. Co. vs. Rock Hill, 2 SE (2d) 392)

The ordinance in question in no way controls or guides the discretion vested thereby in
the respondents. It prescribes no uniform rule upon which the special permission of the
city is to be granted. Thus the city is clothed with the uncontrolled power to capriciously
grant the privilege to some and deny it others; to refuse the application of one landowner
or lessee and to grant that of another, when for all material purposes, the two applying
 for precisely the same privileges under the same circumstances. The danger of such an
ordinance is that it makes possible arbitrary discriminations and abuses in its execution,
depending upon no conditions or qualifications whatever, other than the unregulated
arbitrary will of the city authorities as the touchstone by which its validity is to be tested.
Fundamental rights under our government do not depend for their existence upon such a
slender and uncertain thread. Ordinances which thus invest a city council with a
discretion which is purely arbitrary, and which may be exercised in the interest of a
favored few, are unreasonable and invalid. The ordinance should have established a
rule by which its impartial enforcement could be secured. All of the authorities cited
above sustain this conclusion.

As was said in City of Richmond vs. Dudley, 129 Ind. 112,28 N. E. 312, 314 13 L. R. A.
587, 28 Am. St. Rep. 180: "It seems from the foregoing authorities to be well established
that municipal ordinances placing restrictions upon lawful conduct or the lawful use of
property must, in order to be valid, specify the rules and conditions to be observed in
such conduct or business; and must admit of the exercise of the privilege of all citizens
alike who will comply with such rules and conditions; and must not admit of the exercise,
or of an opportunity for the exercise, of any arbitrary discrimination by the municipal
authorities between citizens who will so comply. (Schloss Poster Adv. Co., Inc. vs. City
of Rock Hill, et al., 2 SE (2d), pp. 394-395).

It is contended, on the other hand, that the mayor can refuse a permit solely in case that the
proposed building "destroys the view of the public plaza or occupies any public property" (as
stated in its section 3); and in fact, the refusal of the Mayor of Baao to issue a building permit to
the appellant was predicated on the ground that the proposed building would "destroy the view
of the public plaza" by preventing its being seen from the public highway. Even thus interpreted,
the ordinance is unreasonable and oppressive, in that it operates to permanently deprive
appellants of the right to use their own property; hence, it oversteps the bounds of police power,
and amounts to a taking of appellants property without just compensation. We do not overlook
that the modern tendency is to regard the beautification of neighborhoods as conducive to the
comfort and happiness of residents. But while property may be regulated in the interest of the
general welfare, and in its pursuit, the State may prohibit structures offensive to the sight
(Churchill and Tait vs. Rafferty, 32 Phil. 580), the State may not, under the guise of police
power, permanently divest owners of the beneficial use of their property and practically
confiscate them solely to preserve or assure the aesthetic appearance of the community. As the
case now stands, every structure that may be erected on appellants' land, regardless of its own
beauty, stands condemned under the ordinance in question, because it would interfere with the
view of the public plaza from the highway. The appellants would, in effect, be constrained to let
their land remain idle and unused for the obvious purpose for which it is best suited, being urban
in character. To legally achieve that result, the municipality must give appellants just
compensation and an opportunity to be heard.

An ordinance which permanently so restricts the use of property that it can not be used
for any reasonable purpose goes, it is plain, beyond regulation and must be recognized
as a taking of the property. The only substantial difference, in such case, between
restriction and actual taking, is that the restriction leaves the owner subject to the burden
of payment of taxation, while outright confiscation would relieve him of that burden.
(Arverne Bay Constr. Co. vs. Thatcher (N.Y.) 117 ALR. 1110, 1116).
 A regulation which substantially deprives an owner of all beneficial use of his property is
confiscation and is a deprivation within the meaning of the 14th Amendment.
(Sundlum vs. Zoning Bd., 145 Atl. 451; also Eaton vs. Sweeny, 177 NE 412; Taylor vs.
Jacksonville, 133 So. 114).

Zoning which admittedly limits property to a use which can not reasonably be made of it
cannot be said to set aside such property to a use but constitutes the taking of such
property without just compensation. Use of property is an element of ownership therein.
Regardless of the opinion of zealots that property may properly, by zoning, be utterly
destroyed without compensation, such principle finds no support in the genius of our
government nor in the principles of justice as we known them. Such a doctrine shocks
the sense of justice. If it be of public benefit that property remain open and unused, then
certainly the public, and not the private individuals, should bear the cost of reasonable
compensation for such property under the rules of law governing the condemnation of
private property for public use. (Tews vs. Woolhiser (1933) 352 I11. 212, 185 N.E. 827)
(Emphasis supplied.)

The validity of the ordinance in question was justified by the court below under section 2243,
par. (c), of the Revised Administrative Code, as amended. This section provides:

SEC. 2243. Certain legislative powers of discretionary character. — The municipal

council shall have authority to exercise the following discretionary powers:

xxx xxx xxx

(c) To establish fire limits in populous centers, prescribe the kinds of buildings that may
be constructed or repaired within them, and issue permits for the creation or repair
thereof, charging a fee which shall be determined by the municipal council and which
shall not be less than two pesos for each building permit and one peso for each repair
permit issued. The fees collected under the provisions of this subsection shall accrue to
the municipal school fund.

Under the provisions of the section above quoted, however, the power of the municipal council
to require the issuance of building permits rests upon its first establishing fire limits in populous
parts of the town and prescribing the kinds of buildings that may be constructed or repaired
within them. As there is absolutely no showing in this case that the municipal council had either
established fire limits within the municipality or set standards for the kind or kinds of buildings to
be constructed or repaired within them before it passed the ordinance in question, it is clear that
said ordinance was not conceived and promulgated under the express authority of sec. 2243 (c)
aforequoted.

We rule that the regulation in question, Municipal Ordinance No. 7, Series of 1950, of the
Municipality of Baao, Camarines Sur, was beyond the authority of said municipality to enact,
and is therefore null and void. Hence, the conviction of herein appellants is reversed, and said
accused are acquitted, with costs de oficio. So ordered.
G.R. No. L-60077 January 18, 1991

NATIONAL POWER CORPORATION, petitioner,

vs.
SPS. MISERICORDIA GUTIERREZ and RICARDO MALIT and THE HONORABLE COURT
OF APPEALS,respondents.

Pedro S. Dabu for private respondents.

BIDIN, J.:

This is a petition for review on certiorari filed by the National Power Corporation (NPC) seeking
the reversal or modification of the March 9, 1986 Decision of the Court of Appeals in CA G.R.
No. 54291-R entitled "National Power Corporation v. Sps. Misericordia Gutierrez and Ricardo
Malit", affirming the December 4, 1972 Decision of the then Court of First Instance of
Pampanga, Fifth Judicial District, Branch II, in Civil Case No. 2709, entitled National Power
Corporation v. Matias Cruz, et al.

The undisputed facts of the case, as found by the Court of Appeals, are as follows:

Plaintiff National Power Corporation, a government owned and controlled entity, in

accordance with Commonwealth Act No. 120, is invested with the power of eminent
domain for the purpose of pursuing its objectives, which among others is the
construction, operation, and maintenance of electric transmission lines for distribution
throughout the Philippines. For the construction of its 230 KV Mexico-Limay transmission
lines, plaintiff's lines have to pass the lands belonging to defendants Matias Cruz, Heirs
of Natalia Paule and spouses Misericordia Gutierrez and Ricardo Malit covered by tax
declarations Nos. 907, 4281 and 7582, respectively.

Plaintiff initiated negotiations for the acquisition of right of way easements over the
aforementioned lots for the construction of its transmission lines but unsuccessful in this
regard, said corporation was constrained to file eminent domain proceedings against the
herein defendants on January 20, 1965.

Upon filing of the corresponding complaint, plaintiff corporation deposited the amount of
P973.00 with the Provincial Treasurer of Pampanga, tendered to cover the provisional
value of the land of the defendant spouses Ricardo Malit and Misericordia Gutierrez.
And by virtue of which, the plaintiff corporation was placed in possession of the property
of the defendant spouses so it could immediately proceed with the construction of its
Mexico-Limay 230 KV transmission line. In this connection, by the trial court's order of
September 30, 1965, the defendant spouses were authorized to withdraw the fixed
provisional value of their land in the sum of P973.00.

The only controversy existing between the parties litigants is the reasonableness and
adequacy of the disturbance or compensation fee of the expropriated properties.

Meanwhile, for the purpose of determining the fair and just compensation due the
defendants, the court appointed three commissioners, comprised of one representative
of the plaintiff, one for the defendants and the other from the court, who then were
empowered to receive evidence, conduct ocular inspection of the premises, and
thereafter, prepare their appraisals as to the fair and just compensation to be paid to the
owners of the lots. Hearings were consequently held before said commissioners and
during their hearings, the case of defendant Heirs of Natalia Paule was amicably settled
by virtue of a Right of Way Grant (Exh. C) executed by Guadalupe Sangalang for herself
and in behalf of her co-heirs in favor of the plaintiff corporation. The case against Matias
Cruz was earlier decided by the court, thereby leaving only the case against the
defendant spouses Ricardo Malit and Misericordia Gutierrez still to be resolved.
Accordingly, the commissioners submitted their individual reports. The commissioner for
the plaintiff corporation recommended the following:

. . . that plaintiff be granted right of way easement over the 760 square meters of
the defendants Malit and Gutierrez land for plaintiff transmission line upon
payment of an easement fee of P1.00 therefor. . . . (Annex M)

The commissioner for the defendant spouses recommended the following:

. . . that Mr. and Mrs. Ricardo Malit be paid as disturbance compensation the
amount of P10.00 sq. meter or the total amount of P7,600.00' (Annex K)

The Court's commissioner recommended the following:

. . . the payment of Five (P 5.OO) Pesos per square meter of the area covered by
the Right-of-way to be granted, . . .(Annex L)

The plaintiff corporation urged the Court that the assessment as recommended
by their commissioner be the one adopted. Defendant spouses, however,
dissented and objected to the price recommended by both the representative of
the court and of the plaintiff corporation.

With these reports submitted by the three commissioners and on the evidence
adduced by the defendants as well as the plaintiff for the purpose of proving the
fair market value of the property sought to be expropriated, the lower court
rendered a decision the dispositive portion of which reads as follows:

WHEREFORE, responsive to the foregoing considerations, judgment is

hereby rendered ordering plaintiff National Power Corporation to pay
defendant spouses Ricardo Malit and Misericordia Gutierrez the sum of
P10.00 per square meter as the fair and reasonable compensation for the
right-of-way easement of the affected area, which is 760 squares, or a
total sum of P7,600.00 and P800.00 as attorney's fees' (Record on
Appeal, p. 83)

Dissatisfied with the decision, the plaintiff corporation filed a motion for
reconsideration which was favorably acted upon by the lower court, and in an
order dated June 10, 1973, it amended its previous decision in the following
tenor:

On the basis of an ocular inspection made personally by the undersigned,

this court finally classified the land of the spouses Ricardo Malit and
Misericordia to be partly commercial and partly agricultural, for which
 reason the amount of P10.00 per sq. meter awarded in the decision of
December 4,1972 is hereby reduced to P5.00 per square meter as the
fair and reasonable market value of the 760 square meters belonging to
the said spouses.

There being no claim and evidence for attorney's fees, the amount of
P800.00 awarded as attorney's fees, in the decision of December 4, 1972
is hereby reconsidered and set aside. (Annex S)

Still not satisfied, an appeal was filed by petitioner (NPC) with the Court of
Appeals but respondent Court of Appeals in its March 9, 1982, sustained the trial
court, as follows:

WHEREFORE, finding no reversible error committed by the court a quo,

the appealed judgment is hereby affirmed with costs against the plaintiff-
appellant.

Hence, the instant petition.

The First Division of this Court gave due course to the petition and required both parties to
submit their respective memoranda (Resolution of January 12, 1983). It also noted in an internal
resolution of August 17, 1983 that petitioner flied its memorandum while the respondents failed
to file their memorandum within the period which expired on February 24,1983; hence, the case
was considered submitted for decision.

The sole issue raised by petitioner is —

WHETHER PETITIONER SHOULD BE MADE TO PAY SIMPLE EASEMENT FEE OR

FULL COMPENSATION FOR THE LAND TRAVERSED BY ITS TRANSMISSION
LINES.

It is the contention of petitioner that the Court of Appeals committed gross error by adjudging
the petitioner liable for the payment of the full market value of the land traversed by its
transmission lines, and that it overlooks the undeniable fact that a simple right-of-way easement
(for the passage of transmission lines) transmits no rights, except that of the easement. Full
ownership is retained by the private respondents and they are not totally deprived of the use of
the land. They can continue planting the same agricultural crops, except those that would result
in contact with the wires. On this premise, petitioner submits that if full market value is required,
then full transfer of ownership is only the logical equivalent.

The petition is devoid of merit. The resolution of this case hinges on the determination of
whether the acquisition of a mere right-of-way is an exercise of the power of eminent domain
contemplated by law.1âwphi1

The trial court's observation shared by the appellate court show that ". . . While it is true that
plaintiff are (sic) only after a right-of-way easement, it nevertheless perpetually deprives
defendants of their proprietary rights as manifested by the imposition by the plaintiff upon
defendants that below said transmission lines no plant higher than three (3) meters is allowed.
Furthermore, because of the high-tension current conveyed through said transmission lines,
danger to life and limbs that may be caused beneath said wires cannot altogether be
discounted, and to cap it all plaintiff only pays the fee to defendants once, while the latter shall
continually pay the taxes due on said affected portion of their property."

The foregoing facts considered, the acquisition of the right-of-way easement falls within the
purview of the power of eminent domain. Such conclusion finds support in similar cases of
easement of right-of-way where the Supreme Court sustained the award of just compensation
for private property condemned for public use (See National Power Corporation vs. Court of
Appeals, 129 SCRA 665, 1984; Garcia vs. Court of Appeals, 102 SCRA 597,1981). The
Supreme Court, in Republic of the Philippines vs. PLDT, * thus held that:

Normally, of course, the power of eminent domain results in the taking or appropriation
of title to, and possession of, the expropriated property; but no cogent reason appears
why said power may not be availed of to impose only a burden upon the owner of
condemned property, without loss of title and possession. It is unquestionable that real
property may, through expropriation, be subjected to an easement of right-of-way.

In the case at bar, the easement of right-of-way is definitely a taking under the power of eminent
domain. Considering the nature and effect of the installation of the 230 KV Mexico-Limay
transmission lines, the limitation imposed by NPC against the use of the land for an indefinite
period deprives private respondents of its ordinary use.

For these reasons, the owner of the property expropriated is 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. Just compensation has always been understood to be
the just and complete equivalent of the loss which the owner of the thing expropriated has to
suffer by reason of the expropriation (Province of Tayabas vs. Perez, 66 Phil. 467 [1938];
Assoc. of Small Land Owners of the Phils., Inc. vs. Secretary of Agrarian Reform, G.R. No.
78742; Acuna vs. Arroyo, G.R. No. 79310; Pabrico vs. Juico, G.R. No. 79744; Manaay v. Juico,
G.R. No. 79777,14 July 1989, 175 SCRA 343 [1989]). The price or value of the land and its
character at the time it was taken by the Government are the criteria for determining just
compensation (National Power Corp. v. Court of Appeals, 129 SCRA 665, [1984]). The above
price refers to the market value of the land which may be the full market value thereof.
According to private respondents, the market value of their lot is P50.00 per square meter
because the said lot is adjacent to the National and super highways of Gapan, Nueva Ecija and
Olongapo City.

Private respondents recognize the inherent power of eminent domain being exercised by NPC
when it finally consented to the expropriation of the said portion of their land, subject however to
payment of just compensation. No matter how laudable NPC's purpose is, for which
expropriation was sought, it is just and equitable that they be compensated the fair and full
equivalent for the loss sustained, which is the measure of the indemnity, not whatever gain
would accrue to the expropriating entity (EPZA v. Dulay, 149 SCRA 305 [1987]; Mun. of Daet v.
Court of Appeals, 93 SCRA 503 (1979]).

It appearing that the trial court did not act capriciously and arbitrarily in setting the price of P5.00
per square meter of the affected property, the said award is proper and not unreasonable.

On the issue of ownership being claimed by petitioner in the event that the price of P5.00 per
square meter be sustained, it is well settled that an issue which has not been raised in the
Court a quo cannot be raised for the first time on appeal as it would be offensive to the basic
rules of fair play, justice and due process . . . (Filipino Merchants v. Court of Appeals, G.R. No.
85141, November 8, 1989, 179 SCRA 638; Commissioner of Internal Revenue v. Procter and
Gamble Philippines Manufacturing Corporation, 160 SCRA 560 [1988]; Commissioner of
Internal Revenue v. Wander Philippines, Inc., 160 SCRA 573 1988]). Petitioner only sought an
easement of right-of-way, and as earlier discussed, the power of eminent domain may be
exercised although title was not transferred to the expropriator.

WHEREFORE, the assailed decision of the Court of Appeals is AFFIRMED.

SO ORDERED.

September 26, 2006

NATIONAL POWER CORPORATION, petitioner,

vs.
MARIA MENDOZA SAN PEDRO, represented by VICENTE, HERMINIA and FRANCISCO,
all surnamed SAN PEDRO, respondents.

DECISION

CALLEJO, SR., J.:

Before the Court is a Petition for Review on Certiorari under Rule 45 of the Decision1 of the
Court of Appeals (CA) in CA-G.R. CV No. 72860, and its Resolution2 denying the motion for
reconsideration thereof.

The Antecedents

The National Power Corporation (NPC) is a government-owned-and-controlled corporation

created to undertake the development of hydro-electric generation of power and the production
of electricity from any and all sources; and particularly the construction, operation, and
maintenance of power plants, auxiliary plants, dams, reservoirs, pipes, mains, transmission
lines, power stations and substations, and other works for the purpose of developing hydraulic
power from any river, lake, creek, spring and waterfalls in the Philippines and supplying such
power to the inhabitants thereof.3 Under Republic Act No. 6395, as amended, the NPC is
authorized to enter private property provided that the owners thereof shall be indemnified for
any actual damage caused thereby.4

For the construction of its San Manuel-San Jose 500 KV Transmission Line and Tower No.
SMJ-389, NPC negotiated with Maria Mendoza San Pedro, then represented by her son,
Vicente, for an easement of right of way over her property, Lot No. 2076. The property, which
was partly agricultural and partly residential land, was located in Barangay Partida, Norzagaray,
Bulacan and covered by Tax Declaration No. 00386. On June 19, 1997, Maria executed a Right
of Way Grant5 in favor of NPC over the lot for P1,277,886.90. The NPC paid her P524,635.50
for the damaged improvements thereon.6

The payment voucher for the residential portion of the lot valued at P6,000,000.00 (at P600.00
per square meter) was then processed.7 However, the NPC Board of Directors approved Board
Resolution No. 97-2468 stating that it would pay only P230.00 per sq m for the residential
portion and P89.00 per sq m for the agricultural portion, on the following premises:
 A) The proposed land valuations were evaluated and analyzed using the joint appraisal
report on fair market value of lands by Cuervo Appraisal, Inc., Development Bank of the
Philippines, and the Land Bank of the Philippines and the fair market values established
by the respective Provincial Appraisal Committee (PAC) of Zambales, Pangasinan,
Nueva Ecija, Pampanga and Bulacan as well as the City Appraisal Committee (CAC) of
San Carlos and Cabanatuan.

B) For lot acquisition, adopt PAC or CUERVO Appraisal, whichever is lower; if there is a
problem of acceptance, refer same to the Board;

C) For easement over agricultural lands, adopt median or average if there are several
amounts involved; and

D) Always oppose any proposals for conversion of agricultural lands.9

On January 15, 1998, the NPC filed a complaint10 for eminent domain in the Regional Trial
Court (RTC) of Bulacan against Maria and other landowners. The case was docketed as Civil
Case No. 28-M-98. According to NPC, in order to construct and maintain its Northwestern
Luzon Transmission Line Project (San Manuel-San Jose 500 KV Transmission Line Project), it
was necessary to acquire several lots in the Municipalities of San Jose del Monte and
Norzagaray, Bulacan for an easement of right of way in the total area of more or less 35,288.5
sq m. The owners of the affected areas and their corresponding assessed values are:

OWNER/ LOT/ TAX TITLE TOTAL AREA ASSESSED CLASSIFICATION

CLAIMANT BLK. DEC. NO. AREA AFFECTED VALUE OF OF LAND
NO. NO. IN SQ. M. AREA
AFFECTED
Ma. Mendoza San 2076 00386 122,821.32 17,195 P 18,555.75 Agricultural
Pedro rep. by 10,000 6,565 P147,712.50 Residential
Vicente San Pedro
Lorenza Manuel / 1250 96- T- 5,700 51,666.5 P 13,481.03 Agricultural
Sps. Raul & Edna 21017- 28392-
Lagula P-(M)
00084
Sps. Segundo & 1251 96- P-3965 6,362 6,362 P 16,210.00 Agricultural
Maxima Manuel / 21017-
Sps. Raul & Edna (M)
Lagula 00083

Maria San Pedro filed her Answer11 on February 2, 1998, alleging that there had already been
an agreement as to the just compensation for her property. She prayed, among others, that she
should be paid the consideration stated in the Right of Way Grant, P600.00 per sq m for the
residential portion of the land as agreed upon by her and NPC, and to base the values from
Resolution No. 97-00512 of the Provincial Appraisal Committee.

Meanwhile, Maria San Pedro filed an Amended Answer13 in which she alleged that NPC had
resorted to deceit, trickery and machination to induce her to grant a right of way by assuring her
that it would also pay for the residential portion of the property at P600.00 per sq m.
On August 10, 1998, the RTC issued a writ of possession against Maria San Pedro.14 When she
passed away on August 22, 1998,15 she was substituted by her heirs, Vicente, Herminia and
Francisco, all surnamed San Pedro, on September 11, 1998.16

During the pre-trial on January 25, 1999, the parties agreed that the only issue for resolution
was the just compensation for the property. The court appointed a committee of commissioners
to ascertain and recommend to the trial court the just compensation for the properties,
composed of Atty. Josephine L. Sineneng-Baltazar, the Clerk of Court, as chairperson; and
Engr. Oscar C. Cruz, Provincial Assessor of Bulacan, and Atty. Henry P. Alog of the Litigation
Department of NPC to serve as members-commissioners thereof.17

On July 12, 1999, Atty. Baltazar and Engr. Cruz submitted their report, 18 recommending as
payment for just compensation P800.00 per sq m for the residential lot and P700.00 per sq m
for the agricultural lot.19 The majority report reads:

I. Description of the Property

A parcel of land with a total area of 132,821.32 square meters located at Partida,
Norzagaray, Bulacan and declared for taxation purposes in the name of Maria Mendoza
San Pedro is sought to be expropriated by plaintiff National Power Corporation for the
construction and maintenance of its Northwestern Luzon Transmission Line Project (San
Miguel-San Jose 500 KV Transmission Line Project), to wit:

Lot No. Tax Dec. Total Area Area Classification

No. Affected in
sq. m.

2076 01337 122,821.32 17,195 Agricultural

10,000.00 6,565 Residential

The pertinent tax declaration is hereto attached as Annex "A."

The residential lot is not affected by NPC's project in its entirety. Around 2,000 sq. m.
remains on each side of the residential lot.

Likewise, only a portion or 17,195 sq. m. of (sic) more than 12 hectares agricultural land,
(sic) is affected by the project. A sketch plan of the affected area is attached hereto as
Annex "B."

II. Claims of the Parties

Defendants allege that they had signed a Right of Way Grant Contract dated June 19,
1997 which plaintiff itself prepared and was notarized by Atty. Marcelo Aure; that, among
others, defendants and plaintiff agreed that the price of the residential land is P600.00
per square meter, based on the Provincial Appraisals Committee (PAC) Resolution No.
97-005; that, on December 6, 1997, plaintiff informed them that the NPC Board passed
Resolution No. 97-246 dated October 27, 1997, pursuant to which the board approved
price for acquisition of subject property is P230.00 per sq. m. for residential and P89.00
per sq. m. for agricultural lot. Defendants did not accept the new offer.

On the other hand, plaintiff alleges that the price for residential land is P230.00 per sq.
m. as approved by NPC's Board and not P600.00 per sq. m. being asked by defendants.
It further recommended the appointment of commissioners to report to the Court the just
compensation to be paid to the defendants.

III. Observations

The Commissioners went to the site on May 11, 1999 and were able to observe that:

(1) The residential lot of Vicente San Pedro is not affected by NPC's project in its
entirety. Around 2,000 sq. m. remains on each side of the residential lot. There
are no existing structures or improvements on said residential lot, which is
situated along the all-weather (gravel) road. Defendants are afraid to utilize the
said remaining portions for residential purposes because of the reported constant
loud buzzing and exploding sounds emanating from the towers and transmission
lines, especially on rainy days. The two children of Vicente San Pedro had
wanted to construct their residential houses on said land, but decided against it
now because of fear that the large transmission lines looming not far above their
land and the huge tower in front of their lot will affect their safety and health.
Moreover, there is a slim chance now that somebody will still buy the remaining
portions on each side of the residential lot affected by the project, to the damage
of the defendant, both as to future actual use of the land and financial gains to be
derived therefrom.

(2) Likewise only a portion, or 17,195 sq. m. of the 122,821.32 square meter
agricultural land, is affected by the transmission line project. It was not planted
with palay at the time of the inspection. According to the defendants, their farm
helpers are already afraid to work on the land because of the buzzing and
cracking sounds coming from the tower and transmission lines.

(3) The site is located in a highly developed area about 1.5 kms. away from
Norzagaray Municipal Building. The vast land owned by Jesus Is Lord
congregation is on the same side of the road as subject property. Opposite the
road is an ongoing resort project, the Falcon Crest Resort about ½ kilometers
away, and the proposed Catholic Retreat House about 200 meters away.
Attached as Annex "C" is the Location Plan of said lot.

IV. Available Data

(1) Based on the Zoning Certificate issued by the Municipal Mayor, subject parcel
of land has been classified as residential pursuant to the proposed
Comprehensive Land Use Plan of local government unit. Copy of said Zoning
Certificate is hereto attached as Annex "D."

(2) Based on the BIR Zonal Valuation attached as Annex "E," subject land has a
zonal value of P60.00/sq. m. for residential and P30.00/sq. m. for agricultural lot.
However, it is common knowledge that zonal valuation provided by BIR cannot
 be made as basis for the purpose of determining just compensation in eminent
domain cases because it is only for the purpose of computing internal revenue
taxes.

(3) Opinion values gathered by the Provincial Assessor on the price of the
property are as follows:

Residential - P1,075.00 / sq. m.

Agricultural - P 643.00 / sq. m.

The summary of Opinion Values is hereto attached as Annex "F."

(4) There are no available sales data on properties within the vicinity of subject
land for the years 1996 and 1997, approximate time of the taking.

IV. Recommendation

The Commissioners, after considering the location of the subject property in a highly
developed area and accessibility thru the all-weather road (gravel); its potential for full
development as shown by the existence of building projects in the vicinity; and the long-
term effect the expropriation will have on the lives, comfort and financial condition of
herein defendants, respectfully recommend the following amounts as payment for the
affected portions of subject property.

P800. / sq. m. - for the residential lot

P700. / sq. m. - for the agricultural lot20

However, Atty. Alog, who represented NPC, dissented from the report, claiming that it was
merely based on "opinion values," and the self-serving declarations and opinions of defendants.
He maintained that, in determining just compensation, the trial court should instead consider the
appraisal report of Cuervo Appraisers, Inc., upon which Resolution No. 97-246 of NPC was
based. He likewise argued that the property involved was actually and principally used as
agricultural, though declared as agricultural/residential lots; hence, only the easement fee of
right of way should be paid, as the principal purpose for which the lot was devoted would not be
impaired by the construction of transmission lines. His report reads:

I. FINDINGS

The ocular inspection and research conducted by the undersigned Commissioner on

May 12, 1999 disclosed the following pertinent information and data:

1) The subject lots can be reached through a 1.4 km two lane concrete road,
from the Sta. Maria-Norzagaray National Highway intersection at Poblacion,
Norzagaray, Bulacan (refer to Annex "B");

2) The low lying northern portion of the property is presently used as riceland and
the rest planted with assorted trees (refer to Annex "C," pictures);
 3) The property is a portion of hill in the area with sides sloping downward on the
northern eastern boundaries (refer to Annex "C");

4) There is no visible structural development in the area except for:

a) a two lane concrete road adjacent to the property at the northwest

boundaries going to San Jose Del Monte, Bulacan;

b) newly constructed steel towers of NPC;

c) barbed wire fence with wooden post covering the northwestern portion
of the lot adjacent to the concrete road to San Jose Del Monte, Bulacan
and a bamboo fence that covers the southern portion (refer to Annex "C");
and

d) residential house approximately 200 meters from affected area.

5) During the ocular inspection, it is noted that they still use the affected area for
agricultural purposes;

6) The Falcon Crest Resort is approximately 1 km. from the affected property;

7) Price data gathered are as follows (in square meter unless specified):

Agri-Orchard Riceland Subd. Res'l Agr'l

(Interior) unirrigated along
(Interior) Sta.
Maria
(Garay)
Provincial Appraisal P600.00 P400.00
Committee –
Bulacan (Res. No. 97-
005)
(Annex "D")
NP Board Resolution P89.00 P80.00 P230.00
No. 97-246
(Annex "E")
Cuervo Appraisers, Inc. P890,000/ha. P800,000/ha. P230.0021
(Annex "F")

Atty. Alog also recommended that only P2,640,274.70 be paid to defendants by way of just
compensation, broken down as follows:

Eight Hundred Two Thousand Three - Payment for damaged

Hundred Sixty Eight Pesos and 50/100 crops/plants/trees
(P802,368.50)
One Hundred Sixty Two Thousand Eight - Payment for structures
 Hundred Sixty Five Pesos and 65/100
(P162,865.65)
One Million Five Hundred Nine Thousand - Payment for residential
Nine Hundred Fifty Pesos portion of lot
(P1,509,950.00)
One Hundred Fifty One Thousand Six - Easement fee for
Hundred Ninety One Pesos and 60/100 agricultural portion of lot
(P151,691.60)
Thirteen Thousand Three Hundred - Tower Occupancy Fee
Ninety-Eight and 95/100 (P13,398.95)22

On October 28, 1999, the RTC rendered judgment,23 declaring as well-grounded, fair and
reasonable the compensation for the property as recommended by Atty. Baltazar and Engr.
Cruz. The fallo of the RTC decision reads:

WHEREFORE, premises considered, this Court hereby orders the above-described

5,700-square meter lot from Lot No. 1250 of defendants Spouse (sic) Raul (sic) and the
afore-described 6,362-square meter lot from Lot No. 1251 of same defendants, subject
to the covering Compromise Agreements; and the above-described 17,195-square
meter lot from Lot No. 2076 of defendant Maria Mendoza San Pedro, CONDEMNED
and/or EXPROPRIATED for the construction and maintenance of plaintiff's Northwestern
Luzon Transmission Line Project (San Manuel - San Jose 500 KV Transmission Line
Project), a project for public purpose.

Accordingly, this Court hereby fixes the just compensation for the expropriated lots, as
follows:

OWNERS LOT AREA PRICE/ JUST

NO. EXPROPRIATED S.Q. COMPENSATION
METER

Sps. Raul & Edna 1250 5,700 sq. m. P499.00 P2,844,300.00

Lagula

Sps. Raul & Edna 1251 6,362 sq. m. 499.00 2,174,638

Lagula

Ma. Mendoza San 2076 17,195 sq. m. 800.00 13,756,000

Pedro her heirs

Hence, plaintiff is ordered to pay, as soon as possible, herein defendants the just
compensation enumerated above for their respective lots aforementioned. For this
purpose, plaintiff may withdraw the sum of money deposited with the Land Bank of the
Philippines or any other banks pursuant to Section 2 of Rule 67 of the Rules of Court, as
amended by P.D. No. 42.

FURTHER, defendants are ordered to clear and vacate the lots in question within 30
days from receipt hereof and to surrender possession thereof to the plaintiff.
 The fees for the 3 Commissioners of the Appraisal Committee in the sum of P6,000.00
for the Chairman and P5,000.00 each for the 2 members, shall be paid by the plaintiff.

SO ORDERED.24

On November 19, 1999, the heirs of Maria San Pedro filed a Manifestation and Motion 25 for the
partial reconsideration of the decision on the ground that the court failed to include in its
decision the just compensation for the 6,565-square-meter residential portion of their land, with
prayer for attorney's fees equivalent to 10% of the total amount to be awarded to them.

On December 3, 1999, NPC filed its motion for reconsideration,26 insisting that the just
compensation awarded to defendants was without legal and factual basis, and that it should
only be made to pay an easement fee.

On June 6, 2001, the trial court issued an Order granting the motion of the heirs and denied that
of NPC.27 The RTC declared that the just compensation for the residential portion of the
property should be the same as that of the spouses Lagula's property, which was P499.00 per
sq m. On the claim of NPC in its motion for reconsideration that it should be made to pay only
an easement fee, the trial court ruled that Lot No. 2076 should be treated the same way as NPC
treated the properties of the spouses Lagula. It was pointed out that in the compromise
agreements executed by plaintiff and spouses Lagula, plaintiff paid P499.00 per sq m on the
basis of a straight sale of their agricultural land, and not merely an easement fee for a right of
way thereon. The fallo of the amended decision reads:

WHEREFORE, in the light of the foregoing, the Court hereby:

1. Grants the motion of defendant Maria Mendoza San Pedro and thus orders
that the 1st paragraph of page 8 of the Decision be amended to read as follows:

"Plaintiff is expropriating portions of defendants' above-described properties to

give way to the construction and maintenance of its Northern Luzon
Transmission Line Project (San Manuel - San Jose 500 KV Transmission Line
Project), a project for public purpose. The area of the lots sought to be
expropriated from the lot of defendant Maria Mendoza San Pedro, represented
by her heirs, are 17,195 square meters more or less of agricultural land and
6,565 square meters of residential land, while the area of the land sought to be
expropriated from the two lots of defendants Sps. Raul and Edna Lagula are only
5,166.50 square meters, more or less, from Lot No. 1250 and 6,363 (sic) square
meters, more or less, from Lot No. 1251.

Furthermore, the second paragraph of the dispositive portion of the Decision should be
amended as follows:

"Accordingly, this Court hereby fixes the just compensation for the expropriated
lots, as follows:

OWNERS LOT AREA PRICE/ JUST

NO. EXPROPRIATED S.Q. COMPENSATION
METER
 Sps. Raul & Edna
Lagula 1250 5,700 sq. m. P499.00 P2,844,300.00

Sps. Raul & Edna

Lagula 1251 6,362 sq. m. 499.00 3,174,638.00

Ma. Mendoza San

Pedro her heirs 2076 17,195 sq. m. 499.00 8,580,305.00

Ma. Mendoza San

Pedro her heirs 6,565 sq. m. 800.00 5,252,000.00

2. Denies the plaintiff's Motion for Reconsideration for lack of merit.

SO ORDERED.28

NPC appealed the amended decision to the CA, asserting that:

THE LOWER COURT GRAVELY ERRED IN FIXING P800.00 AND P499.00 PER
SQUARE METER AS JUST COMPENSATION FOR APPELLEE'S 6,565 SQUARE
METERS OF RESIDENTIAL LAND AND 17,195 SQUARE METERS OF
AGRICULTURAL LAND, RESPECTIVELY.29

On September 28, 2005, the CA rendered judgment dismissing the appeal. The CA ruled that
the July 12, 1999 majority report was based on uncontroverted facts, supported by documentary
evidence and confirmed by
the commissioners' ocular inspection of the subject properties. To arrive at a reasonable
estimate of just compensation, the commissioners considered factors such as the location, the
most profitable likely use of the remaining area, size, shape, accessibility, as well as listings of
other properties within the vicinity. Citing National Power Corporation v. Manubay Agro-
Industrial Development Corporation,30 the CA found as unpersuasive NPC's argument that it
should only pay an easement fee. It ruled that considering the nature and effect of the
installation of power lines, the limitations on the use of land for an indefinite period deprives the
owner of its normal use. The falloof the CA decision reads:

WHEREFORE, the Appeal is hereby DENIED. The assailed Decision and Order dated
28 October 1999 and 6 June 2001, respectively, are AFFIRMED.

SO ORDERED.31

NPC filed a Motion for Reconsideration,32 which the CA denied in its Resolution33 dated
December 22, 2005; hence, the instant petition based on the following ground:

THE COURT OF APPEALS COMMITTED A GRAVE ERROR WHEN IT UPHELD THE

DECISION OF THE TRIAL COURT FIXING THE JUST COMPENSATION FOR
RESPONDENT'S 6,565 SQ. METERS OF RESIDENTIAL LAND AND 17,195 SQUARE
METERS OF AGRICULTURAL LAND, AT PHP800.00 AND PHP499.00 PER SQUARE
METER RESPECTIVELY, INSTEAD OF THE EASEMENT FEE AS PRAYED FOR IN
 THE COMPLAINT AND PROVIDED UNDER REPUBLIC ACT NO. 6395, AS
AMENDED, OTHERWISE KNOWN AS THE REVISED NPC CHARTER.34

The Ruling of the Court

The petition is denied for lack of merit.

The CA found no reversible error in the trial court's finding of just compensation. Inasmuch as
the determination of just compensation in eminent domain cases is a judicial function and
factual findings of the CA are conclusive on the parties and reviewable only when the case falls
within the recognized exceptions, which does not obtain in this case, we see no reason to
disturb the factual findings as to the valuation of the subject property.35

Petitioner avers that the rulings of the trial court affirmed by the appellate court, based on the
majority report on the subject property's just compensation, is not supported by documentary
evidence. It avers that in the majority report, Commissioners Atty. Baltazar and Engr. Cruz,
even admit that there were no available sales data on properties within the vicinity of the subject
property for the years 1996 and 1997. Moreover, the Bureau of Internal Revenue (BIR) valued
the property at P60.00 per sq m for residential, and P30.00 per sq m for agricultural lot.36

Petitioner further argues that respondents have not shown that the condition of the adjoining
properties or improvements thereon had increased their land's economic value.37 The valuation,
thus, of the trial court, as affirmed by the CA, was exorbitant and devoid of factual and legal
basis.38

We are not persuaded.

The constitutional limitation of "just compensation" is considered to be the sum equivalent to the
market value of the property, broadly described to be the price fixed by the seller in open market
in the usual and ordinary course of legal action and competition or the fair value of the property
as between one who receives, and one who desires to sell it, fixed at the time of the actual
taking by the government.39 To determine the just compensation to be paid to the landowner,
the nature and character of the land at the time of its taking is the principal criterion. 40

In the July 12, 1999 Majority Report, the commissioners found that the property was located in a
highly-developed area and was accessible through an all-weather road. The fact that the
property had potential for full development as shown by the existence of building projects in the
vicinity, and the long-term effect of the expropriation on the lives, comfort and financial condition
of petitioners was likewise considered. The report also took into account the ocular inspection
conducted by the commissioners on May 11, 1999. The tax declaration of the subject
property,41the NPC sketch plan,42 the location plan,43 the zoning certificates,44 the zonal
valuation of the BIR,45 and the opinion values46 were also considered.

The lone fact that there was no available sales data on properties within the vicinity of
respondent's land for 1996 and 1997 and that the BIR zonal value was P60.00 per sq m for
residential and P30.00 per sq m for agricultural did not proscribe the commissioners and the trial
court from making their own reasonable estimates of just compensation, after considering all the
facts as to the condition of the property and its surroundings, its improvements and capabilities.
As had been amply explained by this Court in Export Processing Zone Authority v. Dulay:47
 Various factors can come into play in the valuation of specific properties singled out for
expropriation. The values given by provincial assessors are usually uniform for very wide
areas covering several barrios or even an entire town with the exception of the
poblacion. Individual differences are never taken into account. The value of land is
based on such generalities as its possible cultivation for rice, corn, coconuts, or other
crops. Very often land described as "cogonal" has been cultivated for generations.
Buildings are described in terms of only two or three classes of building materials and
estimates of areas are more often inaccurate than correct. Tax values can serve as
guides but cannot be absolute substitutes for just compensation.

To say that the owners are estopped to question the valuations made by assessors
since they had the opportunity to protest is illusory. The overwhelming mass of land
owners accept unquestioningly what is found in the tax declarations prepared by local
assessors or municipal clerks for them. They do not even look at, much less analyze, the
statements. The idea of expropriation simply never occurs until a demand is made or a
case filed by an agency authorized to do so.

It is violative of due process to deny to the owner the opportunity to prove that the
valuation in the tax documents is unfair or wrong. And it is repulsive to basic concepts of
justice and fairness to allow the haphazard work of a minor bureaucrat or clerk to
absolutely prevail over the judgment of a court promulgated only after expert
commissioners have actually viewed the property, after evidence and arguments pro and
con have been presented, and after all factors and considerations essential to a fair and
just determination have been judiciously evaluated.48

Conformably with the rulings of this Court, the majority report took into account the most
profitable likely use of the remaining area; and the size, shape, accessibility, as well as listings
of other properties within the vicinity.49

As gleaned from the location plan50 of the property in the case at bar, Lot No. 2076 is connected
via a cemented road to the National Road, 1.5 kilometers away. The same is likewise
strategically located at a junction of the barrio road leading to the Provincial Road, the National
Road and to Sapang Palay. The lot is also on the same side of the road as the land owned by
the Jesus Is Lord Congregation and the Partida Elementary School. The ocular inspection of the
commissioners also reveals that opposite the road, about half a km away, is an ongoing resort
project, the Falcon Crest Resort, and, about 200 meters away, the proposed Catholic Retreat
House. While there are no existing structures or improvements on the residential portion of the
lot, the same is situated along the all-weather (gravel) road and is fronting the property. On the
agricultural portion thereof, the same appears to have been cultivated prior to the taking, as
petitioner offered to compensate respondent's heirs' damages to the crops, plants and trees.

The trial court fixed the just compensation for the property as follows: (1) P499.00 per sq m on
the 17,195 sq m agricultural portion of the subject land; and (2) P800.00 per sq m on the 6,565
sq m residential portion of the lot. Noticeably, the trial court did not blindly accept the
recommendation of majority of the commissioners of P800.00 per sq m for the residential lot
and P700.00 per sq m for the agricultural lot. Indeed, the trial court took into account the
evidence of the parties, in tandem with the findings and recommendation of the majority of the
commissioners. Considering that such valuation of the trial court as affirmed by the CA is
reasonable as it is and supported by the evidence on record, we find no compelling reason to
disturb the same.51
The Court is not persuaded by petitioner's argument that respondents had not shown that the
condition of the adjoining properties, i.e., improvements, had increased their land's economic
value. It bears stressing that there is absence of any available sales data on properties within
the vicinity of respondent's land for the years 1996 and 1997, the time of the taking. The
property of respondent was the first to be sold. It is thus an exercise in futility for respondents to
require evidence of sales of properties in the vicinity when no such transactions took place.

Petitioner's contention that the trial court should have based the fixing of just compensation on
the appraisal report of Cuervo Appraisers, Inc. (where petitioner based its Resolution No. 97-
246) is likewise untenable. Petitioner failed to present the so-called report of the Cuervo
Appraisers, Inc. as evidence. We note that annexed to NPC Resolution No. 97-246 is a data of
the NPC Board Appraisal on the Fair Market Value of residential lands along the concrete road
in Sapang Palay, San Jose Del Monte, valued at P499.00 per sq m, which, however, is not
signed nor authenticated. If, at all, the values indicated therein are self-serving to petitioner.

Parenthetically, petitioner has not explained why it agreed on paying just compensation
of P499.00 per sq m on the agricultural lands of the spouses Lagula, when the purported
Cuervo Appraisal Report indicates that the fair market value of unirrigated riceland along the
road is only P110.00 per sq m, and for an unirrigated interior only P85.00 per sq m.52 Had
petitioner really believed Cuervo's appraisal, then, it should have likewise insisted on the values
therein when it dealt with the spouses Lagulas.

Notably, the lower court's valuations of respondent's property –P499.00 per sq m on the
agricultural portion and P800.00 per sq m on the residential portion of the lot – are near the
estimates made by the following: (1) the Provincial Appraisal Committee, in its Resolution No.
97-005, which are P400.00 for agricultural and P600.00 for residential;53 (2) the
recommendation in the majority report of the commissioners (P700.00 for agricultural
and P800.00 for residential); and (3) the opinion values, which are P643.00 for agricultural
and P1,075.00 for residential. On the other hand, the valuations made by Atty. Alog, P89.00 for
agricultural and P230.00 for residential, are unconscionably low, understandably so because he
works for petitioner.

On the question as to whether petitioner shall pay only an easement fee to respondent's heirs,
the following pronouncement in National Power Corporation v. Aguirre-Paderanga54 is
enlightening:

Indeed, expropriation is not limited to the acquisition of real property with a

corresponding transfer of title or possession. The right-of-way easement resulting in a
restriction or limitation on property rights over the land traversed by transmission lines,
as in the present case, also falls within the ambit of the term "expropriation."As
explained in National Power Corporation v. Gutierrez, viz:

The trial court's observation shared by the appellate court show that "x x x While
it is true that plaintiff [is] only after a right-of-way easement, it nevertheless
perpetually deprives defendants of their proprietary rights as manifested by the
imposition by the plaintiff upon defendants that below said transmission lines no
plant higher than three (3) meters is allowed. Furthermore, because of the high-
tension current conveyed through said transmission lines, danger to life and
limbs that may be caused beneath said wires cannot altogether be discounted,
 and to cap it all, plaintiff only pays the fee to defendants once, while the latter
shall continually pay the taxes due on said affected portion of their property."

The foregoing facts considered, the acquisition of the right-of-way easement falls
within the purview of the power of eminent domain. Such conclusion finds
support in similar cases of easement of right-of-way where the Supreme Court
sustained the award of just compensation for private property condemned for
public use (See National Power Corporation v. Court of Appeals, 129 SCRA 665,
1984; Garcia v. Court of Appeals, 102 SCRA 597, 1981). The Supreme Court,
in Republic of the Philippines v. PLDT, thus held that:

"Normally, of course, the power of eminent domain results in the taking or

appropriation of title to, and possession of, the expropriated property; but no
cogent reason appears why said power may not be availed of to impose only a
burden upon the owner of condemned property, without loss of title and
possession. It is unquestionable that real property may, through expropriation, be
subjected to an easement of right-of-way."

In the case at bar, the easement of right-of-way is definitely a taking under the power of
eminent domain. Considering the nature and effect of the installation of the 230 KV
Mexico-Limay transmission lines, the limitation imposed by NPC against the use of the
land for an indefinite period deprives private respondents of its ordinary use.55

Similarly, in this case, the commissioners' observation on the reported constant loud buzzing
and exploding sounds emanating from the towers and transmission lines, especially on rainy
days; the constant fear on the part of the landowners that the large transmission lines looming
not far above their land and the huge tower in front of their lot will affect their safety and health;
and the slim chance that no one would be interested to buy the remaining portions on each side
of the residential lot affected by the project, to the damage of the landowners, both as to future
actual use of the land and financial gains to be derived therefrom, makes the instant case fall
within the ambit of expropriation.

WHEREFORE, premises considered, the appeal is hereby DENIED for lack of merit. The ruling
of the Court of Appeals in CA-G.R. CV No. 72860 is AFFIRMED.

G.R. No. L-119694 May 22, 1995

PHILIPPINE PRESS INSTITUTE, INC., for and in behalf of 139 members, represented by
its President, Amado P. Macasaet and its Executive Director Ermin F. Garcia,
Jr., petitioner,
vs.
COMMISSION ON ELECTIONS, respondent.

RESOLUTION

FELICIANO, J.:
The Philippine Press Institute, Inc. ("PPI") is before this Court assailing the constitutional validity
of Resolution No. 2772 issued by respondent Commission on Elections ("Comelec") and its
corresponding Comelec directive dated 22 March 1995, through a Petition for Certiorari and
Prohibition. Petitioner PPI is a non-stock, non-profit organization of newspaper and magazine
publishers.

On 2 March 1995, Comelec promulgated Resolution No. 2772, which reads in part:

xxx xxx xxx

Sec. 2. Comelec Space. — The Commission shall procure free print space of not
less than one half (1/2) page in at least one newspaper of general circulation in
every province or city for use as "Comelec Space" from March 6, 1995 in the
case of candidates for senator and from March 21, 1995 until May 12, 1995. In
the absence of said newspaper, "Comelec Space" shall be obtained from any
magazine or periodical of said province or city.

Sec. 3. Uses of Comelec Space. — "Comelec Space" shall be allocated by the

Commission, free of charge, among all candidates within the area in which the
newspaper, magazine or periodical is circulated to enable the candidates to
make known their qualifications, their stand on public issues and their platforms
and programs of government.

"Comelec Space" shall also be used by the Commission for dissemination of vital
election information.

Sec. 4. Allocation of Comelec Space. — (a) "Comelec Space" shall also

be available to all candidates during the periods stated in Section 2 hereof.
Its allocation shall be equal and impartial among all candidates for the same
office. All candidates concerned shall be furnished a copy of the allocation of
"Comelec Space" for their information, guidance and compliance.

(b) Any candidate desiring to avail himself of "Comelec Space" from newspapers
or publications based in the Metropolitan Manila Area shall submit an application
therefor, in writing, to the Committee on Mass Media of the Commission. Any
candidate desiring to avail himself of "Comelec Space" in newspapers or
publications based in the provinces shall submit his application therefor, in
writing, to the Provincial Election Supervisor concerned. Applications for
availment of "Comelec Space" maybe filed at any time from the date of effectivity
of this Resolution.

(c) The Committee on Mass Media and the Provincial Election Supervisors
shall allocate available "Comelec Space" among the candidates concerned by
lottery of which said candidates shall be notified in advance, in writing, to be
present personally or by representative to witness the lottery at the date, time
and place specified in the notice. Any party objecting to the result of the lottery
may appeal to the Commission.

(d) The candidates concerned shall be notified by the Committee on Mass Media
or the Provincial Election Supervisor, as the case maybe, sufficiently in advance
 and in writing of the date of issue and the newspaper or publication allocated to
him, and the time within which he must submit the written material for publication
in the "Comelec Space".

xxx xxx xxx

Sec. 8. Undue Reference to Candidates/Political Parties in Newspapers. — No

newspaper or publication shall allow to be printed or published in the news,
opinion, features, or other sections of the newspaper or publication accounts or
comments which manifestly favor or oppose any candidate or political party by
unduly or repeatedly referring to or including therein said candidate or political
party. However, unless the facts and circumstances clearly indicate otherwise,
the Commission will respect the determination by the publisher and/or editors of
the newspapers or publications that the accounts or views published are
significant, newsworthy and of public interest. (Emphasis supplied)

Apparently in implementation of this Resolution, Comelec through Commissioner Regalado E.

Maambong sent identical letters, dated 22 March 1995, to various publishers of newspapers like
the Business World, the Philippine Star, the Malaya and the Philippine Times Journal, all
members of PPI. These letters read as follows:

This is to advise you that pursuant to Resolution No. 2772 of the Commission on
Elections, you are directed to provide free print space of not less than one half
(1/2) page for use as "Comelec Space" or similar to the print support which you
have extended during the May 11, 1992 synchronized elections which was 2 full
pages for each political party fielding senatorial candidates, from March 6, 1995
to May 6, 1995, to make known their qualifications, their stand on public issues
and their platforms and programs of government.

We shall be informing the political parties and candidates to submit directly to

you their pictures, biographical data, stand on key public issues and platforms of
government either as raw data or in the form of positives or camera-ready
materials.

Please be reminded that the political parties/candidates may be accommodated

in your publication any day upon receipt of their materials until May 6, 1995
which is the last day for campaigning.

We trust you to extend your full support and cooperation in this regard.
(Emphasis supplied)

In this Petition for Certiorari and Prohibition with prayer for the issuance of a Temporary
Restraining Order, PPI asks us to declare Comelec Resolution No. 2772 unconstitutional and
void on the ground that it violates the prohibition imposed by the Constitution upon the
government, and any of its agencies, against the taking of private property for public use without
just compensation. Petitioner also contends that the 22 March 1995 letter directives of Comelec
requiring publishers to give free "Comelec Space" and at the same time process raw data to
make it camera-ready, constitute impositions of involuntary servitude, contrary to the provisions
of Section 18 (2), Article III of the 1987 Constitution. Finally, PPI argues that Section 8 of
Comelec Resolution No. 2772 is violative of the constitutionally guaranteed freedom of speech,
of the press and of expression.1

On 20 April 1995, this Court issued a Temporary Restraining Order enjoining Comelec from
enforcing and implementing Section 2 of Resolution No. 2772, as well as the Comelec directives
addressed to various print media enterprises all dated 22 March 1995. The Court also required
the respondent to file a Comment on the Petition.

The Office of the Solicitor General filed its Comment on behalf of respondent Comelec alleging
that Comelec Resolution No. 2772 does not impose upon the publishers any obligation to
provide free print space in the newspapers as it does not provide any criminal or administrative
sanction for non-compliance with that Resolution. According to the Solicitor General, the
questioned Resolution merely established guidelines to be followed in connection with the
procurement of "Comelec space," the procedure for and mode of allocation of such space to
candidates and the conditions or requirements for the candidate's utilization of the "Comelec
space" procured. At the same time, however, the Solicitor General argues that even if the
questioned Resolution and its implementing letter directives are viewed as mandatory, the same
would nevertheless be valid as an exercise of the police power of the State. The Solicitor
General also maintains that Section 8 of Resolution No. 2772 is a permissible exercise of the
power of supervision or regulation of the Comelec over the communication and information
operations of print media enterprises during the election period to safeguard and ensure a fair,
impartial and credible election.2

At the oral hearing of this case held on 28 April 1995, respondent Comelec through its
Chairman, Hon. Bernardo Pardo, in response to inquiries from the Chief Justice and other
Members of the Court, stated that Resolution No. 2772, particularly Section 2 thereof and the 22
March 1995 letters dispatched to various members of petitioner PPI, were not intended to
compel those members to supply Comelec with free print space. Chairman Pardo represented
to the Court that Resolution and the related letter-directives were merely designed to solicit from
the publishers the same free print space which many publishers had voluntarily given to
Comelec during the election period relating to the 11 May 1992 elections. Indeed, the Chairman
stated that the Comelec would, that very afternoon, meet and adopt an appropriate amending or
clarifying resolution, a certified true copy of which would forthwith be filed with the Court.

On 5 May 1995, the Court received from the Office of the Solicitor General a manifestation
which attached a copy of Comelec Resolution No. 2772-A dated 4 May 1995. The operative
portion of this Resolution follows:

NOW THEREFORE, pursuant to the powers vested in it by the Constitution, the

Omnibus Election Code, Republic Acts No. 6646 and 7166 and other election
laws, the Commission on Elections RESOLVED to clarify Sections 2 and 8 of
Res. No. 2772 as follows:

1. Section 2 of Res. No. 2772 shall not be

construed to mean as requiring publishers of the
different mass media print publications to provide
print space under pain of prosecution, whether
administrative, civil or criminal, there being no
sanction or penalty for violation of said Section
provided for either in said Resolution or in Section
 90 of Batas Pambansa Blg. 881, otherwise known
as the Omnibus Election Code, on the grant of
"Comelec space."

2. Section 8 of Res. No. 2772 shall not be

construed to mean as constituting prior restraint on
the part of publishers with respect to the printing or
publication of materials in the news, opinion,
features or other sections of their respective
publications or other accounts or comments, it
being clear from the last sentence of said Section 8
that the Commission shall, "unless the facts and
circumstances clearly indicate otherwise . .
. respect the determination by the publisher and/or
editors of the newspapers or publications that the
accounts or views published are significant,
newsworthy and of public interest."

This Resolution shall take effect upon approval. (Emphasis in the original)

While, at this point, the Court could perhaps simply dismiss the Petition for Certiorari and
Prohibition as having become moot and academic, we consider it not inappropriate to pass
upon the first constitutional issue raised in this case. Our hope is to put this issue to rest and
prevent its resurrection.

Section 2 of Resolution No. 2772 is not a model of clarity in expression. Section 1 of Resolution
No. 2772-A did not try to redraft Section 2; accordingly, Section 2 of Resolution No. 2772
persists in its original form. Thus, we must point out that, as presently worded, and in particular
as interpreted and applied by the Comelec itself in its 22 March 1995 letter-directives to
newspaper publishers, Section 2 of Resolution No. 2772 is clearly susceptible of the reading
that petitioner PPI has given it. That Resolution No. 2772 does not, in express terms, threaten
publishers who would disregard it or its implementing letters with some criminal or other
sanction, does not by itself demonstrate that the Comelec's original intention was simply to
solicit or request voluntary donations of print space from publishers. A written communication
officially directing a print media company to supply free print space, dispatched by a
government (here a constitutional) agency and signed by a member of the Commission
presumably legally authorized to do so, is bound to produce a coercive effect upon the company
so addressed. That the agency may not be legally authorized to impose, or cause the imposition
of, criminal or other sanctions for disregard of such directions, only aggravates the constitutional
difficulties inhearing in the present situation. The enactment or addition of such sanctions by the
legislative authority itself would be open to serious constitutional objection.

To compel print media companies to donate "Comelec-space" of the dimensions specified in

Section 2 of Resolution No. 2772 (not less than one-half page), amounts to "taking" of private
personal property for public use or purposes. Section 2 failed to specify the
intended frequency of such compulsory "donation:" only once during the period from 6 March
1995 (or 21 March 1995) until 12 May 1995? or everyday or once a week? or as often as
Comelec may direct during the same period? The extent of the taking or deprivation is not
insubstantial; this is not a case of a de minimistemporary limitation or restraint upon the use of
private property. The monetary value of the compulsory "donation," measured by the advertising
rates ordinarily charged by newspaper publishers whether in cities or in non-urban areas, may
be very substantial indeed.

The taking of print space here sought to be effected may first be appraised under the rubric of
expropriation of private personal property for public use. The threshold requisites for a lawful
taking of private property for public use need to be examined here: one is the necessity for the
taking; another is the legal authority to effect the taking. The element of necessity for the taking
has not been shown by respondent Comelec. It has not been suggested that the members of
PPI are unwilling to sell print space at their normal rates to Comelec for election purposes.
Indeed, the unwillingness or reluctance of Comelec to buy print space lies at the heart of the
problem. 3 Similarly, it has not been suggested, let alone demonstrated, that Comelec has been
granted the power of eminent domain either by the Constitution or by the legislative authority. A
reasonable relationship between that power and the enforcement and administration of election
laws by Comelec must be shown; it is not casually to be assumed.

That the taking is designed to subserve "public use" is not contested by petitioner PPI. We note
only that, under Section 3 of Resolution No. 2772, the free "Comelec space" sought by the
respondent Commission would be used not only for informing the public about the identities,
qualifications and programs of government of candidates for elective office but also for
"dissemination of vital election information" (including, presumably, circulars, regulations,
notices, directives, etc. issued by Comelec). It seems to the Court a matter of judicial notice that
government offices and agencies (including the Supreme Court) simply purchase print space, in
the ordinary course of events, when their rules and regulations, circulars, notices and so forth
need officially to be brought to the attention of the general public.

The taking of private property for public use is, of course, authorized by the Constitution, but not
without payment of "just compensation" (Article III, Section 9). And apparently the necessity of
paying compensation for "Comelec space" is precisely what is sought to be avoided by
respondent Commission, whether Section 2 of Resolution No. 2772 is read as petitioner PPI
reads it, as an assertion of authority to require newspaper publishers to "donate" free print
space for Comelec purposes, or as an exhortation, or perhaps an appeal, to publishers to
donate free print space, as Section 1 of Resolution No. 2772-A attempts to suggest. There is
nothing at all to prevent newspaper and magazine publishers from voluntarily giving free print
space to Comelec for the purposes contemplated in Resolution No. 2772. Section 2 of
Resolution No. 2772 does not, however, provide a constitutional basis for compelling publishers,
against their will, in the kind of factual context here present, to provide free print space for
Comelec purposes. Section 2 does not constitute a valid exercise of the power of eminent
domain.

We would note that the ruling here laid down by the Court is entirely in line with the theory of
democratic representative government. The economic costs of informing the general public
about the qualifications and programs of those seeking elective office are most appropriately
distributed as widely as possible throughout our society by the utilization of public funds,
especially funds raised by taxation, rather than cast solely on one small sector of society, i.e.,
print media enterprises. The benefits which flow from a heightened level of information on and
the awareness of the electoral process are commonly thought to be community-wide; the
burdens should be allocated on the same basis.

As earlier noted, the Solicitor General also contended that Section 2 of Resolution No. 2772,
even if read as compelling publishers to "donate" "Comelec space, " may be sustained as a
valid exercise of the police power of the state. This argument was, however, made too casually
to require prolonged consideration on our part. Firstly, there was no effort (and apparently no
inclination on the part of Comelec) to show that the police power — essentially a power of
legislation — has been constitutionally delegated to respondent Commission.4 Secondly, while
private property may indeed be validly taken in the legitimate exercise of the police power of the
state, there was no attempt to show compliance in the instant case with the requisites of a lawful
taking under the police power. 5

Section 2 of Resolution No. 2772 is a blunt and heavy instrument that purports, without a
showing of existence of a national emergency or other imperious public necessity,
indiscriminately and without regard to the individual business condition of particular newspapers
or magazines located in differing parts of the country, to take private property of newspaper or
magazine publishers. No attempt was made to demonstrate that a real and palpable or urgent
necessity for the taking of print space confronted the Comelec and that Section 2 of Resolution
No. 2772 was itself the only reasonable and calibrated response to such necessity available to
the Comelec. Section 2 does not constitute a valid exercise of the police power of the State.

We turn to Section 8 of Resolution No. 2772, which needs to be quoted in full again:

Sec. 8. Undue Reference to Candidates/Political Parties in Newspapers. — No

newspaper or publication shall allow to be printed or published in the news,
opinion, features, or other sections of the newspaper or publication accounts or
comments which manifestly favor or oppose any candidate or political party by
unduly or repeatedly referring to or including therein said candidate or political
party. However, unless the facts and circumstances clearly indicate otherwise,
the Commission will respect the determination by the publisher and/or editors of
the newspapers or publications that the accounts or views published are
significant, newsworthy and of public interest.

It is not easy to understand why Section 8 was included at all in Resolution No. 2772. In any
case, Section 8 should be viewed in the context of our decision in National Press Club v.
Commission on Elections. 6 There the Court sustained the constitutionality of Section 11 (b) of
R.A. No. 6646, known as the Electoral Reforms Law of 1987, which prohibits the sale or
donation of print space and airtime for campaign or other political purposes, except to the
Comelec. In doing so, the Court carefully distinguished (a) paid political advertisements which
are reached by the prohibition of Section 11 (b), from (b) the reporting of news, commentaries
and expressions of belief or opinion by reporters, broadcasters, editors, commentators or
columnists which fall outside the scope of Section 11 (b) and which are protected by the
constitutional guarantees of freedom of speech and of the press:

Secondly, and more importantly, Section 11 (b) is limited in its scope of

application. Analysis of Section 11 (b) shows that it purports to apply only to the
purchase and sale, including purchase and sale disguised as a donation, of print
space and air time for campaign or other political purposes. Section 11 (b) does
not purport in any way to restrict the reporting by
newspapers or radio or television stations of news or news-worthy events relating
to candidates, their qualifications, political parties and programs of government.
Moreover, Section 11 (b) does not reach commentaries and expressions of belief
or opinion by reporters or broadcaster or editors or commentators or columnists
in respect of candidates, their qualifications, and programs and so forth, so long
 at least as such comments, opinions and beliefs are not in fact advertisements
for particular candidates covertly paid for. In sum, Section 11 (b) is not to be read
as reaching any report or commentary or other coverage that, in responsible
media, is not paid for by candidates for political office. We read Section 11 (b) as
designed to cover only paid political advertisements of particular candidates.

The above limitation in scope of application of Section 11 (b) — that it does not
restrict either the reporting of or the expression of belief or opinion or comment
upon the qualifications and programs and activities of any and all candidates for
office — constitutes the critical distinction which must be made between the
instant case and that of Sanidad v. Commission on Elections. . . . 7 (Citations
omitted; emphasis supplied)

Section 8 of Resolution No. 2772 appears to represent the effort of the Comelec to establish a
guideline for implementation of the above-quoted distinction and doctrine in National Press
Club an effort not blessed with evident success. Section 2 of Resolution No. 2772-A while
possibly helpful, does not add substantially to the utility of Section 8 of Resolution No. 2772.
The distinction between paid political advertisements on the one hand and news reports,
commentaries and expressions of belief or opinion by reporters, broadcasters, editors, etc. on
the other hand, can realistically be given operative meaning only in actual cases or
controversies, on a case-to-case basis, in terms of very specific sets of facts.

At all events, the Court is bound to note that PPI has failed to allege any specific affirmative
action on the part of Comelec designed to enforce or implement Section 8. PPI has not claimed
that it or any of its members has sustained actual or imminent injury by reason of Comelec
action under Section 8. Put a little differently, the Court considers that the precise constitutional
issue here sought to be raised — whether or not Section 8 of Resolution No. 2772 constitutes a
permissible exercise of the Comelec's power under Article IX, Section 4 of the Constitution to

supervise or regulate the enjoyment or utilization of all franchise or permits for

the operation of — media of communication or information — [for the purpose of
ensuring] equal opportunity, time and space, and the right of reply, including
reasonable, equal rates therefore, for public information campaigns and forums
among candidates in connection with the objective of holding free, orderly
honest, peaceful and credible elections —

is not ripe for judicial review for lack of an actual case or controversy involving, as the very lis
mota thereof, the constitutionality of Section 8.

Summarizing our conclusions:

1. Section 2 of Resolution No. 2772, in its present form and as interpreted by Comelec in its 22
March 1995 letter directives, purports to require print media enterprises to "donate" free print
space to Comelec. As such, Section 2 suffers from a fatal constitutional vice and must be set
aside and nullified.

2. To the extent it pertains to Section 8 of Resolution No. 2772, the Petition for Certiorari and
Prohibition must be dismissed for lack of an actual, justiciable case or controversy.
WHEREFORE, for all the foregoing, the Petition for Certiorari and Prohibition is GRANTED in
part and Section 2 of Resolution No. 2772 in its present form and the related letter-directives
dated 22 March 1995 are hereby SET ASIDE as null and void, and the Temporary Restraining
Order is hereby MADE PERMANENT. The Petition is DISMISSED in part, to the extent it relates
to Section 8 of Resolution No. 2772. No pronouncement as to costs.

THIRD DIVISION

[G.R. No. 125218. January 23, 1998]

FILSTREAM INTERNATIONAL INCORPORATED, petitioner, vs. COURT OF APPEALS,

JUDGE FELIPE S. TONGCO and THE CITY OF MANILA, respondent.

[G.R. No. 128077. January 23, 1998]

FILSTREAM INTERNATIONAL INCORPORATED, petitioner, vs., COURT OF APPEALS,

ORLANDO MALIT, ANTONIO CAGUIAT, ALICIA CABRERA, ARMANDO LACHICA,
JACINTO CAGUIAT, GLORIA ANTONIO, ELIZALDE NAVARRA, DOLORES
FUENTES, SUSANA ROY, ANTONIO IBANEZ, BENIGNO BASILIO, LUCERIA
DEMATULAC, FLORENCIA GOMEZ, LAZARO GOMEZ, JOSE GOMEZ, VENANCIO
MANALOTO, CRISTINO UMALI, DEMETRIA GATUS, PRISCILLA MALONG,
DOMINGO AGUILA, RAMON SAN AGUSTIN, JULIAN FERRER, JR., FRANCISCO
GALANG, FLORENTINO MALIWAT, SEVERINA VILLAR, TRINIDAD NAGUIT, JOSE
NAGUIT, FORTUNATO AGUSTIN CABRERA, GAUDENCIO INTAL, DANILO DAVID,
ENRIQUE DAVID, VICENTE DE GUZMAN, POLICARPIO LUMBA, BELEN PALMA,
ELEN SOMVILLO, LEONARDO MANICAD, OPRENG MICLAT, BENITA MATA,
GREGORIO LOPEZ, MARCELINA SAPNO, JESUS MERCADO, and CALIXTO
GOMEZ, respondent.

DECISION
FRANCISCO, J.:

In resolving the instant petitions, the Court is tasked to strike a balance between the
contending interests when the state exercised its power of eminent domain. On one side we
have the owners of the property to be expropriated who must be duly compensated for the loss
of their property, while on the other is the State which must take the property for public use.
Petitioner, Filstream International Inc., is the registered owner of the properties subject of
this dispute consisting of adjacent parcels of land situated in Antonio Rivera Street, Tondo II,
Manila, with a total area of 3,571.10 square meters and covered by T.C.T. Nos. 203937,
203936, 169198, 169199, 169200 and 169202 of the Register of Deeds of Manila.
 On January 7, 1993, petitioner filed an ejectment suit before the Metropolitan Trial Court of
Manila (Branch 15) docketed as Civil Case No. 140817-CV against the occupants of the
abovementioned parcels of land (herein private respondents in G.R. No. 128077) on the
grounds of termination of the lease contract and non-payment of rentals. Judgment was
rendered by the MTC on September 14, 1993 ordering private respondents to vacate the
premises and pay back rentals to petitioner.[1]
Not satisfied, private respondents appealed the decision to the Regional Trial Court of
Manila, Branch 4 (Civil Case No. 93-68130) which in turn affirmed the decision of the MTC in its
decision dated February 22, 1994. Still not content, private respondents proceeded to the Court
of Appeals via a petition for review (CA-G.R. SP No. 33714). The result however remained the
same as the CA affirmed the decision of the RTC in its decision dated August 25, 1994.[2]
Thereafter, no further action was taken by the private respondents, as a result of which the
decision in the ejectment suit became final and executory.
However, it appeared that during the pendency of the ejectment proceedings private
respondents filed on May 25, 1993, a complaint for Annulment of Deed of Exchange against
petitioner Filstream which was docketed in Civil Case No. 93-66059 before the RTC of Manila,
Branch 43. It was at this stage that respondent City of Manila came into the picture when the
city government approved Ordinance No. 7813[3] on November 5, 1993, authorizing Mayor
Alfredo S. Lim to initiate the acquisition by negotiation, expropriation, purchase, or other legal
means certain parcels of land registered under T.C.T. Nos. 169193, 169198, 169190, 169200,
169202, and 169192 of the Registry of Deeds of Manila which formed part of the properties of
petitioner then occupied by private respondents. Subsequently, the City of Manila approved
Ordinance No. 7855[4] declaring the expropriation of certain parcels of land situated along
Antonio Rivera and Fernando Ma. Guerero streets in Tondo, Manila which were owned by Mr.
Enrique Quijano Gutierez, petitioners predecessor-in-interest. The said properties were to be
sold and distributed to qualified tenants of the area pursuant to the Land Use Development
Program of the City of Manila.
On May 23, 1994, respondent City of Manila filed a complaint for eminent domain (Civil
Case No. 94-70560) before the RTC of Manila, Branch 42,[5] seeking to expropriate the
aforecited parcels of land owned by petitioner Filstream which are situated at Antonio Rivera
Street, Tondo II, Manila.[6]
Pursuant to the complaint filed by respondent City of Manila,the trial court issued a Writ of
Possession[7] in favor of the former which ordered the transfer of possession over the disputed
premises to the City of Manila.
At this juncture, petitioner Filstream filed a motion to dismiss the complaint for eminent
domain as well as a motion to quash the writ of possession. The motion to dismiss was
premised on the following grounds: no valid cause of action; the petition does not satisfy the
requirements of public use and a mere clandestine maneuver to circumvent the writ execution
issued by the RTC of Manila, Branch 4 in the ejectment suit; violation of the constitutional
guarantee against non-impairment of obligation and contract; price offered was too low hence
violative of the just compensation provision of the constitution and the said amount is without
the certification of the City Treasurer for availability of funds. [8] With respect to the motion to
quash the writ of possession, petitioner raised the following objections: failure to comply with
Section 2 of Rule 67 of the Rules of Court, Ordinance No. 7813 is a void enactment for it was
approved without a public hearing and violative of the constitutional guarantee against
impairment of obligation and contracts; the price is too low and unconscionable violating the just
compensation provision of the constitution, and the said writ is tainted with infirmity considering
the absence of a certification from the City of Manila that there is an immediately available fund
for the subject expropriation.[9]
Respondent City of Manila filed its opposition[10] to petitioner Filstreams two motion and to
which petitioner accordingly filed a reply.[11] On September 30, 1994, the RTC of Manila, Branch
42, issued an order denying petitioner Filstreams motion to dismiss and the motion to quash the
Writ of Possession and declared as follows:

IN FINE, the defendants motion to dismiss and motion to quash writ of possession are both
without merit and are hereby DENIED and the subject parcels of lands covered by TCT Nos.
203937, 203936, 169198, 169199, 169200, and 169202 (of the Register of Deeds of Manila)
located at Antonio Rivera Street, Tondo II, Manila with a total area of 3,571.10 square meters
are hereby declared CONDEMNED in favor of the City of Manila for distribution and resale to all
poor and landless qualified residents/tenants in the said area under the citys land-for-the-
landless program upon payment of just compensation which is yet to be determined by this
Court.[12]

Petitioner filed a motion for reconsideration[13] as well as a supplemental motion for

reconsideration[14] seeking the reversal of the above-quoted order but the same were
denied.[15] Still, petitioner filed a subsequent motion to be allowed to file a second motion for
reconsideration but it was also denied.
Aggrieved, petitioner filed on March 31, 1996, a Petition for Certiorari with the Court of
Appeals (CA-G.R. SP No. 36904) seeking to set aside the September 30, 1994 order of the
RTC of Manila, Branch 42. However, on March 18, 1996, respondent CA issued a resolution
dismissing the petition in this wise:

It appearing that the above-entitled petition is insufficient in form and substance -- it does not
comply with Section 2(a), Rule 6 of the Revised Internal Rules of the Court of Appeals which
requires that the petition shall be x x x accompanied by x x x other pertinent documents and
papers, aside from the fact that copies of the pleadings attached to the petition are blurred and
unreadable -- this Court resolved to summarily DISMISS the same (petition).[16]

Petitioner filed a motion for reconsideration and attached clearer copies of the pertinent
documents and papers pursuant to Section 2(a) Rule 6 of the Revised Internal Rules of the
Court of Appeals. But on May 20, 1996, respondent CA issued a resolution denying the motion
as petitioner failed to submit clearer and readable copies of the pleadings.[17]This prompted
petitioner to proceed to this Court giving rise to the instant petition for review on certiorari under
Rule 45 and docketed herein as G.R. No. 125218, assailing the dismissal of its petition by the
CA in its resolution dated March 18, 1996 as well as that of its motion for reconsideration in the
resolution dated May 20, 1996.
Meanwhile, owing to the finality of the decision in the ejectment suit (Civil Case No 140817
CV), the MTC of Manila, Branch 15, upon motion of petitioner Filstream, issued a Writ of
Execution as well as a Notice to Vacate the disputed premises.[18] Private respondents filed a
Motion to Recall/Quash the Writ of Execution and Notice to Vacate[19] alleging the existence of a
supervening event in that the properties subject of the dispute have already been ordered
condemned in an expropriation proceeding in favor of the City of Manila for the benefit of the
qualified occupants thereof, thus execution shall be stayed. Petitioner opposed the motion,
reiterating that the decision in the ejectment case is already final and executory and disputed
private respondents right to interpose the expropriation proceedings as a defense because the
latter were not parties to the same.
 For its part, the City of Manila filed on March 13, 1996, a motion for intervention with prayer
to stay/quash the writ of execution on the ground that it is the present possessor of the property
subject of execution.
In its order dated March 14, 1996, the MTC of Manila, Branch 14, denied private
respondents motion as it found the allegations therein bereft of merit and upheld the issuance of
the Writ of Execution and Notice to Vacate in petitioners favor.[20] Subsequently, the trial court
also denied the motion filed by the City of Manila.
On April 22, 1996, the trial court issued an order commanding the demolition of the
structure erected on the disputed premises. To avert the demolition, private respondents filed
before the RTC of Manila, Branch 14, a Petition for Certiorari and Prohibition with prayer for the
issuance of a temporary restraining order and preliminary injunction (docketed as Civil Case No.
96-78098). On April 29, 1996, the RTC of Manila, Branch 33, issued a TRO enjoining the
execution if the writ issued in Civil Case No. 140817-CV by the MTC of Manila, Branch
14.[21] Subsequently, the RTC issued a writ of preliminary injunction on May 14, 1996.[22]
On May 15, 1996, the City of Manila filed its Petition for Certiorari and Prohibition with
prayer for the issuance of a temporary restraining order and preliminary injunction which was
raffled to Branch 23 of the RTC of Manila (docketed as Civil Case No. 96-78382), seeking the
reversal of the orders issued by the MTC of Manila, Branch 14, which denied its motion to
intervene and quash the writ of execution in Civil Case No. 140817-CV.
Thereafter, upon motion filed by the City of Manila, an order was issued by the RTC of
Manila, Branch 10, ordering the consolidation of Civil Case No. 96-78382 with Civil Case No.
96-78098 pending before Branch 14 of the RTC of Manila.[23] On May 21, 1996, the RTC of
Manila, Branch 14, issued an injunction in Civil Case No. 96-78098 enjoining the
implementation of the writ of execution until further orders from the court. [24] Petitioner Filstream
filed a Motion to Dissolve the Writ of Preliminary Injunction and to be allowed to post a counter-
bond but the trial court denied the same. Filstream then filed a motion for reconsideration from
the order of denial but pending resolution of this motion for voluntary inhibition of the presiding
judge of the RTC of Manila, Branch 14. The motion for inhibition was granted[25] and as a result,
the consolidated cases (Civil Case No. 96-78382 and 96-78098) were re-raffled to the RTC of
Manila, Branch 33.
During the proceedings before the RTC of Manila, Branch 33, petitioner Filstream moved
for the dismissal of the consolidated cases (Civil Case No. 96-78382 and 96-78098) for violation
of Supreme Court Circular No. 04-94 (forum shopping) because the same parties, causes of
action and subject matter involved therein have already been disposed of in the decision in the
ejectment case (Civil Case No. 140817) which has already become final and executory prior to
the filing of these consolidated cases.
On December 9, 1996, an order was issued by the RTC of Manila, Branch 33, ordering the
dismissal of Civil Cases Nos. 96-78382 and 96-78098 for violation of Supreme Court Circular
No. 04-94.[26] Immediately thereafter, petitioner Filstream filed an Ex-parte Motion for Issuance
of an Alias Writ of Demolition and Ejectment and a supplemental motion to the same dated
January 10 and 13, 1997, respectively,[27] before the MTC of Manila, Branch 15, which
promulgated the decision in the ejectment suit (Civil Case No. 140817-CV).On January 23,
1997, the court granted the motion and issued the corresponding writ of demolition.
As a consequence of the dismissal of the consolidated cases, herein private respondents
filed a Petition for Certiorari and Prohibition with prayer for the issuance of a temporary
restraining order and preliminary injunction before the Court of Appeals (docketed as CA-G.R.
SP No. 43101)[28] assailing the above-mentioned order of dismissal by the RTC of Manila,
Branch 33, as having been issued with grave abuse of discretion tantamount to lack or in
excess of jurisdiction.
In a resolution dated January 28, 1997, the Court of Appeals granted herein private
respondents prayer for the issuance of a temporary restraining order and directed the MTC of
Manila, Branch 15, to desist from implementing the order of demolition dated January 23, 1997,
unless otherwise directed.[29]
At the conclusion of the hearing for the issuance of a writ of preliminary injunction, the Court
of Appeals, in its resolution dated February 18, 1997, found merit in private respondents
allegations in support of their application of the issuance of the writ and granted the same, to
wit:

Finding that the enforcement or implementation of the writ of execution and notice to vacate
issued in Civil Case No. 140817-CV, the ejectment case before respondent Judge Jiro, during
the pendency of the instant petition, would probably be in violation of petitioners right, and would
tend to render the judgment in the instant case ineffectual, and probably work injustice to the
petitioners, the application for the issuance of a writ of preliminary injunction is hereby
GRANTED.

WHEREFORE, upon the filing of a bond in the amount of P150,000.00, let a writ of preliminary
injunction be issued enjoining respondents, their employees, agents, representatives and
anyone acting in their behalf from enforcing or executing the writ of execution and notice to
vacate issued in Civil Case No. 140817-CV of the court of respondent Judge Jiro, or otherwise
disturbing the status quo, until further orders of this Court.[30]

In turn, petitioner Filstream is now before this Court via a Petition for Certiorari under Rule
65 (G.R. No. 128077), seeking to nullify the Resolutions of the Court of Appeals dated January
28, 1997 and February 18, 1997 which granted herein private respondents prayer for a TRO
and Writ of Preliminary Injunction, the same being null and void for having been issued in grave
abuse of discretion.
Upon motion filed by petitioner Filstream, in order to avoid any conflicting decision on the
legal issues raised in the petitions, the Court ordered that the later petition, G.R. No. 128077 be
consolidated with G.R. No. 128077 in the resolution of March 5, 1997.[31]
The issue raised in G.R. No. 125218 is purely procedural and technical matter. Petitioner
takes exception to the resolutions of respondent CA dated March 18, 1996 and May 20, 1996
which ordered the dismissal of its Petition for Certiorari for non-compliance with Sec. 2(a) of
Rule 6 of the Revised Internal Rules of the Court of Appeals by failing to attach to its petition
other pertinent documents and papers and for attaching copies of pleadings which are blurred
and unreadable. Petitioner argues that respondent appellate court seriously erred in giving more
premium to form rather than the substance.
We agree with the petitioner. A strict adherence to the technical and procedural rules in this
case would defeat rather than meet the ends of justice as it would result in the violation of the
substantial rights of petitioner. At stake in the appeal filed by petitioner before the CA is the
exercise of their property rights over the disputed premises which have been expropriated and
have in fact been ordered condemned in favor of the City of Manila. In effect, the dismissal of
their appeal in the expropriation proceedings based on the aforementioned grounds is
tantamount to a deprivation of property without due process of law as it would automatically
validate the expropriation proceedings based on the aforementioned grounds is tantamount to a
deprivation of property without due process of law as it would automatically validate the
expropriation proceedings which the petitioner is still disputing. It must be emphasized that
where substantial rights are affected, as in this case, the stringent application of procedural
rules may be relaxed if only to meet the ends of substantial justice.
In these instances, respondent CA can exercise its discretion to suspend its internal rules
and allow the parties to present and litigate their causes of action so that the Court can make an
actual and complete disposition of the issues presented in the case. Rather than simply
dismissing the petition summarily for non-compliance with respondent courts internal rules,
respondent CA should have instead entertained petitioner Filstreams petition for review on
Certiorari, and ordered petitioner to submit the corresponding pleadings which it deems relevant
and replace those which are unreadable. This leniency could not have caused any prejudiced to
the rights of the other parties.
With regard to the other petition, G.R. No. 128077, petitioner Filstream objects to the
issuance by respondent CA of the restraining order and the preliminary injunction enjoining the
execution of the writ of demolition issued in the ejectment suit (Civil Case No. 140817-CV) as an
incident to private respondents pending petition assailing the dismissal by the RTC of Manila,
Branch 33, of the consolidated petitions for certiorari filed by private respondents and the City of
Manila on the ground of forum shopping.
The propriety of the issuance of the restraining order and the writ of preliminary injunction is
but a mere incient to the actual controversy which is rooted in the assertion of the conflicting
rights of the parties in this case over the disputed premises. In order to determine whether
private respondents are entitled to the injunctive reliefs granted by respondent CA, we deemed
it proper to extract the source of discord.
Petitioner Filstream anchors its claim by virtue of its ownership over the properties and the
existence of a final and executory judgment against private respondents ordering the latters
ejectment from the premises (Civil Case No. 140817-CV).
Private respondents claim on the other hand hinges on an alleged supervening event which
has rendered the enforcement of petitioners rights moot, that is, the expropriation proceedings
(Civil Case No. 94-70560) undertaken by the City of Manila over the disputed premises for the
benefit of herein private respondents. For its part, the City of Manila is merely exercising its
power of eminent domain within its jurisdiction by expropriating petitioners properties for public
use.
There is no dispute as to the existence of a final and executory judgment in favor of
petitioner Filstream ordering the ejectment of private respondents from the properties subject of
this dispute. The judgment in the ejectment suit became final and executory after private
respondents failed to interpose any appeal from the adverse decision of the Court of Appeals
dated August 25, 1994 in CA-G.R. SP No. 33714. Thus, petitioner has every right to assert the
execution of this decision as it had already became final and executory.
However, it must also be conceded that the City of Manila has an undeniable right to
exercise its power of eminent domain within its jurisdiction. The right to expropriate private
property for public use is expressly granted to it under Section 19 of the 1991 Local Government
Code, to wit:

SECTION 19. Eminent Domain A local government unit may, through its chief executive and
acting pursuant to an ordinance, exercise the power of eminent domain for public use, or
purpose, or welfare for the benefit of the poor and the landless, upon payment of just
compensation, pursuant to the provisions of the Constitution and pertinent laws: Provided,
however, that the power of eminent domain may not be exercised unless a valid and definite
offer has been previously made to the owner, and such offer was not accepted; Provided,
further, That the local government unit may immediately take possession of the property upon
the filing of the expropriation proceedings and upon making a deposit with the proper court of at
least fifteen (15%) of the fair market value of the property based on the current tax declaration
of the property to be expropriated: Provided, finally, That the amount to be paid for the
expropriated property shall be determined by the proper court, based on the fair market value at
the time of the taking of the property. (Italics supplied)

More specifically, the City of Manila has the power to expropriate private property in the
pursuit of its urban land reform and housing program as explicitly laid out in the Revised Charter
of the City of Manila (R.A. No. 409) as follows:

General powers The city may have a common seal and alter the same at pleasure, and may
take, purchase, receive, hold, lease, convey, and dispose of real and personal property for the
general interest of the city, condemn private property for public use, contract and be contracted
with, sue and be sued, and prosecute and defend to final judgment and execution, and exercise
all the powers hereinafter conferred. (R.A. 409, Sec. 3; Italics supplied).

xxxxxxxxx

Sec. 100. The City of Manila is authorized to acquire private lands in the city and to subdivide
the same into home lots for sale on easy terms to city residents, giving first priority to the bona
fide tenants or occupants of said lands, and second priority to laborers and low-salaried
employees. For the purpose of this section, the city may raise necessary funds by
appropriations of general funds, by securing loans or by issuing bonds, and, if necessary, may
acquire the lands through expropriation proceedings in accordance with law, with the approval
of the President x x x. (Italics supplied).

In fact, the City of Manilas right to exercise these prerogatives notwithstanding the
existence of a final and executory judgment over the property to be expropriated has been
upheld by this Court in the case of Philippine Columbian Association vs. Panis, G.R. No.
106528, December 21, 1993.[32] Relying on the aforementioned provisions of the Revised
Charter of the City of Manila, the Court declared that:

The City of Manila, acting through its legislative branch, has the express power to acquire
private lands in the city and subdivide these lands into home lots for sale to bona-fide tenants or
occupants thereof, and to laborers and low-salaried employees of the city.

That only a few could actually benefit from the expropriation of the property does not diminish its
public use character. It is simply not possible to provide all at once land and shelter for all who
need them (Sumulong v. Guerrero, 154 SCRA 461 [1987]).

Corollary to the expanded notion of public use, expropriation is not anymore confined to vast
tracts of land and landed estates (Province of Camarines Sur v. Court of Appeals, G.R. Nol
103125, May 17, 1993; J. M. Tuason and Co., Inc. v. Land Tenure Administration, 31 SCRA 413
[1970]). It is therefore of no moment that the land sought to be expropriated in this case is less
than the half a hectare only (Pulido v. Court of Appeals, 122 SCRA 63 [1983]).

Through the years, the public use requirement in eminent domain has evolved into a flexible
concept, influenced by changing conditions (Sumulong v. Guerrero, supra; Manotok v. National
Housing Authority, 150 SCRA 89 [1987]; Heirs of Juancho Ardona v. Reyes, 125 SCRA 220
[1983]). Public use now includes the broader notion of indirect public benefit or advantage,
including a particular, urban land reform and housing.[33]

We take judicial notice of the fact that urban land reform has become a paramount task in
view of the acute shortage of decent housing in urban areas particularly in Metro
Manila. Nevertheless, despite the existence of a serious dilemma, local government units are
not given an unbridled authority when exercising their power of eminent domain in pursuit of
solutions to these problems. The basic rules still have to be followed, which are as follows: no
person shall be deprived of life, liberty, or property without due process of law, nor shall any
person be denied the equal protection of the laws (Art. 3, Sec. 1, 1987 Constitution); private
property shall not be taken for public use without just compensation (Art. 3, Section 9, 1987
Constitution). Thus the exercise by local government units of the power of eminent domain is
not without limitations. Even Section 19 of the 1991 Local Government Code is very explicit that
it must comply with the provisions of the Constitution and pertinent laws, to wit:

SECTION 19. Eminent Domain. A local government unit may, through its chief executive and
acting pursuant to an ordinance, exercise the power of eminent domain for public use, or
purpose, or welfare for the benefit of the poor and the landless, upon payment of just
compensation, pursuant to the provisions of the Constitution and pertinent laws: x x x. (Italics
supplied).

The governing law that deals with the subject of expropriation for purposed of urban land
reform and housing in Republic Act No. 7279 (Urban Development and Housing Act of 1992)
and Sections 9 and 10 of which specifically provide as follows:

Sec. 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 sub-divisions, 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 of Priority Development, Zonal Improvement sites, and
Slum Improvement and Resettlement Program sites which have not yet been acquired;

(e) Bagong Lipunan Improvement 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.
Sec. 10. Modes of Land Acquisition. The modes of acquiring lands for purposes of this Act shall
include, among others, community mortgage, land swapping, land assembly or consolidation,
land banking, donation to the Government, joint venture agreement, negotiated purchase, and
expropriation: Provided, however, That expropriation shall be resorted to only when other
modes of acquisition have been exhausted: Provided further, That where expropriation is
resorted to, parcels of land owned by small property owners shall be exempted for purposes of
this Act: Provided, finally, That abandoned property, as herein defined, shall be reverted and
escheated to the State in a proceeding analogous to the procedure laid down in Rule 91 of the
Rules of Court.

For the purpose of socialized housing, government-owned and foreclosed properties shall be
acquired by the local government units, or by the National Housing Authority primarily through
negotiated purchase: Provided, That qualified beneficiaries who are actual occupants of the
land shall be given the right of first refusal. (Italics supplied).

Very clear from the abovequoted provisions are the limitations with respect to the order of
priority in acquiring private lands and in resorting to expropriation proceedings as means to
acquire the same. Private lands rank last in the order of priority for purposes of socialized
housing. In the same vein, expropriation proceedings are to be resorted to only when the other
modes of acquisition have been exhausted. Compliance with these conditions must be deemed
mandatory because these are the only safeguards in securing the right of owners of private
property to due process when their property is expropriated for public use.
Proceeding from the parameters laid out in the above disquisitions, we now pose the crucial
question: Did the city of Manila comply with the abovementioned conditions when it expropriated
petitioner Filstreams properties? We have carefully scrutinized the records of this case and
found nothing that would indicate the respondent City of Manila complied with Sec. 9 and Sec.
10 of R.A. 7279. Petitioners Filstreams properties were expropriated and ordered condemned in
favor of the City of Manila sans any showing that resort to the acquisition of other lands listed
under Sec. 9 of RA 7279 have proved futile. Evidently, there was a violation of petitioner
Filstreams right to due process which must accordingly be rectified.
Indeed, it must be emphasized that the State has a paramount interest in exercising its
power of eminent domain for the general good considering that the right of the State to
expropriate private property as long as it is for public use always takes precedence over the
interest of private property owners. However we must not lose sight of the fact that the individual
rights affected by the exercise of such right are also entitled to protection, bearing in mind that
the exercise of this superior right cannot override the guarantee of due process extended by the
law to owners of the property to be expropriated. In this regard, vigilance over compliance with
the due process requirements is in order.
WHEREFORE, the petitions are hereby GRANTED. In G.R. 125218, the resolutions of the
Court of Appeals in CA-G.R. SP No. 36904 dated March 18, 1996 and May 20, 1996 are hereby
REVERSED and SET ASIDE. In G.R. No. 128077, the resolution of the Court of Appeals in CA-
G.R. SP No. 43101 dated January 28, 1997 and February 18, 1997 are REVERSED and SET
ASIDE.
SECOND DIVISION

[G.R. No. 152230. August 9, 2005]

JESUS IS LORD CHRISTIAN SCHOOL FOUNDATION, INC., petitioner, vs. MUNICIPALITY
(now CITY) OF PASIG, METRO MANILA, respondent.

DECISION
CALLEJO, SR., J.:

Before us is a petition for review of the Decision[1] of the Court of Appeals (CA) in CA-G.R.
CV No. 59050, and its Resolution dated February 18, 2002, denying the motion for
reconsideration thereof. The assailed decision affirmed the order of the Regional Trial Court
(RTC) of Pasig, Branch 160, declaring the respondent Municipality (now City) of Pasig as
having the right to expropriate and take possession of the subject property.

The Antecedents

The Municipality of Pasig needed an access road from E. R. Santos Street, a municipal
road near the Pasig Public Market, to Barangay Sto. Tomas Bukid, Pasig, where 60 to 70
houses, mostly made of light materials, were located. The road had to be at least three meters
in width, as required by the Fire Code, so that fire trucks could pass through in case of
conflagration.[2] Likewise, the residents in the area needed the road for water and electrical
outlets.[3] The municipality then decided to acquire 51 square meters out of the 1,791-square
meter property of Lorenzo Ching Cuanco, Victor Ching Cuanco and Ernesto Ching Cuanco Kho
covered by Transfer Certificate of Title (TCT) No. PT-66585,[4] which is abutting E. R. Santos
Street.
On April 19, 1993, the Sangguniang Bayan of Pasig approved an Ordinance[5] authorizing
the municipal mayor to initiate expropriation proceedings to acquire the said property and
appropriate the fund therefor. The ordinance stated that the property owners were notified of the
municipalitys intent to purchase the property for public use as an access road but they rejected
the offer.
On July 21, 1993, the municipality filed a complaint, amended on August 6, 1993, against
the Ching Cuancos for the expropriation of the property under Section 19 of Republic Act (R.A.)
No. 7160, otherwise known as the Local Government Code. The plaintiff alleged therein that it
notified the defendants, by letter, of its intention to construct an access road on a portion of the
property but they refused to sell the same portion. The plaintiff appended to the complaint a
photocopy of the letter addressed to defendant Lorenzo Ching Cuanco.[6]
The plaintiff deposited with the RTC 15% of the market value of the property based on the
latest tax declaration covering the property. On plaintiffs motion, the RTC issued a writ of
possession over the property sought to be expropriated. On November 26, 1993, the plaintiff
caused the annotation of a notice of lis pendens at the dorsal portion of TCT No. PT-92579
under the name of the Jesus Is Lord Christian School Foundation, Incorporated (JILCSFI) which
had purchased the property.[7] Thereafter, the plaintiff constructed therein a cemented road with
a width of three meters; the road was called Damayan Street.
In their answer,[8] the defendants claimed that, as early as February 1993, they had sold the
said property to JILCSFI as evidenced by a deed of sale[9] bearing the signature of defendant
Ernesto Ching Cuanco Kho and his wife.
 When apprised about the complaint, JILCSFI filed a motion for leave to intervene as
defendant-in-intervention, which motion the RTC granted on August 26, 1994.[10]
In its answer-in-intervention, JILCSFI averred, by way of special and affirmative defenses,
that the plaintiffs exercise of eminent domain was only for a particular class and not for the
benefit of the poor and the landless. It alleged that the property sought to be expropriated is not
the best portion for the road and the least burdensome to it. The intervenor filed a crossclaim
against its co-defendants for reimbursement in case the subject property is expropriated. [11] In
its amended answer, JILCSFI also averred that it has been denied the use and enjoyment of its
property because the road was constructed in the middle portion and that the plaintiff was not
the real party-in-interest. The intervenor, likewise, interposed counterclaims against the plaintiff
for moral damages and attorneys fees.[12]
During trial, Rolando Togonon, the plaintiffs messenger, testified on direct examination that
on February 23, 1993, he served a letter of Engr. Jose Reyes, the Technical Assistant to the
Mayor on Infrastructure, to Lorenzo Ching Cuanco at his store at No. 18 Alkalde Jose Street,
Kapasigan, Pasig. A lady received the same and brought it inside the store. When she returned
the letter to him, it already bore the signature of Luz Bernarte. He identified a photocopy of the
letter as similar to the one he served at the store. On cross-examination, he admitted that he
never met Luz Bernarte. [13]
Edgardo del Rosario, a resident of Sto. Tomas Bukid since 1982 declared that he would
pass through a wooden bridge to go to E. R. Santos Street. At times, the bridge would be
slippery and many had met accidents while walking along the bridge. Because of this, they
requested Mayor Vicente Eusebio to construct a road therein. He attested that after the
construction of the cemented access road, the residents had water and electricity.[14]
Augusto Paz of the City Engineers Office testified that, sometime in 1992, the plaintiff
constructed a road perpendicular from E. R. Santos Street to Sto. Tomas Bukid; he was the
Project Engineer for the said undertaking. Before the construction of the road, the lot was raw
and they had to put filling materials so that vehicles could use it. According to him, the length of
the road which they constructed was 70 meters long and 3 meters wide so that a fire truck could
pass through. He averred that there is no other road through which a fire truck could pass to go
to Sto. Tomas Bukid.[15]
Manuel Tembrevilla, the Fire Marshall, averred that he had seen the new road, that is,
Damayan Street, and found that a fire truck could pass through it. He estimated the houses in
the area to be around 300 to 400. Tembrevilla also stated that Damayan Street is the only road
in the area.[16]
Finally, Bonifacio Maceda, Jr., Tax Mapper IV, testified that, according to their records,
JILCSFI became the owner of the property only on January 13, 1994.[17]
The plaintiff offered in evidence a photocopy of the letter of Engr. Jose Reyes addressed to
Lorenzo Ching Cuanco to prove that the plaintiff made a definite and valid offer to acquire the
property to the co-owners. However, the RTC rejected the same letter for being a mere
photocopy.[18]
For the defendant-intervenor, Normita del Rosario, owner of the property located across the
subject property, testified that there are other roads leading to E. R. Santos Street. She
asserted that only about ten houses of the urban poor are using the new road because the other
residents are using an alternative right-of-way. She averred that she did not actually occupy her
property; but there were times that she visited it.[19]
 Danilo Caballero averred that he had been a resident of Sto. Tomas Bukid for seven years.
From his house, he could use three streets to go to E. R. Santos Street, namely, Catalina
Street, Damayan Street and Bagong Taon Street. On cross-examination, he admitted that no
vehicle could enter Sto. Tomas Bukid except through the newly constructed Damayan Street.[20]
Eduardo Villanueva, Chairman of the Board of Trustees and President of JILCSFI, testified
that the parcel of land was purchased for purposes of constructing a school building and a
church as worship center. He averred that the realization of these projects was delayed due to
the passing of the ordinance for expropriation.[21]
The intervenor adduced documentary evidence that on February 27, 1993, Lorenzo Ching
Cuanco and the co-owners agreed to sell their property covered by TCT No. PT-66585
for P1,719,000.00.[22] It paid a down payment of P1,000,000.00 for the property. After payment
of the total purchase price, the Ching Cuancos executed a Deed of Absolute Sale[23] over the
property on December 13, 1993. On December 21, 1993, TCT No. PT-92579 was issued in the
name of JILCSFI.[24] It declared the property for taxation purposes under its name.[25]
On September 3, 1997, the RTC issued an Order in favor of the plaintiff, the dispositive
portion of which reads:

WHEREFORE, in view of the foregoing and in accordance with Section 4, Rule 67 of the
Revised Rules of Court, the Court Resolves to DECLARE the plaintiff as having a lawful right to
take the property in question for purposes for which the same is expropriated.

The plaintiff and intervenor are hereby directed to submit at least two (2) names of their
recommended commissioners for the determination of just compensation within ten (10) days
from receipt hereof.

SO ORDERED.[26]

The RTC held that, as gleaned from the declaration in Ordinance No. 21, there was
substantial compliance with the definite and valid offer requirement of Section 19 of R.A. No.
7160, and that the expropriated portion is the most convenient access to the interior of Sto.
Tomas Bukid.
Dissatisfied, JILCSFI elevated the case to the CA on the following assignment of errors:

First Assignment of Error

THE LOWER COURT SERIOUS[LY] ERRED WHEN IT RULED THAT PLAINTIFF-APPELLEE

SUBSTANTIALLY COMPLIED WITH THE LAW WHEN IT EXPROPRIATED JILS PROPERTY
TO BE USED AS A RIGHT OF WAY.

Second Assignment of Error

THE LOWER COURT ERRED IN DISREGARDING JILS EVIDENCE PROVING THAT THERE
WAS NO PUBLIC NECESSITY TO WARRANT THE EXPROPRIATION OF THE SUBJECT
PROPERTY.[27]

The Court of Appeals Decision

 In a Decision dated March 13, 2001, the CA affirmed the order of the RTC. [28] The CA
agreed with the trial court that the plaintiff substantially complied with Section 19 of R.A. No.
7160, particularly the requirement that a valid and definite offer must be made to the owner. The
CA declared that the letter of Engr. Reyes, inviting Lorenzo Ching Cuanco to a conference to
discuss with him the road project and the price of the lot, was a substantial compliance with the
valid and definite offer requirement under said Section 19. In addition, the CA noted that there
was also constructive notice to the defendants of the expropriation proceedings since a notice
of lis pendens was annotated at the dorsal portion of TCT No. PT-92579 on November 26,
1993.[29]
Finally, the CA upheld the public necessity for the subject property based on the findings of
the trial court that the portion of the property sought to be expropriated appears to be, not only
the most convenient access to the interior of Sto. Tomas Bukid, but also an easy path for
vehicles entering the area, particularly fire trucks. Moreover, the CA took into consideration the
provision of Article 33 of the Rules and Regulations Implementing the Local Government Code,
which regards the construction or extension of roads, streets, sidewalks as public use, purpose
or welfare.[30]
On April 6, 2001, JILCSFI filed a motion for reconsideration of the said decision alleging
that the CA erred in relying on the photocopy of Engr. Reyes letter to Lorenzo Ching Cuanco
because the same was not admitted in evidence by the trial court for being a mere photocopy. It
also contended that the CA erred in concluding that constructive notice of the expropriation
proceeding, in the form of annotation of the notice of lis pendens, could be considered as a
substantial compliance with the requirement under Section 19 of the Local Government Code
for a valid and definite offer. JILCSFI also averred that no inspection was ever ordered by the
trial court to be conducted on the property, and, if there was one, it had the right to be present
thereat since an inspection is considered to be part of the trial of the case.[31]
The CA denied the motion for reconsideration for lack of merit. It held that it was not
precluded from considering the photocopy[32] of the letter, notwithstanding that the same was
excluded by the trial court, since the fact of its existence was duly established by corroborative
evidence. This corroborative evidence consisted of the testimony of the plaintiffs messenger
that he personally served the letter to Lorenzo Ching Cuanco, and Municipal Ordinance No. 21
which expressly stated that the property owners were already notified of the expropriation
proceeding. The CA noted that JILCSFI failed to adduce controverting evidence, thus the
presumption of regularity was not overcome.[33]

The Present Petition

In this petition, petitioner JILCSFI raises the following issues: (1) whether the respondent
complied with the requirement, under Section 19 of the Local Government Code, of a valid and
definite offer to acquire the property prior to the filing of the complaint; (2) whether its property
which is already intended to be used for public purposes may still be expropriated by the
respondent; and (3) whether the requisites for an easement for right-of-way under Articles 649
to 657 of the New Civil Code may be dispensed with.
The petitioner stresses that the law explicitly requires that a valid and definite offer be made
to the owner of the property and that such offer was not accepted. It argues that, in this case,
there was no evidence to show that such offer has been made either to the previous owner or
the petitioner, the present owner. The petitioner contends that the photocopy of the letter of
Engr. Reyes, notifying Lorenzo Ching Cuanco of the respondents intention to construct a road
on its property, cannot be considered because the trial court did not admit it in evidence. And
assuming that such letter is admissible in evidence, it would not prove that the offer has been
made to the previous owner because mere notice of intent to purchase is not equivalent to an
offer to purchase. The petitioner further argues that the offer should be made to the proper
party, that is, to the owner of the property. It noted that the records in this case show that as of
February 1993, it was already the owner of the property. Assuming, therefore, that there was an
offer to purchase the property, the same should have been addressed to the petitioner, as
present owner.[34]
The petitioner maintains that the power of eminent domain must be strictly construed since
its exercise is necessarily in derogation of the right to property ownership. All the requirements
of the enabling law must, therefore, be strictly complied with. Compliance with such
requirements cannot be presumed but must be proved by the local government exercising the
power. The petitioner adds that the local government should, likewise, comply with the
requirements for an easement of right-of-way; hence, the road must be established at a point
least prejudicial to the owner of the property. Finally, the petitioner argues that, if the property is
already devoted to or intended to be devoted to another public use, its expropriation should not
be allowed.[35]
For its part, the respondent avers that the CA already squarely resolved the issues raised in
this petition, and the petitioner failed to show valid and compelling reason to reverse the CAs
findings. Moreover, it is not the function of the Supreme Court to weigh the evidence on factual
issues all over again.[36] The respondent contends that the Ching Cuancos were deemed to
have admitted that an offer to purchase has been made and that they refused to accept such
offer considering their failure to specifically deny such allegation in the complaint. In light of such
admission, the exclusion of the photocopy of the letter of Engr. Reyes, therefore, is no longer
significant.[37]

The Ruling of the Court

The petition is meritorious.

At the outset, it must be stressed that only questions of law may be raised by the parties
and passed upon by the Supreme Court in petitions for review on certiorari.[38] Findings of fact of
the CA, affirming those of the trial court, are final and conclusive and may not be reviewed on
appeal.[39]
Nonetheless, where it is shown that the conclusion is a finding grounded on speculations,
surmises or conjectures or where the judgment is based on misapprehension of facts, the
Supreme Court may reexamine the evidence on record.[40]

Eminent Domain: Nature and Scope

The right of eminent domain is usually understood to be an ultimate right of the sovereign
power to appropriate any property within its territorial sovereignty for a public purpose. The
nature and scope of such power has been comprehensively described as follows:
It is an indispensable attribute of sovereignty; a power grounded in the primary duty of
government to serve the common need and advance the general welfare. Thus, the right of
eminent domain appertains to every independent government without the necessity for
constitutional recognition. The provisions found in modern constitutions of civilized countries
relating to the taking of property for the public use do not by implication grant the power to the
government, but limit the power which would, otherwise, be without limit. Thus, our own
Constitution provides that [p]rivate property shall not be taken for public use without just
compensation. Furthermore, the due process and equal protection clauses act as additional
safeguards against the arbitrary exercise of this governmental power.[41]

Strict Construction and Burden of Proof

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.[42] It is one of the harshest
proceedings known to the law. Consequently, when the sovereign delegates the power to a
political unit or agency, a strict construction will be given against the agency asserting the
power.[43] The authority to condemn is to be strictly construed in favor of the owner and against
the condemnor.[44] When the power is granted, the extent to which it may be exercised is limited
to the express terms or clear implication of the statute in which the grant is contained.[45]
Corollarily, the respondent, which is the condemnor, has the burden of proving all the
essentials necessary to show the right of condemnation.[46] It has the burden of proof to
establish that it has complied with all the requirements provided by law for the valid exercise of
the power of eminent domain.
The grant of the power of eminent domain to local government units is grounded on Section
19 of R.A. No. 7160 which reads:

SEC. 19. Eminent Domain. A local government unit may, through its chief executive and acting
pursuant to an ordinance, exercise the power of eminent domain for public use, or purpose, or
welfare for the benefit of the poor and the landless, upon payment of just compensation,
pursuant to the provisions of the Constitution and pertinent laws; Provided, however, That the
power of eminent domain may not be exercised unless a valid and definite offer has been
previously made to the owner, and such offer was not accepted: Provided, further, That the local
government unit may immediately take possession of the property upon the filing of the
expropriation proceedings and upon making a deposit with the proper court of at least fifteen
percent (15%) of the fair market value of the property based on the current tax declaration of the
property to be expropriated: Provided, finally, That the amount to be paid for the expropriated
property shall be determined by the proper court based on the fair market value at the time of
the taking of the property.

The Court declared that the following requisites for the valid exercise of the power of
eminent domain by a local government unit must be complied with:

1. An ordinance is enacted by the local legislative council authorizing the local chief
executive, in behalf of the local government unit, to exercise the power of eminent
domain or pursue expropriation proceedings over a particular private property.
 2. The power of eminent domain is exercised for public use, purpose or welfare, or for the
benefit of the poor and the landless.

3. There is payment of just compensation, as required under Section 9, Article III of the
Constitution, and other pertinent laws.

4. A valid and definite offer has been previously made to the owner of the property sought
to be expropriated, but said offer was not accepted.[47]

Valid and Definite Offer

Article 35 of the Rules and Regulations Implementing the Local Government Code
provides:

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.

(b) If the owner or owners accept the offer in its entirety, a contract of sale shall be executed
and payment forthwith made.

(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.

(d) The contract of sale shall be supported by the following documents:

(1) Resolution of the sanggunian authorizing the local chief executive to enter into a contract of
sale. The resolution shall specify the terms and conditions to be embodied in the contract;

(2) Ordinance appropriating the amount specified in the contract; and

(3) Certification of the local treasurer as to availability of funds together with a statement that
such fund shall not be disbursed or spent for any purpose other than to pay for the purchase of
the property involved.

The respondent was burdened to prove the mandatory requirement of a valid and definite
offer to the owner of the property before filing its complaint and the rejection thereof by the
latter.[48] It is incumbent upon the condemnor to exhaust all reasonable efforts to obtain the land
it desires by agreement.[49] Failure to prove compliance with the mandatory requirement will
result in the dismissal of the complaint.[50]
An offer is a unilateral proposition which one party makes to the other for the celebration of
a contract.[51] It creates a power of acceptance permitting the offeree, by accepting the offer, to
transform the offerors promise into a contractual obligation.[52] Corollarily, the offer must be
complete, indicating with sufficient clearness the kind of contract intended and definitely stating
the essential conditions of the proposed contract.[53] An offer would require, among other things,
a clear certainty on both the object and the cause or consideration of the envisioned contract.[54]
The purpose of the requirement of a valid and definite offer 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 action.[55] The law is designed to give to the
owner the opportunity to sell his land without the expense and inconvenience of a protracted
and expensive litigation. This is a substantial right which should be protected in every
instance.[56] It encourages acquisition without litigation and spares not only the landowner but
also the condemnor, the expenses and delays of litigation. It permits the landowner to receive
full compensation, and the entity acquiring the property, immediate use and enjoyment of the
property. A reasonable offer in good faith, not merely perfunctory or pro forma offer, to acquire
the property for a reasonable price must be made to the owner or his privy.[57] A single bona
fide offer that is rejected by the owner will suffice.
The expropriating authority is burdened to make known its definite and valid offer to all the
owners of the property. However, it has a right to rely on what appears in the certificate of title
covering the land to be expropriated. Hence, it is required to make its offer only to the registered
owners of the property. After all, it is well-settled that persons dealing with property covered by a
Torrens certificate of title are not required to go beyond what appears on its face. [58]
In the present case, the respondent failed to prove that before it filed its complaint, it made
a written definite and valid offer to acquire the property for public use as an access road. The
only evidence adduced by the respondent to prove its compliance with Section 19 of the Local
Government Code is the photocopy of the letter purportedly bearing the signature of Engr. Jose
Reyes, to only one of the co-owners, Lorenzo Ching Cuanco. The letter reads:

MR. LORENZO CHING CUANCO

18 Alcalde Jose Street
Capasigan, Pasig
Metro Manila

Dear Mr. Cuanco:

This refers to your parcel of land located along E. Santos Street, Barangay Palatiw, Pasig,
Metro Manila embraced in and covered by TCT No. 66585, a portion of which with an area of
fifty-one (51) square meters is needed by the Municipal Government of Pasig for conversion into
a road-right of way for the benefit of several residents living in the vicinity of your property.
Attached herewith is the sketch plan for your information.

In this connection, may we respectfully request your presence in our office to discuss this
project and the price that may be mutually agreed upon by you and the Municipality of Pasig.

Thank you.

Very truly yours,

(Sgd.)
ENGR. JOSE L. REYES
Technical Asst. to the Mayor
 on Infrastructure[59]

It bears stressing, however, that the respondent offered the letter only to prove its desire or
intent to acquire the property for a right-of-way.[60] The document was not offered to prove that
the respondent made a definite and valid offer to acquire the property. Moreover, the RTC
rejected the document because the respondent failed to adduce in evidence the original copy
thereof.[61] The respondent, likewise, failed to adduce evidence that copies of the letter were
sent to and received by all the co-owners of the property, namely, Lorenzo Ching Cuanco,
Victor Ching Cuanco and Ernesto Kho.
The respondent sought to prove, through the testimony of its messenger, Rolando
Togonon, that Lorenzo Ching Cuanco received the original of the said letter. But Togonon
testified that he merely gave the letter to a lady, whom he failed to identify. He stated that the
lady went inside the store of Lorenzo Ching Cuanco, and later gave the letter back to him
bearing the signature purportedly of one Luz Bernarte. However, Togonon admitted, on cross-
examination, that he did not see Bernarte affixing her signature on the letter. Togonon also
declared that he did not know and had never met Lorenzo Ching Cuanco and Bernarte:
Q And after you received this letter from that lady, what did you do afterwards?
A I brought it with me, that letter, and then I went to Caruncho.
Q So, [M]r. Witness, you are telling this Honorable Court that this letter intended to Mr.
Lorenzo was served at Pasig Trading which was situated at No. 18 Alkalde Jose
Street on February 23, 1993?
A Yes, Maam.
ATTY. TAN:
That is all for the witness, Your Honor.
COURT:
Do you have any cross-examination?
ATTY. JOLO:
Just a few cross, Your Honor, please. With the kind permission of the Honorable Court.
COURT:
Proceed.
CROSS-EXAMINATION
BY ATTY. JOLO:
Q Mr. Witness, do you know Mr. Lorenzo Ching [Cuanco]
A I do not know him.
Q As a matter of fact, you have not seen him even once, isnt not (sic)?
A Yes, Sir.
Q This Luz Bernarte, do you know her?
A I do not know her.
 Q As a matter of fact, you did not see Mrs. Bernarte even once?
A That is correct.
Q And as a matter of fact, [M]r. Witness, you did not see Mrs. Luz Bernarte affixing her
signature on the bottom portion of this demand letter, marked as Exh. C-2?
A Yes, Sir.[62]
Even if the letter was, indeed, received by the co-owners, the letter is not a valid and
definite offer to purchase a specific portion of the property for a price certain. It is merely an
invitation for only one of the co-owners, Lorenzo Ching Cuanco, to a conference to discuss the
project and the price that may be mutually acceptable to both parties.
There is no legal and factual basis to the CAs ruling that the annotation of a notice of lis
pendens at the dorsal portion of petitioners TCT No. PT-92579 is a substantial compliance with
the requisite offer. A notice of lis pendens is a notice to the whole world of the pendency of an
action involving the title to or possession of real property and a warning that those who acquire
an interest in the property do so at their own risk and that they gamble on the result of the
litigation over it.[63] Moreover, the lis pendens was annotated at the dorsal portion of the title only
on November 26, 1993, long after the complaint had been filed in the RTC against the Ching
Cuancos.
Neither is the declaration in one of the whereas clauses of the ordinance that the property
owners were already notified by the municipality of the intent to purchase the same for public
use as a municipal road, a substantial compliance with the requirement of a valid and definite
offer under Section 19 of R.A. No. 7160. Presumably, the Sangguniang Bayan relied on the
erroneous premise that the letter of Engr. Reyes reached the co-owners of the property. In the
absence of competent evidence that, indeed, the respondent made a definite and valid offer to
all the co-owners of the property, aside from the letter of Engr. Reyes, the declaration in the
ordinance is not a compliance with Section 19 of R.A. No. 7160.
The respondent contends, however, that the Ching Cuancos, impliedly admitted the
allegation in its complaint that an offer to purchase the property was made to them and that they
refused to accept the offer by their failure to specifically deny such allegation in their answer.
This contention is wrong. As gleaned from their answer to the complaint, the Ching Cuancos
specifically denied such allegation for want of sufficient knowledge to form a belief as to its
correctness. Under Section 10,[64] Rule 8 of the Rules of Court, such form of denial, although not
specific, is sufficient.

Public Necessity

We reject the contention of the petitioner that its property can no longer be expropriated by
the respondent because it is intended for the construction of a place for religious worship and a
school for its members. As aptly explained by this Court in Manosca v. Court of
Appeals,[65] thus:

It has been explained as early as Sea v. Manila Railroad Co., that:

A historical research discloses the meaning of the term public use to be one of constant growth.
As society advances, its demands upon the individual increases and each demand is a new use
to which the resources of the individual may be devoted. for whatever is beneficially employed
for the community is a public use.

Chief Justice Enrique M. Fernando states:

The taking to be valid must be for public use. There was a time when it was felt that a literal
meaning should be attached to such a requirement. Whatever project is undertaken must be for
the public to enjoy, as in the case of streets or parks. Otherwise, expropriation is not allowable.
It is not so any more. As long as the purpose of the taking is public, then the power of eminent
domain comes into play. As just noted, the constitution in at least two cases, to remove any
doubt, determines what is public use. One is the expropriation of lands to be subdivided into
small lots for resale at cost to individuals. The other is the transfer, through the exercise of this
power, of utilities and other private enterprise to the government. It is accurate to state then that
at present whatever may be beneficially employed for the general welfare satisfies the
requirements of public use.

Chief Justice Fernando, writing the ponencia in J.M. Tuason & Co. vs. Land Tenure
Administration, has viewed the Constitution a dynamic instrument and one that is not to be
construed narrowly or pedantically so as to enable it to meet adequately whatever problems the
future has in store. Fr. Joaquin Bernas, a noted constitutionalist himself, has aptly observed that
what, in fact, has ultimately emerged is a concept of public use which is just as broad as public
welfare.

Petitioners ask: But (w)hat is the so-called unusual interest that the expropriation of (Felix
Manalos) birthplace become so vital as to be a public use appropriate for the exercise of the
power of eminent domain when only members of the Iglesia ni Cristo would benefit? This
attempt to give some religious perspective to the case deserves little consideration, for what
should be significant is the principal objective of, not the casual consequences that might follow
from, the exercise of the power. The purpose in setting up the marker is essentially to recognize
the distinctive contribution of the late Felix Manalo to the culture of the Philippines, rather than
to commemorate his founding and leadership of the Iglesia ni Cristo. The practical reality that
greater benefit may be derived by members of the Iglesia ni Cristo than by most others could
well be true but such a peculiar advantage still remains to be merely incidental and secondary in
nature. Indeed, that only a few would actually benefit from the expropriation of property, does
not necessarily diminish the essence and character of public use.

The petitioner asserts that the respondent must comply with the requirements for the
establishment of an easement of right-of-way, more specifically, the road must be constructed at
the point least prejudicial to the servient state, and that there must be no adequate outlet to a
public highway. The petitioner asserts that the portion of the lot sought to be expropriated is
located at the middle portion of the petitioners entire parcel of land, thereby splitting the lot into
two halves, and making it impossible for the petitioner to put up its school building and worship
center.
The subject property is expropriated for the purpose of constructing a road. The respondent
is not mandated to comply with the essential requisites for an easement of right-of-way under
the New Civil Code. Case law has it that in the absence of legislative restriction, the grantee of
the power of eminent domain may determine the location and route of the land to be
taken[66] unless such determination is capricious and wantonly injurious.[67] Expropriation is
justified so long as it is for the public good and there is genuine necessity of public
character.[68] Government may not capriciously choose what private property should be taken.[69]
 The respondent has demonstrated the necessity for constructing a road from E. R. Santos
Street to Sto. Tomas Bukid. The witnesses, who were residents of Sto. Tomas Bukid, testified
that although there were other ways through which one can enter the vicinity, no vehicle,
however, especially fire trucks, could enter the area except through the newly constructed
Damayan Street. This is more than sufficient to establish that there is a genuine necessity for
the construction of a road in the area. After all, absolute necessity is not required, only
reasonable and practical necessity will suffice.[70]
Nonetheless, the respondent failed to show the necessity for constructing the road
particularly in the petitioners property and not elsewhere.[71] We note that the whereas clause of
the ordinance states that the 51-square meter lot is the shortest and most suitable access road
to connect Sto. Tomas Bukid to E. R. Santos Street. The respondents complaint also alleged
that the said portion of the petitioners lot has been surveyed as the best possible ingress and
egress. However, the respondent failed to adduce a preponderance of evidence to prove its
claims.
On this point, the trial court made the following findings:

The contention of the defendants that there is an existing alley that can serve the purpose of the
expropriator is not accurate. An inspection of the vicinity reveals that the alley being referred to
by the defendants actually passes thru Bagong Taon St. but only about one-half (1/2) of its
entire length is passable by vehicle and the other half is merely a foot-path. It would be more
inconvenient to widen the alley considering that its sides are occupied by permanent structures
and its length from the municipal road to the area sought to be served by the expropriation is
considerably longer than the proposed access road. The area to be served by the access road
is composed of compact wooden houses and literally a slum area. As a result of the
expropriation of the 51-square meter portion of the property of the intervenor, a 3-meter wide
road open to the public is created. This portion of the property of the intervenor is the most
convenient access to the interior of Sto. Tomas Bukid since it is not only a short cut to the
interior of the Sto. Tomas Bukid but also an easy path for vehicles entering the area, not to
mention the 3-meter wide road requirement of the Fire Code.[72]

However, as correctly pointed out by the petitioner, there is no showing in the record that an
ocular inspection was conducted during the trial. If, at all, the trial court conducted an ocular
inspection of the subject property during the trial, the petitioner was not notified thereof. The
petitioner was, therefore, deprived of its right to due process. It bears stressing that an ocular
inspection is part of the trial as evidence is thereby received and the parties are entitled to be
present at any stage of the trial.[73] Consequently, where, as in this case, the petitioner was not
notified of any ocular inspection of the property, any factual finding of the court based on the
said inspection has no probative weight. The findings of the trial court based on the conduct of
the ocular inspection must, therefore, be rejected.
IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The Decision and
Resolution of the Court of Appeals are REVERSED AND SET ASIDE. The RTC is ordered to
dismiss the complaint of the respondent without prejudice to the refiling thereof.
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.

George M. Baladjay, Mario G. dela Victoria, Olegario Sarmiento, Jr., and Democrito Barcenas
for petitioners.

The Solicitor General for respondent Judge.

F.A. Sugue & Elino B. Lingas for Philippine Tourism Authoirity

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

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.

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.

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.

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.

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 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.

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;

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:

V. Presidential Proclamation 2052 is Unconstitutional:

VI. Presidential Decree No 1533 is Unconstitutional:

 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.

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.

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.

Section 6, Article II provides:

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.

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 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"?

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 well- being 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 electricity-which 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.

G.R. No. L-48685 September 30, 1987

LORENZO SUMULONG and EMILIA VIDANES-BALAOING, petitioners,
vs.
HON. BUENAVENTURA GUERRERO and NATIONAL HOUSING AUTHORITY, respondents.

CORTES, J.:

On December 5, 1977 the National Housing Authority (NIIA) filed a complaint for expropriation
of parcels of land covering approximately twenty five (25) hectares, (in Antipolo, Rizal) including
the lots of petitioners Lorenzo Sumulong and Emilia Vidanes-Balaoing with an area of 6,667
square meters and 3,333 square meters respectively. The land sought to be expropriated were
valued by the NHA at one peso (P1.00) per square meter adopting the market value fixed by the
provincial assessor in accordance with presidential decrees prescribing the valuation of property
in expropriation proceedings.

Together with the complaint was a motion for immediate possession of the properties. The NHA
deposited the amount of P158,980.00 with the Philippine National Bank, representing the "total
market value" of the subject twenty five hectares of land, pursuant to Presidential Decree No.
1224 which defines "the policy on the expropriation of private property for socialized housing
upon payment of just compensation."

On January 17, 1978, respondent Judge issued the following Order:

Plaintiff having deposited with the Philippine National Bank, Heart Center
Extension Office, Diliman, Quezon City, Metro Manila, the amount of
P158,980.00 representing the total market value of the subject parcels of land, let
a writ of possession be issued.

SO ORDERED.

Pasig, Metro Manila, January 17, 1978.

(SGD)
BUENAVENTURA S.
GUERRERO

J
u
d
g
e

Petitioners filed a motion for reconsideration on the ground that they had been deprived of the
possession of their property without due process of law. This was however, denied.

Hence, this petition challenging the orders of respondent Judge and assailing the
constitutionality of Pres. Decree No. 1224, as amended. Petitioners argue that:
 1) Respondent Judge acted without or in excess of his jurisdiction or with grave
abuse of discretion by issuing the Order of January 17, 1978 without notice and
without hearing and in issuing the Order dated June 28, 1978 denying the motion
for reconsideration.

2) Pres. Decree l224, as amended, is unconstitutional for being violative of the

due process clause, specifically:

a) The Decree would allow the taking of property regardless of

size and no matter how small the area to be expropriated;

b) "Socialized housing" for the purpose of condemnation

proceeding, as defined in said Decree, is not really for a public
purpose;

c) The Decree violates procedural due process as it allows

immediate taking of possession, control and disposition of
property without giving the owner his day in court;

d) The Decree would allow the taking of private property upon

payment of unjust and unfair valuations arbitrarily fixed by
government assessors;

e) The Decree would deprive the courts of their judicial discretion

to determine what would be the "just compensation" in each and
every raise of expropriation.

Indeed, the exercise of the power of eminent domain is subject to certain limitations imposed by
the constitution, to wit:

Private property shall not be taken for public use without just compensation (Art.
IV, Sec. 9);

No person shall be deprived of life, liberty, or property without due process of

law, nor shall any person be denied the equal protection of the laws (Art. IV, sec.
1).

Nevertheless, a clear case of constitutional infirmity has to be established for this Court to nullify
legislative or executive measures adopted to implement specific constitutional provisions aimed
at promoting the general welfare.

Petitioners' objections to the taking of their property subsumed under the headings of public
use, just compensation, and due process have to be balanced against competing interests of
the public recognized and sought to be served under declared policies of the constitution as
implemented by legislation.

1. Public use

a) Socialized Housing
Petitioners contend that "socialized housing" as defined in Pres. Decree No. 1224, as amended,
for the purpose of condemnation proceedings is not "public use" since it will benefit only "a
handful of people, bereft of public character."

"Socialized housing" is defined as, "the construction of dwelling units for the middle and lower
class members of our society, including the construction of the supporting infrastructure and
other facilities" (Pres. Decree No. 1224, par. 1). This definition was later expanded to include
among others:

a) The construction and/or improvement of dwelling units for the middle and
lower income groups of the society, including the construction of the supporting
infrastructure and other facilities;

b) Slum clearance, relocation and resettlement of squatters and slum dwellers as

well as the provision of related facilities and services;

c) Slum improvement which consists basically of allocating homelots to the

dwellers in the area or property involved, rearrangemeant and re-alignment of
existing houses and other dwelling structures and the construction and provision
of basic community facilities and services, where there are none, such as roads,
footpaths, drainage, sewerage, water and power system schools, barangay
centers, community centers, clinics, open spaces, parks, playgrounds and other
recreational facilities;

d) The provision of economic opportunities, including the development of

commercial and industrial estates and such other facilities to enhance the total
community growth; and

e) Such other activities undertaken in pursuance of the objective to provide and

maintain housing for the greatest number of people under Presidential Decree
No, 757, (Pres. Decree No. 1259, sec. 1)

The "public use" requirement for a and exercise of the power of eminent domain is a flexible and
evolving concept influenced by changing conditions. In this jurisdiction, the statutory and judicial
trend has been summarized as follows:

The taking to be valid must be for public use. There was a time when it was felt
that a literal meaning should be attached to such a requirement. Whatever
project is undertaken must be for the public to enjoy, as in the case of streets or
parks. Otherwise, expropriation is not allowable. It is not anymore. As long as the
purpose of the taking is public, then the power of eminent domain comes into
play. As just noted, the constitution in at least two cases, to remove any doubt,
determines what is public use. One is the expropriation of lands to be subdivided
into small lots for resale at cost to individuals. The other is in the transfer, through
the exercise of this power, of utilities and other private enterprise to the
government. It is accurate to state then that at present whatever may be
beneficially employed for the general welfare satisfies the requirement of public
use [Heirs of Juancho Ardona v. Reyes, G.R. Nos. 60549, 60553-60555 October
26, 1983, 125 SCRA 220 (1983) at 234-5 quoting E. FERNANDO, THE
 CONSTITUTION OF THE PHILIPPINES 523-4, (2nd ed., 1977) Emphasis
supplied].

The term "public use" has acquired a more comprehensive coverage. To the literal import of the
term signifying strict use or employment by the public has been added the broader notion of
indirect public benefit or advantage. As discussed in the above cited case of Heirs of Juancho
Ardona:

The restrictive view of public use may be appropriate for a nation which
circumscribes the scope of government activities and public concerns and which
possesses big and correctly located public lands that obviate the need to take
private property for public purposes. Neither circumstance applies to the
Philippines. We have never been a laissez faire State. And the necessities which
impel the exertion of sovereign power are all too often found in areas of scarce
public land or limited government resources. (p. 231)

Specifically, urban renewal or redevelopment and the construction of low-cost housing is

recognized as a public purpose, not only because of the expanded concept of public use but
also because of specific provisions in the Constitution. The 1973 Constitution made it incumbent
upon the State to establish, maintain and ensure adequate social services including housing
[Art. 11, sec. 7]. The 1987 Constitution goes even further by providing that:

The State shall promote a just and dynamic social order that will ensure the
prosperity and independence of the nation and free the people from poverty
through policies that provide adequate social services, promote full employment,
a rising standard of living and an improved quality of life for all. [Art. II, sec. 9]

The state shall by law, and for the common good, undertake, in cooperation with
the private sector, a continuing program of urban land reform and housing which
will make available at affordable cost decent housing and basic services to
underprivileged and homeless citizens in urban centers and resettlement areas.
It shall also promote adequate employment opportunities to such citizens. In the
implementation of such program the State shall respect the rights of small
property owners. (Art. XIII, sec. 9, Emphaisis supplied)

Housing is a basic human need. Shortage in housing is a matter of state concern since it
directly and significantly affects public health, safety, the environment and in sum, the general
welfare. The public character of housing measures does not change because units in housing
projects cannot be occupied by all but only by those who satisfy prescribed qualifications. A
beginning has to be made, for it is not possible to provide housing for are who need it, all at
once.

Population growth, the migration to urban areas and the mushrooming of crowded makeshift
dwellings is a worldwide development particularly in developing countries. So basic and urgent
are housing problems that the United Nations General Assembly proclaimed 1987 as the
"International Year of Shelter for the Homeless" "to focus the attention of the international
community on those problems". The General Assembly is Seriously concerned that, despite the
efforts of Governments at the national and local levels and of international organizations, the
driving conditions of the majority of the people in slums and squatter areas and rural
settlements, especially in developing countries, continue to deteriorate in both relative and
absolute terms." [G.A. Res. 37/221, Yearbook of the United Nations 1982, Vol. 36, p. 1043-4]

In the light of the foregoing, this Court is satisfied that "socialized housing" fans within the
confines of "public use". It is, particularly important to draw attention to paragraph (d) of Pres.
Dec. No. 1224 which opportunities inextricably linked with low-cost housing, or slum clearance,
relocation and resettlement, or slum improvement emphasize the public purpose of the project.

In the case at bar, the use to which it is proposed to put the subject parcels of land meets the
requisites of "public use". The lands in question are being expropriated by the NHA for the
expansion of Bagong Nayon Housing Project to provide housing facilities to low-salaried
government employees. Quoting respondents:

1. The Bagong Nayong Project is a housing and community development

undertaking of the National Housing Authority. Phase I covers about 60 hectares
of GSIS property in Antipolo, Rizal; Phase II includes about 30 hectares for
industrial development and the rest are for residential housing development.

It is intended for low-salaried government employees and aims to provide

housing and community services for about 2,000 families in Phase I and about
4,000 families in Phase II.

It is situated on rugged terrain 7.5 kms. from Marikina Town proper; 22 Kms. east
of Manila; and is within the Lungs Silangan Townsite Reservation (created by
Presidential Proclamation No. 1637 on April 18, 1977).

The lands involved in the present petitions are parts of the expanded/additional
areas for the Bagong Nayon Project totalling 25.9725 hectares. They likewise
include raw, rolling hills. (Rollo, pp. 266-7)

The acute shortage of housing units in the country is of public knowledge. Official data indicate
that more than one third of the households nationwide do not own their dwelling places. A
significant number live in dwellings of unacceptable standards, such as shanties, natural
shelters, and structures intended for commercial, industrial, or agricultural purposes. Of these
unacceptable dwelling units, more than one third is located within the National Capital Region
(NCR) alone which lies proximate to and is expected to be the most benefited by the housing
project involved in the case at bar [See, National Census and Statistics Office, 1980 Census of
Population and Housing].

According to the National Economic and Development Authority at the time of the expropriation
in question, about "50 per cent of urban families, cannot afford adequate shelter even at
reduced rates and will need government support to provide them with social housing, subsidized
either partially or totally" [NEDA, FOUR YEAR DEVELOPMENT PLAN For 1974-1977, p. 357].
Up to the present, housing some remains to be out of the reach of a sizable proportion of the
population" [NEDA, MEDIUM-TERM PHILIPPINE DEVELOPMENT PLAN 1987-1992, p. 240].

The mushrooming of squatter colonies in the Metropolitan Manila area as well as in other cities
and centers of population throughout the country, and, the efforts of the government to initiate
housing and other projects are matters of public knowledge [See NEDA, FOUR YEAR
DEVELOPMENT PLAN For 1974-1977, pp. 357-361; NEDA, FIVE-YEAR PHILIPPINE
DEVELOPMENT PLAN 1978-1982, pp. 215-228 NEDA, FIVE YEAR PHILIPPINE
DEVELOPMENT PLAN 1983-1987, pp. 109-117; NEDA, MEDIUM TERM PHILIPPINE
DEVELOPMENT PLAN 1987-1992, pp. 240-254].

b) Size of Property

Petitioners further contend that Pres. Decree 1224, as amended, would allow the taking of "any
private land" regardless of the size and no matter how small the area of the land to be
expropriated. Petitioners claim that "there are vast areas of lands in Mayamot, Cupang, and San
Isidro, Antipolo, Rizal hundred of hectares of which are owned by a few landowners only. It is
surprising [therefore] why respondent National Housing Authority [would] include [their] two man
lots ..."

In J.M. Tuason Co., Inc. vs. Land Tenure Administration [G. R. No. L-21064, February 18, 1970,
31 SCRA 413 (1970) at 428] this Court earlier ruled that expropriation is not confined to landed
estates. This Court, quoting the dissenting opinion of Justice J.B.L. Reyes in Republic vs.
Baylosis, [96 Phil. 461 (1955)], held that:

The propriety of exercising the power of eminent domain under Article XIII,
section 4 of our Constitution cannot be determined on a purely quantitative or
area basis. Not only does the constitutional provision speak of lands instead of
landed estates, but I see no cogent reason why the government, in its quest for
social justice and peace, should exclusively devote attention to conflicts of large
proportions, involving a considerable number of individuals, and eschew small
controversies and wait until they grow into a major problem before taking
remedial action.

The said case of J.M. Tuason Co., Inc. departed from the ruling in Guido vs. Rural Progress
Administration [84 Phil. 847 (1949)] which held that the test to be applied for a valid
expropriation of private lands was the area of the land and not the number of people who stood
to be benefited. Since then "there has evolved a clear pattern of adherence to the "number of
people to be benefited test" " [Mataas na Lupa Tenants Association, Inc. v. Dimayuga, G.R. No.
32049, June 25,1984, 130 SCRA 30 (1984) at 39]. Thus, in Pulido vs. Court of Appeals [G.R.
No. 57625, May 3, 1983, 122 SCRA 63 (1983) at 73], this Court stated that, "[i]t is unfortunate
that the petitioner would be deprived of his landholdings, but his interest and that of his family
should not stand in the way of progress and the benefit of the greater may only of the
inhabitants of the country."

The State acting through the NHA is vested with broad discretion to designate the particular
property/properties to be taken for socialized housing purposes and how much thereof may be
expropriated. Absent a clear showing of fraud, bad faith, or gross abuse of discretion, which
petitioners herein failed to demonstrate, the Court will give due weight to and leave undisturbed
the NHA's choice and the size of the site for the project. The property owner may not interpose
objections merely because in their judgment some other property would have been more
suitable, or just as suitable, for the purpose. The right to the use, enjoyment and disposal of
private property is tempered by and has to yield to the demands of the common good. The
Constitutional provisions on the subject are clear:

The State shall promote social justice in all phases of national development. (Art.
II, sec. 10)
 The Congress shall give highest priority to the enactment of measures that
protect and enhance the right of all the people to human dignity, reduce social,
economic, and political inequalities, and remove cultural inequities by equitably
diffusing wealth and political power for the common good. To this end, the State
shall regulate the acquisition, ownership, use and disposition of property and its
increments. (Art, XIII, sec. 1)

Indeed, the foregoing provisions, which are restatements of the provisions in the 1935 and 1973
Constitutions, emphasize:

...the stewardship concept, under which private property is supposed to be held

by the individual only as a trustee for the people in general, who are its real
owners. As a mere steward, the individual must exercise his rights to the property
not for his own exclusive and selfish benefit but for the good of the entire
community or nation [Mataas na Lupa Tenants Association, Inc. supra at 42-3
citing I. CRUZ, PHILIPPINE POLITICAL LAW, 70 (1983 ed.)].

2. Just Compensation

Petitioners maintain that Pres. Decree No. 1224, as amended, would allow the taking of private
property upon payment of unjust and unfair valuations arbitrarily fixed by government
assessors. In addition, they assert that the Decree would deprive the courts of their judicial
discretion to determine what would be "just compensation".

The foregoing contentions have already been ruled upon by this Court in the case of Ignacio vs.
Guerrero (G.R. No. L-49088, May 29, 1987) which, incidentally, arose from the same
expropriation complaint that led to this instant petition. The provisions on just compensation
found in Presidential Decree Nos. 1224, 1259 and 1313 are the same provisions found in
Presidential Decree Nos. 76, 464, 794 and 1533 which were declared unconstitutional in Export
Processing Zone All thirty vs. Dulay (G.R. No. 5960 April 29, 1987) for being encroachments on
prerogatives.

This Court abandoned the ruling in National Housing Authority vs. Reyes [G.R. No. 49439, June
29,1983, 123 SCRA 245 (1983)] which upheld Pres. Decree No. 464, as amended by -
Presidential Decree Nos. 794, 1224 and 1259.

In said case of Export Processing Zone Authority, this Court pointed out that:

The basic unfairness of the decrees is readily apparent.

Just compensation means the value of the property at the time of the taking. It
means a fair and full equivalent for the loss sustained. ALL the facts as to the
condition of the property and its surroundings, its improvements and capabilities,
should be considered.

xxx xxx xxx

Various factors can come into play in the valuation of specific properties singled
out for expropriation. The values given by provincial assessors are usually
uniform for very wide areas covering several barrios or even an entire total with
 the exception of the poblacion. Individual differences are never taken into
account. The value of land is based on such generalities as its possible
cultivation for rice, corn, coconuts, or other crops. Very often land described as
directional has been cultivated for generations. Buildings are described in terms
of only two or three classes of building materials and estimates of areas are more
often inaccurate than correct. Tax values can serve as guides but cannot be
absolute substitutes for just compensation.

To say that the owners are estopped to question the valuations made by
assessors since they had the opportunity to protest is illusory. The overwhelming
mass of landowners accept unquestioningly what is found in the tax declarations
prepared by local assessors or municipal clerks for them. They do not even look
at, much less analyze, the statements. The Idea of expropriation simply never
occurs until a demand is made or a case filed by an agency authorized to do so.
(pp. 12-3)

3. Due Process

Petitioners assert that Pres. Decree 1224, as amended, violates procedural due process as it
allows immediate taking of possession, control and disposition of property without giving the
owner his day in court. Respondent Judge ordered the issuance of a writ of possession without
notice and without hearing.

The constitutionality of this procedure has also been ruled upon in the Export Processing Zone
Authority case, viz:

It is violative of due process to deny to the owner the opportunity to prove that
the valuation in the tax documents is unfair or wrong. And it is repulsive to basic
concepts of justice and fairness to allow the haphazard work of minor bureaucrat
or clerk to absolutely prevail over the judgment of a court promulgated only after
expert commissioners have actually viewed the property, after evidence and
arguments pro and con have been presented, and after all factors and
considerations essential to a fair and just determination have been judiciously
evaluated. (p. 13)

On the matter of the issuance of a writ of possession, the ruling in the Ignacio case is reiterated,
thus:

[I]t is imperative that before a writ of possession is issued by the Court in

expropriation proceedings, the following requisites must be met: (1) There must
be a Complaint for expropriation sufficient in form and in substance; (2) A
provisional determination of just compensation for the properties sought to be
expropriated must be made by the trial court on the basis of judicial (not
legislative or executive) discretion; and (3) The deposit requirement under
Section 2, Rule 67 must be complied with. (p. 14)

This Court holds that "socialized housing" defined in Pres. Decree No. 1224, as amended by
Pres. Decree Nos. 1259 and 1313, constitutes "public use" for purposes of expropriation.
However, as previously held by this Court, the provisions of such decrees on just compensation
are unconstitutional; and in the instant case the Court finds that the Orders issued pursuant to
the corollary provisions of those decrees authorizing immediate taking without notice and
hearing are violative of due process.

WHEREFORE, the Orders of the lower court dated January 17, 1978 and June 28, 1978 issuing
the writ of possession on the basis of the market value appearing therein are annulled for
having been issued in excess of jurisdiction. Let this case be remanded to the court of origin for
further proceedings to determine the compensation the petitioners are entitled to be paid. No
costs.

G.R. No. 103125 May 17, 1993

PROVINCE OF CAMARINES SUR, represented by GOV. LUIS R. VILLAFUERTE and HON.

BENJAMIN V. PANGA as Presiding Judge of RTC Branch 33 at Pili, Camarines
Sur, petitioners,
vs.
THE COURT OF APPEALS (THIRD DIVISION), ERNESTO SAN JOAQUIN and EFREN SAN
JOAQUIN, respondents.

The Provincial Attorney for petitioners.

Reynaldo L. Herrera for Ernesto San Joaquin.

QUIASON, J.:

In this appeal by certiorari from the decision of the Court of Appeals in AC-G.R. SP No. 20551
entitled "Ernesto N. San Joaquin, et al., v. Hon. Benjamin V. Panga, et al.," this Court is asked
to decide whether the expropriation of agricultural lands by local government units is subject, to
the prior approval of the Secretary of the Agrarian Reform, as the implementator of the agrarian
reform program.

On December 22, 1988, the Sangguniang Panlalawigan of the Province of Camarines Sur
passed Resolution No. 129, Series of 1988, authorizing the Provincial Governor to purchase or
expropriate property contiguous to the provincial capitol site, in order to establish a pilot farm for
non-food and non-traditional agricultural crops and a housing project for provincial government
employees.

The "WHEREAS" clause o:f the Resolution states:

WHEREAS, the province of Camarines Sur has adopted a five-year

Comprehensive Development plan, some of the vital components of which
includes the establishment of model and pilot farm for non-food and non-
traditional agricultural crops, soil testing and tissue culture laboratory centers, 15
small scale technology soap making, small scale products of plaster of paris,
marine biological and sea farming research center,and other progressive
feasibility concepts objective of which is to provide the necessary scientific and
technology know-how to farmers and fishermen in Camarines Sur and to
establish a housing project for provincial government employees;
 WHEREAS, the province would need additional land to be acquired either by
purchase or expropriation to implement the above program component;

WHEREAS, there are contiguous/adjacent properties to be (sic) present

Provincial Capitol Site ideally suitable to establish the same pilot development
center;

WHEREFORE . . . .

Pursuant to the Resolution, the Province of Camarines Sur, through its Governor, Hon. Luis
R.Villafuerte, filed two separate cases for expropriation against Ernesto N. San Joaquin and
Efren N. San Joaquin, docketed as Special Civil Action Nos. P-17-89 and P-19-89 of the
Regional Trial Court, Pili, Camarines Sur, presided by the Hon. Benjamin V. Panga.

Forthwith, the Province of Camarines Sur filed a motion for the issuance of writ of possession.
The San Joaquins failed to appear at the hearing of the motion.

The San Joaquins moved to dismiss the complaints on the ground of inadequacy of the price
offered for their property. In an order dated December 6, 1989, the trial court denied the motion
to dismiss and authorized the Province of Camarines Sur to take possession of the property
upon the deposit with the Clerk of Court of the amount of P5,714.00, the amount provisionally
fixed by the trial court to answer for damages that private respondents may suffer in the event
that the expropriation cases do not prosper. The trial court issued a writ of possession in an
order dated January18, 1990.

The San Joaquins filed a motion for relief from the order, authorizing the Province of Camarines
Sur to take possession of their property and a motion to admit an amended motion to dismiss.
Both motions were denied in the order dated February 1990.

In their petition before the Court of Appeals, the San Joaquins asked: (a) that Resolution No.
129, Series of 1988 of the Sangguniang Panlalawigan be declared null and void; (b) that the
complaints for expropriation be dismissed; and (c) that the order dated December 6, 1989 (i)
denying the motion to dismiss and (ii) allowing the Province of Camarines Sur to take
possession of the property subject of the expropriation and the order dated February 26, 1990,
denying the motion to admit the amended motion to dismiss, be set aside. They also asked that
an order be issued to restrain the trial court from enforcing the writ of possession, and thereafter
to issue a writ of injunction.

In its answer to the petition, the Province of Camarines Sur claimed that it has the authority to
initiate the expropriation proceedings under Sections 4 and 7 of Local Government Code (B.P.
Blg. 337) and that the expropriations are for a public purpose.

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

Hence this petition.

It must be noted that in the Court of Appeals, the San Joaquins asked for: (i) the dismissal of the
complaints for expropriation on the ground of the inadequacy of the compensation offered for
the property and (ii) the nullification of Resolution No. 129, Series of 1988 of the Sangguniang
Panlalawigan of the Province of Camarines Sur.

The Court of Appeals did not rule on the validity of the questioned resolution; neither did it
dismiss the complaints. However, when the Court of Appeals ordered the suspension of the
proceedings until the Province of Camarines Sur shall have obtained the authority of the
Department of Agrarian Reform to change the classification of the lands sought to be
expropriated from agricultural to non-agricultural use, it assumed that the resolution is valid and
that the expropriation is for a public purpose or public use.

Modernly, there has been a shift from the literal to a broader interpretation of "public purpose" or
"public use" for which the power of eminent domain may be exercised. The old concept was that
the condemned property must actually be used by the general public (e.g. roads, bridges, public
plazas, etc.) before the taking thereof could satisfy the constitutional requirement of "public
use". Under the new concept, "public use" means public advantage, convenience or benefit,
which tends to contribute to the general welfare and the prosperity of the whole community, like
a resort complex for tourists or housing project (Heirs of Juancho Ardano v. Reyes, 125 SCRA
220 [1983]; Sumulong v. Guerrero, 154 SC.RA 461 [1987]).

The expropriation of the property authorized by the questioned resolution is for a public
purpose. The establishment of a pilot development center would inure to the direct benefit and
advantage of the people of the Province of Camarines Sur. Once operational, the center would
make available to the community invaluable information and technology on agriculture, fishery
and the cottage industry. Ultimately, the livelihood of the farmers, fishermen and craftsmen
would be enhanced. The housing project also satisfies the public purpose requirement of the
Constitution. As held in Sumulong v. Guerrero, 154 SCRA 461, "Housing is a basic human
need. Shortage in housing is a matter of state concern since it directly and significantly affects
public health, safety, the environment and in sum the general welfare."

It is the submission of the Province of Camarines Sur that its exercise of the power of eminent
domain cannot be restricted by the provisions of the Comprehensive Agrarian Reform Law (R.A.
No. 6657), particularly Section 65 thereof, which requires the approval of the Department of
Agrarian Reform before a parcel of land can be reclassified from an agricultural to a non-
agricultural land.

The Court of Appeals, following the recommendation of the Solicitor General, held that the
Province of Camarines Sur must comply with the provision of Section 65 of the Comprehensive
Agrarian Reform Law and must first secure the approval of the Department of Agrarian Reform
of the plan to expropriate the lands of the San Joaquins.
In Heirs of Juancho Ardana v. Reyes, 125 SCRA 220, petitioners raised the issue of whether
the Philippine Tourism Authority can expropriate lands covered by the "Operation Land
Transfer" for use of a tourist resort complex. There was a finding that of the 282 hectares sought
to be expropriated, only an area of 8,970 square meters or less than one hectare was affected
by the land reform program and covered by emancipation patents issued by the Ministry of
Agrarian Reform. While the Court said that there was "no need under the facts of this petition to
rule on whether the public purpose is superior or inferior to another purpose or engage in a
balancing of competing public interest," it upheld the expropriation after noting that petitioners
had failed to overcome the showing that the taking of 8,970 square meters formed part of the
resort complex. A fair and reasonable reading of the decision is that this Court viewed the power
of expropriation as superior to the power to distribute lands under the land reform program.

The Solicitor General denigrated the power to expropriate by the Province of Camarines Sur by
stressing the fact that local government units exercise such power only by delegation.
(Comment, pp. 14-15; Rollo, pp. 128-129)

It is true that local government units have no inherent power of eminent domain and can
exercise it only when expressly authorized by the legislature (City of Cincinnati v. Vester, 28l US
439, 74 L.ed. 950, 50 SCt. 360). It is also true that in delegating the power to expropriate, the
legislature may retain certain control or impose certain restraints on the exercise thereof by the
local governments (Joslin Mfg. Co. v. Providence, 262 US 668 67 L. ed. 1167, 43 S Ct. 684).
While such delegated power may be a limited authority, it is complete within its limits. Moreover,
the limitations on the exercise of the delegated power must be clearly expressed, either in the
law conferring the power or in other legislations.

Resolution No. 129, Series of 1988, was promulgated pursuant to Section 9 of B.P. Blg. 337,
the Local Government Code, which provides:

A local government unit may, through its head and acting pursuant to a resolution
of its sanggunian exercise the right of eminent domain and institute
condemnation proceedings for public use or purpose.

Section 9 of B.P. Blg. 337 does not intimate in the least that local government, units must first
secure the approval of the Department of Land Reform for the conversion of lands from
agricultural to non-agricultural use, before they can institute the necessary expropriation
proceedings. Likewise, there is no provision in the Comprehensive Agrarian Reform Law which
expressly subjects the expropriation of agricultural lands by local government units to the control
of the Department of Agrarian Reform. The closest provision of law that the Court of Appeals
could cite to justify the intervention of the Department of Agrarian Reform in expropriation
matters is Section 65 of the Comprehensive Agrarian Reform Law, which reads:

Sec. 65. Conversion of Lands. — After the lapse of five (5) years from its award,
when the land ceases to be economically feasible and sound for, agricultural
purposes, or the locality has become urbanized and the land will have a greater
economic value for residential, commercial or industrial purposes, the DAR, upon
application of the beneficiary or the landowner, with due notice to the affected
parties, and subject to existing laws, may authorize the reclassification or
conversion of the land and its disposition: Provided, That the beneficiary shall
have fully paid his obligation.
The opening, adverbial phrase of the provision sends signals that it applies to lands previously
placed under the agrarian reform program as it speaks of "the lapse of five (5) years from its
award."

The rules on conversion of agricultural lands found in Section 4 (k) and 5 (1) of Executive Order
No. 129-A, Series of 1987, cannot be the source of the authority of the Department of Agrarian
Reform to determine the suitability of a parcel of agricultural land for the purpose to which it
would be devoted by the expropriating authority. While those rules vest on the Department of
Agrarian Reform the exclusive authority to approve or disapprove conversions of agricultural
lands for residential, commercial or industrial uses, such authority is limited to the applications
for reclassification submitted by the land owners or tenant beneficiaries.

Statutes conferring the power of eminent domain to political subdivisions cannot be broadened
or constricted by implication (Schulman v. People, 10 N.Y. 2d. 249, 176 N.E. 2d. 817, 219 NYS
2d. 241).

To sustain the Court of Appeals would mean that the local government units can no longer
expropriate agricultural lands needed for the construction of roads, bridges, schools, hospitals,
etc, without first applying for conversion of the use of the lands with the Department of Agrarian
Reform, because all of these projects would naturally involve a change in the land use. In effect,
it would then be the Department of Agrarian Reform to scrutinize whether the expropriation is for
a public purpose or public use.

Ordinarily, it is the legislative branch of the local government unit that shall determine whether
the use of the property sought to be expropriated shall be public, the same being an expression
of legislative policy. The courts defer to such legislative determination and will intervene only
when a particular undertaking has no real or substantial relation to the public use (United States
Ex Rel Tennessee Valley Authority v. Welch, 327 US 546, 90 L. ed. 843, 66 S Ct 715; State ex
rel Twin City Bldg. and Invest. Co. v. Houghton, 144 Minn. 1, 174 NW 885, 8 ALR 585).

There is also an ancient rule that restrictive statutes, no matter how broad their terms are, do
not embrace the sovereign unless the sovereign is specially mentioned as subject thereto
(Alliance of Government Workers v. Minister of Labor and Employment, 124 SCRA 1 [1983]).
The Republic of the Philippines, as sovereign, or its political subdivisions, as holders of
delegated sovereign powers, cannot be bound by provisions of law couched in general term.

The fears of private respondents that they will be paid on the basis of the valuation declared in
the tax declarations of their property, are unfounded. This Court has declared as
unconstitutional the Presidential Decrees fixing the just compensation in expropriation cases to
be the value given to the condemned property either by the owners or the assessor, whichever
was lower ([Export Processing Zone Authority v. Dulay, 149 SCRA 305 [1987]). As held
in Municipality of Talisay v. Ramirez, 183 SCRA 528 [1990], the rules for determining just
compensation are those laid down in Rule 67 of the Rules of Court, which allow private
respondents to submit evidence on what they consider shall be the just compensation for their
property.

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

The decision of the Court of Appeals is AFFIRMED insofar as it sets aside the order of the trial
court, denying the amended motion to dismiss of the private respondents.

[Synopsis/Syllabi]
FIRST DIVISION

[G.R. No. 106440. January 29, 1996]

ALEJANDRO MANOSCA, ASUNCION MANOSCA and LEONICA MANOSCA, petitioners,

vs. HON. COURT OF APPEALS, HON. BENJAMIN V. PELAYO, Presiding Judge,
RTC-Pasig, Metro Manila, Branch 168, HON. GRADUACION A. REYES CLARAVAL,
Presiding Judge, RTC-Pasig, Metro Manila, Branch 71, and REPUBLIC OF THE
PHILIPPINES, respondents.

DECISION
VITUG, J.:

In this appeal, via a petition for review on certiorari, from the decision[1] of the Court of
Appeals, dated 15 January 1992, in CA-G.R. SP No. 24969 (entitled Alejandro Manosca, et
al. v. Hon. Benjamin V. Pelayo, et al.), this Court is asked to resolve whether or not the public
use requirement of Eminent Domain is extant in the attempted expropriation by the Republic of
a 492-square-meter parcel of land so declared by the National Historical Institute (NHI) as a
national historical landmark.
The facts of the case are not in dispute.
Petitioners inherited a piece of land located at P. Burgos Street, Calzada, Taguig, Metro
Manila, with an area of about four hundred ninety-two (492) square meters. When the parcel
was ascertained by the NHI to have been the birthsite of Felix Y. Manalo, the founder of Iglesia
Ni Cristo, it passed Resolution No. 1, Series of 1986, pursuant to Section 4[2]of Presidential
Decree No. 260, declaring the land to be a national historical landmark. The resolution was,
on 06 January 1986, approved by the Minister of Education, Culture and Sports. Later, the
opinion of the Secretary of Justice was asked on the legality of the measure. In his Opinion No.
133, Series of 1987, the Secretary of Justice replied in the affirmative; he explained:

According to your guidelines, national landmarks are places or objects that are associated with
an event, achievement, characteristic, or modification that makes a turning point or stage in
Philippine history. Thus, the birthsite of the founder of the Iglesia ni Cristo, the late Felix Y.
Manalo, who, admittedly, had made contributions to Philippine history and culture has been
declared as a national landmark. It has been held that places invested with unusual historical
interest is a public use for which the power of eminent domain may be authorized x x x.
In view thereof, it is believed that the National Historical Institute as an agency of the
Government charged with the maintenance and care of national shrines, monuments and
landmarks and the development of historical sites that may be declared as national shrines,
monuments and/or landmarks, may initiate the institution of condemnation proceedings for the
purpose of acquiring the lot in question in accordance with the procedure provided for in Rule 67
of the Revised Rules of Court. The proceedings should be instituted by the Office of the Solicitor
General in behalf of the Republic.

Accordingly, on 29 May 1989, the Republic, through the Office of the Solicitor-General,
instituted a complaint for expropriation[3] before the Regional Trial Court of Pasig for and in
behalf of the NHI alleging, inter alia, that:

Pursuant to Section 4 of Presidential Decree No. 260, the National Historical Institute issued
Resolution No. 1, Series of 1986, which was approved on January, 1986 by the then Minister of
Education, Culture and Sports, declaring the above described parcel of land which is the
birthsite of Felix Y. Manalo, founder of the Iglesia ni Cristo, as a National Historical Landmark.
The plaintiff perforce needs the land as such national historical landmark which is a public
purpose.

At the same time, respondent Republic filed an urgent motion for the issuance of an order
to permit it to take immediate possession of the property. The motion was opposed by
petitioners. After a hearing, the trial court issued, on 03 August 1989,[4] an order fixing the
provisional market (P54,120.00) and assessed (P16,236.00) values of the property and
authorizing the Republic to take over the property once the required sum would have been
deposited with the Municipal Treasurer of Taguig, Metro Manila.
Petitioners moved to dismiss the complaint on the main thesis that the intended
expropriation was not for a public purpose and, incidentally, that the act would constitute an
application of public funds, directly or indirectly, for the use, benefit, or support of Iglesia ni
Cristo, a religious entity, contrary to the provision of Section 29(2), Article VI, of the 1987
Constitution.[5] Petitioners sought, in the meanwhile, a suspension in the implementation of the
03rd August 1989 order of the trial court.
On 15 February 1990, following the filing by respondent Republic of its reply to petitioners
motion seeking the dismissal of the case, the trial court issued its denial of said motion to
dismiss.[6] Five (5) days later, or on 20 February 1990,[7] another order was issued by the trial
court, declaring moot and academic the motion for reconsideration and/or suspension of the
order of 03 August 1989 with the rejection of petitioners motion to dismiss. Petitioners motion for
the reconsideration of the 20th February 1990 order was likewise denied by the trial court in
its 16th April 1991 order.[8]
Petitioners then lodged a petition for certiorari and prohibition with the Court of Appeals. In
its now disputed 15th January 1992 decision, the appellate court dismissed the petition on the
ground that the remedy of appeal in the ordinary course of law was an adequate remedy and
that the petition itself, in any case, had failed to show any grave abuse of discretion or lack of
jurisdictional competence on the part of the trial court. A motion for the reconsideration of the
decision was denied in the 23rd July 1992 resolution of the appellate court.
We begin, in this present recourse of petitioners, with a few known postulates.
Eminent domain, also often referred to as expropriation and, with less frequency, as
condemnation, is, like police power and taxation, an inherent power of sovereignty. It need not
be clothed with any constitutional gear to exist; instead, provisions in our Constitution on the
subject are meant more to regulate, rather than to grant, the exercise of the power.Eminent
domain is generally so described as the highest and most exact idea of property remaining in
the government that may be acquired for some public purpose through a method in the nature
of a forced purchase by the State.[9] It is a right to take or reassert dominion over property within
the state for public use or to meet a public exigency. It is said to be an essential part of
governance even in its most primitive form and thus inseparable from sovereignty. [10] The only
direct constitutional qualification is that private property shall not be taken for public use without
just compensation.[11] This proscription is intended to provide a safeguard against possible
abuse and so to protect as well the individual against whose property the power is sought to be
enforced.
Petitioners assert that the expropriation has failed to meet the guidelines set by this Court in
the case of Guido v. Rural Progress Administration,[12] to wit: (a) the size of the land
expropriated; (b) the large number of people benefited; and, (c) the extent of social and
economic reform.[13] Petitioners suggest that we confine the concept of expropriation only to the
following public uses,[14] i.e., the -

x x x taking of property for military posts, roads, streets, sidewalks, bridges, ferries, levees,
wharves, piers, public buildings including schoolhouses, parks, playgrounds, plazas, market
places, artesian wells, water supply and sewerage systems, cemeteries, crematories, and
railroads.

This view of petitioners is much too limitative and restrictive.

The court, in Guido, merely passed upon the issue of the extent of the Presidents power
under Commonwealth Act No. 539 to, specifically, acquire private lands for subdivision into
smaller home lots or farms for resale to bona fide tenants or occupants. It was in this particular
context of the statute that the Court had made the pronouncement. The guidelines
in Guido were not meant to be preclusive in nature and, most certainly, the power of eminent
domain should not now be understood as being confined only to the expropriation of vast tracts
of land and landed estates.[15]
The term public use, not having been otherwise defined by the constitution, must be
considered in its general concept of meeting a public need or a public exigency.[16] Black
summarizes the characterization given by various courts to the term; thus:

Public Use. Eminent domain. The constitutional and statutory basis for taking property by
eminent domain. For condemnation purposes, public use is one which confers same benefit or
advantage to the public; it is not confined to actual use by public. It is measured in terms of right
of public to use proposed facilities for which condemnation is sought and, as long as public has
right of use, whether exercised by one or many members of public, a public advantage or public
benefit accrues sufficient to constitute a public use. Montana Power Co. vs. Bokma, Mont. 457
P. 2d 769, 772, 773.

Public use, in constitutional provisions restricting the exercise of the right to take private
property in virtue of eminent domain, means a use concerning the whole community as
distinguished from particular individuals. But each and every member of society need not be
equally interested in such use, or be personally and directly affected by it; if the object is to
satisfy a great public want or exigency, that is sufficient. Rindge Co. vs. Los Angeles County,
262 U.S. 700, 43 S.Ct. 689, 692, 67 L.Ed. 1186. The term may be said to mean public
usefulness, utility, or advantage, or what is productive of general benefit. It may be limited to the
inhabitants of a small or restricted locality, but must be in common, and not for a particular
individual. The use must be a needful one for the public, which cannot be surrendered without
obvious general loss and inconvenience. A public use for which land may be taken defies
absolute definition for it changes with varying conditions of society, new appliances in the
sciences, changing conceptions of scope and functions of government, and other differing
circumstances brought about by an increase in population and new modes of communication
and transportation. Katz v. Brandon, 156 Conn., 521, 245 A.2d 579,586.[17]

The validity of the exercise of the power of eminent domain for traditional purposes is
beyond question; it is not at all to be said, however, that public use should thereby be restricted
to such traditional uses. The idea that public use is strictly limited to clear cases of use by the
public has long been discarded. This Court in Heirs of Juancho Ardona v. Reyes,[18] quoting
from Berman v. Parker (348 U.S. 25; 99 L. ed. 27), held:

We do not sit to determine whether a particular housing project is or is not desirable. The
concept of the public welfare is broad and inclusive. See DayBrite Lighting, Inc. v. Missouri,
342 US 421, 424, 96 L. Ed. 469, 472, 72 S Ct 405. The values it represents are spiritual as well
as physical, aesthetic as well as monetary. It is within the power of the legislature to determine
that the community should be beautiful as well as healthy, spacious as well as clean, well-
balanced as well as carefully patrolled. In the present case, the Congress and its authorized
agencies have made determinations that take into account a wide variety of values. It is not for
us to reappraise them. If those who govern the District of Columbia decide that the Nations
Capital should be beautiful as well as sanitary, there is nothing in the Fifth Amendment that
stands in the way.

Once the object is within the authority of Congress, the right to realize it through the exercise of
eminent domain is clear. For the power of eminent domain is merely the means to the end. See
Luxton v. North River Bridge Co. 153 US 525, 529, 530, 38 L. ed. 808, 810, 14 S Ct 891; United
States v. Gettysburg Electric R. Co. 160 US 668, 679, 40 L. ed. 576, 580, 16 S Ct 427.

It has been explained as early as Sea v. Manila Railroad Co.,[19] that:

x x x A historical research discloses the meaning of the term public use to be one of constant
growth. As society advances, its demands upon the individual increase and each demand is a
new use to which the resources of the individual may be devoted. x x x for whatever is
beneficially employed for the community is a public use.

Chief Justice Enrique M. Fernando states:

The taking to be valid must be for public use. There was a time when it was felt that a literal
meaning should be attached to such a requirement. Whatever project is undertaken must be for
the public to enjoy, as in the case of streets or parks. Otherwise, expropriation is not allowable.
It is not so any more. As long as the purpose of the taking is public, then the power of eminent
domain comes into play. As just noted, the constitution in at least two cases, to remove any
doubt, determines what is public use. One is the expropriation of lands to be subdivided into
small lots for resale at cost to individuals. The other is the transfer, through the exercise of this
power, of utilities and other private enterprise to the government. It is accurate to state then that
at present whatever may be beneficially employed for the general welfare satisfies the
requirement of public use.[20]
Chief Justice Fernando, writing the ponencia in J.M. Tuason & Co. vs. Land Tenure
Administration,[21] has viewed the Constitution a dynamic instrument and one that is not to be
construed narrowly or pedantically so as to enable it to meet adequately whatever problems the
future has in store. Fr. Joaquin Bernas, a noted constitutionalist himself, has aptly observed that
what, in fact, has ultimately emerged is a concept of public use which is just as broad as public
welfare.[22]
Petitioners ask: But (w)hat is the so-called unusual interest that the expropriation of (Felix
Manalos) birthplace become so vital as to be a public use appropriate for the exercise of the
power of eminent domain when only members of the Iglesia ni Cristo would benefit? This
attempt to give some religious perspective to the case deserves little consideration, for what
should be significant is the principal objective of, not the casual consequences that might follow
from, the exercise of the power. The purpose in setting up the marker is essentially to recognize
the distinctive contribution of the late Felix Manalo to the culture of the Philippines, rather than
to commemorate his founding and leadership of the Iglesia ni Cristo. The practical reality that
greater benefit may be derived by members of the Iglesia ni Cristo than by most others could
well be true but such a peculiar advantage still remains to be merely incidental and secondary in
nature. Indeed, that only a few would actually benefit from the expropriation of property does not
necessarily diminish the essence and character of public use.[23]
Petitioners contend that they have been denied due process in the fixing of the provisional
value of their property. Petitioners need merely to be reminded that what the law prohibits is the
lack of opportunity to be heard;[24] contrary to petitioners argument, the records of this case are
replete with pleadings[25] that could have dealt, directly or indirectly, with the provisional value of
the property.
Petitioners, finally, would fault respondent appellate court in sustaining the trial courts order
which considered inapplicable the case of Noble v. City of Manila.[26] Both courts held
correctly. The Republic was not a party to the alleged contract of exchange between the Iglesia
ni Cristo and petitioners which (the contracting parties) alone, not the Republic, could properly
be bound.
All considered, the Court finds the assailed decision to be in accord with law and
jurisprudence.
WHEREFORE, the petition is DENIED. No costs.
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 Decision[1] and the Resolution[2]of the
Court of Appeals[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, 1997[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.
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 proceedings[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 later[6], the said trial court in an Order[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.
In an Order[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 1406-A 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 agreement[9] dated January
4, 1993 is quoted hereunder:
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.
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.
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 Order[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.[11]
In the Order[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 moved[13] for its reconsideration. The same proved futile since the trial court denied
reconsideration in its Order[14] dated November 3, 1997.
On December 4, 1997, the trial court, at the instance[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 prohibition[16] seeking to nullify the Orders dated August 4, 1997 and November 3,
1997 of the trial court. Petitioner filed its Comment[17]on January 16, 1998.
Acting on the petition, the Court of Appeals in a Decision[18]dated March 25, 1998 upheld
the rescission of the compromise agreement, ratiocinating thus:

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:

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.[19]

xxx
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.[20]
Petitioner sought[21] reconsideration of the Decision dated March 25, 1998. However, public
respondent in a Resolution[22] dated January 14, 1999 denied petitioners motion for
reconsideration.
Hence, this petition anchored on the following assignment of errors, to wit:

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.[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 quasi-judicial 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.[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.[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.[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.[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. Tan[28] and Bautista v.
Sarmiento[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 jurisdiction [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. Tan[31] and Bautista v. Sarmiento[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 Appeals[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.[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
Court[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.[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 dismiss[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 cases[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. Arlegui[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.[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. Guerrero[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.[42]
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:

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 approachesthereto, 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)

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 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.

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)

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

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

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

xxx

(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.[43]

In Manila Railroad Co. v. Mitchel[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.[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.[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:[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 Villaroya[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.
SECOND DIVISION

[G.R. No. 158563. June 30, 2005]

AIR TRANSPORTATION OFFICE (ATO) and MACTAN-CEBU INTERNATIONAL AIRPORT

AUTHORITY (MCIAA), petitioners, vs. APOLONIO GOPUCO, JR., respondent.

DECISION
CHICO-NAZARIO, J.:

When private land is expropriated for a particular public use, and that particular public use
is abandoned, does its former owner acquire a cause of action for recovery of the property?
The trial courts ruling in the negative was reversed by the Court of Appeals in its
Decision[1] of 28 February 2001. Hence this petition for review under Rule 45 of the 1997 Rules
of Civil Procedure of the said Decision of the court a quo, and its Resolution[2] of 22 May 2003
dismissing petitioners motion for reconsideration.
The facts, as adduced from the records, are as follows:
Respondent Apolonio Gopuco, Jr. was the owner of Cadastral Lot No. 72 consisting of 995
square meters located in the vicinity of the Lahug Airport in Cebu City covered by Transfer
Certificate of Title (TCT) No. 13061-T.
The Lahug Airport had been turned over by the Unites States Army to the Republic of the
Philippines sometime in 1947 through the Surplus Property Commission, which accepted it in
behalf of the Philippine Government. In 1947, the Surplus Property Commission was succeeded
by the Bureau of Aeronautics, which office was supplanted by the National Airport Corporation
(NAC). The NAC was in turn dissolved and replaced with the Civil Aeronautics Administration
(CAA).[3]
Sometime in 1949, the NAC informed the owners of the various lots surrounding the Lahug
Airport, including the herein respondent, that the government was acquiring their lands for
purposes of expansion. Some landowners were convinced to sell their properties on the
assurance that they would be able to repurchase the same when these would no longer be used
by the airport. Others, including Gopuco, refused to do so.
Thus, on 16 April 1952, the CAA filed a complaint with the Court of First Instance (CFI) of
Cebu for the expropriation of Lot No. 72 and its neighboring realties, docketed as Civil Case No.
R-1881.
On 29 December 1961, the CFI promulgated a Decision,

1. Declaring the expropriation of [the subject lots, including Lot No. 72] justified and in lawful
exercise of the right of eminent domain;

2. Declaring . a balance of P1,990 in favor of Apolonio Go Puco, Jr. with legal interest from
November 16, 1947 until fully paid. ;

3. After the payment of the foregoing financial obligation to the landowners, directing the latter to
deliver to the plaintiff the corresponding Transfer Certificates of Title to their respective lots; and
upon the presentation of the said titles to the Register of Deeds, ordering the latter to cancel the
same and to issue, in lieu thereof, new Transfer Certificates of Title in the name of the plaintiff.[4]

No appeal was taken from the above Decision on Lot No. 72, and the judgment of
condemnation became final and executory. Thereafter, on 23 May 1962, absolute title to Lot No.
72 was transferred to the Republic of the Philippines under TCT No. 25030.[5]
Subsequently, when the Mactan International Airport commenced operations, the Lahug
Airport was ordered closed by then President Corazon C. Aquino in a Memorandum of 29
November 1989.[6] Lot No. 72 was thus virtually abandoned.[7]
On 16 March 1990, Gopuco wrote[8] the Bureau of Air Transportation, through the manager
of the Lahug Airport, seeking the return of his lot and offering to return the money previously
received by him as payment for the expropriation. This letter was ignored.[9]
In the same year, Congress passed Republic Act No. 6958 creating the Mactan-Cebu
International Airport Authority (MCIAA) and in part providing for the transfer of the assets of the
Lahug Airport thereto. Consequently, on 08 May 1992, ownership of Lot No. 72 was transferred
to MCIAA under TCT No. 120356.[10]
On 06 August 1992, Apolonio Gopuco, Jr. filed an amended complaint[11] for recovery of
ownership of Lot No. 72 against the Air Transportation Office[12] and the Province of Cebu with
the Regional Trial Court (RTC) of Cebu, Branch X, docketed as Civil Case No. CEB-11914. He
maintained that by virtue of the closure of the Lahug Airport, the original purpose for which the
property was expropriated had ceased or otherwise been abandoned, and title to the property
had therefore reverted to him.
Gopuco further alleged that when the original judgment of expropriation had been handed
down, and before they could file an appeal thereto, the CAA offered them a compromise
settlement whereby they were assured that the expropriated lots would be resold to them for the
same price as when it was expropriated in the event that the Lahug Airport would be
abandoned. Gopuco claims to have accepted this offer.[13] However, he failed to present any
proof on this matter, and later admitted that insofar as the said lot was concerned, no
compromise agreement was entered into by the government and the previous owners.[14]
Lastly, Gopuco asserted that he had come across several announcements in the papers
that the Lahug Airport was soon to be developed into a commercial complex, which he took to
be a scheme of the Province of Cebu to make permanent the deprivation of his property.
On 20 May 1994, the trial court rendered a Decision[15] dismissing the complaint and
directing the herein respondent to pay the MCIAA exemplary damages, litigation expenses and
costs.
Aggrieved by the holding of the trial court, Gopuco appealed to the Court of Appeals, which
overturned the RTC decision, ordered the herein petitioners to reconvey Lot No. 72 to Gopuco
upon payment of the reasonable price as determined by it, and deleted the award to the
petitioners of exemplary damages, litigation expenses and costs.
The Motion for Reconsideration was denied[16] on 22 May 2003, hence this petition, which
raises the following issues:

WHETHER THE COURT OF APPEALS ERRED IN HOLDING THAT RESPONDENT HAS THE
RIGHT TO RECLAIM OWNERSHIP OVER THE SUBJECT EXPROPRIATED LOT BASED ON
THE IMPORT OF THE DECEMBER 29, 1961 DECISION IN CIVIL CASE NO. 1881.

WHETHER THE COURT OF APPEALS ERRED IN DELETING THE AWARD OF LITIGATION

EXPENSES AND COSTS IN FAVOR OF PETITIONERS.

In deciding the original expropriation case that gave rise to the present controversy, Civil
Case No. R-1881, the CFI reasoned that the planned expansion of the airport justified the
exercise of eminent domain, thus:

As for the public purpose of the expropriation proceeding, it cannot be doubted. Although the
Mactan Airport is being constructed, it does not take away the actual usefulness and importance
of the Lahug Airport; it is handling the air traffic both civilian and military. From it aircrafts fly to
Mindanao and Visayas and pass thru it on their return flights to the North and Manila. Then, no
evidence was adduced to show how soon is the Mactan Airport to be placed in operation and
whether the Lahug Airport will be closed immediately thereafter. It is for the other departments
of the Government to determine said matters. The Court cannot substitute its judgment for those
of the said departments or agencies. In the absence of such a showing, the Court will
presume that the Lahug Airport will continue to be in operation.[17] (emphasis supplied)

By the time Gopuco had filed his action for recovery of ownership of Lot No. 72, Lahug
Airport had indeed ceased to operate. Nevertheless, the trial court held:

The fact of abandonment or closure of the Lahug Airport admitted by the defendant did not by
itself, result in the reversion of the subject property back to the plaintiff. Nor did it vest in the
plaintiff the right to demand reconveyance of said property.

When real property has been acquired for public use unconditionally, either by eminent domain
or by purchase, the abandonment or non-use of the real property, does not ipso facto give to the
previous owner of said property any right to recover the same (Fery vs. Municipality of
Cabanatuan, 42 Phil. 28).[18]

In reversing the trial court, the Court of Appeals called attention to the fact that both parties
cited Fery v. Municipality of Cabanatuan,[19] which the trial court also relied on in its Decision.
The court a quo agreed in Gopucos interpretation of Fery that when the CFI in Civil Case No. R-
1881 held that,

. . . [T]hen, no evidence was adduced to show how soon is the Mactan Airport to be placed in
operation and whether the Lahug Airport will be closed immediately thereafter.In the absence of
such a showing, the Court will presume that the Lahug Airport will continue to be in operation, . .
. .[20]

the expropriation of the property was conditioned on its continued devotion to its public purpose.
Thus, although the MCIAA stressed that nothing in the judgment of expropriation expressly
stated that the lands would revert to their previous owners should the public use be terminated
or abandoned, the Court of Appeals nevertheless ruled that,

. . . [W]hile, there is no explicit statement that the land is expropriated with the condition that
when the purpose is ended the property shall return to its owner, the full import of the decision
(in Civil Case No. R-1881) suggests that the expropriation was granted because there is no
clear showing that Lahug Airport will be closed, the moment Mactan International Airport is put
to operation. It stands to reason that should that public use be abandoned, then the
expropriated property should revert back to its former owner.

Moreover, the foundation of the right to exercise the power of eminent domain is genuine
necessity. Condemnation is justified only if it is for the public good and there is genuine
necessity of a public character. Thus, when such genuine necessity no longer exists as when
the State abandons the property expropriated, government interest must yield to the private
right of the former land owner, whose property right was disturbed as a consequence of the
exercise of eminent domain.

Justice, equity and fair play demand that the property should revert back to plaintiff-appellant
upon paying the reasonable value of the land to be based on the prevailing market value at the
time of judicial demand to recover the property. If the State expects landowners to cooperate in
its bid to take private property for its public use, so must it apply also the same standard, to
allow the landowner to reclaim the property, now that the public use has been abandoned.[21]

In this petition, the MCIAA reiterates that the Republic of the Philippines validly expropriated
Lot No. 72 through the proceedings in Civil Case No. R-1881, the judgment of which had long
become final and executory. It further asserts that said judgment vested absolute and
unconditional title in the government, specifically on the petitioners, there having been no
condition whatsoever that the property should revert to its owners in case the Lahug Airport
should be abandoned.
On the other hand, the respondent would have us sustain the appellate courts interpretation
of Fery as applied to the original judgment of expropriation, to the effect that this was subject to
the condition that the Lahug Airport will continue to be in operation.
We resolve to grant the petition.
 In Fery, the Court asked and answered the same question confronting us now: When
private land is expropriated for a particular public use, and that particular public use is
abandoned, does the land so expropriated return to its former owner?[22]

The answer to that question depends upon the character of the title acquired by the
expropriator, whether it be the State, a province, a municipality, or a corporation which has the
right to acquire property under the power of eminent domain. If, for example, land is
expropriated for a particular purpose, with the condition that when that purpose is ended or
abandoned the property shall return to its former owner, then, of course, when the
purpose is terminated or abandoned the former owner reacquires the property so
expropriated. If, for example, land is expropriated for a public street and the expropriation is
granted upon condition that the city can only use it for a public street, then, of course, when the
city abandons its use as a public street, it returns to the former owner, unless there is some
statutory provision to the contrary. . . If upon the contrary, however, the decree of expropriation
gives to the entity a fee simple title, then of course, the land becomes the absolute property of
the expropriator, whether it be the State, a province, or municipality, and in that case the non-
user does not have the effect of defeating the title acquired by the expropriation proceedings.
(10 R.C.L., 240, sec. 202; 20 C.J. 1234, secs. 593-599 and numerous cases cited; Reichling vs.
Covington Lumber Co., 57 Wash., 225; 135 Am. St. Rep., 976; McConihay vs. Wright, 121 U.S.,
201.)

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. (Fort Wayne vs. Lake Shore, etc. Ry. Co., 132 Ind., 558; 18 L.R.A., 367.) (Emphases
Supplied)[23]

Did the judgment of expropriation in Civil Case No. R-1881 vest absolute and unconditional
title in the government? We have already had occasion to rule on this matter in Mactan-Cebu
International Airport Authority v. Court of Appeals,[24] which is a related action for reconveyance
of a parcel of land also subject of the expropriation proceedings in Civil Case No. R-1881. One
of the landowners affected by the said proceeding was Virginia Chiongbian, to whom the CFI
ordered the Republic of the Philippines to pay P34,415.00, with legal interest computed from the
time the government began using her land. Like the herein respondent, she did not appeal from
the CFIs judgment. Also like Gopuco, she eventually filed for the reconveyance of her property
when the airport closed. Although she was upheld by both the RTC of Cebu and the Court of
Appeals, on appeal we held that the terms of the judgment (in Civil Case No. R-1881) are
clear and unequivocal and granted title to Lot No. 941 in fee simple to the Republic of the
Philippines. There was no condition imposed to the effect that the lot would return to
CHIONGBIAN or that CHIONGBIAN had a right to repurchase the same if the purpose for
which it was expropriated is ended or abandoned or if the property was to be used other
than as the Lahug Airport.[25] Moreover, we held that although other lot owners were able to
successfully reacquire their lands by virtue of a compromise agreement, since CHIONGBIAN
was not a party to any such agreement, she could not validly invoke the same.
The respondent would have us revisit this ruling for three reasons. First, because he claims
there is no showing that the government benefited from entering into compromise agreements
with the other lot owners; second, because such a doctrine supposedly discriminates against
those who have neither the werewithal nor the savvy to contest the expropriation, or agree to
modify the judgment; and third, because there exists between the government and the owners
of expropriated realty an implied contract that the properties involved will be used only for the
public purpose for which they were acquired in the first place.
As to respondents first and second arguments, we have time and again ruled that a
compromise agreement, when not contrary to law, public order, public policy, morals, or good
customs, is a valid contract which is the law between the parties.[26] It is a contract perfected by
mere consent,[27] whereby the parties, making reciprocal concessions, avoid litigation or put an
end to one already commenced. It has the force of law and is conclusive between the
parties,[28] and courts will not relieve parties from obligations voluntarily assumed, simply
because their contracts turned out to be unwise.[29] Note that respondent has not shown that any
of the compromise agreements were in any way tainted with illegality, irregularity or
imprudence. Indeed, anyone who is not a party to a contract or agreement cannot be bound by
its terms, and cannot be affected by it.[30] Since Gopuco was not a party to the compromise
agreements, he cannot legally invoke the same.[31]
Lastly, Gopuco argues that there is present, in cases of expropriation, an implied contract
that the properties will be used only for the public purpose for which they were acquired. No
such contract exists.
Eminent domain is generally described as the highest and most exact idea of property
remaining in the government that may be acquired for some public purpose through a method in
the nature of a forced purchase by the State.[32] Also often referred to as expropriation and, with
less frequency, as condemnation, it is, like police power and taxation, an inherent power of
sovereignty and need not be clothed with any constitutional gear to exist; instead, provisions in
our Constitution on the subject are meant more to regulate, rather than to grant, the exercise of
the power. It is a right to take or reassert dominion over property within the state for public use
or to meet a public exigency and is said to be an essential part of governance even in its most
primitive form and thus inseparable from sovereignty.[33] In fact, all separate interests of
individuals in property are held of the government under this tacit agreement or implied
reservation. Notwithstanding the grant to individuals, the eminent domain, the highest and most
exact idea of property, remains in the government, or in the aggregate body of people in their
sovereign capacity; and they have the right to resume the possession of the property
whenever the public interest so requires it.[34]
The ubiquitous character of eminent domain is manifest in the nature of the expropriation
proceedings. Expropriation proceedings are not adversarial in the conventional sense, for the
condemning authority is not required to assert any conflicting interest in the property. Thus, by
filing the action, the condemnor in effect merely serves notice that it is taking title and
possession of the property, and the defendant asserts title or interest in the property, not to
prove a right to possession, but to prove a right to compensation for the taking. [35]
The only direct constitutional qualification is thus that private property shall not be taken for
public use without just compensation.[36] This prescription is intended to provide a safeguard
against possible abuse and so to protect as well the individual against whose property the
power is sought to be enforced.[37]
In this case, the judgment on the propriety of the taking and the adequacy of the
compensation received have long become final. We have also already held that the terms of
that judgment granted title in fee simple to the Republic of the Philippines. Therefore, pursuant
to our ruling in Fery, as recently cited in Reyes v. National Housing Authority,[38] no rights to Lot
No. 72, either express or implied, have been retained by the herein respondent.
We are not unaware of the ruling in Heirs of Timoteo Moreno v. Mactan-Cebu International
Airport Authority,[39] concerning still another set of owners of lots declared expropriated in the
judgment in Civil Case No. R-1881. As with Chiongbian and the herein respondent, the owners
of the lots therein did not appeal the judgment of expropriation, but subsequently filed a
complaint for reconveyance. In ordering MCIAA to reconvey the said lots in their favor, we held
that the predicament of petitioners therein involved a constructive trust akin to the implied
trust referred to in Art. 1454[40] of the Civil Code.[41] However, we qualified our Decision in that
case, to the effect that,

We adhere to the principles enunciated in Fery and in Mactan-Cebu International Airport

Authority, and do not overrule them. Nonetheless the weight of their import, particularly our
ruling as regards the properties of respondent Chiongbian in Mactan-Cebu International Airport
Authority, must be commensurate to the facts that were established therein as distinguished
from those extant in the case at bar. Chiongbian put forth inadmissible and inconclusive
evidence, while in the instant case we have preponderant proof as found by the trial
court of the existence of the right of repurchase in favor of petitioners.

Neither has Gopuco, in the present case, adduced any evidence at all concerning a right of
repurchase in his favor. Heirs of Moreno is thus not in point.
The trial court was thus correct in denying Gopucos claim for the reconveyance of Lot No.
72 in his favor. However, for failure of the petitioners to present any proof that this case was
clearly unfounded or filed for purposes of harassment, or that the herein respondent acted in
gross and evident bad faith, the reimposition of litigation expenses and costs has no basis. It is
not sound public policy to set a premium upon the right to litigate where such right is exercised
in good faith, as in the present case.[42]
WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals in CA-G.R.
SP No. 49898 dated 28 February 2001, and its Resolution of 22 May 2003 are hereby
REVERSED and SET ASIDE. The Decision of RTC-Branch X of Cebu dated 20 May 1994 in
Civil Case No. CEB-11914 is REINSTATED with the modification that the award of exemplary
damages, litigation expenses and costs are DELETED.
EN BANC

[G.R. No. 161656. June 29, 2005]

REPUBLIC OF THE PHILIPPINES, GENERAL ROMEO ZULUETA, COMMODORE

EDGARDO GALEOS, ANTONIO CABALUNA, DOROTEO MANTOS & FLORENCIO
BELOTINDOS, petitioners, vs. VICENTE G. LIM, respondent.

RESOLUTION
SANDOVAL-GUTIERREZ, J.:

Justice is the first virtue of social institutions.[1] When the state wields its power of eminent
domain, there arises a correlative obligation on its part to pay the owner of the expropriated
property a just compensation. If it fails, there is a clear case of injustice that must be redressed.
In the present case, fifty-seven (57) years have lapsed from the time the Decision in the subject
expropriation proceedings became final, but still the Republic of the Philippines, herein
petitioner, has not compensated the owner of the property. To tolerate such prolonged inaction
on its part is to encourage distrust and resentment among our people the very vices that
corrode the ties of civility and tempt men to act in ways they would otherwise shun.
A revisit of the pertinent facts in the instant case is imperative.
On September 5, 1938, the Republic of the Philippines (Republic) instituted a special civil
action for expropriation with the Court of First Instance (CFI) of Cebu, docketed as Civil Case
No. 781, involving Lots 932 and 939 of the Banilad Friar Land Estate, Lahug, Cebu City, for the
purpose of establishing a military reservation for the Philippine Army. Lot 932 was registered in
the name of Gervasia Denzon under Transfer Certificate of Title (TCT) No. 14921 with an area
of 25,137 square meters, while Lot 939 was in the name of Eulalia Denzon and covered by TCT
No. 12560 consisting of 13,164 square meters.
After depositing P9,500.00 with the Philippine National Bank, pursuant to the Order of the
CFI dated October 19, 1938, the Republic took possession of the lots. Thereafter, or on May 14,
1940, the CFI rendered its Decision ordering the Republic to pay the Denzons the sum
of P4,062.10 as just compensation.
The Denzons interposed an appeal to the Court of Appeals but it was dismissed on March
11, 1948. An entry of judgment was made on April 5, 1948.
In 1950, Jose Galeos, one of the heirs of the Denzons, filed with the National Airports
Corporation a claim for rentals for the two lots, but it denied knowledge of the matter. Another
heir, Nestor Belocura, brought the claim to the Office of then President Carlos Garcia who wrote
the Civil Aeronautics Administration and the Secretary of National Defense to expedite action on
said claim. On September 6, 1961, Lt. Manuel Cabal rejected the claim but expressed
willingness to pay the appraised value of the lots within a reasonable time.
For failure of the Republic to pay for the lots, on September 20, 1961, the Denzons
successors-in-interest, Francisca Galeos-Valdehueza and Josefina Galeos-Panerio,[2]filed
with the same CFI an action for recovery of possession with damages against the Republic and
officers of the Armed Forces of the Philippines in possession of the property. The case was
docketed as Civil Case No. R-7208.
In the interim or on November 9, 1961, TCT Nos. 23934 and 23935 covering Lots 932 and
939 were issued in the names of Francisca Valdehueza and Josefina Panerio, respectively.
Annotated thereon was the phrase subject to the priority of the National Airports Corporation to
acquire said parcels of land, Lots 932 and 939 upon previous payment of a reasonable market
value.
On July 31, 1962, the CFI promulgated its Decision in favor of Valdehueza and Panerio,
holding that they are the owners and have retained their right as such over Lots 932 and 939
because of the Republics failure to pay the amount of P4,062.10, adjudged in the expropriation
proceedings. However, in view of the annotation on their land titles, they were ordered to
execute a deed of sale in favor of the Republic. In view of the differences in money value from
1940 up to the present, the court adjusted the market value at P16,248.40, to be paid with 6%
interest per annum from April 5, 1948, date of entry in the expropriation proceedings, until full
payment.
After their motion for reconsideration was denied, Valdehueza and Panerio appealed from
the CFI Decision, in view of the amount in controversy, directly to this Court. The case was
docketed as No. L-21032.[3] On May 19, 1966, this Court rendered its Decision affirming the CFI
Decision. It held that Valdehueza and Panerio are still the registered owners of Lots 932 and
939, there having been no payment of just compensation by the Republic. Apparently, this Court
found nothing in the records to show that the Republic paid the owners or their successors-in-
interest according to the CFI decision. While it deposited the amount of P9,500,00, and said
deposit was allegedly disbursed, however, the payees could not be ascertained.
Notwithstanding the above finding, this Court still ruled that Valdehueza and Panerio are
not entitled to recover possession of the lots but may only demand the payment of their fair
market value, ratiocinating as follows:

Appellants would contend that: (1) possession of Lots 932 and 939 should be restored to them
as owners of the same; (2) the Republic should be ordered to pay rentals for the use of said
lots, plus attorneys fees; and (3) the court a quo in the present suit had no power to fix the value
of the lots and order the execution of the deed of sale after payment.

It is true that plaintiffs are still the registered owners of the land, there not having been a transfer
of said lots in favor of the Government. The records do not show that the Government paid the
owners or their successors-in-interest according to the 1940 CFI decision although, as
stated, P9,500.00 was deposited by it, and said deposit had been disbursed. With the records
lost, however, it cannot be known who received the money (Exh. 14 says: It is further certified
that the corresponding Vouchers and pertinent Journal and Cash Book were destroyed during
the last World War, and therefore the names of the payees concerned cannot be
ascertained.) And the Government now admits that there is no available record showing
that payment for the value of the lots in question has been made (Stipulation of Facts, par.
9, Rec. on Appeal, p. 28).

The points in dispute are whether such payment can still be made and, if so, in what
amount. Said lots have been the subject of expropriation proceedings. By final and
executory judgment in said proceedings, they were condemned for public use, as part of
an airport, and ordered sold to the Government. In fact, the abovementioned title
certificates secured by plaintiffs over said lots contained annotations of the right of the
National Airports Corporation (now CAA) to pay for and acquire them. It follows that both
by virtue of the judgment, long final, in the expropriation suit, as well as the annotations
upon their title certificates, plaintiffs are not entitled to recover possession of their
expropriated lots which are still devoted to the public use for which they were
expropriated but only to demand the fair market value of the same.

Meanwhile, in 1964, Valdehueza and Panerio mortgaged Lot 932 to Vicente Lim, herein
respondent,[4] as security for their loans. For their failure to pay Lim despite demand, he had the
mortgage foreclosed in 1976. Thus, TCT No. 23934 was cancelled, and in lieu thereof, TCT No.
63894 was issued in his name.
On August 20, 1992, respondent Lim filed a complaint for quieting of title with the
Regional Trial Court (RTC), Branch 10, Cebu City, against General Romeo Zulueta, as
Commander of the Armed Forces of the Philippines, Commodore Edgardo Galeos, as
Commander of Naval District V of the Philippine Navy, Antonio Cabaluna, Doroteo Mantos and
Florencio Belotindos, herein petitioners. Subsequently, he amended the complaint to implead
the Republic.
On May 4, 2001, the RTC rendered a decision in favor of respondent, thus:

WHEREFORE, judgment is hereby rendered in favor of plaintiff Vicente Lim and against all
defendants, public and private, declaring plaintiff Vicente Lim the absolute and exclusive
owner of Lot No. 932 with all the rights of an absolute owner including the right to
possession. The monetary claims in the complaint and in the counter claims contained in the
answer of defendants are ordered Dismissed.

Petitioners elevated the case to the Court of Appeals, docketed therein as CA-G.R. CV No.
72915. In its Decision[5] dated September 18, 2003, the Appellate Court sustained the RTC
Decision, thus:

Obviously, defendant-appellant Republic evaded its duty of paying what was due to the
landowners. The expropriation proceedings had already become final in the late 1940s
and yet, up to now, or more than fifty (50) years after, the Republic had not yet paid the
compensation fixed by the court while continuously reaping benefits from the
expropriated property to the prejudice of the landowner. x x x. This is contrary to the
rules of fair play because 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 for the land within a reasonable time from its taking. Without prompt payment,
compensation cannot be considered just for the property owner is made to suffer the
consequence of being immediately deprived of his land while being made to wait for a
decade or more, in this case more than 50 years, before actually receiving the amount
necessary to cope with the loss. To allow the taking of the landowners properties, and in
the meantime leave them empty-handed by withholding payment of compensation while
the government speculates on whether or not it will pursue expropriation, or worse, for
government to subsequently decide to abandon the property and return it to the
landowners, is undoubtedly an oppressive exercise of eminent domain that must never
be sanctioned. (Land Bank of the Philippines vs. Court of Appeals, 258 SCRA 404).

xxxxxx

An action to quiet title is a common law remedy for the removal of any cloud or doubt or
uncertainty on the title to real property. It is essential for the plaintiff or complainant to have a
legal or equitable title or interest in the real property, which is the subject matter of the action.
Also the deed, claim, encumbrance or proceeding that is being alleged as cloud on plaintiffs title
must be shown to be in fact invalid or inoperative despite its prima facie appearance of validity
or legal efficacy (Robles vs. Court of Appeals, 328 SCRA 97). In view of the foregoing
discussion, clearly, the claim of defendant-appellant Republic constitutes a cloud, doubt
or uncertainty on the title of plaintiff-appellee Vicente Lim that can be removed by an
action to quiet title.

WHEREFORE, in view of the foregoing, and finding no reversible error in the appealed May 4,
2001 Decision of Branch 9, Regional Trial Court of Cebu City, in Civil Case No. CEB-12701, the
said decision is UPHELD AND AFFIRMED. Accordingly, the appeal is DISMISSED for lack of
merit.

Undaunted, petitioners, through the Office of the Solicitor General, filed with this Court a
petition for review on certiorari alleging that the Republic has remained the owner of Lot 932 as
held by this Court in Valdehueza vs. Republic.[6]
In our Resolution dated March 1, 2004, we denied the petition outright on the ground that
the Court of Appeals did not commit a reversible error. Petitioners filed an urgent motion for
reconsideration but we denied the same with finality in our Resolution of May 17, 2004.
 On May 18, 2004, respondent filed an ex-parte motion for the issuance of an entry of
judgment. We only noted the motion in our Resolution of July 12, 2004.
On July 7, 2004, petitioners filed an urgent plea/motion for clarification, which is actually
a second motion for reconsideration. Thus, in our Resolution of September 6, 2004, we
simply noted without action the motion considering that the instant petition was already
denied with finality in our Resolution of May 17, 2004.
On October 29, 2004, petitioners filed a very urgent motion for leave to file a motion for
reconsideration of our Resolution dated September 6, 2004 (with prayer to refer the case to
the En Banc). They maintain that the Republics right of ownership has been settled
in Valdehueza.
The basic issue for our resolution is whether the Republic has retained ownership of Lot
932 despite its failure to pay respondents predecessors-in-interest the just compensation
therefor pursuant to the judgment of the CFI rendered as early as May 14, 1940.
Initially, we must rule on the procedural obstacle.
While we commend the Republic for the zeal with which it pursues the present case, we
reiterate that its urgent motion for clarification filed on July 7, 2004 is actually a second motion
for reconsideration. This motion is prohibited under Section 2, Rule 52, of the 1997 Rules of
Civil Procedure, as amended, which provides:

Sec. 2. Second motion for reconsideration. No second motion for reconsideration of a judgment
or final resolution by the same party shall be entertained.

Consequently, as mentioned earlier, we simply noted without action the motion since
petitioners petition was already denied with finality.
Considering the Republics urgent and serious insistence that it is still the owner of Lot 932
and in the interest of justice, we take another hard look at the controversial issue in order to
determine the veracity of petitioners stance.
One of the basic principles enshrined in our Constitution is that no person shall be deprived
of his private property without due process of law; and in expropriation cases, an essential
element of due process is that there must be just compensation whenever private property is
taken for public use.[7] Accordingly, Section 9, Article III, of our Constitution mandates: Private
property shall not be taken for public use without just compensation.
The Republic disregarded the foregoing provision when it failed and refused to pay
respondents predecessors-in-interest the just compensation for Lots 932 and 939. The length of
time and the manner with which it evaded payment demonstrate its arbitrary high-handedness
and confiscatory attitude. The final judgment in the expropriation proceedings (Civil Case No.
781) was entered on April 5, 1948. More than half of a century has passed, yet, to this day, the
landowner, now respondent, has remained empty-handed. Undoubtedly, over 50 years of
delayed payment cannot, in any way, be viewed as fair. This is more so when such delay is
accompanied by bureaucratic hassles. Apparent from Valdehueza is the fact that respondents
predecessors-in-interest were given a run around by the Republics officials and agents. In 1950,
despite the benefits it derived from the use of the two lots, the National Airports
Corporation denied knowledge of the claim of respondents predecessors-in-interest. Even
President Garcia, who sent a letter to the Civil Aeronautics Administration and the Secretary of
National Defense to expedite the payment, failed in granting relief to them. And, on September
6, 1961, while the Chief of Staff of the Armed Forces expressed willingness to pay the
appraised value of the lots, nothing happened.
The Court of Appeals is correct in saying that Republics delay is contrary to the rules of fair
play, as just compensation embraces not only the correct determination of the amount to
be paid to the owners of the land, but also the payment for the land within a reasonable
time from its taking. Without prompt payment, compensation cannot be considered
just. In jurisdictions similar to ours, where an entry to the expropriated property precedes the
payment of compensation, it has been held that if the compensation is not paid in a reasonable
time, the party may be treated as a trespasser ab initio.[8]
Corollarily, in Provincial Government of Sorsogon vs. Vda. De Villaroya,[9] similar to the
present case, this Court expressed its disgust over the governments vexatious delay in the
payment of just compensation, thus:

The petitioners have been waiting for more than thirty years to be paid for their land
which was taken for use as a public high school. As a matter of fair procedure, it is the duty
of the Government, whenever it takes property from private persons against their will, to supply
all required documentation and facilitate payment of just compensation. The imposition of
unreasonable requirements and vexatious delays before effecting payment is not only
galling and arbitrary but a rich source of discontent with government. There should be
some kind of swift and effective recourse against unfeeling and uncaring acts of middle
or lower level bureaucrats.

We feel the same way in the instant case.

More than anything else, however, it is the obstinacy of the Republic that prompted us to
dismiss its petition outright. As early as May 19, 1966, in Valdehueza, this Court mandated the
Republic to pay respondents predecessors-in-interest the sum of P16,248.40 as reasonable
market value of the two lots in question. Unfortunately, it did not comply and allowed several
decades to pass without obeying this Courts mandate. Such prolonged obstinacy bespeaks of
lack of respect to private rights and to the rule of law, which we cannot countenance. It is
tantamount to confiscation of private property. While it is true that all private properties are
subject to the need of government, and the government may take them whenever the necessity
or the exigency of the occasion demands, however, the Constitution guarantees that when this
governmental right of expropriation is exercised, it shall be attended by compensation. [10] From
the taking of private property by the government under the power of eminent domain, there
arises an implied promise to compensate the owner for his loss.[11]
Significantly, the above-mentioned provision of Section 9, Article III of the Constitution is not
a grant but a limitation of power. This limiting function is in keeping with the philosophy of the
Bill of Rights against the arbitrary exercise of governmental powers to the detriment of the
individuals rights. Given this function, the provision should therefore be strictly interpreted
against the expropriator, the government, and liberally in favor of the property owner.[12]
Ironically, in opposing respondents claim, the Republic is invoking this Courts Decision
in Valdehueza, a Decision it utterly defied. How could the Republic acquire ownership over Lot
932 when it has not paid its owner the just compensation, required by law, for more than 50
years? 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,[13] thus:
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.)

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.

Our own Supreme Court has held in Visayan Refining Co. v. Camus and Paredes, that:

If the laws which we have exhibited or cited in the preceding discussion are attentively
examined it will be apparent that the method of expropriation adopted in this jurisdiction
is such as to afford absolute reassurance that no piece of land can be finally and
irrevocably taken from an unwilling owner until compensation is paid...(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.[14]
Significantly, in Municipality of Bian v. Garcia[15] this Court ruled that the expropriation of
lands consists of two stages, to wit:

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.
 It is only upon the completion of these two stages that expropriation is said to have been
completed. In Republic v. Salem Investment Corporation,[16] 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-in-interest for a period of 57 years rendered the expropriation
process incomplete.
The Republic now argues that under Valdehueza, respondent is not entitled to recover
possession of Lot 932 but only to demand payment of its fair market value. Of course, we are
aware of the doctrine that non-payment of just compensation (in an expropriation proceedings)
does not entitle the private landowners to recover possession of the expropriated lots. This is
our ruling in the recent cases of Republic of the Philippines vs. Court of Appeals, et
al.,[17] and Reyes vs. National Housing Authority.[18] However, the facts of the present case do
not justify its application. It bears stressing that the Republic was ordered to pay just
compensation twice, the first was in the expropriation proceedings and the second,
in Valdehueza. Fifty-seven (57) years have passed since then. We cannot but construe the
Republics failure to pay just compensation as a deliberate refusal on its part. Under such
circumstance, recovery of possession is in order. In several jurisdictions, the courts held that
recovery of possession may be had when property has been wrongfully taken or is wrongfully
retained by one claiming to act under the power of eminent domain[19] or where a rightful entry
is made and the party condemning refuses to pay the compensation which has been
assessed or agreed upon;[20] or fails or refuses to have the compensation assessed and
paid.[21]
The Republic also contends that where there have been constructions being used by the
military, as in this case, public interest demands that the present suit should not be sustained.
It must be emphasized that an individual cannot be deprived of his property for the public
convenience.[22] In Association of Small Landowners in the Philippines, Inc. vs. Secretary of
Agrarian Reform,[23] we ruled:

One of the basic principles of the democratic system is that where the rights of the individual are
concerned, the end does not justify the means. It is not enough that there be a valid objective; it
is also necessary that the means employed to pursue it be in keeping with the Constitution.
Mere expediency will not excuse constitutional shortcuts. There is no question that not even
the strongest moral conviction or the most urgent public need, subject only to a few
notable exceptions, will excuse the bypassing of an individual's rights. It is no
exaggeration to say that a person invoking a right guaranteed under Article III of the
Constitution is a majority of one even as against the rest of the nation who would deny
him that right.

The right covers the persons life, his liberty and his property under Section 1 of Article III
of the Constitution. With regard to his property, the owner enjoys the added protection of
Section 9, which reaffirms the familiar rule that private property shall not be taken for
public use without just compensation.

The Republics assertion that the defense of the State will be in grave danger if we shall
order the reversion of Lot 932 to respondent is an overstatement. First, Lot 932 had ceased to
operate as an airport. What remains in the site is just the National Historical Institutes marking
stating that Lot 932 is the former location of Lahug Airport. And second, there are only thirteen
(13) structures located on Lot 932, eight (8) of which are residence apartments of military
personnel. Only two (2) buildings are actually used as training centers. Thus, practically
speaking, the reversion of Lot 932 to respondent will only affect a handful of military personnel.
It will not result to irreparable damage or damage beyond pecuniary estimation, as what the
Republic vehemently claims.
We thus rule that the special circumstances prevailing in this case entitle respondent to
recover possession of the expropriated lot from the Republic. Unless this form of swift and
effective relief is granted to him, the grave injustice committed against his predecessors-in-
interest, though no fault or negligence on their part, will be perpetuated. Let this case, therefore,
serve as a wake-up call to the Republic that in the exercise of its power of eminent domain,
necessarily in derogation of private rights, it must comply with the Constitutional limitations. This
Court, as the guardian of the peoples right, will not stand still in the face of the Republics
oppressive and confiscatory taking of private property, as in this case.
At this point, it may be argued that respondent Vicente Lim acted in bad faith in entering
into a contract of mortgage with Valdehueza and Panerio despite the clear annotation in TCT
No. 23934 that Lot 932 is subject to the priority of the National Airports Corporation [to
acquire said parcels of land] x x x upon previous payment of a reasonable market value.
The issue of whether or not respondent acted in bad faith is immaterial considering that the
Republic did not complete the expropriation process. In short, it failed to perfect its title over Lot
932 by its failure to pay just compensation. The issue of bad faith would have assumed
relevance if the Republic actually acquired title over Lot 932. In such a case, even if
respondents title was registered first, it would be the Republics title or right of ownership that
shall be upheld. But now, assuming that respondent was in bad faith, can such fact vest
upon the Republic a better title over Lot 932? We believe not. This is because in the first
place, the Republic has no title to speak of.
At any rate, assuming that respondent had indeed knowledge of the annotation, still nothing
would have prevented him from entering into a mortgage contract involving Lot 932 while the
expropriation proceeding was pending. Any person who deals with a property subject of an
expropriation does so at his own risk, taking into account the ultimate possibility of losing the
property in favor of the government. Here, the annotation merely served as a caveat that the
Republic had a preferential right to acquire Lot 932 upon its payment of a reasonable
market value. It did not proscribe Valdehueza and Panerio from exercising their rights of
ownership including their right to mortgage or even to dispose of their property. In Republic vs.
Salem Investment Corporation,[24] we recognized the owners absolute right over his property
pending completion of the expropriation proceeding, thus:

It is only upon the completion of these two stages that expropriation is said to have been
completed. Moreover, it is only upon payment of just compensation that title over the property
passes to the government. Therefore, until the action for expropriation has been completed and
terminated, ownership over the property being expropriated remains with the registered
owner. Consequently, the latter can exercise all rights pertaining to an owner, including
the right to dispose of his property subject to the power of the State ultimately to acquire
it through expropriation.

It bears emphasis that when Valdehueza and Panerio mortgaged Lot 932 to respondent in
1964, they were still the owners thereof and their title had not yet passed to the petitioner
Republic. In fact, it never did. Such title or ownership was rendered conclusive when we
categorically ruled in Valdehueza that: It is true that plaintiffs are still the registered owners
of the land, there not having been a transfer of said lots in favor of the Government.
For respondents part, it is reasonable to conclude that he entered into the contract of
mortgage with Valdehueza and Panerio fully aware of the extent of his right as a mortgagee. A
mortgage is merely an accessory contract intended to secure the performance of the principal
obligation. One of its characteristics is that it is inseparable from the property. It adheres to the
property regardless of who its owner may subsequently be.[25] Respondent must have known
that even if Lot 932 is ultimately expropriated by the Republic, still, his right as a mortgagee is
protected. In this regard, Article 2127 of the Civil Code provides:

Art. 2127. The mortgage extends to the natural accessions, to the improvements, growing
fruits, and the rents or income not yet received when the obligation becomes due, and to the
amount of the indemnity granted or owing to the proprietor from the insurers of the property
mortgaged, or in virtue of expropriation for public use, with the declarations, amplifications,
and limitations established by law, whether the estate remains in the possession of the
mortgagor or it passes in the hands of a third person.

In summation, while the prevailing doctrine is that the non-payment of just compensation
does not entitle the private landowner to recover possession of the expropriated
lots,[26] however, in cases where the government failed to pay just compensation within five
(5)[27] years from the finality of the judgment in the expropriation proceedings, the owners
concerned shall have the right to recover possession of their property. This is in consonance
with the principle that the government cannot keep the property and dishonor the
judgment.[28] To be sure, the five-year period limitation will encourage the government to pay
just compensation punctually. This is in keeping with justice and equity. After all, it is the duty of
the government, whenever it takes property from private persons against their will, to facilitate
the payment of just compensation. In Cosculluela v. Court of Appeals,[29] we defined just
compensation as not only the correct determination of the amount to be paid to the property
owner but also the payment of the property within a reasonable time. Without prompt payment,
compensation cannot be considered just.
WHEREFORE, the assailed Decision of the Court of Appeals in CA-G.R. CV No. 72915 is
AFFIRMED in toto.
The Republics motion for reconsideration of our Resolution dated March 1, 2004 is
DENIED with FINALITY. No further pleadings will be allowed.
Let an entry of judgment be made in this case.

G.R. No. 72126 January 29, 1988

MUNICIPALITY OF MEYCAUAYAN, BULACAN, HON. ADRIANO D. DAEZ, MUNICIPAL

MAYOR, MEYCAUAYAN, BULACAN, petitioners,
vs.
INTERMEDIATE APPELLATE COURT and PHILIPPINE PIPES & MERCHANDIZING
CORPORATION, respondents.

GUTIERREZ, JR., J.:

This is a petition for review on certiorari of the resolution dated April 24,1985 by the former
Intermediate Appellate Court, now Court of Appeals, setting aside its earlier decision dated
January 10, 1985 and dismissing the special civil action for expropriation filed by the petitioner.
In 1975, respondent Philippine Pipes and Merchandising Corporation filed with the Office of the
Municipal Mayor of Meycauayan, Bulacan, an application for a permit to fence a parcel of land
with a width of 26.8 meters and a length of 184.37 meters covered by Transfer Certificates of
Title Nos. 215165 and 37879. The fencing of said property was allegedly to enable the storage
of the respondent's heavy equipment and various finished products such as large diameter steel
pipes, pontoon pipes for ports, wharves, and harbors, bridge components, pre-stressed girders
and piles, large diameter concrete pipes, and parts for low cost housing.

In the same year, the Municipal Council of Meycauayan, headed by then Mayor Celso R.
Legaspi, passed Resolution No. 258, Series of 1975, manifesting the intention to expropriate the
respondent's parcel of land covered by Transfer Certificate of Title No. 37879.

An opposition to the resolution was filed by the respondent with the Office of the Provincial
Governor, which, in turn, created a special committee of four members to investigate the matter.

On March 10, 1976, the Special Committee recommended that the Provincial Board of Bulacan
disapprove or annul the resolution in question because there was no genuine necessity for the
Municipality of Meycauayan to expropriate the respondent's property for use as a public road.

On the basis of this report, the Provincial Board of Bulacan passed Resolution No. 238, Series
of 1976, disapproving and annulling Resolution No. 258, Series of 1975, of the Municipal
Council of Meycauayan. The respondent, then, reiterated to the Office of the Mayor its petition
for the approval of the permit to fence the aforesaid parcels of land.

On October 21, 1983, however, the Municipal Council of Meycauayan, now headed by Mayor
Adriano D. Daez, passed Resolution No. 21, Series of 1983, for the purpose of expropriating
anew the respondent's land. The Provincial Board of Bulacan approved the aforesaid resolution
on January 25, 1984.

Thereafter, the petitioner, on February 14, 1984, filed with the Regional Trial Court of Malolos,
Bulacan, Branch VI, a special civil action for expropriation.

Upon deposit of the amount of P24,025.00, which is the market value of the land, with the
Philippine National Bank, the trial court on March 1, 1984 issued a writ of possession in favor of
the petitioner.

On August 27, 1984, the trial court issued an order declaring the taking of the property as lawful
and appointing the Provincial Assessor of Bulacan as court commissioner who shall hold the
hearing to ascertain the just compensation for the property.

The respondent went to the Intermediate Appellate Court on petition for review. On January 10,
1985, the appellate court affirmed the trial court's decision. However, upon motion for
reconsideration by the respondent, the decision was re-examined and reversed. The appellate
court held that there is no genuine necessity to expropriate the land for use as a public road as
there were several other roads for the same purpose and another more appropriate lot for the
proposed public road. The court, taking into consideration the location and size of the land, also
opined that the land is more Ideal for use as storage area for respondent's heavy equipment
and finished products.
After its motion for reconsideration was denied, the petitioner went to this Court on petition for
review on certiorari on October 25, 1985, with the following arguments:

Petitioners most respectfully submit that respondent Court has decided a

question of substance not in accord with law or with applicable decisions of this
Honorable Supreme Court; that the judgment is based on a misapprehension of
facts and the conclusion is a finding grounded entirely on speculation, surmises,
and conjectures, because:

a. It concluded, that by dismissing the complaint for expropriation the existence

of legal and factual circumstance of grave abuse of discretion amounting to lack
of jurisdiction committed by the respondent Judge without any shred of evidence
at all contrary to the law on evidence;

b. It concluded, in its decision that respondent Philippine Pipes and

Merchandising Corporation has no need of the property sought to be condemned
on the use to which it is devoted as a private road but allegedly for storage
contrary to the allegations of respondent Philippine Pipes and Merchandising
Corporation itself;

c. It anchored its decision on factual situations obtaining a long, long time ago
without regard to the relatively present situation now obtaining. (Rollo, pp. 8-9)

In refuting the petitioner's arguments, the private respondent contends that this Court may only
resolve questions of law and not questions of fact such as those which the petitioner puts in
issue in this case. The respondent further argues that this Court may not also interfere with an
action of the Court of Appeals which involves the exercise of discretion.

We agree with the respondent.

The jurisdiction of this Court in cases brought to us from the Court of Appeals is limited to the
review of errors of law (Rizal Cement Co., Inc. v. Villareal, 135 SCRA 15, 24), factual issues not
being proper in certiorari proceedings (See Ygay et al. v. Hon. Escareal et al., 135 SCRA 78,
82).

This Court reviews and rectifies the findings of fact of the Court of Appeals only under certain
established exceptions such as: (1) when the conclusion is a finding grounded entirely on
speculations, surmises and conjectures; (2) when the inference made is manifestly mistaken,
absurd and impossible; (3) when there is grave abuse of discretion; (4) when the judgment is
based on a misapprehension of facts; and (5) when the court, in making its finding, went beyond
the issues of the case and the same is contrary to the admissions of both the appellant and the
appellee (Moran, Jr. v. Court of Appeals, 133 SCRA 88).

None of the exceptions warranting non-application of the rule is present in this case. On the
contrary, we find that the appellate court's decision is supported by substantial evidence.

The petitioner's purpose in expropriating the respondent's property is to convert the same into a
public road which would provide a connecting link between Malhacan Road and Bulac Road in
Valenzuela, Bulacan and thereby ease the traffic in the area of vehicles coming from MacArthur
Highway.
The records, however, reveals that there are other connecting links between the
aforementioned roads. The petitioner itself admits that there are four such cross roads in
existence. The respondent court stated that with the proposed road, there would be seven.

Appreciating the evidence presented before it, with particular emphasis on the Special
Committee's report dated March 10, 1976, the Court of Appeals declared:

xxx xxx xxx

FACTS ESTABLISHED ON OCULAR INSPECTION

In the ocular inspection, the following facts came into the limelight:

(1) The property in question of the Philippine Pipes and Merchandazing

Corporation intended to be expropriated by the Municipality of Meycauayan is
embraced under Transfer Certificate of Title No. 37879 and is a private road of
the company used in the conduct and operation of its business, with
the inhabitation in nearby premises tolerated to pass the same. It extends from
Bulac Road to the south, to Malhacan Road on the north, with a width of about 6
to 7 meters, more or less.

(2) Adjoining this private road on the eastern side, is a vacant property also
belonging to the Philippine Pipes and Merchandising Corporation and extending
also from Bulac Road to Malhacan Road, with a high wall along the property line
on the east side thereof serving as a fence.

(3) Opposite the private road, after crossing Bulac Road, is the gate of the factory
of the Philippine Pipes and Merchandising Corporation.

(4) From the private road of the firm on the eastern direction about 30 to 40
meters distance are subdivision roads of an existing subdivision with a width of 6
to 7 meters, more or less, running parallel to the said private road of the firm and
likewise extending from Bulac Road to Malhacan Road. Whether said subdivision
roads had already been donated to the municipality is not known.

(5) On the western side of the private road is a vacant lot with an area of l6,071
square meters offered for sale by its owner extending also from Bulac Road to
Malhacan Road.

(6) Bulac road, a municipal road with a width of about 6 to 7 meters and all the
nearby subdivision roads are obviously very poorly developed and maintained,
and are in dire need of repair. Like the Malhacan Road, Bulac road extends from
the McArthur Highway with exit to North Diversion Road.

xxx xxx xxx

The Sketch Plan (Rollo, p. 26 or p. 97) clearly and conclusively shows that
petitioner does not need this strip of land as a private road. The Sketch Plan
clearly shows that petitioner's factory site is adjacent to Bulac Road which has a
width of about seven meters, more or less. Petitioner can use Bulac Road in
reaching McArthur Highway on the west or in reaching the Manila North
Expressway on the east for the purpose of transporting its products. Petitioner
does not need to go to Malhacan Road via this so-called private road before
going to McArthur Highway or to the Manila North Expressway. Why should
petitioner go first to Malhacan Road via this so called "private road" before going
to McArthur Highway or to the Manila North Expressway when taking the Bulac
Road in going to McArthur Highway or to the Manila North Expressway is more
direct, nearer and more advantageous. Hence, it is beyond doubt that petitioner
acquired this strip of land for the storage of its heavy equipments and various
finished products and for growth and expansion and never to use it as a private
road. This is the very reason why petitioner filed an application with the Office of
the Municipal Mayor of Meycauayan, Bulacan to fence with hollow blocks this
strip of land.

Third, We will determine whether there is a genuine necessity to expropriate this

strip of land for use as a public road.

We hereby quote a relevant part of the Special Committee's Report dated March
10, 1976, which is as follows:

OBSERVATION OF COMMITTEE

From the foregoing facts, it appears obvious to this Special Committee that there
is no genuine necessity for the Municipality of' Meycauayan to expropriate the
aforesaid property of the Philippine Pipes and Merchandising Corporation for use
as a public road. Considering that in the vicinity there are other available road
and vacant lot offered for sale situated similarly as the lot in question and lying
Idle, unlike the lot sought to be expropriated which was found by the Committee
to be badly needed by the company as a site for its heavy equipment after it is
fenced together with the adjoining vacant lot, the justification to condemn the
same does not appear to be very imperative and necessary and would only
cause unjustified damage to the firm. The desire of the Municipality of
Meycauayan to build a public road to decongest the volume of traffic can be fully
and better attained by acquiring the other available roads in the vicinity maybe at
lesser costs without causing harm to an establishment doing legitimate business
therein. Or, the municipality may seek to expropriate a portion of the vacant lot
also in the vicinity offered for sale for a wider public road to attain decongest (sic)
of traffic because as observed by the Committee, the lot of the Corporation
sought to be taken will only accommodate a one-way traffic lane and therefore,
will not suffice to improve and decongest the flow of traffic and pedestrians in the
Malhacan area. ...

xxx xxx xxx

It must be noted that this strip of land covered by Transfer Certificates of Titles
Nos. 215165 and 37879 were acquired by petitioner from Dr. Villacorta. The lot
for sale and lying Idle with an area of 16,071 square meter which is adjacent and
on the western side of the aforesaid strip of land and extends likewise from Bulac
Road to Malhacan Road belongs also to Dr. Villacorta. This lot for sale and lying
 Idle is most Ideal for use as a public road because it is more than three (3) times
wider that the said strip of land.

xxx xxx xxx

xxx xxx xxx

Since there is another lot ready for sale and lying Idle, adjacent and on the
western side of the strip of land, and extending also from Malhacan Road to
Bulac Road and most Ideal for a public road because it is very much wider than
the lot sought to be expropriated, it seems that it is more just, fair, and
reasonable if this lot is the one to be expropriated. (Rollo, pp. 22-26)

The petitioner objects to the appellate court's findings contending that they were based on facts
obtaining long before the present action to expropriate took place. We note, however, that there
is no evidence on record which shows a change in the factual circumstances of the case. There
is no showing that some of the six other available cross roads have been closed or that the
private roads in the subdivision may not be used for municipal purposes. What is more likely is
that these roads have already been turned over to the government. The petitioner alleges that
surely the environmental progress during the span of seven years between the first and second
attempts to expropriate has brought about a change in the facts of the case. This allegation
does not merit consideration absent a showing of concrete evidence attesting to it.

There is no question here as to the right of the State to take private property for public use upon
payment of just compensation. What is questioned is the existence of a genuine necessity
therefor.

As early as City of Manila v. Chinese Community of Manila (40 Phil. 349) this Court held that the
foundation of the right to exercise the power of eminent domain is genuine necessity and that
necessity must be of a public character. Condemnation of private property is justified only if it is
for the public good and there is a genuine necessity of a public character. Consequently, the
courts have the power to inquire into the legality of the exercise of the right of eminent domain
and to determine whether there is a genuine necessity therefor (Republic v. La Orden de PP.
Benedictos de Filipinas, 1 SCRA 646; J.M. Tuason & Co., Inc. v. Land Tenure Administration,
31 SCRA 413).

In the recent case of De Knecht v. Bautista, (100 SCRA 660) this court further ruled that the
government may not capriciously choose what private property should be taken. Citing the case
of J.M. Tuason & Co., Inc. v. Land Tenure Administration (supra), the Court held:

... 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. (At p. 436)

There is absolutely no showing in the petition why the more appropriate lot for the proposed
road which was offered for sale has not been the subject of the petitioner's attempt to
expropriate assuming there is a real need for another connecting road.
WHEREFORE, the petition is hereby DISMISSED for lack of merit. The questioned resolution of
the respondent court is AFFIRMED.

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

She prays for such other remedy as the Court may deem just and equitable in
the premises.

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 expropriated-petitioner 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

The Human Settlements Commission considered conditionality social impact and cost. The
pertinent portion of its report reads:

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

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

engineering factors and management consideration

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 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.

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:

(1) Number of property owners:

Alignment 1 73

Alignment 2 49

(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

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:

(1) Nature and number of properties involved:

Line I Line 2

Lots L Impr L Impro

o ove o veme
t ment t nts
s s

Res 4 46 3 34
iden 1 8
tial

Co 2 24 1 13
mm 5 1
 erci
al

Indu 5 3 1 1
stria
l

Chu 1 1 1 1
rch

Edu _ _ _ _
cati
onal

TO 7 75 5 49
TAL 2 1

(2) Relative value of properties affected:

Lots Improve Total

ments

Align P9,300,1 P5,92 P15,22

ment 36 8,680 8,816
1

Align 8,314,89 6,644, 14,959,

ment 0 130 020
2

Differ P269,7
ence 96

It is obvious from the immediately table that the right- of-way 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

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

Weighing in the balance the issues and factors of necessity, functionality, impact,
cost and property valuation as basis for scheme of compensation to be adopted
in the instant case, the Hearing Board takes cognizance of the following points:

1. The EDSA extension to Roxas Boulevard is necessary and desirable from the
strictly technical viewpoint and the overall perspective of the Metro Manila
transport system.
 2. The right-of-way acquisition 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 negotiated sale approach to compensation as proposed should apply to a

whichever alignment is selected.

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.

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 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 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.

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:

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, Parañaque
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.

S E C O N D D I V I S I O N

LOURDES DE LA PAZ MASIKIP, G.R. No. 136349

Petitioner,

Present:

- versus -
PUNO, J., Chairman,
SANDOVAL-GUTIERREZ,
CORONA,
THE CITY OF PASIG, HON. AZCUNA, and
MARIETTA A. LEGASPI, in her GARCIA, JJ.
capacity as Presiding Judge of the
Regional Trial Court of Pasig City,
Branch 165 and THE COURT OF Promulgated:
APPEALS,
Respondents.
January 23, 2006
x-----------------------------------------------------------------------------------------x

DECISION

SANDOVAL GUTIERREZ, J.:

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.

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 dated November 20, 1998 denying petitioners Motion for Reconsideration.

The facts of the case are:

Petitioner Lourdes Dela Paz Masikip is the registered owner of a parcel of land with an area of
4,521 square meters located at Pag-Asa, Caniogan, Pasig City, Metro Manila.

In a letter dated January 6, 1994, the then Municipality of Pasig, now City of Pasig, respondent,
notified petitioner of its intention to expropriate a 1,500 square meter portion of her property to
be used for the sports development and recreational activities of the residents of Barangay
Caniogan. This was pursuant to Ordinance No. 42, Series of 1993 enacted by the
then Sangguniang Bayan of Pasig.

Again, on March 23, 1994, respondent wrote another letter to petitioner, but 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.

On May 2, 1994, petitioner sent a reply to respondent stating that the intended expropriation of
her property is unconstitutional, invalid, and oppressive, as the area of her lot is neither
sufficient nor suitable to provide land opportunities to deserving poor sectors of our community.

In its letter of December 20, 1994, respondent reiterated that the purpose of the expropriation of
petitioners property is to provide sports and recreational facilities to its poor residents.

Subsequently, on February 21, 1995, respondent filed with the trial court a complaint for
expropriation, docketed as SCA No. 873. Respondent prayed that the trial court, after due
notice and hearing, issue an order for the condemnation of the property; that commissioners be
appointed for the purpose of determining the just compensation; and that judgment be rendered
based on the report of the commissioners.

On April 25, 1995, petitioner filed a Motion to Dismiss the complaint on the following grounds:

I
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)

II

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 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 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.
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.

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

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:

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.

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 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 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 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 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 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 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 government.[8]

The power of eminent domain is lodged in the legislative branch of the government. It delegates
the exercise thereof to local government units, other public entities and public utility
corporations,[9] subject only to Constitutional limitations. Local governments have no inherent
power of eminent domain and may exercise it only when expressly authorized by
statute.[10] Section 19 of the Local Government Code of 1991 (Republic Act No. 7160)
prescribes the delegation by Congress of the power of eminent domain to local government
units and lays down the parameters for its exercise, thus:

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

In this case, petitioner contends that respondent City of Pasig failed to establish a genuine
necessity which justifies the condemnation of her property. While she does not dispute the
intended public purpose, nonetheless, she insists that there must be a genuine necessity for the
proposed use and purposes. According to petitioner, there is already an established sports
development and recreational activity center at Rainforest Park in Pasig City, fully operational
and being utilized by its residents, including those from Barangay Caniogan. Respondent does
not dispute this. Evidently, there is no genuine necessity to justify the expropriation.

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 of the right to exercise eminent domain is a
genuine necessity and that necessity must be of a public character. Moreover, the
ascertainment of the necessity must precede or accompany and not follow, the taking of the
land. In City of Manila v. Arellano Law College,[13] we ruled that necessity within the rule that the
particular property to be expropriated must be necessary, does not mean an absolute but only a
reasonable or practical necessity, such as would combine the greatest benefit to the public with
the least inconvenience and expense to the condemning party and the property owner
consistent with such benefit.

Applying this standard, we hold that respondent City of Pasig has failed to establish that
there is a genuine necessity to expropriate petitioners property. Our scrutiny of the records
shows that the Certification[14] issued by the Caniogan Barangay Council dated November 20,
1994, the basis for the 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 categorically public. The necessity has not been shown, especially
considering 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 own and possess property is one of the most cherished rights of men. It is
so fundamental that it has been written into organic law of every nation where the rule of law
prevails. Unless the requisite of genuine necessity for the expropriation of ones property is
clearly established, it shall be the duty of the courts to protect the rights of individuals to their
private property. Important as the power of eminent domain may be, the inviolable sanctity
which the Constitution attaches to the property of the individual requires not only that the
purpose for the taking of private property be specified. The genuine necessity for the taking,
which must be of a public character, must also be shown to exist.

WHEREFORE, the petition for review is GRANTED. The challenged Decision and
Resolution of the Court of Appeals in CA-G.R. SP No. 41860 are REVERSED. The complaint
for expropriation filed before the trial court by respondent City of Pasig, docketed as SCA No.
873, is ordered DISMISSED.

SECOND DIVISION

[G.R. No. 146062. June 28, 2001]

SANTIAGO ESLABAN, JR., in his capacity as Project Manager of the National Irrigation
Administration, petitioner, vs. CLARITA VDA. DE ONORIO, respondent.

DECISION
MENDOZA, J.:

This is a petition for review of the decision[1] of the Court of Appeals which affirmed the
decision of the Regional Trial Court, Branch 26, Surallah, South Cotabato, ordering the National
Irrigation Administration (NIA for brevity) to pay respondent the amount of P107,517.60 as just
compensation for the taking of the latters property.
The facts are as follows:
Respondent Clarita Vda. de Enorio is the owner of a lot in Barangay M. Roxas, Sto. Nio,
South Cotabato with an area of 39,512 square meters. The lot, known as Lot 1210-A-Pad-11-
000586, is covered by TCT No. T-22121 of the Registry of Deeds, South Cotabato. On October
6, 1981, Santiago Eslaban, Jr., Project Manager of the NIA, approved the construction of the
main irrigation canal of the NIA on the said lot, affecting a 24,660 square meter portion
thereof. Respondents husband agreed to the construction of the NIA canal provided that they be
paid by the government for the area taken after the processing of documents by the
Commission on Audit.
Sometime in 1983, a Right-of-Way agreement was executed between respondent and the
NIA (Exh. 1). The NIA then paid respondent the amount of P4,180.00 as Right-of-Way
damages.Respondent subsequently executed an Affidavit of Waiver of Rights and Fees
whereby she waived any compensation for damages to crops and improvements which she
suffered as a result of the construction of a right-of-way on her property (Exh. 2). The same
year, petitioner offered respondent the sum of P35,000.00 by way of amicable settlement
pursuant to Executive Order No. 1035, 18, which provides in part that

Financial assistance may also be given to owners of lands acquired under C.A. 141, as
amended, for the area or portion subject to the reservation under Section 12 thereof in such
amounts as may be determined by the implementing agency/instrumentality concerned in
consultation with the Commission on Audit and the assessors office concerned.

Respondent demanded payment for the taking of her property, but petitioner refused to pay.
Accordingly, respondent filed on December 10, 1990 a complaint against petitioner before the
Regional Trial Court, praying that petitioner be ordered to pay the sum of P111,299.55 as
compensation for the portion of her property used in the construction of the canal constructed by
the NIA, litigation expenses, and the costs.
Petitioner, through the Office of the Solicitor-General, filed an Answer, in which he admitted
that NIA constructed an irrigation canal over the property of the plaintiff and that NIA paid a
certain landowner whose property had been taken for irrigation purposes, but petitioner
interposed the defense that: (1) the government had not consented to be sued; (2) the total area
used by the NIA for its irrigation canal was only 2.27 hectares, not 24,600 square meters; and
(3) respondent was not entitled to compensation for the taking of her property considering that
she secured title over the property by virtue of a homestead patent under C.A. No. 141.
At the pre-trial conference, the following facts were stipulated upon: (1) that the area taken
was 24,660 square meters; (2) that it was a portion of the land covered by TCT No. T-22121 in
the name of respondent and her late husband (Exh. A); and (3) that this area had been taken by
the NIA for the construction of an irrigation canal.[2]
On October 18, 1993, the trial court rendered a decision, the dispositive portion of which
reads:

In view of the foregoing, decision is hereby rendered in favor of plaintiff and against the
defendant ordering the defendant, National Irrigation Administration, to pay to plaintiff the sum
of One Hundred Seven Thousand Five Hundred Seventeen Pesos and Sixty Centavos
(P107,517.60) as just compensation for the questioned area of 24,660 square meters of land
owned by plaintiff and taken by said defendant NIA which used it for its main canal plus costs.[3]

On November 15, 1993, petitioner appealed to the Court of Appeals which, on October 31,
2000, affirmed the decision of the Regional Trial Court. Hence this petition.
The issues in this case are:
1. WHETHER OR NOT THE PETITION IS DISMISSIBLE FOR FAILURE TO COMPLY
WITH THE PROVISIONS OF SECTION 5, RULE 7 OF THE REVISED RULES OF
CIVIL PROCEDURE.
2. WHETHER OR NOT LAND GRANTED BY VIRTUE OF A HOMESTEAD PATENT
AND SUBSEQUENTLY REGISTERED UNDER PRESIDENTIAL DECREE 1529
CEASES TO BE PART OF THE PUBLIC DOMAIN.
3. WHETHER OR NOT THE VALUE OF JUST COMPENSATION SHALL BE
DETERMINED FROM THE TIME OF THE TAKING OR FROM THE TIME OF THE
FINALITY OF THE DECISION.
4. WHETHER THE AFFIDAVIT OF WAIVER OF RIGHTS AND FEES EXECUTED BY
RESPONDENT EXEMPTS PETITIONER FROM MAKING PAYMENT TO THE
FORMER.
We shall deal with these issues in the order they are stated.
First. Rule 7, 5 of the 1997 Revised Rules on Civil Procedure provides
Certification against forum shopping. The plaintiff or principal party shall certify under oath in the
complaint or other initiatory pleading asserting a claim for relief, or in a sworn certification
annexed thereto and simultaneously filed therewith: (a) that he has not theretofore commenced
any action or filed any claim involving the same issues in any court, tribunal or quasi-judicial
agency and, to the best of his knowledge, no such other action or claim is pending therein; (b) if
there is such other pending action or claim, a complete statement of the present status thereof;
and (c) if he should thereafter learn that the same or similar action or claim has been filed or is
pending, he shall report the fact within five (5) days therefrom to the court wherein his aforesaid
complaint or initiatory pleading has been filed.

Failure to comply with the foregoing requirements shall not be curable by mere amendment of
the complaint or other initiatory pleading but shall be cause for the dismissal of the case without
prejudice, unless otherwise provided, upon motion and after hearing . . . .

By reason of Rule 45, 4 of the 1997 Revised Rules on Civil Procedure, in relation to Rule
42, 2 thereof, the requirement of a certificate of non-forum shopping applies to the filing of
petitions for review on certiorari of the decisions of the Court of Appeals, such as the one filed
by petitioner.
As provided in Rule 45, 5, The failure of the petitioner to comply with any of the foregoing
requirements regarding . . . the contents of the document which should accompany the petition
shall be sufficient ground for the dismissal thereof.
The requirement in Rule 7, 5 that the certification should be executed by the plaintiff or the
principal means that counsel cannot sign the certificate against forum-shopping. The reason for
this is that the plaintiff or principal knows better than anyone else whether a petition has
previously been filed involving the same case or substantially the same issues. Hence, a
certification signed by counsel alone is defective and constitutes a valid cause for dismissal of
the petition.[4]
In this case, the petition for review was filed by Santiago Eslaban, Jr., in his capacity as
Project Manager of the NIA. However, the verification and certification against forum-shopping
were signed by Cesar E. Gonzales, the administrator of the agency. The real party-in-interest is
the NIA, which is a body corporate. Without being duly authorized by resolution of the board of
the corporation, neither Santiago Eslaban, Jr. nor Cesar E. Gonzales could sign the certificate
against forum-shopping accompanying the petition for review. Hence, on this ground alone, the
petition should be dismissed.
Second. Coming to the merits of the case, the land under litigation, as already stated, is
covered by a transfer certificate of title registered in the Registry Office of Koronadal, South
Cotabato on May 13, 1976. This land was originally covered by Original Certificate of Title No.
(P-25592) P-9800 which was issued pursuant to a homestead patent granted on February 18,
1960. We have held:

Whenever public lands are alienated, granted or conveyed to applicants thereof, and the deed
grant or instrument of conveyance [sales patent] registered with the Register of Deeds and the
corresponding certificate and owners duplicate of title issued, such lands are deemed registered
lands under the Torrens System and the certificate of title thus issued is as conclusive and
indefeasible as any other certificate of title issued to private lands in ordinary or cadastral
registration proceedings.[5]
 The Solicitor-General contends, however, that an encumbrance is imposed on the land in
question in view of 39 of the Land Registration Act (now P.D. No. 1529, 44) which provides:

Every person receiving a certificate of title in pursuance of a decree of registration, and every
subsequent purchaser of registered land who takes a certificate of title for value in good faith
shall hold the same free from all encumbrances except those noted on said certificate, and any
of the following encumbrances which may be subsisting, namely:

....

Third. Any public highway, way, private way established by law, or any government
irrigation canal or lateral thereof, where the certificate of title does not state that the boundaries
of such highway, way, irrigation canal or lateral thereof, have been determined.
As this provision says, however, the only servitude which a private property owner is
required to recognize in favor of the government is the easement of a public highway, way,
private way established by law, or any government canal or lateral thereof where the certificate
of title does not state that the boundaries thereof have been pre-determined. This implies that
the same should have been pre-existing at the time of the registration of the land in order that
the registered owner may be compelled to respect it. Conversely, where the easement is not
pre-existing and is sought to be imposed only after the land has been registered under the Land
Registration Act, proper expropriation proceedings should be had, and just compensation paid
to the registered owner thereof.[6]
In this case, the irrigation canal constructed by the NIA on the contested property was built
only on October 6, 1981, several years after the property had been registered on May 13,
1976.Accordingly, prior expropriation proceedings should have been filed and just
compensation paid to the owner thereof before it could be taken for public use.
Indeed, the rule is that where private property is needed for conversion to some public use,
the first thing obviously that the government should do is to offer to buy it. [7] If the owner is
willing to sell and the parties can agree on the price and the other conditions of the sale, a
voluntary transaction can then be concluded and the transfer effected without the necessity of a
judicial action.Otherwise, the government will use its power of eminent domain, subject to the
payment of just compensation, to acquire private property in order to devote it to public use.
Third. With respect to the compensation which the owner of the condemned property is
entitled to receive, it is likewise settled that it is the market value which should be paid or that
sum of money which a person, desirous but not compelled to buy, and an owner, willing but not
compelled to sell, would agree on as a price to be given and received therefor. [8] Further, just
compensation means not only the correct amount to be paid to the owner 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 for then the property owner is made to suffer the
consequence 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. [9] Nevertheless,
as noted in Ansaldo v. Tantuico, Jr.,[10] there are instances where the expropriating agency takes
over the property prior to the expropriation suit, in which case just compensation shall be
determined as of the time of taking, not as of the time of filing of the action of eminent domain.
Before its amendment in 1997, Rule 67, 4 provided:
Order of condemnation. When such a motion is overruled or when any party fails to defend as
required by this rule, the court may enter an order of condemnation declaring that the plaintiff
has a lawful right to take the property sought to be condemned, for the public use or purpose
described in the complaint upon the payment of just compensation to be determined as of the
date of the filing of the complaint. . . .

It is now provided that-

SEC. 4. Order of expropriation. If the objections to and the defense 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. (Emphasis added)

Thus, the value of the property must be determined either as of the date of the taking of the
property or the filing of the complaint, whichever came first. Even before the new rule, however,
it was already held in Commissioner of Public Highways v. Burgos[11] that the price of the land at
the time of taking, not its value after the passage of time, represents the true value to be paid as
just compensation. It was, therefore, error for the Court of Appeals to rule that the just
compensation to be paid to respondent should be determined as of the filing of the complaint in
1990, and not the time of its taking by the NIA in 1981, because petitioner was allegedly remiss
in its obligation to pay respondent, and it was respondent who filed the complaint. In the case
of Burgos,[12] it was also the property owner who brought the action for compensation against
the government after 25 years since the taking of his property for the construction of a road.
Indeed, the value of the land may be affected by many factors. It may be enhanced on
account of its taking for public use, just as it may depreciate. As observed in Republic v. Lara:[13]

[W]here property is taken ahead of the filing of the condemnation proceedings, the value thereof
may be enhanced by the public purpose for which it is taken; the entry by the plaintiff upon the
property may have depreciated its value thereby; or there may have been a natural increase in
the value of the property from the time it is taken to the time the complaint is filed, due to
general economic conditions. The owner of private property should be compensated only for
what he actually loses; it is not intended that his compensation shall extend beyond his loss or
injury. And what he loses is only the actual value of his property at the time it is taken. This is
the only way that compensation to be paid can be truly just, i.e., just not only to the individual
whose property is taken, but to the public, which is to pay for it . . . .

In this case, the proper valuation for the property in question is P16,047.61 per hectare, the
price level for 1982, based on the appraisal report submitted by the commission (composed of
the provincial treasurer, assessor, and auditor of South Cotabato) constituted by the trial court
to make an assessment of the expropriated land and fix the price thereof on a per hectare
basis.[14]
Fourth. Petitioner finally contends that it is exempt from paying any amount to respondent
because the latter executed an Affidavit of Waiver of Rights and Fees of any compensation due
in favor of the Municipal Treasurer of Barangay Sto. Nio, South Cotabato. However, as the
Court of Appeals correctly held:

[I]f NIA intended to bind the appellee to said affidavit, it would not even have bothered to give
her any amount for damages caused on the improvements/crops within the appellees
property. This, apparently was not the case, as can be gleaned from the disbursement voucher
in the amount of P4,180.00 (page 10 of the Folder of Exhibits in Civil Case 396) issued on
September 17, 1983 in favor of the appellee, and the letter from the Office of the Solicitor
General recommending the giving of financial assistance in the amount of P35,000.00 to the
appellee.

Thus, We are inclined to give more credence to the appellees explanation that the waiver of
rights and fees pertains only to improvements and crops and not to the value of the land utilized
by NIA for its main canal.[15]

WHEREFORE, premises considered, the assailed decision of the Court of Appeals is

hereby AFFIRMED with MODIFICATION to the extent that the just compensation for the
contested property be paid to respondent in the amount of P16,047.61 per hectare, with interest
at the legal rate of six percent (6%) per annum from the time of taking until full payment is
made. Costs against petitioner.

G.R. No. 71176 May 21, 1990

REPUBLIC OF THE PHILIPPINES (Ministry of Education and Culture), petitioner,

vs.
INTERMEDIATE APPELLATE COURT and AMEREX ELECTRONICS, PHILS.
CORPORATION, respondents.

Siguion Reyna, Montecillo and Ongsiako for private respondents.

FERNAN, C.J.:

The government, in the exercise of its power of eminent domain, expropriated property owned
by Amerex Electronics, Phils. Corporation. The amount of just compensation for such property
is now the subject of this petition for review on certiorari.

The property involved consists of four (4) parcels of land with a total area of 9,650 square
meters located at No. 2090 Dr. Manuel L. Carreon Street, Manila, a short walking distance from
Herran (now Pedro Gil) Street. Its previous owner, Avegon Inc., offered it for sale to the City
School Board of Manila on July 21, 1973 at P2,300,000. The school board was willing to buy at
P1,800,000 but the then Mayor of Manila intervened and volunteered to negotiate with Avegon
Inc. for a better price.
Inasmuch as the alleged negotiation did not materialize, on June 3, 1974, Avegon Inc. sold the
property and its improvements to Amerex Electronics, Phils. Corporation (Amerex for brevity) for
P1,800,000. Thereafter, Transfer Certificates of Title Nos. 115571, 115572, 115573 and 115574
were issued in favor of Amerex.

On August 29, 1975, the Solicitor General filed for the Department of Education and Culture
(DEC) a complaint against Amerex for the expropriation of said property before the Court of
First Instance of Manila (Civil Case No. 99190). The complaint stated that the property was
needed by the government as a permanent site for the Manuel de la Fuente High School (later
renamed Don Mariano Marcos Memorial High School); that the fair market value of the property
had been declared by Amerex as P2,435,000, and that the assessor had determined its market
value as P2,432,042 and assessed it for taxation purposes in the amount of P1,303,470.1

In a motion praying that the plaintiff be authorized to take immediate possession of the property,
the then Acting Solicitor General Hugo E. Gutierrez, Jr., invoking Presidential Decree No. 42,
informed the court that said assessed value of the property for taxation purposes had been
deposited with the Philippine National Bank (PNB) in Escolta, Manila on September 30, 1975.

Consequently, on October 9, 1975, the court issued an order directing the sheriff to place the
plaintiff in possession of the property. The plaintiff took actual possession thereof on October
13, 1975.

Amerex filed a motion to dismiss the complaint stating that while it was not contesting the merits
of the complaint, the same failed to categorically state the amount of just compensation for the
property. It therefore prayed that in consonance with P.D. No. 794, the just compensation be
fixed at P2,432,042, the market value of the property determined by the assessor which was
lower than Amerex's own declaration.

The motion to dismiss was opposed by the plaintiff reasoning that while indeed the market value
as determined by the assessor was lower than that declared by Amerex, the plaintiff intended to
present evidence of a much lower market value.

Alleging that its motion to dismiss merely sought a clarification on the just compensation for the
property, Amerex filed a motion to withdraw the plaintiffs deposit of P1,303,470 with the PNB
without prejudice to its entitlement to the amount of P1,128,572, the balance of the just
compensation of P2,432,042 insisted upon. The plaintiff interposed no objection to the motion
provided that an order of condemnation be issued by the court and that the plaintiff be allowed
to present its evidence on the matter of just compensation.

On December 3, 1975, the lower court issued an order vesting the plaintiff with the lawful light to
take the property upon payment of just compensation as provided by law. On December 19,
1975, after the parties had submitted the names of their respective recommendees to the
appraisal committee, the lower court appointed Atty. Narciso Peña, Aurelio V. Aquino and Atty.
Higinio Sunico as commissioners.

Thereafter, the lower court ordered Amerex to submit an audited financial statement on the
acquisition cost of the property including expenses for its improvement. Amerex was also
allowed by the court, after it had filed a second motion therefor, to withdraw the P1,303,470
deposit with the PNB.
On March 12, 1976, the plaintiff filed a motion for leave of court to amend its complaint stating
that after it had filed the same, P.D. No. 464 2 was amended by P.D. No. 794; that Section 92 of
said Code, as amended, provided that when private property is acquired for public use, its just
compensation "shall not exceed the market value declared by the owner or administrator or
anyone having legal interest in the property, or such market value as determined by the
assessor, whichever is lower"; and that the amended complaint would state that the fair market
value of the property could not be in excess of P1,800,000, the amount for which defendant's
predecessor-in-interest had offered to sell said properties to the Division of Public Schools of
Manila and which amount was also the purchase price paid by Amerex to Avegon Inc. In due
course, plaintiff filed an amended complaint.

Amerex, however, opposed the motion for leave to amend the complaint contending that the
plaintiff was insisting on a valuation given by neither the owner nor the assessor as mandated
by P.D. No. 794 but by another person in August 1973 when the peso value was much higher.

The lower court denied the motion to amend the complaint; but after the plaintiff had filed a
motion for reconsideration, the lower court admitted the amended complaint on April 27, 1976.
In the meantime, Amerex submitted to the court "audited financial statements' consisting of an
account stating that the cost of its land and buildings was P2,107,479.48, and another account
stating that it incurred total expenses of P150,539 for their maintenance. 3 These statements
yielded the amount of P2,258,018.48 as the total value of the property.

The commissioners conducted an ocular inspection and hearing on the value of the property.
On October 18, 1976, the plaintiff filed a motion seeking the disqualification of Engineer Aurelio
B. Aquino as commissioner on the ground that he could not be expected to be unbiased
inasmuch as in the three appraisal reports submitted by Amerex, Aquino had indicated as fair
market value of the property amounts much more than the plaintiffs fair market value
determination of P1,800,000. Said appraisal reports were made by Ampil Realty and Appraisal
Co., Inc. with Aquino signing thereon as real estate appraiser. One report, dated February 15,
1974 and submitted to Commonwealth Insurance Company indicated P2,100,000 as the fair
market value of the property. 4 Two other reports were made at the behest of Amerex with one,
dated November 15, 1974, fixing the fair market value at P2,300,000 5, and the other, dated
June 5, 1975, with P2,400,000 as the fair market value. 6

Amerex opposed the motion to disqualify Aquino as commissioner, and the court, in its order of
November 5, 1976, denied it. Hence, on January 24, 1977, the commissioners submitted their
appraisal report finding that the fair market value of the property was P2,763,400. The
commissioners, however added:

Under the provision of Presidential Decree No. 464, as amended by Presidential

Decree No. 794, abovequoted, we could have safely adopted the valuation of the
City Assessor in the sum of P2,432,042.00, this being lower than that declared
by the owner in the sum of P2,435,000.00, although by actual appraisal of the
undersigned Commissioners the property could command a fair market value of
P2,763,400.00 as of the date of our ocular inspection.

Considering, however, that according to the audited statement submitted by

defendant, the acquisition costs and other legal expenses incurred on the subject
property by AMEREX, the grand total of P2,258,018.57, are (sic) lower than the
findings of the undersigned Commissioners, the explanation being the fact that
 the price of the sale was a real bargain possibly due to dire necessities of the
seller Avegon, it is respectfully submitted that the said sum of P2,258,018.57 be
adopted for purposes of determining just compensation payable to defendant
AMEREX, which sum does not exceed, but is even lower than, the fair market
value was determined by the City Assessor and as declared by said defendant. 7

Both parties objected to the report of the commissioners. The plaintiff contended that the
commissioners' conclusion that the fair market value of the property was P2,763,400 was
unsupported by evidence and that their recommended just compensation of P2,258,018.57 was
excessive. It reiterated its stand that the just compensation should only be P1,800,000 it being
the price had the sale between the city school board and Avegon Inc. materialized and also the
actual price of the sale between Avegon Inc. and Amerex. On the other hand, Amerex averred
that the recommended just compensation was unjustified in view of the commissioners' finding
that the fair market value of the property was P2,763,400.

On March 15, 1977, the lower court 8 rendered a decision based on the following findings:

The court believes that the findings of the commissioners are supported by the
evidence adduced during the hearings and that their recommendation is
reasonable. The property was originaly owned by Avegon Inc. and was assessed
at P1,079,370.00 by the City of Manila for the year 1974 (Exh. A-4). Avegon Inc.
offered to sell it to the City School Board on July 21, 1973 at P2,300,000.00 but it
accepted the counter-offer of P1,800,000. The negotiations, however, fell through
when the city failed to act (Exhs. C, C-1, C-2, C-3 and C-4). The property was
appraised on February 15, 1974 at P2,100,000.00 at the Instance of
Commonwealth Insurance Company, an affiliate of Warner, Barnes & Co., Inc.
(Exh. G). The defendant company introduced improvements on the property in
the middle part of 1974 worth P260,690.50 (Exhs. 4, 4-A to 4-J; 11, 13, 14 to 19).
After the renovation, the property was again appraised at the instance of the
defendant at P2,300,000.00 on November 15, 1974 (Exh. 2). Due to the world-
wide recession, there followed a slump in the demand for electronic products. On
June 4, 1975, the Traders Commodities Corporation offered to buy the property
at P2,750,000.00 with a deposit of P50,000.00 as earnest money. The offer was
formally made by the law firm Salonga, Ordoñez, Yap, Africano and Associates
(Exch. 6). The offer was accepted on June 9, 1975 (Exhs. 7 and 8). The sale was
not consummated, however, when the government notified the defendant in a
conference held in Malacanang on June 15, 1975 that it wanted to buy the
property for the use of the Manuel de la Fuente High School (Exh. 9). Because of
the failure of the parties to agree on the price and other conditions of the
purchase, the government filed this action on August 2, 1975.

It is apparent that the commissioners were influenced by the fact that the city
assessors fixed the market value of the property at P2,432,042.00 for the year
1975 pursuant to Presidential Decree No. 464 and that there was a perfected
contract to buy it at P2,750,000.00. No evidence was presented nor even an
allegation made, to show that the government valuation is fraudulent or
erroneous. It must therefore be regular (Rule 131, sec. m) and in view of the
reliance of the Presidential Decree upon it as a standard to be followed by the
courts in arriving at the just compensation of the property when it is acquired by
the government, it has great evidentiary weight. The offer to buy at
 P2,750,000.00 was made by one of the most reputable law firms in the country. It
is not likely that it would have lent itself to any fraudulent device or scheme to
inflate the value of the property. Commissioner Peña is a renowned authority on
land registration, and has been a realtor for many years. Atty. Higinio Sunico is
the chief of the Land Management Division, Bureau of Lands, who was
recommended by the plaintiff. Both are well-known for their probability Although it
appears that Mr. Aquino, the commissioner recommended by the defendant, had
occasion in the past to participate in transactions involving the same property,
the court believes that the concurrence of the other commissioners is a safe
guaranty of the correctness of their appraisal and recommendation.

Accordingly, the dispositive portion of the decision reads as follows:

WHEREFORE, judgment is hereby rendered funding the amount of

P2,258.018.57 as just compensation for the property of the defendant and
declaring the plaintiff entitled to possess and approximate it to the public use
alleged in the complaint and to retain it upon payment of the said amount, after
deducting the amount of P1,303,470.00, with legal interest from October 13,
1975 when the plaintiff was placed in possession of the real property, and upon
payment to each of the commissioners of the sum of P35.00 for their attendance
during the hearings held on January 23, February 16, May 11, July 23,
September 17, October 12 and December 10, 1976, plus P500.00 each for the
preparation of the report, and the costs.

The plaintiff elevated the case to the then Intermediate Appellate Court (IAC) for review. On
October 29, 1984, it affirmed the appealed decision with the modification that the plaintiff
Republic of the Philippines be exempted from the payment of the commissioners' fees, the
P500.00 granted each of them for the preparation of the report and the costs.

Its motion for the reconsideration of said decision having been denied, petitioner filed the instant
petition submitting the following issues for resolution:

1. Whether or not respondent Court erred in not disqualifying

Commissioner Aurelio B. Aquino from membership in the
Committee of Appraisal.

2. Whether or not respondent Court erred in not totally

disregarding the audited statement by the defendant, which is
hearsay in nature and was not formally offered in evidence.

3. Whether or not respondent Court erred in totally disregarding

petitioner's evidence showing that the award of just compensation
should be only P1,800,000.00 and not P2,258.018.57 as awarded
by said respondent Court.

The issue of the disqualification of Aquino as commissioner deserves scant attention. Under
Section 8, Rule 67 of the Rules of Court, the court may take the following actions on the report
submitted by commissioners: it may "accept the report and render judgment in accordance
therewith; or for cause shown, it may recommit the same to the commissioners for further report
of facts, or it may set aside the report and appoint new commissioners, or it may accept the
report in part and reject it in part; . . . ." In other words, the report of the commissioners is merely
advisory and recommendatory in character as far as the court is concerned. 9

Hence, it hardly matters that one of the three commissioners had a preconceived and biased
valuation of the condemned property. The veracity or exactitude of the estimate arrived at by the
commissioners may not be adversely affected thereby. In fact, the report of only two
commissioners may suffice if the third commissioner dissents from the former's
valuation. 10 Indeed, the participation of an allegedly biased commissioner may not result in the
total disregard of an appraisal report in the absence of proof that the two other commissioners
were unduly influenced by their allegedly partial colleague.

The determination of just compensation for a condemned property is basically a judicial

function. As the court is not bound by the commissioners' report, it may make such order or
render such judgment as shall secure to the plaintiff the property essential to the exercise of its
right of condemnation, and to the defendant just compensation for the property expropriated.
For that matter, this Court may even substitute its own estimate of the value as gathered from
the record. 11 Hence, although the determination of just compensation appears to be a factual
matter which is ordinarily outside the ambit of its jurisdiction, this Court may disturb the lower
court's factual finding on appeal when there is clear error or grave abuse of discretion. 12

We hold that the courts below made an erroneous determination of just compensation in this
case.

In the first place, the just compensation prescribed herein is based on the commissioners'
recommendation which in turn is founded on the "audited" statements of Amerex that the
property is worth P2,258,018.57. As earlier pointed out, while the court may accept the
commissioners' report and render judgment in accordance therewith, it may not do so without
considering whether the report is supported by evidence. The court is also duty-bound to
determine whether the commissioners had discharged the trust reposed in them according to
well-established rules and formed their judgment upon correct legal principles for they are not
supposed to act ad libitum .13

Amerex's "audited" statement on the acquisition cost, cost of painting and major repairs, taxes,
and insurance premiums which totals P2,107,479.48, contains the following certification:

We have checked the details of the transactions indicated in the foregoing

schedule of Land and Building Account as at January 31, 1976 with the books
and records of Amerex Electronics (Philippines) Corporation which were
presented to us for examination and have found the details to be in accordance
therewith. We have not made an audit of the books of accounts of Amerex
Electronics (Philippines) Corporation.

Sycip, Gorres Velayo & Co.

PTR No. 4709791

January 23, 1976

Makati, Rizal
 (Emphasis supplied).14

Amerex's other "audited" statement on the maintenance expenses of the property wherein it
allegedly incurred the amount of P150,539.09 contains a similar certification by the same
accounting firm specifically stating that the auditor did not make an audit of the books of
accounts of Amerex. 15

It is clear from these certifications that the accounting firm which issued them merely compared
the figures in the schedules or "audited" statements with those of the records and books of
accounts of Amerex. As no investigation was made as to the veracity of the figures in the
account, there was no audit in the real sense of the term. To audit is to examine an account,
compare it with the vouchers, adjust the same, and to state the balance, by persons legally
authorized for the purpose. 16 While the word "audit" is sometimes restricted to a mere
mathematical process, it generally includes investigation, the weighing of evidence, and
deciding whether items should or should not be included in the account .17 Audit involves the
exercise of discretion; it is a quasi-judicial function.18 The accuracy of the "audited" statements
herein is therefore suspect.

Besides the fact that the petitioner was not furnished a copy of the audited statements which
were also not introduced in evidence, Enrique P. Esteban, vice-president and treasurer of
Amerex, and even a representative of the accounting firm, were likewise not presented during
the trial thereby depriving petitioner herein of the opportunity to cross-examine them. It would
therefore be unfair to the petitioner to hold it bound by the "audited" statements of Amerex
which may have been premised on false or mistaken data. 19

This Court having declared as unconstitutional the mode of fixing just compensation under P.D.
No. 794 20 just compensation should be determined either at the time of the actual taking of the
government or at the time of the judgment of the court, whichever comes first. 21

In this case, the issuance of the condemnation order and the actual taking of the property both
occurred in October, 1975. Accordingly, the appraisal made by Ampil Realty and Appraisal Co.,
Inc. on June 5, 1975, which date is nearest to that of the actual taking of the property, should be
the basis for the determination of just compensation the record being bereft of any indications of
anomaly appertaining thereto. It should be added that Wenceslao Ampil, the president of said
appraisal firm, testified at the trial and therefore petitioner had the opportunity to confront him
and to question his report. The reasonableness of the June 5,1975 appraisal fixing at
P2,400,000 the fair market value of the property, is bolstered by the fact that on June 4, 1975,
Traders Commodities Corporation, through its lawyer, Sedfrey A. Ordoñez offered to buy the
property at P2,750,000. 22 It must be emphasized, however, that legal interest on the balance of
the just compensation of P2,400,000 after deducting the amount of P1,303,470 which had been
delivered to Amerex, should be paid by petitioner from the time the government actually took
over the propert y. 23

Much as we realize the need of the government, under these trying times, to get the best
possible price for the expropriated property considering the ceaseless and continuing necessity
for schools, we cannot agree with the petitioner that the just compensation for the property
should be the price it commanded when it was first offered for sale to the City School Board of
Manila. Petitioner failed to substantiate its claim that the property is worth the lower amount of
P1,800,000. In contrast, Amerex submitted evidence consisting of the aforesaid June 5, 1975
appraisal report which fixed the fair market value of the property at P2,400,000.
WHEREFORE, the just compensation of the property expropriated for the use of the Manuel de
la Fuente High School Don Mariano Marcos Memorial High School) is hereby fixed at Two
Million Four Hundred Thousand Pesos (P2,400,000.00). After deducting the amount of
P1,303,470.00 therefrom, the petitioner shall pay the balance with legal interest from October
13, 1975.

G.R. No. L-59603 April 29, 1987

EXPORT PROCESSING ZONE AUTHORITY, petitioner,

vs.
HON. CEFERINO E. DULAY, in his capacity as the Presiding Judge, Court of First
Instance of Cebu, Branch XVI, Lapu-Lapu City, and SAN ANTONIO DEVELOPMENT
CORPORATION, respondents.
Elena M. Cuevas for respondents.

GUTIERREZ, JR., J.:

The question raised in this petition is whether or not Presidential Decrees Numbered 76, 464,
794 and 1533 have repealed and superseded Sections 5 to 8 of Rule 67 of the Revised Rules of
Court, such that in determining the just compensation of property in an expropriation case, the
only basis should be its market value as declared by the owner or as determined by the
assessor, whichever is lower.

On January 15, 1979, the President of the Philippines, issued Proclamation No. 1811, reserving
a certain parcel of land of the public domain situated in the City of Lapu-Lapu, Island of Mactan,
Cebu and covering a total area of 1,193,669 square meters, more or less, for the establishment
of an export processing zone by petitioner Export Processing Zone Authority (EPZA).

Not all the reserved area, however, was public land. The proclamation included, among others,
four (4) parcels of land with an aggregate area of 22,328 square meters owned and registered
in the name of the private respondent. The petitioner, therefore, offered to purchase the parcels
of land from the respondent in acccordance with the valuation set forth in Section 92,
Presidential Decree (P.D.) No. 464, as amended. The parties failed to reach an agreement
regarding the sale of the property.

The petitioner filed with the then Court of First Instance of Cebu, Branch XVI, Lapu-Lapu City, a
complaint for expropriation with a prayer for the issuance of a writ of possession against the
private respondent, to expropriate the aforesaid parcels of land pursuant to P.D. No. 66, as
amended, which empowers the petitioner to acquire by condemnation proceedings any property
for the establishment of export processing zones, in relation to Proclamation No. 1811, for the
purpose of establishing the Mactan Export Processing Zone.

On October 21, 1980, the respondent judge issued a writ of possession authorizing the
petitioner to take immediate possession of the premises. On December 23, 1980, the private
respondent flied its answer.

At the pre-trial conference on February 13, 1981, the respondent judge issued an order stating
that the parties have agreed that the only issue to be resolved is the just compensation for the
properties and that the pre-trial is thereby terminated and the hearing on the merits is set on
April 2, 1981.
On February 17, 1981, the respondent judge issued the order of condemnation declaring the
petitioner as having the lawful right to take the properties sought to be condemned, upon the
payment of just compensation to be determined as of the filing of the complaint. The respondent
judge also issued a second order, subject of this petition, appointing certain persons as
commissioners to ascertain and report to the court the just compensation for the properties
sought to be expropriated.

On June 19, 1981, the three commissioners submitted their consolidated report recommending
the amount of P15.00 per square meter as the fair and reasonable value of just compensation
for the properties.

On July 29, 1981, the petitioner Med a Motion for Reconsideration of the order of February 19,
1981 and Objection to Commissioner's Report on the grounds that P.D. No. 1533 has
superseded Sections 5 to 8 of Rule 67 of the Rules of Court on the ascertainment of just
compensation through commissioners; and that the compensation must not exceed the
maximum amount set by P.D. No. 1533.

On November 14, 1981, the trial court denied the petitioner's motion for reconsideration and
gave the latter ten (10) days within which to file its objection to the Commissioner's Report.

On February 9, 1982, the petitioner flied this present petition for certiorari and mandamus with
preliminary restraining order, enjoining the trial court from enforcing the order dated February
17, 1981 and from further proceeding with the hearing of the expropriation case.

The only issue raised in this petition is whether or not Sections 5 to 8, Rule 67 of the Revised
Rules of Court had been repealed or deemed amended by P.D. No. 1533 insofar as the
appointment of commissioners to determine the just compensation is concerned. Stated in
another way, is the exclusive and mandatory mode of determining just compensation in P.D.
No. 1533 valid and constitutional?

The petitioner maintains that the respondent judge acted in excess of his jurisdiction and with
grave abuse of discretion in denying the petitioner's motion for reconsideration and in setting the
commissioner's report for hearing because under P.D. No. 1533, which is the applicable law
herein, the basis of just compensation shall be the fair and current market value declared by the
owner of the property sought to be expropriated or such market value as determined by the
assessor, whichever is lower. Therefore, there is no more need to appoint commissioners as
prescribed by Rule 67 of the Revised Rules of Court and for said commissioners to consider
other highly variable factors in order to determine just compensation. The petitioner further
maintains that P.D. No. 1533 has vested on the assessors and the property owners themselves
the power or duty to fix the market value of the properties and that said property owners are
given the full opportunity to be heard before the Local Board of Assessment Appeals and the
Central Board of Assessment Appeals. Thus, the vesting on the assessor or the property owner
of the right to determine the just compensation in expropriation proceedings, with appropriate
procedure for appeal to higher administrative boards, is valid and constitutional.

Prior to the promulgation of P.D. Nos. 76, 464, 794 and 1533, this Court has interpreted the
eminent domain provisions of the Constitution and established the meaning, under the
fundametal law, of just compensation and who has the power to determine it. Thus, in the
following cases, wherein the filing of the expropriation proceedings were all commenced prior to
the promulgation of the aforementioned decrees, we laid down the doctrine onjust
compensation:

Municipality of Daet v. Court of Appeals (93 SCRA 503, 516),

xxx xxx xxx

"And in the case of J.M. Tuason & Co., Inc. v. Land Tenure Administration, 31 SCRA 413, the
Court, speaking thru now Chief Justice Fernando, reiterated the 'well-settled (rule) that just
compensation means the equivalent for the value of the property at the time of its taking.
Anything beyond that is more and anything short of that is less, than just compensation. It
means a fair and full equivalent for the loss sustained, which is the measure of the indemnity,
not whatever gain would accrue to the expropriating entity."

Garcia v. Court ofappeals (102 SCRA 597, 608),

xxx xxx xxx

"Hence, in estimating the market value, all the capabilities of the property and all the
uses to which it may be applied or for which it is adapted are to be considered and not
merely the condition it is in the time and the use to which it is then applied by the owner.
All the facts as to the condition of the property and its surroundings, its improvements
and capabilities may be shown and considered in estimating its value."

Republic v. Santos (141 SCRA 30, 35-36),

"According to section 8 of Rule 67, the court is not bound by the commissioners' report.
It may make such order or render such judgment as shall secure to the plaintiff the
property essential to the exercise of his right of condemnation, and to the defendant just
compensation for the property expropriated. This Court may substitute its own estimate
of the value as gathered from the record (Manila Railroad Company v. Velasquez, 32
Phil. 286)."

However, the promulgation of the aforementioned decrees practically set aside the above and
many other precedents hammered out in the course of evidence-laden, well argued, fully heard,
studiously deliberated, and judiciously considered court proceedings. The decrees categorically
and peremptorily limited the definition of just compensation thus:

P.D. No. 76:

xxx xxx xxx

"For purposes of just compensation in cases of private property acquired by the

government for public use, the basis shall be the current and fair market value declared
by the owner or administrator, or such market value as determined by the Assessor,
whichever is lower."

P.D. No. 464:

 "Section 92. Basis for payment of just compensation in expropriation proceedings. — In
determining just compensation which private property is acquired by the government for
public use, the basis shall be the market value declared by the owner or administrator or
anyone having legal interest in the property, or such market value as determined by the
assessor, whichever is lower."

P.D. No. 794:

"Section 92. Basis for payment of just compensation in expropriation proceedings. — In

determining just compensation when private property is acquired by the government for
public use, the same shall not exceed the market value declared by the owner or
administrator or anyone having legal interest in the property, or such market value as
determined by the assessor, whichever is lower."

P.D. No. 1533:

"Section 1. In determining just compensation for private property acquired through

eminent domain proceedings, the compensation to be paid shall not exceed the value
declared by the owner or administrator or anyone having legal interest in the property or
determined by the assessor, pursuant to the Real Property Tax Code, whichever value is
lower, prior to the recommendation or decision of the appropriate Government office to
acquire the property."

We are constrained to declare the provisions of the Decrees on just compensation

unconstitutional and void and accordingly dismiss the instant petition for lack of merit.

The method of ascertaining just compensation under the aforecited decrees constitutes
impermissible encroachment on judicial prerogatives. It tends to render this Court inutile in a
matter which under the Constitution is reserved to it for final determination.

Thus, although in an expropriation proceeding the court technically would still have the power to
determine the just compensation for the property, following the applicable decrees, its task
would be relegated to simply stating the lower value of the property as declared either by the
owner or the assessor. As a necessary consequence, it would be useless for the court to
appoint commissioners under Rule 67 of the Rules of Court. Moreover, the need to satisfy the
due process clause in the taking of private property is seemingly fulfilled since it cannot be said
that a judicial proceeding was not had before the actual taking. However, the strict application of
the decrees during the proceedings would be nothing short of a mere formality or charade as
the court has only to choose between the valuation of the owner and that of the assessor, and
its choice is always limited to the lower of the two. The court cannot exercise its discretion or
independence in determining what is just or fair. Even a grade school pupil could substitute for
the judge insofar as the determination of constitutional just compensation is concerned.

In the case of National Housing Authority v. Reyes (123 SCRA 245), this Court upheld P.D. No.
464, as further amended by P.D. Nos. 794, 1224 and 1259. In this case, the petitioner National
Housing Authority contended that the owner's declaration at P1,400.00 which happened to be
lower than the assessor's assessment, is the just compensation for the respondent's property
under section 92 of P.D. No. 464. On the other hand, the private respondent stressed that while
there may be basis for the allegation that the respondent judge did not follow the decree, the
matter is still subject to his final disposition, he having been vested with the original and
competent authority to exercise his judicial discretion in the light of the constitutional clauses on
due process and equal protection.

To these opposing arguments, this Court ruled ihat under the conceded facts, there should be a
recognition that the law as it stands must be applied; that the decree having spoken so clearly
and unequivocably calls for obedience; and that on a matter where the applicable law speaks in
no uncertain language, the Court has no choice except to yield to its command. We further
stated that "the courts should recognize that the rule introduced by P.D. No. 76 and reiterated in
subsequent decrees does not upset the established concepts of justice or the constitutional
provision on just compensation for, precisely, the owner is allowed to make his own valuation of
his property."

While the Court yielded to executive prerogative exercised in the form of absolute law-making
power, its members, nonetheless, remained uncomfortable with the implications of the decision
and the abuse and unfairness which might follow in its wake. For one thing, the President
himself did not seem assured or confident with his own enactment. It was not enough to lay
down the law on determination of just compensation in P.D. 76. It had to be repeated and
reiterated in P.D. 464, P.D. 794, and P.D. 1533. The provision is also found in P.D. 1224, P.D.
1259 and P.D. 1313. Inspite of its effectivity as general law and the wide publicity given to it, the
questioned provision or an even stricter version had to be embodied in cases of specific
expropriations by decree as in P.D. 1669 expropriating the Tambunting Estate and P.D. 1670
expropriating the Sunog Apog area in Tondo, Manila.

In the present petition, we are once again confronted with the same question of whether the
courts under P.D. 1533, which contains the same provision on just compensation as its
predecessor decrees, still have the power and authority to determine just compensation,
independent of what is stated by the decree and to this effect, to appoint commissioners for
such purpose.

This time, we answer in the affirmative.

In overruling the petitioner's motion for reconsideration and objection to the commissioner's
report, the trial court said:

"Another consideration why the Court is empowered to appoint commissioners to assess

the just compensation of these properties under eminent domain proceedings, is the
well-entrenched ruling that 'the owner of property expropriated is entitled to recover from
expropriating authority the fair and full value of the lot, as of the time when possession
thereof was actually taken by the province, plus consequential damages — including
attorney's fees — from which the consequential benefits, if any should be deducted, with
interest at the legal rate, on the aggregate sum due to the owner from and after the date
of actual taking.' (Capitol Subdivision, Inc. v. Province of Negros Occidental, 7 SCRA
60). In fine, the decree only establishes a uniform basis for determining just
compensation which the Court may consider as one of the factors in arriving at 'just
compensation,' as envisage in the Constitution. In the words of Justice Barredo,
"Respondent court's invocation of General Order No. 3 of September 21, 1972 is nothing
short of an unwarranted abdication of judicial authority, which no judge duly imbued with
the implications of the paramount principle of independence of the judiciary should ever
think of doing." (Lina v. Purisima, 82 SCRA 344, 351; Cf. Prov. of Pangasinan v. CFI
Judge of Pangasinan, Br. VIII, 80 SCRA 117) Indeed, where this Court simply follows
 PD 1533, thereby limiting the determination of just compensation on the value declared
by the owner or administrator or as determined by the Assessor, whichever is lower, it
may result in the deprivation of the landowner's right of due process to enable it to prove
its claim to just compensation, as mandated by the Constitution. (Uy v. Genato, 57
SCRA 123). The tax declaration under the Real Property Tax Code is, undoubtedly, for
purposes of taxation."

We are convinced and so rule that the trial court correctly stated that the valuation in the decree
may only serve as a guiding principle or one of the factors in determining just compensation but
it may not substitute the court's own judgment as to what amount should be awarded and how
to arrive at such amount. A return to the earlier well-established doctrine, to our mind, is more in
keeping with the principle that the judiciary should live up to its mission "by vitalizing and not
denigrating constitutional rights." (See Salonga v. Cruz Paño, 134 SCRA 438, 462; citing
Mercado v. Court of First Instance of Rizal, 116 SCRA 93.) The doctrine we enunciated
in National Housing Authority v. Reyes, supra, therefore, must necessarily be abandoned if we
are to uphold this Court's role as the guardian of the fundamental rights guaranteed by the due
process and equal protection clauses and as the final arbiter over transgressions committed
against constitutional rights.

The basic unfairness of the decrees is readily apparent.

Just compensation means the value of the property at the time of the taking. It means a fair and
full equivalent for the loss sustained. All the facts as to the condition of the property and its
surroundings, its improvements and capabilities, should be considered.

In this particular case, the tax declarations presented by the petitioner as basis for just
compensation were made by the Lapu-Lapu municipal, later city assessor long before martial
law, when land was not only much cheaper but when assessed values of properties were stated
in figures constituting only a fraction of their true market value. The private respondent was not
even the owner of the properties at the time. It purchased the lots for development purposes. To
peg the value of the lots on the basis of documents which are out of date and at prices below
the acquisition cost of present owners would be arbitrary and confiscatory.

Various factors can come into play in the valuation of specific properties singled out for
expropriation. The values given by provincial assessors are usually uniform for very wide areas
covering several barrios or even an entire town with the exception of the poblacion. Individual
differences are never taken into account. The value of land is based on such generalities as its
possible cultivation for rice, corn, coconuts, or other crops. Very often land described as
"cogonal" has been cultivated for generations. Buildings are described in terms of only two or
three classes of building materials and estimates of areas are more often inaccurate than
correct. Tax values can serve as guides but cannot be absolute substitutes for just
compensation.

To say that the owners are estopped to question the valuations made by assessors since they
had the opportunity to protest is illusory. The overwhelming mass of land owners accept
unquestioningly what is found in the tax declarations prepared by local assessors or municipal
clerks for them. They do not even look at, much less analyze, the statements. The Idea of
expropriation simply never occurs until a demand is made or a case filed by an agency
authorized to do so.
It is violative of due process to deny to the owner the opportunity to prove that the valuation in
the tax documents is unfair or wrong. And it is repulsive to basic concepts of justice and fairness
to allow the haphazard work of a minor bureaucrat or clerk to absolutely prevail over the
judgment of a court promulgated only after expert commissioners have actually viewed the
property, after evidence and arguments pro and con have been presented, and after all factors
and considerations essential to a fair and just determination have been judiciously evaluated.

As was held in the case of Gideon v. Wainwright (93 ALR 2d,733,742):

"In the light of these and many other prior decisions of this Court, it is not surprising that the
Betts Court, when faced with the contention that 'one charged with crime, who is unable to
obtain counsel must be furnished counsel by the State,' conceded that '[E]xpressions in the
opinions of this court lend color to the argument. . .' 316 U.S., at 462, 463, 86 L ed. 1602, 62 S
Ct. 1252. The fact is that in deciding as it did-that "appointment of counsel is not a fundamental
right, essential to a fair trial" — the Court in Betts v. Brady made an ubrupt brake with its own
well-considered precedents. In returning to these old precedents, sounder we believe than the
new, we but restore constitutional principles established to achieve a fair system of justice. . ."

We return to older and more sound precedents. This Court has the duty to formulate guiding
and controlling constitutional principles, precepts, doctrines, or rules. (See Salonga v. Cruz
Pano, supra).

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 court's 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 court's 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.

WHEREFORE, IN VIEW OF THE FOREGOING, the petition is hereby DISMISSED. The

temporary restraining order issued on February 16, 1982 is LIFTED and SET ASIDE.

G.R. No. L-50147 August 3, 1990

JOSE MA. ANSALDO, for himself and as attorney-in-fact of Maria Angela

Ansaldo, petitioners
vs.
FRANCISCO S. TANTUICO, JR., Acting Chairman, Commission on Audit, and BALTAZAR
AQUINO, Minister of Public Highways, respondents.

Misa & LozadaBito for petitioners.

NARVASA, J.:
This expropriation case is quite unique. Two lots of private ownership were taken by the
Government and used for the widening of a road more than forty-three years ago, without
benefit of an action of eminent domain or agreement with its owners, albeit without protest by
the latter.

The lots belong to the petitioners, Jose Ma. Ansaldo and Maria Angela Ansaldo, are covered by
title in their names 1and have an aggregate area of 1,041 square meters. These lots were taken
from the Ansaldos sometime in 1947 by the Department of Public Work Transportation and
Communication and made part of what used to be Sta. Mesa Street and is now Ramon
Magsaysay Avenue at San Juan, Metro Manila. This, to repeat, without demur on the part of the
owners.

Said owners made no move whatever until twenty-six years later. They wrote to ask for
compensation for their land on January 22, 1973. 2 Their claim was referred to the Secretary of
Justice who in due course rendered an opinion dated February 22, 1973, 3 that just
compensation should be paid in accordance with Presidential Decree No. 76. 4The Decree
provided that the basis for the payment of just compensation of property taken for public use
should be the current and fair market value thereof as declared by the owner or administrator, or
such market value as determined by the assessor, whichever was lower. 5 The Secretary of
Justice thus advised that the corresponding expropriation suit be forthwith instituted to fix the
just compensation to be paid to the Ansaldos.

Pursuant to this opinion, the Commissioner of Public Highways requested the Provincial
Assessor of Rizal to make a redetermination of the market value of the Ansaldos' property in
accordance with PD 76. 6 The new valuation was made, after which the Auditor of the Bureau of
Public Highways forwarded the Ansaldos' claim to the Auditor General with the recommendation
that payment be made on the basis of the "current and fair market value, . . . and not on the fair
market value at the time of taking. 7

The Commission on Audit, however, declined to adopt the recommendation. In a decision

handed down on September 26, 1973, the Acting Chairman ruled that "the amount of
compensation to be paid to the claimants is to be determined as of the time of the taking of the
subject lots, 8 i.e. 1947. The ruling was reiterated by the Commission on September 8, 1978,
and again on January 25, 1979 when it denied the Ansaldos' motion for reconsideration. 9 It is
these rulings of the Commission on Audit that the Ansaldos have appealed to this Court.

While not decisive of this case, it may be stressed that the provisions of Presidential Decree No.
76 and its related or successor decrees (Numbered 464, 794 and 1533) no longer determine the
just compensation payable to owners of expropriated property. Said provisions were, it may be
recalled, struck down as unconstitutional and void in 1988, in Export Processing Zone Authority
v. Dulay, 10 which declared that the mode therein prescribed for determining just compensation,
i. e., on the basis of the value declared by the owner or administrator or on that determined by
the assessor, whichever is lower, constituted an impermissible encroachment on the judicial
prerogative to resolve the issue in an appropriate proceeding of eminent domain.

Now, nothing in the record even remotely suggests that the land was taken from the Ansaldos
against their will. Indeed, all indications, not the least of which is their silence for more than two
decades, are that they consented to such a taking although they knew that no expropriation
case had been commenced at all. There is therefore no reason, as regards the Ansaldos'
property, to impugn the existence of the power to expropriate, or the public purpose for which
that power was exercised.

The sole question thus confronting the Court involves the precise time at which just
compensation should be fixed, whether as of the time of actual taking of possession by the
expropriating entity or, as the Ansaldos maintain, only after conveyance of title to the
expropriator pursuant to expropriation proceedings duly instituted since it is only at such a time
that the constitutional requirements of due process aside from those of just compensation may
be fully met.

Normally, of course, where the institution of an expropriation action precedes the taking of the
property subject thereof, the just compensation is fixed as of the time of the filing of the
complaint. This is so provided by the Rules of Court, 11 the assumption of possession by the
expropriator ordinarily being conditioned on its deposits with the National or Provincial Treasurer
of the value of the property as provisionally ascertained by the court having jurisdiction of the
proceedings.

There are instances, however, where the expropriating agency takes over the property prior to
the expropriation suit, as in this case although, to repeat, the case at bar is quite extraordinary
in that possession was taken by the expropriator more than 40 years prior to suit. In these
instances, this Court has ruled that the just compensation shall be determined as of the time
of taking, not as of the time of filing of the action of eminent domain.

In the context of the State's inherent power of eminent domain, there is a "taking" when the
owner is actually deprived or dispossessed of his property; when there is a practical destruction
or a material impairment of the value of his property or when he is deprived of the ordinary use
thereof. 12 There is a "taking" in this sense when the expropriator enters private property not
only for a momentary period but for a more permanent duration, for the purpose of devoting the
property to a public use in such a manner as to oust the owner and deprive him of all beneficial
enjoyment thereof. 13 For ownership, after all, "is nothing without the inherent rights of
possession, control and enjoyment. Where the owner is deprived of the ordinary and beneficial
use of his property or of its value by its being diverted to public use, there is taking within the
Constitutional sense. 14 Under these norms, there was undoubtedly a taking of the Ansaldos'
property when the Government obtained possession thereof and converted it into a part of a
thoroughfare for public use.

It is as of the time of such a taking, to repeat, that the just compensation for the property is to be
established. As stated in Republic v. Philippine National Bank, 15

. . . (W)hen plaintiff takes possession before the institution of the condemnation

proceedings, the value should be fixed as of the time of the taking of said
possession, not of filing of the complaint and the latter should be the basis for the
determination of the value, when the taking of the property involved coincides
with or is subsequent to, the commencement of the proceedings. Indeed,
otherwise, the provision of Rule 69, Section 3, directing that compensation be
determined as of the date of the filing of the complaint' would never be operative.
As intimated in Republic v. Lara (supra), said provision contemplates normal
circumstances, under which the complaint coincides or even precedes the taking
of the property by the plaintiff.
The reason for the rule, as pointed out in Rpublic v. Larae, 16 is that —

. . . (W)here property is taken ahead of the filing of the condemnation

proceedings, the value thereof may be enchanced by the public purpose for
which it is taken; the entry by the plaintiff upon the property may have
depreciated its value thereby; or, there may have been a natural increase in the
value of the property from the time the complaint is filed, due to general
economic conditions. The owner of private property should be compensated only
for what he actually loses; it is not intended that his compensation shall extend
beyond his loss or injury. And what he loses is only the actual value of his
property at the time it is taken. This is the only way that compensation to be paid
can be truly just i.e.,"just; not only to the individual whose property is taken but, to
the public, which is to pay for it.

Clearly, then, the value of the Ansaldos' property must be ascertained as of the year 1947,
when it was actually taken, and not at the time of the filing of the expropriation suit, which, by
the way, still has to be done. It is as of that time that the real measure of their loss may fairly be
adjudged. The value, once fixed, shall earn interest at the legal rate until full payment is
effected, conformably with other principles laid down by case law. 17

WHEREFORE, the petition is DENIED, the challenged decision of the Commission on Audit is
AFFIRMED, and the Department of Public Works and Highways is DIRECTED to forthwith
institute the appropriate expropriation action over the land in question so that the just
compensation due its owners may be determined in accordance with the Rules of Court, with
interest at the legal rate of six percent (6%) per annum from the time of taking until full payment
is made. No costs.

G.R. No. 170846 February 6, 2007

NATIONAL POWER CORPORATION, Petitioner,

vs.
AURELLANO S. TIANGCO, LOURDES S. TIANGCO and NESTOR S.
TIANGCO, Respondents.

DECISION

GARCIA, J.:

In this petition for review on certiorari under Rule 45 of the Rules of Court, petitioner National
Power Corporation (NPC) seeks the annulment and setting aside of the Decision1 dated March
14, 2005 of the Court of Appeals (CA) in CA-G.R. CV No. 53576, as reiterated in its
Resolution2 of December 2, 2005 which denied the petitioner’s motion for reconsideration. The
assailed decision modified that of the Regional Trial Court (RTC) of Tanay, Rizal, Branch 80, by
increasing the amount of just compensation due the respondents in an expropriation case filed
against them by the petitioner.

The facts:
Herein respondents Aurellano, Lourdes and Nestor, all surnamed Tiangco, are the owners of a
parcel of land with an area of 152,187 square meters at Barangay Sampaloc, Tanay, Rizal and
registered in their names under TCT No. M-17865 of the Registry of Deeds of Rizal.

On the other hand, petitioner NPC is a government-owned and controlled corporation created
for the purpose of undertaking the development and generation of power from whatever source.
NPC’s charter (Republic Act No. 6395) authorizes the corporation to acquire private property
and exercise the right of eminent domain.1awphi1.net

NPC requires 19,423 square meters of the respondents’ aforementioned property, across which
its 500Kv Kalayaan-San Jose Transmission Line Project will traverse. NPC’s Segregation
Plan3 for the purpose shows that the desired right-of-way will cut through the respondents’ land,
in such a manner that 33,392 square meters thereof will be left separated from 99,372 square
meters of the property. Within the portion sought to be expropriated stand fruit-bearing tress,
such as mango, avocado, jackfruit, casuy, santol, calamansi, sintones and coconut trees.

On November 20, 1990, after repeated unsuccessful negotiations with the respondents, NPC
filed with the RTC of Tanay, Rizal a complaint for expropriation4 against them. In time, the
respondents filed their answer.

On March 14, 1991, the trial court issued a Condemnation Order, granting NPC the right to take
possession of the area sought to be expropriated. In the same Order, the court directed the
parties to nominate their respective commissioners, with a third member to be nominated and
appointed by the court itself, to determine the proper amount of just compensation to be paid to
the respondents. As constituted in the manner thus indicated, the board of commissioners was
composed of the following: for NPC, Atty. Restituto Mallo of its Legal Department; for the
respondents, Mr. Basilio Afuang, a geodetic engineer and a real estate broker by profession;
and for the court, Clerk of Court V Ms. Amelia de Guzman Carbonell.

On April 5, 1991, the trial court issued an order directing NPC to pay and deposit with the Rizal
Provincial Treasurer the amount of ₱81,204.00, representing the temporary provisional value of
the area subject of the expropriation prior to the taking of possession thereof. On April 22, 1991,
with NPC having complied with the deposit requirement, a writ of possession was issued in its
favor.

Thereafter, an ocular inspection of the premises was conducted and hearings before the board
of commissioners were held, during which the Municipal Assessor of Tanay, Rizal was
presented. He submitted a record of the Schedule of Values for taxation purposes and a
certification to the effect that the unit value of the respondents’ property is ₱21,000.00 per
hectare.

On August 7, 1993, commissioner Basilio Afuang for the respondents filed his report. He
pegged the price of the area sought to be expropriated at ₱30.00 per square meter or
₱582,690.005 in the aggregate; and for the improvements thereon, Afuang placed a valuation of
₱2,093,950.00. The figures are in contrast with the respondents’ own valuation of ₱600,600.00,
for the area, and ₱4,935,500.00, for the improvements.

On September 14, 1993, NPC filed an amended complaint to acquire only 19,423 square
meters of the respondents’ property. The original area of 20,220 square meters initially sought
to be expropriated under the original complaint turned out to be in excess of the area required.
For its part, NPC made it clear that it is interested only in acquiring an easement of right-of-way
over the respondents’ property and that ownership of the area over which the right-of-way will
be established shall remain with the respondents. For this reason, NPC claims that it should
pay, in addition to the agreed or adjudged value of the improvements on the area, only an
easement fee in an amount equivalent to ten per cent (10%) of the market value of the property
as declared by the respondents or by the Municipal Assessor, whichever is lower, as provided
for under Section 3-A of Republic Act No. 6395, as amended by Presidential Decree 938.6

The court-appointed commissioner, Ms. Amelia de Guzman Carbonell, found that the risk and
dangerous nature of the transmission line project essentially deprive the respondents of the use
of the area. Nonetheless, she recommended that the determination of just compensation should
be relegated to "expert appraisers."7

From the evidence before it, the trial court made a determination that the market value of the
property is ₱2.09 per square meter, or ₱40,594.07 for the entire 19,423 square meters needed
by NPC, and not the ₱30.00 per square meter claimed by the respondents. Neither did the trial
court consider NPC’s reliance on Section 3-A of Republic Act No. 6395, as amended by
Presidential Decree 938, the court placing more weight on the respondents’ argument that
expropriation would result in the substantial impairment of the use of the area needed, even
though what is sought is a mere aerial right-of-way. The court found as reasonable the amount
of ₱324,750.00 offered by NPC for the improvements, as the same is based on the official
current schedule of values as determined by the Municipal Assessor of Tanay, Rizal.

Hence, in its decision8 of February 19, 1996, the trial court rendered judgment as follows:

WHEREFORE, in view of the foregoing, judgment is hereby rendered:

1. Expropriating in favor of [NPC] a parcel of land covering a total area of 19,423 sq.m.
covered by TCT No. M-17860 owned by the [respondents];

2. Ordering the amount of P40,594.07 as just compensation for the 19,423 square
meters of land affected by the expropriations; and the amount of P324,750.00 as
reasonable compensation for the improvements on the land expropriated with legal
interest from the time of possession by the plaintiff. No pronouncement as to costs.

SO ORDERED. (Words in brackets supplied.)

The respondents moved for reconsideration, presenting for the first time a document entitled
"Bureau of Internal Revenue Circular of Appraisal," which shows that for the year 1985, lands in
Barangay Sampaloc were valued at ₱30.00 per square meter; for the year 1992, at ₱80.00 per
square meter; and for year 1994, at ₱100.00 per square meter. Respondents maintain that the
price of ₱30.00 per square meter for the needed area of 19,423 square meters is the
reasonable amount and should be the basis for fixing the amount of just compensation due
them. The trial court denied the motion, stating that the BIR circular in question was belatedly
filed and therefore NPC could not have opposed its presentation.

From the aforesaid decision of the trial court, both NPC and the respondents went on appeal to
the CA whereat the separate appeals were consolidated and docketed as CA-G.R. CV No.
53576. The appellate court found merit in the respondents’ appeal, and disregarded the ₱2.09
per square meter valuation of the trial court, which was based on a 1984 tax declaration.
Instead, the CA placed reliance upon a 1993 tax declaration, "being only two years removed
from the time of taking."9 The appellate court determined the time of taking to be in 1991. Thus,
the greater value of ₱913,122.00 as declared in Tax Declaration No. 011-2667 dated July 23,
1993 should be the basis for determining just compensation. With regard to the value of
improvements, the appellate court found NPC’s valuation more favorable, being based on the
current (1991) schedule of values for trees in the provinces of Rizal and Laguna. Hence, in its
decision10 of March 14, 2005, the CA rendered judgment, to wit:

WHEREFORE, the instant Appeal is GRANTED. The decision of the Regional Trial Court of
Tanay, Rizal, Branch 80 dated February 19, 1996 is hereby MODIFIED and the compensation
awarded for the 19,423 square meters of land affected is increased to ₱116,538.00, and the
reasonable compensation for the improvements thereon is likewise increased to P325,025.00,
with legal interest from the time of possession by the plaintiff-appellee NAPOCOR. No
pronouncement as to costs.

SO ORDERED.

NPC moved for reconsideration, but its motion was denied by the appellate court in its
resolution11 of December 2, 2005.

Hence, NPC’s instant petition for review, submitting for our resolution only the following issues
with respect to the amount of just compensation that must be paid the respondents for the
expropriated portion (19,423 square meters) of their property:

1. Is it to be based on the 1984 or the 1993 valuation?

2. Should NPC pay for the value of the land being taken, or should it be limited to what is
provided for under P.D. 938, that is, ten per cent (10%) of its market value as declared by
the owner or the assessor (whichever is lower), considering that the purpose for which
the property is being taken is merely for the establishment of a safe and free passage for
its overhead transmission lines?

There is no issue as to the improvements. Since the ₱325,025.00 valuation therefor is the very
price set by the NPC commissioner, to which the corporation did not object but otherwise
adopts, the Court fixes the amount of ₱325,025.00 as just compensation for the improvements.

We now come to the more weighty question of what amount is just by way of compensation for
the 19,423 square-meter portion of the respondents’ property.

In eminent domain cases, the time of taking is the filing of the complaint, if there was no actual
taking prior thereto. Hence, in this case, the value of the property at the time of the filing of the
complaint on November 20, 1990 should be considered in determining the just compensation
due the respondents. So it is that in National Power Corporation v. Court of Appeals, et al., 12 we
ruled:

Normally, the time of the taking coincides with the filing of the complaint for expropriation.
Hence, many rulings of this Court have equated just compensation with the value of the
property as of the time of filing of the complaint consistent with the above provision of the Rules.
So too, where the institution of the action precedes entry into the property, the just
compensation is to be ascertained as of the time of the filing of the complaint.
The trial court fixed the value of the property at its 1984 value, while the CA, at its 1993 worth.
Neither of the two determinations is correct. For purposes of just compensation, the
respondents should be paid the value of the property as of the time of the filing of the complaint
which is deemed to be the time of taking the property.

It was certainly unfair for the trial court to have considered a property value several years
behind its worth at the time the complaint in this case was filed on November 20, 1990. The
landowners are necessarily shortchanged, considering that, as a rule, land values enjoy steady
upward movement. It was likewise erroneous for the appellate court to have fixed the value of
the property on the basis of a 1993 assessment. NPC would be paying too much. Petitioner
corporation is correct in arguing that the respondents should not profit from an assessment
made years after the taking.

The expropriation proceedings in this case having been initiated by NPC on November 20,
1990, property values on such month and year should lay the basis for the proper determination
of just compensation. In Association of Small Landowners in the Philippines, Inc. v. Secretary of
Agrarian Reform,13 the Court ruled that the equivalent to be rendered for the property to be
taken shall be substantial, full, ample and, as must apply to this case, real. This must be taken
to mean, among others, that the value as of the time of taking should be the price to be paid the
property owner.

Just compensation is defined as the full and fair equivalent of the property taken from its owner
by the expropriator. In this case, this simply means the property’s fair market value at the time
of the filing of the complaint, or "that sum of money which a person desirous but not compelled
to buy, and an owner willing but not compelled to sell, would agree on as a price to be given and
received therefor."14 The measure is not the taker’s gain, but the owner’s loss.

In the determination of such value, the court is not limited to the assessed value of the property
or to the schedule of market values determined by the provincial or city appraisal committee;
these values consist but one factor in the judicial valuation of the property. 15 The nature and
character of the land at the time of its taking is the principal criterion for determining how much
just compensation should be given to the landowner16 All the facts as to the condition of the
property and its surroundings, as well as its improvements and capabilities, should be
considered.17

Neither of the two determinations made by the courts below is therefore correct. A new one
must be arrived at, taking into consideration the foregoing pronouncements.

Now, to the second issue raised by petitioner NPC.

In several cases, the Court struck down NPC’s consistent reliance on Section 3-A of Republic
Act No. 6395, as amended by Presidential Decree 938.18 True, an easement of a right-of-way
transmits no rights except the easement itself, and the respondents would retain full ownership
of the property taken. Nonetheless, the acquisition of such easement is not gratis. The
limitations on the use of the property taken for an indefinite period would deprive its owner of the
normal use thereof. For this reason, the latter is entitled to payment of a just compensation,
which must be neither more nor less than the monetary equivalent of the land taken. 19

While the power of eminent domain results in the taking or appropriation of title to, and
possession of, the expropriated property, no cogent reason appears why said power may not be
availed of to impose only a burden upon the owner of the condemned property, without loss of
title and possession.20 However, if the easement is intended to perpetually or indefinitely deprive
the owner of his proprietary rights through the imposition of conditions that affect the ordinary
use, free enjoyment and disposal of the property or through restrictions and limitations that are
inconsistent with the exercise of the attributes of ownership, or when the introduction of
structures or objects which, by their nature, create or increase the probability of injury, death
upon or destruction of life and property found on the land is necessary, then the owner should
be compensated for the monetary equivalent of the land, in accordance with our ruling in NPC v.
Manubay Agro-Industrial:

As correctly observed by the CA, considering the nature and the effect of the installation power
lines, the limitations on the use of the land for an indefinite period would deprive respondent of
normal use of the property. For this reason, the latter is entitled to payment of a just
compensation, which must be neither more nor less than the monetary equivalent of the land.21

The evidence suggests that NPC’s transmission line project that traverses the respondents’
property is perpetual, or at least indefinite, in nature. Moreover, not to be discounted is the fact
that the high-tension current to be conveyed through said transmission lines evidently poses a
danger to life and limb; injury, death or destruction to life and property within the vicinity. As the
Court held in NPC v. Chiong,22 it is not improper to assume that NPC will erect structures for its
transmission lines within the property. What is sought to be expropriated in this case is, at its
longest extent, 326.34 meters, and through it may be built several structures, not simply one.
Finally, if NPC were to have its way, respondents will continue to pay the realty taxes due on the
affected portion of their property, an imposition that, among others, merits the rejection of NPC’s
thesis of payment of a mere percentage of the property’s actual value.

WHEREFORE, the instant petition is GRANTED in part in that the decision of the Court of
Appeals dated March 14, 2005 vis a vis the award of ₱116,538.00, as and by way of just
compensation for the 19,423 square meters of the respondents’ property, is SET ASIDE, and
the case is ordered REMANDED to the court of origin for the proper determination of the
amount of just compensation for the portion thus taken, based on our pronouncements hereon.
The same decision, however, is AFFIRMED, insofar as it pertains to the award of ₱325,025.00
for the improvements, with legal interest from the time of actual possession by the petitioner.

No pronouncement as to costs.

G.R. No. 78742 July 14, 1989

ASSOCIATION OF SMALL LANDOWNERS IN THE PHILIPPINES, INC., JUANITO D.

GOMEZ, GERARDO B. ALARCIO, FELIPE A. GUICO, JR., BERNARDO M. ALMONTE,
CANUTO RAMIR B. CABRITO, ISIDRO T. GUICO, FELISA I. LLAMIDO, FAUSTO J. SALVA,
REYNALDO G. ESTRADA, FELISA C. BAUTISTA, ESMENIA J. CABE, TEODORO B.
MADRIAGA, AUREA J. PRESTOSA, EMERENCIANA J. ISLA, FELICISIMA C. ARRESTO,
CONSUELO M. MORALES, BENJAMIN R. SEGISMUNDO, CIRILA A. JOSE & NAPOLEON
S. FERRER, petitioners,
vs.
HONORABLE SECRETARY OF AGRARIAN REFORM, respondent.

G.R. No. 79310 July 14, 1989

ARSENIO AL. ACUNA, NEWTON JISON, VICTORINO FERRARIS, DENNIS JEREZA,
HERMINIGILDO GUSTILO, PAULINO D. TOLENTINO and PLANTERS' COMMITTEE, INC.,
Victorias Mill District, Victorias, Negros Occidental, petitioners,
vs.
JOKER ARROYO, PHILIP E. JUICO and PRESIDENTIAL AGRARIAN REFORM
COUNCIL, respondents.

G.R. No. 79744 July 14, 1989

INOCENTES PABICO, petitioner,

vs.
HON. PHILIP E. JUICO, SECRETARY OF THE DEPARTMENT OF AGRARIAN REFORM,
HON. JOKER ARROYO, EXECUTIVE SECRETARY OF THE OFFICE OF THE PRESIDENT,
and Messrs. SALVADOR TALENTO, JAIME ABOGADO, CONRADO AVANCENA and
ROBERTO TAAY, respondents.

G.R. No. 79777 July 14, 1989

NICOLAS S. MANAAY and AGUSTIN HERMANO, JR., petitioners,

vs.
HON. PHILIP ELLA JUICO, as Secretary of Agrarian Reform, and LAND BANK OF THE
PHILIPPINES, respondents.

CRUZ, J.:

In ancient mythology, Antaeus was a terrible giant who blocked and challenged Hercules for his
life on his way to Mycenae after performing his eleventh labor. The two wrestled mightily and
Hercules flung his adversary to the ground thinking him dead, but Antaeus rose even stronger to
resume their struggle. This happened several times to Hercules' increasing amazement. Finally,
as they continued grappling, it dawned on Hercules that Antaeus was the son of Gaea and
could never die as long as any part of his body was touching his Mother Earth. Thus
forewarned, Hercules then held Antaeus up in the air, beyond the reach of the sustaining soil,
and crushed him to death.

Mother Earth. The sustaining soil. The giver of life, without whose invigorating touch even the
powerful Antaeus weakened and died.

The cases before us are not as fanciful as the foregoing tale. But they also tell of the elemental
forces of life and death, of men and women who, like Antaeus need the sustaining strength of
the precious earth to stay alive.

"Land for the Landless" is a slogan that underscores the acute imbalance in the distribution of
this precious resource among our people. But it is more than a slogan. Through the brooding
centuries, it has become a battle-cry dramatizing the increasingly urgent demand of the
dispossessed among us for a plot of earth as their place in the sun.

Recognizing this need, the Constitution in 1935 mandated the policy of social justice to "insure
the well-being and economic security of all the people," 1 especially the less privileged. In 1973,
the new Constitution affirmed this goal adding specifically that "the State shall regulate the
acquisition, ownership, use, enjoyment and disposition of private property and equitably diffuse
property ownership and profits." 2 Significantly, there was also the specific injunction to
"formulate and implement an agrarian reform program aimed at emancipating the tenant from
the bondage of the soil." 3

The Constitution of 1987 was not to be outdone. Besides echoing these sentiments, it also
adopted one whole and separate Article XIII on Social Justice and Human Rights, containing
grandiose but undoubtedly sincere provisions for the uplift of the common people. These include
a call in the following words for the adoption by the State of an agrarian reform program:

SEC. 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.

Earlier, in fact, R.A. No. 3844, otherwise known as the Agricultural Land Reform Code, had
already been enacted by the Congress of the Philippines on August 8, 1963, in line with the
above-stated principles. This was substantially superseded almost a decade later by P.D. No.
27, which was promulgated on October 21, 1972, along with martial law, to provide for the
compulsory acquisition of private lands for distribution among tenant-farmers and to specify
maximum retention limits for landowners.

The people power revolution of 1986 did not change and indeed even energized the thrust for
agrarian reform. Thus, on July 17, 1987, President Corazon C. Aquino issued E.O. No. 228,
declaring full land ownership in favor of the beneficiaries of P.D. No. 27 and providing for the
valuation of still unvalued lands covered by the decree as well as the manner of their payment.
This was followed on July 22, 1987 by Presidential Proclamation No. 131, instituting a
comprehensive agrarian reform program (CARP), and E.O. No. 229, providing the mechanics
for its implementation.

Subsequently, with its formal organization, the revived Congress of the Philippines took over
legislative power from the President and started its own deliberations, including extensive public
hearings, on the improvement of the interests of farmers. The result, after almost a year of
spirited debate, was the enactment of R.A. No. 6657, otherwise known as the Comprehensive
Agrarian Reform Law of 1988, which President Aquino signed on June 10, 1988. This law, while
considerably changing the earlier mentioned enactments, nevertheless gives them suppletory
effect insofar as they are not inconsistent with its provisions. 4

The above-captioned cases have been consolidated because they involve common legal
questions, including serious challenges to the constitutionality of the several measures
mentioned above. They will be the subject of one common discussion and resolution, The
different antecedents of each case will require separate treatment, however, and will first be
explained hereunder.
G.R. No. 79777

Squarely raised in this petition is the constitutionality of P.D. No. 27, E.O. Nos. 228 and 229,
and R.A. No. 6657.

The subjects of this petition are a 9-hectare riceland worked by four tenants and owned by
petitioner Nicolas Manaay and his wife and a 5-hectare riceland worked by four tenants and
owned by petitioner Augustin Hermano, Jr. The tenants were declared full owners of these
lands by E.O. No. 228 as qualified farmers under P.D. No. 27.

The petitioners are questioning P.D. No. 27 and E.O. Nos. 228 and 229 on grounds inter alia of
separation of powers, due process, equal protection and the constitutional limitation that no
private property shall be taken for public use without just compensation.

They contend that President Aquino usurped legislative power when she promulgated E.O. No.
228. The said measure is invalid also for violation of Article XIII, Section 4, of the Constitution,
for failure to provide for retention limits for small landowners. Moreover, it does not conform to
Article VI, Section 25(4) and the other requisites of a valid appropriation.

In connection with the determination of just compensation, the petitioners argue that the same
may be made only by a court of justice and not by the President of the Philippines. They invoke
the recent cases of EPZA v. Dulay 5 andManotok v. National Food Authority. 6 Moreover, the
just compensation contemplated by the Bill of Rights is payable in money or in cash and not in
the form of bonds or other things of value.

In considering the rentals as advance payment on the land, the executive order also deprives
the petitioners of their property rights as protected by due process. The equal protection clause
is also violated because the order places the burden of solving the agrarian problems on the
owners only of agricultural lands. No similar obligation is imposed on the owners of other
properties.

The petitioners also maintain that in declaring the beneficiaries under P.D. No. 27 to be the
owners of the lands occupied by them, E.O. No. 228 ignored judicial prerogatives and so
violated due process. Worse, the measure would not solve the agrarian problem because even
the small farmers are deprived of their lands and the retention rights guaranteed by the
Constitution.

In his Comment, the Solicitor General stresses that P.D. No. 27 has already been upheld in the
earlier cases ofChavez v. Zobel, 7 Gonzales v. Estrella, 8 and Association of Rice and Corn
Producers of the Philippines, Inc. v. The National Land Reform Council. 9 The determination of
just compensation by the executive authorities conformably to the formula prescribed under the
questioned order is at best initial or preliminary only. It does not foreclose judicial intervention
whenever sought or warranted. At any rate, the challenge to the order is premature because no
valuation of their property has as yet been made by the Department of Agrarian Reform. The
petitioners are also not proper parties because the lands owned by them do not exceed the
maximum retention limit of 7 hectares.

Replying, the petitioners insist they are proper parties because P.D. No. 27 does not provide for
retention limits on tenanted lands and that in any event their petition is a class suit brought in
behalf of landowners with landholdings below 24 hectares. They maintain that the determination
of just compensation by the administrative authorities is a final ascertainment. As for the cases
invoked by the public respondent, the constitutionality of P.D. No. 27 was merely assumed
in Chavez, while what was decided in Gonzales was the validity of the imposition of martial law.

In the amended petition dated November 22, 1588, it is contended that P.D. No. 27, E.O. Nos.
228 and 229 (except Sections 20 and 21) have been impliedly repealed by R.A. No. 6657.
Nevertheless, this statute should itself also be declared unconstitutional because it suffers from
substantially the same infirmities as the earlier measures.

A petition for intervention was filed with leave of court on June 1, 1988 by Vicente Cruz, owner
of a 1. 83- hectare land, who complained that the DAR was insisting on the implementation of
P.D. No. 27 and E.O. No. 228 despite a compromise agreement he had reached with his tenant
on the payment of rentals. In a subsequent motion dated April 10, 1989, he adopted the
allegations in the basic amended petition that the above- mentioned enactments have been
impliedly repealed by R.A. No. 6657.

G.R. No. 79310

The petitioners herein are landowners and sugar planters in the Victorias Mill District, Victorias,
Negros Occidental. Co-petitioner Planters' Committee, Inc. is an organization composed of
1,400 planter-members. This petition seeks to prohibit the implementation of Proc. No. 131 and
E.O. No. 229.

The petitioners claim that the power to provide for a Comprehensive Agrarian Reform Program
as decreed by the Constitution belongs to Congress and not the President. Although they agree
that the President could exercise legislative power until the Congress was convened, she could
do so only to enact emergency measures during the transition period. At that, even assuming
that the interim legislative power of the President was properly exercised, Proc. No. 131 and
E.O. No. 229 would still have to be annulled for violating the constitutional provisions on just
compensation, due process, and equal protection.

They also argue that under Section 2 of Proc. No. 131 which provides:

Agrarian Reform Fund.-There is hereby created a special fund, to be known as the Agrarian
Reform Fund, an initial amount of FIFTY BILLION PESOS (P50,000,000,000.00) to cover the
estimated cost of the Comprehensive Agrarian Reform Program from 1987 to 1992 which shall
be sourced from the receipts of the sale of the assets of the Asset Privatization Trust and
Receipts of sale of ill-gotten wealth received through the Presidential Commission on Good
Government and such other sources as government may deem appropriate. The amounts
collected and accruing to this special fund shall be considered automatically appropriated for the
purpose authorized in this Proclamation the amount appropriated is in futuro, not in esse. The
money needed to cover the cost of the contemplated expropriation has yet to be raised and
cannot be appropriated at this time.

Furthermore, they contend that taking must be simultaneous with payment of just compensation
as it is traditionally understood, i.e., with money and in full, but no such payment is
contemplated in Section 5 of the E.O. No. 229. On the contrary, Section 6, thereof provides that
the Land Bank of the Philippines "shall compensate the landowner in an amount to be
established by the government, which shall be based on the owner's declaration of current fair
market value as provided in Section 4 hereof, but subject to certain controls to be defined and
promulgated by the Presidential Agrarian Reform Council." This compensation may not be paid
fully in money but in any of several modes that may consist of part cash and part bond, with
interest, maturing periodically, or direct payment in cash or bond as may be mutually agreed
upon by the beneficiary and the landowner or as may be prescribed or approved by the PARC.

The petitioners also argue that in the issuance of the two measures, no effort was made to
make a careful study of the sugar planters' situation. There is no tenancy problem in the sugar
areas that can justify the application of the CARP to them. To the extent that the sugar planters
have been lumped in the same legislation with other farmers, although they are a separate
group with problems exclusively their own, their right to equal protection has been violated.

A motion for intervention was filed on August 27,1987 by the National Federation of Sugarcane
Planters (NASP) which claims a membership of at least 20,000 individual sugar planters all over
the country. On September 10, 1987, another motion for intervention was filed, this time by
Manuel Barcelona, et al., representing coconut and riceland owners. Both motions were granted
by the Court.

NASP alleges that President Aquino had no authority to fund the Agrarian Reform Program and
that, in any event, the appropriation is invalid because of uncertainty in the amount
appropriated. Section 2 of Proc. No. 131 and Sections 20 and 21 of E.O. No. 229 provide for an
initial appropriation of fifty billion pesos and thus specifies the minimum rather than the
maximum authorized amount. This is not allowed. Furthermore, the stated initial amount has not
been certified to by the National Treasurer as actually available.

Two additional arguments are made by Barcelona, to wit, the failure to establish by clear and
convincing evidence the necessity for the exercise of the powers of eminent domain, and the
violation of the fundamental right to own property.

The petitioners also decry the penalty for non-registration of the lands, which is the
expropriation of the said land for an amount equal to the government assessor's valuation of the
land for tax purposes. On the other hand, if the landowner declares his own valuation he is
unjustly required to immediately pay the corresponding taxes on the land, in violation of the
uniformity rule.

In his consolidated Comment, the Solicitor General first invokes the presumption of
constitutionality in favor of Proc. No. 131 and E.O. No. 229. He also justifies the necessity for
the expropriation as explained in the "whereas" clauses of the Proclamation and submits that,
contrary to the petitioner's contention, a pilot project to determine the feasibility of CARP and a
general survey on the people's opinion thereon are not indispensable prerequisites to its
promulgation.

On the alleged violation of the equal protection clause, the sugar planters have failed to show
that they belong to a different class and should be differently treated. The Comment also
suggests the possibility of Congress first distributing public agricultural lands and scheduling the
expropriation of private agricultural lands later. From this viewpoint, the petition for prohibition
would be premature.

The public respondent also points out that the constitutional prohibition is against the payment
of public money without the corresponding appropriation. There is no rule that only money
already in existence can be the subject of an appropriation law. Finally, the earmarking of fifty
billion pesos as Agrarian Reform Fund, although denominated as an initial amount, is actually
the maximum sum appropriated. The word "initial" simply means that additional amounts may
be appropriated later when necessary.

On April 11, 1988, Prudencio Serrano, a coconut planter, filed a petition on his own behalf,
assailing the constitutionality of E.O. No. 229. In addition to the arguments already raised,
Serrano contends that the measure is unconstitutional because:

(1) Only public lands should be included in the CARP;

(2) E.O. No. 229 embraces more than one subject which is not expressed in the
title;

(3) The power of the President to legislate was terminated on July 2, 1987; and

(4) The appropriation of a P50 billion special fund from the National Treasury did
not originate from the House of Representatives.

G.R. No. 79744

The petitioner alleges that the then Secretary of Department of Agrarian Reform, in violation of
due process and the requirement for just compensation, placed his landholding under the
coverage of Operation Land Transfer. Certificates of Land Transfer were subsequently issued to
the private respondents, who then refused payment of lease rentals to him.

On September 3, 1986, the petitioner protested the erroneous inclusion of his small landholding
under Operation Land transfer and asked for the recall and cancellation of the Certificates of
Land Transfer in the name of the private respondents. He claims that on December 24, 1986,
his petition was denied without hearing. On February 17, 1987, he filed a motion for
reconsideration, which had not been acted upon when E.O. Nos. 228 and 229 were issued.
These orders rendered his motion moot and academic because they directly effected the
transfer of his land to the private respondents.

The petitioner now argues that:

(1) E.O. Nos. 228 and 229 were invalidly issued by the President of the
Philippines.

(2) The said executive orders are violative of the constitutional provision that no
private property shall be taken without due process or just compensation.

(3) The petitioner is denied the right of maximum retention provided for under the
1987 Constitution.

The petitioner contends that the issuance of E.0. Nos. 228 and 229 shortly before Congress
convened is anomalous and arbitrary, besides violating the doctrine of separation of powers.
The legislative power granted to the President under the Transitory Provisions refers only to
emergency measures that may be promulgated in the proper exercise of the police power.
The petitioner also invokes his rights not to be deprived of his property without due process of
law and to the retention of his small parcels of riceholding as guaranteed under Article XIII,
Section 4 of the Constitution. He likewise argues that, besides denying him just compensation
for his land, the provisions of E.O. No. 228 declaring that:

Lease rentals paid to the landowner by the farmer-beneficiary after October 21,
1972 shall be considered as advance payment for the land.

is an unconstitutional taking of a vested property right. It is also his contention that the inclusion
of even small landowners in the program along with other landowners with lands consisting of
seven hectares or more is undemocratic.

In his Comment, the Solicitor General submits that the petition is premature because the motion
for reconsideration filed with the Minister of Agrarian Reform is still unresolved. As for the
validity of the issuance of E.O. Nos. 228 and 229, he argues that they were enacted pursuant to
Section 6, Article XVIII of the Transitory Provisions of the 1987 Constitution which reads:

The incumbent president shall continue to exercise legislative powers until the first Congress is
convened.

On the issue of just compensation, his position is that when P.D. No. 27 was promulgated on
October 21. 1972, the tenant-farmer of agricultural land was deemed the owner of the land he
was tilling. The leasehold rentals paid after that date should therefore be considered
amortization payments.

In his Reply to the public respondents, the petitioner maintains that the motion he filed was
resolved on December 14, 1987. An appeal to the Office of the President would be useless with
the promulgation of E.O. Nos. 228 and 229, which in effect sanctioned the validity of the public
respondent's acts.

G.R. No. 78742

The petitioners in this case invoke the right of retention granted by P.D. No. 27 to owners of rice
and corn lands not exceeding seven hectares as long as they are cultivating or intend to
cultivate the same. Their respective lands do not exceed the statutory limit but are occupied by
tenants who are actually cultivating such lands.

According to P.D. No. 316, which was promulgated in implementation of P.D. No. 27:

No tenant-farmer in agricultural lands primarily devoted to rice and corn shall be

ejected or removed from his farmholding until such time as the respective rights
of the tenant- farmers and the landowner shall have been determined in
accordance with the rules and regulations implementing P.D. No. 27.

The petitioners claim they cannot eject their tenants and so are unable to enjoy their right of
retention because the Department of Agrarian Reform has so far not issued the implementing
rules required under the above-quoted decree. They therefore ask the Court for a writ of
mandamus to compel the respondent to issue the said rules.
In his Comment, the public respondent argues that P.D. No. 27 has been amended by LOI 474
removing any right of retention from persons who own other agricultural lands of more than 7
hectares in aggregate area or lands used for residential, commercial, industrial or other
purposes from which they derive adequate income for their family. And even assuming that the
petitioners do not fall under its terms, the regulations implementing P.D. No. 27 have already
been issued, to wit, the Memorandum dated July 10, 1975 (Interim Guidelines on Retention by
Small Landowners, with an accompanying Retention Guide Table), Memorandum Circular No.
11 dated April 21, 1978, (Implementation Guidelines of LOI No. 474), Memorandum Circular No.
18-81 dated December 29,1981 (Clarificatory Guidelines on Coverage of P.D. No. 27 and
Retention by Small Landowners), and DAR Administrative Order No. 1, series of 1985
(Providing for a Cut-off Date for Landowners to Apply for Retention and/or to Protest the
Coverage of their Landholdings under Operation Land Transfer pursuant to P.D. No. 27). For
failure to file the corresponding applications for retention under these measures, the petitioners
are now barred from invoking this right.

The public respondent also stresses that the petitioners have prematurely initiated this case
notwithstanding the pendency of their appeal to the President of the Philippines. Moreover, the
issuance of the implementing rules, assuming this has not yet been done, involves the exercise
of discretion which cannot be controlled through the writ of mandamus. This is especially true if
this function is entrusted, as in this case, to a separate department of the government.

In their Reply, the petitioners insist that the above-cited measures are not applicable to them
because they do not own more than seven hectares of agricultural land. Moreover, assuming
arguendo that the rules were intended to cover them also, the said measures are nevertheless
not in force because they have not been published as required by law and the ruling of this
Court in Tanada v. Tuvera.10 As for LOI 474, the same is ineffective for the additional reason
that a mere letter of instruction could not have repealed the presidential decree.

Although holding neither purse nor sword and so regarded as the weakest of the three
departments of the government, the judiciary is nonetheless vested with the power to annul the
acts of either the legislative or the executive or of both when not conformable to the
fundamental law. This is the reason for what some quarters call the doctrine of judicial
supremacy. Even so, this power is not lightly assumed or readily exercised. The doctrine of
separation of powers imposes upon the courts a proper restraint, born of the nature of their
functions and of their respect for the other departments, in striking down the acts of the
legislative and the executive as unconstitutional. The policy, indeed, is a blend of courtesy and
caution. To doubt is to sustain. The theory is that before the act was done or the law was
enacted, earnest studies were made by Congress or the President, or both, to insure that the
Constitution would not be breached.

In addition, the Constitution itself lays down stringent conditions for a declaration of
unconstitutionality, requiring therefor the concurrence of a majority of the members of the
Supreme Court who took part in the deliberations and voted on the issue during their session en
banc.11 And as established by judge made doctrine, the Court will assume jurisdiction over a
constitutional question only if it is shown that the essential requisites of a judicial inquiry into
such a question are first satisfied. Thus, there must be an actual case or controversy involving a
conflict of legal rights susceptible of judicial determination, the constitutional question must have
been opportunely raised by the proper party, and the resolution of the question is unavoidably
necessary to the decision of the case itself. 12

With particular regard to the requirement of proper party as applied in the cases before us, we
hold that the same is satisfied by the petitioners and intervenors because each of them has
sustained or is in danger of sustaining an immediate injury as a result of the acts or measures
complained of. 13 And even if, strictly speaking, they are not covered by the definition, it is still
within the wide discretion of the Court to waive the requirement and so remove the impediment
to its addressing and resolving the serious constitutional questions raised.

In the first Emergency Powers Cases, 14 ordinary citizens and taxpayers were allowed to
question the constitutionality of several executive orders issued by President Quirino although
they were invoking only an indirect and general interest shared in common with the public. The
Court dismissed the objection that they were not proper parties and ruled that "the
transcendental importance to the public of these cases demands that they be settled promptly
and definitely, brushing aside, if we must, technicalities of procedure." We have since then
applied this exception in many other cases. 15

The other above-mentioned requisites have also been met in the present petitions.

In must be stressed that despite the inhibitions pressing upon the Court when confronted with
constitutional issues like the ones now before it, it will not hesitate to declare a law or act invalid
when it is convinced that this must be done. In arriving at this conclusion, its only criterion will be
the Constitution as God and its conscience give it the light to probe its meaning and discover its
purpose. Personal motives and political considerations are irrelevancies that cannot influence its
decision. Blandishment is as ineffectual as intimidation.

For all the awesome power of the Congress and the Executive, the Court will not hesitate to
"make the hammer fall, and heavily," to use Justice Laurel's pithy language, where the acts of
these departments, or of any public official, betray the people's will as expressed in the
Constitution.

It need only be added, to borrow again the words of Justice Laurel, that —

... when the judiciary mediates to allocate constitutional boundaries, it does not
assert any superiority over the other departments; it does not in reality nullify or
invalidate an act of the Legislature, but only asserts the solemn and sacred
obligation assigned to it by the Constitution to determine conflicting claims of
authority under the Constitution and to establish for the parties in an actual
controversy the rights which that instrument secures and guarantees to them.
This is in truth all that is involved in what is termed "judicial supremacy" which
properly is the power of judicial review under the Constitution. 16

The cases before us categorically raise constitutional questions that this Court must
categorically resolve. And so we shall.

II

We proceed first to the examination of the preliminary issues before resolving the more serious
challenges to the constitutionality of the several measures involved in these petitions.
The promulgation of P.D. No. 27 by President Marcos in the exercise of his powers under
martial law has already been sustained in Gonzales v. Estrella and we find no reason to modify
or reverse it on that issue. As for the power of President Aquino to promulgate Proc. No. 131
and E.O. Nos. 228 and 229, the same was authorized under Section 6 of the Transitory
Provisions of the 1987 Constitution, quoted above.

The said measures were issued by President Aquino before July 27, 1987, when the Congress
of the Philippines was formally convened and took over legislative power from her. They are not
"midnight" enactments intended to pre-empt the legislature because E.O. No. 228 was issued
on July 17, 1987, and the other measures, i.e., Proc. No. 131 and E.O. No. 229, were both
issued on July 22, 1987. Neither is it correct to say that these measures ceased to be valid
when she lost her legislative power for, like any statute, they continue to be in force unless
modified or repealed by subsequent law or declared invalid by the courts. A statute does
not ipso facto become inoperative simply because of the dissolution of the legislature that
enacted it. By the same token, President Aquino's loss of legislative power did not have the
effect of invalidating all the measures enacted by her when and as long as she possessed it.

Significantly, the Congress she is alleged to have undercut has not rejected but in fact
substantially affirmed the challenged measures and has specifically provided that they shall be
suppletory to R.A. No. 6657 whenever not inconsistent with its provisions. 17 Indeed, some
portions of the said measures, like the creation of the P50 billion fund in Section 2 of Proc. No.
131, and Sections 20 and 21 of E.O. No. 229, have been incorporated by reference in the
CARP Law. 18

That fund, as earlier noted, is itself being questioned on the ground that it does not conform to
the requirements of a valid appropriation as specified in the Constitution. Clearly, however,
Proc. No. 131 is not an appropriation measure even if it does provide for the creation of said
fund, for that is not its principal purpose. An appropriation law is one the primary and specific
purpose of which is to authorize the release of public funds from the treasury. 19 The creation of
the fund is only incidental to the main objective of the proclamation, which is agrarian reform.

It should follow that the specific constitutional provisions invoked, to wit, Section 24 and Section
25(4) of Article VI, are not applicable. With particular reference to Section 24, this obviously
could not have been complied with for the simple reason that the House of Representatives,
which now has the exclusive power to initiate appropriation measures, had not yet been
convened when the proclamation was issued. The legislative power was then solely vested in
the President of the Philippines, who embodied, as it were, both houses of Congress.

The argument of some of the petitioners that Proc. No. 131 and E.O. No. 229 should be
invalidated because they do not provide for retention limits as required by Article XIII, Section 4
of the Constitution is no longer tenable. R.A. No. 6657 does provide for such limits now in
Section 6 of the law, which in fact is one of its most controversial provisions. This section
declares:

Retention Limits. — Except as otherwise provided in this Act, no person may own
or retain, directly or indirectly, any public or private agricultural land, the size of
which shall vary according to factors governing a viable family-sized farm, such
as commodity produced, terrain, infrastructure, and soil fertility as determined by
the Presidential Agrarian Reform Council (PARC) created hereunder, but in no
case shall retention by the landowner exceed five (5) hectares. Three (3)
 hectares may be awarded to each child of the landowner, subject to the following
qualifications: (1) that he is at least fifteen (15) years of age; and (2) that he is
actually tilling the land or directly managing the farm; Provided, That landowners
whose lands have been covered by Presidential Decree No. 27 shall be allowed
to keep the area originally retained by them thereunder, further, That original
homestead grantees or direct compulsory heirs who still own the original
homestead at the time of the approval of this Act shall retain the same areas as
long as they continue to cultivate said homestead.

The argument that E.O. No. 229 violates the constitutional requirement that a bill shall have only
one subject, to be expressed in its title, deserves only short attention. It is settled that the title of
the bill does not have to be a catalogue of its contents and will suffice if the matters embodied in
the text are relevant to each other and may be inferred from the title. 20

The Court wryly observes that during the past dictatorship, every presidential issuance, by
whatever name it was called, had the force and effect of law because it came from President
Marcos. Such are the ways of despots. Hence, it is futile to argue, as the petitioners do in G.R.
No. 79744, that LOI 474 could not have repealed P.D. No. 27 because the former was only a
letter of instruction. The important thing is that it was issued by President Marcos, whose word
was law during that time.

But for all their peremptoriness, these issuances from the President Marcos still had to comply
with the requirement for publication as this Court held in Tanada v. Tuvera. 21 Hence, unless
published in the Official Gazette in accordance with Article 2 of the Civil Code, they could not
have any force and effect if they were among those enactments successfully challenged in that
case. LOI 474 was published, though, in the Official Gazette dated November 29,1976.)

Finally, there is the contention of the public respondent in G.R. No. 78742 that the writ of
mandamus cannot issue to compel the performance of a discretionary act, especially by a
specific department of the government. That is true as a general proposition but is subject to
one important qualification. Correctly and categorically stated, the rule is that mandamus will lie
to compel the discharge of the discretionary duty itself but not to control the discretion to be
exercised. In other words, mandamus can issue to require action only but not specific action.

Whenever a duty is imposed upon a public official and an unnecessary and

unreasonable delay in the exercise of such duty occurs, if it is a clear duty
imposed by law, the courts will intervene by the extraordinary legal remedy of
mandamus to compel action. If the duty is purely ministerial, the courts will
require specific action. If the duty is purely discretionary, the courts
by mandamus will require action only. For example, if an inferior court, public
official, or board should, for an unreasonable length of time, fail to decide a
particular question to the great detriment of all parties concerned, or a court
should refuse to take jurisdiction of a cause when the law clearly gave it
jurisdiction mandamus will issue, in the first case to require a decision, and in the
second to require that jurisdiction be taken of the cause. 22

And while it is true that as a rule the writ will not be proper as long as there is still a plain,
speedy and adequate remedy available from the administrative authorities, resort to the courts
may still be permitted if the issue raised is a question of law. 23
III

There are traditional distinctions between the police power and the power of eminent domain
that logically preclude the application of both powers at the same time on the same subject. In
the case of City of Baguio v. NAWASA, 24for example, where a law required the transfer of all
municipal waterworks systems to the NAWASA in exchange for its assets of equivalent value,
the Court held that the power being exercised was eminent domain because the property
involved was wholesome and intended for a public use. Property condemned under the police
power is noxious or intended for a noxious purpose, such as a building on the verge of collapse,
which should be demolished for the public safety, or obscene materials, which should be
destroyed in the interest of public morals. The confiscation of such property is not compensable,
unlike the taking of property under the power of expropriation, which requires the payment of
just compensation to the owner.

In the case of Pennsylvania Coal Co. v. Mahon, 25 Justice Holmes laid down the limits of the
police power in a famous aphorism: "The general rule at least is that while property may be
regulated to a certain extent, if regulation goes too far it will be recognized as a taking." The
regulation that went "too far" was a law prohibiting mining which might cause the subsidence of
structures for human habitation constructed on the land surface. This was resisted by a coal
company which had earlier granted a deed to the land over its mine but reserved all mining
rights thereunder, with the grantee assuming all risks and waiving any damage claim. The Court
held the law could not be sustained without compensating the grantor. Justice Brandeis filed a
lone dissent in which he argued that there was a valid exercise of the police power. He said:

Every restriction upon the use of property imposed in the exercise of the police
power deprives the owner of some right theretofore enjoyed, and is, in that
sense, an abridgment by the State of rights in property without making
compensation. But restriction imposed to protect the public health, safety or
morals from dangers threatened is not a taking. The restriction here in question is
merely the prohibition of a noxious use. The property so restricted remains in the
possession of its owner. The state does not appropriate it or make any use of it.
The state merely prevents the owner from making a use which interferes with
paramount rights of the public. Whenever the use prohibited ceases to be
noxious — as it may because of further changes in local or social conditions —
the restriction will have to be removed and the owner will again be free to enjoy
his property as heretofore.

Recent trends, however, would indicate not a polarization but a mingling of the police power and
the power of eminent domain, with the latter being used as an implement of the former like the
power of taxation. The employment of the taxing power to achieve a police purpose has long
been accepted. 26 As for the power of expropriation, Prof. John J. Costonis of the University of
Illinois College of Law (referring to the earlier case of Euclid v. Ambler Realty Co., 272 US 365,
which sustained a zoning law under the police power) makes the following significant remarks:

Euclid, moreover, was decided in an era when judges located the Police and
eminent domain powers on different planets. Generally speaking, they viewed
eminent domain as encompassing public acquisition of private property for
improvements that would be available for public use," literally construed. To the
police power, on the other hand, they assigned the less intrusive task of
preventing harmful externalities a point reflected in the Euclid opinion's reliance
 on an analogy to nuisance law to bolster its support of zoning. So long as
suppression of a privately authored harm bore a plausible relation to some
legitimate "public purpose," the pertinent measure need have afforded no
compensation whatever. With the progressive growth of government's
involvement in land use, the distance between the two powers has contracted
considerably. Today government often employs eminent domain interchangeably
with or as a useful complement to the police power-- a trend expressly approved
in the Supreme Court's 1954 decision in Berman v. Parker, which broadened the
reach of eminent domain's "public use" test to match that of the police power's
standard of "public purpose." 27

The Berman case sustained a redevelopment project and the improvement of blighted areas in
the District of Columbia as a proper exercise of the police power. On the role of eminent domain
in the attainment of this purpose, Justice Douglas declared:

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. 28

In Penn Central Transportation Co. v. New York City, 29 decided by a 6-3 vote in 1978, the U.S
Supreme Court sustained the respondent's Landmarks Preservation Law under which the
owners of the Grand Central Terminal had not been allowed to construct a multi-story office
building over the Terminal, which had been designated a historic landmark. Preservation of the
landmark was held to be a valid objective of the police power. The problem, however, was that
the owners of the Terminal would be deprived of the right to use the airspace above it although
other landowners in the area could do so over their respective properties. While insisting that
there was here no taking, the Court nonetheless recognized certain compensatory rights
accruing to Grand Central Terminal which it said would "undoubtedly mitigate" the loss caused
by the regulation. This "fair compensation," as he called it, was explained by Prof. Costonis in
this wise:

In return for retaining the Terminal site in its pristine landmark status, Penn Central was
authorized to transfer to neighboring properties the authorized but unused rights accruing to the
site prior to the Terminal's designation as a landmark — the rights which would have been
exhausted by the 59-story building that the city refused to countenance atop the Terminal.
Prevailing bulk restrictions on neighboring sites were proportionately relaxed, theoretically
enabling Penn Central to recoup its losses at the Terminal site by constructing or selling to
others the right to construct larger, hence more profitable buildings on the transferee sites. 30

The cases before us present no knotty complication insofar as the question of compensable
taking is concerned. To the extent that the measures under challenge merely prescribe retention
limits for landowners, there is an exercise of the police power for the regulation of private
property in accordance with the Constitution. But where, to carry out such regulation, it becomes
necessary to deprive such owners of whatever lands they may own in excess of the maximum
area allowed, there is definitely a taking under the power of eminent domain for which payment
of just compensation is imperative. The taking contemplated is not a mere limitation of the use
of the land. What is required is the surrender of the title to and the physical possession of the
said excess and all beneficial rights accruing to the owner in favor of the farmer-beneficiary.
This is definitely an exercise not of the police power but of the power of eminent domain.

Whether as an exercise of the police power or of the power of eminent domain, the several
measures before us are challenged as violative of the due process and equal protection
clauses.

The challenge to Proc. No. 131 and E.O. Nos. 228 and 299 on the ground that no retention
limits are prescribed has already been discussed and dismissed. It is noted that although they
excited many bitter exchanges during the deliberation of the CARP Law in Congress, the
retention limits finally agreed upon are, curiously enough, not being questioned in these
petitions. We therefore do not discuss them here. The Court will come to the other claimed
violations of due process in connection with our examination of the adequacy of just
compensation as required under the power of expropriation.

The argument of the small farmers that they have been denied equal protection because of the
absence of retention limits has also become academic under Section 6 of R.A. No. 6657.
Significantly, they too have not questioned the area of such limits. There is also the complaint
that they should not be made to share the burden of agrarian reform, an objection also made by
the sugar planters on the ground that they belong to a particular class with particular interests of
their own. However, no evidence has been submitted to the Court that the requisites of a valid
classification have been violated.

Classification has been defined as the grouping of persons or things similar to each other in
certain particulars and different from each other in these same particulars. 31 To be valid, it must
conform to the following requirements: (1) it must be based on substantial distinctions; (2) it
must be germane to the purposes of the law; (3) it must not be limited to existing conditions
only; and (4) it must apply equally to all the members of the class. 32 The Court finds that all
these requisites have been met by the measures here challenged as arbitrary and
discriminatory.

Equal protection simply means that all persons or things similarly situated must be treated alike
both as to the rights conferred and the liabilities imposed. 33 The petitioners have not shown that
they belong to a different class and entitled to a different treatment. The argument that not only
landowners but also owners of other properties must be made to share the burden of
implementing land reform must be rejected. There is a substantial distinction between these two
classes of owners that is clearly visible except to those who will not see. There is no need to
elaborate on this matter. In any event, the Congress is allowed a wide leeway in providing for a
valid classification. Its decision is accorded recognition and respect by the courts of justice
except only where its discretion is abused to the detriment of the Bill of Rights.

It is worth remarking at this juncture that a statute may be sustained under the police power only
if there is a concurrence of the lawful subject and the lawful method. Put otherwise, the interests
of the public generally as distinguished from those of a particular class require the interference
of the State and, no less important, the means employed are reasonably necessary for the
attainment of the purpose sought to be achieved and not unduly oppressive upon
individuals. 34 As the subject and purpose of agrarian reform have been laid down by the
Constitution itself, we may say that the first requirement has been satisfied. What remains to be
examined is the validity of the method employed to achieve the constitutional goal.

One of the basic principles of the democratic system is that where the rights of the individual are
concerned, the end does not justify the means. It is not enough that there be a valid objective; it
is also necessary that the means employed to pursue it be in keeping with the Constitution.
Mere expediency will not excuse constitutional shortcuts. There is no question that not even the
strongest moral conviction or the most urgent public need, subject only to a few notable
exceptions, will excuse the bypassing of an individual's rights. It is no exaggeration to say that
a, person invoking a right guaranteed under Article III of the Constitution is a majority of one
even as against the rest of the nation who would deny him that right.

That right covers the person's life, his liberty and his property under Section 1 of Article III of the
Constitution. With regard to his property, the owner enjoys the added protection of Section 9,
which reaffirms the familiar rule that private property shall not be taken for public use without
just compensation.

This brings us now to the power of eminent domain.

IV

Eminent domain is an inherent power of the State that enables it to forcibly

acquire private lands intended for public use upon payment of just compensation
to the owner. Obviously, there is no need to expropriate where the owner is
willing to sell under terms also acceptable to the purchaser, in which case an
ordinary deed of sale may be agreed upon by the parties. 35 It is only where the
owner is unwilling to sell, or cannot accept the price or other conditions offered
by the vendee, that the power of eminent domain will come into play to assert the
paramount authority of the State over the interests of the property owner. Private
rights must then yield to the irresistible demands of the public interest on the
time-honored justification, as in the case of the police power, that the welfare of
the people is the supreme law.

But for all its primacy and urgency, the power of expropriation is by no means absolute (as
indeed no power is absolute). The limitation is found in the constitutional injunction that "private
property shall not be taken for public use without just compensation" and in the abundant
jurisprudence that has evolved from the interpretation of this principle. Basically, the
requirements for a proper exercise of the power are: (1) public use and (2) just compensation.

Let us dispose first of the argument raised by the petitioners in G.R. No. 79310 that the State
should first distribute public agricultural lands in the pursuit of agrarian reform instead of
immediately disturbing property rights by forcibly acquiring private agricultural lands.
Parenthetically, it is not correct to say that only public agricultural lands may be covered by the
CARP as the Constitution calls for "the just distribution of all agricultural lands." In any event,
the decision to redistribute private agricultural lands in the manner prescribed by the CARP was
made by the legislative and executive departments in the exercise of their discretion. We are not
justified in reviewing that discretion in the absence of a clear showing that it has been abused.
A becoming courtesy admonishes us to respect the decisions of the political departments when
they decide what is known as the political question. As explained by Chief Justice Concepcion
in the case of Tañada v. Cuenco: 36

The term "political question" connotes what it means in ordinary parlance,

namely, a question of policy. It refers to "those questions which, under the
Constitution, are to be decided by the people in their sovereign capacity; or in
regard to which full discretionary authority has been delegated to the legislative
or executive branch of the government." It is concerned with issues dependent
upon the wisdom, not legality, of a particular measure.

It is true that the concept of the political question has been constricted with the enlargement of
judicial power, which now includes the authority of the courts "to determine whether or not there
has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of
any branch or instrumentality of the Government." 37 Even so, this should not be construed as a
license for us to reverse the other departments simply because their views may not coincide
with ours.

The legislature and the executive have been seen fit, in their wisdom, to include in the CARP
the redistribution of private landholdings (even as the distribution of public agricultural lands is
first provided for, while also continuing apace under the Public Land Act and other cognate
laws). The Court sees no justification to interpose its authority, which we may assert only if we
believe that the political decision is not unwise, but illegal. We do not find it to be so.

In U.S. v. Chandler-Dunbar Water Power Company,38 it was held:

Congress having determined, as it did by the Act of March 3,1909 that the entire
St. Mary's river between the American bank and the international line, as well as
all of the upland north of the present ship canal, throughout its entire length, was
"necessary for the purpose of navigation of said waters, and the waters
connected therewith," that determination is conclusive in condemnation
proceedings instituted by the United States under that Act, and there is no room
for judicial review of the judgment of Congress ... .

As earlier observed, the requirement for public use has already been settled for us by the
Constitution itself No less than the 1987 Charter calls for agrarian reform, which is the reason
why private agricultural lands are to be taken from their owners, subject to the prescribed
maximum retention limits. The purposes specified in P.D. No. 27, Proc. No. 131 and R.A. No.
6657 are only an elaboration of the constitutional injunction that the State adopt the necessary
measures "to encourage and undertake the just distribution of all agricultural lands to enable
farmers who are landless to own directly or collectively the lands they till." That public use, as
pronounced by the fundamental law itself, must be binding on us.

The second requirement, i.e., the payment of just compensation, needs a longer and more
thoughtful examination.

Just compensation is defined as the full and fair equivalent of the property taken from its owner
by the expropriator. 39 It has been repeatedly stressed by this Court that the measure is not the
taker's gain but the owner's loss. 40 The word "just" is used to intensify the meaning of the word
"compensation" to convey the idea that the equivalent to be rendered for the property to be
taken shall be real, substantial, full, ample. 41

It bears repeating that the measures challenged in these petitions contemplate more than a
mere regulation of the use of private lands under the police power. We deal here with an actual
taking of private agricultural lands that has dispossessed the owners of their property and
deprived them of all its beneficial use and enjoyment, to entitle them to the just compensation
mandated by the Constitution.

As held in Republic of the Philippines v. Castellvi, 42 there is compensable taking when the
following conditions concur: (1) the expropriator must enter a private property; (2) the entry must
be for more than a momentary period; (3) the entry must be under warrant or color of legal
authority; (4) the property must be devoted to public use or otherwise informally appropriated or
injuriously affected; and (5) the utilization of the property for public use must be in such a way
as to oust the owner and deprive him of beneficial enjoyment of the property. All these
requisites are envisioned in the measures before us.

Where the State itself is the expropriator, it is not necessary for it to make a deposit upon its
taking possession of the condemned property, as "the compensation is a public charge, the
good faith of the public is pledged for its payment, and all the resources of taxation may be
employed in raising the amount." 43 Nevertheless, Section 16(e) of the CARP Law provides that:

Upon receipt by the landowner of the corresponding payment or, in case of

rejection or no response from the landowner, upon the deposit with an accessible
bank designated by the DAR of the compensation in cash or in LBP bonds in
accordance with this Act, the DAR shall take immediate possession of the land
and shall request the proper Register of Deeds to issue a Transfer Certificate of
Title (TCT) in the name of the Republic of the Philippines. The DAR shall
thereafter proceed with the redistribution of the land to the qualified beneficiaries.

Objection is raised, however, to the manner of fixing the just compensation, which it is claimed
is entrusted to the administrative authorities in violation of judicial prerogatives. Specific
reference is made to Section 16(d), which provides that in case of the rejection or disregard by
the owner of the offer of the government to buy his land-

... the DAR shall conduct summary administrative proceedings to determine the
compensation for the land by requiring the landowner, the LBP and other
interested parties to submit evidence as to the just compensation for the land,
within fifteen (15) days from the receipt of the notice. After the expiration of the
above period, the matter is deemed submitted for decision. The DAR shall decide
the case within thirty (30) days after it is submitted for decision.

To be sure, the determination of just compensation is a function addressed to the courts of

justice and may not be usurped by any other branch or official of the government. EPZA v.
Dulay 44 resolved a challenge to several decrees promulgated by President Marcos providing
that the just compensation for property under expropriation should be either the assessment of
the property by the government or the sworn valuation thereof by the owner, whichever was
lower. In declaring these decrees unconstitutional, the Court held through Mr. Justice Hugo E.
Gutierrez, Jr.:
 The method of ascertaining just compensation under the aforecited decrees
constitutes impermissible encroachment on judicial prerogatives. It tends to
render this Court inutile in a matter which under this Constitution is reserved to it
for final determination.

Thus, although in an expropriation proceeding the court technically would still

have the power to determine the just compensation for the property, following the
applicable decrees, its task would be relegated to simply stating the lower value
of the property as declared either by the owner or the assessor. As a necessary
consequence, it would be useless for the court to appoint commissioners under
Rule 67 of the Rules of Court. Moreover, the need to satisfy the due process
clause in the taking of private property is seemingly fulfilled since it cannot be
said that a judicial proceeding was not had before the actual taking. However, the
strict application of the decrees during the proceedings would be nothing short of
a mere formality or charade as the court has only to choose between the
valuation of the owner and that of the assessor, and its choice is always limited
to the lower of the two. The court cannot exercise its discretion or independence
in determining what is just or fair. Even a grade school pupil could substitute for
the judge insofar as the determination of constitutional just compensation is
concerned.

xxx

In the present petition, we are once again confronted with the same question of
whether the courts under P.D. No. 1533, which contains the same provision on
just compensation as its predecessor decrees, still have the power and authority
to determine just compensation, independent of what is stated by the decree and
to this effect, to appoint commissioners for such purpose.

This time, we answer in the affirmative.

xxx

It is violative of due process to deny the owner the opportunity to prove that the
valuation in the tax documents is unfair or wrong. And it is repulsive to the basic
concepts of justice and fairness to allow the haphazard work of a minor
bureaucrat or clerk to absolutely prevail over the judgment of a court
promulgated only after expert commissioners have actually viewed the property,
after evidence and arguments pro and con have been presented, and after all
factors and considerations essential to a fair and just determination have been
judiciously evaluated.

A reading of the aforecited Section 16(d) will readily show that it does not suffer from the
arbitrariness that rendered the challenged decrees constitutionally objectionable. Although the
proceedings are described as summary, the landowner and other interested parties are
nevertheless allowed an opportunity to submit evidence on the real value of the property. But
more importantly, the determination of the just compensation by the DAR is not by any means
final and conclusive upon the landowner or any other interested party, for Section 16(f) clearly
provides:
 Any party who disagrees with the decision may bring the matter to the court of
proper jurisdiction for final determination of just compensation.

The determination made by the DAR is only preliminary unless accepted by all parties
concerned. Otherwise, the courts of justice will still have the right to review with finality the said
determination in the exercise of what is admittedly a judicial function.

The second and more serious objection to the provisions on just compensation is not as easily
resolved.

This refers to Section 18 of the CARP Law providing in full as follows:

SEC. 18. Valuation and Mode of Compensation. — The LBP shall compensate
the landowner in such amount as may be agreed upon by the landowner and the
DAR and the LBP, in accordance with the criteria provided for in Sections 16 and
17, and other pertinent provisions hereof, or as may be finally determined by the
court, as the just compensation for the land.

The compensation shall be paid in one of the following modes, at the option of
the landowner:

(1) Cash payment, under the following terms and conditions:

(a) For lands above fifty (50) hectares, insofar as

the excess hectarage is concerned — Twenty-five
percent (25%) cash, the balance to be paid in
government financial instruments negotiable at any
time.

(b) For lands above twenty-four (24) hectares and

up to fifty (50) hectares — Thirty percent (30%)
cash, the balance to be paid in government
financial instruments negotiable at any time.

(c) For lands twenty-four (24) hectares and below

— Thirty-five percent (35%) cash, the balance to be
paid in government financial instruments negotiable
at any time.

(2) Shares of stock in government-owned or controlled corporations, LBP

preferred shares, physical assets or other qualified investments in accordance
with guidelines set by the PARC;

(3) Tax credits which can be used against any tax liability;

(4) LBP bonds, which shall have the following features:

(a) Market interest rates aligned with 91-day

treasury bill rates. Ten percent (10%) of the face
value of the bonds shall mature every year from the
date of issuance until the tenth (10th) year:
Provided, That should the landowner choose to
forego the cash portion, whether in full or in part, he
shall be paid correspondingly in LBP bonds;

(b) Transferability and negotiability. Such LBP

bonds may be used by the landowner, his
successors-in- interest or his assigns, up to the
amount of their face value, for any of the following:

(i) Acquisition of land or other real properties of the

government, including assets under the Asset
Privatization Program and other assets foreclosed
by government financial institutions in the same
province or region where the lands for which the
bonds were paid are situated;

(ii) Acquisition of shares of stock of government-

owned or controlled corporations or shares of stock
owned by the government in private corporations;

(iii) Substitution for surety or bail bonds for the

provisional release of accused persons, or for
performance bonds;

(iv) Security for loans with any government financial

institution, provided the proceeds of the loans shall
be invested in an economic enterprise, preferably in
a small and medium- scale industry, in the same
province or region as the land for which the bonds
are paid;

(v) Payment for various taxes and fees to

government: Provided, That the use of these bonds
for these purposes will be limited to a certain
percentage of the outstanding balance of the
financial instruments; Provided, further, That the
PARC shall determine the percentages mentioned
above;

(vi) Payment for tuition fees of the immediate family

of the original bondholder in government
universities, colleges, trade schools, and other
institutions;

(vii) Payment for fees of the immediate family of the

original bondholder in government hospitals; and
 (viii) Such other uses as the PARC may from time
to time allow.

The contention of the petitioners in G.R. No. 79777 is that the above provision is
unconstitutional insofar as it requires the owners of the expropriated properties to accept just
compensation therefor in less than money, which is the only medium of payment allowed. In
support of this contention, they cite jurisprudence holding that:

The fundamental rule in expropriation matters is that the owner of the property
expropriated is 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. Just compensation has always been understood to be the just
and complete equivalent of the loss which the owner of the thing expropriated
has to suffer by reason of the expropriation . 45 (Emphasis supplied.)

In J.M. Tuazon Co. v. Land Tenure Administration, 46 this Court held:

It is well-settled that just compensation means the equivalent for the value of the
property at the time of its taking. Anything beyond that is more, and anything
short of that is less, than just compensation. It means a fair and full equivalent for
the loss sustained, which is the measure of the indemnity, not whatever gain
would accrue to the expropriating entity. The market value of the land taken is
the just compensation to which the owner of condemned property is entitled, the
market value being that sum of money which a person desirous, but not
compelled to buy, and an owner, willing, but not compelled to sell, would agree
on as a price to be given and received for such property. (Emphasis supplied.)

In the United States, where much of our jurisprudence on the subject has been derived, the
weight of authority is also to the effect that just compensation for property expropriated is
payable only in money and not otherwise. Thus —

The medium of payment of compensation is ready money or cash. The

condemnor cannot compel the owner to accept anything but money, nor can the
owner compel or require the condemnor to pay him on any other basis than the
value of the property in money at the time and in the manner prescribed by the
Constitution and the statutes. When the power of eminent domain is resorted to,
there must be a standard medium of payment, binding upon both parties, and the
law has fixed that standard as money in cash. 47 (Emphasis supplied.)

Part cash and deferred payments are not and cannot, in the nature of things, be
regarded as a reliable and constant standard of compensation. 48

"Just compensation" for property taken by condemnation means a fair equivalent

in money, which must be paid at least within a reasonable time after the taking,
and it is not within the power of the Legislature to substitute for such payment
future obligations, bonds, or other valuable advantage. 49(Emphasis supplied.)

It cannot be denied from these cases that the traditional medium for the payment of just
compensation is money and no other. And so, conformably, has just compensation been paid in
the past solely in that medium. However, we do not deal here with the traditional excercise of
the power of eminent domain. This is not an ordinary expropriation where only a specific
property of relatively limited area is sought to be taken by the State from its owner for a specific
and perhaps local purpose.

What we deal with here is a revolutionary kind of expropriation.

The expropriation before us affects all private agricultural lands whenever found and of
whatever kind as long as they are in excess of the maximum retention limits allowed their
owners. This kind of expropriation is intended for the benefit not only of a particular community
or of a small segment of the population but of the entire Filipino nation, from all levels of our
society, from the impoverished farmer to the land-glutted owner. Its purpose does not cover only
the whole territory of this country but goes beyond in time to the foreseeable future, which it
hopes to secure and edify with the vision and the sacrifice of the present generation of Filipinos.
Generations yet to come are as involved in this program as we are today, although hopefully
only as beneficiaries of a richer and more fulfilling life we will guarantee to them tomorrow
through our thoughtfulness today. And, finally, let it not be forgotten that it is no less than the
Constitution itself that has ordained this revolution in the farms, calling for "a just distribution"
among the farmers of lands that have heretofore been the prison of their dreams but can now
become the key at least to their deliverance.

Such a program will involve not mere millions of pesos. The cost will be tremendous.
Considering the vast areas of land subject to expropriation under the laws before us, we
estimate that hundreds of billions of pesos will be needed, far more indeed than the amount of
P50 billion initially appropriated, which is already staggering as it is by our present standards.
Such amount is in fact not even fully available at this time.

We assume that the framers of the Constitution were aware of this difficulty when they called for
agrarian reform as a top priority project of the government. It is a part of this assumption that
when they envisioned the expropriation that would be needed, they also intended that the just
compensation would have to be paid not in the orthodox way but a less conventional if more
practical method. There can be no doubt that they were aware of the financial limitations of the
government and had no illusions that there would be enough money to pay in cash and in full for
the lands they wanted to be distributed among the farmers. We may therefore assume that their
intention was to allow such manner of payment as is now provided for by the CARP Law,
particularly the payment of the balance (if the owner cannot be paid fully with money), or indeed
of the entire amount of the just compensation, with other things of value. We may also suppose
that what they had in mind was a similar scheme of payment as that prescribed in P.D. No. 27,
which was the law in force at the time they deliberated on the new Charter and with which they
presumably agreed in principle.

The Court has not found in the records of the Constitutional Commission any categorical
agreement among the members regarding the meaning to be given the concept of just
compensation as applied to the comprehensive agrarian reform program being contemplated.
There was the suggestion to "fine tune" the requirement to suit the demands of the project even
as it was also felt that they should "leave it to Congress" to determine how payment should be
made to the landowner and reimbursement required from the farmer-beneficiaries. Such
innovations as "progressive compensation" and "State-subsidized compensation" were also
proposed. In the end, however, no special definition of the just compensation for the lands to be
expropriated was reached by the Commission. 50
On the other hand, there is nothing in the records either that militates against the assumptions
we are making of the general sentiments and intention of the members on the content and
manner of the payment to be made to the landowner in the light of the magnitude of the
expenditure and the limitations of the expropriator.

With these assumptions, the Court hereby declares that the content and manner of the just
compensation provided for in the afore- quoted Section 18 of the CARP Law is not violative of
the Constitution. We do not mind admitting that a certain degree of pragmatism has influenced
our decision on this issue, but after all this Court is not a cloistered institution removed from the
realities and demands of society or oblivious to the need for its enhancement. The Court is as
acutely anxious as the rest of our people to see the goal of agrarian reform achieved at last after
the frustrations and deprivations of our peasant masses during all these disappointing decades.
We are aware that invalidation of the said section will result in the nullification of the entire
program, killing the farmer's hopes even as they approach realization and resurrecting the
spectre of discontent and dissent in the restless countryside. That is not in our view the intention
of the Constitution, and that is not what we shall decree today.

Accepting the theory that payment of the just compensation is not always required to be made
fully in money, we find further that the proportion of cash payment to the other things of value
constituting the total payment, as determined on the basis of the areas of the lands
expropriated, is not unduly oppressive upon the landowner. It is noted that the smaller the land,
the bigger the payment in money, primarily because the small landowner will be needing it more
than the big landowners, who can afford a bigger balance in bonds and other things of value. No
less importantly, the government financial instruments making up the balance of the payment
are "negotiable at any time." The other modes, which are likewise available to the landowner at
his option, are also not unreasonable because payment is made in shares of stock, LBP bonds,
other properties or assets, tax credits, and other things of value equivalent to the amount of just
compensation.

Admittedly, the compensation contemplated in the law will cause the landowners, big and small,
not a little inconvenience. As already remarked, this cannot be avoided. Nevertheless, it is
devoutly hoped that these countrymen of ours, conscious as we know they are of the need for
their forebearance and even sacrifice, will not begrudge us their indispensable share in the
attainment of the ideal of agrarian reform. Otherwise, our pursuit of this elusive goal will be like
the quest for the Holy Grail.

The complaint against the effects of non-registration of the land under E.O. No. 229 does not
seem to be viable any more as it appears that Section 4 of the said Order has been superseded
by Section 14 of the CARP Law. This repeats the requisites of registration as embodied in the
earlier measure but does not provide, as the latter did, that in case of failure or refusal to
register the land, the valuation thereof shall be that given by the provincial or city assessor for
tax purposes. On the contrary, the CARP Law says that the just compensation shall be
ascertained on the basis of the factors mentioned in its Section 17 and in the manner provided
for in Section 16.

The last major challenge to CARP is that the landowner is divested of his property even before
actual payment to him in full of just compensation, in contravention of a well- accepted principle
of eminent domain.
The recognized rule, indeed, 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. Thus:

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 condemnor's title relates
back to the date on which the petition under the Eminent Domain Act, or the commissioner's
report under the Local Improvement Act, is filed. 51

... 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. 52 (Emphasis supplied.)

In Kennedy v. Indianapolis, 53 the US Supreme Court cited several cases holding that title to
property does not pass to the condemnor until just compensation had actually been made. In
fact, the decisions appear to be uniformly to this effect. As early as 1838, in Rubottom v.
McLure, 54 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, 55 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."

Our own Supreme Court has held in Visayan Refining Co. v. Camus and Paredes, 56 that:

If the laws which we have exhibited or cited in the preceding discussion are
attentively examined it will be apparent that the method of expropriation adopted
in this jurisdiction is such as to afford absolute reassurance that no piece of land
can be finally and irrevocably taken from an unwilling owner until compensation
is paid ... . (Emphasis supplied.)

It is true that P.D. No. 27 expressly ordered the emancipation of tenant-farmer as October 21,
1972 and declared that he shall "be deemed the owner" of a portion of land consisting of a
family-sized farm except that "no title to the land owned by him was to be actually issued to him
unless and until he had become a full-fledged member of a duly recognized farmers'
cooperative." It was understood, however, that full payment of the just compensation also had to
be made first, conformably to the constitutional requirement.

When E.O. No. 228, categorically stated in its Section 1 that:

All qualified farmer-beneficiaries are now deemed full owners as of October 21,
1972 of the land they acquired by virtue of Presidential Decree No. 27.
(Emphasis supplied.)

it was obviously referring to lands already validly acquired under the said decree, after proof of
full-fledged membership in the farmers' cooperatives and full payment of just compensation.
Hence, it was also perfectly proper for the Order to also provide in its Section 2 that the "lease
rentals paid to the landowner by the farmer- beneficiary after October 21, 1972 (pending
transfer of ownership after full payment of just compensation), shall be considered as advance
payment for the land."

The CARP Law, for its part, conditions the transfer of possession and ownership of the land to
the government on receipt by the landowner of the corresponding payment or the deposit by the
DAR of the compensation in cash or LBP bonds with an accessible bank. Until then, title also
remains with the landowner. 57 No outright change of ownership is contemplated either.

Hence, the argument that the assailed measures violate due process by arbitrarily transferring
title before the land is fully paid for must also be rejected.

It is worth stressing at this point that all rights acquired by the tenant-farmer under P.D. No. 27,
as recognized under E.O. No. 228, are retained by him even now under R.A. No. 6657. This
should counter-balance the express provision in Section 6 of the said law that "the landowners
whose lands have been covered by Presidential Decree No. 27 shall be allowed to keep the
area originally retained by them thereunder, further, That original homestead grantees or direct
compulsory heirs who still own the original homestead at the time of the approval of this Act
shall retain the same areas as long as they continue to cultivate said homestead."

In connection with these retained rights, it does not appear in G.R. No. 78742 that the appeal
filed by the petitioners with the Office of the President has already been resolved. Although we
have said that the doctrine of exhaustion of administrative remedies need not preclude
immediate resort to judicial action, there are factual issues that have yet to be examined on the
administrative level, especially the claim that the petitioners are not covered by LOI 474
because they do not own other agricultural lands than the subjects of their petition.

Obviously, the Court cannot resolve these issues. In any event, assuming that the petitioners
have not yet exercised their retention rights, if any, under P.D. No. 27, the Court holds that they
are entitled to the new retention rights provided for by R.A. No. 6657, which in fact are on the
whole more liberal than those granted by the decree.

The CARP Law and the other enactments also involved in these cases have been the subject of
bitter attack from those who point to the shortcomings of these measures and ask that they be
scrapped entirely. To be sure, these enactments are less than perfect; indeed, they should be
continuously re-examined and rehoned, that they may be sharper instruments for the better
protection of the farmer's rights. But we have to start somewhere. In the pursuit of agrarian
reform, we do not tread on familiar ground but grope on terrain fraught with pitfalls and expected
difficulties. This is inevitable. The CARP Law is not a tried and tested project. On the contrary,
to use Justice Holmes's words, "it is an experiment, as all life is an experiment," and so we learn
as we venture forward, and, if necessary, by our own mistakes. We cannot expect perfection
although we should strive for it by all means. Meantime, we struggle as best we can in freeing
the farmer from the iron shackles that have unconscionably, and for so long, fettered his soul to
the soil.

By the decision we reach today, all major legal obstacles to the comprehensive agrarian reform
program are removed, to clear the way for the true freedom of the farmer. We may now glimpse
the day he will be released not only from want but also from the exploitation and disdain of the
past and from his own feelings of inadequacy and helplessness. At last his servitude will be
ended forever. At last the farm on which he toils will be his farm. It will be his portion of the
Mother Earth that will give him not only the staff of life but also the joy of living. And where once
it bred for him only deep despair, now can he see in it the fruition of his hopes for a more
fulfilling future. Now at last can he banish from his small plot of earth his insecurities and dark
resentments and "rebuild in it the music and the dream."

WHEREFORE, the Court holds as follows:

1. R.A. No. 6657, P.D. No. 27, Proc. No. 131, and E.O. Nos. 228 and 229 are
SUSTAINED against all the constitutional objections raised in the herein
petitions.

2. Title to all expropriated properties shall be transferred to the State only upon
full payment of compensation to their respective owners.

3. All rights previously acquired by the tenant- farmers under P.D. No. 27 are
retained and recognized.

4. Landowners who were unable to exercise their rights of retention under P.D.
No. 27 shall enjoy the retention rights granted by R.A. No. 6657 under the
conditions therein prescribed.

5. Subject to the above-mentioned rulings all the petitions are DISMISSED,

without pronouncement as to costs.

G.R. No. 118712 October 6, 1995

LAND BANK OF THE PHILIPPINES, petitioner,

vs.
COURT OF APPEALS, PEDRO L. YAP, HEIRS OF EMILIANO F. SANTIAGO,
AGRICULTURAL MANAGEMENT & DEVELOPMENT CORP., respondents.

G.R. No. 118745 October 6, 1995

DEPARTMENT OF AGRARIAN REFORM, represented by the Secretary of Agrarian

Reform, petitioner,
vs.
COURT OF APPEALS, PEDRO L. YAP, HEIRS OF EMILIANO F. SANTIAGO,
AGRICULTURAL MANAGEMENT & DEVELOPMENT CORP., ET AL., respondents.

FRANCISCO, R., J.:

It has been declared that the duty of the court to protect the weak and the underprivileged
should not be carried out to such an extent as deny justice to the landowner whenever truth and
justice happen to be on his side.1 As eloquently stated by Justice Isagani Cruz:
 . . . social justice — or any justice for that matter — is for the deserving, whether
he be a millionaire in his mansion or a pauper in his hovel. It is true that, in case
of reasonable doubt, we are called upon to tilt the balance in favor of the poor, to
whom the Constitution fittingly extends its sympathy and compassion. But never
is it justified to prefer the poor simply because they are poor, or to reject the rich
simply because they are rich, for justice must always be served, for poor and rich
alike, according to the mandate of the law.2

In this agrarian dispute, it is once more imperative that the aforestated principles be applied in
its resolution.

Separate petitions for review were filed by petitioners Department of Agrarian Reform (DAR)
(G.R. No. 118745) and Land Bank of the Philippines (G.R. No. 118712) following the adverse
ruling by the Court of Appeals in CA-G.R. SP No. 33465. However, upon motion filed by private
respondents, the petitions were ordered consolidated.3

Petitioners assail the decision of the Court of Appeals promulgated on October 20, 1994, which
granted private respondents' Petition for Certiorari and Mandamus and ruled as follows:

WHEREFORE, premises considered, the Petition for Certiorari and Mandamus is

hereby GRANTED:

a) DAR Administrative Order No. 9, Series of 1990 is

declared null and void insofar as it provides for the opening of
trust accounts in lieu of deposits in cash or bonds;

b) Respondent Landbank is ordered to immediately deposit — not

merely "earmark", "reserve" or "deposit in trust" — with an
accessible bank designated by respondent DAR in the names of
the following petitioners the following amounts in cash and in
government financial instruments — within the parameters of Sec.
18 (1) of RA 6657:

P 1,455,207.31 Pedro L. Yap

P 135,482.12 Heirs of Emiliano Santiago

P 15,914,127.77 AMADCOR;

c) The DAR-designated bank is ordered to allow the petitioners to

withdraw the above-deposited amounts without prejudice to the
final determination of just compensation by the proper authorities;
and

d) Respondent DAR is ordered to

1) immediately conduct summary administrative proceedings to
determine the just compensation for the lands of the petitioners
giving the petitioners 15 days from notice within which to submit
evidence and to 2) decide the cases within 30 days after they are
submitted for decision.4
 Likewise, petitioners seek the reversal of the Resolution dated January 18,
1995,5 denying their motion for reconsideration.

Private respondents are landowners whose landholdings were acquired by the DAR and
subjected to transfer schemes to qualified beneficiaries under the Comprehensive Agrarian
Reform Law (CARL, Republic Act No. 6657).

Aggrieved by the alleged lapses of the DAR and the Landbank with respect to the
valuation and payment of compensation for their land pursuant to the provisions of RA
6657, private respondents filed with this Court a Petition
for Certiorari and Mandamus with prayer for preliminary mandatory injunction. Private
respondents questioned the validity of DAR Administrative Order No. 6, Series of
19926 and DAR Administrative Order No. 9, Series of 1990,7 and sought to compel the
DAR to expedite the pending summary administrative proceedings to finally determine
the just compensation of their properties, and the Landbank to deposit in cash and
bonds the amounts respectively "earmarked", "reserved" and "deposited in trust
accounts" for private respondents, and to allow them to withdraw the same.

Through a Resolution of the Second Division dated February 9, 1994, this Court referred the
petition to respondent Court of Appeals for proper determination and disposition.

As found by respondent court , the following are undisputed:

Petitioner Pedro Yap alleges that "(o)n 4 September 1992 the transfer certificates
of title (TCTs) of petitioner Yap were totally cancelled by the Registrar of Deeds
of Leyte and were transferred in the names of farmer beneficiaries collectively,
based on the request of the DAR together with a certification of the Landbank
that the sum of P735,337.77 and P719,869.54 have been earmarked for
Landowner Pedro L. Yap for the parcels of lands covered by TCT Nos. 6282 and
6283, respectively, and issued in lieu thereof TC-563 and TC-562, respectively,
in the names of listed beneficiaries (ANNEXES "C" & "D") without notice to
petitioner Yap and without complying with the requirement of Section 16 (e) of
RA 6657 to deposit the compensation in cash and Landbank bonds in an
accessible bank. (Rollo, p. 6).

The above allegations are not disputed by any of the respondents.

Petitioner Heirs of Emiliano Santiago allege that the heirs of Emiliano F. Santiago
are the owners of a parcel of land located at Laur, NUEVA ECIJA with an area of
18.5615 hectares covered by TCT No. NT-60359 of the registry of Deeds of
Nueva Ecija, registered in the name of the late Emiliano F. Santiago; that in
November and December 1990, without notice to the petitioners, the Landbank
required and the beneficiaries executed Actual tillers Deed of Undertaking
(ANNEX "B") to pay rentals to the LandBank for the use of their farmlots
equivalent to at least 25% of the net harvest; that on 24 October 1991 the DAR
Regional Director issued an order directing the Landbank to pay the landowner
directly or through the establishment of a trust fund in the amount of
P135,482.12, that on 24 February 1992, the Landbank reserved in trust
P135,482.12 in the name of Emiliano F. Santiago. (ANNEX "E"; Rollo,
p. 7); that the beneficiaries stopped paying rentals to the landowners after they
 signed the Actual Tiller's Deed of Undertaking committing themselves to pay
rentals to the LandBank (Rollo, p. 133).

The above allegations are not disputed by the respondents except that
respondent Landbank claims 1) that it was respondent DAR, not Landbank which
required the execution of Actual Tillers Deed of Undertaking (ATDU, for brevity);
and 2) that respondent Landbank, although armed with the ATDU, did not collect
any amount as rental from the substituting beneficiaries (Rollo, p. 99).

Petitioner Agricultural Management and Development Corporation (AMADCOR,

for brevity) alleges — with respect to its properties located in San Francisco,
Quezon — that the properties of AMADCOR in San Francisco, Quezon consist of
a parcel of land covered by TCT No. 34314 with an area of 209.9215 hectares
and another parcel covered by TCT No. 10832 with an area of 163.6189
hectares; that a summary administrative proceeding to determine compensation
of the property covered by TCT No. 34314 was conducted by the DARAB in
Quezon City without notice to the landowner; that a decision was rendered on 24
November 1992 (ANNEX "F") fixing the compensation for the parcel of land
covered by TCT No. 34314 with an area of 209.9215 hectares at P2,768,326.34
and ordering the Landbank to pay or establish a trust account for said amount in
the name of AMADCOR; and that the trust account in the amount of
P2,768,326.34 fixed in the decision was established by adding P1,986,489.73 to
the first trust account established on 19 December 1991 (ANNEX "G"). With
respect to petitioner AMADCOR's property in Tabaco, Albay, it is alleged that the
property of AMADCOR in Tabaco, Albay is covered by TCT No. T-2466 of the
Register of Deeds of Albay with an area of 1,629.4578 hectares'; that
emancipation patents were issued covering an area of 701.8999 hectares which
were registered on 15 February 1988 but no action was taken thereafter by the
DAR to fix the compensation for said land; that on 21 April 1993, a trust account
in the name of AMADCOR was established in the amount of P12,247,217.83',
three notices of acquisition having been previously rejected by AMADCOR.
(Rollo, pp. 8-9)

The above allegations are not disputed by the respondents except that
respondent Landbank claims that petitioner failed to participate in the DARAB
proceedings (land valuation case) despite due notice to it (Rollo, p. 100).8

Private respondents argued that Administrative Order No. 9, Series of 1990 was issued without
jurisdiction and with grave abuse of discretion because it permits the opening of trust accounts
by the Landbank, in lieu of depositing in cash or bonds in an accessible bank designated by the
DAR, the compensation for the land before it is taken and the titles are cancelled as provided
under Section 16(e) of RA 6657.9 Private respondents also assail the fact that the DAR and the
Landbank merely "earmarked", "deposited in trust" or "reserved" the compensation in their
names as landowners despite the clear mandate that before taking possession of the property,
the compensation must be deposited in cash or in bonds. 10

Petitioner DAR, however, maintained that Administrative Order No. 9 is a valid exercise of its
rule-making power pursuant to Section 49 of RA 6657.11 Moreover, the DAR maintained that the
issuance of the "Certificate of Deposit" by the Landbank was a substantial compliance with
Section 16(e) of RA 6657 and the ruling in the case of Association of Small Landowners in the
Philippines, Inc., et al. vs. Hon. Secretary of Agrarian Reform, G.R. No. 78742, July 14, 1989
(175 SCRA 343).12

For its part, petitioner Landbank declared that the issuance of the Certificates of Deposits was in
consonance with Circular Nos. 29, 29-A and 54 of the Land Registration Authority where the
words "reserved/deposited" were also used.13

On October 20, 1994, the respondent court rendered the assailed decision in favor of private
respondents.14Petitioners filed a motion for reconsideration but respondent court denied the
same.15

Hence, the instant petitions.

On March 20, 1995, private respondents filed a motion to dismiss the petition in G.R. No.
118745 alleging that the appeal has no merit and is merely intended to delay the finality of the
appealed decision.16 The Court, however, denied the motion and instead required the
respondents to file their comments.17

Petitioners submit that respondent court erred in (1) declaring as null and void DAR
Administrative Order No. 9, Series of 1990, insofar as it provides for the opening of trust
accounts in lieu of deposit in cash or in bonds, and (2) in holding that private respondents are
entitled as a matter of right to the immediate and provisional release of the amounts deposited
in trust pending the final resolution of the cases it has filed for just compensation.

Anent the first assignment of error, petitioners maintain that the word "deposit" as used in
Section 16(e) of RA 6657 referred merely to the act of depositing and in no way excluded the
opening of a trust account as a form of deposit. Thus, in opting for the opening of a trust
account as the acceptable form of deposit through Administrative Circular No. 9, petitioner DAR
did not commit any grave abuse of discretion since it merely exercised its power to promulgate
rules and regulations in implementing the declared policies of RA 6657.

The contention is untenable. Section 16(e) of RA 6657 provides as follows:

Sec. 16. Procedure for Acquisition of Private Lands —

xxx xxx xxx

(e) Upon receipt by the landowner of the corresponding payment or, in case of
rejection or no response from the landowner, upon the deposit with an accessible
bank designated by the DAR of the compensation in cash or in LBP bonds in
accordance with this Act, the DAR shall take immediate possession of the land
and shall request the proper Register of Deeds to issue a Transfer Certificate of
Title (TCT) in the name of the Republic of the Philippines. . . . (emphasis
supplied)

It is very explicit therefrom that the deposit must be made only in "cash" or in "LBP bonds".
Nowhere does it appear nor can it be inferred that the deposit can be made in any other form. If
it were the intention to include a "trust account" among the valid modes of deposit, that should
have been made express, or at least, qualifying words ought to have appeared from which it can
be fairly deduced that a "trust account" is allowed. In sum, there is no ambiguity in Section 16(e)
of RA 6657 to warrant an expanded construction of the term "deposit".

The conclusive effect of administrative construction is not absolute. Action of an administrative

agency may be disturbed or set aside by the judicial department if there is an error of law, a
grave abuse of power or lack of jurisdiction or grave abuse of discretion clearly conflicting with
either the letter or the spirit of a legislative enactment. 18 In this regard, it must be stressed that
the function of promulgating rules and regulations may be legitimately exercised only for the
purpose of carrying the provisions of the law into effect. The power of administrative agencies is
thus confined to implementing the law or putting it into effect. Corollary to this is that
administrative regulations cannot extend
the law and amend a legislative enactment,19 for settled is the rule that administrative
regulations must be in harmony with the provisions of the law. And in case there is a
discrepancy between the basic law and an implementing rule or regulation, it is the former that
prevails.20

In the present suit, the DAR clearly overstepped the limits of its power to enact rules and
regulations when it issued Administrative Circular No. 9. There is no basis in allowing the
opening of a trust account in behalf of the landowner as compensation for his property because,
as heretofore discussed, Section 16(e) of RA 6657 is very specific that the deposit must be
made only in "cash" or in "LBP bonds". In the same vein, petitioners cannot invoke LRA Circular
Nos. 29, 29-A and 54 because these implementing regulations cannot outweigh the clear
provision of the law. Respondent court therefore did not commit any error in striking down
Administrative Circular No. 9 for being null and void.

Proceeding to the crucial issue of whether or not private respondents are entitled to withdraw
the amounts deposited in trust in their behalf pending the final resolution of the cases involving
the final valuation of their properties, petitioners assert the negative.

The contention is premised on the alleged distinction between the deposit of compensation
under Section 16(e) of RA 6657 and payment of final compensation as provided under Section
1821 of the same law. According to petitioners, the right of the landowner to withdraw the
amount deposited in his behalf pertains only to the final valuation as agreed upon by the
landowner, the DAR and the LBP or that adjudged by the court. It has no reference to amount
deposited in the trust account pursuant to Section 16(e) in case of rejection by the landowner
because the latter amount is only provisional and intended merely to secure possession of the
property pending final valuation. To further bolster the contention petitioners cite the following
pronouncements in the case of "Association of Small Landowners in the Phil. Inc. vs. Secretary
of Agrarian Reform".22

The last major challenge to CARP is that the landowner is divested of his
property even before actual payment to him in full of just compensation, in
contravention of a well-accepted principle of eminent domain.

xxx xxx xxx

The CARP Law, for its part conditions the transfer of possession and ownership
of the land to the government on receipt by the landowner of the corresponding
payment or the deposit by the DAR of the compensation in cash or LBP bonds
 with an accessible bank. Until then, title also remains with the landowner. No
outright change of ownership is contemplated either.

xxx xxx xxx

Hence the argument that the assailed measures violate due process by arbitrarily
transferring title before the land is fully paid for must also be rejected.

Notably, however, the aforecited case was used by respondent court in discarding petitioners'
assertion as it found that:

. . . despite the "revolutionary" character of the expropriation envisioned under

RA 6657 which led the Supreme Court, in the case of Association of Small
Landowners in the Phil. Inc. vs. Secretary of Agrarian Reform (175 SCRA 343),
to conclude that "payments of the just compensation is not always required to be
made fully in money" — even as the Supreme Court admits in the same case
"that the traditional medium for the payment of just compensation is money and
no other" — the Supreme Court in said case did not abandon the "recognized
rule . . . that title to the property expropriated shall pass from the owner to the
expropriator only upon full payment of the just compensation." 23 (Emphasis
supplied)

We agree with the observations of respondent court. The ruling in the "Association" case merely
recognized the extraordinary nature of the expropriation to be undertaken under RA 6657
thereby allowing a deviation from the traditional mode of payment of compensation and
recognized payment other than in cash. It did not, however, dispense with the settled rule that
there must be full payment of just compensation before the title to the expropriated property is
transferred.

The attempt to make a distinction between the deposit of compensation under Section 16(e) of
RA 6657 and determination of just compensation under Section 18 is unacceptable. To withhold
the right of the landowners to appropriate the amounts already deposited in their behalf as
compensation for their properties simply because they rejected the DAR's valuation, and
notwithstanding that they have already been deprived of the possession and use of such
properties, is an oppressive exercise of eminent domain. The irresistible expropriation of private
respondents' properties was painful enough for them. But petitioner DAR rubbed it in all the
more by withholding that which rightfully belongs to private respondents in exchange for the
taking, under an authority (the "Association" case) that is, however, misplaced. This is misery
twice bestowed on private respondents, which the Court must rectify.

Hence, we find it unnecessary to distinguish between provisional compensation under Section

16(e) and final compensation under Section 18 for purposes of exercising the landowners' right
to appropriate the same. The immediate effect in both situations is the same, the landowner is
deprived of the use and possession of his property for which he should be fairly and
immediately compensated. Fittingly, we reiterate the cardinal rule that:

. . . within the context of the State's inherent power of eminent domain, just
compensation means not only the correct determination of the amount to be paid
to the owner 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" for the property owner is made to suffer the consequence 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. 24 (Emphasis supplied)

The promulgation of the "Association" decision endeavored to remove all legal obstacles in the
implementation of the Comprehensive Agrarian Reform Program and clear the way for the true
freedom of the farmer.25 But despite this, cases involving its implementation continue to multiply
and clog the courts' dockets. Nevertheless, we are still optimistic that the goal of totally
emancipating the farmers from their bondage will be attained in due time. It must be stressed,
however, that in the pursuit of this objective, vigilance over the rights of the landowners is
equally important because social justice cannot be invoked to trample on the rights of property
owners, who under our Constitution and laws are also entitled to protection.26

WHEREFORE, the foregoing premises considered, the petition is hereby DENIED for lack of
merit and the appealed decision is AFFIRMED in toto.

G.R. No. L-59791 February 13, 1992

MANILA ELECTRIC COMPANY, petitioner,

vs.
THE HONORABLE GREGORIO G. PINEDA, Presiding Judge, Court of First Instance of
Rizal, Branch XXI, Pasig, Metro Manila, TEOFILO ARAYON, SR., GIL DE GUZMAN,
LUCITO SANTIAGO and TERESA BAUTISTA, respondents.

Quiason, Makalintal & Barot for petitioner.

Gil P. De Guzman Law Offices for private respondents.

MEDIALDEA, J.:

This is a petition for review on certiorari on pure question of law seeking the nullification of the
orders issued by the respondent Judge Gregorio G. Pineda, in his capacity as the presiding
Judge of the Court of First Instance (now Regional Trial Court) of Rizal, Branch 21, Pasig, Metro
Manila in Civil Case No. 20269, entitled "Manila Electric Company v. Teofilo Arayon, et al." The
aforesaid orders are as follows: (1) the order dated December 4, 1981 granting the motion for
payment of private respondents; (2) the order dated December 21, 1981 granting the private
respondents' omnibus motion; and (3) the order dated February 9, 1982 adjudging in favor of
private respondents the fair market value of their property at forty pesos (P40.00) per square
meter for a total of P369,720.00 and denying the motions for contempt for being moot and
academic and the motion for reconsideration of the orders dated December 4, 1981 and
December 21, 1981 for lack of merit.

The antecedent facts giving rise to the controversy at bar are as follows:

Petitioner Manila Electric Company (MERALCO) is a domestic corporation duly organized and
existing under the laws of Philippines. Respondent Honorable Judge Gregorio G. Pineda is
impleaded in his official capacity as the presiding judge of the Court of First Instance (now
Regional Trial Court) of Rizal, Branch XXI, Pasig, Metro Manila. While private respondents
Teofilo Arayon, Sr., Gil de Guzman, Lucito Santiago and Teresa Bautista are owners in fee
simple of the expropriated property situated at Malaya, Pililla, Rizal.

On October 29, 1974, a complaint for eminent domain was filed by petitioner MERALCO against
forty-two (42) defendants with the Court of First Instance (now Regional Trial Court) of Rizal,
Branch XXII, Pasig, Metro Manila.

The complaint alleges that for the purpose of constructing a 230 KV Transmission line from
Barrio Malaya to Tower No. 220 at Pililla, Rizal, petitioner needs portions of the land of the
private respondents consisting of an aggregate area of 237,321 square meters. Despite
petitioner's offers to pay compensation and attempts to negotiate with the respondents', the
parties failed to reach an agreement.

Private respondents question in their motion to dismiss dated December 27, 1974 the
petitioner's legal existence and the area sought to be expropriated as too excessive.

On January 7, 1975, respondents Gil de Guzman and Teresa Bautista filed a motion for
contempt of court alleging, among other things that petitioner's corporate existence had expired
in 1969 and therefore it no longer exists under Philippine Laws.

But despite the opposition of the private respondents, the court issued an Order dated January
13, 1975 authorizing the petitioner to take or enter upon the possession of the property sought
to be expropriated.

On July 13, 1976, private respondents filed a motion for withdrawal of deposit claiming that they
are entitled to be paid at forty pesos (P40.00) per square meter or an approximate sum of
P272,000.00 and prayed that they be allowed to withdraw the sum of P71,771.50 from
petitioner's deposit-account with the Philippine National Bank, Pasig Branch. However,
respondents motion was denied in an order dated September 3, 1976.

In the intervening period, Branch XXII became vacant when the presiding Judge Nelly
Valdellon-Solis retired, so respondent Judge Pineda acted on the motions filed with Branch
XXII.

Pursuant to a government policy, the petitioners on October 30, 1979 sold to the National Power
Corporation (Napocor) the power plants and transmission lines, including the transmission lines
traversing private respondents' property.

On February 11, 1980, respondent court issued an Order appointing the members of the Board
of Commissioners to make an appraisal of the properties.

On June 5, 1980, petitioner filed a motion to dismiss the complaint on the ground that it has lost
all its interests over the transmission lines and properties under expropriation because of their
sale to the Napocor. In view of this motion, the work of the Commissioners was suspended.

On June 9, 1981, private respondents filed another motion for payment. But despite the
opposition of the petitioner, the respondent court issued the first of the questioned Orders dated
December 4, 1981 granting the motion for payment of private respondents, to wit:
 As prayed for by defendants Teofilo Arayon, Lucito Santiago, Teresa Bautista
and Gil de Guzman, thru counsel Gil de Guzman, in their Motion for Payment, for
reasons therein stated, this Court hereby orders the plaintiff to pay the movants
the amount of P20,400.00 for the expropriated area of 6,800 square meters, at
P3.00 per square meter without prejudice to the just compensation that may be
proved in the final adjudication of this case.

The aforesaid sum of P20,400.00 having been deposited by plaintiff in the

Philippine National Bank (Pasig Branch) under Savings Account No. 9204, let the
Deputy Sheriff of this Branch Mr. Sofronio Villarin withdraw said amount in the
names of Teofilo Arayon, Lucito Santiago, Teresa Bautista and Gil de Guzman,
the said amount to be delivered to the defendant's counsel Atty. Gil de Guzman
who shall sign for the receipt thereof.

SO ORDERED. (Rollo, p. 108)

On December 15, 1981, private respondents filed an Omnibus Motion praying that they be
allowed to withdraw an additional sum of P90,125.50 from petitioner's deposit-account with the
Philippine National Bank.

By order dated December 21, 1981, the respondent court granted the Omnibus Motion
hereunder quoted as follows:

Acting on the Omnibus Motion dated December 15, 1981 filed by Atty. Gil de
Guzman, counsel for Teofilo Arayon, Sr., Lucito Santiago, Teresita Bautista and
for himself, and it appearing that there is deposited in the bank in trust for them
the amount of P90,125.50 to guarantee just compensation of P272,000.00,
thereby leaving a balance of P161,475.00 still payable to them, the same is
hereby GRANTED.

Mr. Nazario Nuevo and Marianita Burog, respectively the Manager and Cashier,
Philippine National Bank, Pasig Branch, Pasig, Metro Manila are hereby ordered
to allow Sheriff Sofronio Villarin to withdraw and collect from the bank the amount
of P90,125.50 under Savings Account No. 9204 and to deliver the same to Atty.
Gil de Guzman upon proper receipt, pending final determination of just
compensation.

SO ORDERED. (Rollo, p. 120)

Private respondents filed another motion dated January 8, 1982 praying that petitioner be
ordered to pay the sum of P169, 200.00.

On January 12, 1982 petitioner filed a motion for reconsideration of the Orders dated December
4, 1981 and December 21, 1981 and to declare private respondents in contempt of court for
forging or causing to be forged the receiving stamp of petitioner's counsel and falsifying or
causing to be falsified the signature of its receiving clerk in their Omnibus Motion.

In response to private respondents' motion for payment dated January 8, 1982, petitioner filed
an opposition alleging that private respondents are not entitled to payment of just compensation
at this stage of the proceeding because there is still no appraisal and valuation of the property.
On February 9, 1982 the respondent court denied the petitioner's motion for reconsideration and
motion for contempt, the dispositive portion of which is hereunder quoted as follows:

Viewed in the light of the foregoing, this Court hereby adjudges in favor of
defendants Teofilo Arayon, Sr., Lucito Santiago, Teresita Bautista and Atty. Gil
de Guzman the fair market value of their property taken by MERALCO at P40.00
per square meter for a total of P369,720.00, this amount to bear legal interest
from February 24, 1975 until fully paid plus consequential damages in terms of
attorney's fees in the sum of P10,000.00, all these sums to be paid by
MERALCO to said defendants with costs of suit, minus the amount of
P102,800.00 already withdrawn by defendants.

For being moot and academic, the motions for contempt are DENIED; for lack of
merit, the motion for reconsideration of the orders of December 4, 1981 and
December 21, 1981 is also DENIED.

SO ORDERED. (Rollo, p. 211-212)

Furthermore, the respondent court stressed in said order that "at this stage, the Court starts to
appoint commissioners to determine just compensation or dispenses with them and adopts the
testimony of a credible real estate broker, or the judge himself would exercise his right to
formulate an opinion of his own as to the value of the land in question. Nevertheless, if he
formulates such an opinion, he must base it upon competent evidence." (Rollo, p. 211)

Hence, this petition.

Subsequently, the respondent court issued an Order dated March 22, 1982 granting the private
respondents' motion for execution pending appeal, thus requiring petitioner to deposit
P52,600.00 representing the consideration paid by Napocor for the property it bought from
petitioner which includes the subject matter of this case, computed at P200.55 per square meter
and to render an accounting.

On March 26, 1982, petitioner filed a petition for preliminary injunction with this Court seeking to
enjoin respondent judge and all persons acting under him from enforcing the Order dated March
22, 1982.

This Court issued a temporary restraining order addressed to respondent judge. A motion to lift
the restraining order was filed by the respondents. Despite a series of oppositions and motions
to lift the said order, this Court reiterated its stand and noted that the restraining order is still
effective.

The petitioner strongly maintains that the respondent court's act of determining and ordering the
payment of just compensation to private respondents without formal presentation of evidence by
the parties on the reasonable value of the property constitutes a flagrant violation of petitioner's
constitutional right to due process. It stressed that respondent court ignored the procedure laid
down by the law in determining just compensation because it formulated an opinion of its own
as to the value of the land in question without allowing the Board of Commissioners to hold
hearings for the reception of evidence.
On the other hand, private respondents controvert the position of the petitioner and contend that
the petitioner was not deprived of due process. They agreed with respondent court's ruling
dispensing the need for the appointment of a Board of Commissioners to determine just
compensation, thus concluding that the respondent court did not err in determining just
compensation.

Furthermore, petitioner argues that the respondent judge gravely abused his discretion in
granting the motion for execution pending appeal and consequently denying the petitioner's
motion to dismiss. Respondent judge should have ordered that Napocor be impleaded in
substitution of petitioner or could have at least impleaded both the Napocor and the petitioner as
party plaintiffs.

The controversy boils down to the main issue of whether or not the respondent court can
dispense with the assistance of a Board of Commissioners in an expropriation proceeding and
determine for itself the just compensation.

The applicable laws in the case at bar are Sections 5 and 8 of Rule 67 of the Revised Rules of
Court. The said sections particularly deal with the ascertainment of compensation and the
court's action upon commissioners' report, to wit:

Sec. 5. Upon the entry of the order of condemnation, the court shall appoint not
more than three (3) competent and disinterested persons as commissioners to
ascertain and report to the court the just compensation for the property sought to
be taken. The order of appointment shall designate the time and place of the first
session of the hearing to be held by the commissioners and specify the time
within which their report is to be filed with the court.

xxx xxx xxx

Sec. 8. Upon the expiration of the period of ten (10) days referred to in the
preceding section, or even before the expiration of such period but after all the
interested parties have filed their objections to the report or their statement of
agreement therewith, the court may, after hearing, accept the report and render
judgment in accordance therewith; or, for cause shown, it may recommit the
same to the commissioners for further report of facts; or it may set aside the
report and appoint new commissioners, or it may accept the report in part and
reject it in part; and it may make such order or render such judgment as shall
secure to the plaintiff the property essential to the exercise of his right of
condemnation, and to the defendant just compensation for the property so taken.

We already emphasized in the case of Municipality of Biñan v. Hon. Jose Mar Garcia (G.R. No.
69260, December 22, 1989, 180 SCRA 576, 583-584) the procedure for eminent domain, to wit:

There are two (2) stages in every action of expropriation. 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". An order of dismissal, if this be ordained,
would be a final one, of course, since it finally disposes of the action and leaves
nothing more to be done by the Court on the merits. So, too, would an order of
condemnation be a final one, for thereafter, as the Rules expressly state, in the
proceedings before the Trial Court, "no objection to the exercise of the right of
condemnation (or the propriety thereof) shall be filed or heard."

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. The order fixing the just compensation on the basis of the
evidence before, and findings of, the commissioners would be final, too. It would
finally dispose of the second stage of the suit, and leave nothing more to be done
by the Court regarding the issue. Obviously, one or another of the parties may
believe the order to be erroneous in its appreciation of the evidence or findings of
fact or otherwise. Obviously, too, such a dissatisfied party may seek reversal of
the order by taking an appeal therefrom.

Respondent judge, in the case at bar, arrived at the valuation of P40.00 per square meter on a
property declared for real estate tax purposes at P2.50 per hectare on the basis of a "Joint
Venture Agreement on Subdivision and Housing Projects" executed by A.B.A Homes and
private respondents on June 1, 1972. This agreement was merely attached to the motion to
withdraw from petitioner's deposit. Respondent judge arrived at the amount of just
compensation on its own, without the proper reception of evidence before the Board of
Commissioners. Private respondents as landowners have not proved by competent evidence
the value of their respective properties at a proper hearing. Likewise, petitioner has not been
given the opportunity to rebut any evidence that would have been presented by private
respondents. In an expropriation case such as this one where the principal issue is the
determination of just compensation, a trial before the Commissioners is indispensable to allow
the parties to present evidence on the issue of just compensation. Contrary to the submission of
private respondents, the appointment of at least three (3) competent persons as 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 court may substitute its own estimate of the value, the latter may only do so for valid
reasons, i.e., 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 grossly inadequate or excessive (Manila Railroad Company v.
Velasquez, 32 Phil. 286). 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. Moreover, in such instances,
where the report of the commissioners may be disregarded, the trial court may make its own
estimate of value from competent evidence that may be gathered from the record. The aforesaid
joint venture agreement relied upon by the respondent judge, in the absence of any other proof
of valuation of said properties, is incompetent to determine just compensation.

Prior to the determination of just compensation, the property owners may rightfully demand to
withdraw from the deposit made by the condemnor in eminent domain proceedings. Upon an
award of a smaller amount by the court, the property owners are subject to a judgment for the
excess or upon the award of a larger sum, they are entitled to a judgment for the amount
awarded by the court. Thus, when the respondent court granted in the Orders dated December
4, 1981 and December 21, 1981 the motions of private respondents for withdrawal of certain
sums from the deposit of petitioner, without prejudice to the just compensation that may be
proved in the final adjudication of the case, it committed no error.

Records, specifically Meralco's deed of sale dated October 30, 1979, in favor of Napocor show
that the latter agreed to purchase the parcels of land already acquired by Meralco, the rights,
interests and easements over those parcels of land which are the subject of the expropriation
proceedings under Civil Case No. 20269, (Court of First Instance of Rizal, Branch XXII), as well
as those parcels of land occupied by Meralco by virtue of grant of easements of right-of-way
(see Rollo, pp. 341-342). Thus, Meralco had already ceded and in fact lost all its rights and
interests over the aforesaid parcels of land in favor of Napocor. In addition, the same contract
reveals that the Napocor was previously advised and actually has knowledge of the pending
litigation and proceedings against Meralco (see Rollo, pp. 342-343). Hence, We find the
contention of the petitioner tenable. It is therefore proper for the lower court to either implead the
Napocor in substitution of the petitioner or at the very least implead the former as party plaintiff.

All premises considered, this Court is convinced that the respondent judge's act of determining
and ordering the payment of just compensation without the assistance of a Board of
Commissioners is a flagrant violation of petitioner's constitutional right to due process and is a
gross violation of the mandated rule established by the Revised Rules of Court.

ACCORDINGLY, the petition is GRANTED and the order dated February 9, 1982 issued by the
respondent judge insofar as it finally determined the amount of just compensation is nullified.
This case is hereby ordered remanded to the lower court for trial with the assistance of a Board
of Commissioners. Further, the National Power Corporation is impleaded as party plaintiff
therein.

[G.R. No. 129998. December 29, 1998]

NATIONAL POWER CORPORATION, petitioner, vs. LOURDES HENSON, married to

Eugenio Galvez; JOSEFINA HENSON, married to Petronio Katigbak, JESUSA
HENSON; CORAZON HENSON, married to Jose Ricafort; ALFREDO TANCHIATCO;
BIENVENIDO DAVID; MARIA BONDOC CAPILI, married to Romeo
Capili; and MIGUEL MANOLOTO, respondents.

DECISION
PARDO, J.:

The case is an appeal via certiorari under Rule 45 of the Revised

Rules of Court from the decision of the Court of Appeals, which affirmed with modification the
decision of the Regional Trial Court, San Fernando, Pampanga, in a special civil action for
eminent domain, ordering the National Power Corporation (NPC) to pay respondents
landowners/claimants just compensation for the taking of their five (5) parcels of land, with an
area of 63,220 square meters at P400.00, per square meter, with legal interest from September
11, 1990, plus costs of the proceedings.
 On March 21, 1990, the National Power Corporation (NPC) originally instituted with the
Regional Trial Court, Third Judicial District, Branch 46, San Fernando, Pampanga, a
complaint[1] for eminent domain, later amended on October 11, 1990, for the taking for public
use of five (5) parcels of land, owned or claimed by respondents, with a total aggregate area of
58,311 square meters, for the expansion of the NPC Mexico Sub-Station.[2]
Respondents are the registered owners/claimants of the five (5) parcels of land sought to
be expropriated, situated in San Jose Matulid, Mexico, Pampanga, more particularly described
as follows:

Parcels of rice land, being Lot 1, 2, 3, 4, and 5 of the subdivision plan Psd-03-017121 (OLT) and
being a portion of Lot 212 of Mexico Cadastre, situated in the Barangay of
San Jose Matulid,Municipality of Mexico, province of Pampanga, Island of Luzon. Bounded on
the North by Barangay Road Calle San Jose; on the East by Lot 6, Psd-03-017121 (OLT)
owned by the National Power Corporation; on the South by Lot 101, Psd-03-017121 (OLT)
being an irrigation ditch; on the West by Lot 100, Psd-03-0017121 (OLT) being an irrigation
ditch and Barrio road, containing an aggregate area of FIFTY EIGHT THOUSAND THREE
HUNDRED ELEVEN (58,311) square meters, which parcels of land are broken down as follows
with claimants:

1. Lot 1-A=43,532 sq. m.- Henson Family

2. Lot 2-A=6,823 sq. m.- Alfredo Tanchiatco, encumbered with Land Bank of the
Phil. (LBP)

3. Lot 3-A=3,057 sq. m.-Bienvenido David, encumbered with LBP

4. Lot 4-A=1,438 sq. m.-Maria Bondoc Capili, encumbered with LBP

5. Lot 5-A=3,461 sq. m.-Miguel Manoloto and Henson Family

Total A=58,311 sq. m.

and covered by Transfer Certificate of Title No. 557 in the name of Henson, et al.; Transfer
Certificate of Title No. 7131/Emancipation Patent No. A-277216 in the name of Alfredo
Tanchiatco; Transfer Certificate of Title No. 7111/Emancipation Patent No. A-278086 in the
name of Bienvenido David; Transfer Certificate of Title No. 7108/Emancipation Patent No. A-
278089 in the name of Maria B. Capili; Certificate of Land Transfer No. 4550 in the name of
Miguel C. Manaloto, and Subdivision Plan Psd-03-017121 (OLT), which is a subdivision of Lot
212, Mexico Cadastre as surveyed for Josefina Katigbak, et al. Said five (5) parcels of land are
agricultural/riceland covered by Operation Land Transfer (OLT) of the Department of Agrarian
Reform.[3]
Petitioner needed the entire area of the five (5) parcels of land, comprising an aggregate
area of 58,311 square meters, for the expansion of its Mexico Subdivision.[4]
On March 28, 1990, petitioner filed an urgent motion to fix the provisional value of the
subject parcels of land.3
On April 20, 1990, respondents filed a motion to dismiss.4 They
did not challenge petitioners right to condemn their property, but declared that the fair market
value of their property was from P180.00 to P250.00 per square meter.[5]
 On July 10, 1990, the trial court denied respondents motion to dismiss. The court did not
declare that petitioner had a lawful right to take the property sought to be
expropriated.[6] However, the court fixed the provisional value of the land at P100.00 per square
meter, for a total area of 63,220[7] square meters of respondents property, to be deposited with
the Provincial Treasurer of Pampanga. Petitioner deposited the amount on August 29, 1990.[8]
On September 5, 1990, the trial court issued a writ of possession in favor of petitioner, and,
on September 11, 1990, the courts deputy sheriff placed petitioner in possession of the subject
land.[9]
On November 22, 1990, and December 20, 1990, the trial court granted the motions of
respondents to withdraw the deposit made by petitioner of the provisional value of their property
amounting to P5,831,100.00, with a balance of P690,900.00, remaining with the Provincial
Treasurer of Pampanga.[10]
On April 5, 1991, the trial court issued an order appointing three (3) commissioners to aid
the court in the reception of evidence to determine just compensation for the taking of the
subject property. After receiving the evidence and conducting an ocular inspection, the
commissioners submitted to the court their individual reports.
Commisioner Mariano C. Tiglao, in his report dated September 10, 1992, recommended
that the fair market value of the entire 63,220 square meters property be fixed at P350.00 per
square meter. Commissioner Arnold P. Atienza, in his report dated February 24, 1993,
recommended that the fair market value be fixed at P375.00 per square meter. Commissioner
Victorino Orocio, in his report dated April 28, 1993, recommended that the fair market value be
fixed at P170.00 per square meter.[11]
However, the trial court did not conduct a hearing on any of the reports.
On May 19, 1993, the trial court rendered judgment fixing the amount of just compensation
to be paid by petitioner for the taking of the entire area of 63,220 square meters at P400.00 per
square meter, with legal interest thereon computed from September 11, 1990, when petitioner
was placed in possession of the land, plus attorneys fees of P20,000.00, and costs of the
proceedings.[12]
In due time, petitioner appealed to the Court of Appeals.[13]
On July 23, 1997, the Court of Appeals rendered decision
affirming that of the Regional Trial Court, except that the award of P20,000.00, as attorneys fees
was deleted.[14]
Hence, this petition for review.[15]
By resolution adopted on October 8, 1997, the Court required respondents to comment on
the petition within ten (10) days from notice.[16] On January 7, 1998, respondents filed their
comment thereon.[17]
By resolution adopted on February 2, 1998, the Court required petitioner to file a reply to
the comment.[18] On August 25, 1990, petitioner filed a reply thereto.[19]
We now resolve to give due course to the petition. We modify the appealed decision.
As respondents did not challenge petitioners right to expropriate
their property, the issue presented boils down to what is the just compensation for the taking of
respondents property for the expansion of the NPCs Mexico Sub-station, situated in San Jose
Matulid, Mexico, Pampanga.
 The parcels of land sought to be expropriated are undeniably idle, undeveloped, raw
agricultural land, bereft of any improvement. Except for the Henson family, all the other
respondents were admittedly farmer beneficiaries under operation land transfer of the
Department of Agrarian Reform. However, the land has been re-classified as residential. The
nature and character of the land at the time of its taking is the principal criterion to determine
just compensation to the landowner.[20]
In this case, the trial court and the Court of Appeals fixed the value of the land at P400.00
per square meter, which was the selling price of lots in the adjacent fully developed subdivision,
the Santo Domingo Village Subdivision. The land in question, however, was an undeveloped,
idle land, principally agricultural in character, though re-classified as residential. Unfortunately,
the trial court, after creating a board of commissioners to help it determine the market value of
the land did not conduct a hearing on the report of the commissioners. The trial court fixed the
fair market value of subject land in an amount equal to the value of lots in the adjacent
fully developed subdivision. This finds no support in the evidence. The valuation was even
higher than the recommendation of anyone of the commissioners.
On the other hand, Commissioner Atienza recommended a fair market value at P375.00
per square meter. This appears to be the closest valuation to the market value of lots in the
adjoining fully developed subdivision. Considering that the subject parcels of land are
undeveloped raw land, the price of P375.00 per square meter would appear to the Court as the
just compensation for the taking of such raw land.
Consequently, we agree with Commissioner Atienzas report that the fair market value of
subject parcels of land be fixed at P375.00 per square meter.
We also agree with petitioner that the area of the communal irrigation canal consisting of
4,809 square meters must be excluded from the land to be expropriated. To begin with, it is
excluded in the amended complaint. Hence, the trial court and the Court of Appeals erred in
including the same in the area to be taken.
The trial court erroneously ordered double payment for 3,611 square meters of lot 5
(portion) in the dispositive part of its decision, and, hence, this must be deleted.
The trial court and the Court of Appeals correctly required petitioner to pay legal
interest[21] on the compensation awarded from September 11, 1990, the date petitioner was
placed in possession of the subject land, less the amount respondents had withdrawn from the
deposit that petitioner made with the Provincial Treasurers Office.
We, however, rule that petitioner is under its charter exempt from payment of costs of the
proceedings.
WHEREFORE, the decision of the Court of Appeals and that of the trial court subject of the
appeal are hereby MODIFIED.
We render judgment as follows:
1. The Court fixes the amount of P375.00, per square meter, as the just compensation
to be paid to respondents for the taking of their property consisting of five (5) parcels
of land, with a total area of 58,311 square meters, described in and covered by
Transfer Certificates of Title Nos. 557, 7131, 7111, 7108 and Certificate of Land
Transfer No. 4550, which parcels of land are broken down as follows:
a. Lot 1-A, with an area of 43,532 square meters belonging to Lourdes
Henson, Josefina Henson, Jesusa Henson and Corazon Henson;
 b. Lot 2-A, with an area of 6,823 square meters belonging to Alfredo
Tanchiatco;
c. Lot 3-A, with an area of 3,057 square meters belonging to Bienvenido David
(TCT No. 7111)
d. Lot 4-A, with an area of 1,438 square meters belonging to Maria Bondoc
Capili (TCT No. 7108)
e. Lot 5-A, with an area of 3,461 square meters belonging to Miguel Manaloto
(150 square meters), Certificate of Land Transfer No. 4550 and Henson
Family (3,311 square meters),
deducting therefrom the amounts they had withdrawn from the deposit of petitioner
for the provisional value of said parcels of land.[22]
2. With legal interest thereon at 6% per annum commencing on September 11, 1990,
until the finality of this decision, and at 12% per annum therefrom on the remaining
unpaid amount until full payment.
Let this decision be recorded in the office of the Register of Deeds of Pampanga.
No costs in all instances.

G.R. Nos. 60225-26 May 8, 1992

NATIONAL POWER CORPORATION, petitioner,

vs.
HONORABLE ZAIN B. ANGAS, District Judge of the Court of First Instance of Lanao del
Sur, HADJI DALUMA KINIDAR, EBRA ALI and/or GASNARA ALI (intervenors),
MANGORSI CASAN, CASNANGAN BATUGAN, PUNDAMARUG ATOCAL, PASAYOD
PADO, DIMAAMPAO BAUTE, CASNANGAN BAUTE, DIMAPORO SUBANG, TAMBILAWAN
OTE, MANISUN ATOCAL, MASACAL TOMIARA (In Civil Case No. 2277) and LACSAMAN
BATUGAN, and/or GUIMBA SHIPPING & DEVELOPMENT CORPORATION, MAGANCONG
DIGAYAN, MOCTARA LAMPACO, LAMPACO PASANDALAN, DIMAPORO SUBANG,
HADJI DALUMA KINIDAR, DIMAAMPAO BAUTE, PANGONOTAN COSNA TAGOL,
SALACOP DIMACALING, HADJI SITTIE SOHRA LINANG BATARA, BERTUDAN PIMPING
and/or CADUROG PIMPING, BUTUAN TAGOL, DISANGCOPAN MARABONG, and HADJI
SALIC SAWA (In Civil Case No. 2248),respondents.

Lucio C. Badelles for petitioner.

Dimnatang Saro for private respondents.

PARAS, J.:

The basic issue in this original action for certiorari and mandamus filed by the National Power
Corporation is whether or not, in the computation of the legal rate of interest on just
compensation for expropriated lands, the law applicable is Article 2209 of the Civil Code which
prescribes a 6% legal interest rate or Central Bank Circular No. 416 which fixed the legal
interest rate at 12% per annum. Pending consideration of this code on the merits, petitioner
seeks the issuance of a writ of preliminary injunction and/or restraining order to restrain or
enjoin the respondent judge of the lower court from enforcing the herein assailed orders and
from further acting or proceeding with Civil Case Nos. 2248 and 2277.
The following are the antecedents of the case:

On April 13, 1974 and December 3, 1974, petitioner National Power Corporation, a government-
owned and controlled corporation and the agency through which the government undertakes the
on-going infrastructure and development projects throughout the country, filed two complaints
for eminent domain against private respondents with the Court of First Instance (now Regional
Trial Court) of Lanao del Sur, docketed as Civil Case No. 2248 and Civil Case No. 2277,
respectively. The complaint which sought to expropriate certain specified lots situated at
Limogao, Saguiaran, Lanao del Sur was for the purpose of the development of hydro-electric
power and production of electricity as well as the erection of such subsidiary works and
constructions as may be necessarily connected therewith.

Both cases were jointly tried upon agreement of the parties. After responsive pleadings were
filed and issues joined, a series of hearings before court-designated commissioners were held.

On June 15, 1979, a consolidated decision in Civil Cases Nos. 2248 and 2277 was rendered by
the lower court, declaring and confirming that the lots mentioned and described in the
complaints have entirely been lawfully condemned and expropriated by the petitioner, and
ordering the latter to pay the private respondents certain sums of money as just compensation
for their lands expropriated "with legal interest thereon . . . until fully paid."

Two consecutive motions for reconsideration of the said consolidated decision were filed by the
petitioner. The same were denied by the respondent court. Petitioner did not appeal the
aforesaid consolidated decision, which became final and executory.

Thus, on May 16, 1980, one of the private respondents (Sittie Sohra Batara) filed an ex-
parte motion for the execution of the June 15, 1979 decision, praying that petitioner be directed
to pay her the unpaid balance of P14,300.00 for the lands expropriated from her, including legal
interest which she computed at 6% per annum. The said motion was granted by the lower court.
Thereafter, the lower court directed the petitioner to deposit with its Clerk of Court the sums of
money as adjudged in the joint decision dated June 15, 1979. Petitioner complied with said
order and deposited the sums of money with interest computed at 6% per annum.

On February 10, 1981, one of the private respondents (Pangonatan Cosna Tagol), through
counsel, filed with the trial court an ex-parte motion in Civil Case No. 2248 praying, for the first
time, that the legal interest on the just compensation awarded to her by the court be computed
at 12% per annum as allegedly "authorized under and by virtue of Circular No. 416 of the
Central Bank issued pursuant to Presidential Decree No. 116 and in a decision of the Supreme
Court that legal interest allowed in the judgment of the courts, in the absence of express
contract, shall be computed at 12% per annum." (Brief for Respondents, p. 3)

On February 11, 1981, the lower court granted the said motion allowing 12% interest per
annum. (Annex L, Petition). Subsequently, the other private respondents filed motions also
praying that the legal interest on the just compensation awarded to them be computed at
12% per annum, on the basis of which the lower court issued on March 10, 1981 and August
28, 1981 orders bearing similar import.

Petitioner moved for a reconsideration of the lower court's last order dated August 28, 1981,
alleging that the main decision had already become final and executory with its compliance of
depositing the sums of money as just compensation for the lands condemned, with legal interest
at 6% per annum; that the said main decision can no longer be modified or changed by the
lower court; and that Presidential Decree No. 116 is not applicable to this case because it is Art.
2209 of the Civil Code which applies.

On January 25, 1982, the lower court denied petitioner's, motion for reconsideration, stating that
the rate of interest at the time of the promulgation of the June 15, 1981 decision is that
prescribed by Central Bank Circular No. 416 issued pursuant to Presidential Decree No. 116,
which is 12% per annum, and that it did not modify or change but merely amplified its order of
August 28, 1981 in the determination of the legal interest.

Petitioner brings the case to Us for a determination of which legal interest is applicable to the
transaction in question.

Central Bank Circular No. 416 reads:

By virtue of the authority granted to it under Section 1 of Act No. 2655, as amended,
otherwise known as the "Usury Law," the Monetary Board, in its Resolution No. 1622
dated July 29, 1974, has prescribed that the rate of interest for the loan or forbearance
of any money, goods or credits and the rate allowed in judgments, in the absence of
express contract as to such rate of interest, shall be twelve per cent (12%) per annum.

It is clear from the foregoing provision that the Central Bank circular applies only to loan or
forbearance of money, goods or credits. This has already been settled in several cases decided
by this Court. Private respondents, however, take exception to the inclusion of the term
"judgments" in the said circular, claiming that such term refers to any judgment directing the
payment of legal interest, which term includes the questioned judgment of the lower court in the
case at bar.

Private respondents' contention is bereft of merit. The term "judgments" as used in Section 1 of
the Usury Law, as well as in Central Bank Circular No. 416, should be interpreted to mean only
judgments involving loan or forbearance of money, goods or credits, following the principle
of ejusdem generis. Under this doctrine, where general terms follow the designation of particular
things or classes of persons or subjects, the general term will be construed to comprehend
those things or persons of the same class or of the same nature as those specifically
enumerated (Crawford, Statutory Construction, p. 191; Go Tiaco vs. Union Ins. Society of
Canton, 40 Phil. 40; Mutuc vs. COMELEC, 36 SCRA 228)

The purpose of the rule on ejusdem generis is to give effect to both the particular and general
words, by treating the particular words as indicating the class and the general words as
including all that is embraced in said class, although not specifically named by the particular
words. This is justified on the ground that if the lawmaking body intended the general terms to
be used in their unrestricted sense, it would have not made an enumeration of particular
subjects but would have used only general terms (2 Sutherland, Statutory Construction, 3rd ed.,
pp. 395-400).

Applying the said rule on statutory construction to Central Bank Circular No. 416, the general
term "judgments" can refer only to judgments in cases involving loans or forbearance of any
money, goods or credits. As significantly laid down by this Court in the case of Reformina vs.
Tomol, 139 SCRA 260:
 The judgments spoken of and referred to are judgments in litigations involving loans or
forbearance of any money, goods or credits. Any other kind of monetary judgment which
has nothing to do with, nor involving loans or forbearance of any money, goods or
credits does not fall within the coverage of the said law for it is not within the ambit of the
authority granted to the Central Bank. The Monetary Board may not tread on forbidden
grounds. It cannot rewrite other laws. That function is vested solely with the legislative
authority. It is axiomatic in legal hermeneutics that statutes should be construed as a
whole and not as a series of disconnected articles and phrases. In the absence of a
clear contrary intention, words and phrases in statutes should not be interpreted in
isolation from one another. A word or phrase in a statute is always used in association
with other words or phrases and its meaning may thus be modified or restricted by the
latter.

Obviously, therefore, Art. 2209 of the Civil Code, and not Central Bank Circular No. 416, is the
law applicable to the case at bar. Said law reads:

Art. 2209. If the obligation consists in the payment of a sum of money, and the debtor
incurs a delay, the indemnity for damages, there being no stipulation to the contrary,
shall be the payment of the interest agreed upon, and in the absence of stipulation, the
legal interest, which is six percent per annum.

The Central Bank circular applies only to loan or forbearance of money, goods or credits and to
judgments involving such loan or forbearance of money, goods or credits. This is evident not
only from said circular but also from Presidential Decree No. 116, which amended Act No. 2655,
otherwise known as the Usury Law. On the other hand, Art. 2209 of the Civil Code applies to
transactions requiring the payment of indemnities as damages, in connection with any delay in
the performance of the obligation arising therefrom other than those covering loan or
forbearance of money, goods or credits.

In the case at bar, the transaction involved is clearly not a loan or forbearance of money, goods
or credits but expropriation of certain parcels of land for a public purpose, the payment of which
is without stipulation regarding interest, and the interest adjudged by the trial court is in the
nature of indemnity for damages. The legal interest required to be paid on the amount of just
compensation for the properties expropriated is manifestly in the form of indemnity for damages
for the delay in the payment thereof. Therefore, since the kind of interest involved in the joint
judgment of the lower court sought to be enforced in this case is interest by way of damages,
and not by way of earnings from loans, etc. Art. 2209 of the Civil Code shall apply.

As for private respondents' argument that Central Bank Circular No. 416 impliedly repealed or
modified Art. 2209 of the Civil Code, suffice it to state that repeals or even amendments by
implication are not favored if two laws can be fairly reconciled. The Courts are slow to hold that
one statute has repealed another by implication, and they will not make such an adjudication if
they can refrain from doing so, or if they can arrive at another result by any construction which is
just and reasonable. Besides, the courts will not enlarge the meaning of one act in order to
decide that it repeals another by implication, nor will they adopt an interpretation leading to an
adjudication of repeal by implication unless it is inevitable and a clear and explicit reason
therefor can be adduced. (82 C.J.S. 479-486). In this case, Central Bank Circular No. 416 and
Art. 2209 of the Civil Code contemplate different situations and apply to different transactions. In
transactions involving loan or forbearance of money, goods or credits, as well as judgments
relating to such loan or forbearance of money, goods or credits, the Central Bank circular
applies. It is only in such transactions or judgments where the Presidential Decree allowed the
Monetary Board to dip its fingers into. On the other hand, in cases requiring the payment of
indemnities as damages, in connection with any delay in the performance of an obligation other
than those involving loan or forbearance of money, goods or credits, Art. 2209 of the Civil Code
applies. For the Court, this is the most fair, reasonable, and logical interpretation of the two
laws. We do not see any conflict between Central Bank Circular No. 416 and Art. 2209 of the
Civil Code or any reason to hold that the former has repealed the latter by implication.

WHEREFORE, the petition is GRANTED. The Orders promulgated on February 11, 1981,
March 10, 1981, August 28, 1981 and January 25, 1982 (as to the recomputation of interest at
12% per annum) are ANNULLED and SET ASIDE. It is hereby declared that the computation of
legal interest at 6% per annum is the correct and valid legal interest allowed in payments of just
compensation for lands expropriated for public use to herein private respondents by the
Government through the National Power Corporation. The injunction heretofore granted is
hereby made permanent. No costs.

G.R. No. L-12032 August 31, 1959

CITY OF BAGUIO, plaintiff-appelle,

vs.
THE NATIONAL WATERWORKS AND SEWERAGE AUTHORITY, defendant-appellant.

City Attorney Sixto A. Domondom for appellee.

Office of the Solicitor General Ambrosio Padilla, First Assistant Government Corporate Counsel
Simeon Gopengco and Solicitor Troadio T. Quinzon, Jr. for appellant.

BAUTISTA ANGELO, J.:

Plaintiff, a municipal corporation, filed on April 25, 1956, in the Court of First Instance of Baguio,
a complaint for declaratory relief against defendant, a public corporation created by Republic
Act No. 1383, contending that said Act does not include within its preview the Baguio Workshop
System; that assuming that it does, said Act is unconstitutional because it has the effect of
depriving plaintiff of the ownership, control and operation of said waterworks system without
compensation and without due process of law, and that it is oppressive, unreasonable and
unjust to plaintiff and other cities, municipalities and municipal districts similarly situated.

On My 22, 1956, defendant filed a motion to dismiss on the ground that Republic Act No. 1383
is a proper exercise of the police power of the State; that assuming that said Act contemplates
an act of expropriation, it is still a constitutional exercise of the power of eliminate domain; that
at any rate the Baguio Waterworks System is not a private property but "public works of public
service" over which the Legislature has control; and that the provision of the said Act being clear
and unambiguous, there is no necessity for construction.

On June 21, 1956, the Court, acting on the motion to dismiss as well as on the answer and
rejoinder filed by both parties, denied the motion and ordered defendant to file its answer to the
complaint. On July 6, 1956, defendant filed its answer reiterating and amplifying the ground
already advanced in this motion to dismiss, adding thereto that the action for the declaratory
relief is improper for the reason that the Baguio waterworks System has already been
transferred to defendant pursuant to Republic Act No. 1383 or, if such has not been done, there
has already been a breach of said Act.
On August 14, 1956, the parties submitted a written stipulation of the facts and filed written
memoranda. And after allowing plaintiff to file a suplementary complaint, the Court on
November 5, 1956, rendered decision the dispositive part of which reads: "This Court, . . . holds
that the workshop system of the City of Baguio falls filed within the category of 'private property',
as contemplated by our constitution and may not expropriated without just compensation — and
that section 8 of republic act No. 1383 provides for the exchange of the NAWASA assets for the
value of workshop system of Baguio is unconstitutional as this is not 'just compensation,'"
Defendant filed a motion for reconsideration, and upon its denial. It took the present appeal.

The issues posed in this appeal are: (1) plaintiff's action for declatory relief is improper because
there has already been a breach by plaintiff of Republic Act No. 1383 (2) Republic Act No. 1383
does not contemplates the exercise of the power of eliminate domain but the exertion of the
police power of the State; and (3) assuming arguendo that Republic Act No. 1383 involves the
exercise of the power of eminent domain the same does not violate our Constitution.

Before we proceed with the discussion of this issues, there is need to state some facts
necessarily for their determination since the proper application of the principles of law that may
be pertinent would greatly depend upon them.

Plaintiff is a municipal corporation organized under its Charter with principal place of business in
the City of Baguio, while defendant is in the public corporation created by Republic Act No. 1383
with provincial place of business in the City of manila. Under section 2553 of its Charter,
plaintiffs is maintaining the Baguio Waterworks System under a certificates of public
convenience, the same being financed by its own funds, the Baguio general fund, and funds
advanced by the national Government. The assets of said system as of December 31, 1955
were reported to be P1,408.795.98. The system supplies only the City of Baguio, its inhabitants,
and transient visitors, and, as provided for in accordance, it grants to the employees of the City
one fifth (1/5) of cubic meter free from every one peso of their total salary per annum as part of
their compensation. The employees of the national Government are not given this privilege but
there is a provision plaintiff Charter which says: "in consideration of the exemption from the
taxation to the extensive real state holdings of the national Government within the limit of the
City, of the expenses of the improvements which the Government of the said City is required to
make a reason for the location therein of the offenses of the national Government, and of free
services in connection of the said offices, there is created a permanent and continuing
appropriation from the funds in the national Treasury not otherwise appropriated, equal to fifty
per centum of the expenses of the Government of the City exclusive of this accounts which
appear as expenses by reason of inter-department charges and charges against the national
Government for services and supplies."

The purposes for which defendants was created is expressed in section 1 of republic Act No.
1383, which we quote:

Creation of the national Waterworks and Sewerage Authority;' its general purposes;
Zone and extends of the jurisdiction comprised by it; domicile and place of business of
the corporation. — For purposes of consolidating and centralizing all waterworks,
sewerage and drainage systems in the Philippines under one control, direction and
general supervision, there is hereby created a public corporation to be known as the
National workshop and Sewerage authority, which shall be organized within one month
after the approval of this Act.
 The National Waterworks and Sewerage authority shall own and/or have jurisdiction,
supervision and control over all territory now embraced by the Metropolitan Water
Districts as well as all areas now served by existing government-owned waterworks in
the boundaries of cities, municipalities and municipality districts in the Philippines
including those served by the waterworks and wells and drills sections of the national
Waterworks and Sewerage authority, any from time to time extends its territory by the
admission of or the inclusion of any municipal or municipal districts in the Philippines.

The jurisdiction of the national waterworks and Sewerage Authority shall extend to the
construction, maintenance, operation and control of non-supporting and/or non-revenue
producing water systems and sanitary works, whether undertaken at the expense of the
Authority or through subsidy of the national Government as provided in Section 10 of this
act.

And to accomplish the above purpose, the following was provided in section 8 of the same act:

Dissolution of the Metropolitan Water District; transfer to the Authority of its records,
assets and liabilities; transfer to the Authority of entities, waterworks and sewerage
systems in the cities, municipalities, municipal district and other government waterworks
and sewerage systems. The present Metropolitan Water District created Under Act
Number Two Thousand eight hundred thirty-two, as amended, is hereby dissolved, and
its records, assets and liabilities are transferred to the authority. All existing government
owned waterworks and sewerage systems are transferred to the National waterworks
and Sewerage Authority, and in turn to pledge such assets as security for the payment
of the waterworks and sewerage bonded debt.

The net book value of the properties and assets of the Metropolitan Water District and of
government-owned waterworks and sewerage systems in cities, municipalities, or
municipal districts, and other government-owned waterworks and sewerage systems
shall be received by the Authority in payment for an equal value of the assets of the
National Waterworks and sewerage Authority.

The references made to the Metropolitan Water District or to any existing government-
owned waterworks and sewerage system in any city, municipality or municipal district
and other waterworks and sewerage system under the Bureau of Public Works, in any
Act or Executive Order or Proclamation of the President of the Philippines or in any city
or municipal ordinance which is still in force, shall be deemed to be a reference to the
National Waterworks and Sewerage Authority created by this Act.

On September 19, 1955, the President of the Philippines issued Executive Order No. 127
outlining the procedure for the transfer of government-owned waterworks and sewerage
systems in the provinces, cities and municipalities to defendant and provided for a time limit for
such transfer, which is "at the earliest time possible but not exceeding 90 days from the date of
said order."

And on March 15, 1956, defendant, implementing said Executive Order, issued Office
Memorandum No. 7 providing, among other things, the following:

(1) Pending the establishment of the Waterworks district offices of the Authority, District
and City Engineers, shall continue to be in charge of the operation and maintenance of
 all existing waterworks systems, including the repair and improvement thereof and the
construction of new waterworks projects in their respective districts in accordance with
the Memorandum of the Secretary of Public Works and Communications dated October
25, 1955, quoted in the Memorandum of the Director of Public Works dated October 27,
1955. Likewise, they shall continue approving vouchers and payrolls for salaries and
essential services chargeable against waterworks funds heretofore, provided that said
expenses do not exceed the appropriations in the approved budget for the preceeding
fiscal year.

(2) Pending the establishment of the Waterworks district offices of the Authority which
shall ultimately include an auditing force, Provincial and City auditors shall, as
heretofore, audit the accounts of the different waterworks systems in their respective
jurisdictions in accordance with Provincial Auditor's Memorandum No. 151 to Provincial
and City Auditors dated December 7, 1955.

(3) Pending the establishment of the waterworks district offices of the Authority,
provincial, city and municipal treasurers shall continue to perform the work of handling
the collections and disbursements of funds of the waterworks systems and artesian wells
projects in their respective jurisdictions in accordance with provincial circular of the
Secretary of Finance to all provincial and City Treasurers dated November 23, 1955.

(4) Provincial Waterworks Boards, provincial Boards, Municipal Boards, or City councils
of cities and municipal councils of Municipalities and municipal districts ipso
facto ceased to have control and supervision over waterworks systems within their
respective territorial jurisdictions upon the formal organization of the National
Waterworks and sewerage Authority in accordance with the provisions of Republic Act
No. 1383. All budgets and plantillas of personnel of said waterworks personnel, including
collectors who were formerly directly under the Provincial, City or Municipal Treasurers,
whether permanent, temporary or emergency, shall be effective only after their approval
by the Board of directors of the Authority.

Let us now discussed the issues raised..

As regards the first issue, appellant contends that appellee's action for declaratory relief is
improper because there has already been a breach of the Republic Act No. 1383, invoking
section 2 of rule 66 which provides; "A contract or statue may be construed before there has
been a breach thereof."

This contention is untenable. To begin with, the answer filed by defendant through its counsel
the Solicitor General contains a express admission of the avernment in appellee's complaint
that "although Republic Act No. 1383 took effect upon its approval on June 18, 1955, and
notwithstanding Executive Order No. 127 of the President, there has been no breach of said law
because no actual physical turn-over of the Baguio Waterworks System has so far been made."
Because of such admission, it has always been assumed in the trial court that the present
action is proper because there has not been such breach so much so that appellant desisted
from raising the point in the rest of the proceedings in the trial court and in the long
memorandum it has submitted, for which reason the trial court made in its decision the following
comment: In its memorandum, however, the NAWASA has failed to argue this point. the
omission is significant and this Court takes that in any objection to the declaratory relief
proceedings are waived." That appellant would now take an inconsistent stand is strange in any
event, we find that such is the situation obtaining here. Republic Act No. 1383 provides that
government-owned waterworks system should be transferred to appellant at the earliest time
possible, and unless by administrative action this provision is actually carried out, it cannot be
said that the transfer has been effected. The most that appellant did to carry out such provision
is to issue its Office memorandum No. 7 which prescribes the preparatory steps for such
transfer pending the establishment of the branch office of the NAWASA that would take over the
waterworks concerned, but before any definite step could be taken to comply with said directive
the present action was instituted. We agree with the trial court that so far there has not been a
breach of the law and that the other requisites necessary for an action for declaratory relief are
present.

The contention that the Republic Act No. 1383 constitutes a valid exercise of police power
rather than a directive to expropriate the waterworks of the appellee by the exercise of the
power of eminent domain cannot also be entertained. This is far from the intent and purpose of
the law. The act does not confiscate, nor destroy, nor appropriate property belonging to the
appellee. It merely directs that all waterworks belonging to cities, municipalities, and municipal
districts in the Philippines be transferred to the NAWASA for the purpose of placing them under
the control and supervision of one agency with a view to promoting their efficient management,
but in so doing it does not confiscate them because it directs that they be paid with an equal
value of the assets of the NAWASA. This is clearly inferred from the context of the law (section
8, Rep. Act No. 1383).

But appellant invites our attention to some authorities purporting to show the Republic Act No.
1383 could at least be considered as a legitimate exercise of police power such that Congress
may in the exercise of such power enact a law transferring Government property from one
agency to another, and laying stress one said authorities it contends that although Congress
cannot deprive the citizens of a municipal corporation of the use of property held in trust for their
benefit it may however change the trustee with or without its consent or compensation provided
the citizens are not deprived of its enjoyment. In other words, appellant invokes the principle
that the transfer of property and authority by an act of Congress from one class of public officer
to another where the property continues devoted to its original purpose does not impair any
vested right of the city owning the property.

But the authorities cited are not in point. They in substance point out that the transfer, if any, of
the property of municipal corporation from one agency to another is merely done for purposes of
administration, its ownership and benefits being retained by the corporation. Such is not the
clear intent of Republic Act No. 1383. Here, as we have already shown, its purpose is to effect a
real transfer of the ownership of the waterworks to the new agency and does not merely
encompass a transfer of administration. At any rate, the authorities cited do not bear out the
proposition of appellant as clearly pointed out by counsel for appellee in his brief.

But it is insisted that the waterworks system of Baguio City does not have the character of
patrimonial property but comes under the phrase "public works for public service" mentioned in
Article 424 of the New Civil Code and as such is subjected to the control of Congress. This
contention is also untenable. The Baguio Waterworks System is not like any public road, park,
street or any other public property held in trust by a municipal corporation held for the benefit of
the public but it is rather a property owned by appellee in its proprietary character. While the
cases may differ as to the public or private character of waterworks, the weight of authority as
far as the legislature is concerned classes them as private affairs. (sec. 239, Vol. I, Revised,
McQuillin Municipal Corporation, p. 239; Shrik vs. City of Lancaster, 313 Pa. 158, 169 Atl. 557).
And in this jurisdiction, this court has already expressed the view that the waterworks system is
patrimonial property of the city that has established it.(Mendoza vs. De Leon, 33 Phil. 509). And
being owned by the municipal corporation in a proprietary character, waterworks cannot be
taken away without observing the safeguards set by our Constitution for the protection of private
property.

While the judicial opinions on this subject are more or less uncertain in expression, and
court judgment apparently conflicting, perhaps it is correct to affirm that a majority of
decision recognize the private rights of the municipal corporation, and hence support the
view that all its property of a distinctly private character is fully protected by the
constitutional provisions protecting private property of the individual or the private
corporation. Accordingly the right of state as to the private property of municipal
corporation is a right of regulation to be exercised in harmony with the general policy of
the state, and though broader than exists in the case of individuals, or private
corporations, is not a right of appropriation.

xxx xxx xxx

The decision maintain that the property held by a municipal corporation units private
capacity is not subject to the unrestricted control of the legislature, and the municipality
cannot be deprived of such property against its will, except by the exercise of eminent
domain with payment of full compensation. (McQuillin Municipal Corporation, 2nd Ed.,
Vol. I, pp. 670-681).

In its private capacity a municipal corporation is wholly different. The people of a

compact community usually require certain conveniences which cannot be furnished
without a franchise from the State and which are either unnecessary in the rural districts,
such as a system of sewers, or parks and open spaces, or which on account of the
expenses it would be financially impossible to supply except where the population is
reasonably dense, such as water or gas. But in so far as the municipality is thus
authorized to exercise the functions of a private corporation, it is clothed with the
capacities of a private corporation and may claim its rights and immunities, even as
against the sovereign, and is subject to the liabilities of such a corporation, even as
against third parties. (19 R.C. L. p. 698)

The attempt of appellant in having waterworks considered as public property subject to the
control of Congress or one which can be regulated by the exercise of police power having failed,
that question that now arises is: Does Republic Act No. 1383 provide for the automatic
expropriation of the waterworks in question in the light of our Constitution? In other words, does
said law comply with the requirements of section 6, Article XIII, in relation to section 1(2), Article
III, of our Constitution?

Section 6, Article XIII of our Constitution provides:

SEC. 6. The State may, in the interest of National Welfare and defense, establish and
operate industries and means of transportation and communication, and, upon payment
of just compensation, transfer to public ownership utilities and other private enterprises
to be operated by the Government.

Section 1 (2), Article III, of our Constitution provides:

 (2) Private property shall not be taken for public use without just compensation.

It is clear that the State may, in the interest of National welfare, transfer to public ownership any
private enterprise upon payment of just compensation. At the same time, one has to bear in
mind that no person can be deprived of his property except for public use and upon payment of
just compensation. There is an attempt to observe this requirement in Republic Act No. 1383
when in providing for the transfer of appellee's waterworks system to a national agency it was
directed that the transfer be made upon payment of an equivalent value of the property. Has this
been implemented? Has appellant actually transferred to appellee any asset of the NAWASA
that may be considered just compensation for the property expropriated? There is nothing in the
record to show that such was done. Neither is there anything to this effect in Office
Memorandum No. 7 issued by the NAWASA in implementation of the provision of the Republic
Act No. 1383. The law speaks of assets of the NAWASA by they are not specified. While the Act
empowers the NAWASA to contract indebtedness and issue bonds subject to the approval of
the Secretary of Finance when necessary for the transaction of its business (sec. 2, par. (L),
sec. 5, Act No. 1383), no such action has been taken to comply with appellant's commitment in
so far as payment of compensation of appellee is concerned. As to when such action should be
taken no one knows. And unless this aspect of the law is clarified and appellee is given its due
compensation, appellee cannot be deprived of its property even if appellant desires to take over
its administration in line with the spirit of the law. We are therefore persuaded to conclude that
the law, insofar as it expropriates the waterworks in question without providing for an effective
payment of just compensation, violates our Constitution. In this respect, the decision of the trial
court is correct.

Wherefore, the decision appealed from is affirmed, without pronouncement as to costs.

EN BANC

MACTAN-CEBU INTERNATIONAL AIRPORT G.R. No. 176625

AUTHORITY and AIR TRANSPORTATION
OFFICE, Present:
Petitioners,
PUNO, C.J.,
CARPIO,
CORONA,
CARPIO MORALES,VELASCO,
- versus - JR., NACHURA, LEONARDO-DE
CASTRO,
BRION,
PERALTA,*
BERSAMIN,
BERNARDO L. LOZADA, SR., and the DEL CASTILLO,
HEIRS OF ROSARIO MERCADO, namely, ABAD,
VICENTE LOZADA, MARIO M. LOZADA, MARCIA VILLARAMA, JR.,
L. GODINEZ, VIRGINIA L. FLORES, BERNARDO PEREZ, and
LOZADA, JR., DOLORES GACASAN, SOCORRO MENDOZA, JJ.
CAFARO and ROSARIO LOZADA, represented
by MARCIA LOZADA GODINEZ, Promulgated:
Respondents.
February 25, 2010

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

DECISION

NACHURA, J.:

This is a petition for review on certiorari under Rule 45 of the Rules of Court, seeking to reverse,
annul, and set aside the Decision[1] dated February 28, 2006 and the Resolution[2] dated
February 7, 2007 of the Court of Appeals (CA) (Cebu City), Twentieth Division, in CA-G.R. CV
No. 65796.

The antecedent facts and proceedings are as follows:

Subject of this case is Lot No. 88-SWO-25042 (Lot No. 88), with an area of 1,017 square
meters, more or less, located in Lahug, Cebu City. Its original owner was Anastacio Deiparine
when the same was subject to expropriation proceedings, initiated by the Republic of the
Philippines (Republic), represented by the then Civil Aeronautics Administration (CAA), for the
expansion and improvement of the Lahug Airport. The case was filed with the then Court of First
Instance of Cebu, Third Branch, and docketed as Civil Case No. R-1881.

As early as 1947, the lots were already occupied by the U.S. Army. They were turned over to
the Surplus Property Commission, the Bureau of Aeronautics, the National Airport Corporation
and then to the CAA.

During the pendency of the expropriation proceedings, respondent Bernardo L. Lozada, Sr.
acquired Lot No. 88 from Deiparine. Consequently, Transfer Certificate of Title (TCT) No. 9045
was issued in Lozadas name.

On December 29, 1961, the trial court rendered judgment in favor of the Republic and ordered
the latter to pay Lozada the fair market value of Lot No. 88, adjudged at P3.00 per square
meter, with consequential damages by way of legal interest computed from November 16,
1947the time when the lot was first occupied by the airport.Lozada received the amount
of P3,018.00 by way of payment.

The affected landowners appealed. Pending appeal, the Air Transportation Office (ATO),
formerly CAA, proposed a compromise settlement whereby the owners of the lots affected by
the expropriation proceedings would either not appeal or withdraw their respective appeals in
consideration of a commitment that the expropriated lots would be resold at the price they were
expropriated in the event that the ATO would abandon the Lahug Airport, pursuant to an
established policy involving similar cases.Because of this promise, Lozada did not pursue his
appeal. Thereafter, Lot No. 88 was transferred and registered in the name of the Republic under
TCT No. 25057.

The projected improvement and expansion plan of the old Lahug Airport, however, was not
pursued.

Lozada, with the other landowners, contacted then CAA Director Vicente Rivera, Jr., requesting
to repurchase the lots, as per previous agreement. The CAA replied that there might still be a
need for the Lahug Airport to be used as an emergency DC-3 airport. It reiterated, however, the
assurance that should this Office dispose and resell the properties which may be found to be no
longer necessary as an airport, then the policy of this Office is to give priority to the former
owners subject to the approval of the President.
On November 29, 1989, then President Corazon C. Aquino issued a Memorandum to the
Department of Transportation, directing the transfer of general aviation operations of
the Lahug Airport to the Mactan International Airport before the end of 1990 and, upon such
transfer, the closure of the Lahug Airport.

Sometime in 1990, the Congress of the Philippines passed Republic Act (R.A.) No. 6958,
entitled An Act Creating the Mactan-Cebu International Airport Authority, Transferring Existing
Assets of the Mactan International Airport and the Lahug Airport to the Authority, Vesting the
Authority with Power to Administer and Operate the Mactan International Airport and the Lahug
Airport, and For Other Purposes.

From the date of the institution of the expropriation proceedings up to the present, the public
purpose of the said expropriation (expansion of the airport) was never actually initiated, realized,
or implemented. Instead, the old airport was converted into a commercial complex. Lot No. 88
became the site of a jail known as Bagong Buhay Rehabilitation Complex, while a portion
thereof was occupied by squatters.[3] The old airport was converted into what is now known as
the Ayala I.T. Park, a commercial area.

Thus, on June 4, 1996, petitioners initiated a complaint for the recovery of possession and
reconveyance of ownership of Lot No. 88. The case was docketed as Civil Case No. CEB-
18823 and was raffled to the Regional Trial Court (RTC), Branch 57, Cebu City. The complaint
substantially alleged as follows:

(a) Spouses Bernardo and Rosario Lozada were the registered owners of Lot No.
88 covered by TCT No. 9045;

(b) In the early 1960s, the Republic sought to acquire by expropriation Lot No.
88, among others, in connection with its program for the improvement and
expansion of the LahugAirport;

(c) A decision was rendered by the Court of First Instance in favor of the
Government and against the land owners, among whom was Bernardo
Lozada, Sr. appealed therefrom;

(d) During the pendency of the appeal, the parties entered into a compromise
settlement to the effect that the subject property would be resold to the
original owner at the same price when it was expropriated in the event that
the Government abandons the Lahug Airport;

(e) Title to Lot No. 88 was subsequently transferred to the Republic of

the Philippines (TCT No. 25057);
 (f) The projected expansion and improvement of the Lahug Airport did not
materialize;

(g) Plaintiffs sought to repurchase their property from then CAA Director Vicente
Rivera. The latter replied by giving as assurance that priority would be
given to the previous owners, subject to the approval of the President,
should CAA decide to dispose of the properties;

(h) On November 29, 1989, then President Corazon C. Aquino, through a

Memorandum to the Department of Transportation and Communications
(DOTC), directed the transfer of general aviation operations at
the Lahug Airport to the Mactan-Cebu International Airport Authority;

(i) Since the public purpose for the expropriation no longer exists, the property
must be returned to the plaintiffs.[4]

In their Answer, petitioners asked for the immediate dismissal of the complaint. They specifically
denied that the Government had made assurances to reconvey Lot No. 88 to respondents in the
event that the property would no longer be needed for airport operations. Petitioners instead
asserted that the judgment of condemnation was unconditional, and respondents were,
therefore, not entitled to recover the expropriated property notwithstanding non-use or
abandonment thereof.

After pretrial, but before trial on the merits, the parties stipulated on the following set of facts:

(1) The lot involved is Lot No. 88-SWO-25042 of the Banilad Estate, situated in
the City of Cebu, containing an area of One Thousand Seventeen (1,017)
square meters, more or less;

(2) The property was expropriated among several other properties in Lahug in
favor of the Republic of the Philippines by virtue of a Decision dated
December 29, 1961 of the CFI of Cebu in Civil Case No. R-1881;

(3) The public purpose for which the property was expropriated was for the
purpose of the Lahug Airport;

(4) After the expansion, the property was transferred in the name of MCIAA;
[and]

(5) On November 29, 1989, then President Corazon C. Aquino directed the
Department of Transportation and Communication to transfer general
aviation operations of the Lahug Airport to the Mactan-Cebu International
Airport Authority and to close the Lahug Airport after such transfer[.] [5]
During trial, respondents presented Bernardo Lozada, Sr. as their lone witness, while petitioners
presented their own witness, Mactan-Cebu International Airport Authority legal assistant Michael
Bacarisas.

On October 22, 1999, the RTC rendered its Decision, disposing as follows:

WHEREFORE, in the light of the foregoing, the Court hereby renders judgment in
favor of the plaintiffs, Bernardo L. Lozada, Sr., and the heirs of Rosario Mercado,
namely, Vicente M. Lozada, Marcia L. Godinez, Virginia L. Flores, Bernardo M.
Lozada, Jr., Dolores L. Gacasan, Socorro L. Cafaro and Rosario M. Lozada,
represented by their attorney-in-fact Marcia Lozada Godinez, and against
defendants Cebu-Mactan International Airport Authority (MCIAA) and Air
Transportation Office (ATO):

1. ordering MCIAA and ATO to restore to plaintiffs the possession and

ownership of their land, Lot No. 88 Psd-821 (SWO-23803), upon payment of the
expropriation price to plaintiffs; and

2. ordering the Register of Deeds to effect the transfer of the Certificate of

Title from defendant[s] to plaintiffs on Lot No. [88], cancelling TCT No. 20357 in
the name of defendant MCIAA and to issue a new title on the same lot in the
name of Bernardo L. Lozada, Sr. and the heirs of Rosario Mercado, namely:
Vicente M. Lozada, Mario M. Lozada, Marcia L. Godinez, Virginia L. Flores,
Bernardo M. Lozada, Jr., Dolores L. Gacasan, Socorro L. Cafaro and Rosario M.
Lozada.

No pronouncement as to costs.

SO ORDERED.[6]

Aggrieved, petitioners interposed an appeal to the CA. After the filing of the necessary appellate
briefs, the CA rendered its assailed Decision dated February 28, 2006, denying petitioners
appeal and affirming in toto the Decision of the RTC, Branch 57, Cebu City. Petitioners motion
for reconsideration was, likewise, denied in the questioned CA Resolution dated February 7,
2007.

Hence, this petition arguing that: (1) the respondents utterly failed to prove that there was a
repurchase agreement or compromise settlement between them and the Government; (2) the
judgment in Civil Case No. R-1881 was absolute and unconditional, giving title in fee simple to
the Republic; and (3) the respondents claim of verbal assurances from government officials
violates the Statute of Frauds.
The petition should be denied.

Petitioners anchor their claim to the controverted property on the supposition that the Decision
in the pertinent expropriation proceedings did not provide for the condition that should the
intended use of Lot No. 88 for the expansion of the Lahug Airport be aborted or abandoned, the
property would revert to respondents, being its former owners. Petitioners cite, in support of this
position, Fery v. Municipality of Cabanatuan,[7] which declared that the Government acquires
only such rights in expropriated parcels of land as may be allowed by the character of its title
over the properties

If x x x land is expropriated for a particular purpose, with the condition that when
that purpose is ended or abandoned the property shall return to its former owner,
then, of course, when the purpose is terminated or abandoned the former owner
reacquires the property so expropriated. If x x x land is expropriated for a public
street and the expropriation is granted upon condition that the city can only use it
for a public street, then, of course, when the city abandons its use as a public
street, it returns to the former owner, unless there is some statutory provision to
the contrary. x x x. If, upon the contrary, however, the decree of expropriation
gives to the entity a fee simple title, then, of course, the land becomes the
absolute property of the expropriator, whether it be the State, a province, or
municipality, and in that case the non-user does not have the effect of defeating
the title acquired by the expropriation proceedings. x x x.

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 right in the land, and the public use may be abandoned,
or the land may be devoted to a different use, without any impairment of the
estate or title acquired, or any reversion to the former owner. x x x.[8]

Contrary to the stance of petitioners, this Court had ruled otherwise in Heirs of Timoteo
Moreno and Maria Rotea v. Mactan-Cebu International Airport Authority,[9] thus

Moreover, respondent MCIAA has brought to our attention a significant and

telling portion in the Decision in Civil Case No. R-1881 validating our discernment
that the expropriation by the predecessors of respondent was ordered under the
running impression that Lahug Airport would continue in operation

As for the public purpose of the expropriation proceeding, it

cannot now be doubted. Although Mactan Airport is being
constructed, it does not take away the actual usefulness and
importance of the Lahug Airport: it is handling the air traffic both
civilian and military. From it aircrafts fly to Mindanao and Visayas
and pass thru it on their flights to the North and Manila. Then, no
evidence was adduced to show how soon is the Mactan Airport to
 be placed in operation and whether the Lahug Airportwill be
closed immediately thereafter. It is up to the other departments of
the Government to determine said matters. The Court cannot
substitute its judgment for those of the said departments or
agencies. In the absence of such showing, the Court will presume
that the Lahug Airport will continue to be in operation (emphasis
supplied).

While in the trial in Civil Case No. R-1881 [we] could have simply acknowledged
the presence of public purpose for the exercise of eminent domain regardless of
the survival of Lahug Airport, the trial court in its Decision chose not to do so but
instead prefixed its finding of public purpose upon its understanding
that Lahug Airport will continue to be in operation. Verily, these meaningful
statements in the body of the Decision warrant the conclusion that the
expropriated properties would remain to be so until it was confirmed
that Lahug Airport was no longer in operation. This inference further implies two
(2) things: (a) after the Lahug Airport ceased its undertaking as such and the
expropriated lots were not being used for any airport expansion project, the rights
vis--vis the expropriated Lots Nos. 916 and 920 as between the State and their
former owners, petitioners herein, must be equitably adjusted; and (b) the
foregoing unmistakable declarations in the body of the Decision should merge
with and become an intrinsic part of the fallo thereof which under the premises is
clearly inadequate since the dispositive portion is not in accord with the findings
as contained in the body thereof.[10]

Indeed, the Decision in Civil Case No. R-1881 should be read in its entirety, wherein it is
apparent that the acquisition by the Republic of the expropriated lots was subject to the
condition that the Lahug Airport would continue its operation. The condition not having
materialized because the airport had been abandoned, the former owner should then be
allowed to reacquire the expropriated property.[11]

On this note, we take this opportunity to revisit our ruling in Fery, which involved an
expropriation suit commenced upon parcels of land to be used as a site for a public
market. Instead of putting up a public market, respondent Cabanatuan constructed residential
houses for lease on the area. Claiming that the municipality lost its right to the property taken
since it did not pursue its public purpose, petitioner Juan Fery, the former owner of the lots
expropriated, sought to recover his properties. However, as he had admitted that, in 1915,
respondent Cabanatuan acquired a fee simple title to the lands in question, judgment was
rendered in favor of the municipality, following American jurisprudence, particularly City of Fort
Wayne v. Lake Shore & M.S. RY. Co.,[12] McConihay v. Theodore Wright,[13] and Reichling v.
Covington Lumber Co.,[14] all uniformly holding that the transfer to a third party of the
expropriated real property, which necessarily resulted in the abandonment of the particular
public purpose for which the property was taken, is not a ground for the recovery of the same by
its previous owner, the title of the expropriating agency being one of fee simple.

Obviously, Fery was not decided pursuant to our now sacredly held constitutional right that
private property shall not be taken for public use without just compensation.[15] It is well settled
that the taking of private property by the Governments power of eminent domain is subject to
two mandatory requirements: (1) that it is for a particular public purpose; and (2) that just
compensation be paid to the property owner. These requirements partake of the nature of
implied conditions that should be complied with to enable the condemnor to keep the property
expropriated.[16]

More particularly, with respect to the element of public use, the expropriator should commit to
use the property pursuant to the purpose stated in the petition for expropriation filed, failing
which, it should file another petition for the new purpose. If not, it is then incumbent upon the
expropriator to return the said property to its private owner, if the latter desires to reacquire the
same. Otherwise, the judgment of expropriation suffers an intrinsic flaw, as it would lack one
indispensable element for the proper exercise of the power of eminent domain, namely, the
particular public purpose for which the property will be devoted. Accordingly, the private
property owner would be denied due process of law, and the judgment would violate the
property owners right to justice, fairness, and equity.

In light of these premises, we now expressly hold that the taking of private property, consequent
to the Governments exercise of its power of eminent domain, is always subject to the condition
that the property be devoted to the specific public purpose for which it was taken. Corollarily, if
this particular purpose or intent is not initiated or not at all pursued, and is peremptorily
abandoned, then the former owners, if they so desire, may seek the reversion of the property,
subject to the return of the amount of just compensation received. In such a case, the exercise
of the power of eminent domain has become improper for lack of the required factual
justification.[17]

Even without the foregoing declaration, in the instant case, on the question of whether
respondents were able to establish the existence of an oral compromise agreement that entitled
them to repurchase Lot No. 88 should the operations of the Lahug Airport be abandoned, we
rule in the affirmative.
It bears stressing that both the RTC, Branch 57, Cebu and the CA have passed upon this
factual issue and have declared, in no uncertain terms, that a compromise agreement was, in
fact, entered into between the Government and respondents, with the former undertaking to
resell Lot No. 88 to the latter if the improvement and expansion of the Lahug Airport would not
be pursued. In affirming the factual finding of the RTC to this effect, the CA declared

Lozadas testimony is cogent. An octogenarian widower-retiree and a resident

of Moon Park, California since 1974, he testified that government representatives
verbally promised him and his late wife while the expropriation proceedings were
on-going that the government shall return the property if the purpose for the
expropriation no longer exists. This promise was made at the premises of the
airport. As far as he could remember, there were no expropriation proceedings
against his property in 1952 because the first notice of expropriation he received
was in 1962. Based on the promise, he did not hire a lawyer. Lozada was firm
that he was promised that the lot would be reverted to him once the public use of
the lot ceases.He made it clear that the verbal promise was made in Lahug with
other lot owners before the 1961 decision was handed down, though he could
not name the government representatives who made the promise. It was just a
verbal promise; nevertheless, it is binding. The fact that he could not supply the
necessary details for the establishment of his assertions during cross-
examination, but that When it will not be used as intended, it will be returned
back, we just believed in the government, does not dismantle the credibility and
truthfulness of his allegation. This Court notes that he was 89 years old when he
testified in November 1997 for an incident which happened decades ago. Still, he
is a competent witness capable of perceiving and making his perception
known. The minor lapses are immaterial. The decision of the competency of a
witness rests primarily with the trial judge and must not be disturbed on appeal
unless it is clear that it was erroneous. The objection to his competency must be
made before he has given any testimony or as soon as the incompetency
becomes apparent. Though Lozada is not part of the compromise
agreement,[18] he nevertheless adduced sufficient evidence to support his
claim.[19]

As correctly found by the CA, unlike in Mactan Cebu International Airport Authority v. Court of
Appeals,[20] cited by petitioners, where respondent therein offered testimonies which were
hearsay in nature, the testimony of Lozada was based on personal knowledge as the assurance
from the government was personally made to him. His testimony on cross-examination
destroyed neither his credibility as a witness nor the truthfulness of his words.

Verily, factual findings of the trial court, especially when affirmed by the CA, are binding
and conclusive on this Court and may not be reviewed. A petition for certiorari under Rule 45 of
the Rules of Court contemplates only questions of law and not of fact. [21] Not one of the
exceptions to this rule is present in this case to warrant a reversal of such findings.
As regards the position of petitioners that respondents testimonial evidence violates the Statute
of Frauds, suffice it to state that the Statute of Frauds operates only with respect to executory
contracts, and does not apply to contracts which have been completely or partially performed,
the rationale thereof being as follows:

In executory contracts there is a wide field for fraud because unless they be in
writing there is no palpable evidence of the intention of the contracting
parties. The statute has precisely been enacted to prevent fraud. However, if a
contract has been totally or partially performed, the exclusion of parol evidence
would promote fraud or bad faith, for it would enable the defendant to keep the
benefits already delivered by him from the transaction in litigation, and, at the
same time, evade the obligations, responsibilities or liabilities assumed or
contracted by him thereby.[22]

In this case, the Statute of Frauds, invoked by petitioners to bar the claim of respondents for the
reacquisition of Lot No. 88, cannot apply, the oral compromise settlement having been partially
performed. By reason of such assurance made in their favor, respondents relied on the same by
not pursuing their appeal before the CA. Moreover, contrary to the claim of petitioners, the fact
of Lozadas eventual conformity to the appraisal of Lot No. 88 and his seeking the correction of a
clerical error in the judgment as to the true area of Lot No. 88 do not conclusively establish that
respondents absolutely parted with their property. To our mind, these acts were simply meant to
cooperate with the government, particularly because of the oral promise made to them.

The right of respondents to repurchase Lot No. 88 may be enforced based on a constructive
trust constituted on the property held by the government in favor of the former. On this note, our
ruling in Heirs of Timoteo Moreno is instructive, viz.:

Mactan-Cebu International Airport Authority is correct in stating that one would

not find an express statement in the Decision in Civil Case No. R-1881 to the
effect that the [condemned] lot would return to [the landowner] or that [the
landowner] had a right to repurchase the same if the purpose for which it was
expropriated is ended or abandoned or if the property was to be used other than
as the Lahug Airport. This omission notwithstanding, and while the inclusion of
this pronouncement in the judgment of condemnation would have been ideal,
such precision is not absolutely necessary nor is it fatal to the cause of
petitioners herein. No doubt, the return or repurchase of the condemned
properties of petitioners could be readily justified as the manifest legal effect or
consequence of the trial courts underlying presumption that Lahug Airport will
continue to be in operation when it granted the complaint for eminent domain and
the airport discontinued its activities.
 The predicament of petitioners involves a constructive trust, one that is akin to
the implied trust referred to in Art. 1454 of the Civil Code, If an absolute
conveyance of property is made in order to secure the performance of an
obligation of the grantor toward the grantee, a trust by virtue of law is
established. If the fulfillment of the obligation is offered by the grantor when it
becomes due, he may demand the reconveyance of the property to him. In the
case at bar, petitioners conveyed Lots No. 916 and 920 to the government with
the latter obliging itself to use the realties for the expansion of Lahug Airport;
failing to keep its bargain, the government can be compelled by petitioners to
reconvey the parcels of land to them, otherwise, petitioners would be denied the
use of their properties upon a state of affairs that was not conceived nor
contemplated when the expropriation was authorized.

Although the symmetry between the instant case and the situation contemplated
by Art. 1454 is not perfect, the provision is undoubtedly applicable. For, as
explained by an expert on the law of trusts: The only problem of great importance
in the field of constructive trust is to decide whether in the numerous and varying
fact situations presented to the courts there is a wrongful holding of property and
hence a threatened unjust enrichment of the defendant. Constructive trusts are
fictions of equity which are bound by no unyielding formula when they are used
by courts as devices to remedy any situation in which the holder of legal title may
not in good conscience retain the beneficial interest.

In constructive trusts, the arrangement is temporary and passive in which the

trustees sole duty is to transfer the title and possession over the property to the
plaintiff-beneficiary. Of course, the wronged party seeking the aid of a court of
equity in establishing a constructive trust must himself do equity. Accordingly, the
court will exercise its discretion in deciding what acts are required of the plaintiff-
beneficiary as conditions precedent to obtaining such decree and has the
obligation to reimburse the trustee the consideration received from the latter just
as the plaintiff-beneficiary would if he proceeded on the theory of rescission. In
the good judgment of the court, the trustee may also be paid the necessary
expenses he may have incurred in sustaining the property, his fixed costs for
improvements thereon, and the monetary value of his services in managing the
property to the extent that plaintiff-beneficiary will secure a benefit from his acts.

The rights and obligations between the constructive trustee and the beneficiary,
in this case, respondent MCIAA and petitioners over Lots Nos. 916 and 920, are
echoed in Art. 1190 of the Civil Code, When the conditions have for their purpose
the extinguishment of an obligation to give, the parties, upon the fulfillment of
said conditions, shall return to each other what they have received x x x In case
of the loss, deterioration or improvement of the thing, the provisions which, with
respect to the debtor, are laid down in the preceding article shall be applied to
the party who is bound to return x x x.[23]

On the matter of the repurchase price, while petitioners are obliged to reconvey Lot No. 88 to
respondents, the latter must return to the former what they received as just compensation for
the expropriation of the property, plus legal interest to be computed from default, which in this
case runs from the time petitioners comply with their obligation to respondents.

Respondents must likewise pay petitioners the necessary expenses they may have incurred in
maintaining Lot No. 88, as well as the monetary value of their services in managing it to the
extent that respondents were benefited thereby.

Following Article 1187[24] of the Civil Code, petitioners may keep whatever income or fruits they
may have obtained from Lot No. 88, and respondents need not account for the interests that the
amounts they received as just compensation may have earned in the meantime.

In accordance with Article 1190[25] of the Civil Code vis--vis Article 1189, which provides that (i)f
a thing is improved by its nature, or by time, the improvement shall inure to the benefit of the
creditor x x x, respondents, as creditors, do not have to pay, as part of the process of restitution,
the appreciation in value of Lot No. 88, which is a natural consequence of nature and time.[26]

WHEREFORE, the petition is DENIED. The February 28, 2006 Decision of the Court of
Appeals, affirming the October 22, 1999 Decision of the Regional Trial Court, Branch 87, Cebu
City, and its February 7, 2007 Resolution are AFFIRMED with MODIFICATION as follows:

1. Respondents are ORDERED to return to petitioners the just compensation they received for
the expropriation of Lot No. 88, plus legal interest, in the case of default, to be computed from
the time petitioners comply with their obligation to reconvey Lot No. 88 to them;

2. Respondents are ORDERED to pay petitioners the necessary expenses the latter incurred in
maintaining Lot No. 88, plus the monetary value of their services to the extent that respondents
were benefited thereby;

3. Petitioners are ENTITLED to keep whatever fruits and income they may have
obtained from Lot No. 88; and

4. Respondents are also ENTITLED to keep whatever interests the amounts they received as
just compensation may have earned in the meantime, as well as the appreciation in value of Lot
No. 88, which is a natural consequence of nature and time;
In light of the foregoing modifications, the case is REMANDED to the Regional Trial Court,
Branch 57, Cebu City, only for the purpose of receiving evidence on the amounts that
respondents will have to pay petitioners in accordance with this Courts decision. No costs.