Consti2 Police Power Cases Fulltext 1

CONSTITUTIONAL LAW 2 |
LIST OF CASES:
POLICE POWER
1. Amelia Cabrera vs Manuel Lapid, GR No. 129098, December 6, 2006
2. Carlos Superdrug Corp. vs DSWD, GR No. 166494, June 29, 2007
3. City of Manila vs Hon. Perfecto Laguio, GR. No. 118127, August 12, 2005
4. Pollution Adjudication Board vs Court of Appeals, G.R. No. 93981, March 11, 1991
5. Metropolitan Manila Development Authority vs Dante O. Garin, G.R. No. 130230, April 15 2009
6. Ortigas & Co., Ltd. vs Court of Appeals, G.R. No. 126102, December 4, 2000
7. Philippine Press Institute vs COMELEC, G.R. No. 119694, May 22, 1995
8. PRC vs Arlene de Guzman, G.R. No. 144681, June 21, 2004
9. JMM Promotion & Management, Inc. vs Court of Appeals, G.R. No. 120095, August 5, 1996
IMMINENT DOMAIN
1. PLDT vs NTC, 190 SCRA 717
2. NPC vs Pobre, G.R. No. 106804, August 12, 2004
3. Lagcao vs Labra, G.R. No. 155746, October 13, 2004
4. Republic vs Castellvi, 58 SCRA 336
5. Emiliano de los Santos vs Intermediate Appellate Court, G.R. No. 71998-99
6. Moday vs Court of Appeals, G.R. No. 107916.
7. NPC vs De la Cruz, G.R. No. 156093
8. Eslaban vs de Onorio, G.R. No. 146062, June 28, 2001
9. NPC vs Henson, G.R. No. 129998, December 29, 1998
10. City of Cebu vs Dedamo, G.R. No. 142971, May 2, 2002
11. Republic vs Vicente Lim, G.R. No. 61656, June 29, 2005
12. Mactan Cebu International Airport Authority vs Court of Appeals, G.R. No. 139495, Nov. 27, 2000
13. City of Mandaluyong vs Francisco, G.R. No. 137152
1
14. Mactan Cebu International Airport Authority vs Bernardo Lozada, G.R. No. 176625, Feb. 25, 2010
15. Reyes vs NHA, G.R. No. 147511, January 20, 2003
16. Republic vs Salem Investment, G.R. No. 137569, June 23, 2000
17. Spouses Campos vs NPC, G.R. No. 143643, June 27, 2003
[G.R. No. 129098. December 6, 2006.]

AMELIA
CABRERA, petitioner, vs.
MANUEL
LAPID,
FERNANDO
BALTAZAR, REYNALDO F. CABRERA
and DIONY VENTURA, respondents.
DECISION
Governor of Pampanga, Mayor of Sasmuan,

Pampanga, Vice-Mayor of Sasmuan,
Pampanga and Superintendent of the
Philippine National Police (PNP)-Region 3,
Pampanga. In her three(3)-page affidavit,
petitioner accused respondents of violating
Section 3(e) of the Anti-Graft and Corrupt
Practices Act and Article 324 of the Revised
Penal Code.
TINGA, J p:
The
instant
petition
for
review
on certiorari seeks the reversal of the
Resolution 1 dated 13 May 1996 and the
Order 2 dated 21 March 1997, both issued
by the Office of the Ombudsman. The
Resolution dismissed the complaint-affidavit
filed by petitioner against respondents and
the Order denied her motion for
reconsideration.
The instant petition originated from a
Complaint-Affidavit 3 filed in November
1995 by petitioner Amelia M. Cabrera with
the
Office
of
the
Ombudsman
("Ombudsman"). Named respondents were
Manuel Lapid, Fernando Baltazar, Reynaldo
F. Cabrera and Superintendent Diony
Ventura, respectively, in their capacities as
In her Complaint-Affidavit, petitioner stated

that she entered into a lease agreement with
the Municipality of Sasmuan over a tract of
land for the purpose of devoting it to
fishpond operations. According to petitioner,
she had spent approximately P5,000,000.00
for its construction before the fishpond
operations commenced in August 1995. A
month later, petitioner learned from
newspaper reports of the impending
demolition of her fishpond as it was
purportedly illegal and blocked the flow of
the Pasak River. Thus, petitioner sent the
fishpond
administrator
to
dissuade
respondents from destroying her property. 4
Despite pleas from petitioner, respondents
ordered the destruction of petitioner's
fishpond. The property was demolished on
10 October 1995 by dynamite blasting.

Petitioner alleged that the demolition was
purposely carried out in the presence of
media representatives and other government
officials to gain media mileage. Petitioner
imputed evident bad faith on respondents
Mayor Baltazar and Vice-Mayor Cabrera in
allowing the destruction of the fishpond
despite their prior knowledge of the
existence of the lease agreement. She also
charged respondents Governor Lapid and
Senior Superintendent Ventura with gross
inexcusable negligence for ordering the
destruction of the fishpond without first
verifying its legality. 5
At
the
preliminary
investigation,
respondents, except Senior Superintendent
Ventura,
submitted
counter-affidavits,
denying the accusations against them. In the
counter-affidavit jointly filed by Mayor
Baltazar and Vice-Mayor Cabrera, they
insisted that contrary to petitioner's claim,
the fishpond was an illegal structure because
it was erected on the seashore, at the mouth
of the Pasak River, and sat on an inalienable
land. They claimed that the demolition was
done by the Task Force Bilis Daloy upon the
directive of then President Fidel V. Ramos. 6
2
In his Counter-Affidavit, 7 Governor Lapid

averred that the contract of lease between
petitioner and the Municipality of Sasmuan,
represented by then Mayor Abelardo
Panlaqui, was executed two weeks before
respondent Mayor Baltazar took his oath of
office in 1995. Governor Lapid also argued
that under the law, the Department of
Agriculture (DA) is the government agency
authorized to enter into licensing agreements
for fishpond operations, and as per
certification by the DA Regional Director,
petitioner's fishpond operation was not
covered by a fishpond lease agreement or
application. Governor Lapid also referred to
the certification by the Municipal Health
Officer of Sasmuan issued before the actual
demolition of the fishpond, describing it as a
nuisance per se and recommending its
abatement. 8
On 13 May 1996, the Ombudsman issued
the
assailed
Resolution,
dismissing
petitioner's complaint. The dismissal was
based on the declaration that the fishpond
was a nuisance per se and, thus, may be
abated by respondents in the exercise of the
police power of the State. 9
Petitioner sought reconsideration of the
Resolution, arguing that under Sec. 149
of Republic Act (R.A.) No. 7160, otherwise
known as the Local Government Code of
1991, the exclusive authority to grant fishery
privileges is vested in the municipalities.
Petitioner also questioned the certification
by the Municipal Health Officer, alleging
that the same was issued before the ocular

inspection of the property which took place
only on the day of the demolition. Petitioner
also contended that a judicial proceeding
was necessary to determine whether the
property
indeed
had
caused
the
flooding. 10 Respondents filed separate
oppositions to petitioner's motion for
reconsideration. 11 Petitioner filed a reply to
the opposition 12 and respondent Governor
Lapid filed a rejoinder to the reply. 13
In the Order dated 21 March 1997, the
Ombudsman affirmed its 13 May 1996
Resolution. It ruled that the repealing clause
of R.A. No. 7160 expressly repealed only
Sec. 2, 6 and 29 of Presidential Decree
(P.D.) No. 704 so that in harmonizing the
remaining provisions of P.D. No. 704 and
the provisions of R.A. No. 7160 applicable
to the grant of fishery privileges, the Bureau
of Fisheries and Aquatic Resources (BFAR)
is the government agency authorized to
grant fishpond license or permit in areas not
identified as municipal waters or not
declared as alienable or disposable by the
Department of Environment and Natural
Resources (DENR). Since it appears from
DENR records that the subject property has
not been declared disposable or included in
areas devoted for fishpond development, the
Ombudsman concluded that the lease
agreement entered into by petitioner was
void ab initio. In view of the illegality of the
lease agreement, the Ombudsman ruled that
its
demolition
was
justified.
The
Ombudsman described the demolition as a
valid exercise of police power and in

accordance with the provision of Sec. 28
of P.D. No. 704 directing the removal of any
fishpen or fishpond that obstructed the free
navigation of a stream or lake. It also upheld
the authority of the district health officer to
determine the abatement of a nuisance
without need of judicial proceedings. 14
Petitioner elevated the matter to this Court
via a petition for review on certiorari under
Rule 45 of the Rules of Court to assail the
13 May 1996 Resolution and 21 March 1997
Order of the Ombudsman. Petitioner
subsequently filed an amended petition for
review
on certiorari to
implead
the
Ombudsman as respondent, although in a
petition for review on certiorari, the tribunal
whose issuance is assailed need not be
impleaded as respondent.
The petition imputes the following errors on
the Ombudsman:
I.
THE
OFFICE
OF
THE
OMBUDSMAN ERRED AND
EXCEEDED ITS AUTHORITY
IN RULING THAT THE LEASE
CONTRACT BETWEEN THE
MUNICIPALITY OF SASMUAN
AND PETITIONER IS NULL
AND VOID.
II.
3
THE
OFFICE
OF
THE
OMBUDSMAN
ERRED
IN
RULING
THAT
THE
DEMOLITION
OF
THE
FISHPOND WAS VALIDLY
MADE BY VIRTUE OF THE
DECLARATION
BY
THE
HEALTH OFFICER THAT IT
WAS A NUISANCE PER SE.
III.
THE
OFFICE
OF
OMBUDSMAN
ERRED
RULING
THAT
DEMOLITION IS PART OF
PROPER EXERCISE OF
POLICE POWER OF
STATE.
THE
IN
THE
THE
THE
THE
IV.
THE
OFFICE
OF
THE
OMBUDSMAN
ERRED
IN
RULING THAT PETITIONER
WAS GIVEN DUE NOTICE
AND HEARING BEFORE THE
FISHPOND WAS BLASTED.
V.
THE
OFFICE
OF
THE
OMBUDSMAN
ERRED
IN
RULING THAT PROBABLE
CAUSE DOES NOT EXIST TO
INDICT RESPONDENTS FOR
VIOLATION OF THE SUBJECT

OFFENSES. 15
for certiorari under Rule 65, not a petition

for review on certiorari under Rule 45. 20
Clearly, this is an appeal from the

questioned issuances of the Ombudsman.
However, such direct resort to this Court
from a resolution or order of the
Ombudsman is not sanctioned by any rule of
procedure.
But in this case, petitioner has taken the

position that the Ombudsman has decided
questions of substance contrary to law and
the applicable decisions of the Supreme
Court. That is a ground under a Rule 45
petition. Indeed, from a reading of the
assignment of errors, it is clear that
petitioner does not impute grave abuse of
discretion to the Ombudsman in issuing the
assailed Resolution and Order. Rather, she
merely questions his findings and
conclusions. As stated earlier, direct appeal
to the Supreme Court via a petition for
review on certiorari is not sanctioned by any
rule of procedure. By availing of a wrong
remedy, the petition should be dismissed
outright.
Neither can petitioner avail of Sec.

27 16 of R.A. No. 6770, otherwise known as
The Ombudsman Act of 1989. The provision
allowed direct appeals in administrative
disciplinary cases from the Office of the
Ombudsman to the Supreme Court. The
right to appeal is granted only in respect to
orders or decisions of the Ombudsman in
administrative cases. 17 The provision does
not cover resolutions of the Ombudsman in
criminal cases. More importantly, Sec. 27
of R.A. No. 6770 insofar as it allowed a
direct appeal to this Court was declared
unconstitutional
in Fabian
v.
Hon.
Desierto. 18
However, an aggrieved party in criminal
actions is not without any recourse. Where
grave abuse of discretion amounting to lack
or excess of jurisdiction taints the findings
of the Ombudsman on the existence of
probable cause, the aggrieved party may file
a
petition
for certiorari under
Rule
65. 19 The remedy from resolutions of the
Ombudsman in preliminary investigations of
criminal
cases
is
a
petition
Even if the Court treats the instant appeal as

a petition for certiorari under Rule 65, its
dismissal is nevertheless warranted because
petitioner failed to present, much more
substantiate, any grave abuse of discretion
on the part of the Ombudsman.
A careful reading of the questioned
Resolution reveals that the Ombudsman
dismissed petitioner's criminal complaint
because respondents had validly resorted to
the police power of the State when they
effected the demolition of the illegal
fishpond in question following the
declaration thereof as a nuisance per se.
Thus, the Ombudsman was of the opinion
4
that no violation of Section 3(e) 21 of

the Anti-Graft and Corrupt Practices Act or
of Article 324 22 of the Revised Penal Code
was committed by respondents. In the words
of the Ombudsman, "those who participated
in the blasting of the subject fishpond were
only impelled by their desire to serve the
best interest of the general public; for the
good and the highest good." 23
By grave abuse of discretion is meant

capricious and whimsical exercise of
judgment as is equivalent to lack of
jurisdiction. Mere abuse of discretion is not
enough. It must be grave abuse of discretion
as when the power is exercised in an
arbitrary or despotic manner by reason of
passion or personal hostility, and must be so
patent and so gross as to amount to an
evasion of a positive duty or to a virtual
refusal to perform the duty enjoined or to act
at all in contemplation of law. 24
Grave abuse of discretion should be
differentiated from an error in judgment. An
error of judgment is one which the court
may commit in the exercise of its
jurisdiction, and which error is reversible
only by an appeal. As long as the court acts
within its jurisdiction, any alleged errors
committed in the exercise of its discretion
will amount to nothing more than mere
errors of judgment, correctible by an appeal
or a petition for review under Rule 45 of the
Rules of Court. An error of jurisdiction is
one where the act complained of was issued

by the court without or in excess of
jurisdiction and which error is correctible
only
by
the
extraordinary
writ
of certiorari. 25
The other errors raised by petitioner pertain
to the Ombudsman's opinion on the lack of
probable cause to indict respondents. These
are purported errors in judgment which can
be corrected by an appeal, although not via a
direct appeal to this Court. Direct resort to
this Court may be had only through the
extraordinary writ of certiorari and upon
showing that the Ombudsman committed
grave abuse of discretion, which petitioner
failed to demonstrate.
Absent any grave abuse of discretion
tainting it, the courts will not interfere with
the Ombudsman's supervision and control
over the preliminary investigation conducted
by him. 26 It is beyond the ambit of this
Court to review the exercise of discretion of
the Ombudsman in prosecuting or
dismissing a complaint filed before
it. 27 The rule is based not only upon respect
for the investigatory and prosecutory powers
granted by the Constitution to the Office of
the Ombudsman but upon practicality as
well. Otherwise, the functions of the courts
will be grievously hampered by innumerable
petitions assailing the dismissal of
investigatory proceedings conducted by the
Office of the Ombudsman with regard to
complaints filed before it, in much the same
way that the courts would be extremely
swamped if they would be compelled to

review the exercise of discretion on the part
of the fiscals or prosecuting attorneys each
time they decide to file an information in
court or dismiss a complaint by a private
complainant. 28
WHEREFORE, the instant petition for
review on certiorari is DENIED. No costs.
SO ORDERED.
||| (Cabrera v. Lapid, G.R. No. 129098,
[December 6, 2006], 539 PHIL 114-125)
[G.R. No. 166494. June 29, 2007.]

CARLOS SUPERDRUG CORP.,
doing business under the name and
style "Carlos Superdrug", ELSIE M.
CANO, doing business under the
name and style "Advance Drug", Dr.
SIMPLICIO L. YAP, JR., doing
business under the name and style
"City Pharmacy", MELVIN S.
DELA SERNA, doing business under
the name and style "Botica dela
Serna", and LEYTE SERV-WELL
CORP., doing business under the
name and style "Leyte Serv-Well
Drugstore", petitioners, vs.
DEPARTMENT
OF
SOCIAL
WELFARE and DEVELOPMENT
(DSWD),
DEPARTMENT
OF
5
HEALTH (DOH), DEPARTMENT

OF
FINANCE
(DOF),
DEPARTMENT
OF
JUSTICE
(DOJ), and DEPARTMENT OF
INTERIOR
and
LOCAL
GOVERNMENT
(DILG), respondents.
DECISION
AZCUNA, J p:
This is a petition 1 for Prohibition with
Prayer for Preliminary Injunction assailing
the constitutionality of Section 4 (a) of
Republic Act (R.A.) No. 9257, 2 otherwise
known as the "Expanded Senior Citizens Act
of 2003".
Petitioners are domestic corporations and
proprietors operating drugstores in the
Philippines.
Public respondents, on the other hand,
include the Department of Social Welfare
and Development (DSWD), the Department
of Health (DOH), the Department of
Finance (DOF), the Department of Justice
(DOJ), and the Department of Interior and
Local Government (DILG) which have been
specifically tasked to monitor the drugstores'
compliance with the law; promulgate the
implementing rules and regulations for the
effective implementation of the law; and
prosecute and revoke the licenses of erring
drugstore establishments.
The antecedents are as follows:

On February 26, 2004, R.A. No. 9257,
amending R.A. No. 7432, 3 was signed into
law by President Gloria Macapagal-Arroyo
and it became effective on March 21, 2004.
Section 4 (a) of the Act states:
SEC. 4. Privileges for the Senior
Citizens. The senior citizens shall
be entitled to the following:
(a) the grant of twenty percent (20%)
discount from all establishments
relative to the utilization of services
in hotels and similar lodging
establishments,
restaurants
and
recreation centers, and purchase of
medicines in all establishments for
the exclusive use or enjoyment of
senior citizens, including funeral and
burial services for the death of senior
citizens;
xxx xxx xxx
The establishment may claim the
discounts granted under (a), (f), (g)
and (h) as tax deduction based on
the net cost of the goods sold or
services rendered: Provided, That the
cost of the discount shall be allowed
as deduction from gross income for
the same taxable year that the
discount
is
granted. Provided,
further, That the total amount of the
claimed tax deduction net of value
added tax if applicable, shall be

included in their gross sales receipts
for tax purposes and shall be subject
to proper documentation and to the
provisions of the National Internal
Revenue Code, as amended. 4
On May 28, 2004, the DSWD approved and
adopted the Implementing Rules and
Regulations of R.A. No. 9257, Rule VI,
Article 8 of which states:
Article
8. Tax
Deduction
of
Establishments.
The
establishment may claim the
discounts granted under Rule V,
Section
4
Discounts
for
Establishments; 5 Section 9, Medical
and Dental Services in Private
Facilities[,] 6 and Sections 10 7 and
11 8 Air, Sea and Land
Transportation as tax deduction
based on the net cost of the goods
sold
or
services
rendered. Provided, That the cost of
the discount shall be allowed as
deduction from gross income for the
same taxable year that the discount is
granted; Provided, further, That the
total amount of the claimed tax
deduction net of value added tax if
applicable, shall be included in their
gross sales receipts for tax purposes
and shall be subject to proper
documentation and to the provisions
of the National Internal Revenue
Code, as amended; Provided, finally,
6
that the implementation of the tax

deduction shall be subject to the
Revenue Regulations to be issued by
the Bureau of Internal Revenue
(BIR) and approved by the
Department
of
Finance
(DOF). 9 DSITEH
On July 10, 2004, in reference to the query
of the Drug Stores Association of the
Philippines (DSAP) concerning the meaning
of a tax deduction under the Expanded
Senior Citizens Act, the DOF, through
Director IV Ma. Lourdes B. Recente,
clarified as follows:
1) The difference between the Tax
Credit (under the Old Senior Citizens
Act) and Tax Deduction (under the
Expanded Senior Citizens Act).
1.1. The provision of Section
4 of R.A. No. 7432 (the old
Senior Citizens Act) grants
twenty
percent
(20%)
discount
from
all
establishments relative to the
utilization of transportation
services, hotels and similar
lodging
establishment,
restaurants and recreation
centers and purchase of
medicines anywhere in the
country, the costs of which
may be claimed by the
private
establishments
concerned as tax credit.
Effectively, a tax credit is a

peso-for-peso deduction from
a taxpayer's tax liability due
to the government of the
amount of discounts such
establishment has granted to
a
senior
citizen.
The
establishment recovers the
full amount of discount given
to a senior citizen and hence,
the government shoulders
100% of the discounts
granted.
It must be noted, however,
that
conceptually,
a tax
credit scheme under the
Philippine
tax
system,
necessitates
that
prior
payments of taxes have been
made and the taxpayer is
attempting to recover this tax
payment from his/her income
tax due. The tax credit
scheme
under R.A.
No.
7432 is,
therefore,
inapplicable since no tax
payments have previously
occurred.
1.2. The provision under R.A.
No. 9257, on the other hand,
provides
that
the
establishment concerned may
claim the discounts under
Section 4 (a), (f), (g) and (h)
as tax deduction from gross
income, based on the net cost

of goods sold or services
rendered.
Under this scheme, the
establishment concerned is
allowed to deduct from gross
income, in computing for its
tax liability, the amount of
discounts granted to senior
citizens. Effectively, the
government loses in terms of
foregone revenues an amount
equivalent to the marginal tax
rate the said establishment is
liable to pay the government.
This will be an amount
equivalent to 32% of the
twenty
percent
(20%)
discounts so granted. The
establishment shoulders the
remaining portion of the
granted discounts.
It may be necessary to note
that while the burden on [the]
government
is
slightly
diminished in terms of its
percentage share on the
discounts granted to senior
citizens, the number of
potential establishments that
may claim tax deductions,
have
however,
been
broadened. Aside from the
establishments that may
claim tax credits under the
7
old law, more establishments

were added under the new
law such as: establishments
providing medical and dental
services, diagnostic and
laboratory services, including
professional fees of attending
doctors
in
all
private
hospitals
and
medical
facilities,
operators
of
domestic air and sea transport
services, public railways and
skyways and bus transport
services.
A simple illustration might
help amplify the points
discussed above, as follows:
Tax Deduction Tax Credit
Gross Sales x x x x x x x x x x x
x
Less: Cost of goods sold x x x x
xxxxxx

Net Sales x x x x x x x x x x x x
Less: Operating Expenses:
Tax Deduction on Discounts x
x x x -Other deductions: x x x x x x x
x

Net Taxable Income x x x x x x
xxxx
Tax Due x x x x x x
Less: Tax Credit -- x x
Net Tax Due -- x x

As shown above, under a tax
deduction scheme, the tax
deduction on discounts was
subtracted from Net Sales
together
with
other
deductions
which
are
considered
as
operating
expenses before the Tax Due
was computed based on the
Net Taxable Income. On the
other hand, under a tax
credit scheme, the amount of
discounts which is the tax
credit item, was deducted
directly from the tax due
amount. 10
Meanwhile,
on
October
1,
2004,
Administrative Order (A.O.) No. 171 or
the Policies and Guidelines to Implement
the Relevant Provisions of Republic Act
9257, otherwise known as the "Expanded
Senior Citizens Act of 2003" 11was issued
by the DOH, providing the grant of twenty
percent (20%) discount in the purchase of
unbranded generic medicines from all
establishments dispensing medicines for the
exclusive use of the senior citizens.
On November 12, 2004, the DOH
issued Administrative
Order
No.
177 12 amending A.O. No. 171. Under A.O.
No. 177, the twenty percent discount shall
not be limited to the purchase of unbranded
generic medicines only, but shall extend to
both prescription and non-prescription

medicines whether branded or generic. Thus,
it stated that "[t]he grant of twenty percent
(20%) discount shall be provided in the
purchase
of
medicines
from
all
establishments dispensing medicines for the
exclusive use of the senior citizens".
Petitioners assail the constitutionality of
Section 4 (a) of the Expanded Senior
Citizens Act based on the following
grounds: 13
1) The law is confiscatory because it
infringes Art. III, Sec. 9 of the
Constitution which provides that
private property shall not be taken
for public use without just
compensation;
2) It violates the equal protection
clause (Art. III, Sec. 1) enshrined
in our Constitution which states
that "no person shall be deprived
of life, liberty or property without
due process of law, nor shall any
person be denied of the equal
protection of the laws;" and
3) The 20% discount on medicines
violates
the
constitutional
guarantee in Article XIII, Section
11 that makes "essential goods,
health and other social services
available to all people at
affordable cost." 14
8
Petitioners assert that Section 4 (a) of the

law is unconstitutional because it constitutes
deprivation of private property. Compelling
drugstore owners and establishments to
grant the discount will result in a loss of
profit and capital because 1) drugstores
impose a mark-up of only 5% to 10% on
branded medicines; and 2) the law failed to
provide a scheme whereby drugstores will
be justly compensated for the discount.
Examining petitioners' arguments, it is

apparent that what petitioners are ultimately
questioning is the validity of the tax
deduction scheme as a reimbursement
mechanism for the twenty percent (20%)
discount that they extend to senior citizens.
Based on the afore-stated DOF Opinion, the
tax deduction scheme does not fully
reimburse petitioners for the discount
privilege accorded to senior citizens. This is
because the discount is treated as a
deduction, a tax-deductible expense that is
subtracted from the gross income and results
in a lower taxable income. Stated otherwise,
it is an amount that is allowed by law 15 to
reduce the income prior to the application of
the tax rate to compute the amount of tax
which is due. 16 Being a tax deduction, the
discount does not reduce taxes owed on a
peso for peso basis but merely offers a
fractional reduction in taxes owed.
Theoretically, the treatment of the discount

as a deduction reduces the net income of the
private establishments concerned. The
discounts given would have entered the
coffers and formed part of the gross sales of
the private establishments, were it not for
R.A. No. 9257.
The permanent reduction in their total
revenues is a forced subsidy corresponding
to the taking of private property for public
use
or
benefit. 17 This
constitutes
compensable taking for which petitioners
would ordinarily become entitled to a just
compensation.
Just compensation is defined as the full and
fair equivalent of the property taken from its
owner by the expropriator. The measure is
not the taker's gain but the owner's loss. The
word just is used to intensify the meaning of
the word compensation, and to convey the
idea that the equivalent to be rendered for
the property to be taken shall be real,
substantial, full and ample. 18
A tax deduction does not offer full
reimbursement of the senior citizen
discount. As such, it would not meet the
definition of just compensation. 19
Having said that, this raises the question of
whether the State, in promoting the health
and welfare of a special group of citizens,
can impose upon private establishments the
burden of partly subsidizing a government
program.
The Court believes so.

The Senior Citizens Act was enacted
primarily to maximize the contribution of
senior citizens to nation-building, and to
grant benefits and privileges to them for
their improvement and well-being as the
State considers them an integral part of our
society. 20
The priority given to senior citizens finds its
basis in the Constitution as set forth in the
law itself. Thus, the Act provides:
SEC. 2. Republic Act No. 7432 is
hereby amended to read as follows:
SECTION
1. Declaration
of
Policies and Objectives. Pursuant
to Article XV, Section 4 of the
Constitution, it is the duty of the
family to take care of its elderly
members while the State may design
programs of social security for them.
In addition to this, Section 10 in the
Declaration of Principles and State
Policies provides: "The State shall
provide social justice in all phases of
national development." Further,
Article XIII, Section 11, provides:
"The State shall adopt an integrated
and comprehensive approach to
health development which shall
endeavor to make essential goods,
health and other social services
available to all the people at
affordable cost. There shall be
9
priority for the needs of the

underprivileged
sick,
elderly,
disabled, women and children."
Consonant with these constitutional
principles the following are the
declared policies of this Act:
xxx xxx xxx
(f) To recognize the important role
of the private sector in the
improvement of the welfare of
senior citizens and to actively seek
their partnership. 21 DAEIHT
To implement the above policy, the law
grants a twenty percent discount to senior
citizens for medical and dental services, and
diagnostic and laboratory fees; admission
fees charged by theaters, concert halls,
circuses, carnivals, and other similar places
of culture, leisure and amusement; fares for
domestic land, air and sea travel; utilization
of services in hotels and similar lodging
establishments, restaurants and recreation
centers; and purchases of medicines for the
exclusive use or enjoyment of senior
citizens. As a form of reimbursement, the
law provides that business establishments
extending the twenty percent discount to
senior citizens may claim the discount as a
tax deduction.
The law is a legitimate exercise of police
power which, similar to the power of
eminent domain, has general welfare for its
object. Police power is not capable of an
exact definition, but has been purposely

veiled in general terms to underscore its
comprehensiveness to meet all exigencies
and provide enough room for an efficient
and flexible response to conditions and
circumstances, thus assuring the greatest
benefits. 22 Accordingly, it has been
described as "the most essential, insistent
and the least limitable of powers, extending
as it does to all the great public needs." 23 It
is "[t]he power vested in the legislature by
the constitution to make, ordain, and
establish all manner of wholesome and
reasonable laws, statutes, and ordinances,
either with penalties or without, not
repugnant to the constitution, as they shall
judge to be for the good and welfare of the
commonwealth, and of the subjects of the
same." 24
For this reason, when the conditions so
demand as determined by the legislature,
property rights must bow to the primacy of
police power because property rights,
though sheltered by due process, must yield
to general welfare. 25
Police power as an attribute to promote the
common
good
would
be
diluted
considerably if on the mere plea of
petitioners that they will suffer loss of
earnings and capital, the questioned
provision is invalidated. Moreover, in the
absence of evidence demonstrating the
alleged confiscatory effect of the provision
in question, there is no basis for its
nullification in view of the presumption of

validity which every law has in its favor. 26
Given these, it is incorrect for petitioners to
insist that the grant of the senior citizen
discount is unduly oppressive to their
business, because petitioners have not taken
time to calculate correctly and come up with
a financial report, so that they have not been
able to show properly whether or not the tax
deduction scheme really works greatly to
their disadvantage. 27
In treating the discount as a tax deduction,
petitioners insist that they will incur losses
because, referring to the DOF Opinion, for
every P1.00 senior citizen discount that
petitioners would give, P0.68 will be
shouldered by them as only P0.32 will be
refunded by the government by way of a tax
deduction.
To illustrate this point, petitioner Carlos
Super Drug cited the anti-hypertensive
maintenance drug Norvasc as an example.
According
to
the
latter,
it
acquires Norvasc from the distributors at
P37.57 per tablet, and retails it at P39.60 (or
at a margin of 5%). If it grants a 20%
discount to senior citizens or an amount
equivalent to P7.92, then it would have to
sell Norvasc at P31.68 which translates to a
loss from capital of P5.89 per tablet. Even if
the government will allow a tax deduction,
only P2.53 per tablet will be refunded and
not the full amount of the discount which is
P7.92. In short, only 32% of the 20%
10
discount will
drugstores. 28
be
reimbursed
to
the
Petitioners' computation is flawed. For

purposes of reimbursement, the law states
that the cost of the discount shall be
deducted from gross income, 29 the amount
of income derived from all sources before
deducting allowable expenses, which will
result in net income. Here, petitioners tried
to show a loss on a per transaction basis,
which should not be the case. An income
statement, showing an accounting of
petitioners' sales, expenses, and net profit (or
loss) for a given period could have
accurately reflected the effect of the
discount on their income. Absent any
financial statement, petitioners cannot
substantiate their claim that they will be
operating at a loss should they give the
discount. In addition, the computation was
erroneously based on the assumption that
their customers consisted wholly of senior
citizens. Lastly, the 32% tax rate is to be
imposed on income, not on the amount of
the discount.
Furthermore, it is unfair for petitioners to
criticize the law because they cannot raise
the prices of their medicines given the
cutthroat nature of the players in the
industry. It is a business decision on the part
of petitioners to peg the mark-up at 5%.
Selling the medicines below acquisition
cost, as alleged by petitioners, is merely a
result of this decision. Inasmuch as pricing
is a property right, petitioners cannot
reproach the law for being oppressive,

simply because they cannot afford to raise
their prices for fear of losing their customers
to competition.
The Court is not oblivious of the retail side
of the pharmaceutical industry and the
competitive pricing component of the
business. While the Constitution protects
property rights, petitioners must accept the
realities of business and the State, in the
exercise of police power, can intervene in
the operations of a business which may
result in an impairment of property rights in
the process.
Moreover, the right to property has a social
dimension. While Article XIII of the
Constitution provides the precept for the
protection of property, various laws and
jurisprudence, particularly on agrarian
reform and the regulation of contracts and
public utilities, continuously serve as a
reminder that the right to property can be
relinquished upon the command of the State
for the promotion of public good. 30
Undeniably, the success of the senior
citizens program rests largely on the support
imparted by petitioners and the other private
establishments concerned. This being the
case, the means employed in invoking the
active participation of the private sector, in
order to achieve the purpose or objective of
the law, is reasonably and directly related.
Without sufficient proof that Section 4 (a) of
R.A. No. 9257 is arbitrary, and that the
continued implementation of the same

would be unconscionably detrimental to
petitioners, the Court will refrain from
quashing a legislative act. 31
WHEREFORE, the petition is DISMISSED

for lack of merit.
||| (Carlos Superdrug Corp. v. DSWD, G.R.
No. 166494, [June 29, 2007], 553 PHIL
120-135)
[G.R. No. 118127. April 12, 2005.]

CITY
OF
MANILA,
HON.
ALFREDO S. LIM as the Mayor of
the City of Manila HON. JOSELITO
L. ATIENZA, in his capacity as ViceMayor of the City of Manila and
Presiding Officer of the City Council
of Manila, HON. ERNESTO A.
NIEVA, HON. GONZALO P.
GONZALES, HON. AVELINO S.
CAILIAN, HON. ROBERTO C.
OCAMPO,
HON.
ALBERTO
DOMINGO, HON. HONORIO U.
LOPEZ, HON. FRANCISCO G.
VARONA, JR., HON. ROMUALDO
S. MARANAN, HON. NESTOR C.
PONCE, JR., HON. HUMBERTO B.
BASCO, HON. FLAVIANO F.
CONCEPCION, JR., HON. ROMEO
11
G. RIVERA, HON. MANUEL M.

ZARCAL, HON. PEDRO S. DE
JESUS, HON. BERNARDITO C.
ANG, HON. MANUEL L. QUIN,
HON. JHOSEP Y. LOPEZ, HON.
CHIKA
G.
GO,
HON.
VICTORIANO A. MELENDEZ,
HON. ERNESTO V.P. MACEDA,
JR., HON. ROLANDO P. NIETO,
HON. DANILO V. ROLEDA, HON.
GERINO A. TOLENTINO, JR.,
HON. MA. PAZ E. HERRERA,
HON. JOEY D. HIZON, HON.
FELIXBERTO D. ESPIRITU, HON.
KARLO Q. BUTIONG, HON.
ROGELIO P. DELA PAZ, HON.
BERNARDO D. RAGAZA, HON.
MA. CORAZON R. CABALLES,
HON. CASIMIRO C. SISON, HON.
BIENVENIDO M. ABANTE, JR.,
HON. MA. LOURDES M. ISIP,
HON. ALEXANDER S. RICAFORT,
HON. ERNESTO F. RIVERA, HON.
LEONARDO L. ANGAT, and HON.
JOCELYN B. DAWIS, in their
capacity as councilors of the City of
Manila, petitioners, vs.
HON.
PERFECTO A.S. LAGUIO, JR., as
Presiding Judge, RTC, Manila and
MALATE
TOURIST
DEVELOPMENT
CORPORATION, respondents.
DECISION
TINGA, J p:
I know only that what is moral is what

you feel good after and what is
immoral is what you feel bad after.
Ernest Hemingway
Afternoon, Ch. 1
Death
in
the
It is a moral and political axiom that

any dishonorable act, if performed by
oneself, is less immoral than if
performed by someone else, who would
be well-intentioned in his dishonesty.
J. Christopher Gerald Bonaparte in
Egypt, Ch. I
The Court's commitment to the protection of
morals is secondary to its fealty to the
fundamental law of the land. It is foremost a
guardian of the Constitution but not the
conscience of individuals. And if it need be,
the Court will not hesitate to "make the
hammer fall, and heavily" in the words of
Justice Laurel, and uphold the constitutional
guarantees when faced with laws that,
though not lacking in zeal to promote
morality, nevertheless fail to pass the test of
constitutionality.
The pivotal issue in this Petition 1 under
Rule 45 (then Rule 42) of the Revised Rules
on Civil Procedure seeking the reversal of
the Decision 2 in Civil Case No. 93-66511
of the Regional Trial Court (RTC) of
Manila, Branch 18 (lower court), 3 is the
validity
of
Ordinance
No.
7783
(the Ordinance) of the City of Manila. 4
The antecedents are as follows:

Private
respondent
Malate
Tourist
Development Corporation (MTDC) is a
corporation engaged in the business of
operating hotels, motels, hostels and lodging
houses. 5 It built and opened Victoria Court
in Malate which was licensed as a motel
although duly accredited with the
Department of Tourism as a hotel. 6 On 28
June 1993, MTDC filed a Petition for
Declaratory Relief with Prayer for a Writ of
Preliminary Injunction and/or Temporary
Restraining Order 7 (RTC Petition) with the
lower court impleading as defendants, herein
petitioners City of Manila, Hon. Alfredo S.
Lim (Lim), Hon. Joselito L. Atienza, and the
members of the City Council of Manila
(City Council). MTDC prayed that
the Ordinance, insofar as it includes motels
and inns as among its prohibited
establishments, be declared invalid and
unconstitutional. 8
Enacted by the City Council 9 on 9 March
1993 and approved by petitioner City Mayor
on 30 March 1993, the said Ordinance is
entitled
AN ORDINANCE PROHIBITING
THE
ESTABLISHMENT
OR
OPERATION
OF
BUSINESSES
PROVIDING CERTAIN FORMS OF
AMUSEMENT, ENTERTAINMENT,
SERVICES AND FACILITIES IN THE
ERMITA-MALATE
AREA,
PRESCRIBING PENALTIES FOR
12
VIOLATION THEREOF, AND FOR

OTHER PURPOSES. 10
The Ordinance is
hereunder:
reproduced
in
full,
SECTION 1.Any provision of existing

laws and ordinances to the contrary
notwithstanding, no
person,
partnership, corporation or entity
shall,
in
the
Ermita-Malate
area bounded by Teodoro M. Kalaw Sr.
Street in the North, Taft Avenue in the
East, Vito Cruz Street in the South and
Roxas Boulevard in the West, pursuant
to P.D. 499 be allowed or authorized to
contract and engage in, any business
providing certain forms of amusement,
entertainment, services and facilities
where women are used as tools in
entertainment and which tend to
disturb the community, annoy the
inhabitants, and adversely affect the
social and moral welfare of the
community, such as but not limited to:
1.Sauna Parlors
2.Massage Parlors
3.Karaoke Bars
4.Beerhouses
5.Night Clubs
6.Day Clubs
7.Super Clubs
8.Discotheques
9.Cabarets
10.Dance Halls
11.Motels
12.Inns
SEC. 2.The City Mayor, the City
Treasurer or any person acting in
behalf of the said officials are
prohibited from issuing permits,
temporary or otherwise, or from
granting licenses and accepting
payments for the operation of business
enumerated in the preceding section.
SEC. 3.Owners and/or operator of
establishments engaged in, or devoted
to, the businesses enumerated in
Section 1 hereof are hereby given three
(3) months from the date of approval of
this ordinance within which to wind up
business operations or to transfer to
any place outside of the Ermita-Malate
area or convert said businesses to
other kinds of business allowable
within the area, such as but not limited
to:
1.Curio or antique shop
2.Souvenir Shops
3.Handicrafts display centers
4.Art galleries
5.Records and music shops
6.Restaurants
7.Coffee shops
8.Flower shops
9.Music lounge and sing-along
restaurants, with well-defined
activities for wholesome family
entertainment that cater to both

local and foreign clientele.
10.Theaters engaged in the
exhibition, not only of motion
pictures but also of cultural
shows, stage and theatrical
plays, art exhibitions, concerts
and the like.
11.Businesses allowable within
the law and medium intensity
districts as provided for in the
zoning
ordinances
for
Metropolitan Manila, except
new warehouse or open-storage
depot, dock or yard, motor
repair shop, gasoline service
station, light industry with any
machinery,
or
funeral
establishments.
SEC. 4.Any person violating any
provisions of this ordinance, shall upon
conviction,
be
punished
by
imprisonment of one (1) year or fine of
FIVE
THOUSAND
(P5,000.00)
PESOS, or both, at the discretion of the
Court, PROVIDED, that in case of
juridical person, the President, the
General Manager, or person-in-charge
of operation shall be liable thereof;
PROVIDED FURTHER, that in case of
subsequent violation and conviction,
the
premises
of
the
erring
establishment shall be closed and
padlocked permanently.
13
SEC. 5.This ordinance shall take effect

upon approval.
Enacted by the City Council of Manila
at its regular session today, March 9,
1993.
Approved by His Honor, the Mayor on
March 30, 1993. (Emphasis supplied)
In the RTC Petition, MTDC argued that
the Ordinance erroneously and improperly
included in its enumeration of prohibited
establishments, motels and inns such as
MTDC's Victoria Court considering that
these were not establishments for
"amusement" or "entertainment" and they
were not "services or facilities for
entertainment," nor did they use women as
"tools for entertainment," and neither did
they "disturb the community," "annoy the
inhabitants" or "adversely affect the social
and moral welfare of the community." 11
MTDC
further
advanced
that
the Ordinance was
invalid
and
unconstitutional for the following reasons:
(1) The City Council has no power to
prohibit the operation of motels as Section
458 (a) 4 (iv) 12 of the Local Government
Code of 1991 (the Code) grants to the City
Council only the power to regulate the
establishment, operation and maintenance of
hotels, motels, inns, pension houses, lodging
houses and other similar establishments;
(2) TheOrdinance is void as it is violative of
Presidential Decree (P.D.) No. 499 13 which
specifically declared portions of the ErmitaMalate area as a commercial zone with

certain restrictions; (3) The Ordinance does
not constitute a proper exercise of police
power as the compulsory closure of the
motel business has no reasonable relation to
the legitimate municipal interests sought to
be protected; (4) The Ordinance constitutes
an ex post facto law by punishing the
operation of Victoria Court which was a
legitimate business prior to its enactment;
(5)
The Ordinance violates
MTDC's
constitutional rights in that: (a) it is
confiscatory and constitutes an invasion of
plaintiff's property rights; (b) the City
Council has no power to find as a fact that a
particular thing is a nuisance per se nor does
it have the power to extrajudicially destroy
it; and (6) The Ordinance constitutes a
denial of equal protection under the law as
no reasonable basis exists for prohibiting the
operation of motels and inns, but not
pension houses, hotels, lodging houses or
other similar establishments, and for
prohibiting said business in the ErmitaMalate area but not outside of this area. 14
In their Answer 15 dated 23 July 1993,
petitioners City of Manila and Lim
maintained that the City Council had the
power to "prohibit certain forms of
entertainment in order to protect the social
and moral welfare of the community" as
provided for in Section 458 (a) 4 (vii) of the
Local Government Code, 16 which reads,
thus:
Section
458.Powers,
Duties,
Functions and Compensation. (a)
The sangguniang panlungsod, as the
legislative body of the city, shall
enact
ordinances,
approve
resolutions and appropriate funds for
the general welfare of the city and its
inhabitants pursuant to Section 16 of
this Code and in the proper exercise
of the corporate powers of the city as
provided for under Section 22 of this
Code, and shall:
xxx xxx xxx
(4)Regulate activities relative to the

use of land, buildings and structures
within the city in order to promote
the general welfare and for said
purpose shall:
xxx xxx xxx
(vii)Regulate the establishment,
operation, and maintenance of
any
entertainment
or
amusement facilities, including
theatrical
performances,
circuses, billiard pools, public
dancing schools, public dance
halls, sauna baths, massage
parlors, and other places for
entertainment or amusement;
regulate such other events or
activities for amusement or
14
entertainment, particularly those

which tend to disturb the
community or annoy the
inhabitants, or require the
suspension or suppression of the
same; or, prohibit certain forms
of amusement or entertainment
in order to protect the social and
moral
welfare
of
the
community.
Citing Kwong
Sing
v. City
of
Manila, 17 petitioners insisted that the
power of regulation spoken of in the abovequoted provision included the power to
control, to govern and to restrain places of
exhibition and amusement. 18
Petitioners
likewise
asserted
that
the Ordinance was enacted by the City
Council of Manila to protect the social and
moral welfare of the community in
conjunction with its police power as found
in Article III, Section 18(kk) ofRepublic Act
No. 409, 19 otherwise known as the Revised
Charter of the City of Manila (Revised
Charter of Manila) 20 which reads, thus:
ARTICLE III THE MUNICIPAL
BOARD
xxx xxx xxx
Section 18.Legislative powers.
The Municipal Board shall have the
following legislative powers:
xxx xxx xxx

(kk)To enact all ordinances it may
deem necessary and proper for the
sanitation and safety, the furtherance
of the prosperity, and the promotion
of the morality, peace, good order,
comfort, convenience, and general
welfare of the city and its
inhabitants, and such others as may
be necessary to carry into effect and
discharge the powers and duties
conferred by this chapter; and to fix
penalties for the violation of
ordinances which shall not exceed
two hundred pesos fine or six
months' imprisonment, or both such
fine and imprisonment, for a single
offense.
Further,
the
petitioners
noted,
the Ordinance had the presumption of
validity; hence, private respondent had the
burden to prove its illegality or
unconstitutionality. 21
Petitioners also maintained that there was no
inconsistency
between P.D.
499 and
the Ordinance as
the
latter
simply
disauthorized certain forms of businesses
and allowed the Ermita-Malate area to
remain
a
commercial
zone. 22 The Ordinance, the petitioners
likewise claimed, cannot be assailed as ex
post facto as it was prospective in
operation.23 The Ordinance also did not
infringe the equal protection clause and
cannot be denounced as class legislation as

there existed substantial and real differences
between the Ermita-Malate area and other
places in the City of Manila. 24
On 28 June 1993, respondent Judge Perfecto
A.S. Laguio, Jr. (Judge Laguio) issued
an ex-parte temporary restraining order
against
the
enforcement
of
the Ordinance. 25 And on 16 July 1993,
again in an intrepid gesture, he granted the
writ of preliminary injunction prayed for by
MTDC. 26
After trial, on 25 November 1994, Judge
Laguio rendered the assailed Decision,
enjoining the petitioners from implementing
the Ordinance. The dispositive portion of
said Decision reads: 27
WHEREFORE, judgment is hereby
rendered declaring Ordinance No.
778[3], Series of 1993, of the City of
Manila null and void, and making
permanent the writ of preliminary
injunction that had been issued by
this Court against the defendant. No
costs.
SO ORDERED. 28
Petitioners filed with the lower court
a Notice of Appeal 29 on 12 December 1994,
manifesting that they are elevating the case
to this Court under then Rule 42 on pure
questions of law. 30
15
On 11 January 1995, petitioners filed the

present Petition, alleging that the following
errors were committed by the lower court in
its ruling: (1) It erred in concluding that the
subject ordinance is ultra vires, or
otherwise,
unfair, unreasonable
and
oppressive exercise of police power; (2) It
erred
in
holding
that
the
questioned Ordinance contravenes P.D.
499 31 which allows operators of all kinds
of commercial establishments, except those
specified therein; and (3) It erred in
declaring
the Ordinance void
and
unconstitutional. 32
In
the Petition and
in
its Memorandum, 33 petitioners in essence
repeat the assertions they made before the
lower court. They contend that the
assailed Ordinance was enacted in the
exercise of the inherent and plenary power
of the State and the general welfare clause
exercised by local government units
provided for in Art. 3, Sec. 18 (kk) of the
Revised
Charter
of
Manila
and
conjunctively, Section 458 (a) 4 (vii) of the
Code. 34 They allege that the Ordinance is a
valid exercise of police power; it does not
contravene P.D. 499; and that it enjoys the
presumption of validity. 35
In its Memorandum 36 dated 27 May 1996,
private
respondent
maintains
that
the Ordinance is ultra vires and that it is
void for being repugnant to the general law.
It reiterates that the questioned Ordinance is
not a valid exercise of police power; that it
is violative of due process, confiscatory and

amounts to an arbitrary interference with its
lawful business; that it is violative of the
equal protection clause; and that it confers
on petitioner City Mayor or any officer
unregulated discretion in the execution of
the Ordinance absent rules to guide and
control his actions.
This is an opportune time to express the
Court's deep sentiment and tenderness for
the Ermita-Malate area being its home for
several decades. A long-time resident, the
Court witnessed the area's many turn of
events. It relished its glory days and endured
its days of infamy. Much as the Court harks
back to the resplendant era of the Old
Manila and yearns to restore its lost
grandeur, it believes that the Ordinance is
not the fitting means to that end. The Court
is of the opinion, and so holds, that the
lower court did not err in declaring
the Ordinance, as it did, ultra vires and
therefore null and void.
The Ordinance is
so
replete
with
constitutional infirmities that almost every
sentence thereof violates a constitutional
provision. The prohibitions and sanctions
therein transgress the cardinal rights of
persons enshrined by the Constitution. The
Court is called upon to shelter these rights
from attempts at rendering them worthless.
The tests of a valid ordinance are well
established. A long line of decisions has held
that for an ordinance to be valid, it must not
only be within the corporate powers of the

local government unit to enact and must be
passed according to the procedure prescribed
by law, it must also conform to the following
substantive requirements: (1) must not
contravene the Constitution or any statute;
(2) must not be unfair or oppressive; (3)
must not be partial or discriminatory; (4)
must not prohibit but may regulate trade; (5)
must be general and consistent with public
policy; and (6) must not be unreasonable. 37
Anent the first criterion, ordinances shall
only be valid when they are not contrary to
the
Constitution
and
to
the
laws. 38 The Ordinance must satisfy two
requirements: it must pass muster under the
test of constitutionality and the test of
consistency with the prevailing laws. That
ordinances should be constitutional uphold
the principle of the supremacy of the
Constitution. The requirement that the
enactment must not violate existing law
gives stress to the precept that local
government units are able to legislate only
by virtue of their derivative legislative
power, a delegation of legislative power
from the national legislature. The delegate
cannot be superior to the principal or
exercise powers higher than those of the
latter. 39
This relationship between the national
legislature and the local government units
has not been enfeebled by the new
provisions in the Constitution strengthening
the policy of local autonomy. The national
16
legislature is still the principal of the local

government units, which cannot defy its will
or modify or violate it. 40
The Ordinance was passed by the City
Council in the exercise of its police power,
an enactment of the City Council acting as
agent of Congress. Local government units,
as agencies of the State, are endowed with
police power in order to effectively
accomplish and carry out the declared
objects of their creation. 41 This delegated
police power is found in Section 16 of the
Code, known as the general welfare
clause, viz:
SECTION 16.General Welfare.
Every local government unit shall
exercise the powers expressly
granted, those necessarily implied
therefrom, as well as powers
necessary, appropriate, or incidental
for its efficient and effective
governance, and those which are
essential to the promotion of the
general welfare. Within their
respective territorial jurisdictions,
local government units shall ensure
and support, among other things, the
preservation and enrichment of
culture, promote health and safety,
enhance the right of the people to a
balanced ecology, encourage and
support
the
development
of
appropriate and self-reliant scientific
and
technological
capabilities,
improve public morals, enhance
economic prosperity and social

justice, promote full employment
among their residents, maintain
peace and order, and preserve the
comfort and convenience of their
inhabitants.
Local government units exercise police
power through their respective legislative
bodies; in this case, the sangguniang
panlungsod or the city council. The Code
empowers the legislative bodies to "enact
ordinances, approve resolutions and
appropriate funds for the general welfare of
the province/city/municipality and its
inhabitants pursuant to Section 16 of the
Code and in the proper exercise of the
corporate
powers
of
the
province/city/municipality provided under
the Code." 42 The inquiry in this Petition is
concerned with the validity of the exercise
of such delegated power.
The
Ordinance
Constitution
contravenes
unconstitutional and repugnant to general

laws.
The relevant constitutional provisions are
the following:
SEC. 5.The maintenance of peace
and order, the protection of life,
liberty, and property, and the
promotion of the general welfare are
essential for the enjoyment by all the
people of the blessings of
democracy. 44
SEC. 14.The State recognizes the
role of women in nation-building,
and shall ensure the fundamental
equality before the law of women
and men. 45
SEC. 1.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 laws. 46
the
The police power of the City Council,

however broad and far-reaching, is
subordinate to the constitutional limitations
thereon; and is subject to the limitation that
its exercise must be reasonable and for the
public good. 43 In the case at bar, the
enactment of the Ordinance was an invalid
exercise of delegated power as it is
SEC. 9.Private property shall not be

taken for public use without just
compensation. 47
A.The Ordinance infringes the Due
Process Clause
The constitutional safeguard of due process
is embodied in the fiat "(N)o person shall be
deprived of life, liberty or property without
due process of law. . . ." 48
17
There is no controlling and precise

definition of due process. It furnishes though
a standard to which governmental action
should conform in order that deprivation of
life, liberty or property, in each appropriate
case, be valid. This standard is aptly
described as a responsiveness to the
supremacy of reason, obedience to the
dictates of justice, 49 and as such it is a
limitation upon the exercise of the police
power. 50
The purpose of the guaranty is to prevent
governmental encroachment against the life,
liberty and property of individuals; to secure
the individual from the arbitrary exercise of
the powers of the government, unrestrained
by the established principles of private rights
and distributive justice; to protect property
from confiscation by legislative enactments,
from seizure, forfeiture, and destruction
without a trial and conviction by the
ordinary mode of judicial procedure; and to
secure to all persons equal and impartial
justice and the benefit of the general law. 51
The guaranty serves as a protection against
arbitrary regulation, and private corporations
and partnerships are "persons" within the
scope of the guaranty insofar as their
property is concerned. 52
This clause has been interpreted as imposing
two separate limits on government, usually
called "procedural due process" and
"substantive due process."
Procedural due process, as the phrase

implies, refers to the procedures that the
government must follow before it deprives a
person of life, liberty, or property. Classic
procedural due process issues are concerned
with what kind of notice and what form of
hearing the government must provide when
it takes a particular action. 53
Substantive due process, as that phrase
connotes, asks whether the government has
an adequate reason for taking away a
person's life, liberty, or property. In other
words, substantive due process looks to
whether there is a sufficient justification for
the government's action. 54 Case law in the
United States (U.S.) tells us that whether
there is such a justification depends very
much on the level of scrutiny used. 55 For
example, if a law is in an area where only
rational basis review is applied, substantive
due process is met so long as the law is
rationally related to a legitimate government
purpose. But if it is an area where strict
scrutiny is used, such as for protecting
fundamental rights, then the government
will meet substantive due process only if it
can prove that the law is necessary to
achieve
a
compelling
government
purpose. 56
The police power granted to local
government units must always be exercised
with utmost observance of the rights of the
people to due process and equal protection
of the law. Such power cannot be exercised
whimsically, arbitrarily or despotically 57 as
its exercise is subject to a qualification,

limitation or restriction demanded by the
respect and regard due to the prescription of
the fundamental law, particularly those
forming part of the Bill of Rights. Individual
rights, it bears emphasis, may be adversely
affected only to the extent that may fairly be
required by the legitimate demands of public
interest or public welfare. 58 Due process
requires the intrinsic validity of the law in
interfering with the rights of the person to
his life, liberty and property. 59
Requisites for the valid exercise of
Police Power are not met
To successfully invoke the exercise of police
power as the rationale for the enactment of
the Ordinance, and to free it from the
imputation of constitutional infirmity, not
only must it appear that the interests of the
public generally, as distinguished from those
of a particular class, require an interference
with private rights, but the means adopted
must be reasonably necessary for the
accomplishment of the purpose and not
unduly oppressive upon individuals. 60 It
must be evident that no other alternative for
the accomplishment of the purpose less
intrusive of private rights can work. A
reasonable relation must exist between the
purposes of the police measure and the
means employed for its accomplishment, for
even under the guise of protecting the public
interest, personal rights and those pertaining
to private property will not be permitted to
be arbitrarily invaded. 61
18
Lacking a concurrence of these two

requisites, the police measure shall be struck
down as an arbitrary intrusion into private
rights 62 a violation of the due process
clause.
The Ordinance was enacted to address and
arrest the social ills purportedly spawned by
the establishments in the Ermita-Malate area
which are allegedly operated under the
deceptive veneer of legitimate, licensed and
tax-paying nightclubs, bars, karaoke bars,
girlie houses, cocktail lounges, hotels and
motels. Petitioners insist that even the Court
in the case of Ermita-Malate Hotel and
Motel Operators Association, Inc. v. City
Mayor of Manila 63had already taken
judicial notice of the "alarming increase in
the rate of prostitution, adultery and
fornication in Manila traceable in great part
to existence of motels, which provide a
necessary atmosphere for clandestine entry,
presence and exit and thus become the ideal
haven for prostitutes and thrill-seekers." 64
The
object
of
the Ordinance was,
accordingly, the promotion and protection of
the social and moral values of the
community. Granting for the sake of
argument
that
the
objectives
of
the Ordinance are within the scope of the
City Council's police powers, the means
employed for the accomplishment thereof
were unreasonable and unduly oppressive.
It is undoubtedly one of the fundamental
duties of the City of Manila to make all
reasonable regulations looking to the

promotion of the moral and social values of
the community. However, the worthy aim of
fostering public morals and the eradication
of the community's social ills can be
achieved through means less restrictive of
private rights; it can be attained by
reasonable restrictions rather than by an
absolute prohibition. The closing down and
transfer of businesses or their conversion
into
businesses
"allowed"
under
the Ordinance have no reasonable relation to
the accomplishment of its purposes.
Otherwise stated, the prohibition of the
enumerated establishments will not per
se protect and promote the social and moral
welfare of the community; it will not in
itself eradicate the alluded social ills of
prostitution, adultery, fornication nor will it
arrest the spread of sexual disease in Manila.
Conceding for the nonce that the ErmitaMalate area teems with houses of ill-repute
and establishments of the like which the
City Council may lawfully prohibit, 65 it is
baseless and insupportable to bring within
that classification sauna parlors, massage
parlors, karaoke bars, night clubs, day clubs,
super clubs, discotheques, cabarets, dance
halls, motels and inns. This is not warranted
under the accepted definitions of these
terms. The enumerated establishments are
lawful pursuits which are not per
se offensive to the moral welfare of the
community.
That these are used as arenas to

consummate illicit sexual affairs and as
venues to further the illegal prostitution is
of no moment. We lay stress on the acrid
truth that sexual immorality, being a
human frailty, may take place in the most
innocent of places that it may even take
place in the substitute establishments
enumerated
under Section 3 of
the Ordinance. If the flawed logic of
the Ordinance were to be followed, in the
remote instance that an immoral sexual act
transpires in a church cloister or a court
chamber, we would behold the spectacle of
the City of Manila ordering the closure of
the church or court concerned. Every
house, building, park, curb, street or even
vehicles for that matter will not be exempt
from the prohibition. Simply because there
are no "pure" places where there are
impure men. Indeed, even the Scripture
and the Tradition of Christians churches
continually
recall
the
presence
and universality of sin in man's history.
(Catechism of the Catholic Church,
Definitive Edition, p. 101; ECCE and
Word & Life Publications, Don Bosco
Compound, Makati)
The problem, it needs to be pointed out, is
not the establishment, which by its nature
cannot be said to be injurious to the health or
comfort of the community and which in
itself is amoral, but the deplorable human
activity that may occur within its premises.
While a motel may be used as a venue for
immoral sexual activity, it cannot for that
19
reason alone be punished. It cannot be

classified as a house of ill-repute or as a
nuisance per se on a mere likelihood or a
naked assumption. If that were so and if that
were allowed, then the Ermita-Malate area
would not only be purged of its supposed
social ills, it would be extinguished of its
soul as well as every human activity,
reprehensible or not, in its every nook and
cranny would be laid bare to the estimation
of the authorities.
The Ordinance seeks to legislate morality

but fails to address the core issues of
morality. Try as the Ordinance may to shape
morality, it should not foster the illusion that
it can make a moral man out of it because
immorality is not a thing, a building or
establishment; it is in the hearts of men. The
City Council instead should regulate human
conduct
that
occurs
inside
the
establishments, but not to the detriment of
liberty and privacy which are covenants,
premiums and blessings of democracy.
While petitioners' earnestness at curbing
clearly objectionable social ills is
commendable, they unwittingly punish even
the
proprietors
and
operators
of
"wholesome," "innocent" establishments. In
the instant case, there is a clear invasion of
personal or property rights, personal in the
case of those individuals desirous of
owning, operating and patronizing those
motels and property in terms of the
investments made and the salaries to be paid

to those therein employed. If the City of
Manila so desires to put an end to
prostitution, fornication and other social ills,
it can instead impose reasonable regulations
such as daily inspections of the
establishments for any violation of the
conditions of their licenses or permits; it
may exercise its authority to suspend or
revoke
their
licenses
for
these
violations; 66 and it may even impose
increased license fees. In other words, there
are other means to reasonably accomplish
the desired end.
Means
infirm
employed
are
constitutionally
The Ordinance disallows the operation of

sauna parlors, massage parlors, karaoke
bars, beerhouses, night clubs, day clubs,
super clubs, discotheques, cabarets, dance
halls, motels and inns in the Ermita-Malate
area. In Section 3 thereof, owners and/or
operators of the enumerated establishments
are given three (3) months from the date of
approval of the Ordinance within which "to
wind up business operations or to transfer to
any place outside the Ermita-Malate area or
convert said businesses to other kinds of
business allowable within the area." Further,
it states in Section 4 that in cases of
subsequent violations of the provisions of
the Ordinance, the "premises of the erring
establishment shall be closed and padlocked
permanently."
It is readily apparent that the means

employed
by
the Ordinance for
the
achievement
of
its
purposes,
the
governmental interference itself, infringes
on the constitutional guarantees of a person's
fundamental right to liberty and property.
Liberty as guaranteed by the Constitution
was defined by Justice Malcolm to include
"the right to exist and the right to be free
from arbitrary restraint or servitude. The
term cannot be dwarfed into mere freedom
from physical restraint of the person of the
citizen, but is deemed to embrace the right
of man to enjoy the faculties with which he
has been endowed by his Creator, subject
only to such restraint as are necessary for the
common welfare." 67 In accordance with
this case, the rights of the citizen to be free
to use his faculties in all lawful ways; to live
and work where he will; to earn his
livelihood by any lawful calling; and to
pursue any avocation are all deemed
embraced in the concept of liberty. 68
The U.S. Supreme Court in the case of Roth
v. Board of Regents, 69 sought to clarify the
meaning of "liberty." It said:
While the Court has not attempted to
define with exactness the liberty . . .
guaranteed [by the Fifth and
Fourteenth Amendments], the term
denotes not merely freedom from
bodily restraint but also the right of
the individual to contract, to engage
in any of the common occupations of
20
life, to acquire useful knowledge, to

marry, establish a home and bring up
children, to worship God according
to the dictates of his own conscience,
and generally to enjoy those
privileges long recognized . . . as
essential to the orderly pursuit of
happiness by free men. In a
Constitution for a free people, there
can be no doubt that the meaning of
"liberty" must be broad indeed.
In another case, it also confirmed that liberty
protected by the due process clause includes
personal decisions relating to marriage,
procreation,
contraception,
family
relationships, child rearing, and education.
In explaining the respect the Constitution
demands for the autonomy of the person in
making these choices, the U.S. Supreme
Court explained:
These matters, involving the most
intimate and personal choices a
person may make in a lifetime,
choices central to personal dignity
and autonomy, are central to the
liberty protected by the Fourteenth
Amendment. At the heart of liberty is
the right to define one's own concept
of existence, of meaning, of
universe, and of the mystery of
human life. Beliefs about these
matters could not define the
attributes of personhood where they
formed under compulsion of the
State. 70
Persons desirous to own, operate and

patronize the enumerated establishments
under Section 1 of the Ordinance may seek
autonomy for these purposes.
Motel patrons who are single and unmarried
may invoke this right to autonomy to
consummate their bonds in intimate sexual
conduct within the motel's premises be it
stressed that their consensual sexual
behavior does not contravene any
fundamental state policy as contained in the
Constitution. 71 Adults have a right to
choose to forge such relationships with
others in the confines of their own private
lives and still retain their dignity as free
persons. The liberty protected by the
Constitution allows persons the right to
make this choice. 72 Their right to liberty
under the due process clause gives them the
full right to engage in their conduct without
intervention of the government, as long as
they do not run afoul of the law. Liberty
should be the rule and restraint the
exception.
of Morfe v. Mutuc, 74 borrowing the words

of Laski, so very aptly stated:
Man is one among many, obstinately
refusing reduction to unity. His
separateness, his isolation, are
indefeasible; indeed, they are so
fundamental that they are the basis
on which his civic obligations are
built. He cannot abandon the
consequences of his isolation, which
are, broadly speaking, that his
experience is private, and the will
built out of that experience personal
to himself. If he surrenders his will
to others, he surrenders himself. If
his will is set by the will of others, he
ceases to be a master of himself. I
cannot believe that a man no longer a
master of himself is in any real sense
free.
Liberty in the constitutional sense not only

means freedom from unlawful government
restraint; it must include privacy as well, if it
is to be a repository of freedom. The right to
be let alone is the beginning of all freedom
it is the most comprehensive of rights and
the right most valued by civilized men. 73
Indeed, the right to privacy as a

constitutional right was recognized in Morfe,
the invasion of which should be justified by
a compelling state interest. Morfe accorded
recognition to the right to privacy
independently of its identification with
liberty; in itself it is fully deserving of
constitutional protection. Governmental
powers should stop short of certain
intrusions into the personal life of the
citizen. 75
The concept of liberty compels respect for

the individual whose claim to privacy and
interference demands respect. As the case
There is a great temptation to have an

extended discussion on these civil liberties
but the Court chooses to exercise restraint
21
and restrict itself to the issues presented

when
it
should.
The
previous
pronouncements of the Court are not to be
interpreted as a license for adults to engage
in criminal conduct. The reprehensibility of
such conduct is not diminished. The Court
only reaffirms and guarantees their right to
make this choice. Should they be prosecuted
for their illegal conduct, they should suffer
the consequences of the choice they have
made. That, ultimately, is their choice.
Modality employed is unlawful
taking
In addition, the Ordinance is unreasonable
and oppressive as it substantially divests the
respondent of the beneficial use of its
property. 76 The Ordinance in Section 1
thereof forbids the running of the
enumerated businesses in the Ermita-Malate
area and in Section 3 instructs its
owners/operators to wind up business
operations or to transfer outside the area or
convert said businesses into allowed
businesses.
An
ordinance
which
permanently restricts the use of property that
it can not be used for any reasonable
purpose goes beyond regulation and must be
recognized as a taking of the property
without just compensation. 77 It is intrusive
and violative of the private property rights
of individuals.
The Constitution expressly provides in
Article III, Section 9, that "private property
shall not be taken for public use without just
compensation." The provision is the most

important protection of property rights in the
Constitution. This is a restriction on the
general power of the government to take
property. The constitutional provision is
about ensuring that the government does not
confiscate the property of some to give it to
others. In part too, it is about loss spreading.
If the government takes away a person's
property to benefit society, then society
should pay. The principal purpose of the
guarantee is "to bar the Government from
forcing some people alone to bear public
burdens which, in all fairness and justice,
should be borne by the public as a whole. 78
There are two different types of taking that
can be identified. A "possessory" taking
occurs when the government confiscates or
physically occupies property. A "regulatory"
taking occurs when the government's
regulation
leaves
no
reasonable
economically viable use of the property. 79
In the landmark case of Pennsylvania Coal
v. Mahon, 80 it was held that a taking also
could be found if government regulation of
the use of property went "too far." When
regulation reaches a certain magnitude, in
most if not in all cases there must be an
exercise
of
eminent
domain
and
compensation to support the act. While
property may be regulated to a certain
extent, if regulation goes too far it will be
recognized as a taking. 81
No formula or rule can be devised to answer

the questions of what is too far and when
regulation becomes a taking. In Mahon,
Justice Holmes recognized that it was "a
question of degree and therefore cannot be
disposed of by general propositions." On
many other occasions as well, the U.S.
Supreme Court has said that the issue of
when regulation constitutes a taking is a
matter of considering the facts in each case.
The Court asks whether justice and fairness
require that the economic loss caused by
public action must be compensated by the
government and thus borne by the public as
a whole, or whether the loss should remain
concentrated on those few persons subject to
the public action. 82
What is crucial in judicial consideration of
regulatory takings is that government
regulation is a taking if it leaves no
reasonable economically viable use of
property in a manner that interferes with
reasonable expectations for use. 83 A
regulation that permanently denies all
economically beneficial or productive use of
land is, from the owner's point of view,
equivalent to a "taking" unless principles of
nuisance or property law that existed when
the owner acquired the land make the use
prohibitable. 84 When the owner of real
property has been called upon to sacrifice all
economically beneficial uses in the name of
the common good, that is, to leave his
property economically idle, he has suffered a
taking. 85
22
A regulation which denies all economically

beneficial or productive use of land will
require compensation under the takings
clause. Where a regulation places limitations
on land that fall short of eliminating all
economically beneficial use, a taking
nonetheless may have occurred, depending
on a complex of factors including the
regulation's economic effect on the
landowner, the extent to which the
regulation interferes with reasonable
investment-backed expectations and the
character of government action. These
inquiries are informed by the purpose of the
takings clause which is to prevent the
government from forcing some people alone
to bear public burdens which, in all fairness
and justice, should be borne by the public as
a whole. 86
A restriction on use of property may also
constitute a "taking" if not reasonably
necessary to the effectuation of a substantial
public purpose or if it has an unduly harsh
impact on the distinct investment-backed
expectations of the owner. 87
The Ordinance gives the owners and
operators of the "prohibited" establishments
three (3) months from its approval within
which to "wind up business operations or to
transfer to any place outside of the ErmitaMalate area or convert said businesses to
other kinds of business allowable within the
area." The directive to "wind up business
operations" amounts to a closure of the
establishment, a permanent deprivation of
property, and is practically confiscatory.

Unless the owner converts his establishment
to accommodate an "allowed" business, the
structure which housed the previous
business will be left empty and gathering
dust. Suppose he transfers it to another area,
he will likewise leave the entire
establishment idle. Consideration must be
given to the substantial amount of money
invested to build the edifices which the
owner reasonably expects to be returned
within a period of time. It is apparent that
the Ordinance leaves
no
reasonable
economically viable use of property in a
manner that interferes with reasonable
expectations for use.
enterprises is just as ridiculous. How may

the respondent convert a motel into a
restaurant or a coffee shop, art gallery or
music lounge without essentially destroying
its property? This is a taking of private
property without due process of law, nay,
even without compensation.
The second and third options to transfer

to any place outside of the Ermita-Malate
area or to convert into allowed businesses
are confiscatory as well. The penalty of
permanent closure in cases of subsequent
violations found in Section 4 of
the Ordinance is also equivalent to a
"taking" of private property.
Petitioners cannot take refuge in classifying

the measure as a zoning ordinance. A zoning
ordinance, although a valid exercise of
police power, which limits a "wholesome"
property to a use which can not reasonably
be made of it constitutes the taking of such
property without just compensation. Private
property which is not noxious nor intended
for noxious purposes may not, by zoning, be
destroyed without compensation. Such
principle finds no support in the principles
of justice as we know them. The police
powers of local government units which
have always received broad and liberal
interpretation cannot be stretched to cover
this particular taking.
The second option instructs the owners to

abandon their property and build another
one outside the Ermita-Malate area. In every
sense, it qualifies as a taking without just
compensation with an additional burden
imposed on the owner to build another
establishment solely from his coffers. The
proffered solution does not put an end to the
"problem," it merely relocates it. Not only is
this impractical, it is unreasonable, onerous
and oppressive. The conversion into allowed
The penalty of closure likewise constitutes

unlawful taking that should be compensated
by the government. The burden on the
owner to convert or transfer his business,
otherwise it will be closed permanently after
a subsequent violation should be borne by
the public as this end benefits them as a
whole.
Distinction should be made between

destruction from necessity and eminent
domain. It needs restating that the property
23
taken in the exercise of police power is

destroyed because it is noxious or intended
for a noxious purpose while the property
taken under the power of eminent domain is
intended for a public use or purpose and is
therefore "wholesome." 88 If it be of public
benefit that a "wholesome" property remain
unused or relegated to a particular purpose,
then certainly the public should bear the cost
of reasonable compensation for the
condemnation of private property for public
use. 89
Further, the Ordinance fails to set up any
standard to guide or limit the petitioners'
actions. It in no way controls or guides the
discretion vested in them. It provides no
definition of the establishments covered by
it and it fails to set forth the conditions when
the establishments come within its ambit of
prohibition. The Ordinance confers upon the
mayor arbitrary and unrestricted power to
close down establishments. Ordinances such
as this, which make possible abuses in its
execution, depending upon no conditions or
qualifications whatsoever other than the
unregulated arbitrary will of the city
authorities as the touchstone by which its
validity is to be tested, are unreasonable and
invalid.
The Ordinance should
have
established a rule by which its impartial
enforcement could be secured. 90
Ordinances placing restrictions upon the
lawful use of property must, in order to be
valid and constitutional, specify the rules
and conditions to be observed and conduct
to avoid; and must not admit of the exercise,

or of an opportunity for the exercise, of
unbridled discretion by the law enforcers in
carrying out its provisions. 91
Thus, in Coates v. City of Cincinnati, 92 as
cited in People v. Nazario, 93 the U.S.
Supreme Court struck down an ordinance
that had made it illegal for "three or more
persons to assemble on any sidewalk and
there conduct themselves in a manner
annoying to persons passing by." The
ordinance was nullified as it imposed no
standard at all "because one may never
know in advance what 'annoys some people
but does not annoy others.'"
Similarly, the Ordinance does not specify
the
standards
to
ascertain
which
establishments "tend to disturb the
community," "annoy the inhabitants," and
"adversely affect the social and moral
welfare of the community." The cited case
supports
the
nullification
of
the Ordinance for lack of comprehensible
standards to guide the law enforcers in
carrying out its provisions.
Petitioners cannot therefore order the
closure of the enumerated establishments
without infringing the due process clause.
These lawful establishments may be
regulated, but not prevented from carrying
on their business. This is a sweeping
exercise of police power that is a result of a
lack of imagination on the part of the City
Council and which amounts to an
interference into personal and private rights

which the Court will not countenance. In
this regard, we take a resolute stand to
uphold the constitutional guarantee of the
right to liberty and property.
Worthy of note is an example derived from
the U.S. of a reasonable regulation which is
a
far
cry
from
the
illconsidered Ordinance enacted by the City
Council.
In FW/PBS, INC. v. Dallas, 94 the city of
Dallas adopted a comprehensive ordinance
regulating "sexually oriented businesses,"
which are defined to include adult arcades,
bookstores, video stores, cabarets, motels,
and theaters as well as escort agencies, nude
model studio and sexual encounter centers.
Among other things, the ordinance required
that such businesses be licensed. A group of
motel owners were among the three groups
of businesses that filed separate suits
challenging the ordinance. The motel
owners asserted that the city violated the due
process clause by failing to produce
adequate support for its supposition that
renting room for fewer than ten (10) hours
resulted in increased crime and other
secondary effects. They likewise argued than
the ten (10)-hour limitation on the rental of
motel rooms placed an unconstitutional
burden on the right to freedom of
association. Anent the first contention, the
U.S. Supreme Court held that the
reasonableness of the legislative judgment
combined with a study which the city
24
considered, was adequate to support the

city's determination that motels permitting
room rentals for fewer than ten (10) hours
should be included within the licensing
scheme. As regards the second point, the
Court held that limiting motel room rentals
to ten (10) hours will have no discernible
effect on personal bonds as those bonds that
are formed from the use of a motel room for
fewer than ten (10) hours are not those that
have played a critical role in the culture and
traditions of the nation by cultivating and
transmitting shared ideals and beliefs.
The ordinance challenged in the above-cited

case merely regulated the targeted
businesses.
It
imposed
reasonable
restrictions; hence, its validity was upheld.
The case of Ermita Malate Hotel and Motel
Operators Association, Inc. v. City Mayor of
Manila, 95 it needs pointing out, is also
different from this case in that what was
involved therein was a measure which
regulated the mode in which motels may
conduct business in order to put an end to
practices which could encourage vice and
immorality. Necessarily, there was no valid
objection on due process or equal protection
grounds as the ordinance did not prohibit
motels. The Ordinance in this case however
is not a regulatory measure but is an exercise
of an assumed power to prohibit. 96
The foregoing premises show that

the Ordinance is an unwarranted and
unlawful curtailment of property and
personal rights of citizens. For being
unreasonable and an undue restraint of trade,
it cannot, even under the guise of exercising
police power, be upheld as valid.
B.The Ordinance violates Equal
Protection Clause
Equal protection requires that all persons or
things similarly situated should be treated
alike, both as to rights conferred and
responsibilities imposed. Similar subjects, in
other words, should not be treated
differently, so as to give undue favor to
some and unjustly discriminate against
others. 97 The guarantee means that no
person or class of persons shall be denied
the same protection of laws which is
enjoyed by other persons or other classes in
like circumstances. 98 The "equal protection
of the laws is a pledge of the protection of
equal laws." 99 It limits governmental
discrimination. The equal protection clause
extends to artificial persons but only insofar
as their property is concerned. 100
The Court has explained the scope of the
equal protection clause in this wise:
. . . What does it signify? To quote
from J.M. Tuason & Co. v. Land
Tenure Administration: "The ideal
situation is for the law's benefits to
be available to all, that none be
placed outside the sphere of its

coverage. Only thus could chance
and favor be excluded and the affairs
of men governed by that serene and
impartial uniformity, which is of the
very essence of the idea of law."
There is recognition, however, in the
opinion that what in fact exists
"cannot approximate the ideal. Nor is
the law susceptible to the reproach
that it does not take into account the
realities of the situation. The
constitutional guarantee then is not to
be given a meaning that disregards
what is, what does in fact exist. To
assure that the general welfare be
promoted, which is the end of law, a
regulatory measure may cut into the
rights to liberty and property. Those
adversely affected may under such
circumstances invoke the equal
protection clause only if they can
show that the governmental act
assailed, far from being inspired by
the attainment of the common weal
was prompted by the spirit of
hostility, or at the very least,
discrimination that finds no support
in reason." Classification is thus not
ruled out, it being sufficient to quote
from the Tuason decision anew "that
the laws operate equally and
uniformly on all persons under
similar circumstances or that all
persons must be treated in the same
manner, the conditions not being
different, both in the privileges
25
conferred and the liabilities imposed.

Favoritism and undue preference
cannot be allowed. For the principle
is that equal protection and security
shall be given to every person under
circumstances which, if not identical,
are analogous. If law be looked upon
in terms of burden or charges, those
that fall within a class should be
treated in the same fashion, whatever
restrictions cast on some in the group
equally binding on the rest. 101
Legislative bodies are allowed to classify the
subjects of legislation. If the classification is
reasonable, the law may operate only on
some and not all of the people without
violating
the
equal
protection
clause. 102 The classification must, as an
indispensable requisite, not be arbitrary. 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.
4)It must apply equally to all
members of the class. 103
In the Court's view, there are no substantial
distinctions between motels, inns, pension
houses, hotels, lodging houses or other

similar establishments. By definition, all are
commercial
establishments
providing
lodging and usually meals and other services
for the public. No reason exists for
prohibiting motels and inns but not pension
houses, hotels, lodging houses or other
similar establishments. The classification in
the instant case is invalid as similar subjects
are not similarly treated, both as to rights
conferred and obligations imposed. It is
arbitrary as it does not rest on substantial
distinctions bearing a just and fair relation to
the purpose of the Ordinance.
The Court likewise cannot see the logic for
prohibiting the business and operation of
motels in the Ermita-Malate area but not
outside of this area. A noxious establishment
does not become any less noxious if located
outside the area.
The standard "where women are used as
tools
for
entertainment"
is
also
discriminatory as prostitution one of the
hinted ills the Ordinance aims to banish
is not a profession exclusive to women. Both
men and women have an equal propensity to
engage in prostitution. It is not any less
grave a sin when men engage in it. And why
would the assumption that there is an
ongoing immoral activity apply only when
women are employed and be inapposite
when men are in harness? This
discrimination based on gender violates
equal protection as it is not substantially
related
to
important
government
objectives. 104 Thus, the discrimination is

invalid.
Failing the test of constitutionality,
the Ordinance likewise failed to pass the test
of consistency with prevailing laws.
C.The Ordinance is repugnant to
general laws; it is ultra
vires
The Ordinance is in contravention of the
Code as the latter merely empowers local
government units to regulate, and not
prohibit, the establishments enumerated in
Section 1 thereof.
The power of the City Council to regulate by
ordinances the establishment, operation, and
maintenance of motels, hotels and other
similar establishments is found in Section
458 (a) 4 (iv), which provides that:
Section
458.Powers,
Duties,
enact
ordinances,
approve
Code, and shall:
xxx xxx xxx
26

purpose shall:
xxx xxx xxx
(iv)Regulate
the
establishment, operation and
maintenance
of
cafes,
restaurants,
beerhouses,
hotels, motels, inns, pension
houses, lodging houses, and
other similar establishments,
including tourist guides and
transports. . . .
While its power to regulate the
establishment, operation and maintenance of
any entertainment or amusement facilities,
and to prohibit certain forms of amusement
or entertainment is provided under Section
458 (a) 4 (vii) of the Code, which reads as
follows:
Section
458.Powers,
Duties,
enact
ordinances,
approve

Code, and shall:
xxx xxx xxx
purpose shall:
xxx xxx xxx
(vii)Regulate
the
establishment, operation, and
maintenance
of
any
entertainment or amusement
facilities, including theatrical
performances,
circuses,
billiard pools, public dancing
schools, public dance halls,
sauna baths, massage parlors,
and
other
places
for
entertainment or amusement;
regulate such other events or
activities for amusement or
entertainment,
particularly
those which tend to disturb
the community or annoy the
inhabitants, or require the
suspension or suppression of
the same; or, prohibit certain
forms of amusement or
entertainment in order to
protect the social and moral
welfare of the community.
Clearly, with respect to cafes, restaurants,

beerhouses, hotels, motels, inns, pension
houses, lodging houses, and other similar
establishments, the only power of the City
Council to legislate relative thereto is to
regulate them to promote the general
welfare. The Code still withholds from cities
the power to suppress and prohibit
altogether the establishment, operation and
maintenance of such establishments. It is
well to recall the rulings of the Court
in Kwong Sing v. City of Manila 105 that:
The word "regulate," as used in
subsection (l), section 2444 of the
Administrative Code, means and
includes the power to control, to
govern, and to restrain; but
"regulate" should not be construed as
synonymous with "suppress" or
"prohibit." Consequently, under the
power to regulate laundries, the
municipal authorities could make
proper police regulations as to the
mode in which the employment or
business shall be exercised. 106
And in People v. Esguerra, 107 wherein the
Court nullified an ordinance of the
Municipality of Tacloban which prohibited
the selling, giving and dispensing of liquor
ratiocinating that the municipality is
empowered only to regulate the same and
not prohibit. The Court therein declared that:
27
(A)s a general rule when a municipal

corporation is specifically given
authority or power to regulate or to
license and regulate the liquor traffic,
power to prohibit is impliedly
withheld. 108
These doctrines still hold contrary to
petitioners' assertion 109 that they were
modified by the Code vesting upon City
Councils prohibitory powers.
Similarly, the City Council exercises
regulatory powers over public dancing
schools, public dance halls, sauna baths,
massage parlors, and other places for
entertainment or amusement as found in the
first clause of Section 458 (a) 4 (vii). Its
powers to regulate, suppress and suspend
"such other events or activities for
amusement or entertainment, particularly
those which tend to disturb the community
or annoy the inhabitants" and to "prohibit
certain
forms
of
amusement
or
entertainment in order to protect the social
and moral welfare of the community" are
stated in the second and third clauses,
respectively of the same Section. The
several powers of the City Council as
provided in Section 458 (a) 4 (vii) of the
Code, it is pertinent to emphasize, are
separated by semi-colons (;), the use of
which indicates that the clauses in which
these powers are set forth are independent of
each other albeit closely related to justify
being put together in a single enumeration or
paragraph. 110 These powers, therefore,
should not be confused, commingled or

consolidated as to create a conglomerated
and unified power of regulation, suppression
and prohibition. 111
The Congress unequivocably specified the
establishments and forms of amusement or
entertainment subject to regulation among
which are beerhouses, hotels, motels, inns,
pension houses, lodging houses, and other
similar establishments (Section 458 (a) 4
(iv)), public dancing schools, public dance
halls, sauna baths, massage parlors, and
other places for entertainment or amusement
(Section 458 (a) 4 (vii)). This enumeration
therefore cannot be included as among
"other events or activities for amusement or
entertainment, particularly those which tend
to disturb the community or annoy the
inhabitants" or "certain forms of amusement
or entertainment" which the City Council
may suspend, suppress or prohibit.
The rule is that the City Council has only
such powers as are expressly granted to it
and those which are necessarily implied or
incidental to the exercise thereof. By reason
of its limited powers and the nature thereof,
said powers are to be construed strictissimi
juris and any doubt or ambiguity arising out
of the terms used in granting said powers
must be construed against the City
Council. 112 Moreover, it is a general rule in
statutory construction that the express
mention of one person, thing, or
consequence is tantamount to an express
exclusion of all others. Expressio unius est
exclusio alterium. This maxim is based upon

the rules of logic and the natural workings of
human mind. It is particularly applicable in
the construction of such statutes as create
new rights or remedies, impose penalties or
punishments, or otherwise come under the
rule of strict construction. 113
The argument that the City Council is
empowered to enact the Ordinance by virtue
of the general welfare clause of the Code
and of Art. 3, Sec. 18 (kk) of the Revised
Charter of Manila is likewise without merit.
On the first point, the ruling of the Court
in People v. Esguerra, 114 is instructive. It
held that:
The powers conferred upon a
municipal council in the general
welfare clause, or section 2238 of the
Revised Administrative Code, refers
to matters not covered by the other
provisions of the same Code, and
therefore it can not be applied to
intoxicating liquors, for the power to
regulate the selling, giving away and
dispensing thereof is granted
specifically by section 2242 (g) to
municipal councils. To hold that,
under the general power granted by
section 2238, a municipal council
may enact the ordinance in question,
notwithstanding the provision of
section 2242 (g), would be to make
the latter superfluous and nugatory,
because the power to prohibit,
includes the power to regulate, the
28
selling, giving away and dispensing

of intoxicating liquors.
On the second point, it suffices to say that
the Code being a later expression of the
legislative will must necessarily prevail and
override the earlier law, the Revised Charter
of Manila. Legis posteriores priores
contrarias abrogant, or later statute repeals
prior ones which are repugnant thereto. As
between two laws on the same subject
matter, which are irreconcilably inconsistent,
that which is passed later prevails, since it is
the latest expression of legislative
will. 115 If there is an inconsistency or
repugnance between two statutes, both
relating to the same subject matter, which
cannot be removed by any fair and
reasonable method of interpretation, it is the
latest expression of the legislative will
which must prevail and override the
earlier. 116
Implied repeals are those which take place
when a subsequently enacted law contains
provisions contrary to those of an existing
law but no provisions expressly repealing
them. Such repeals have been divided into
two general classes: those which occur
where an act is so inconsistent or
irreconcilable with an existing prior act that
only one of the two can remain in force and
those which occur when an act covers the
whole subject of an earlier act and is
intended to be a substitute therefor. The
validity of such a repeal is sustained on the
ground that the latest expression of the

legislative will should prevail. 117
In addition, Section 534(f) of the Code states
that "All general and special laws, acts, city
charters,
decrees,
executive
orders,
proclamations
and
administrative
regulations, or part or parts thereof which
are inconsistent with any of the provisions
of this Code are hereby repealed or modified
accordingly." Thus, submitting to petitioners'
interpretation that the Revised Charter of
Manila empowers the City Council to
prohibit motels, that portion of the Charter
stating such must be considered repealed by
the Code as it is at variance with the latter's
provisions granting the City Council mere
regulatory powers.
It is well to point out that petitioners also
cannot seek cover under the general welfare
clause authorizing the abatement of
nuisances without judicial proceedings. That
tenet applies to a nuisance per se, or one
which affects the immediate safety of
persons and property and may be summarily
abated under the undefined law of necessity.
It can not be said that motels are injurious to
the rights of property, health or comfort of
the community. It is a legitimate business. If
it be a nuisance per accidens it may be so
proven in a hearing conducted for that
purpose. A motel is not per se a nuisance
warranting its summary abatement without
judicial intervention. 118
Notably, the City Council was conferred

powers to prevent and prohibit certain
activities and establishments in another
section of the Code which is reproduced as
follows:
Section
458.Powers,
Duties,
enact
ordinances,
approve
Code, and shall:
(1)Approve ordinances and pass
resolutions necessary for an efficient
and effective city government, and in
this connection, shall:
xxx xxx xxx
(v)Enact ordinances intended to
prevent, suppress and impose
appropriate penalties for habitual
drunkenness in public places,
vagrancy, mendicancy, prostitution,
establishment and maintenance of
houses of ill repute, gambling and
other prohibited games of chance,
fraudulent devices and ways to
obtain money or property, drug
addiction, maintenance of drug dens,
29
drug pushing, juvenile delinquency,

the
printing,
distribution
or
exhibition
of
obscene
or
pornographic
materials
or
publications,
and
such
other
activities inimical to the welfare and
morals of the inhabitants of the city;
xxx xxx xxx
If it were the intention of Congress to confer
upon the City Council the power to prohibit
the establishments enumerated in Section 1
of the Ordinance, it would have so declared
in uncertain terms by adding them to the list
of the matters it may prohibit under the
above-quoted Section. The Ordinance now
vainly attempts to lump these establishments
with houses of ill-repute and expand the
City Council's powers in the second and
third clauses of Section 458 (a) 4 (vii) of the
Code in an effort to overreach its prohibitory
powers. It is evident that these
establishments may only be regulated in
their
establishment,
operation
and
maintenance.
It is important to distinguish the punishable
activities
from
the
establishments
themselves. That these establishments are
recognized legitimate enterprises can be
gleaned from another Section of the
Code. Section 131 under the Title on Local
Government Taxation expressly mentioned
proprietors or operators of massage clinics,
sauna, Turkish and Swedish baths, hotels,
motels and lodging houses as among the
"contractors" defined in paragraph (h)

thereof. The same Section also defined
"amusement" as a "pleasurable diversion
and entertainment," "synonymous to
relaxation, avocation, pastime or fun;" and
"amusement places" to include "theaters,
cinemas, concert halls, circuses and other
places of amusement where one seeks
admission to entertain oneself by seeing or
viewing the show or performances." Thus, it
can be inferred that the Code considers these
establishments as legitimate enterprises and
activities. It is well to recall the
maxim reddendo singula singulis which
means that words in different parts of a
statute must be referred to their appropriate
connection, giving to each in its place, its
proper force and effect, and, if possible,
rendering none of them useless or
superfluous, even if strict grammatical
construction demands otherwise. Likewise,
where words under consideration appear in
different sections or are widely dispersed
throughout an act the same principle
applies. 119
Not only does the Ordinance contravene the

Code, it likewise runs counter to the
provisions of P.D. 499. As correctly argued
by MTDC, the statute had already converted
the residential Ermita-Malate area into a
commercial area. The decree allowed the
establishment and operation of all kinds of
commercial
establishments
except
warehouse or open storage depot, dump or
yard, motor repair shop, gasoline service

station, light industry with any machinery or
funeral establishment. The rule is that for an
ordinance to be valid and to have force and
effect, it must not only be within the powers
of the council to enact but the same must not
be in conflict with or repugnant to the
general law. 120 As succinctly illustrated
in Solicitor General v. Metropolitan Manila
Authority: 121
The requirement that the enactment
must not violate existing law
explains itself. Local political
subdivisions are able to legislate only
by virtue of a valid delegation of
legislative power from the national
legislature (except only that the
power to create their own sources of
revenue and to levy taxes is
conferred by the Constitution itself).
They are mere agents vested with
what is called the power of
subordinate legislation. As delegates
of the Congress, the local
government units cannot contravene
but must obey at all times the will of
their principal. In the case before us,
the enactment in question, which are
merely local in origin cannot prevail
against the decree, which has the
force and effect of a statute. 122
Petitioners
contend
that
the Ordinance enjoys the presumption of
validity. While this may be the rule, it has
already been held that although the
30
presumption is always in favor of the

validity or reasonableness of the ordinance,
such presumption must nevertheless be set
aside
when
the
invalidity
or
unreasonableness appears on the face of the
ordinance itself or is established by proper
evidence. The exercise of police power by
the local government is valid unless it
contravenes the fundamental law of the land,
or an act of the legislature, or unless it is
against public policy or is unreasonable,
oppressive, partial, discriminating or in
derogation of a common right. 123
Conclusion
All
considered,
the Ordinance invades
fundamental personal and property rights
and impairs personal privileges. It is
constitutionally
infirm.
The Ordinance contravenes statutes; it is
discriminatory and unreasonable in its
operation; it is not sufficiently detailed and
explicit that abuses may attend the
enforcement of its sanctions. And not to be
forgotten, the City Council under the Code
had no power to enact the Ordinance and is
thereforeultra vires, null and void.
Concededly, the challenged Ordinance was
enacted with the best of motives and shares
the concern of the public for the cleansing of
the Ermita-Malate area of its social sins.
Police power legislation of such character
deserves the full endorsement of the
judiciary we reiterate our support for it.
But inspite of its virtuous aims, the
enactment of the Ordinance has no statutory

or constitutional authority to stand on. Local
legislative bodies, in this case, the City
Council, cannot prohibit the operation of the
enumerated establishments under Section 1
thereof or order their transfer or conversion
without infringing the constitutional
guarantees of due process and equal
protection of laws not even under the
guise of police power.
WHEREFORE,
the Petition is
hereby
DENIED and the decision of the Regional
Trial Court declaring the Ordinance void is
AFFIRMED. Costs against petitioners.
SO ORDERED.
||| (City of Manila v. Laguio, Jr., G.R. No.
118127, [April 12, 2005], 495 PHIL 289338)
[G.R. No. 93891. March 11, 1991.]

POLLUTION ADJUDICATION
BOARD, petitioner, vs. COURT
OF APPEALS and SOLAR
TEXTILE
FINISHING
CORPORATION, respondents.
Oscar
A. Pascua and Charemon
L. Borre for petitioner.
Clio
Leonardo A. Aurelio for respondent Solar

Textile Finishing Corp.
SYLLABUS
1. ADMINISTRATIVE LAW; POLLUTION
ADJUDICATION BOARD; MAY ISSUE
CEASE AND DESIST ORDERS EXPARTE; BASIS. Section 7(a) of P.D. No.
984 authorized petitioner Board to issue ex
parte cease and desist orders. An ex
parte cease and desist order may be issued
by the Board (a) whenever the wastes
discharged by an establishment pose an
"immediate threat to life, public health,
safety or welfare, or to animal or plant life,"
or (b) whenever such discharges or wastes
exceed "the allowable standards set by the
[NPCC]." On the one hand, it is not essential
that the Board prove that an "immediate
threat to life, public health, safety or
welfare, or to animal or plant life" exists
before an ex parte cease and desist order
may be issued. It is enough if the Board
finds that the wastes discharged do exceed
"the allowable standards set by the
[NPCC]." In respect of discharges of wastes
as to which allowable standards have been
set by the Commission, the Board may issue
an ex parte cease and desist order when
there is prima facie evidence of an
establishment exceeding such allowable
standards. Where, however, the effluents or
discharges have not yet been the subject
matter of allowable standards set by the
Commission, then the Board may act on an
ex parte basis when it finds at least prima
31
facie proof that the wastewater or material

involved presents an "immediate threat to
life, public health, safety or welfare or to
animal or plant life." Since the applicable
standards set by the Commission existing at
any given time may well not cover every
possible or imaginable kind of effluent or
waste discharge, the general standard of an
"immediate threat to life public health,
safety or welfare, or to animal and plant life"
remains necessary.
2. POLITICAL LAW; POLICE POWER;
ENACTMENT
OF
POLLUTION
CONTROL
STATUTES
AND
IMPLEMENTING REGULATIONS, AN
EXERCISE THEREOF. The relevant
pollution control statute and implementing
regulations were enacted and promulgated in
the exercise of that persuasive, sovereign
power to protect the safety, health, and
general welfare and comfort of the public, as
well as the protection of plant and animal
life, commonly designated as the police
power.
3. CONSTITUTIONAL
LAW;
DUE
PROCESS; YIELDS TO THE EXERCISE
OF POLICE POWER. It is a
constitutional common place that the
ordinary requirements of procedural due
process yield to the necessities of protecting
vital public interests like those here
involved, through the exercise of police
power.
4. ADMINISTRATIVE LAW; POLLUTION

ADJUDICATION
BOARD;
DUE
PROCESS; HOLDING OF PUBLIC
HEARING AFTER EX-PARTE ISSUANCE
OF A CEASE AND DESIST ORDER,
SUFFICIENT COMPLIANCE WITH DUE
PROCESS CLAUSE. Where the
establishment affected by an ex parte cease
and desist order contests the correctness of
the prima facie findings of the Board, the
Board must hold a public hearing where
such establishment would have an
opportunity to controvert the basis of
such ex parte order. That such an
opportunity is subsequently available is
really all that is required by the due process
clause of the Constitution in situations like
that we have here.
5. REMEDIAL LAW; ACTIONS;
APPEAL; PROPER REMEDY WHERE
QUESTIONED ORDER AND WRIT OF
EXECUTION WHERE LAWFUL.
Solar claims finally that the petition for
certiorari was the proper remedy as the
questioned Order and Writ of Execution
issued by the Board were patent nullities.
Since we have concluded that Order and
Writ of Execution were entirely within the
lawful authority of petitioner Board, the
trial court did not err when it dismissed
Solar's petition for certiorari. It follows
that the proper remedy was an appeal from
the trial court to the Court of Appeals, as
Solar did in fact appeal.
RE S O LUTI ON
FELICIANO, J p:
Petitioner Pollution Adjudication Board
("Board") asks us to review the Decision and
Resolution promulgated on 7 February 1990
and 10 May 1990, respectively, by the Court
of Appeals in C.A.-G.R. No. SP 18821
entitled "Solar Textile Finishing Corporation
v. Pollution Adjudication Board." In that
Decision and Resolution, the Court of
Appeals reversed an order of the Regional
Trial Court, Quezon City, Branch 77, in
Civil Case No. Q-89-2287 dismissing
private respondent Solar Textile Finishing
Corporation's ("Solar") petition for certiorari
and remanded the case to the trial court for
further proceedings.
On 22 September 1988, petitioner Board
issued an ex parte Order directing Solar
immediately to cease and desist from
utilizing its wastewater pollution source
installations which were discharging
untreated wastewater directly into a canal
leading to the adjacent Tullahan-Tinejeros
River. The Order signed by Hon. Fulgencio
Factoran, Jr., as Board Chairman, reads in
full as follows:
"Respondent, Solar Textile Finishing
Corporation with plant and place of
business at 999 General Pascual
Avenue, Malabon, Metro Manila is
involved in bleaching, rinsing and
dyeing textiles with wastewater of
about 30 gpm. being directly
discharged untreated into the sewer.
32
Based on findings in the Inspections

conducted on 05 November 1986
and 15 November 1986, the volume
of untreated wastewater discharged
in the final outfall outside of the
plant's compound was even greater.
The result of inspection conducted
on 06 September 1988 showed that
respondent's Wastewater Treatment
Plant was noted unoperational and
the combined wastewater generated
from its operation was about 30
gallons per minute and 80% of the
wastewater was being directly
discharged into a drainage canal
leading to the Tullahan-Tinejeros
River by means of a by-pass and the
remaining 20% was channeled into
the plant's existing Wastewater
Treatment Plant (WTP). Result of
the analyses of the sample taken
from the by - pass showed that the
wastewater is highly pollutive in
terms of Color units, BOD and
Suspended Solids, among others.
These acts of respondent in spite of
directives to comply with the
requirements are clearly in violation
of Section 8 of Presidential Decree
No. 984 and Section 103 of its
Implementing Rules and Regulations
and the 1982 Effluent Regulations.
WHEREFORE, pursuant to Section
7 of P.D. 984 and Section 38 of its
Implementing
Rules
and
Regulations, respondent is hereby
ordered to cease and desist from

utilizing its wastewater pollution
source installations and discharging
its untreated wastewater directly into
the canal leading to the TullahanTinejeros
River
effective
immediately upon receipt hereof and
until such time when it has fully
complied with all the requirements
and until further orders from this
Board.
wastewater was being channeled through

Solar's
non-operational
wastewater
treatment plant. Chemical analysis of
samples of Solar's effluents showed the
presence of pollutants on a level in excess
of what was permissible under P.D. No.
984 and its Implementing Regulations.
A copy of the above Order was received by
Solar on 26 September 1988. A Writ of
Execution issued by the Board was received
by Solar on 31 March 1989.
SO ORDERED." 1
We note that the above Order was based on
findings of several inspections of Solar's
plant:
a. inspections conducted on 5
November 1986 and 12 November
1986 by the National Pollution
Control Commission ("NPCC"), the
predecessor of the Board; 2 and
b. the inspection conducted on 6
September 1988 by the Department
of Environment
and
Natural
Resources ("DENR").
The findings of these two (2) inspections
were that Solar's wastewater treatment
plant was non-operational and that its
plant generated about 30 gallons per
minute of wastewater, 80% of which was
being directly discharged into a drainage
canal leading to the Tullahan-Tinejeros
River. The remaining 20% of the
Meantime, Solar filed a motion for

reconsideration appeal with prayer for stay
of execution of the Order dated 22
September 1988. Acting on this motion, the
Board issued an Order dated 24 April 1989
allowing Solar to operate temporarily, to
enable the Board to conduct another
inspection and evaluation of Solar's
wastewater treatment facilities. In the same
Order, the Board directed the Regional
Executive Director of the DENR NCR to
conduct the inspection and evaluation within
thirty (30) days.
On 21 April 1989, however, Solar went to
the Regional Trial Court of Quezon City,
Branch 77, on petition for certiorari with
preliminary injunction against the Board, the
petition being docketed as Civil Case No. Q89-2287.
On 21 July 1989, the Regional Trial Court
dismissed Solar's petition upon two (2)
grounds, i.e., that appeal and not certiorari
33
from the questioned Order of the Board as

well as the Writ of Execution was the proper
remedy, and that the Board's subsequent
Order allowing Solar to operate temporarily
had rendered Solar's petition moot and
academic.
Dissatisfied, Solar went on appeal to the
Court of Appeals which, in the Decision
here assailed, reversed the Order of
dismissal of the trial court and remanded the
case to that court for further proceedings. In
addition, the Court of Appeals declared the
Writ of Execution null and void. At the same
time, the Court of Appeals said in the
dispositive portion of its Decision that:
". . . Still and all, this decision is
without prejudice to whatever action
the appellee [Board] may take
relative to the projected 'inspection
and evaluation' of appellant's
[Solar's] water treatment facilities." 3
The Court of Appeals, in so ruling, held that
certiorari was a proper remedy since the
Orders of petitioner Board may result in
great and irreparable injury to Solar; and
that while the case might be moot and
academic, "larger issues" demanded that the
question of due process be settled. Petitioner
Board moved for reconsideration, without
success.
The Board is now before us on a Petition for

Review basically arguing that:
1. its ex parte Order dated 22
September 1988 and the Writ of
Execution were issued in
accordance with law and were
not
violative
of
the
requirements of due process;
and
2. the ex parte Order and the Writ of
Execution are not the proper
subjects of a petition for
certiorari.
The only issue before us at this time is
whether or not the Court of Appeals erred in
reversing the trial court on the ground that
Solar had been denied due process by the
Board.
Petitioner Board claims that under P.D. No.
984, Section 7(a), it has legal authority to
issue ex parte orders to suspend the
operations of an establishment when there
is prima
facie evidence
that
such
establishment is discharging effluents or
wastewater, the pollution level of which
exceeds the maximum permissible standards
set by the NPCC (now, the Board).
Petitioner Board contends that the reports
before it concerning the effluent discharges
of Solar into the Tullahan-Tinejeros River
provided prima facie evidence of violation
by Solar of Section 5 of the 1982 Effluent
Code.
Solar, on the other hand, contends that under

the Board's own rules and regulations, an ex
parte order may issue only if the effluents
discharged pose an "immediate threat to life,
public health; safety or welfare, or to animal
and plant life." In the instant case, according
to Solar, the inspection reports before the
Board made no finding that Solar's
wastewater discharged posed such a threat.
The Court is not persuaded by Solar's
contention. Section 7(a) of P.D. No.
984 authorized petitioner Board to issue ex
parte cease and desist orders under the
following circumstances:
"P.D. 984, Section 7, paragraph (a),
provides:
(a) Public Hearing . . . Provided,
That whenever the Commission finds
prima facie evidence that the
discharged sewage or wastes are of
immediate threat to life, public
health, safety or welfare, or to
animal or plant life, or exceeds the
allowable standards set by the
Commission, the Commissioner may
issue an ex-parte order directing the
discontinuance of the same or
the temporary
suspension
or
cessation of operation of the
establishment or person generating
such sewage or wastes without the
necessity of a prior public hearing.
The said ex-parte order shall be
immediately executory and shall
34
remain in force until said

establishment or person prevents or
abates the said pollution within the
allowable standards or modified or
nullified by a competent court."
(Emphasis supplied).
We note that under the above-quoted portion
of Section 7(a) of P.D. No. 984, an ex
parte cease and desist order may be issued
by the Board (a) whenever the wastes
discharged by an establishment pose an
safety or welfare, or to animal or plant life,"
or (b) whenever such discharges or wastes
exceed "the allowable standards set by the
[NPCC]." On the one hand, it is not essential
that the Board prove that an "immediate
threat to life, public health, safety or
welfare, or to animal or plant life" exists
before an ex parte cease and desist order
may be issued. It is enough if the Board
finds that the wastes discharged do exceed
"the allowable standards set by the
[NPCC]." In respect of discharges of wastes
as to which allowable standards have been
set by the Commission, the Board may issue
an ex parte cease and desist order when
there is prima facieevidence of an
establishment exceeding such allowable
standards. Where, however, the effluents or
discharges have not yet been the subject
matter of allowable standards set by the
Commission, then the Board may act on an
ex parte basis when it finds at least prima
facie proof that the wastewater or material
involved presents an "immediate threat to
life, public health, safety or welfare or to

animal or plant life." Since the applicable
standards set by the Commission existing at
any given time may well not cover every
possible or imaginable kind of effluent or
waste discharge, the general standard of an
"immediate threat to life public health,
safety or welfare, or to animal and plant life"
remains necessary.
Upon the other hand, the Court must assume
that the extant allowable standards have
been set by the Commission or Board
precisely in order to avoid or neutralize an
safety or welfare, or to animal or plant life."
Section 5 of the Effluent Regulations of
1982 4 sets out the maximum permissible
levels of physical and chemical substances
which effluents from domestic wastewater
treatment plants and industrial plants must
not exceed "when discharged into bodies of
water classified as Class A, B, C, D, SB and
SC in accordance with the 1978 NPCC
Rules and Regulations." The waters of
Tullahan-Tinejeros River are classified as
inland waters Class D underSection 68 of
the
1978
NPCC
Rules
and
Regulations, 5 which in part provides that:
"Section 68. Water Usage and
Classification. The quality of
Philippine
waters
shall
be
maintained in a safe and satisfactory
condition according to their best
usages. For this purpose, all water
shall be classified according to the

following beneficial usages:
(a) Fresh Surface Water.
Classification Best usage
xxx xxx xxx
Class D For agriculture, irrigation,
live
stock
watering
and
industrial cooling and processing
xxx xxx xxx
(Emphases supplied)
The reports on the inspections carried on
Solar's wastewater treatment facilities on 5
and 12 November 1986 and 6 September
1988 set forth the following identical
finding:
"a. For legal action in [view of]
violation of Section 103 of the
implementing rules and regulations
of P.D. No. 984 and Section 5 of the
Effluent Regulations of 1982." 6
Placing the maximum allowable standards
set in Section 5 of the Effluent Regulations
of 1982 alongside the findings of the
November 1986 and September 1988
inspection reports, we get the following
results:
"Inland November September
35
Waters 1986 1988

(Class C & D) 7 Report 8 Report 9
Station 1 Station 1
a) Color
in 100 a) Color
units 250 125
platinum (Apparent
cobalt Color)
units
b) p H 6-8.5 b) pH 9.3 8.7
c) Tempera- 40 c) Temperature
ture in C (C)
d) Phenols in 0.1 d) Phenols in
mg./l. mg./l.
e) Suspended 75 e) Suspended 340 8
0
solids in solids in
mg./l. mg./l.
f) BOD
in 80 f) BOD
(5day) 1,100 152
mg./l mg./l.
g) oil/Grease 10 g) Oil/Grease
in mg./l. mg./l.
h) Detergents 5 h) Detergents 2.93
in mg./l." mg./l. MBAS
i) Dissolved 0
Oxygen, mg./l.
j) Settleable 0.4 1.5
Matter, mg./l.
k) Total Dis- 800 610
solved Solids
mg./l.
l) Total Solids 1,400 690
mg./l.
m) Turbidity
NTU/ppm. SiO3 70
The November 1986 inspections report

concluded that:
"Records of the Commission show
that the plant under its previous
owner, Fine Touch Finishing
Corporation, was issued a Notice of
Violation on 20 December 1985
directing same to cease and desist
from conducting dyeing operation
until such time the waste treatment
plant is already completed and
operational. The new owner Solar
Textile Corporation informed the
Commission of the plant acquisition
thru its letter dated March 1986 (sic).
The new owner was summoned to a
hearing held on 13 October 1986
based on the adverse findings during
the inspection/water sampling test
conducted on 08 August 1986. As
per instruction of the Legal Division
a re-inspection/sampling test should
be conducted first before an
appropriate legal action is instituted;
hence, this inspection.
Based on the above findings, it is
clear that the new owner
continuously violates the directive of
the Commission by undertaking
dyeing operation without completing
first and operating its existing WTP.
The analysis of results on water
samples taken showed that the
untreated wastewater from the firm
pollutes our water resources. In this

connection, it is recommended that
appropriate legal action be instituted
immediately against the firm . . ." 10
The September 1988 inspection report's
conclusions were:
"1. The plant was undertaking
dyeing, bleaching and rinsing
operations during the inspection. The
combined wastewater generated from
the said operations was estimated at
about 30 gallons per minute. About
80% of the wastewater was traced
directly discharged into a drainage
canal leading to the Tullahan Tinejeros river by means of a bypass.
The remaining 20% was channeled
into the plant's existing wastewater
treatment plant (WTP).
2. The WTP was noted not yet fully
operational some accessories
were not yet installed. Only the sump
pit and the holding/collecting tank
are functional but appeared seldom
used. The wastewater mentioned
channeled
was
noted
held
indefinitely into the collection tank
for primary treatment. There was no
effluent discharge [from such
collection tank].
3. A sample from the bypass
wastewater was collected for
laboratory analyses. Result of the
36
analyses show that the bypass

wastewater is polluted in terms of
color units, BOD and suspended
solids, among others. (Please see
attached laboratory result)." 11
From the foregoing reports, it is clear to this
Court that there was at least prima
facie evidence before the Board that the
effluents emanating from Solar's plant
exceeded the maximum allowable levels of
physical and chemical substances set by the
NPCC and that accordingly there was
adequate basis supporting the ex parte cease
and desist order issued by the Board. It is
also well to note that the previous owner of
the plant facility Fine Touch Finishing
Corporation had been issued a Notice of
Violation on 20 December 1985 directing it
to cease and refrain from carrying out
dyeing operations until the water treatment
plant was completed and operational. Solar,
the new owner, informed the NPCC of the
acquisition of the plant on March 1986.
Solar was summoned by the NPCC to a
hearing on 13 October 1986 based on the
results of the sampling test conducted by the
NPCC on 8 August 1986. Petitioner Board
refrained from issuing an ex parte cease and
desist order until after the November 1986
and September 1988 re-inspections were
conducted and the violation of applicable
standards was confirmed. In other words,
petitioner Board appears to have been
remarkably forbearing in its efforts to
enforce the applicable standards vis-a-vis
Solar. Solar, on the other hand, seemed very
casual about its continued discharge of

untreated, pollutive effluents into the
Tullahan-Tinejeros River, presumably loath
to spend the money necessary to put its
Wastewater Treatment Plant ("WTP") in an
operating condition.
In this connection, we note that

in Technology Developers, Inc. v. Court of
Appeals, et al., 12 the Court very recently
upheld the summary closure ordered by the
Acting Mayor of Sta. Maria, Bulacan, of a
pollution-causing
establishment,
after
finding that the records showed that:
"1. No mayor's permit had been
secured. While it is true that the
matter of determining whether there
is a pollution of the environment that
requires control if not prohibition of
the operation of a business is
essentially addressed to the then
National
Pollution
Control
Commission of the Ministry of
Human Settlements, now the
Environmental Management Bureau
of the Department of Environment
and Natural Resources, it must be
recognized that the mayor of a town
has as much responsibility to protect
its inhabitants from pollution, and by
virtue of his police power, he may
deny the application for a permit to
operate a business or otherwise close
the
same
unless
appropriate
measures are taken to control and or

avoid injury to the health of the
residents of the community from the
emission in the operation of the
business.
2. The Acting Mayor, in a letter of
February 16, 1989, called the
attention of petitioner to the pollution
emitted by the fumes of its plant
whose offensive odor "not only
pollute the air in the locality but also
affect the health of the residents in
the area," so that petitioner was
ordered to stop its operation until
further orders and it was required to
bring the following:
xxx xxx xxx
(3) Region
IIIDepartment of Environment
and Natural Resources AntiPollution permit. (Annex A2, petition).
3. This action of the Acting Mayor
was in response to the complaint of
the residents of Barangay Guyong,
Sta. Maria, Bulacan, directed to the
Provincial
Governor
through
channels (Annex A-B, petition). . . .
4. The closure order of the Acting
Mayor was issued only after an
investigation was made by Marivic
Guina who in her report of
37
December 8, 1988 observed that the

fumes emitted by the plant of
petitioner goes directly to the
surrounding houses and that no
proper air pollution device has been
installed. (Annex A-9, petition).
xxx xxx xxx
6. While petitioner was able to
present a temporary permit to
operate by the then National
Pollution Control Commission on
December 15, 1987, the permit was
good only up to May 25, 1988
(Annex A-12, petition). Petitioner
had not exerted any effort to extend
or validate its permit much less to
install any device to control the
pollution and prevent any hazard to
the health of the residents of the
community."
In the instant case, the ex parte cease and
desist Order was issued not by a local
government official but by the Pollution
Adjudication Board, the very agency of the
Government charged with the task of
determining whether the effluents of a
particular industrial establishment comply
with or violate applicable anti-pollution
statutory and regulatory provisions.
Ex parte cease and desist orders are
permitted by law and regulations in
situations like that here presented precisely
because stopping the continuous discharge
of pollutive and untreated effluents into the

rivers and other inland waters of the
Philippines cannot be made to wait until
protracted litigation over the ultimate
correctness or propriety of such orders has
run its full course, including multiple and
sequential appeals such as those which Solar
has taken, which of course may take several
years. The relevant pollution control statute
and implementing regulations were enacted
and promulgated in the exercise of that
persuasive, sovereign power to protect the
safety, health, and general welfare and
comfort of the public, as well as the
protection of plant and animal life,
commonly designated as the police power. It
is a constitutional common place that the
ordinary requirements of procedural due
process yield to the necessities of protecting
vital public interests like those here
involved, through the exercise of police
power. The Board's ex parte Order and Writ
of Execution would, of course, have
compelled Solar temporarily to stop its plant
operations, a state of affairs Solar could in
any case have avoided by simply absorbing
the bother and burden of putting its WTP on
an
operational
basis.
Industrial
establishments are not constitutionally
entitled to reduce their capitals costs and
operating expenses and to increase their
profits by imposing upon the public threats
and risks to its safety, health, general
welfare and comfort, by disregarding the
requirements of anti-pollution statutes and
their implementing regulations. cdll
It should perhaps be made clear the Court is

not here saying that the correctness of the ex
parte Order and Writ of Execution may not
be contested by Solar in a hearing before the
Board itself. Where the establishment
affected by an ex parte cease and desist
order contests the correctness of the prima
facie findings of the Board, the Board must
hold a public hearing where such
establishment would have an opportunity to
controvert the basis of such ex parte order.
That such an opportunity is subsequently
available is really all that is required by the
due process clause of the Constitution in
situations like that we have here. The
Board's decision rendered after the public
hearing may then be tested judicially by an
appeal to the Court of Appeals in accordance
with Section 7(c) of P.D. No. 984 and
Section 42 of the Implementing Rules and
Regulations. A subsequent public hearing is
precisely what Solar should have sought
instead of going to court to seek nullification
of the Board's Order and Writ of Execution
and instead of appealing to the Court of
Appeals. It will be recalled that the Board in
fact gave Solar authority temporarily to
continue operations until still another
inspection of its wastewater treatment
facilities and then another analysis of
effluent samples could be taken and
evaluated.
Solar claims finally that the petition for
certiorari was the proper remedy as the
questioned Order and Writ of Execution
issued by the Board were patent nullities.
38
Since we have concluded that Order and

Writ of Execution were entirely within the
lawful authority of petitioner Board, the trial
court did not err when it dismissed Solar's
petition for certiorari. It follows that the
proper remedy was an appeal from the trial
court to the Court of Appeals, as Solar did in
fact appeal.
ACCORDINGLY, the Petition for Review is
given DUE COURSE and the Decision of
the Court of Appeals dated 7 February 1990
and its Resolution dated 10 May 1990 in
A.C.-G.R. No. SP 18821 are hereby SET
ASIDE. The Order of petitioner Board dated
22 September 1988 and the Writ of
Execution, as well as the decision of the trial
court dated 21 July 1989, are hereby
REINSTATED, without prejudice to the
right of Solar to contest the correctness of
the basis of the Board's Order and Writ of
Execution at a public hearing before the
Board.
Fernan,
C.J.,
Gutierrez,
Bidin and Davide, Jr., JJ., concur.
Jr.,
||| (Pollution Adjudication Board v. Court of

Appeals, G.R. No. 93891 (Resolution),
[March 11, 1991], 272-A PHIL 66-80)
[G.R. No. 130230. April 15, 2005.]

METROPOLITAN
MANILA
DEVELOPMENT AUTHORITY,
petitioner,
vs.
DANTE
O.
GARIN, respondent.
FAILURE TO REDEEM LICENSE

AFTER 30 DAYS.
VALID
AS
TEMPORARY
DRIVER'S LICENSE FOR SEVEN
DAYS
FROM
DATE
OF
APPREHENSION. 1
DECISION
CHICO-NAZARIO, J p:
At issue in this case is the validity of Section
5(f) of Republic Act No. 7924 creating the
Metropolitan
Manila
Development
Authority (MMDA), which authorizes it to
confiscate and suspend or revoke driver's
licenses in the enforcement of traffic laws
and regulations.
The issue arose from an incident involving
the respondent Dante O. Garin, a lawyer,
who was issued a traffic violation receipt
(TVR) and his driver's license confiscated
for parking illegally along Gandara Street,
Binondo, Manila, on 05 August 1995. The
following statements were printed on the
TVR:
YOU ARE HEREBY DIRECTED
TO REPORT TO THE MMDA
TRAFFIC OPERATIONS CENTER
PORT AREA MANILA AFTER 48
HOURS
FROM
DATE
OF
APPREHENSION
FOR
DISPOSITION/APPROPRIATE
ACTION THEREON. CRIMINAL
CASE SHALL BE FILED FOR
Shortly before the expiration of the TVR's

validity, the respondent addressed a
letter 2 to then MMDA Chairman Prospero
Oreta requesting the return of his driver's
license, and expressing his preference for his
case to be filed in court.
Receiving no immediate reply, Garin filed
the original complaint 3 with application for
preliminary injunction in Branch 260 of the
Regional Trial Court (RTC) of Paraaque,
on 12 September 1995, contending that, in
the absence of any implementing rules and
regulations, Sec. 5(f) of Rep. Act No.
7924 grants the MMDA unbridled discretion
to deprive erring motorists of their licenses,
pre-empting a judicial determination of the
validity of the deprivation, thereby violating
the due process clause of the Constitution.
The respondent further contended that the
provision violates the constitutional
prohibition against undue delegation of
legislative authority, allowing as it does the
MMDA to fix and impose unspecified
and therefore unlimited fines and other
penalties on erring motorists.
In support of his application for a writ of
preliminary injunction, Garin alleged that he
39
suffered and continues to suffer great and

irreparable damage because of the
deprivation of his license and that, absent
any implementing rules from the Metro
Manila Council, the TVR and the
confiscation of his license have no legal
basis.
For its part, the MMDA, represented by the
Office of the Solicitor General, pointed out
that the powers granted to it by Sec. 5(f)
of Rep. Act No. 7924 are limited to the
fixing, collection and imposition of fines
and penalties for traffic violations, which
powers are legislative and executive in
nature; the judiciary retains the right to
determine the validity of the penalty
imposed. It further argued that the doctrine
of separation of powers does not preclude
"admixture" of the three powers of
government in administrative agencies. 4
The MMDA also refuted Garin's allegation
that the Metro Manila Council, the
governing board and policy making body of
the petitioner, has as yet to formulate the
implementing rules for Sec. 5(f) of Rep. Act
No. 7924 and directed the court's attention
to MMDA Memorandum Circular No. TT95-001 dated 15 April 1995. Respondent
Garin, however, questioned the validity of
MMDA Memorandum Circular No. TT-95001, as he claims that it was passed by the
Metro Manila Council in the absence of a
quorum.
Judge Helen Bautista-Ricafort issued a

temporary restraining order on 26
September 1995, extending the validity of
the TVR as a temporary driver's license for
twenty more days. A preliminary mandatory
injunction was granted on 23 October 1995,
and the MMDA was directed to return the
respondent's driver's license.
On 14 August 1997, the trial court rendered
the assailed decision 5 in favor of the herein
respondent and held that:
a. There was indeed no quorum in
that First Regular Meeting of the
MMDA Council held on March 23,
1995, hence MMDA Memorandum
Circular No. TT-95-001, authorizing
confiscation of driver's licenses upon
issuance of a TVR, is void ab initio.
b. The summary confiscation of a
driver's license without first giving
the driver an opportunity to be heard;
depriving him of a property right
(driver's license) without DUE
PROCESS; not filling (sic) in Court
the complaint of supposed traffic
infraction, cannot be justified by any
legislation
(and
is)
hence
unconstitutional.
WHEREFORE, the temporary writ
of preliminary injunction is hereby
made permanent; th(e) MMDA is
directed to return to plaintiff his
driver's license; th(e) MMDA is
likewise ordered to desist from

confiscating driver's license without
first giving the driver the opportunity
to be heard in an appropriate
proceeding.
In filing this petition, 6 the MMDA
reiterates and reinforces its argument in the
court below and contends that a license to
operate a motor vehicle is neither a contract
nor a property right, but is a privilege
subject to reasonable regulation under the
police power in the interest of the public
safety and welfare. The petitioner further
argues that revocation or suspension of this
privilege does not constitute a taking
without due process as long as the licensee
is given the right to appeal the revocation.
To buttress its argument that a licensee may
indeed appeal the taking and the judiciary
retains the power to determine the validity of
the confiscation, suspension or revocation of
the license, the petitioner points out that
under the terms of the confiscation, the
licensee has three options:
1. To voluntarily pay the imposable
fine,
2. To protest the apprehension by
filing a protest with the
MMDA
Adjudication
Committee, or
40
3. To request the referral of the TVR

to the Public Prosecutor's
Office.
The MMDA likewise argues that
Memorandum Circular No. TT-95-001 was
validly passed in the presence of a quorum,
and that the lower court's finding that it had
not was based on a "misapprehension of
facts," which the petitioner would have us
review. Moreover, it asserts that though the
circular is the basis for the issuance of
TVRs, the basis for the summary
confiscation of licenses is Sec. 5(f) of Rep.
Act No. 7924 itself, and that such power is
self-executory and does not require the
issuance of any implementing regulation or
circular.
Meanwhile, on 12 August 2004, the
MMDA, through its Chairman Bayani
Fernando,
implemented Memorandum
Circular No. 04, Series of 2004, outlining
the procedures for the use of the
Metropolitan Traffic Ticket (MTT) scheme.
Under the circular, erring motorists are
issued an MTT, which can be paid at any
Metrobank branch. Traffic enforcers may no
longer confiscate drivers' licenses as a
matter of course in cases of traffic
violations. All motorists with unredeemed
TVRs were given seven days from the date
of implementation of the new system to pay
their fines and redeem their license or
vehicle plates. 7
It would seem, therefore, that insofar as the

absence of a prima facie case to enjoin the
petitioner from confiscating drivers' licenses
is concerned, recent events have overtaken
the Court's need to decide this case, which
has been rendered moot and academic by the
implementation of Memorandum Circular
No. 04, Series of 2004.
The petitioner, however, is not precluded
from
re-implementing
Memorandum
Circular No. TT-95-001, or any other
scheme, for that matter, that would entail
confiscating drivers' licenses. For the proper
implementation, therefore, of the petitioner's
future programs, this Court deems it
appropriate to make the following
observations:
1. A license to operate a motor vehicle is a
privilege that the state may
withhold in the exercise of its
police power.
The petitioner correctly points out that a
license to operate a motor vehicle is not a
property right, but a privilege granted by the
state, which may be suspended or revoked
by the state in the exercise of its police
power, in the interest of the public safety
and welfare, subject to the procedural due
process requirements. This is consistent with
our rulings in Pedro v. Provincial Board of
Rizal 8 on the license to operate a
cockpit, Tan
v.
Director
of
Forestry 9 and Oposa v. Factoran 10 on
timber licensing agreements, and Surigao
Electric Co., Inc. v. Municipality of

Surigao 11 on a legislative franchise to
operate an electric plant.
Petitioner cites a long list of American cases
to prove this point, such as State ex. Rel.
Sullivan, 12 which states in part that, "the
legislative power to regulate travel over the
highways and thoroughfares of the state for
the general welfare is extensive. It may be
exercised in any reasonable manner to
conserve the safety of travelers and
pedestrians. Since motor vehicles are
instruments of potential danger, their
registration and the licensing of their
operators have been required almost from
their first appearance. The right to operate
them in public places is not a natural and
unrestrained right, but a privilege subject to
reasonable regulation, under the police
power, in the interest of the public safety
and welfare. The power to license imports
further power to withhold or to revoke such
license upon noncompliance with prescribed
conditions."
Likewise, the petitioner quotes the
Pennsylvania
Supreme
Court
in Commonwealth v. Funk, 13 to the effect
that: "Automobiles are vehicles of great
speed and power. The use of them
constitutes an element of danger to persons
and property upon the highways. Carefully
operated, an automobile is still a dangerous
instrumentality, but, when operated by
careless or incompetent persons, it becomes
an engine of destruction. The Legislature, in
41
the exercise of the police power of the

commonwealth, not only may, but must,
prescribe how and by whom motor vehicles
shall be operated on the highways. One of
the primary purposes of a system of general
regulation of the subject matter, as here by
the Vehicle Code, is to insure the
competency of the operator of motor
vehicles. Such a general law is manifestly
directed to the promotion of public safety
and is well within the police power."
The common thread running through the

cited cases is that it is the legislature, in the
exercise of police power, which has the
power and responsibility to regulate how
and by whom motor vehicles may be
operated on the state highways.
delivery of basic services in Metro Manila.

From this premise, the MMDA argued that
there was no need for the City of Makati to
enact an ordinance opening Neptune Street
to the public.
Tracing the legislative history of Rep. Act
No. 7924 creating the MMDA, we
concluded that the MMDA is not a local
government unit or a public corporation
endowed with legislative power, and, unlike
its predecessor, the Metro Manila
Commission, it has no power to enact
ordinances for the welfare of the
community. Thus, in the absence of an
ordinance from the City of Makati, its own
order to open the street was invalid.
In Metro Manila Development Authority v.

Bel-Air Village Association, Inc., 14 we
categorically stated that Rep. Act No.
7924 does not grant the MMDA with police
power, let alone legislative power, and that
all its functions are administrative in nature.
We restate here the doctrine in the said

decision as it applies to the case at bar:
police power, as an inherent attribute of
sovereignty, is the power vested by
the Constitution in the legislature to make,
ordain, and establish all manner of
wholesome and reasonable laws, statutes
and ordinances, either with penalties or
without, not repugnant to the Constitution,
as they shall judge to be for the good and
welfare of the commonwealth, and for the
subjects of the same.
The said case also involved the herein

petitioner MMDA which claimed that it had
the authority to open a subdivision street
owned by the Bel-Air Village Association,
Inc. to public traffic because it is an agent of
the state endowed with police power in the
Having been lodged primarily in the

National Legislature, it cannot be exercised
by any group or body of individuals not
possessing legislative power. The National
Legislature, however, may delegate this
power to the president and administrative
2. The MMDA is not vested with police

power.
boards as well as the lawmaking bodies of

municipal corporations or local government
units (LGUs). Once delegated, the agents
can exercise only such legislative powers as
are conferred on them by the national
lawmaking body.
Our Congress delegated police power to the
LGUs in the Local Government Code of
1991. 15 A local government is a "political
subdivision of a nation or state which is
constituted by law and has substantial
control
of
local
affairs." 16 Local
government units are the provinces, cities,
municipalities
and barangays,
which
exercise police power through their
respective legislative bodies.
Metropolitan or Metro Manila is a body
composed of several local government units.
With the passage of Rep. Act No. 7924 in
1995, Metropolitan Manila was declared as a
"special development and administrative
region" and the administration of "metrowide" basic services affecting the region
placed under "a development authority"
referred to as the MMDA. Thus:
. . . [T]he powers of the MMDA are
limited to the following acts:
formulation,
coordination,
regulation,
implementation,
preparation,
management,
monitoring, setting of policies,
installation of a system and
administration. There is no syllable
in R. A. No. 7924 that grants the
42
MMDA police power, let alone

legislative power. Even the Metro
Manila Council has not been
delegated any legislative power.
Unlike the legislative bodies of the
local government units, there is no
provision in R. A. No. 7924 that
empowers the MMDA or its
Council to "enact ordinances,
approve
resolutions
and
appropriate funds for the general
welfare" of the inhabitants of
Metro Manila. The MMDA is, as
termed in the charter itself, a
"development authority." It is an
agency created for the purpose of
laying
down
policies
and
coordinating with the various
national government agencies,
people's
organizations,
nongovernmental organizations and
the private sector for the efficient
and expeditious delivery of basic
services in the vast metropolitan
area. All
its
functions
are
administrative in nature and these
are actually summed up in the
charter itself, viz:
"Sec. 2. Creation of the
Metropolitan
Manila
Development Authority. . .
.
The MMDA shall perform
planning, monitoring and
coordinative functions, and in
the
process
exercise
regulatory and supervisory
authority over the delivery of
metro-wide services within
Metro
Manila,
without
diminution of the autonomy
of the local government units
concerning
purely
local
matters."
xxx xxx xxx
Clearly, the MMDA is not a political
unit of government. The power
delegated to the MMDA is that given
to the Metro Manila Council to
promulgate administrative rules and
regulations in the implementation of
the MMDA's functions. There is no
grant of authority to enact
ordinances and regulations for the
general welfare of the inhabitants
of the metropolis. 17 (footnotes
omitted, emphasis supplied)
Therefore, insofar as Sec. 5(f) of Rep. Act
No. 7924 is understood by the lower court
and by the petitioner to grant the MMDA
the power to confiscate and suspend or
revoke drivers' licenses without need of any
other legislative enactment, such is an
unauthorized exercise of police power.
3. Sec. 5(f) grants the MMDA with
the duty to enforce existing traffic
rules and regulations.
Section 5 of Rep. Act No. 7924 enumerates

the "Functions and Powers of the Metro
Manila Development Authority." The
contested clause in Sec. 5(f) states that the
petitioner shall "install and administer a
single ticketing system, fix, impose and
collect fines and penalties for all kinds of
violations of traffic rules and regulations,
whether moving or nonmoving in nature,
and confiscate and suspend or revoke
drivers' licenses in the enforcement of such
traffic laws and regulations, the provisions
of Rep. Act No. 4136 18 and P.D. No.
1605 19 to the contrary notwithstanding,"
and that "(f)or this purpose, the Authority
shall enforce all traffic laws and regulations
in Metro Manila, through its traffic
operation center, and may deputize members
of the PNP, traffic enforcers of local
government units, duly licensed security
guards, or members of non-governmental
organizations to whom may be delegated
certain authority, subject to such conditions
and requirements as the Authority may
impose."
Thus, where there is a traffic law or
regulation validly enacted by the legislature
or those agencies to whom legislative
powers have been delegated (the City of
Manila in this case), the petitioner is not
precluded and in fact is duty-bound to
confiscate and suspend or revoke drivers'
licenses in the exercise of its mandate of
transport and traffic management, as well as
the administration and implementation of all
traffic enforcement operations, traffic
43
engineering services and traffic education

programs. 20
WHEREFORE, the petition is dismissed.

SO ORDERED.
This is consistent with our ruling in BelAir that the MMDA is a development
authority created for the purpose of laying
down policies and coordinating with the
various national government agencies,
people's organizations, non-governmental
organizations and the private sector, which
may enforce, but not enact, ordinances.
This is also consistent with the fundamental
rule of statutory construction that a statute is
to be read in a manner that would breathe
life into it, rather than defeat it, 21 and is
supported by the criteria in cases of this
nature that all reasonable doubts should be
resolved in favor of the constitutionality of a
statute. 22
A last word. The MMDA was intended to
coordinate services with metro-wide impact
that transcend local political boundaries or
would entail huge expenditures if provided
by the individual LGUs, especially with
regard
to
transport
and
traffic
management, 23 and we are aware of the
valiant efforts of the petitioner to untangle
the increasingly traffic-snarled roads of
Metro Manila. But these laudable intentions
are limited by the MMDA's enabling law,
which we can but interpret, and petitioner
must be reminded that its efforts in this
respect must be authorized by a valid law, or
ordinance, or regulation arising from a
legitimate source. AEDISC
||| (MMDA v. Garin, G.R. No. 130230, [April

15, 2005], 496 PHIL 82-97)
[G.R. No. 126102. December 4, 2000.]

ORTIGAS
&
CO.
LTD., petitioner, vs.
THE
COURT OF APPEALS and
ISMAEL
G.
MATHAY
III, respondents.
Atty. Eulogio R. Rodriguez for petitioner.
Puhawan Aldon & Associates
Offices for private respondent.
Law
SYNOPSIS
Petitioner Ortigas sold to the Hermosos a
parcel of land in Greenhills Subdivision. The
contract of sale provided that the lot will be
used for single-family residential building
only and this was annotated at the back of
the title of the lot. In 1981, the Metropolitan
Commission enacted MMC Ordinance No.
81-01 reclassifying as a commercial zone
the stretch of Ortigas Avenue from
Roosevelt Street to Madison Street.
Subsequently in 1984, private respondent

Mathay III leased the lot from Hermoso and
constructed a commercial building for
Greenhills Autohaus, Inc., a car sales
company.
Petitioner filed Civil Case No. 4 seeking to
enjoin the building by respondent of
structure on the lot and sought the
demolition of the commercial structure for
having violated the terms and conditions of
the Deed of Sale. The trial court issued the
injunctive order ruling that the ordinance
should be given prospective application.
On certiorari, however, the CA granted the
petition, ruling that the trial court gravely
abused its discretion in refusing to treat
MMC Ordinance No. 81-01 as applicable to
Civil Case No. 64931. CA held that the
ordinance
effectively
nullified
the
restrictions allowing only residential use of
the property in question.
In this petition, petitioner claims that even
with the zoning ordinance, the seller and
buyer of the re-classified lot can voluntarily
agree to an exclusive residential use thereof;
and that respondent Mathay III as a mere
lessee of the lot in question, is a total
stranger to the deed of sale and is thus
barred from questioning the condition of
said deed.
The Supreme Court denied the petition,
ruling: that while as a rule, laws are to be
construed as having only prospective
operation, one exception is a law which
44
involves police power, which could be given

retroactive effect and may reasonably impair
vested rights or contracts; that the MMC
Ordinance No. 81-01 has been held to be a
legitimate police power measure to which
the non-impairment of contracts or vested
rights clauses will have to yield; and that
Mathay III in this case is clearly a real party
in interest because he holds the lot pursuant
to a valid lease and it is his building of a
commercial structure which petitioner seeks
to enjoin.
transactions could be given retroactive effect

and may reasonably impair vested rights or
contracts. Police power legislation is
applicable not only to future contracts, but
equally to those already in existence.
Nonimpairment of contracts or vested rights
clauses will have to yield to the superior and
legitimate exercise by the State of police
power to promote the health, morals, peace,
education, good order, safety, and general
welfare of the people. Moreover, statutes in
exercise of valid police power must be read
into every contract.
SYLLABUS
1. STATUTORY CONSTRUCTION; LAWS
ARE
GENERALLY
GIVEN
PROSPECTIVE APPLICATION; LAW
WHICH INVOLVES POLICE POWER IS
AN EXCEPTION. In general, we agree
that laws are to be construed as having only
prospective operation. Lex prospicit, non
respicit. Equally settled, only laws existing
at the time of the execution of a contract are
applicable thereto and are not later statutes,
unless the latter are specifically intended to
have a retroactive effect. A later law which
enlarges, abridges, or in any manner changes
the intent of the parties to the contract
necessarily impairs the contract itself and
cannot be given retroactive effect without
violating the constitutional prohibition
against impairment of contracts. But, the
foregoing principles do admit of certain
exceptions. One involves police power. A
law enacted in the exercise of police power
to regulate or govern certain activities or
2. CONSTITUTIONAL LAW; POLICE

POWER;
CONTRACTUAL
STIPULATIONS AND VESTED RIGHTS
MUST YIELD TO POLICE POWER;
CASE AT BAR.
Noteworthy,
in Sangalang vs. Intermediate Appellate
Court, we already upheld MMC Ordinance
No. 81-01 as a legitimate police power
measure. Following our ruling in Ortigas &
Co., Ltd. vs. Feati Bank & Trust Co., 94
SCRA 533 (1979), the contractual
stipulations annotated on the Torrens Title,
on which Ortigas relies, must yield to the
ordinance. When that stretch of Ortigas
Avenue from Roosevelt Street to Madison
Street was reclassified as a commercial zone
by the Metropolitan Manila Commission in
March 1981, the restrictions in the contract
of sale between Ortigas and Hermoso,
limiting all construction on the disputed lot
to single-family residential buildings, were
deemed extinguished by the retroactive
operation of the zoning ordinance and could
no longer be enforced. While our legal

system upholds the sanctity of contract so
that a contract is deemed law between the
contracting parties, nonetheless, stipulations
in a contract cannot contravene "law, morals,
good customs, public order, or public
policy." Otherwise such stipulations would
be deemed null and void.
3. REMEDIAL
LAW;
CIVIL
PROCEDURE;
REAL
PARTY
IN
INTEREST; LESSEE WHO BUILT
COMMERCIAL STRUCTURE SOUGHT
TO BE DEMOLISHED IS A REAL PARTY
IN INTEREST. By real interest is meant
a
present
substantial
interest,
as
distinguished from a mere expectancy or a
future,
contingent,
subordinate,
or
consequential interest. Tested by the
foregoing definition, private respondent in
this case is clearly a real party in interest. It
is not disputed that he is in possession of the
lot pursuant to valid lease. He is a possessor
in the concept of a "holder of the thing"
under Article 525 of the Civil Code. He was
impleaded as a defendant in the amended
complaint in Civil Case No. 64931. Further,
what petitioner seeks to enjoin is the
building by respondent of a commercial
structure on the lot. Clearly, it is private
respondent's acts which are in issue, and his
interest in said issue cannot be a mere
incidental interest. In its amended complaint,
petitioner prayed for, among others,
judgment "ordering the demolition of all
improvements illegally built on the lot in
question." These show that it is petitioner
45
Mathay III, doing business as "Greenhills

Autohaus, Inc.," and not only the Hermosos,
who will be adversely affected by the court's
decree.
xxx xxx xxx

6. The BUYER shall not erect . . .
any sign or billboard on the roof
. . . for advertising purposes . . .
DECISION
xxx xxx xxx
QUISUMBING, J p:
This petition seeks to reverse the decision of
the Court of Appeals, dated March 25, 1996,
in CA-G.R. SP No. 39193, which nullified
the writ of preliminary injunction issued by
the Regional Trial Court of Pasig City,
Branch 261, in Civil Case No. 64931. It also
assails the resolution of the appellate court,
dated August 13, 1996, denying petitioner's
motion for reconsideration.
The facts of this case, as culled from the
records, are as follows:
On August 25, 1976, petitioner Ortigas &
Company sold to Emilia Hermoso, a parcel
of land known as Lot 1, Block 21, Psd66759, with an area of 1,508 square meters,
located in Greenhills Subdivision IV, San
Juan, Metro Manila, and covered by
Transfer Certificate of Title No. 0737. The
contract of sale provided that the lot:
1. . . . (1) be used exclusively . . . for
residential purposes only, and
not more than one single-family
residential building will be
constructed thereon, . . .
11. No single-family residential

building shall be erected . . .
until the building plans,
specification . . . have been
approved by the SELLER . . .
xxx xxx xxx
14. . . . restrictions shall run with the
land and shall be construed as
real covenants until December
31, 2025 when they shall cease
and terminate . . . 1
These and the other conditions were duly
annotated on the certificate of title issued to
Emilia.
In 1981, the Metropolitan Manila
Commission (now Metropolitan Manila
Development Authority) enacted MMC
Ordinance No. 81-01, also known as the
Comprehensive Zoning Area for the
National Capital Region. The ordinance
reclassified as a commercial area a portion
of Ortigas Avenue from Madison to
Roosevelt Streets of Greenhills Subdivision
where the lot is located.
On June 8, 1984, private respondent Ismael

Mathay III leased the lot from Emilia
Hermoso and J.P. Hermoso Realty Corp..
The lease contract did not specify the
purposes of the lease. Thereupon, private
respondent constructed a single story
commercial
building
for
Greenhills
Autohaus, Inc., a car sales company.
On January 18, 1995, petitioner filed a
complaint against Emilia Hermoso with the
Regional Trial Court of Pasig, Branch 261.
Docketed as Civil Case No. 64931, the
complaint sought the demolition of the said
commercial structure for having violated the
terms and conditions of the Deed of Sale.
Complainant prayed for the issuance of a
temporary restraining order and a writ of
preliminary injunction to prohibit petitioner
from constructing the commercial building
and/or engaging in commercial activity on
the lot. The complaint was later amended to
implead Ismael G. Mathay III and J.P.
Hermoso Realty Corp., which has a ten
percent (10%) interest in the lot.
In his answer, Mathay III denied any
knowledge of the restrictions on the use of
the lot and filed a cross-claim against the
Hermosos.
On June 16, 1995, the trial court issued the
writ of preliminary injunction. On June 29,
1995, Mathay III moved to set aside the
injunctive order, but the trial court denied
the motion.
46
Mathay III then filed with the Court of

Appeals a special civil action for certiorari,
docketed as CA-G.R. SP No. 39193,
ascribing to the trial court grave abuse of
discretion in issuing the writ of preliminary
injunction. He claimed that MMC Ordinance
No. 81-01 classified the area where the lot
was located as commercial area and said
ordinance must be read into the August 25,
1976 Deed of Sale as a concrete exercise of
police power.
Ortigas and Company averred that inasmuch

as the restrictions on the use of the lot were
duly annotated on the title it issued to Emilia
Hermoso, said restrictions must prevail over
the ordinance, specially since these
restrictions were agreed upon before the
passage of MMC Ordinance No. 81-01.
On March 25, 1996, the appellate court
disposed of the case as follows:
WHEREFORE, in light of the
foregoing, the petition is hereby
GRANTED. The assailed orders are
hereby nullified and set aside.
Ortigas
seasonably
moved
for
reconsideration, but the appellate court
denied it on August 13, 1996.
Hence, the instant petition.
In its Memorandum, petitioner now submits
that the "principal issue in this case is
whether respondent Court of Appeals
correctly set aside the Order dated June 16,
1995 of the trial court which issued the writ
of preliminary injunction on the sole
ground that MMC Ordinance No. 81-01
nullified the building restriction imposing
exclusive residential use on the property in
question." 3 It also asserts that "Mathay III
lacks legal capacity to question the validity
of conditions of the deed of sale; and he is
barred by estoppel or waiver to raise the
same question like his principals, the
owners." 4 Lastly, it avers that the appellate
court "unaccountably failed to address"
several questions of fact.
Principally, we must resolve the issue of
whether the Court of Appeals erred in
holding that the trial court committed grave
abuse of discretion when it refused to apply
MMC Ordinance No. 81-01 to Civil Case
No. 64931.
SO ORDERED. 2
In finding for Mathay III, the Court of
Appeals held that the MMC Ordinance No.
81-01 effectively nullified the restrictions
allowing only residential use of the property
in question.
But first, we must address petitioner's

allegation that the Court of Appeals
"unaccountably failed to address" questions
of fact. For basic is the rule that factual
issues may not be raised before this Court in
a petition for review and this Court is not
duty-bound
to
consider
said
questions. 5 CA-G.R. SP No. 39193 was a
special civil action for certiorari, and the
appellate court only had to determine if the
trial court committed grave abuse of
discretion amounting to want or excess of
jurisdiction in issuing the writ of preliminary
injunction. Thus, unless vital to our
determination of the issue at hand, we shall
refrain from further consideration of factual
questions.
Petitioner contends that the appellate court
erred in limiting its decision to the cited
zoning ordinance. It avers that a contractual
right is not automatically discarded once a
claim is made that it conflicts with police
power. Petitioner submits that the restrictive
clauses in the questioned contract is not in
conflict with the zoning ordinance. For one,
according to petitioner, the MMC Ordinance
No. 81-01 did not prohibit the construction
of residential buildings. Petitioner argues
that even with the zoning ordinance, the
seller and buyer of the re-classified lot can
voluntarily agree to an exclusive residential
use thereof. Hence, petitioner concludes that
the Court of Appeals erred in holding that
the condition imposing exclusive residential
use was effectively nullified by the zoning
ordinance.
In its turn, private respondent argues that the
appellate court correctly ruled that the trial
court had acted with grave abuse of
discretion in refusing to subject the contract
to the MMC Ordinance No. 81-01. He avers
47
that the appellate court properly held the

police power superior to the non-impairment
of contract clause in the Constitution. He
concludes that the appellate court did not err
in dissolving the writ of preliminary
injunction issued by the trial court in excess
of its jurisdiction.
We note that in issuing the disputed writ of
preliminary injunction, the trial court
observed that the contract of sale was
entered into in August 1976, while the
zoning ordinance was enacted only in March
1981. The trial court reasoned that since
private respondent had failed to show that
MMC Ordinance No. 81-01 had retroactive
effect, said ordinance should be given
prospective application only, 6 citing Co
vs. Intermediate Appellate Court, 162 SCRA
390 (1988).
In general, we agree that laws are to be
construed as having only prospective
operation. Lex prospicit, non respicit.
Equally settled, only laws existing at the
time of the execution of a contract are
applicable thereto and not later statutes,
unless the latter are specifically intended to
have retroactive effect. 7 A later law which
enlarges, abridges, or in any manner changes
the intent of the parties to the contract
necessarily impairs the contract itself8 and
cannot be given retroactive effect without
violating the constitutional prohibition
against impairment of contracts. 9
But, the foregoing principles do admit of

certain exceptions. One involves police
power. A law enacted in the exercise of
police power to regulate or govern certain
activities or transactions could be given
retroactive effect and may reasonably impair
vested rights or contracts. Police power
legislation is applicable not only to future
contracts, but equally to those already in
existence. 10 Non-impairment of contracts
or vested rights clauses will have to yield to
the superior and legitimate exercise by the
State of police power to promote the health,
morals, peace, education, good order, safety,
and
general
welfare
of
the
people. 11 Moreover, statutes in exercise of
valid police power must be read into every
contract. 12 Noteworthy,
in Sangalang
vs. Intermediate Appellate Court, 13 we
already upheld MMC Ordinance No. 81-01
as a legitimate police power measure.
The trial court's reliance on the Co
vs. IAC, 14 is misplaced. In Co, the disputed
area was agricultural and Ordinance No. 8101 did not specifically provide that "it shall
have retroactive effect so as to discontinue
all rights previously acquired over lands
located within the zone which are neither
residential
nor
light
industrial
in
nature," 15 and stated with respect to
agricultural areas covered that "the zoning
ordinance should be given prospective
operation only." 16 The area in this case
involves not agricultural but urban
residential land. Ordinance No. 81-01
retroactively affected the operation of the
zoning ordinance in Greenhills by

reclassifying certain locations therein as
commercial.
Following our ruling in Ortigas & Co.,
Ltd. vs. Feati Bank & Trust Co., 94 SCRA
533 (1979), the contractual stipulations
annotated on the Torrens Title, on which
Ortigas relies, must yield to the ordinance.
When that stretch of Ortigas Avenue from
Roosevelt Street to Madison Street was
reclassified as a commercial zone by the
Metropolitan Manila Commission in March
1981, the restrictions in the contract of sale
between Ortigas and Hermoso, limiting all
construction on the disputed lot to singlefamily residential buildings, were deemed
extinguished by the retroactive operation of
the zoning ordinance and could no longer be
enforced. While our legal system upholds
the sanctity of contract so that a contract is
deemed law between the contracting
parties, 17 nonetheless, stipulations in a
contract cannot contravene "law, morals,
good customs, public order, or public
policy." 18Otherwise
such
stipulations
would be deemed null and void. Respondent
court correctly found that the trial court
committed in this case a grave abuse of
discretion amounting to want of or excess of
jurisdiction in refusing to treat Ordinance
No. 81-01 as applicable to Civil Case No.
64931. In resolving matters in litigation,
judges are not only duty-bound to ascertain
the facts and the applicable laws, 19 they are
also bound by their oath of office to apply
the applicable law. 20
48
As a secondary issue, petitioner contends

that respondent Mathay III, as a mere lessee
of the lot in question, is a total stranger to
the deed of sale and is thus barred from
questioning the conditions of said deed.
Petitioner points out that the owners of the
lot voluntarily agreed to the restrictions on
the use of the lot and do not question the
validity of these restrictions. Petitioner
argues that Mathay III as a lessee is merely
an agent of the owners, and could not
override and rise above the status of his
principals. Petitioner submits that he could
not have a higher interest than those of the
owners, the Hermosos, and thus had
no locus standi to file CA-G.R. SP No.
39193 to dissolve the injunctive writ issued
by the RTC of Pasig City.
in the question involved, or a mere

incidental interest. 21 By real interest is
meant a present substantial interest, as
distinguished from a mere expectancy or a
future,
contingent,
subordinate,
or
consequential interest. 22
For his part, private respondent argues that

as the lessee who built the commercial
structure, it is he and he alone who stands to
be either benefited or injured by the results
of the judgment in Civil Case No. 64931. He
avers he is the party with real interest in the
subject matter of the action, as it would be
his business, not the Hermosos', which
would suffer had not the respondent court
dissolved the writ of preliminary injunction.
Tested by the foregoing definition, private

respondent in this case is clearly a real party
in interest. It is not disputed that he is in
possession of the lot pursuant to a valid
lease. He is a possessor in the concept of a
"holder of the thing" under Article 525 of
the Civil Code. 23 He was impleaded as a
defendant in the amended complaint in Civil
Case No. 64931. Further, what petitioner
seeks to enjoin is the building by respondent
of a commercial structure on the lot. Clearly,
it is private respondent's acts which are in
issue, and his interest in said issue cannot be
a mere incidental interest. In its amended
complaint, petitioner prayed for, among
others, judgment "ordering the demolition of
all improvements illegally built on the lot in
question." 24 These show that it is petitioner
Mathay III, doing business as "Greenhills
Autohaus, Inc.," and not only the Hermosos,
who will be adversely affected by the court's
decree.
A real party in interest is defined as "the

party who stands to be benefited or injured
by the judgment or the party entitled to the
avails of the suit." "Interest" within the
meaning of the rule means material interest,
an interest in issue and to be affected by the
decree, as distinguished from mere interest
Petitioner also cites the rule that a stranger

to a contract has no rights or obligations
under it, 25 and thus has no standing to
challenge its validity. 26 But in seeking to
enforce the stipulations in the deed of sale,
petitioner impleaded private respondent as a

defendant. Thus petitioner must recognize
that where a plaintiff has impleaded a party
as a defendant, he cannot subsequently
question the latter's standing in court. 27
WHEREFORE, the instant petition is
DENIED. The challenged decision of the
Court of Appeals dated March 25, 1996, as
well as the assailed resolution of August 13,
1996, in CA-G.R. SP No. 39193 is
AFFIRMED. Costs against petitioner.
SO ORDERED.
||| (Ortigas & Co. Ltd. v. Court of Appeals,
G.R. No. 126102, [December 4, 2000], 400
PHIL 615-626)
[G.R. No. 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.
SYLLABUS
49
1. CONSTITUTIONAL LAW; BILL OF

RIGHTS;
PROHIBITION
AGAINST
TAKING OF PRIVATE PROPERTY FOR
PUBLIC
USE
WITHOUT
JUST
COMPENSATION;
COMPELLING
PUBLISHERS TO "DONATE" COMELEC
SPACE,
A VIOLATION
OF.
To compel print
media
companies to
donate "Comelec space" of the dimensions
specified in Section 2 of Resolution No.
2722 (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 minimis temporary
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 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. 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. 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. . . . Section 2 does
not constitute a valid exercise of the power
of eminent domain.
2. ID.; ID.; ID.; ID.; PUBLIC FUNDS,
NOT PUBLISHERS SOLELY, SHOULD
BEAR
COSTS
FOR
PUBLIC
INFORMATION
OF
ELECTORAL
PROCESSES. 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.
3. ID.; POLICE POWER; REQUISITES
FOR A VALID EXERCISE THEREOF
NOT COMPLIED WITH IN CASE AT
BAR. 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. 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. Section 2 of Resolution No. 2772 is a
50
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.
4. ID.; SUPREME COURT; POWER OF
JUDICIAL
REVIEW;
CONSTITUTIONALITY OF SEC. 8
COMELEC RESOLUTION NO. 2772,
WITHOUT ACTUAL CONTROVERSY, IS
NOT RIPE FOR JUDICIAL REVIEW;
CASE AT BAR. Section 8 of Resolution
No. 2772 should be viewed in the context of
our decision in National Press Club v.
Commission on Elections. 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 whichfall outside the scope of
Section 11 (b) and which are protected by
the constitutional guarantees of freedom of
speech and of the press. . . . Section 8 of
Resolution No. 2772 appears to represent
the effort of the Comelec to establish a
guideline for implementation of the abovequoted 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 . . . 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.
R ES OLUTIO N
FELICIANO, J p:
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 senators and
from March 21, 1995 until May 12,
1995. In the absence of said
51
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
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'
may be 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 may
be, 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 publication 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,
thePhilippine
Star, the Malaya and the Philippine Times
Journal, all members of PPI. These letters
read as follows:
52
"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 ()
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 to 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 cameraready materials.
Please be reminded that the political
parties/candidates
may
be
accommodated in your publications
any day upon receipt of their
materials until May 6, 1995 which is
the 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
noncompliance
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 supervisor 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
53
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 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 the 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
publishers
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
54
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
tosupply free print space, dispatched by
government (here a constitutional) agency
and signed by 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 direction, only aggravates the
constitutional difficulties inhering 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 onehalf 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 has 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
minimis temporary 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 nonurban 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
imminent
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
55
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 exhortion, 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 their 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
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 different 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 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
Newspaper. 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 manifest 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
indicates
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
56
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:
Moreover, Section 11 (b) does not

reach commentaries and expressions
of belief or opinion by reporters or
broadcasters
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.
Comelec to establish a guidelines 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.
"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 sta
tions of news or news-noteworthy
events relating to candidates, their
qualifications, political parties and
programs
of
government.
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)
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

appears to represent the effort of the
"supervise
or
regulate
the
enjoyment or utilization of all
57
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 therefor,
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.
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 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 from and the related letterdirectives 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.
||| (Philippine Press Institute, Inc. v.
COMELEC, G.R. No. 119694 (Resolution),
[May 22, 1995], 314 PHIL 131-149)
[G.R. No. 144681. June 21, 2004.]

PROFESSIONAL REGULATION
COMMISSION
(PRC),
CHAIRMAN HERMOGENES P.
POBRE,
ASSOCIATE
COMMISSIONER
ARMANDO
PASCUAL,
BOARD
OF
MEDICINE,
CHAIRMAN
RODOLFO P. DE GUZMAN,
JOSE S. RAMIREZ, JUANITO B.
BILLOTE,
RUBEN
R.
POLICARPIO, EDGARDO T.
FERNANDO and RICARDO D.
FULGENCIO
II, petitioners, vs.
ARLENE V. DE GUZMAN,
VIOLETA
V.
MENESES,
CELERINA S. NAVARRO, JOSE
RAMONCITO P. NAVARRO,
ARNEL V. HERRERA and
GERALDINE ELIZABETH M.
PAGILAGAN,
ELNORA
R.
RAQUENO,
MARISSA
A.
REGODON,
LAURA
M.
SANTOS, KARANGALAN D.
SERRANO,
DANILO
A.
VILLAVER, MARIA ROSARIO
L. LEONOR, ALICIA S. LIZANO,
MARITEL M.
ECHIVERRI,
BERNADETTE T. MENDOZA,
FERNANDO F. MANDAPAT,
ALELI A. GOLLAYAN, ELCIN C.
ARRIOLA, HERMINIGILDA E.
CONEJOS,
SALLY
B.
BUNAGAN,
ROGELIO
B.
ANCHETA, OSCAR H. PADUA,
JR., EVELYN
D. GRAJO,
EVELYN
S.
ACOSTA,
MARGARITA
BELINDA
L.
VICENCIO, VALENTINO P.
ARBOLEDA,
EVELYN
O.
RAMOS,
ACHILLES
J.
PERALTA, CORAZON M. CRUZ,
LEUVINA P. CHICO, JOSEPH A.
JAO,
MA.
LUISA
S.
GUTIERREZ, LYDIA C. CHAN,
OPHELIA
C.
HIDALGO,
FERNANDO T. CRUZ, MELVIN
M.
USITA,
RAFAEL
I.
TOLENTINO, GRACE E. UY,
CHERYL
R.
TRIGUERO,
58
MICHAEL
L.
SERRANO,
FEDERICO
L.
CASTILLO,
MELITA J. CAEDO, SAMUEL
B. BANGOY, BERNARDITA B.
SY, GLORIA T. JULARBAL,
FREDERICK D. FRANCISCO,
CARLOS M. BERNARDO, JR.,
HUBERT
S.
NAZARENO,
CLARISSA
B.
BACLIG,
DAYMINDA G. BONTUYAN,
BERNADETTE H. CABUHAT,
NANCY J. CHAVEZ, MARIO D.
CUARESMA, ERNESTO L. CUE,
EVELYN
C.
CUNDANGAN,
RHONEIL R. DEVERATURDA,
DERILEEN
D.
DORADO,
SAIBZUR N. EDDING, VIOLETA
C. FELIPE, HERMINIO V.
FERNANDEZ,
JR.,
MARIA
VICTORIA M. LACSAMANA,
NORMA G. LAFAVILLA, RUBY
B. LANTIN, MA. ELOISA Q.
MALLARI,
CLARISA
SJ.
NICOLAS,
PERCIVAL
H.
PANGILINAN, ARNULFO A.
SALVADOR,
ROBERT
B.
SANCHEZ, MERLY D. STA. ANA
and
YOLANDA
P.
UNICA,respondents.
DECISION
TINGA, J p:
This petition for review under Rule 45 of the
1997 Rules of Civil Procedure seeks to
nullify the Decision, 1 dated May 16, 2000,
of the Court of Appeals in CA-G.R. SP No.

37283. The appellate court affirmed the
judgment 2 dated December 19, 1994, of the
Regional Trial Court (RTC) of Manila,
Branch 52, in Civil Case No. 93-66530. The
trial court allowed the respondents to take
their physician's oath and to register as duly
licensed physicians. Equally challenged is
the Resolution 3 promulgated on August 25,
2000 of the Court of Appeals, denying
petitioners' Motion for Reconsideration.
The facts of this case are as follows:
The respondents are all graduates of the
Fatima College of Medicine, Valenzuela
City, Metro Manila. They passed the
Physician Licensure Examination conducted
in February 1993 by the Board of Medicine
(Board). Petitioner Professional Regulation
Commission (PRC) then released their
names as successful examinees in the
medical licensure examination.
Shortly thereafter, the Board observed that
the grades of the seventy-nine successful
examinees from Fatima College in the two
most difficult subjects in the medical
licensure exam, Biochemistry (Bio-Chem)
and Obstetrics and Gynecology (OB-Gyne),
were unusually and exceptionally high.
Eleven Fatima examinees scored 100% in
Bio-Chem and ten got 100% in OB-Gyne,
another eleven got 99% in Bio-Chem, and
twenty-one scored 99% in OB-Gyne. The
Board also observed that many of those who
passed from Fatima got marks of 95% or
better in both subjects, and no one got a

mark lower than 90%. A comparison of the
performances of the candidates from other
schools was made. The Board observed that
strangely, the unusually high ratings were
true only for Fatima College examinees. It
was a record-breaking phenomenon in the
history of the Physician Licensure
Examination.
On June 7, 1993, the Board issued
Resolution No. 19, withholding the
registration as physicians of all the
examinees from the Fatima College of
Medicine. 4 The PRC asked the National
Bureau of Investigation (NBI) to investigate
whether any anomaly or irregularity marred
the February 1993 Physician Licensure
Examination.
Prior to the NBI investigation, the Board
requested Fr. Bienvenido F. Nebres, S.J., an
expert mathematician and authority in
statistics, and later president of the Ateneo
de Manila University, to conduct a statistical
analysis of the results in Bio-Chem and ObGyne of the said examination.
On June 10, 1993, Fr. Nebres submitted his
report. He reported that a comparison of the
scores in Bio-Chem and Ob-Gyne, of the
Fatima College examinees with those of
examinees from De La Salle University and
Perpetual Help College of Medicine showed
that the scores of Fatima College examinees
were not only incredibly high but unusually
clustered close to each other. He concluded
59
that there must be some unusual reason

creating the clustering of scores in the two
subjects. It must be a cause "strong enough
to eliminate the normal variations that one
should expect from the examinees [of
Fatima College] in terms of talent, effort,
energy, etc." 5
For its part, the NBI found that "the
questionable passing rate of Fatima
examinees in the [1993] Physician
Examination leads to the conclusion that the
Fatima examinees gained early access to the
test questions." 6
On July 5, 1993, respondents Arlene V. De
Guzman, Violeta V. Meneses, Celerina S.
Navarro, Jose Ramoncito P. Navarro, Arnel
V. Herrera, and Geraldine Elizabeth M.
Pagilagan (Arlene V. De Guzman et al., for
brevity) filed a special civil action
for mandamus, with prayer for preliminary
mandatory injunction docketed as Civil Case
No. 93-66530 with the Regional Trial Court
(RTC) of Manila, Branch 52. Their petition
was adopted by the other respondents as
intervenors.
On July 28, 1993, the RTC issued

an Order in Civil Case No. 93-66530
granting
the
preliminary mandatory
injunction sought by the respondents. It
ordered the petitioners to administer the
physician's oath to Arlene V. De Guzman et
al., and enter their names in the rolls of the
PRC.
Meanwhile, on November 22, 1993, during

the pendency of the instant petition, the pretrial conference in Civil Case No. 93-66530
was held. Then, the parties, agreed to reduce
the testimonies of their respective witnesses
to sworn questions-and-answers. This was
without prejudice to cross-examination by
the opposing counsel.
The petitioners then filed a special civil

action for certiorari with the Court of
Appeals to set aside the mandatory
injunctive writ, docketed as CA-G.R. SP No.
31701.
On December 13, 1993, petitioners' counsel

failed to appear at the trial in the mistaken
belief that the trial was set for December 15.
The trial court then ruled that petitioners
waived their right to cross-examine the
witnesses.
On October 21, 1993, the appellate court

decided CA-G.R. SP No. 31701, with the
dispositive portion of the Decision ordaining
as follows:
WHEREFORE, this petition is
GRANTED. Accordingly, the writ of
preliminary mandatory injunction
issued by the lower court against
petitioners is hereby nullified and set
aside.
SO ORDERED. 7
Meanwhile, the Board issued Resolution No.

26, dated July 21, 1993, charging
respondents with "immorality, dishonest
conduct, fraud, and deceit" in connection
with the Bio-Chem and Ob-Gyne
examinations. It recommended that the test
results of the Fatima examinees be nullified.
The case was docketed as Adm. Case No.
1687 by the PRC.
Arlene V. de Guzman, et al., then elevated

the foregoing Decision to this Court in G.R.
No. 112315. In our Resolution dated May
23, 1994, we denied the petition for failure
to show reversible error on the part of the
appellate court.
On January 27, 1994, counsel for petitioners

filed a Manifestation and Motion stating the
reasons for her non-appearance and praying
that the cross-examination of the witnesses
for the opposing parties be reset. The trial
court denied the motion for lack of notice to
adverse counsel. It also denied the Motion
for Reconsideration that followed on the
ground that adverse counsel was notified
less than three (3) days prior to the hearing.
Meanwhile, to prevent the PRC and the
Board from proceeding with Adm. Case No.
1687, the respondents herein moved for the
issuance of a restraining order, which the
lower court granted in its Order dated April
4, 1994.
The petitioners then filed with this Court a
petition for certiorari docketed as G.R. No.
115704, to annul the Orders of the trial court
60
dated November 13, 1993, February 28,

1994, and April 4, 1994. We referred the
petition to the Court of Appeals where it was
docketed as CA-G.R. SP No. 34506.
On August 31, 1994, the appellate court
decided CA-G.R. SP No. 34506 as follows:
WHEREFORE, the present petition
for certiorari with
prayer
for
temporary
restraining
order/preliminary
injunction
is
GRANTED and the Orders of
December 13, 1993, February 7,
1994, February 28, 1994, and April
4, 1994 of the RTC-Manila, Branch
52, and all further proceedings taken
by it in Special Civil Action No. 9366530 are hereby DECLARED
NULL and VOID. The said RTCManila is ordered to allow
petitioners' counsel to cross-examine
the respondents' witnesses, to allow
petitioners to present their evidence
in due course of trial, and thereafter
to decide the case on the merits on
the basis of the evidence of the
parties. Costs against respondents.
IT IS SO ORDERED. 8
The trial was then set and notices were sent
to the parties.
A day before the first hearing, on September
22, 1994, the petitioners filed an Urgent ExParte Manifestation and Motion praying for
the partial reconsideration of the appellate

court's decision in CA-G.R. SP No. 34506,
and for the outright dismissal of Civil Case
No. 93-66530. The petitioners asked for the
suspension of the proceedings.
In its Order dated September 23, 1994, the
trial court granted the aforesaid motion,
cancelled the scheduled hearing dates, and
reset the proceedings to October 21 and 28,
1994.
Meanwhile, on October 25, 1994, the Court
of Appeals denied the partial motion for
reconsideration in CA-G.R. SP No. 34506.
Thus, petitioners filed with the Supreme
Court a petition for review docketed as G.R.
No.
117817,
entitled Professional
Regulation Commission, et al. v. Court of
Appeals, et al.
On November 11, 1994, counsel for the

petitioners failed to appear at the trial of
Civil Case No. 93-66530. Upon motion of
the respondents herein, the trial court ruled
that herein petitioners waived their right to
cross-examine the herein respondents. Trial
was reset to November 28, 1994.
On November 25, 1994, petitioners' counsel
moved for the inhibition of the trial court
judge for alleged partiality. On November
28, 1994, the day the Motion to Inhibit was
to be heard, petitioners failed to appear.
Thus, the trial court denied the Motion to
Inhibit and declared Civil Case No. 9366530 deemed submitted for decision.
On December 19, 1994, the trial court
handed down its judgment in Civil Case No.
93-66530, the fallo of which reads:
WHEREFORE,
judgment
is
rendered ordering the respondents to
allow the petitioners and intervenors
(except those with asterisks and
footnotes in pages 1 & 2 of this
decision)
[sic], 9 to
take
the
physician's oath and to register them
as physicians.
It should be made clear that this
decision is without prejudice to any
administrative disciplinary action
which may be taken against any of
the petitioners for such causes and in
the manner provided by law and
consistent with the requirements of
the Constitution as any other
professionals.
No costs.
SO ORDERED. 10
As a result of these developments,
petitioners filed with this Court a petition for
review on certiorari docketed as G.R. No.
118437, entitled Professional Regulation
Commission
v. Hon. David
G. Nitafan,
praying inter alia, that (1) G.R. No. 118437
be consolidated with G.R. No. 117817; (2)
61
the decision of the Court of Appeals dated

August 31, 1994 in CA-G.R. SP No. 34506
be nullified for its failure to decree the
dismissal of Civil Case No. 93-66530, and
in the alternative, to set aside the decision of
the trial court in Civil Case No. 93-66530,
order the trial court judge to inhibit himself,
and Civil Case No. 93-66530 be re-raffled to
another branch.
On December 26, 1994, the petitioners
herein filed their Notice of Appeal 11 in
Civil Case No. 93-66530, thereby elevating
the case to the Court of Appeals, where it
was docketed as CA-G.R. SP No. 37283.
In our Resolution of June 7, 1995, G.R. No.
118437 was consolidated with G.R. No.
117817.
On July 9, 1998, we disposed of G.R. Nos.
117817 and 118437 in this wise:
WHEREFORE, the petition in G.R.
No. 117817 is DISMISSED for
being moot. The petition in G.R. No.
118437 is likewise DISMISSED on
the ground that there is a pending
appeal before the Court of Appeals.
Assistant Solicitor General Amparo
M. Cabotaje-Tang is advised to be
more circumspect in her dealings
with the courts as a repetition of the
same or similar acts will be dealt
with accordingly.
SO ORDERED. 12
While CA-G.R. SP No. 37283 was awaiting

disposition by the appellate court, Arnel V.
Herrera, one of the original petitioners in
Civil Case No. 93-66530, joined by twentyseven intervenors, to wit: Fernando F.
Mandapat, Ophelia C. Hidalgo, Bernadette
T. Mendoza, Ruby B. Lantin-Tan, Fernando
T. Cruz, Marissa A. Regodon, Ma. Eloisa Q.
Mallari-Largoza, Cheryl R. Triguero, Joseph
A. Jao, Bernadette H. Cabuhat, Evelyn S.
Acosta-Cabanes, Laura M. Santos, Maritel
M. Echiverri, Bernadette C. Escusa,
Carlosito C. Domingo, Alicia S. Lizano,
Elnora R. Raqueno-Rabaino, Saibzur N.
Edding, Derileen D. Dorado-Edding, Robert
B. Sanchez, Maria Rosario L. LeonorLacandula,
Geraldine
Elizabeth
M.
Pagilagan-Palma, Margarita Belinda L.
Vicencio-Gamilla, Herminigilda E. Conejos,
Leuvina P. Chico-Paguio, Elcin C. ArriolaOcampo, and Jose Ramoncito P. Navarro,
manifested that they were no longer
interested in proceeding with the case and
moved for its dismissal. A similar
manifestation and motion was later filed by
intervenors Mary Jean I. Yeban-Merlan,
Michael L. Serrano, Norma G. Lafavilla,
Arnulfo A. Salvador, Belinda C. Rabara,
Yolanda P. Unica, Dayminda G. Bontuyan,
Clarissa B. Baclig, Ma. Luisa S. Gutierrez,
Rhoneil R. Deveraturda, Aleli A. Gollayan,
Evelyn C. Cundangan, Frederick D.
Francisco, Violeta V. Meneses, Melita J.
Caedo, Clarisa SJ. Nicolas, Federico L.
Castillo, Karangalan D. Serrano, Danilo A.
Villaver, Grace E. Uy, Lydia C. Chan, and
Melvin M. Usita. The Court of Appeals
ruled that its decision in CA-G.R. SP No.

37283 would not apply to them.
On May 16, 2000, the Court of Appeals
decided CA-G.R. SP No. 37283, with the
following fallo, to wit:
WHEREFORE, finding no reversible
error in the decision appealed from,
We hereby AFFIRM the same and
DISMISS the instant appeal.
No pronouncement as to costs.
SO ORDERED. 13
In sustaining the trial court's decision, the
appellate court ratiocinated that the
respondents complied with all the statutory
requirements for admission into the
licensure examination for physicians in
February 1993. They all passed the said
examination.
Having
fulfilled
the
requirements
of Republic
Act
No.
2382, 14 they should be allowed to take their
oaths as physicians and be registered in the
rolls of the PRC.
Hence, this petition raising the following
issues:
I
WHETHER
OR
NOT
RESPONDENTS HAVE A VALID
CAUSE
OF
ACTION
FOR
MANDAMUS
AGAINST
62
PETITIONERS IN THE LIGHT OF

THE RESOLUTION OF THIS
HONORABLE COURT IN G.R.
NO. 112315 AFFIRMING THE
COURT OF APPEALS' DECISION
DECLARING THAT IF EVER
THERE IS SOME DOUBT AS TO
THE MORAL FITNESS OF
EXAMINEES, THE ISSUANCE OF
LICENSE
TO
PRACTICE
MEDICINE
IS
NOT
AUTOMATICALLY GRANTED TO
THE SUCCESSFUL EXAMINEES.
II
WHETHER
OR
NOT
THE
PETITION FOR MANDAMUS
COULD PROCEED DESPITE THE
PENDENCY
OF
ADMINISTRATIVE CASE NO.
1687, WHICH WAS PRECISELY
LODGED TO DETERMINE THE
MORAL
FITNESS
OF
RESPONDENTS TO BECOME
DOCTORS. 15
To our mind, the only issue is: Did the Court
of Appeals commit a reversible error of law
in sustaining the judgment of the trial court
that respondents are entitled to a writ of
mandamus?
The petitioners submit that a writ of
mandamus will not lie in this case. They
point out that for a writ of mandamus to
issue, the applicant must have a well-
defined, clear and certain legal right to the

thing demanded and it is the duty of the
respondent to perform the act required.
Thus, mandamus may be availed of only
when the duty sought to be performed is a
ministerial and not a discretionary one. The
petitioners argue that the appellate court's
decision in CA-G.R. SP No. 37283
upholding the decision of the trial court in
Civil Case No. 93-66530 overlooked its own
pronouncement in CA-G.R. SP No. 31701.
The Court of Appeals held in CA-G.R. SP
No. 31701 that the issuance of a license to
engage in the practice of medicine becomes
discretionary on the PRC if there exists
some doubt that the successful examinee has
not fully met the requirements of the law.
The petitioners stress that this Court's
Resolution dated May 24, 1994 in G.R. No.
112315 held that there was no showing "that
the Court of Appeals had committed any
reversible error in rendering the questioned
judgment" in CA-G.R. SP No. 31701. The
petitioners point out that our Resolution in
G.R. No. 112315 has long become final and
executory.
Respondents counter that having passed the
1993 licensure examinations for physicians,
the petitioners have the obligation to
administer to them the oath as physicians
and to issue their certificates of registration
as
physicians
pursuant
to Section
20 16 of Rep. Act No. 2382. The Court of
Appeals in CA-G.R. SP No. 37283, found
that respondents complied with all the
requirements of Rep. Act No. 2382.
Furthermore, respondents were admitted by

the Medical Board to the licensure
examinations and had passed the same.
Hence, pursuant to Section 20 of Rep. Act
No. 2382, the petitioners had the obligation
to administer their oaths as physicians and
register them.
Mandamus is a command issuing from a
court of competent jurisdiction, in the name
of the state or the sovereign, directed to
some inferior court, tribunal, or board, or to
some corporation or person requiring the
performance of a particular duty therein
specified, which duty results from the
official station of the party to whom the writ
is directed, or from operation of
law. 17 Section 3 of Rule 65 18 of the 1997
Rules of Civil Procedure outlines two
situations when a writ of mandamus may
issue, when any tribunal, corporation, board,
officer or person unlawfully (1) neglects the
performance of an act which the law
specifically enjoins as a duty resulting from
an office, trust, or station; or (2) excludes
another from the use and enjoyment of a
right or office to which the other is entitled.
We shall discuss the issues successively.
1. On The Existence of a Duty of the Board
of Medicine To Issue Certificates of
Registration as Physicians under Rep. Act
No. 2382.
For mandamus to prosper, there must be a
showing that the officer, board, or official
63
concerned, has a clear legal duty, not

involving discretion. 19 Moreover, there
must be statutory authority for the
performance of the act, 20and the
performance of the duty has been
refused. 21 Thus, it must be pertinently
asked now: Did petitioners have the duty to
administer the Hippocratic Oath and register
respondents as physicians under the Medical
Act of 1959?
As found by the Court of Appeals, on which
we agree on the basis of the records:
It bears emphasizing herein that
petitioner-appellees and intervenorappellees have fully complied with
all the statutory requirements for
admission
into
the
licensure
examinations
for
physicians
conducted and administered by the
respondent-appellants on February
12, 14, 20 and 21, 1993. Stress, too,
must be made of the fact that all of
them successfully passed the same
examinations. 22
The crucial query now is whether the
Court of Appeals erred in concluding that
petitioners should allow the respondents to
take their oaths as physicians and register
them, steps which would enable
respondents to practice the medical
profession 23 pursuant to Section 20 of
the Medical Act of 1959?
The appellate court relied on a single

provision, Section 20 of Rep. Act No. 2382,
in concluding that the petitioners had the
ministerial obligation to administer the
Hippocratic Oath to respondents and register
them as physicians. But it is a basic rule in
statutory construction that each part of a
statute should be construed in connection
with every other part to produce a
harmonious
whole,
not
confining
construction to only one section. 24The
intent or meaning of the statute should be
ascertained from the statute taken as a
whole, not from an isolated part of the
provision. Accordingly, Section 20, of Rep.
Act No. 2382, as amended should be read in
conjunction with the other provisions of the
Act. Thus, to determine whether the
petitioners had the ministerial obligation to
administer the Hippocratic Oath to
respondents and register them as physicians,
recourse must be had to the entirety of
the Medical Act of 1959.
A careful reading of Section 20 of
the Medical Act of 1959 discloses that the
law uses the word "shall" with respect to the
issuance of certificates of registration. Thus,
the petitioners "shall sign and issue
certificates of registration to those who have
satisfactorily
complied
with
the
requirements of the Board." In statutory
construction the term "shall" is a word of
command. It is given imperative meaning.
Thus, when an examinee satisfies the
requirements for the grant of his physician's
license, the Board is obliged to administer to
him his oath and register him as a physician,

pursuant to Section 20 and par. (1) of
Section 22 25 of the Medical Act of 1959.
However, the surrounding circumstances in
this case call for serious inquiry concerning
the satisfactory compliance with the Board
requirements by the respondents. The
unusually high scores in the two most
difficult
subjects
was
phenomenal,
according to Fr. Nebres, the consultant of
PRC on the matter, and raised grave doubts
about the integrity, if not validity, of the
tests. These doubts have to be appropriately
resolved.
Under the second paragraph of Section 22,
the Board is vested with the power to
conduct administrative investigations and
"disapprove applications for examination or
registration," pursuant to the objectives
of Rep. Act No. 2382 as outlined in Section
1 26 thereof. In this case, after the
investigation, the Board filed before the
PRC, Adm. Case No. 1687 against the
respondents to ascertain their moral and
mental fitness to practice medicine, as
required by Section 9 27 of Rep. Act No.
2382. In its Decision dated July 1, 1997, the
Board ruled:
WHEREFORE, the BOARD hereby
CANCELS
the
respondents[']
examination papers in the Physician
Licensure Examinations given in
February 1993 and further DEBARS
them from taking any licensure
64
examination for a period of ONE (1)

YEAR from the date of the
promulgation of this DECISION.
They may, if they so desire, apply for
the scheduled examinations for
physicians after the lapse of the
period imposed by the BOARD.
examinees from Fatima College of Medicine

for "immorality, dishonesty, fraud, and
deceit in the Obstetrics-Gynecology and
Biochemistry examinations." It likewise
sought to cancel the examination results
obtained by the examinees from the Fatima
College.
SO ORDERED. 28
Section
8 30 of Rep.
Act
No.
2382 prescribes, among others, that a person
who aspires to practice medicine in the
Philippines, must have "satisfactorily passed
the
corresponding
Board
Examination." Section 22, in turn, provides
that the oath may only be administered "to
physicians
who
qualified
in
the
examinations." The operative word here is
"satisfactorily," defined as "sufficient to
meet a condition or obligation" or "capable
of
dispelling
doubt
or
ignorance." 31 Gleaned
from
Board
Resolution No. 26, the licensing authority
apparently did not find that the respondents
"satisfactorily passed"
the
licensure
examinations. The Board instead sought to
nullify the examination results obtained by
the respondents.
Until the moral and mental fitness of the

respondents could be ascertained, according
to petitioners, the Board has discretion to
hold in abeyance the administration of the
Hippocratic Oath and the issuance of the
certificates
to
them.
The
writ
of mandamus does not lie to compel
performance of an act which is not duly
authorized.
The respondents nevertheless argue that
under Section 20, the Board shall not issue a
certificate of registration only in the
following instances: (1) to any candidate
who has been convicted by a court of
competent jurisdiction of any criminal
offense involving moral turpitude; (2) or has
been found guilty of immoral or
dishonorable conduct after the investigation
by the Board; or (3) has been declared to be
of unsound mind. They aver that none of
these circumstances are present in their case.
Petitioners reject respondents' argument. We
are informed that in Board Resolution No.
26, 29 dated July 21, 1993, the Board
resolved to file charges against the
2. On the Right Of The Respondents To Be

Registered As Physicians
The function of mandamus is not to
establish a right but to enforce one that has
been established by law. If no legal right has
been violated, there can be no application of
a legal remedy, and the writ of mandamus is
a legal remedy for a legal right. 32 There
must be a well-defined, clear and certain

legal right to the thing demanded. 33 It is
long established rule that a license to
practice medicine is a privilege or franchise
granted by the government.34
It is true that this Court has upheld the
constitutional right 35 of every citizen to
select a profession or course of study subject
to a fair, reasonable, and equitable admission
and academic requirements. 36 But like all
rights and freedoms guaranteed by the
Charter, their exercise may be so regulated
pursuant to the police power of the State to
safeguard health, morals, peace, education,
order, safety, and general welfare of the
people. 37 Thus, persons who desire to
engage in the learned professions requiring
scientific or technical knowledge may be
required to take an examination as a
prerequisite to engaging in their chosen
careers. This regulation takes particular
pertinence in the field of medicine, to
protect the public from the potentially
deadly effects of incompetence and
ignorance among those who would practice
medicine. In a previous case, it may be
recalled, this Court has ordered the Board of
Medical Examiners to annul both its
resolution and certificate authorizing a
Spanish subject, with the degree of
Licentiate in Medicine and Surgery from the
University of Barcelona, Spain, to practice
medicine in the Philippines, without first
passing the examination required by the
Philippine Medical Act. 38 In another case
worth noting, we upheld the power of the
65
State to upgrade the selection of applicants

into medical schools through admission
tests. 39
It must be stressed, nevertheless, that the
power to regulate the exercise of a
profession or pursuit of an occupation
cannot be exercised by the State or its agents
in an arbitrary, despotic, or oppressive
manner. A political body that regulates the
exercise of a particular privilege has the
authority to both forbid and grant such
privilege in accordance with certain
conditions. Such conditions may not,
however,
require
giving
up
ones
constitutional rights as a condition to
acquiring the license. 40 Under the view that
the legislature cannot validly bestow an
arbitrary power to grant or refuse a license
on a public agency or officer, courts will
generally strike down license legislation that
vests in public officials discretion to grant or
refuse a license to carry on some ordinarily
lawful business, profession, or activity
without prescribing definite rules and
conditions for the guidance of said officials
in the exercise of their power. 41
In the present case, the aforementioned
guidelines are provided for in Rep. Act No.
2382, as amended, which prescribes the
requirements for admission to the practice of
medicine, the qualifications of candidates
for the board examinations, the scope and
conduct of the examinations, the grounds for
denying the issuance of a physician's
license, or revoking a license that has been
issued. Verily, to be granted the privilege to

practice medicine, the applicant must show
that he possesses all the qualifications and
none of the disqualifications. Furthermore, it
must appear that he has fully complied with
all the conditions and requirements imposed
by the law and the licensing authority.
Should doubt taint or mar the compliance as
being less than satisfactory, then the
privilege will not issue. For said privilege is
distinguishable from a matter of right, which
may be demanded if denied. Thus, without a
definite showing that the aforesaid
requirements and conditions have been
satisfactorily met, the courts may not grant
the writ of mandamus to secure said
privilege without thwarting the legislative
will.
3. On the Ripeness of the Petition for
Mandamus
Lastly, the petitioners herein contend that
the Court of Appeals should have dismissed
the petition for mandamus below for being
premature.
They
argue
that
the
administrative remedies had not been
exhausted. The records show that this is not
the first time that petitioners have sought the
dismissal of Civil Case No. 93-66530. This
issue was raised in G.R. No. 115704, which
petition we referred to the Court of Appeals,
where it was docketed as CA-G.R. SP No.
34506. On motion for reconsideration in
CA-G.R. SP No. 34506, the appellate court
denied the motion to dismiss on the ground
that the prayers for the nullification of the
order of the trial court and the dismissal of

Civil Case No. 93-66530 were inconsistent
reliefs. In G.R. No. 118437, the petitioners
sought to nullify the decision of the Court of
Appeals in CA-G.R. SP No. 34506 insofar
as it did not order the dismissal of Civil Case
No. 93-66530. In our consolidated decision,
dated July 9, 1998, in G.R. Nos. 117817 &
118437, this Court speaking through Justice
Bellosillo opined that:
Indeed, the issue as to whether the

Court of Appeals erred in not
ordering the dismissal of Civil Case
No. 93-66530 sought to be resolved
in the instant petition has been
rendered meaningless by an event
taking place prior to the filing of this
petition and denial thereof should
follow
as
a
logical
consequence. 42 There is no longer
any justiciable controversy so that
any declaration thereon would be of
no practical use or value. 43 It
should be recalled that in its decision
of 19 December 1994 the trial court
granted the writ of mandamus prayed
for by private respondents, which
decision was received by petitioners
on 20 December 1994. Three (3)
days after, or on 23 December 1994,
petitioners filed the instant petition.
By then, the remedy available to
them was to appeal the decision to
the Court of Appeals, which they in
66
fact did, by filing a notice of appeal

on 26 December 1994. 44
The petitioners have shown no cogent
reason for us to reverse the aforecited ruling.
Nor will their reliance upon the doctrine of
the exhaustion of administrative remedies in
the instant case advance their cause any.
Section 26 45 of the Medical Act of
1959 provides for the administrative and
judicial remedies that respondents herein
can avail to question Resolution No. 26 of
the Board of Medicine, namely: (a) appeal
the unfavorable judgment to the PRC; (b)
should the PRC ruling still be unfavorable,
to elevate the matter on appeal to the Office
of the President; and (c) should they still be
unsatisfied, to ask for a review of the case or
to bring the case to court via a special civil
action
of certiorari.
Thus,
as
a
rule, mandamus will
not
lie
when
administrative
remedies
are
still
available. 46 However, the doctrine of
exhaustion of administrative remedies does
not apply where, as in this case, a pure
question of law is raised. 47 On this issue,
no reversible error may, thus, be laid at the
door of the appellate court in CA-G.R. SP
No. 37283, when it refused to dismiss Civil
Case No. 93-66530.
As we earlier pointed out, herein
respondents Arnel V. Herrera, Fernando F.
Mandapat, Ophelia C. Hidalgo, Bernadette
T. Mendoza, Ruby B. Lantin-Tan, Fernando
T. Cruz, Marissa A. Regodon, Ma. Eloisa Q.
Mallari-Largoza, Cheryl R. Triguero, Joseph

A. Jao, Bernadette H. Cabuhat, Evelyn S.
Acosta-Cabanes, Laura M. Santos, Maritel
M. Echiverri, Bernadette C. Escusa,
Carlosito C. Domingo, Alicia S. Lizano,
Elnora R. Raqueno-Rabaino, Saibzur N.
Edding, Derileen D. Dorado-Edding, Robert
B. Sanchez, Maria Rosario LeonorLacandula,
Geraldine
Elizabeth
M.
Pagilagan-Palma, Margarita Belinda L.
Vicencio-Gamilla, Herminigilda E. Conejos,
Leuvina P. Chico-Paguio, Elcin C. ArriolaOcampo, and Jose Ramoncito P. Navarro
manifested to the Court of Appeals during
the pendency of CA-G.R. SP No. 37283,
that they were no longer interested in
proceeding with the case and moved for its
dismissal insofar as they were concerned. A
similar manifestation and motion were later
filed by intervenors Mary Jean I. YebanMerlan, Michael L. Serrano, Norma G.
Lafavilla, Arnulfo A. Salvador, Belinda C.
Rabarra, Yolanda P. Unica, Dayminda G.
Bontuyan, Clarissa B. Baclig, Ma. Luisa S.
Gutierrez, Rhoneil R. Deveraturda, Aleli A.
Gollayan, Evelyn C. Cundangan, Frederick
D. Francisco, Violeta V. Meneses, Melita J.
Caedo, Clarisa SJ. Nicolas, Federico L.
Castillo, Karangalan D. Serrano, Danilo A.
Villaver, Grace E. Uy, Lydia C. Chan, and
Melvin M. Usita. Following these
manifestations and motions, the appellate
court in CA-G.R. SP No. 37283 decreed that
its ruling would not apply to them. Thus,
inasmuch as the instant case is a petition for
review of the appellate court's ruling in CAG.R. SP No. 37283, a decision which is
inapplicable
to
the
aforementioned
respondents will similarly not apply to them.
As to Achilles J. Peralta, Evelyn O. Ramos,
Sally B. Bunagan, Rogelio B. Ancheta,
Oscar H. Padua, Jr., Evelyn D. Grajo,
Valentino P. Arboleda, Carlos M. Bernardo,
Jr., Mario D. Cuaresma, Violeta C. Felipe,
Percival H. Pangilinan, Corazon M. Cruz
and Samuel B. Bangoy, herein decision shall
not apply pursuant to the Orders of the trial
court in Civil Case No. 93-66530, dropping
their names from the suit.
Consequently, this Decision is binding only
on the remaining respondents, namely:
Arlene V. de Guzman, Celerina S. Navarro,
Rafael I. Tolentino, Bernardita B. Sy, Gloria
T. Jularbal, Hubert S. Nazareno, Nancy J.
Chavez, Ernesto L. Cue, Herminio V.
Fernandez, Jr., Maria Victoria M.
Lacsamana and Merly D. Sta. Ana, as well
as the petitioners.
WHEREFORE, the instant petition is
GRANTED. Accordingly, (1) the assailed
decision dated May 16, 2000, of the Court of
Appeals, in CA-G.R. SP No. 37283, which
affirmed the judgment dated December 19,
1994, of the Regional Trial Court of Manila,
Branch 52, in Civil Case No. 93-66530,
ordering petitioners to administer the
physician's oath to herein respondents as
well as the resolution dated August 25, 2000,
of the appellate court, denying the
petitioners' motion for reconsideration, are
REVERSED and SET ASIDE; and (2) the
67
writ of mandamus, issued in Civil Case No.

93-66530, and affirmed by the appellate
court in CA-G.R. SP No. 37283 is
NULLIFIED AND SET ASIDE.
Ma.
Bezen
Ringpis
General for respondents.
SO ORDERED.
1. POLITICAL
LAW;
INHERENT
POWERS OF THE STATE; POLICE
POWER; NATURE AND SCOPE. The
latin maxim salus populi est suprema
lex embodies the character of the entire
spectrum of public laws aimed at promoting
the general welfare of the people under the
State's police power. As an inherent attribute
of sovereignty which virtually "extends to
all public needs," this "least limitable" of
governmental powers grants a wide panoply
of instruments through which the state,
as parens patriae gives effect to a host of its
regulatory powers. Describing the nature
and scope of the police power, Justice
Malcolm, in the early case of Rubi v.
Provincial Board of Mindoro (89 Phil. 660,
708, [1919]) wrote: "The police power of
the State," one court has said . . . 'is a power
coexistensive with self-protection, and is not
inaptly termed 'the law of overruling
necessity.' It may be said to be that inherent
and plenary power in the state which enables
it to prohibit all things hurtful to the
comfort, safety and welfare of society."
Carried onward by the current of legislature.
the judiciary rarely attempts to dam the
onrushing power of legislative discretion,
provided the purposes of the law do not go
beyond the great principles that mean
security for the public welfare or do not
||| (Professional Regulation Commission v.

De Guzman, G.R. No. 144681, [June 21,
2004], 476 PHIL 596-623)
[G.R. No. 120095. August 5, 1996.]

JMM
PROMOTION
AND
MANAGEMENT,
INC.,
and
KARY
INTERNATIONAL,
INC., petitioners, vs.
HON.
COURT OF APPEALS, HON.
MA. NIEVES CONFESSOR, then
Secretary of the Department of
Labor and Employment, HON.
JOSE BRILLANTES, in his
capacity as acting Secretary of the
Department
of
Labor
and
Employment
and
HON.
FELICISIMO JOSON, in his
capacity as Administrator of the
Philippine Overseas Employment
Administration, respondents.
Don P. Porciuncula for petitioner.
Liban/Solicitor
SYLLABUS
arbitrarily interfere with the right of the

individual."
2. ID.; ID.; ID.; EXERCISE THEREOF
ENJOYS A PRESUMED VALIDITY
UNLESS IT IS SHOWN THAT IT DOES
NOT ENHANCE THE PUBLIC WELFARE
OR WAS EXERCISED ARBITRARILY OR
UNREASONABLY. Thus, police power
concerns government enactments which
precisely interfere with personal liberty or
property in order to promote the general
welfare or the common good. As the assailed
Department Order enjoys a presumed
validity, it follows that the burden rests upon
petitioners to demonstrate that the said
order, particularly its ARB requirement,
does not enhance the public welfare or was
exercised arbitrarily or unreasonably.
3. ID.;
ID.;
ID.;
THE
PROPER
REGULATION OF A PROFESSION,
CALLING, BUSINESS OR TRADE IS A
VALID
EXERCISE
THEREOF.
Nevertheless, no right is absolute, and the
proper regulation of a profession, calling
business or trade has always been upheld as
a legitimate subject of a valid exercise of the
police power by the state particularly when
their conduct affects either the execution of
legitimate governmental functions, the
preservation of the State, the public health
and welfare and public morals. According to
the maxim, sic utere tuo ut alienum non
laedas, it must of course be within the
legitimate range of legislative action to
define the mode and manner in which every
68
one may so use his own property so as not to

pose injury to himself or others.
4. ID.; ID.; ID.; WHERE THE LIBERTY
CURTAILED AFFECTS AT MOST THE
RIGHT
TO
PROPERTY,
THE
PERMISSIBLE
SCOPE
OF
REGULATORY MEASURES IS MUCH
WIDER. In any case, where the liberty
curtailed affects at most the rights of
property, the permissible scope of regulatory
measures is certainly much wider. To
pretend that licensing or accreditation
requirements violates the due process clause
is to ignore the settled practice, under the
mantle of the police power, of regulating
entry to the practice of various trades or
professions. Professionals leaving for abroad
are required to pass rigid written and
practical exams before they are deemed fit
to practice their trade. Seamen are required
to take tests determining their seamanship.
Locally, the Professional Regulation
Commission has began to require previously
licensed doctors and other professionals to
furnish documentary proof that they had
either re-trained or had undertaken
continuing education courses as a
requirement for renewal of their licenses. It
is not claimed that these requirements pose
an unwarranted deprivation of a property
right under the due process clause. So long
as professionals and other workers meet
reasonable regulatory standards no such
deprivation exists.
5. CONSTITUTIONAL LAW; STATE

POLICIES; THE STATE SHALL AFFORD
FULL PROTECTION TO LABOR;
ELUCIDATED. Protection to labor does
not indicate promotion of employment
alone. Under the welfare and social justice
provisions
of
the Constitution,
the
promotion of full employment, while
desirable, cannot take a backseat to the
government's constitutional duty to provide
mechanisms for the protection of our workforce, local or overseas. As this Court
explained in Philippine Association of
Service Exporters (PASEI) v. Drilon, in
reference to the recurring problems faced by
our overseas workers: what concerns
the Constitution more paramountly is that
such an employment be above all, decent,
just, and humane. It is bad enough that the
country has to send its sons and daughters to
strange lands because it cannot satisfy their
employment needs at home. Under these
circumstances, the Government is dutybound to insure that our toiling expatriates
have adequate protection, personally and
economically, while away from home. A
profession, trade or calling is a property
right within the meaning of our
constitutional guarantees. One cannot be
deprived of the right to work and the right to
make a living because these rights are
property rights, the arbitrary and
unwarranted deprivation of which normally
constitutes an actionable wrong.
6. ID.; BILL OF RIGHTS; NONIMPAIRMENT OF OBLIGATIONS OF
CONTRACTS; MUST YIELD TO THE

STATE'S POLICE POWER. It is a futile
gesture on the part of petitioners to invoke
the
non-impairment
clause
of
theConstitution to support their argument
that the government cannot enact the
assailed regulatory measures because they
abridge
the
freedom
to
contract.
In Philippine Association of Service
Exporters, Inc. vs. Drilon, we held that
"(t)he
non-impairment
clause
of
the Constitution . . . must yield to the loftier
purposes targeted by the government."
Equally important, into every contract is
read provisions of existing law, and always,
a reservation of the police power for so long
as the agreement deals with a subject
impressed with the public welfare.
7. ID.; ID.; EQUAL PROTECTION
CLAUSE; MERELY REQUIRES THAT
ALL PERSONS BE TREATED ALIKE
UNDER LIKE CONDITIONS. The
equal protection clause is directed
principally against undue favor and
individual or class privilege. It is not
intended to prohibit legislation which is
limited to the object to which it is directed or
by the territory in which it is to operate. It
does not require absolute equality, but
merely that all persons be treated alike under
like conditions both as to privileges
conferred and liabilities imposed. We have
held, time and again, that the equal
protection clause of the Constitution does
not forbid classification for so long as such
classification is based on real and substantial
69
differences having a reasonable relation to

the subject of the particular legislation. If
classification is germane to the purpose of
the law, concerns all members of the class,
and applies equally to present and future
conditions, the classification does not violate
the equal protection guarantee.
DECISION
KAPUNAN, J p:
This limits of government regulation under
the State's police power are once again at the
vortex of the instant controversy. Assailed is
the government's power to control
deployment of female entertainers to Japan
by requiring an Artist Record Book (ARB)
as a precondition to the processing by the
POEA of any contract for overseas
employment. By contending that the right to
overseas employment is a property right
within the meaning of the Constitution,
petitioners vigorously aver that deprivation
thereof allegedly through the onerous
requirement of an ARB violates the due
process clause and constitutes an invalid
exercise of the police power.
the overseas employment industry promised

to extend full support for a program aimed at
removing kinks in the system of
deployment. In its place, the government,
through the Secretary of Labor and
Employment,
subsequently
issued
Department Order No. 28 creating the
Entertainment Industry Advisory Council
(EIAC). which was tasked with issuing
guidelines on the training, testing
certification and deployment of performing
artists abroad.
Pursuant
to
the
EIAC's
recommendations, 1 the Secretary of Labor,
on January 6, 1994, issued Department
Order No. 3 establishing various procedures
and requirements for screening performing
artists under a new system of training,
testing, certification and deployment of the
former. Performing artists successfully
hurdling the test, training and certification
requirement were to be issued an Artist's
Record Book (ARB), a necessary
prerequisite to processing of any contract of
employment by the POEA. Upon request of
the industry, implementation of the process,
originally scheduled for April 1, 1994, was
moved to October 1, 1994.
The factual antecedents are undisputed.

Following the much-publicized death of
Maricris Sioson in 1991, former President
Corazon C. Aquino ordered a total ban
against the deployment of performing artists
to Japan and other foreign destinations. The
ban was, however, rescinded after leaders of
Thereafter, the Department of Labor,

following the EIAC's recommendation,
issued a series of orders fine-tuning and
implementing the new system. Prominent
among these orders were the following
issuances:
1. Department Order No. 3-A,

providing for additional guidelines
on the training, testing, certification
and deployment of performing
artists.
2. Department Order No. 3-B,
pertaining to the Artist Record Book
(ARB) requirement, which could be
processed only after the artist could
show proof of academic and skills
training and has passed the required
tests.
3. Department Order No. 3-E,
providing the minimum salary a
performing artist ought to receive
(not less than US$600.00 for those
bound for Japan) and the authorized
deductions therefrom.
4. Department Order No. 3-F,
providing for the guidelines on the
issuance and use of the ARB by
returning performing artists who,
unlike new artists, shall only undergo
a Special Orientation Program
(shorter than the basic program)
although they must pass the
academic test.
In Civil No. 95-72750, the Federation of
Entertainment Talent Managers of the
Philippines (FETMOP), on January 27, 1995
filed a class suit assailing these department
orders, principally contending that said
orders 1) violated the constitutional right to
70
travel; 2) abridged existing contracts for

employment; and 3) deprived individual
artists of their licenses without due process
of law. FETMOP, likewise, averred that the
issuance of the Artist Record Book (ARB)
was discriminatory and illegal and "in gross
violation of the constitutional right . . . to
life liberty and property." Said Federation
consequently prayed for the issuance of a
writ of preliminary injunction against the
aforestated orders.
The latin maxim salus populi est suprema

lex embodies the character of the entire
spectrum of public laws aimed at promoting
the general welfare of the people under the
State's police power. As an inherent attribute
of sovereignty which virtually "extends to
all public needs," 2 this "least limitable" 3of
governmental powers grants a wide panoply
of instruments through which the state,
as parens patriae gives effect to a host of its
regulatory powers.
Thus, police power concerns government

enactments which precisely interfere with
personal liberty or property in order to
promote the general welfare or the common
good. As the assailed Department Order
enjoys a presumed validity, it follows that
the burden rests upon petitioners to
demonstrate that the said order, particularly,
its ARB requirement, does not enhance the
public welfare or was exercised arbitrarily or
unreasonably.
On February 2, 1992, JMM Promotion and

Management, Inc. and Kary International,
Inc., herein petitioners, filed a Motion for
Intervention in said civil case, which was
granted by the trial court in an Order dated
15 February, 1995.
Describing the nature and scope of the

police power, Justice Malcolm, in the early
case of Rubi v. Provincial Board of
Mindoro 4 wrote:
A through review of the facts and

circumstances leading to the issuance of the
assailed orders compels us to rule that the
Artist Record Book requirement and the
questioned Department Order related to its
issuance were issued by the Secretary of
Labor pursuant to a valid exercise of the
police power.
However, on February 21, 1995, the trial

court issued an Order denying petitioners'
prayer for a writ of preliminary injunction
and dismissed the complaint.
On appeal from the trial court's Order,
respondent court, in CA G.R. SP No. 36713
dismissed
the
same.
Tracing
the
circumstances which led to the issuance of
the ARB requirement and the assailed
Department Order, respondent court
concluded that the issuances constituted a
valid exercise by the state of the police
power.
We agree.
"The police power of the State," one

court has said . . . 'is a power
coextensive with self-protection, and
is not inaptly termed 'the law of
overruling necessity.' It may be said
to be that inherent and plenary power
in the state which enables it to
prohibit all things hurtful to the
comfort, safety and welfare of
society." Carried onward by the
current of legislature, the judiciary
rarely attempts to dam the onrushing
power of legislative discretion,
provided the purposes of the law do
not go beyond the great principles
that mean security for the public
welfare or do not arbitrarily interfere
with the right of the individual." 5
In 1984, the Philippines emerged as the

largest labor sending country in Asia
dwarfing the labor export of countries with
mammoth populations such as India and
China. According to the National Statistics
Office,
this diasporawas
augmented
annually by over 450,000 documented and
clandestine or illegal (undocumented)
workers who left the country for various
destinations abroad, lured by higher salaries,
better work opportunities and sometimes
better living conditions.
Of the hundreds of thousands of workers
who left the country for greener pastures in
the last few years, women composed slightly
71
close to half of those deployed, constituting

47% between 1987-1991, exceeding this
proportion (58%) by the end of 1991, 6 the
year former President Aquino instituted the
ban on deployment of performing artists to
Japan and other countries as a result of the
gruesome death of Filipino entertainer
Maricris Sioson.
It was during the same period that this Court
took judicial notice not only of the trend, but
also of the fact that most of our women, a
large number employed as domestic helpers
and entertainers, worked under exploitative
conditions "marked by physical and personal
abuse." 7 Even then, we noted that "[t]he
sordid tales of maltreatment suffered by
migrant Filipina workers, even rape and
various forms of torture, confirmed by
testimonies of returning workers" compelled
"urgent government action." 8
Pursuant to the alarming number of reports
that a significant number of Filipina
performing artists ended up as prostitutes
abroad (many of whom were beaten,
drugged and forced into prostitution), and
following the deaths of a number of these
women, the government began instituting
measures aimed at deploying only those
individuals who met set standards which
would qualify them as legitimate performing
artists. In spite of these measures, however,
a number of our countrymen have
nonetheless fallen victim to unscrupulous
recruiters, ending up as virtual slaves
controlled by foreign crime syndicates and
forced into jobs other than those indicated in

their employment contracts. Worse, some of
our women have been forced into
prostitution.
demands of employment as artists abroad. It

cannot be gainsaid that this scheme at least
lessens the room for exploitation by
unscrupulous individuals and agencies.
Thus, after a number of inadequate and

failed accreditation schemes, the Secretary
of Labor issued on August 16, 1993, D.O.
No. 28, establishing the Entertainment
Industry Advisory Council (EIAC), the
policy advisory body of DOLE on
entertainment industry matters. 9 Acting on
the recommendations of the said body, the
Secretary of Labor, on January 6, 1994,
issued the assailed orders. These orders
embodied EIAC's Resolution No. 1, which
called for guidelines on screening, testing
and accrediting performing overseas Filipino
artists. Significantly, as the respondent court
noted, petitioners were duly represented in
the
EIAC, 10 which
gave
the
recommendations on which the ARB and
other requirements were based.
Moreover, here or abroad, selection of

performing artists is usually accomplished
by auditions, where those deemed unfit are
usually weeded out through a process which
is inherently subjective and vulnerable to
bias and differences in taste. The ARB
requirement goes one step further, however,
attempting to minimize the subjectivity of
the process by defining minimum skills
required from entertainers and performing
artists. As the Solicitor General observed,
this should be easily met by experienced
artists possessing merely basic skills. The
tests are aimed at segregating real artists or
performers from those passing themselves
off as such, eager to accept any available job
and therefore exposing themselves to
possible exploitation.
Clearly, the welfare of Filipino performing

artists, particularly the women was
paramount in the issuance of Department
Order No. 3. Short of a total and absolute
ban against the deployment of performing
artists to "high-risk" destinations, a measure
which would only drive recruitment further
underground, the new scheme at the very
least rationalizes the method of screening
performing artists by requiring reasonable
educational and artistic skills from them and
limits deployment to only those individuals
adequately prepared for the unpredictable
As to the other provisions of Department

Order No. 3 questioned by petitioners, we
see nothing wrong with the requirement for
document and booking confirmation (D.O.
3-C), a minimum salary scale (D.O. 3-E), or
the requirement for registration of returning
performers. The requirement for a venue
certificate or other documents evidencing
the place and nature of work allows the
government closer monitoring of foreign
employers and helps keep our entertainers
away from prostitution fronts and other
worksites associated with unsavory,
72
immoral, illegal or exploitative practices.

Parenthetically, none of these issuances
appear to us, by any stretch of the
imagination, even remotely unreasonable or
arbitrary. They address a felt need of
according greater protection for an oftexploited segment of our OCW's. They
respond to the industry's demand for clearer
and more practicable rules and guidelines.
Many of these provisions were fleshed out
following recommendations by, and after
consultations with, the affected sectors and
non-government organizations. On the
whole, they are aimed at enhancing the
safety and security of entertainers and artists
bound for Japan and other destinations,
without stifling the industry's concerns for
expansion and growth.
In any event, apart from the State's police
power, the Constitution itself mandates
government to extend the fullest protection
to our overseas workers. The basic
constitutional statement on labor, embodied
in Section
18
of
Article
II
of
the Constitution provides:
Sec. 18. The State affirms labor as a

primary social economic force. It
shall protect the rights of workers
and promote their welfare.
More emphatically, the social justice
provision
on
labor
of
the
1987 Constitution in
states:
its
first
paragraph
The State shall afford full protection

to labor, local and overseas,
organized and unorganized and
promote full employment and
equality
of
employment
opportunities for all.
Obviously, protection to labor does not
indicate promotion of employment alone.
Under the welfare and social justice
provisions
of
the Constitution,
the
promotion of full employment, while
desirable, cannot take a backseat to the
government's constitutional duty to provide
mechanisms for the protection of our
workforce, local or overseas. At this Court
explained in Philippine Association of
Service Exporters (PASEI) v. Drilon, 11 in
reference to the recurring problems faced by
our overseas workers:
What concerns the Constitution more
paramountly is that such an
employment be above all, decent,
just, and humane. It is bad enough
that the country has to send its sons
and daughters to strange lands
because it cannot satisfy their
employment needs at home. Under
these circumstances, the Government
is duty-bound to insure that our
toiling expatriates have adequate
protection,
personally
and
economically,
home.
while
away
from
We now go to petitioners' assertion that the

police power cannot, nevertheless, abridge
the right of our performing workers to return
to work abroad after having earlier qualified
under the old process, because, having
previously
been
accredited,
their
accreditation became a "property right,"
protected by the due process clause. We find
this contention untenable.
A profession, trade or calling is a property
right within the meaning of our
constitutional guarantees. One cannot be
deprived of the right to work and the right to
make a living because these rights are
property rights, the
arbitrary and
unwarranted deprivation of which normally
constitutes an actionable wrong. 12
Nevertheless, no right is absolute, and the
proper regulation of a profession, calling,
business or trade has always been upheld as
a legitimate subject of a valid exercise of the
police power by the state particularly when
their conduct affects either the execution of
legitimate governmental functions, the
preservation of the State, the public health
and welfare and public morals. According to
the maxim, sic utere tuo ut alienum non
laedas, it must of course be within the
legitimate range of legislative action to
define the mode and manner in which every
one may so use his own property so as not to
pose injury to himself or others. 13
73
In any case, where the liberty curtailed

affects at most the rights of property, the
permissible scope of regulatory measures is
certainly much wider. 14 To pretend that
licensing or accreditation requirements
violates the due process clause is to ignore
the settled practice, under the mantle of the
police power, of regulating entry to the
practice of various trades or professions.
Professionals leaving for abroad are required
to pass rigid written and practical exams
before they are deemed fit to practice their
trade. Seamen are required to take tests
determining their seamanship. Locally, the
Professional Regulation Commission has
began to require previously licensed doctors
and other professionals to furnish
documentary proof that they had either retrained or had undertaken continuing
education courses as a requirement for
renewal of their licenses. It is not claimed
that these requirements pose an unwarranted
deprivation of a property right under the due
process clause. So long as professionals and
other workers meet reasonable regulatory
standards no such deprivation exists.
Finally, it is a futile gesture on the part of
petitioners to invoke the non-impairment
clause of the Constitution to support their
argument that the government cannot enact
the assailed regulatory measures because
they abridge the freedom to contract.
In Philippine Association of Service
Exporters, Inc. vs. Drilon, we held that
"[t]he
non-impairment
clause
of
the Constitution . . . must yield to the loftier
purposes
targeted
by
the
government."15 Equally important, into
every contract is read provisions of existing
law, and always, a reservation of the police
power for so long as the agreement deals
with a subject impressed with the public
welfare.
A last point. Petitioners suggest that the
singling out of entertainers and performing
artists under the assailed department orders
constitutes class legislation which violates
the
equal
protection
clause
of
the Constitution. We do not agree.
The equal protection clause is directed
principally against undue favor and
individual or class privilege. It is not
intended to prohibit legislation which is
limited to the object to which it is directed
or by the territory in which it is to operate. It
does not require absolute equality, but
merely that all persons be treated alike under
like conditions both as to privileges
conferred and liabilities imposed. 16 We
have held, time and again, that the equal
protection clause of the Constitution does
not forbid classification for so long as such
classification is based on real and substantial
differences having a reasonable relation to
the subject of the particular legislation. 17 If
classification is germane to the purpose of
the law, concerns all members of the class,
and applies equally to present and future
conditions, the classification does not violate
the equal protection guarantee.
In the case at bar, the challenged Department

Order clearly applies to all performing
artists and entertainers destined for jobs
abroad. These orders, we stressed
hereinbefore, further the Constitutional
mandate requiring government to protect our
workforce, particularly those who may be
prone to abuse and exploitation as they are
beyond the physical reach of government
regulatory agencies. The tragic incidents
must somehow stop, but short of absolutely
curtailing the right of these performers and
entertainers to work abroad, the assailed
measures enable our government to assume
a measure of control.
WHEREFORE, finding no reversible error
in the decision sought to be reviewed,
petition is hereby DENIED.
||| (JMM Promotion and Management, Inc. v.
Court of Appeals, G.R. No. 120095, [August
5, 1996], 329 PHIL 87-102)
[G.R. No. 88404. October 18, 1990.]

PHILIPPINE LONG DISTANCE
TELEPHONE
CO.
[PLDT],
petitioner, vs. THE
NATIONAL
TELECOMMUNICATIONS
COMMISSION AND CELLCOM,
74
INC.,
(EXPRESS
TELECOMMUNICATIONS CO.,
INC. [ETCI]),respondents.
Alampan &
petitioner.
Manhit
Law
Offices for
Gozon, Fernandez, Defensor & Parel for

private respondent.
DECISION
MELENCIO-HERRERA, J p:
Petitioner Philippine Long Distance
Telephone Company (PLDT) assails, by way
of Certiorari and Prohibition under Rule 65,
two (2) Orders of public respondent
National Telecommunications Commission
(NTC), namely, the Order of 12 December
1988 granting private respondent Express
Telecommunications Co., Inc. (ETCI)
provisional authority to install, operate and
maintain a Cellular Mobile Telephone
System in Metro-Manila (Phase A) in
accordance with specified conditions, and
the Order, dated 8 May 1988, denying
reconsideration.
On 22 June 1958, Rep. Act No. 2090, was
enacted, otherwise known as "An Act
Granting Felix Alberto and Company,
Incorporated, a Franchise to Establish Radio
Stations for Domestic and Transoceanic
Telecommunications." Felix Alberto & Co.,
Inc. (FACI) was the original corporate name,
which was changed to ETCI with the
amendment of the Articles of Incorporation

in 1964. Much later, "CELLCOM, Inc." was
the name sought to be adopted before the
Securities and Exchange Commission, but
this was withdrawn and abandoned.
On 13 May 1987, alleging urgent public
need, ETCI filed an application with public
respondent NTC (docketed as NTC Case
No. 87-89) for the issuance of a Certificate
of Public Convenience and Necessity
(CPCN) to construct, install, establish,
operate and maintain a Cellular Mobile
Telephone System and an Alpha Numeric
Paging System in Metro Manila and in the
Southern Luzon regions, with a prayer for
provisional authority to operate Phase A of
its proposal within Metro Manila.
PLDT filed an Opposition with a Motion to
Dismiss, based primarily on the following
grounds: (1) ETCI is not capacitated or
qualified under its legislative franchise to
operate a systemwide telephone or network
of telephone service such as the one
proposed in its application; (2) ETCI lacks
the facilities needed and indispensable to the
successful operation of the proposed cellular
mobile telephone system; (3) PLDT has
itself a pending application with NTC, Case
No. 86-86, to install and operate a Cellular
Mobile Telephone System for domestic and
international service not only in Manila but
also in the provinces and that under the
"prior operator" or "protection of
investment" doctrine, PLDT has the priority
or preference in the operation of such
service; and (4) the provisional authority, if

granted,
will
result
in
needless,
uneconomical and harmful duplication,
among others.
In an Order, dated 12 November 1987, NTC
overruled PLDT's Opposition and declared
that Rep. Act No. 2090 (1958) should be
liberally construed as to include among the
services under said franchise the operation
of a cellular mobile telephone service.
In the same Order, ETCI was required to
submit the certificate of registration of its
Articles of Incorporation with the Securities
and Exchange Commission, the present
capital and ownership structure of the
company and such other evidence, oral or
documentary, as may be necessary to prove
its legal, financial and technical capabilities
as well as the economic justifications to
warrant the setting up of cellular mobile
telephone and paging systems. The
continuance of the hearings was also
directed.
After evaluating the reconsideration sought
by PLDT, the NTC, in October 1988,
maintained its ruling that liberally construed,
applicant's franchise carries with it the
privilege to operate and maintain a cellular
mobile telephone service.
On 12 December 1988, NTC issued the first
challenged Order. Opining that "public
interest, convenience and necessity further
demand a second cellular mobile telephone
75
service provider and finds PRIMA FACIE

evidence showing applicant's legal, financial
and technical capabilities to provide a
cellular mobile service using the AMPS
system," NTC granted ETCI provisional
authority to install, operate and maintain a
cellular mobile telephone system initially in
Metro Manila, Phase A only, subject to the
terms and conditions set forth in the same
Order. One of the conditions prescribed
(Condition No. 5) was that, within ninety
(90) days from date of the acceptance by
ETCI of the terms and conditions of the
provisional authority, ETCI and PLDT "shall
enter into an interconnection agreement for
the provision of adequate interconnection
facilities between applicant's cellular mobile
telephone switch and the public switched
telephone network and shall jointly submit
such interconnection agreement to the
Commission for approval."
In a "Motion to Set Aside the Order"
granting provisional authority, PLDT alleged
essentially that the interconnection ordered
was in violation of due process and that the
grant of provisional authority was
jurisdictionally and procedurally infirm. On
8 May 1989, NTC denied reconsideration
and set the date for continuation of the
hearings on the main proceedings. This is
the second questioned Order.
PLDT urges us now to annul the NTC
Orders of 12 December 1988 and 8 May
1989 and to order ETCI to desist from,
suspend, and/or discontinue any and all acts

intended for its implementation.
investment of approximately P225M, but

accepted the forfeiture proferred.
On 15 June 1989, we resolved to dismiss the

petition for its failure to comply fully with
the requirements of Circular No. 188. Upon
satisfactory showing, however, that there
was, in fact, such compliance, we
reconsidered the order, reinstated the
Petition, and required the respondents NTC
and ETCI to submit their respective
Comments.
ETCI moved to have the TRO lifted, which

we denied on 6 March 1990 We stated,
however, that the inaugural ceremony ETCI
had scheduled for that day could proceed, as
the same was not covered by the TRO.
On 27 February 1990, we issued a

Temporary Restraining Order enjoining
NTC to "Cease and Desist from all or any of
its on-going proceedings and ETCI from
continuing any and all acts intended or
related to or which will amount to the
implementation/execution of its provisional
authority." This was upon PLDT's urgent
manifestation that it had been served an
NTC Order, dated 14 February 1990,
directing immediate compliance with its
Order of 12 December 1988, "otherwise the
Commission shall be constrained to take the
necessary measures and bring to bear upon
PLDT the full sanctions provided by law."
We required PLDT to post a bond of P5M. It
has complied, with the statement that it was
"post(ing) the same on its agreement and/or
consent to have the same forfeited in favor
of Private Respondent ETCI/CELLCOM
should the instant Petition be dismissed for
lack of merit." ETCI took exception to the
sufficiency of the bond considering its initial
PLDT relies on the following grounds for

the issuance of the Writs prayed for:
"1. Respondent NTC's subject order
effectively
licensed
and/or
authorized a corporate entity without
any franchise to operate a public
utility, legislative or otherwise, to
establish
and
operate
a
telecommunications system.
"2. The same order validated stock
transactions of a public service
enterprise contrary to and/or in direct
violation of Section 20(h) of
the Public Service Act.
"3. Respondent NTC adjudicated in
the same order a controverted matter
that was not heard at all in the
proceedings under which it was
promulgated."
As correctly pointed out by respondents, this
being a special civil action for Certiorari and
Prohibition, we only need determine if NTC
acted without jurisdiction or with grave
abuse of discretion amounting to lack or
76
excess of jurisdiction in granting provisional

authority to ETCI under the NTC questioned
Orders of 12 December 1988 and 8 May
1989.
The case was set for oral argument on 21
August 1990 with the parties directed to
address, but not limited to, the following
issues: (1) the status and coverage of Rep.
Act No. 2090 as a franchise; (2) the transfer
of shares of stock of a corporation holding a
CPCN; and (3) the principle and procedure
of interconnection. The parties were
thereafter required to submit their respective
Memoranda, with which they have
complied.
We find no grave abuse of discretion on the
part of NTC, upon the following
considerations:
motion of the pleaders or on its own

initiative, the relief prayed for, based
on the pleading, together with the
affidavits and supporting documents
attached thereto, without prejudice to
a final decision after completion of
the hearing which shall be called
within thirty (30) days from grant of
authority asked for." (Rule 15, Rules
of Practice and Procedure Before the
Board of Communications (now
NTC).
What the NTC granted was such a
provisional authority, with a definite expiry
period of eighteen (18) months unless
sooner renewed, and which may be revoked,
amended or revised by the NTC. It is also
limited to Metro Manila only. What is more,
the main proceedings are clearly to continue
as stated in the NTC Order of 8 May 1989.
1. NTC Jurisdiction
There can be no question that the NTC is the
regulatory agency of the national
government with jurisdiction over all
telecommunications entities. It is legally
clothed with authority and given ample
discretion to grant a provisional permit or
authority. In fact, NTC may, on its own
initiative, grant such relief even in the
absence of a motion from an applicant.
"Sec. 3. Provisional Relief . Upon
the filing of an application,
complaint or petition or at any stage
thereafter, the Board may grant on
The provisional authority was issued after

due hearing, reception of evidence and
evaluation thereof, with the hearings
attended by various oppositors, including
PLDT. It was granted only after a prima
facie showing that ETCI hag the necessary
legal, financial and technical capabilities and
that public interest, convenience and
necessity so demanded.
PLDT argues, however, that a provisional

authority is nothing short of a Certificate of
Public Convenience and Necessity (CPCN)
and that it is merely a "distinction without a

difference." That is not so. Basic differences
do exist, which need not be elaborated on.
What should be borne in mind is that
provisional authority would be meaningless
if the grantee were not allowed to operate.
Moreover, it is clear from the very Order of
12 December 1988 itself that its scope is
limited only to the first phase, out of four, of
the proposed nationwide telephone system.
The installation and operation of an alpha
numeric paging system was not authorized.
The provisional authority is not exclusive.
Its lifetime is limited and may be revoked by
the NTC at any time in accordance with law.
The initial expenditure of P130M more or
less, is rendered necessary even under a
provisional authority to enable ETCI to
prove its capability. And as pointed out by
the Solicitor General, on behalf of the NTC,
if what had been granted were a CPCN, it
would constitute a final order or award
reviewable only by ordinary appeal to the
Court of Appeals pursuant to Section 9(3)
of BP Blg. 129, and not by Certiorari before
this Court.
The final outcome of the application rests
within the exclusive prerogative of the NTC.
Whether or not a CPCN would eventually
issue would depend on the evidence to be
presented during the hearings still to be
conducted, and only after a full evaluation of
the proof thus presented.
2. The Coverage of ETCI's Franchise
77
Rep. Act No. 2090 grants ETCI (formerly

FACI) "the right and privilege of
constructing, installing, establishing and
operating in the entire Philippines radio
stations for reception and transmission of
messages on radio stations in the foreign and
domestic public fixed point-to-point and
public base, aeronautical and land mobile
stations, . . . with the corresponding relay
stations for the reception and transmission
of wireless messages on radiotelegraphy
and/or radiotelephony . . . . " PLDT
maintains that the scope of the franchise is
limited to "radio stations" and excludes
telephone services such as the establishment
of the proposed Cellular Mobile Telephone
System (CMTS). However, in its Order of
12 November 1987, the NTC construed the
technical term "radiotelephony" liberally as
to include the operation of a cellular mobile
telephone system. It said:
"In resolving the said issue, the
Commission takes into consideration
the different definitions of the term
"radiotelephony." As defined by the
New
International
Webster
Dictionary the term "radiotelephony"
is defined as a telephony carried on
by aid of radiowaves without
connecting wires. The International
Telecommunications Union (ITU)
defines a "radiotelephone call" as a
"telephone call, originating in or
intended on all or part of its route
over the radio communications
channels of the mobile service or of
the mobile satellite service." From

the
above
definitions,
while
under Republic Act 2090 a systemwide telephone or network of
telephone service by means of
connecting wires may not have been
contemplated, it can be construed
liberally that the operation of a
cellular mobile telephone service
which carries messages, either voice
or record, with the aid of radiowaves
or a part of its route carried over
radio communication channels, is
one included among the services
under said franchise for which a
certificate of public convenience and
necessity may be applied for."
The foregoing is the construction given by
an administrative agency possessed of the
necessary special knowledge, expertise and
experience and deserves great weight and
respect (Asturias Sugar Central, Inc. v.
Commissioner of Customs, et al., L-19337,
September 30, 1969, 29 SCRA 617). It can
only be set aside on proof of gross abuse of
discretion, fraud, or error of law (Tupas
Local Chapter No. 979 v. NLRC, et al., L60532-33, November 5, 1985, 139 SCRA
478). We discern none of those
considerations sufficient to warrant judicial
intervention.
3. The Status of ETCI's Franchise
PLDT alleges that the ETCI franchise had
lapsed into non-existence for failure of the
franchise holder to begin and complete

construction of the radio system authorized
under the franchise as explicitly required
in Section 4 of its franchise, Rep. Act No.
2090. 1 PLDT also invokes Pres. Decree No.
36, enacted on 2 November 1972, which
legislates the mandatory cancellation or
invalidation of all franchises for the
operation of communications services,
which have not been availed of or used by
the party or parties in whose name they were
issued.
However, whether or not ETCI, and before it
FACI, in contravention of its franchise,
started
the
first
of
its
radio
telecommunication stations within (2) years
from the grant of its franchise and completed
the construction within ten (10) years from
said date; and whether or not its franchise
had remained unused from the time of its
issuance, are questions of fact beyond the
province of this Court, besides the wellsettled procedural consideration that factual
issues are not subjects of a special civil
action for Certiorari (Central Bank of the
Philippines vs. Court of Appeals, G.R. No.
41859, 8 March 1989, 171 SCRA 49; Ygay
vs. Escareal, G.R. No. 44189, 8 February
1985, 135 SCRA 78; Filipino Merchant's
Insurance Co., Inc. vs. Intermediate
Appellate Court, G.R. No. 71640, 27 June
1988, 162 SCRA 669). Moreover, neither
Section 4, Rep. Act No. 2090 nor Pres.
Decree No. 36 should be construed as selfexecuting in working a forfeiture. Franchise
holders should be given an opportunity to be
78
heard, particularly so, where, as in this case,

ETCI does not admit any breach, in
consonance with the rudiments of fair play.
Thus, the factual situation of this case differs
from that in Angeles Ry Co. vs. City of Los
Angeles (92 Pacific Reporter 490) cited by
PLDT, where the grantee therein admitted its
failure to complete the conditions of its
franchise and yet insisted on a decree of
forfeiture.
More importantly, PLDT's allegation
partakes of a collateral attack on a franchise
(Rep. Act No. 2090), which is not allowed.
A franchise is a property right and cannot be
revoked or forfeited without due process of
law. The determination of the right to the
exercise of a franchise, or whether the right
to enjoy such privilege has been forfeited by
non-user, is more properly the subject of the
prerogative writ of quo warranto, the right
to assert which, as a rule, belongs to the
State "upon complaint or otherwise"
(Sections 1, 2 and 3, Rule 66, Rules of
Court), 2 the reason being that the abuse of a
franchise is a public wrong and not a private
injury. A forfeiture of a franchise will have
to be declared in a direct proceeding for the
purpose brought by the State because a
franchise is granted by law and its unlawful
exercise is primarily a concern of
Government.
"A . . . franchise is . . . granted by
law, and its . . . unlawful exercise is
the concern primarily of the
Government. Hence, the latter as a
role is the party called upon to bring

the action for such . . . unlawful
exercise of . . . franchise." (IV-B V.
FRANCISCO, 298 [1963 ed.],
citing Cruz vs. Ramos, 84 Phil. 226).
4. ETCI's Stock Transactions
ETCI admits that in 1964, the Albertos, as
original owners of more than 40% of the
outstanding capital stock sold their holdings
to the Orbes. In 1968, the Albertos reacquired the shares they had sold to the
Orbes. In 1987, the Albertos sold more than
40% of their shares to Horacio Yalung.
Thereafter, the present stockholders acquired
their ETCI shares. Moreover, in 1964, ETCI
had increased its capital stock from
P40,000.00 to P360,000.00; and in 1987,
from P360,000.00 to P40M.
PLDT contends that the transfers in 1987 of
the shares of stock to the new stockholders
amount to a transfer of ETCI's franchise,
which needs Congressional approval
pursuant to Rep. Act No. 2090, and since
such approval had not been obtained, ETCI's
franchise had been invalidated. The
provision relied on reads, in part, as follows:
SECTION 10. The grantee shall not
lease, transfer, grant the usufruct of,
sell or assign this franchise nor the
rights and privileges acquired
thereunder to any person, firm,
company, corporation or other
commercial or legal entity nor merge
with any other person, company or

corporation organized for the same
purpose, without the approval of the
Congress of the Philippines first had.
...."
It should be noted, however, that the
foregoing provision is, directed to the
"grantee" of the franchise, which is the
corporation itself and refers to a sale, lease,
or assignment of that franchise. It does not
include the transfer or sale of shares of stock
of a corporation by the latter's stockholders.
The sale of shares of stock of a public utility
is governed by another law, i.e., Section
20(h)
of
the Public
Service
Act (Commonwealth Act No. 146). Pursuant
thereto, the Public Service Commission
(now the NTC) is the government agency
vested with the authority to approve the
transfer of more than 40% of the subscribed
capital stock of a telecommunications
company to a single transferee, thus:
SEC. 20. Acts requiring the approval
of the Commission. Subject to
established
limitations
and
exceptions and saving provisions to
the contrary, it shall be unlawful for
any public service or for the owner,
lessee or operator thereof, without
the approval and authorization of the
Commission previously had
xxx xxx xxx
79
(h) To sell or register in its books the

transfer or sale of shares of its capital
stock, if the result of that sale in
itself or in connection with another
previous sale, shall be to vest in the
transferee more than forty per
centum of the subscribed capital of
said public service. Any transfer
made in violation of this provision
shall be void and of no effect and
shall not be registered in the books
of the public service corporation.
Nothing herein contained shall be
construed to prevent the holding of
shares lawfully acquired. (As
amended by Com. Act No. 454)."
In other words, transfers of shares of a

public utility corporation need only NTC
approval, not Congressional authorization.
What transpired in ETCI were a series of
transfers of shares starting in 1964 until
1987. The approval of the NTC may be
deemed to have been met when it authorized
the issuance of the provisional authority to
ETCI. There was full disclosure before the
NTC of the transfers. In fact, the NTC Order
of 12 November 1987 required ETCI to
submit its "present capital and ownership
structure." Further, ETCI even filed a
Motion before the NTC, dated 8 December
1987, or more than a year prior to the grant
of provisional authority, seeking approval of
the increase in its capital stock from
P960,000.00 to P40M, and the stock

transfers made by its stockholders.
A distinction should be made between shares
of stock, which are owned by stockholders,
the sale of which requires only NTC
approval, and the franchise itself which is
owned by the corporation as the grantee
thereof, the sale or transfer of which requires
Congressional sanction. Since stockholders
own the shares of stock, they may dispose of
the same as they see fit. They may not,
however, transfer or assign the property of a
corporation, like its franchise. In other
words, even if the original stockholders had
transferred their shares to another group of
shareholders, the franchise granted to the
corporation subsists as long as the
corporation, as an entity, continues to exist.
The franchise is not thereby invalidated by
the transfer of the shares. A corporation has
a personality separate and distinct from that
of each stockholder. It has the right of
continuity
or
perpetual
succession
(Corporation Code, Sec. 2).
To all appearances, the stock transfers were
not just for the purpose of acquiring the
ETCI franchise, considering that, as
heretofore stated, a series of transfers was
involved from 1964 to 1987. And, contrary
to PLDT's assertion, the franchise was not
the only property of ETCI of meaningful
value. The "zero" book value of ETCI
assets, as reflected in its balance sheet, was
plausibly explained as due to the
accumulated depreciation over the years
entered for accounting purposes and was not

reflective of the actual value that those
assets would command in the market.
But again, whether ETCI has offended
against a provision of its franchise, or has
subjected it to misuse or abuse, may more
properly
be
inquired
into
in quo
warranto proceedings instituted by the State.
It is the condition of every franchise that it is
subject to amendment, alteration, or repeal
when the common good so requires
(1987 Constitution, Article XII, Section 11).
5. The NTC Interconnection Order
In the provisional authority granted by NTC
to ETCI, one of the conditions imposed was
that the latter and PLDT were to enter into
an interconnection agreement to be jointly
submitted to NTC for approval.
PLDT vehemently opposes interconnection
with its own public switched telephone
network. It contends: that while PLDT
welcomes
interconnections
in
the
furtherance of public interest, only parties
who can establish that they have valid and
subsisting legislative franchises are entitled
to apply for a CPCN or provisional
authority, absent which, NTC has no
jurisdiction to grant them the CPCN or
interconnection with PLDT; that the 73
telephone systems operating all over the
Philippines have a viability and feasibility
independent of any interconnection with
PLDT; that "the NTC is not empowered to
80
compel such a private raid on PLDT's

legitimate income arising out of its gigantic
investment;" that "it is not public interest,
but purely a private and selfish interest
which will be served by an interconnection
under ETCI's terms;" and that "to compel
PLDT to interconnect merely to give
viability to a prospective competitor, which
cannot stand on its own feet, cannot be
justified in the name of a non-existent public
need" (PLDT Memorandum, pp. 48 and 50).
PLDT cannot
interconnect.
justifiably
refuse
to
Rep. Act No. 6849, or the Municipal

Telephone Act of 1989, approved on 8
February 1990, mandates interconnection
providing as it does that "all domestic
telecommunications carriers or utilities . . .
shall be interconnected to the public switch
telephone network." Such regulation of the
use and ownership of telecommunications
systems is in the exercise of the plenary
police power of the State for the promotion
of
the
general
welfare.
The
1987Constitution recognizes the existence of
that power when it provides:
"SEC. 6. The use of property bears a
social function, and all economic
agents shall contribute to the
common good. Individuals and
private
groups,
including
corporations,
cooperatives,
and
similar collective organizations, shall
have the right to own, establish, and
operate economic enterprises, subject

to the duty of the State to promote
distributive justice and to intervene
when the common good so demands"
(Article XII).
The interconnection which has been
required of PLDT is a form of "intervention"
with property rights dictated by "the
objective of government to promote the
rapid expansion of telecommunications
services in all areas of the Philippines, . . . to
maximize the use of telecommunications
facilities available, . . . in recognition of the
vital role of communications in nation
building . . . and to ensure that all users of
the public telecommunications service have
access to all other users of the service
wherever they may be within the Philippines
at an acceptable standard of service and at
reasonable cost" (DOTC Circular No. 90248). Undoubtedly, the encompassing
objective is the common good. The NTC, as
the regulatory agency of the State, merely
exercised its delegated authority to regulate
the use of telecommunications networks
when it decreed interconnection.
The importance and emphasis given to
interconnection dates back to Ministry
Circular No. 82-81, dated 6 December 1982,
providing:
"Sec. 1. That the government
encourages the provision and
operation of public mobile telephone
service within local sub-base
stations, particularly, in the highly

commercialized areas;
"Sec. 5. That, in the event the
authority to operate said service be
granted to other applicants, other
than the franchise holder, the
franchise operator shall be under
obligation to enter into an agreement
with the domestic telephone network,
under
an
interconnection
agreement;"
Department
of
Transportation
and
Communication (DOTC) Circular No. 87188, issued in 1987, also decrees:
"12. All public communications
carriers shall interconnect their
facilities pursuant to comparatively
efficient interconnection (CEI) as
defined by the NTC in the interest of
economic efficiency."
The sharing of revenue was an additional
feature considered in DOTC Circular No.
90-248, dated 14 June 1990, laying down the
"Policy on Interconnection and Revenue
Sharing
by Public
Communications
Carriers," thus:
"WHEREAS, it is the objective of
government to promote the rapid
expansion of telecommunications
services in all areas of the
Philippines;
81
"WHEREAS, there is s need to

maximize
the
use
of
telecommunications
facilities
available and encourage investment
in telecommunications infrastructure
by suitably qualified service
providers;
"WHEREAS, in recognition of the
vital role of communications in
nation building, there is a need to
ensure that all users of the public
telecommunications service have
access to all other users of the
service wherever they may be within
the Philippines at an acceptable
standard of service and at reasonable
cost.
"WHEREFORE, xxx the following
Department
policies
on
interconnection and revenue sharing
are hereby promulgated:
1. All facilities offering
public
telecommunication
services
shall
be
interconnected
into
the
nationwide
telecommunications
network/s,
xxx xxx xxx
4. The interconnection of
networks shall be effected in
a fair and non-discriminatory
manner and
shortest
practicable.
within the
timeframe
5. The precise points of

interface between service
operators shall be as defined
by the NTC; and the
apportionment of costs and
division of revenues resulting
from
interconnection
of
telecommunications networks
shall be as approved and/or
prescribed by the NTC.
xxx xxx xxx"
Since then, the NTC, on 12 July 1990,
issued Memorandum Circular No. 7-1390 prescribing the "Rules and Regulations
Governing the Interconnection of Local
Telephone Exchanges and Public Calling
Offices
with
the
Nationwide
Telecommunications Network/s, the Sharing
of Revenue Derived Therefrom, and for
Other Purposes."
The NTC order to interconnect allows the
parties themselves to discuss and agree upon
the specific terms and conditions of the
interconnection agreement instead of the
NTC itself laying down the standards of
interconnection which it can very well
impose. Thus it is that PLDT cannot
justifiably claim denial of due process. It has
been heard. It will continue to be heard in
the main proceedings. It will surely be heard
in the negotiations concerning

interconnection agreement.
the
As disclosed during the hearing, the

interconnection sought by ETCI is by no
means a "parasitic dependence" on PLDT.
The ETCI system can operate on its own
even without interconnection, but it will be
limited to its own subscribers. What
interconnection seeks to accomplish is to
enable the system to reach out to the greatest
number of people possible in line with
governmental policies laid down. Cellular
phones can access PLDT units and vice
versa in as wide an area as attainable. With
the broader reach, public interest and
convenience will be better served. To be
sure, ETCI could provide no mean
competition (although PLDT maintains that
it has nothing to fear from the "innocuous
interconnection"), and eat into PLDT's own
toll revenue ("cream PLDT revenue," in its
own words), but all for the eventual benefit
of all that the system can reach.
6. Ultimate Considerations
The decisive considerations are public need,

public interest, and the common good.
Those were the overriding factors which
motivated NTC in granting provisional
authority to ETCI. Article II, Section 24 of
the 1987Constitution, recognizes the vital
role of communication and information in
nation building. It is likewise a State policy
82
to provide the environment for the

emergence of communications structures
suitable to the balanced flow of information
into, out of, and across the country (Article
XVI, Section 10, ibid.). A modern and
dependable
communications
network
rendering efficient and reasonably priced
services is also indispensable for accelerated
economic recovery and development. To
these public and national interests, public
utility companies must bow and yield.
Despite the fact that there is a virtual
monopoly of the telephone system in the
country at present, service is sadly
inadequate. Customer demands are hardly
met, whether fixed or mobile. There is a
unanimous cry to hasten the development of
a modern, efficient, satisfactory and
continuous telecommunications service not
only in Metro Manila but throughout the
archipelago. The need therefor was
dramatically emphasized by the destructive
earthquake of 16 July 1990. It may be that
users of the cellular mobile telephone would
initially be limited to a few and to highly
commercialized areas. However, it is a step
in the right direction towards the
enhancement of the telecommunications
infrastructure,
the
expansion
of
telecommunications services in, hopefully,
all areas of the country, with chances of
complete disruption of communications
minimized. It will thus impact on the total
development
of
the
country's
telecommunications systems and redound to
the benefit of even those who may not be

able to subscribe to ETCI.
Free competition in the industry may also
provide the answer to a much-desired
improvement in the quality and delivery of
this type of public utility, to improved
technology, fast and handy mobile service,
and reduced user dissatisfaction. After all,
neither PLDT nor any other public utility
has a constitutional right to a monopoly
position in view of the Constitutional
proscription that no franchise certificate or
authorization shall be exclusive in character
or shall last longer than fifty (50) years
(ibid., Section 11; Article XIV, Section 5,
1973 Constitution; Article XIV, Section 8,
1935 Constitution). Additionally, the State is
empowered to decide whether public interest
demands that monopolies be regulated or
prohibited (1987 Constitution, Article XII,
Section 19).
WHEREFORE, finding no grave abuse of
discretion, tantamount to lack of or excess of
jurisdiction, on the part of the National
Telecommunications Commission in issuing
its challenged Orders of 12 December 1988
and 8 May 1989 in NTC Case No. 87-39,
this Petition is DISMISSED for lack of
merit. The Temporary Restraining Order
heretofore issued is LIFTED. The bond
issued as a condition for the issuance of said
restraining Order is declared forfeited in
favor of private responder Express
Telecommunications Co., Inc.
Costs against petitioner.

||| (PLDT
Co.
v.
National
Telecommunications Commission, G.R. No.
88404, [October 18, 1990], 268 PHIL 784815)
[G.R. No. 106804. August 12, 2004.]

NATIONAL
POWER
CORPORATION, petitioner, vs.
COURT OF APPEALS and
ANTONINO POBRE, respondents.
DECISION
CARPIO, J p:
The Case
83
Before us is a petition for review 1 of the 30

March 1992 Decision 2 and 14 August 1992
Resolution of the Court of Appeals in CAG.R. CV No. 16930. The Court of Appeals
affirmed the Decision 3 of the Regional Trial
Court, Branch 17, Tabaco, Albay in Civil
Case No. T-552.
The Antecedents
Petitioner National Power Corporation
("NPC") is a public corporation created to
generate geothermal, hydroelectric, nuclear
and other power and to transmit electric
power nationwide. 4 NPC is authorized by
law to acquire property and exercise the
right of eminent domain.
Private
respondent
Antonino
Pobre
("Pobre") is the owner of a 68,969 squaremeter land ("Property") located in Barangay
Bano, Municipality of Tiwi, Albay. The
Property is covered by TCT No. 4067 and
Subdivision Plan 11-9709. SATDEI
In 1963, Pobre began developing the
Property as a resort-subdivision, which he
named as "Tiwi Hot Springs Resort
Subdivision." On 12 January 1966, the then
Court of First Instance of Albay approved
the subdivision plan of the Property. The
Register of Deeds thus cancelled TCT No.
4067 and issued independent titles for the
approved lots. In 1969, Pobre started
advertising and selling the lots.
On 4 August 1965, the Commission on

Volcanology certified that thermal mineral
water and steam were present beneath the
Property. The Commission on Volcanology
found the thermal mineral water and steam
suitable for domestic use and potentially for
commercial or industrial use.
NPC then became involved with Pobres
Property in three instances.
First was on 18 February 1972 when Pobre
leased to NPC for one year eleven lots from
the approved subdivision plan.
Second was sometime in 1977, the first time
that NPC filed its expropriation case against
Pobre to acquire an 8,311.60 square-meter
portion of the Property. 5 On 23 October
1979, the trial court ordered the
expropriation of the lots upon NPCs
payment of P25 per square meter or a total
amount of P207,790. NPC began drilling
operations and construction of steam wells.
While this first expropriation case was
pending, NPC dumped waste materials
beyond the site agreed upon by NPC with
Pobre. The dumping of waste materials
altered the topography of some portions of
the Property. NPC did not act on Pobres
complaints and NPC continued with its
dumping.
Third was on 1 September 1979, when NPC
filed its second expropriation case against
Pobre to acquire an additional 5,554 square
meters of the Property. This is the subject of
this petition. NPC needed the lot for the

construction
and
maintenance
of
Naglagbong Well Site F-20, pursuant to
Proclamation No. 739 6 and Republic Act
No. 5092. 7 NPC immediately deposited
P5,546.36 with the Philippine National
Bank. The deposit represented 10% of the
total market value of the lots covered by the
second expropriation. On 6 September 1979,
NPC entered the 5,554 square-meter lot
upon the trial courts issuance of a writ of
possession to NPC.
On 10 December 1984, Pobre filed a motion
to dismiss the second complaint for
expropriation. Pobre claimed that NPC
damaged his Property. Pobre prayed for just
compensation of all the lots affected by
NPCs actions and for the payment of
damages.
On 2 January 1985, NPC filed a motion to
dismiss the second expropriation case on the
ground that NPC had found an alternative
site and that NPC had already abandoned in
1981 the project within the Property due to
Pobres opposition.
On 8 January 1985, the trial court granted
NPCs motion to dismiss but the trial court
allowed Pobre to adduce evidence on his
claim for damages. The trial court admitted
Pobres exhibits on the damages because
NPC failed to object.
On 30 August 1985, the trial court ordered
the case submitted for decision since NPC
84
failed to appear to present its evidence. The

trial court denied NPCs motion to
reconsider the submission of the case for
decision.
NPC filed a petition for certiorari 8 with the
then
Intermediate
Appellate
Court,
questioning the 30 August 1985 Order of the
trial court. On 12 February 1987, the
Intermediate Appellate Court dismissed
NPCs petition but directed the lower court
to rule on NPCs objections to Pobres
documentary exhibits.
On 27 March 1987, the trial court admitted
all of Pobres exhibits and upheld its Order
dated 30 August 1985. The trial court
considered the case submitted for decision.
subdivision of defendant
with an area of sixty
eight thousand nine
hundred
sixty
nine
(68,969) square meters,
plus legal rate of interest
per
annum
from
September 6, 1979 until
the whole amount is
paid, and upon payment
thereof by the plaintiff
the defendant is hereby
ordered to execute the
necessary
Deed
of
Conveyance or Absolute
Sale of the property in
favor of the plaintiff;
(2) The
(1) The sum of THREE

MILLION
FOUR
HUNDRED
FORTY
EIGHT
THOUSAND
FOUR
HUNDRED
FIFTY (P3,448,450.00)
PESOS which is the fair
market value of the
WHEREFORE, by reason of the

foregoing, the Decision appealed
from is AFFIRMED with the
modification that the award of
attorneys fees is deleted. No
pronouncement as to costs.
SO ORDERED. 10
The Court of Appeals denied NPCs motion
for reconsideration in a Resolution dated 14
August 1992.
The Ruling of the Trial Court
On 13 July 1987, NPC filed its motion for

reconsideration of the decision. On 30
October 1987, the trial court issued its Order
denying NPCs motion for reconsideration.
In its 69-page decision, the trial court

recounted in great detail the scale and scope
of the damage NPC inflicted on the Property
that Pobre had developed into a resortsubdivision. Pobres Property suffered
"permanent injury" because of the noise,
water, air and land pollution generated by
NPCs geothermal plants. The construction
and operation of the geothermal plants
drastically changed the topography of the
Property making it no longer viable as a
resort-subdivision. The chemicals emitted by
the geothermal plants damaged the natural
resources in the Property and endangered the
lives of the residents.
NPC appealed to the Court of Appeals. On

30 March 1992, the Court of Appeals upheld
the decision of the trial court but deleted the
NPC did not only take the 8,311.60 squaremeter portion of the Property, but also the
remaining area of the 68,969 square-meter
On 29 April 1987, the trial court issued its

Decision in favor of Pobre. The dispositive
portion of the decision reads: EDIHSC
WHEREFORE, premises considered,
judgment is hereby rendered in favor
of the defendant and against the
plaintiff, ordering the plaintiff to pay
unto the defendant:
sum of ONE
HUNDRED FIFTY
THOUSAND
(P150,000.00)
PESOS for and as
attorneys fees.
award of attorneys fees. The dispositive

portion of the decision reads:
Costs against the plaintiff.

SO ORDERED. 9
85
Property. NPC had rendered Pobres entire

Property useless as a resort-subdivision. The
Property has become useful only to NPC.
NPC must therefore take Pobres entire
Property and pay for it.
The trial court found the following badges
of NPCs bad faith: (1) NPC allowed five
years to pass before it moved for the
dismissal of the second expropriation case;
(2) NPC did not act on Pobres plea for NPC
to eliminate or at least reduce the damage to
the Property; and (3) NPC singled out
Pobres
Property
for
piecemeal
expropriation when NPC could have
expropriated other properties which were
not affected in their entirety by NPCs
operation.
The trial court found the just compensation
to be P50 per square meter or a total of
P3,448,450 for Pobres 68,969 square-meter
Property. NPC failed to contest this
valuation. Since NPC was in bad faith and it
employed dilatory tactics to prolong this
case, the trial court imposed legal interest on
the P3,448,450 from 6 September 1979 until
full payment. The trial court awarded Pobre
attorneys fees of P150,000.
The Ruling of the Court of Appeals
The Court of Appeals affirmed the decision
of the trial court. However, the appellate
court deleted the award of attorneys fees
because Pobre did not properly plead for
it. AEIHCS
The Issues
NPC claims that the Court of Appeals
committed the following errors that warrant
reversal of the appellate courts decision:
1. In not annulling the appealed
Decision for having been
rendered by the trial court with
grave abuse of discretion and
without jurisdiction;
2. In holding that NPC had "taken"
the entire Property of Pobre;
3. Assuming arguendo that there was
"taking" of the entire Property,
in not excluding from the
Property the 8,311.60 squaremeter portion NPC had
previously expropriated and
paid for;
4. In holding that the amount of just
compensation fixed by the trial
court at P3,448,450.00 with
interest from September 6, 1979
until fully paid, is just and fair;
5. In not holding that the just
compensation should be fixed at
P25.00 per square meter only as
what NPC and Pobre had
previously mutually agreed
upon; and
6. In not totally setting aside the

appealed Decision of the trial
court. 11
Procedural Issues
NPC, represented by the Office of the
Solicitor General, insists that at the time that
it moved for the dismissal of its complaint,
Pobre had yet to serve an answer or a motion
for summary judgment on NPC. Thus, NPC
as plaintiff had the right to move for the
automatic dismissal of its complaint. NPC
relies on Section 1, Rule 17 of the 1964
Rules of Court, the Rules then in effect.
NPC argues that the dismissal of the
complaint should have carried with it the
dismissal of the entire case including
Pobres counterclaim.
NPCs belated attack on Pobres claim for
damages must fail. The trial courts
reservation of Pobres right to recover
damages in the same case is already beyond
review. The 8 January 1985 Order of the
trial court attained finality when NPC failed
to move for its reconsideration within the
15-day reglementary period. NPC opposed
the order only on 27 May 1985 or more than
four months from the issuance of the order.
We cannot fault the Court of Appeals for not

considering NPCs objections against the
subsistence of Pobres claim for damages.
NPC neither included this issue in its
86
assignment of errors nor discussed it in its

appellants brief. NPC also failed to question
the trial courts 8 January 1985 Order in the
petition for certiorari 12 it had earlier filed
with the Court of Appeals. It is only before
this Court that NPC now vigorously assails
the preservation of Pobres claim for
damages. Clearly, NPCs opposition to the
existence of Pobres claim for damages is a
mere afterthought. Rules of fair play, justice
and due process dictate that parties cannot
raise an issue for the first time on appeal. 13
We must correct NPCs claim that it filed the
notice of dismissal just "shortly" after it had
filed the complaint for expropriation. While
NPC had intimated several times to the trial
court its desire to dismiss the expropriation
case it filed on 5 September 1979, 14 it was
only on 2 January 1985 that NPC filed its
notice of dismissal. 15 It took NPC more
than five years to actually file the notice of
dismissal. Five years is definitely not a short
period of time. NPC obviously dilly-dallied
in filing its notice of dismissal while NPC
meanwhile burdened Pobres property
rights.
Even a timely opposition against Pobres
claim for damages would not yield a
favorable ruling for NPC. It is not Section 1,
Rule 17 of the 1964 Rules of Court that is
applicable to this case but Rule 67 of the
same Rules, as well as jurisprudence on
expropriation cases. Rule 17 referred to
dismissal of civil actions in general while
Rule 67 specifically governed eminent

domain cases.
Eminent domain is the authority and right of
the state, as sovereign, to take private
property for public use upon observance of
due process of law and payment of just
compensation. 16 The power of eminent
domain may be validly delegated to the local
governments, other public entities and
public
utilities 17 such
as
NPC.
Expropriation is the procedure for enforcing
the right of eminent domain. 18 "Eminent
Domain" was the former title of Rule 67 of
the 1964 Rules of Court. In the 1997 Rules
of Civil Procedure, which took effect on 1
July 1997, the prescribed method of
expropriation is still found in Rule 67, but
its title is now "Expropriation."
Section 1, Rule 17 of the 1964 Rules of
Court provided the exception to the general
rule that the dismissal of the complaint is
addressed to the sound discretion of the
court. 19 For as long as all of the elements
of Section 1, Rule 17 were present the
dismissal of the complaint rested exclusively
on the plaintiffs will. 20 The defending
party and even the courts were powerless to
prevent the dismissal. 21 The courts could
only accept and record the dismissal. 22
A plain reading of Section 1, Rule 17 of the
1964 Rules of Court makes it obvious that
this rule was not intended to supplement
Rule 67 of the same Rules. Section 1, Rule

17 of the 1964 Rules of Court, provided that:
SECTION 1. Dismissal by the
plaintiff. An action may be
dismissed by the plaintiff without
order of court by filing a notice of
dismissal at any time before service
of the answer or of a motion for
summary
judgment.
Unless
otherwise stated in the notice, the
dismissal is without prejudice, except
that a notice operates as an
adjudication upon the merits when
filed by a plaintiff who has once
dismissed in a competent court an
action based on or including the
same claim. A class suit shall not be
dismissed or compromised without
approval of the court.
While Section 1, Rule 17 spoke of the
"service of answer or summary judgment,"
the Rules then did not require the filing of an
answer or summary judgment in eminent
domain cases. 23 In lieu of an answer,
Section 3 of Rule 67 required the defendant
to file a single motion to dismiss where he
should present all of his objections and
defenses to the taking of his property for the
purpose specified in the complaint. 24 In
short, in expropriation cases under Section 3
of Rule 67, the motion to dismiss took the
place of the answer.
The records show that Pobre had already
filed and served on NPC his "motion to
87
dismiss/answer" 25 even before NPC filed

its own motion to dismiss. NPC filed its
notice of dismissal of the complaint on 2
January 1985. However, as early as 10
December 1984, Pobre had already filed
with the trial court and served on NPC his
"motion to dismiss/answer." A certain
Divina Cerela received Pobres pleading on
behalf of NPC. 26 Unfortunately for NPC,
even Section 1, Rule 17 of the 1964 Rules of
Court could not save its cause.
NPC is in no position to invoke Section 1,
Rule 17 of the 1964 Rules of Court. A
plaintiff loses his right under this rule to
move for the immediate dismissal of the
complaint once the defendant had served on
the plaintiff the answer or a motion for
summary judgment before the plaintiff could
file his notice of dismissal of the
complaint. 27 Pobres
"motion
to
dismiss/answer," filed and served way ahead
of NPCs motion to dismiss, takes the case
out of Section 1, Rule 17 assuming the same
applies.
In expropriation cases, there is no such thing
as the plaintiffs matter of right to dismiss
the complaint precisely because the
landowner may have already suffered
damages at the start of the taking. The
plaintiffs right in expropriation cases to
dismiss the complaint has always been
subject to court approval and to certain
conditions. 28 The exceptional right that
Section 1, Rule 17 of the 1964 Rules of
Court conferred on the plaintiff must be
understood to have applied only to other

civil actions. The 1997 Rules of Civil
Procedure abrogated this exceptional
right. 29
The power of eminent domain is subject to
limitations. A landowner cannot be deprived
of his right over his land until expropriation
proceedings are instituted in court. 30 The
court must then see to it that the taking is for
public use, there is payment of just
compensation and there is due process of
law. 31
If the propriety of the taking of private
property through eminent domain is subject
to judicial scrutiny, the dismissal of the
complaint must also pass judicial inquiry
because private rights may have suffered in
the meantime. The dismissal, withdrawal or
abandonment of the expropriation case
cannot be made arbitrarily. If it appears to
the court that the expropriation is not for
some public use, 32 then it becomes the duty
of
the
court
to
dismiss
the
action. 33 However, when the defendant
claims that his land suffered damage
because of the expropriation, the dismissal
of the action should not foreclose the
defendants right to have his damages
ascertained either in the same case or in a
separate action. 34
Thus, NPCs theory that the dismissal of its
complaint carried with it the dismissal of
Pobres claim for damages is baseless. There
is nothing in Rule 67 of the 1964 Rules of
Court that provided for the dismissal of the

defendants claim for damages, upon the
dismissal of the expropriation case. Case law
holds that in the event of dismissal of the
expropriation case, the claim for damages
may be made either in a separate or in the
same action, for all damages occasioned by
the institution of the expropriation
case. 35 The dismissal of the complaint can
be made under certain conditions, such as
the reservation of the defendants right to
recover damages either in the same or in
another action. 36 The trial court in this case
reserved Pobres right to prove his claim in
the same case, a reservation that has become
final due to NPCs own fault.
Factual Findings of the Trial
Appellate Courts Bind the Court
and
The trial and appellate courts held that even

before the first expropriation case, Pobre had
already established his Property as a resortsubdivision. NPC had wrought so much
damage to the Property that NPC had made
the Property uninhabitable as a resortsubdivision. NPCs facilities such as steam
wells, nag wells, power plants, power lines,
and canals had hemmed in Pobres Property.
NPCs operations of its geothermal project
also posed a risk to lives and properties.
We uphold the factual findings of the trial
and appellate courts. Questions of facts are
beyond the pale of Rule 45 of the Rules of
Court as a petition for review may only raise
questions of law. 37 Moreover, factual
88
findings of the trial court, particularly when

affirmed by the Court of Appeals, are
generally binding on this Court. 38 We thus
find no reason to set aside the two courts
factual findings. ACTEHI
NPC points out that it did not take Pobres
68,969 square-meter Property. NPC argues
that assuming that it is liable for damages,
the 8,311.60 square-meter portion that it had
successfully expropriated and fully paid for
should have been excluded from the 68,969
square-meter Property that Pobre claims
NPC had damaged.
We are not persuaded.
In its 30 October 1987 Order denying NPCs
motion for reconsideration, the trial court
pointed out that the Property originally had a
total
area
of
141,300
square
meters. 39 Pobre converted the Property into
a resort-subdivision and sold lots to the
public. What remained of the lots are the
68,969 square meters of land. 40 Pobre no
longer claimed damages for the other lots
that he had before the expropriation.
Pobre identified in court the lots forming the
68,969 square-meter Property. NPC had the
opportunity to object to the identification of
the lots. 41 NPC, however, failed to do so.
Thus, we do not disturb the trial and
appellate courts finding on the total land
area NPC had damaged.
NPC must Pay Just Compensation for the

Entire Property
Ordinarily, the dismissal of the expropriation
case restores possession of the expropriated
land to the landowner. 42 However, when
possession of the land cannot be turned over
to the landowner because it is neither
convenient nor feasible anymore to do so,
the only remedy available to the aggrieved
landowner is to demand payment of just
compensation. 43
In this case, we agree with the trial and

appellate courts that it is no longer possible
and practical to restore possession of the
Property to Pobre. The Property is no longer
habitable as a resort-subdivision. The
Property is worthless to Pobre and is now
useful only to NPC. Pobre has completely
lost the Property as if NPC had physically
taken over the entire 68,969 square-meter
Property.
In United States v. Causby, 44 the U.S.
Supreme Court ruled that when private
property is rendered uninhabitable by an
entity with the power to exercise eminent
domain, the taking is deemed complete.
Such taking is thus compensable.
In this jurisdiction, the Court has ruled that
if the government takes property without
expropriation and devotes the property to
public use, after many years the property
owner may demand payment of just

compensation. 45This principle is in accord
with the constitutional mandate that private
property shall not be taken for public use
without just compensation. 46
In the recent case of National Housing
Authority
v.
Heirs
of
Isidro
Guivelondo, 47 the Court compelled the
National Housing Authority ("NHA") to pay
just compensation to the landowners even
after the NHA had already abandoned the
expropriation case. The Court pointed out
that a government agency could not initiate
expropriation proceedings, seize a persons
property, and then just decide not to proceed
with the expropriation. Such a complete
turn-around is arbitrary and capricious and
was condemned by the Court in the strongest
possible terms. NHA was held liable to the
landowners for the prejudice that they had
suffered.
In this case, NPC appropriated Pobres
Property without resort to expropriation
proceedings. NPC dismissed its own
complaint for the second expropriation. At
no point did NPC institute expropriation
proceedings for the lots outside the 5,554
square-meter portion subject of the second
expropriation. The only issues that the trial
court had to settle were the amount of just
compensation and damages that NPC had to
pay Pobre.
This case ceased to be an action for
expropriation when NPC dismissed its
89
complaint for expropriation. Since this case

has been reduced to a simple case of
recovery of damages, the provisions of the
Rules of Court on the ascertainment of the
just compensation to be paid were no longer
applicable. A trial before commissioners, for
instance, was dispensable.
We have held that the usual procedure in the
determination of just compensation is
waived when the government itself initially
violates procedural requirements. 48 NPCs
taking of Pobres property without filing the
appropriate expropriation proceedings and
paying him just compensation is a
transgression of procedural due process.
From the beginning, NPC should have
initiated expropriation proceedings for
Pobres entire 68,969 square-meter Property.
NPC did not. Instead, NPC embarked on a
piecemeal expropriation of the Property.
Even as the second expropriation case was
still pending, NPC was well aware of the
damage that it had unleashed on the entire
Property.
NPC,
however,
remained
impervious to Pobres repeated demands for
NPC to abate the damage that it had wrought
on his Property.
NPC moved for the dismissal of the
complaint for the second expropriation on
the ground that it had found an alternative
site and there was stiff opposition from
Pobre. 49 NPC abandoned the second
expropriation case five years after it had
already deprived the Property virtually of all
its value. NPC has demonstrated its utter

disregard for Pobres property rights.
Thus, it would now be futile to compel NPC
to institute expropriation proceedings to
determine the just compensation for Pobres
68,969 square-meter Property. Pobre must
be spared any further delay in his pursuit to
receive just compensation from NPC.
Just compensation is the fair and full
equivalent of the loss. 50 The trial and
appellate courts endeavored to meet this
standard. The P50 per square meter
valuation of the 68,969 square-meter
Property is reasonable considering that the
Property was already an established resortsubdivision. NPC has itself to blame for not
contesting the valuation before the trial
court. Based on the P50 per square meter
valuation, the total amount of just
compensation that NPC must pay Pobre is
P3,448,450.
The landowner is entitled to legal interest on
the price of the land from the time of the
taking up to the time of full payment by the
government. 51 In
accord
with
jurisprudence, we fix the legal interest at six
per cent (6%) per annum. 52 The legal
interest should accrue from 6 September
1979, the date when the trial court issued the
writ of possession to NPC, up to the time
that NPC fully pays Pobre. 53
NPCs abuse of its eminent domain authority
is appalling. However, we cannot award
moral damages because Pobre did not assert

his right to it. 54 We also cannot award
attorneys fees in Pobres favor since he did
not appeal from the decision of the Court of
Appeals denying recovery of attorneys
fees. 55
Nonetheless, we find it proper to award
P50,000 in temperate damages to Pobre. The
court may award temperate or moderate
damages, which are more than nominal but
less than compensatory damages, if the court
finds that a party has suffered some
pecuniary loss but its amount cannot be
proved with certainty from the nature of the
case. 56 As the trial and appellate courts
noted, Pobres resort-subdivision was no
longer just a dream because Pobre had
already established the resort-subdivision
and the prospect for it was initially
encouraging. That is, until NPC permanently
damaged Pobres Property. NPC did not just
destroy the property. NPC dashed Pobres
hope of seeing his Property achieve its full
potential as a resort-subdivision.
The lesson in this case must not be lost on
entities with eminent domain authority. Such
entities cannot trifle with a citizens property
rights. The power of eminent domain is an
extraordinary power they must wield with
circumspection and utmost regard for
procedural requirements. Thus, we hold
NPC liable for exemplary damages of
P100,000. Exemplary damages or corrective
damages are imposed, by way of example or
correction for the public good, in addition to
90
the moral, temperate,

compensatory damages. 57
liquidated
or
WHEREFORE, we DENY the petition for

lack of merit. The appealed Decision of the
Court of Appeals dated 30 March 1992 in
CA-G.R. CV No. 16930 is AFFIRMED with
MODIFICATION.
National
Power
Corporation is ordered to pay Antonino
Pobre P3,448,450 as just compensation for
the 68,969 square-meter Property at P50 per
square meter. National Power Corporation is
directed to pay legal interest at 6% per
annum on the amount adjudged from 6
September 1979 until fully paid. Upon
National Power Corporations payment of
the full amount, Antonino Pobre is ordered
to execute a Deed of Conveyance of the
Property in National Power Corporations
favor. National Power Corporation is further
ordered to pay temperate and exemplary
damages of P50,000 and P100,000,
respectively. No costs.
SO ORDERED.
||| (National Power Corp. v. Court of
Appeals, G.R. No. 106804, [August 12,
2004], 479 PHIL 850-870)
[G.R. No. 155746. October 13, 2004.]
DIOSDADO
LAGCAO,
DOROTEO
LAGCAO
and
URSULA
LAGCAO, petitioners, vs. JUDGE
GENEROSA G. LABRA, Branch
23, Regional Trial Court, Cebu,
and
the
CITY
OF
CEBU, respondent.
DECISION
CORONA, J p:
Before us is a petition for review of the
decision dated July 1, 2002 of the Regional
Trial
Court,
Branch
23,
Cebu
City 1 upholding the validity of the City of
Cebu's Ordinance No. 1843, as well as the
lower court's order dated August 26, 2002
denying
petitioner's
motion
for
reconsideration.
In 1964, the Province of Cebu donated 210
lots to the City of Cebu. One of these lots
was Lot 1029, situated in Capitol Hills,
Cebu City, with an area of 4,048 square
meters. In 1965, petitioners purchased Lot
1029 on installment basis. But then, in late
1965, the 210 lots, including Lot 1029,
reverted
to
the
Province
of
Cebu. 2 Consequently, the province tried to
annul the sale of Lot 1029 by the City of
Cebu to the petitioners. This prompted the
latter to sue the province for specific
performance and damages in the then Court
of First Instance.
On July 9, 1986, the court a quo ruled in

favor of petitioners and ordered the Province
of Cebu to execute the final deed of sale in
favor of petitioners. On June 11, 1992, the
Court of Appeals affirmed the decision of
the trial court. Pursuant to the ruling of the
appellate court, the Province of Cebu
executed on June 17, 1994 a deed of
absolute sale over Lot 1029 in favor of
petitioners. Thereafter, Transfer Certificate
of Title (TCT) No. 129306 was issued in the
name of petitioners and Crispina Lagcao. 3
After acquiring title, petitioners tried to take
possession of the lot only to discover that it
was already occupied by squatters. Thus, on
June 15, 1997, petitioners instituted
ejectment proceedings against the squatters.
The Municipal Trial Court in Cities
(MTCC), Branch 1, Cebu City, rendered a
decision on April 1, 1998, ordering the
squatters to vacate the lot. On appeal, the
RTC affirmed the MTCC's decision and
issued a writ of execution and order of
demolition.
However, when the demolition order was
about to be implemented, Cebu City Mayor
Alvin Garcia wrote two letters 4 to the
MTCC, requesting the deferment of the
demolition on the ground that the City was
still looking for a relocation site for the
squatters. Acting on the mayor's request, the
MTCC issued two orders suspending the
demolition for a period of 120 days from
February 22, 1999. Unfortunately for
petitioners, during the suspension period,
91
the Sangguniang Panlungsod (SP) of Cebu

City passed a resolution which identified Lot
1029 as a socialized housing site pursuant
to RA 7279. 5 Then, on June 30, 1999, the
SP of Cebu City passed Ordinance No.
1772 6which included Lot 1029 among the
identified sites for socialized housing. On
July, 19, 2000, Ordinance No. 1843 7 was
enacted by the SP of Cebu City authorizing
the mayor of Cebu City to initiate
expropriation proceedings for the acquisition
of Lot 1029 which was registered in the
name of petitioners. The intended
acquisition was to be used for the benefit of
the homeless after its subdivision and sale to
the actual occupants thereof. For this
purpose, the ordinance appropriated the
amount of P6,881,600 for the payment of
the subject lot. This ordinance was approved
by Mayor Garcia on August 2, 2000.
On August 29, 2000, petitioners filed with
the RTC an action for declaration of nullity
of Ordinance No. 1843 for being
unconstitutional. The trial court rendered its
decision on July 1, 2002 dismissing the
complaint filed by petitioners whose
subsequent motion for reconsideration was
likewise denied on August 26, 2002.
In this appeal, petitioners argue that
Ordinance No. 1843 is unconstitutional as it
sanctions the expropriation of their property
for the purpose of selling it to the squatters,
an endeavor contrary to the concept of
"public
use"
contemplated
in
the Constitution. 8 They allege that it will
benefit only a handful of people. The

ordinance, according to petitioners, was
obviously passed for politicking, the
squatters undeniably being a big source of
votes.
In sum, this Court is being asked to resolve
whether or not the intended expropriation by
the City of Cebu of a 4,048-square-meter
parcel of land owned by petitioners
contravenes the Constitution and applicable
laws.
Under Section 48 of RA 7160, 9 otherwise
known as the Local Government Code of
1991, 10 local legislative power shall be
exercised
by
the Sangguniang
Panlungsod of the city. The legislative acts
of the Sangguniang Panlungsod in the
exercise of its lawmaking authority are
denominated ordinances.
Local government units have no inherent
power of eminent domain and can exercise it
only when expressly authorized by the
legislature. 11 By virtue of RA 7160,
Congress conferred upon local government
units the power to expropriate. Ordinance
No. 1843 was enacted pursuant to Section
19 of RA 7160:
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 . . .. (italics supplied).
Ordinance No. 1843 which authorized the
expropriation of petitioners' lot was enacted
by the SP of Cebu City to provide socialized
housing for the homeless and low-income
residents of the City.
However, while we recognize that housing is
one of the most serious social problems of
the country, local government units do not
possess unbridled authority to exercise their
power of eminent domain in seeking
solutions to this problem.
There are two legal provisions which limit
the exercise of this power: (1) 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; 12and (2) private property shall not be
compensation. 13 Thus, the exercise by local
government units of the power of eminent
domain is not absolute. In fact, Section 19 of
RA 7160 itself explicitly states that such
exercise must comply with the provisions of
the Constitution and pertinent laws.
The exercise of the power of eminent
domain drastically affects a landowner's
right to private property, which is as much a
constitutionally-protected right necessary for
92
the preservation and enhancement of

personal dignity and intimately connected
with
the
rights
to
life
and
liberty. 14 Whether directly exercised by the
State or by its authorized agents, the
exercise of eminent domain is necessarily in
derogation of private rights. 15 For this
reason, the need for a painstaking scrutiny
cannot be overemphasized.
The due process clause cannot be trampled
upon each time an ordinance orders the
expropriation of a private individual's
property. The courts cannot even adopt
hands-off policy simply because public use
or public purpose is invoked by an
ordinance, or just compensation has been
fixed and determined. In De Knecht vs.
Bautista, 16 we said:
It is obvious then that a land-owner
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 oppressive
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 governmental 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. . . ..
The foundation of the right to exercise
eminent domain is genuine necessity and
that necessity must be of public
character. 17 Government
may
not
capriciously or arbitrarily choose which
private property should be expropriated. In
this case, there was no showing at all why
petitioners' property was singled out for
expropriation by the city ordinance or what
necessity impelled the particular choice or
selection. Ordinance No. 1843 stated no
reason for the choice of petitioners' property
as the site of a socialized housing project.
housing shall be acquired in the

following order:
(a) Those owned by the
Government or any of
its
subdivisions,
instrumentalities,
or
agencies,
including
government-owned or
controlled corporations
and their subsidiaries;
(b) Alienable lands of the
public domain;
(c) Unregistered
abandoned
lands;
and
or
idle
Condemnation of private lands in an

irrational or piecemeal fashion or the
random expropriation of small lots to
accommodate no more than a few tenants or
squatters is certainly not the condemnation
for
public
use
contemplated
by
the Constitution. This is depriving a citizen
of his property for the convenience of a few
without perceptible benefit to the public. 18
(d) Those within the declared

Areas
or
Priority
Development,
Zonal
Improvement Program
sites,
and
Slum
Improvement
and
Resettlement Program
sites which have not yet
been acquired;
RA 7279 is the law that governs the local

expropriation of property for purposes of.
urban land reform and housing. Sections 9
and 10 thereof provide:
(e) Bagong
Lipunan
Improvement of Sites
and Services or BLISS
which have not yet been
acquired; and
SEC 9. Priorities in the Acquisition

of Land. Lands for socialized
(f) Privately-owned lands.

93
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 onsite development of government
lands. (Emphasis supplied).
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: . . . (Emphasis
supplied).
In the recent case of Estate or Heirs of the
Late Ex-Justice Jose B.L. Reyes et al. vs.
City of Manila, 19 we ruled that the abovequoted provisions are strict limitations on
the exercise of the power of eminent domain
by local government units, especially with
respect to (1) the order of priority in

acquiring land for socialized housing and (2)
the resort to expropriation proceedings as a
means to acquiring it. Private lands rank last
in the order of priority for purposes of
socialized housing. In the same vein,
expropriation proceedings may be resorted
to only after the other modes of acquisition
are exhausted. Compliance with these
conditions is mandatory because these are
the only safeguards of oftentimes helpless
owners of private property against what may
be a tyrannical violation of due process
when their property is forcibly taken from
them allegedly for public use.
We have found nothing in the records
indicating that the City of Cebu complied
strictly with Sections 9 and 10 of RA 7279.
Ordinance No. 1843 sought to expropriate
petitioners' property without any attempt to
first acquire the lands listed in (a) to (e) of
Section 9 of RA 7279. Likewise, Cebu City
failed to establish that the other modes of
acquisition in Section 10 of RA 7279 were
first exhausted. Moreover, prior to the
passage of Ordinance No. 1843, there was
no evidence of a valid and definite offer to
buy petitioners' property as required by
Section 19 of RA 7160. 20 We therefore find
Ordinance No. 1843 to be constitutionally
infirm for being violative of the petitioners'
right to due process.
It should also be noted that, as early as 1998,
petitioners had already obtained a favorable
judgment of eviction against the illegal
occupants of their property. The judgment in

this ejectment case had, in fact, already
attained finality, with a writ of execution and
an order of demolition. But Mayor Garcia
requested the trial court to suspend the
demolition on the pretext that the City was
still searching for a relocation site for the
squatters. However, instead of looking for a
relocation site during the suspension period,
the city council suddenly enacted Ordinance
No. 1843 for the expropriation of petitioners'
lot. It was trickery and bad faith, pure and
simple. The unconscionable manner in
which the questioned ordinance was passed
clearly indicated that respondent City
transgressed the Constitution, RA 7160
and RA 7279.
For an ordinance to be valid, it must not
only be within the corporate powers of the
city or municipality to enact but must also
be passed according to the procedure
prescribed by law. It must be in accordance
with certain well-established basic principles
of a substantive nature. These principles
require that an ordinance (1) must not
contravene the Constitution or any statute
(2) must not be unfair or oppressive (3) must
not be partial or discriminatory (4) must not
prohibit but may regulate trade (5) must be
general and consistent with public policy,
and (6) must not be unreasonable. 21
Ordinance No. 1843 failed to comply with
the foregoing substantive requirements. A
clear case of constitutional infirmity having
been thus established, this Court is
94
constrained to nullify the subject ordinance.

We recapitulate:
first, as earlier discussed, the
questioned ordinance is repugnant to
the
pertinent
provisions
of
the Constitution, RA 7279 and RA
7160;
second, the precipitate manner in
which it was enacted was plain
oppression masquerading as a propoor ordinance;
third, the fact that petitioners' small
property was singled out for
expropriation for the purpose of
awarding it to no more than a few
squatters
indicated
manifest
partiality against petitioners, and
fourth, the ordinance failed to show
that there was a reasonable relation
between the end sought and the
means adopted. While the objective
of the City of Cebu was to provide
adequate housing to slum dwellers,
the means it employed in pursuit of
such objective fell short of what was
legal, sensible and called for by the
circumstances.
Indeed, experience has shown that the
disregard of basic liberties and the use of
short-sighted methods in expropriation
proceedings have not achieved the desired
results. Over the years, the government, has
tried to remedy the worsening squatter

problem. Far from solving it, however,
government's kid-glove approach has only
resulted in the multiplication and
proliferation of squatter colonies and
blighted areas. A pro-poor program that is
well-studied, adequately funded, genuinely
sincere and truly respectful of everyone's
basic rights is what this problem calls for,
not the improvident enactment of politicsbased ordinances targeting small private lots
in no rational fashion.
WHEREFORE, the petition is hereby
GRANTED. The July 1, 2002 decision of
Branch 23 of the Regional Trial Court of
Cebu City is RESERVED and SET ASIDE.
SO ORDERED.
||| (Lagcao v. Labra, G.R. No. 155746,
[October 13, 2004], 483 PHIL 303-315)
[G.R. No. L-20620. August 15, 1974.]

REPUBLIC
OF
THE
PHILIPPINES, plaintiff-appellant,
vs. CARMEN M. VDA. DE
CASTELLVI, ET AL., defendantsappellees.
Office of the Solicitor General for plaintiffappellant.

C .A. Mendoza & A.V . Raquiza and Alberto
Cacnio & Associates for defendantappellees.
DECISION
ZALDIVAR, J p:
Appeal from the decision of the Court of
First Instance of Pampanga in its Civil Case
No. 1623, an expropriation proceeding.
Plaintiff-appellant, the Republic of the
Philippines, (hereinafter referred to as the
Republic) filed, on June 26, 1959, a
complaint for eminent domain against
defendant-appellee, Carmen M. vda. de
Castellvi, judicial administratrix of the estate
of the late Alfonso de Castellvi hereinafter
referred to as Castellvi), over a parcel of
land situated in the barrio of San Jose,
Floridablanca, Pampanga, described as
follows:
"A parcel of land, Lot No. 199-B
Bureau of Lands Plan Swo-23666.
Bounded on the NE by Maria Nieves
Toledo-Gozun; on the SE by national
road; on the SW by AFP reservation,
and on the NW by AFP reservation.
Containing an area of 759,299 square
meters, more or less, and registered
in the name of Alfonso Castellvi
95
under TCT No. 13631 of the Register

of Deeds 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 of Lot 1B, 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, Blk1. 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
96
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.
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.
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 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 ToledoGozun; 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
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
After the parties-defendants and intervenors

had filed their respective memoranda, and
the Republic, after several extensions of
time, had adopted as its memorandum its
objections to the report of the
Commissioners, the trial court, on May 26,
1961, rendered its decision 6 the dispositive

portion of which reads as follows:
"WHEREFORE, taking into account
all the foregoing circumstances, and
that the lands are titled, . . . the rising
trend of land values,. . . and the
lowered purchasing power of the
Philippine peso, the court finds that
the unanimous recommendation of
the commissioners of ten (P10.00)
pesos per square meter for the three
lots of the defendants subject of this
action is fair and just."
xxx xxx xxx
"The plaintiff will pay 6% interest
per annum on the total value of the
lands of defendant Toledo-Gozun
since (sic) the amount deposited as
provisional value from August 10,
1959 until full payment is made to
said defendant or deposit therefor is
made in court.
"In respect to the defendant
Castellvi, interest at 6% per annum
will also be paid by the plaintiff to
defendant Castellvi from July 1,
1956 when plaintiff commenced its
illegal possession of the Castellvi
land when the instant action had not
yet been commenced to July 10,
1959 when the provisional value
thereof was actually deposited in
court, on the total value of the said
97
(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 newlydiscovered evidence, that the decision was
not supported by the evidence, and that the
decision was against the law, against which
motion defendants Castellvi and ToledoGozun filed their respective oppositions. On
July 8, 1961 when the motion of the
Republic
for
new
trial
and/or
reconsideration was called for hearing, the
Republic filed a supplemental motion for
new trial upon the ground of additional
newly-discovered evidence. This motion for
new trial and/or reconsideration was denied
by the court on July 12, 1961.
On July 17, 1961 the Republic gave notice

of its intention to appeal from the decision
of May 26, 1961 and the order of July 12,
1961. Defendant Castellvi also filed, on July
17, 1961, her notice of appeal from the
decision of the trial court.
The Republic filed various ex-parte motions
for extension of time within which to file its
record on appeal. The Republic's record on
appeal was finally submitted on December
6, 1961.
Defendants Castellvi and Toledo-Gozun
filed not only a joint opposition to the
approval of the Republic's record on appeal,
but also a joint memorandum in support of
their opposition. The Republic also filed a
memorandum in support of its prayer for the
approval of its record on appeal. On
December 27, 1961 the trial court issued an
order declaring both the record on appeal
filed by the Republic, and the record on
appeal filed by defendant Castellvi as having
been filed out of time, thereby dismissing
both appeals.
On January 11, 1962 the Republic filed a
"motion to strike out the order of December
27, 1961 and for reconsideration", and
subsequently an amended record oil 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
98
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 than 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 condemnor 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
x x x 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:
99
"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 anytime

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 erect
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,
100
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;
101
"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
nonpayment 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 aboveentitled 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
102
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
Castellvi'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
103
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
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 ToledoGozun, 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 exorbitant but also
unconscionable, and almost fantastic". On
the other hand, both Castellvi and ToledoGozun 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
104
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
(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
105
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 ToledoGozun 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-ToledoGozun). As a matter of fact, regarding lot 1B 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
106
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 an 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:
107
". . . 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.
108
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 he 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
109
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. 16-1345, 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
110
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
111
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 newlydiscovered evidence. Unfortunately,
the Court cannot classify it as newlydiscovered evidence, because under
the circumstances, the correct
qualification that can be given is
'forgotten
evidence'.
Forgotten
evidence, however, is not newlydiscovered evidence." 33
The granting or denial of a motion for new
trial is, as a general rule, discretionary with
the trial court, whose judgment should not
be disturbed unless there is a clear showing
of abuse of discretion. 34 We do not see any
abuse of discretion on the part of the lower
court when it denied the motions for a new
trial.
WHEREFORE, the decision appealed from

is modified, as follows:
(a) the lands of appellees Carmen vda.
de Castellvi and Maria Nieves Toledo-
Gozun, as described in the complaint,

are declared expropriated for public
use;
(b) the fair market value of the lands of
the appellees is fixed at P5.00 per
square meter;
(c) the Republic must pay appellee
Castellvi the sum of P3,796,495.00 as
just compensation for her one parcel of
land that has an area of 759,299 square
meters, minus the sum of P151,859.80
that she withdrew out of the amount
that was deposited in court as the
provisional value of the land, with
interest at the rate of 6% per annum
from July 10, 1959 until the day full
payment is made or deposited in court;
(d) the Republic must pay appellee
Toledo-Gozun
the
sum
of
P2,695,225.00 as the just compensation
for her two parcels of land that have a
total area of 539,045 square meters,
minus the sum of P107,809.00 that she
withdrew out of the amount that was
deposited in court as the provisional
value of her lands, with interest at the
rate of 6%, per annum from July 10,
1959 until the day full payment is made
or deposited in court;
(e) the attorney's lien of Atty. Alberto
Cacnio is enforced; and
(f) the costs should be paid by appellant

Republic of the Philippines, as
provided in Section 12, Rule 67, and in
Section 13 Rule 141, of the Rules of
Court.
IT IS SO ORDERED.
||| (Republic v. Vda. de Castellvi, G.R. No. L20620, [August 15, 1974], 157 PHIL 329364)
[G.R. Nos. 71998-99. June 2, 1993.]

EMILIANO R. DE LOS SANTOS,
SPOUSES NORMA A. PADILLA
and ISIDORO L. PADILLA and
the HEIRS OF FRANCISCO
DAYRIT, petitioners, vs. THE
HONORABLE INTERMEDIATE
APPELLATE COURT, HON.
JUDGE CICERO C. JURADO,
NESTOR
AGUSTIN
and
EDILBERTO
CADIENTE, respondents.
Isidoro L. Padilla for petitioners.
Joaquin G. Mendoza for E. Cadiente.
112
DECISION
ROMERO, J p:
Questioned in the instant petition for review
on certiorari is the Decision of the then
Intermediate Appellate Court 1 affirming the
December 1, 1982 Order of the then Court
of First Instance of Rizal, Branch XXII at
Pasig 2 in Civil Case Nos. 46800 and 46801
which states in toto:
"It appearing that the construction of
the road and creek in question was a
project undertaken under the
authority of the Minister of Public
Works, the funding of which was the
responsibility of the National
Government and that the defendants
impleaded herein are Edilberto
Cadiente and Nestor Agustin and not
the Republic of the Philippines
which cannot be sued without its
consent, this Court hereby resolves
to dismiss these two (2) cases
without pronouncement as to costs.
SO ORDERED."
Civil Case Nos. 46800 and 46801 were both
filed on July 13, 1982 by petitioners who are
co-owners under TCT No. 329945 of a
parcel of land located in Barrio Wawa,
Binangonan, Rizal with an area of nineteen
thousand sixty-one (19,061) square meters.
In Civil Case No. 46800, petitioners alleged
in the petition for prohibition that in October
1981, without their knowledge or consent,

Lorenzo Cadiente, a private contractor and
the Provincial Engineer of Rizal constructed
a road nine (9) meters wide and one hundred
twenty-eight meters and seventy centimeters
(128.70) long occupying a total area of one
thousand one hundred sixty-five (1,165)
square meters of their land.
Petitioners added that aside from the road,
the said respondents also constructed,
without their knowledge and consent, an
artificial creek twenty-three meters and
twenty centimeters (23.20) wide and one
hundred twenty-eight meters and sixty-nine
centimeters long (128.69) occupying an area
of two thousand nine hundred six (2,906)
square meters of their property. Constructed
in a zigzag manner, the creek meandered
through their property.
Alleging that if completed, the road and the
creek would "serve no public profitable and
practicable purpose but for respondents'
personal profit, to the great damage and
prejudice of the taxpayers and the
petitioners," the same petitioners invoked
their rights under Art. IV, Secs. 1 and 2, of
the
Bill
of
Rights
of
the 1973
Constitution and prayed for the issuance of a
restraining order or a writ of preliminary
injunction to stop the construction. They
also prayed that after hearing on the merits,
judgment be rendered: (1) declaring illegal
the construction of the road and artificial
creek which was made without their
knowledge and consent, "without due
process and without just compensation and

in violation of the provision of statute law
and of the Philippine Constitution;" (2)
issuing a permanent prohibition; (3) ordering
respondents to pay petitioners "jointly and
collectively" P15,000.00 as attorney's fees
and P600.00 for each appearance, and (4)
ordering the respondents to pay the costs of
the suit. 3
An action for damages, Civil Case No.
46801, on the other hand, was founded on
Art. 32, paragraphs 6 and 7 of the Civil
Code and the constitutional provisions on
the right against deprivation of property
without due process of law and without just
compensation.
Thereafter, the two cases were consolidated.
On November 11, 1982, the Solicitor
General filed a motion to dismiss both cases
on the following grounds: (a) with respect to
Civil Case No. 46800, the pendency of Civil
Case No. 46801 which involved the same
parties and cause of action; (b) both cases
were in reality suits against the state which
could not be maintained without the State's
consent; and (c) lack of cause of action.
Consequently, the lower court issued the
aforequoted Order of December 1, 1982.
Their motion for the reconsideration of said
Order having been denied, petitioners
elevated (to) the cases to this Court through
an "appeal by certiorari" which was
docketed as G.R. No. 63610. The Second
Division of this Court, however, referred the
113
cases to the then Intermediate Appellate

Court pursuant to Sec. 16 of the Interim
Rules. 4 In due course, the appellate court
rendered a Decision on May 22, 1985 which
disposed of the cases thus:
"Accordingly, the two actions cannot
be maintained. They are in reality
suits against the state which has not
given its consent to be sued (Minister
[sic] vs. CFI, 40 SCRA 464; Isberto
vs. Raquiza, 67 SCRA 116; Begosa
v. Chairman, PVA, 32 SCRA 466).
Appellants' remedy lies elsewhere.
Appellants assert that the taking of
their property in the manner alleged
in these two cases was without due
process of law. This is not correct.
The appealed order has not closed
the door to appellants' right, if any, to
just compensation for the alleged
area of their land which was
expropriated. The court below
dismissed the cases for lack of
consent on the part of the state to be
sued herein. We repeat, appellants'
remedy for just compensation lies
elsewhere.
WHEREFORE, the order
from is in full accord
evidence and the law and
therefore affirmed in all
Costs against appellants.
SO ORDERED." 5
appealed
with the
is hereby
its parts.
Consequently, petitioners elevated the cases

to this Court through a petition for review on
certiorari. The petition is anchored on the
ruling of the Court in Amigable v.
Cuenca 6 which states: ". . . where the
government takes away property from a
private landowner for public use without
going through the legal process of
expropriation or negotiated sale," a suit may
properly be maintained against the
government.
We hold for the petitioners.
That the principle of state immunity from
suit cannot be invoked to defeat petitioners'
claim has long been settled. In Ministerio v.
Court of First Instance of Cebu, 7 the Court
held:
". . . The doctrine of governmental
immunity from suit cannot serve as
an instrument for perpetrating an
injustice on a citizen. Had the
government followed the procedure
indicated by the governing law at the
time, a complaint would have been
filed by it, and only upon payment of
the compensation fixed by the
judgment, or after tender to the party
entitled to such payment of the
amount fixed, may it 'have the right
to enter in and upon the land so
condemned' to appropriate the same
to the public use defined in the
judgment. If there were an
observance of procedural regularity,
petitioners would not be in the sad

plaint they are now. It is unthinkable
then that precisely because there was
a failure to abide by what the law
requires, the government would
stand to benefit. It is just as
important, if not more so, that there
be fidelity to legal norms on the part
of the officialdom if the rule of law
were to be maintained. It is not too
much to say that when the
government takes any property for
public use, which is conditioned
upon
the
payment
of
just
compensation, to be judicially
ascertained, it makes manifest that it
submits to the jurisdiction of a court.
There is no thought then that the
doctrine of immunity from suit could
still be appropriately invoked."
We find the facts of the Ministerio case on
all fours with the instant cases insofar as the
fact that the respondent government officials
executed a shortcut in appropriating
petitioners' property for public use is
concerned. As in the Amigable case, no
expropriation proceedings were initiated
before construction of the projects began. In
like manner, nowhere in his pleadings in the
cases at bar does the Solicitor General
mention the fact that expropriation
proceedings had in fact been undertaken
before the road and artificial creek were
constructed. Thus, quoting the answer of the
defendants in Civil Case No. 46801, the
Solicitor General summarized the facts
114
which defendants considered as constituting

justification for the construction as follows:
"10. The construction of the road and
creek in question on the property
which at the time was said to be
public property, was initiated, and
construction effected, through the
usual and ordinary course, as shown
by the following:
a. November 5, 1979
Engr. Data who was the
incumbent District Engineer
submitted (thru channels)
plans, program of works and
detailed
estimates
for
approval
of
higher
authorities, thru the initiation
of Mayor Ynares and
Assemblyman
Gilberto
Duavit;
d. June 17, 1981 The

undersigned defendant Nestor
Agustin was designated Chief
Civil Engineer of the Rizal
Engineering District, Vice
Engr. Cresencio Data who
reached
his
compulsory
retirement age;
e. September 23, 1981
Funds in the amount of
P588,000.00 was released for
partial implementation of the
project. The total amount
requested was P1,200,000.00;
f. October 19, 1981
The undersigned submitted a
request to the MPWH Central
Office seeking authority to
effect implementation of the
project;
b. February 18, 1980

Regional Director Eduardo L.
Lagunilla, MPW Region IV,
EDSA,
Quezon
City
endorsed said request to the
Minister of Public Works;
g. October 29, 1981

The
Regional
Director
approved the plans and
program of works for the
project in the amount of
P588,000.00;
c. February 13, 1981

Assemblyman
Gilberto
Duavit sent a hand-written
follow-up note regarding the
project;
h. November 11, 1981

The Honorable Minister
Jesus S. Hipolito granted the
request to undertake the
implementation
of
the
project;
i. November 25, 1981

Project implementation was
started;
j. March 3, 1982
Construction
of
rock
bulkhead was completed;
k. November 23, 1981
P249,000.00 was released
for improvement (deepening
and diverting of flow) of
Binangonan River which was
a complimentary structure of
Binangonan port system;
l. April 19, 1982

Implementation was started.
Contract for this project was
approved by the Regional
Director
in
favor
of
EDILBERTO
CADIENTE
CONSTRUCTION;
m. May 21, 1982
Deepening slightly of the
adjacent portion of the rock
bulkhead was completed.
11. The construction of the structures
was done in good faith;
The construction of the roadway and
deepening of the creek was designed
to generate for the municipality of
115
Binangonan, Rizal more benefits in

the form of substantial revenue from
fishing industry, parking area, market
rentals, development site, and road
system improvements. The area
covered by said public improvements
is part of the Laguna Lake area
which is submerged in water even
during dry season. The municipal
mayor of Binangonan, Rizal stated
that said area is public property." 8
Public respondents' belief that the property
involved is public, even if buttressed by
statements of other public officials, is no
reason for the unjust taking of petitioners'
property. As TCT No. 329945 shows, the
property was registered under the Torrens
system
in
the
names
of
"Emiliano R. de los Santos,
married
to
Corazon Dayrit; and Norma Alabastro,
married to Isidoro L. Padilla" as early as
March 29, 1971. Had the public
respondents, including the other officials
involved in the construction, performed their
functions by exercising even the ordinary
diligence expected of them as public
officials, they would not have failed to note
that the property is a private one. A public
infrastructure losses its laudability if, in the
process of undertaking it, private rights are
disregarded. In this connection, the Court
said in Republic v. Sandiganbayan: 9
"It can hardly be doubted that in
exercising the right of eminent
domain, the State exercises its jus
imperii, as distinguished from its

proprietary rights or jus gestionis.
Yet, even in that area, it has been
held that where private property has
been taken in expropriation without
just compensation being paid, the
defense of immunity from suit
cannot be set up by the State against
an action for payment by the owner."
Republic of the Philippines shall have been

impleaded as defendant in both cases.
SO ORDERED.
||| (De Los Santos v. Intermediate Appellate
Court, G.R. Nos. 71998-99, [June 2, 1993])
Public respondents' assertion that the project

had been completed on May 21, 1982 meets
strong opposition from the petitioners who
insist that the project "until now is not yet
finished." 10 This factual issue needs
determination which only the trial court can
undertake. Thus, the need for a full blown
trial on the merits. We do not subscribe to
the appellate court's suggestion that the
remedy of the petitioners "lies elsewhere."
The filing of another case to determine just
compensation is superfluous. The issue may
be threshed out below for practical reasons
in the event that it is shown later that it is no
longer possible to prohibit the public
respondents from continuing with the public
work. As held in the Amigable case,
damages may be awarded the petitioners in
the form of legal interest on the price of the
land to be reckoned from the time of the
unlawful taking.
[G.R. No. 107916. February 20, 1997.]

GRANTED and Civil Cases Nos. 46800 and
46801 shall be REMANDED to the lower
court for trial on the merits after the
Roldan L. Torralba, for petitioners.
PERCIVAL MODAY,
ZOTICO MODAY (deceased) and
LEONORA MODAY, petitioners, v
s. COURT OF APPEALS, JUDGE
EVANGELINE S. YUIPCO OF
BRANCH 6, REGIONAL TRIAL
COURT, AGUSAN DEL SUR
AND
MUNICIPALITY
OF
BUNAWAN, respondents.
Estanislao
G. Ebarle,
Jr. for
public
respondent Municipality of Bunawan.
116
SYLLABUS
POLITICAL
LAW; LOCAL
GOVERNMENT
CODE (B.P.
337);
POWER OF THE SANGGUNIANG
PANLALAWIGAN
TO
REVIEW
ORDINANCES, RESOLUTIONS AND
EXECUTIVE ORDERS PROMULGATED
BY
THE
MUNICIPAL
MAYOR;
DECLARATION OF INVALIDITY MUST
BE ON THE SOLE GROUND THAT IT IS
BEYOND THE POWER OF THE
SANGGUNIAN BAYAN OR MAYOR TO
ISSUE THE RESOLUTION, ORDINANCE
OR ORDER UNDER REVIEW. 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 vs. Blas, 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."
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.
DECISION
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. 6138Pls-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
ROMERO, J p:
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,
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,
117
Zotico and
defendants.
Leonora Moday,
as
party
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 (1)
ofB.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. cdasia
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,
118
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
property could proceed. 13
petitioners'
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
order invalid in whole or in part,
entering its actions upon the minutes
119
and advising the proper municipal

authorities thereof. The effect of
such an action shall be to annul the
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. 4389 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 sevenhectare 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. 24Government
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
120
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.
In this petition for review under Rule 45 of

the Rules of Court, petitioner National
Power Corporation (NAPOCOR) seeks to
annul and set aside the November 18, 2002
Decision 1 of the Court of Appeals (CA) in
CA-G.R. CV No. 67446, which affirmed the
December 28, 1999 Order 2 of the Imus,
Cavite Regional Trial Court (RTC), Branch
XX in Civil Case No. 1816-98, which fixed
the fair market value of the expropriated lots
at PhP10,000.00 per square meter.
The Facts
SO ORDERED.
||| (Moday v. Court of Appeals, G.R. No.
107916, [February 20, 1997])
[G.R. No. 156093. February 2, 2007.]

NATIONAL
POWER
CORP., petitioner, vs.
SPOUSES
NORBERTO AND JOSEFINA
DELA CRUZ, METROBANK,
Dasmarias,
Cavite
Branch,
REYNALDO FERRER, and S.K.
DYNAMICS MANUFACTURER
CORP.,respondents.
DECISION
VELASCO, JR., J p:
The Case
Petitioner NAPOCOR is a governmentowned and controlled corporation created

under Republic Act No. 6395, as amended,
with
the
mandate
of
developing
hydroelectric power, producing transmission
lines, and developing hydroelectric power
throughout the Philippines. NAPOCOR
decided to acquire an easement of right-ofway over portions of land within the areas of
Dasmarias and Imus, Cavite for the
construction and maintenance of the
proposed Dasmarias-Zapote 230 kV
Transmission Line Project. 3
On November 27, 1998, petitioner filed a
Complaint 4 for eminent domain and
expropriation of an easement of right-ofway against respondents as registered
owners of the parcels of land sought to be
expropriated, which were covered by
Transfer Certificates of Title (TCT) Nos. T313327, T-671864, and T-454278. The
affected areas were 51.55, 18.25, and 14.625
square meters, respectively, or a total of

84.425 square meters.
After respondents filed their respective
answers to petitioner's Complaint, petitioner
deposited PhP5,788.50 to cover the
provisional value of the land in accordance
with Section 2, Rule 67 of the Rules of
Court. 5 Then, on February 25, 1999,
petitioner filed an Urgent Ex-Parte Motion
for the Issuance of a Writ of Possession,
which the trial court granted in its March 9,
1999 Order. The trial court issued a Writ of
Possession over the lots owned by
respondents spouses de la Cruz and
respondent Ferrer on March 10, 1999 and
April 12, 1999, respectively.
However, the trial court dropped the Dela
Cruz spouses and their mortgagee,
Metrobank, as parties-defendants in its May
11, 1999 Order, 6 in view of the Motion to
Intervene filed by respondent/intervenor
Virgilio M. Saulog, who claimed ownership
of the land sought to be expropriated from
respondents spouses Dela Cruz.
On June 24, 1999, the trial court terminated
the pre-trial in so far as respondent Ferrer
was concerned, considering that the sole
issue was the amount of just compensation,
and issued an Order directing the
constitution of a Board of Commissioners
with respect to the property of respondent
S.K. Dynamics. The trial court designated
Mr. Lamberto C. Parra, Cavite Provincial
Assessor, as chairman, while petitioner
121
nominated the Municipal Assessor of

Dasmarias, Mr. Regalado T. Andaya, as
member. Respondent S.K. Dynamics did not
nominate any commissioner.
As to the just compensation for the property
of Saulog, successor-in-interest of the Dela
Cruz spouses, the trial court ordered the
latter and petitioner to submit their
compromise agreement.
The commissioners conducted an ocular
inspection of S.K. Dynamics' property, and
on October 8, 1999, they submitted a report
to the trial court, with the following
pertinent findings:
In arriving our [sic] estimate of
values our studies and analysis
include the following:
II. NEIGHBORHOOD
DESCRIPTION
The neighborhood particularly in the
immediate vicinity is within a mixed
residential and commercial area,
situated in the northern section of the
Municipality of Dasmarias which
was transversed [sic] by Gen. Emilio
Aguinaldo Highway [where] several
residential
subdivisions
and
commercial establishment[s] are
located.
Considered as some of the important
improvements [on] the vicinity are
(within 1.5 radius)
Orchard Golf and Country Club
Community centers such as,

[sic] churches, public markets,
shopping malls, banks and
gasoline stations are easily
accessible from the subject real
properties.
Convenience facilities such as
electricity, telephone service as
well as pipe potable water
supply system are all available
along Gen. Emilio Aguinaldo
Highway.
Public transportation consisting
of passenger jeepneys and buses
as well taxicabs are [sic]
regularly available along Gen.
E. Emilio Aguinaldo Highway
[sic].
Golden City Subdivision

xxx xxx xxx
I. PROPERTY LOCATION
Southfield Subdivisions
As shown to us on-site during our
ocular inspection, the appraised
property is land only, identified as
the area affected by the construction
of the National Power Corporation
(NPC) Dasmarias-Zapote 230KV
Transmission Lines Project, located
within
Barangay
Salitran,
Dasmarias, Cavite registered in the
name
of
S.K.
Dynamic[s]
Manufacture[r],
Corp.,
under
Transfer Certificate of Title No. T454278.
Arcontica Sports Complex

Max's Restaurant
Waltermart Shopping Mall
UMC Medical Center
Several
savings
and
Commercial Banks as well as
several Gasoline stations.
IV. HIGHEST
AND
PROFITABLE USE
MOST
xxx xxx xxx

The subject property is situated
within the residential/commercial
zone and considering the area
affected
and
taking
into
consideration, their location, shape,
lot topography, accessibility and the
predominant uses of properties in the
neighborhood, as well as the trend of
land developments in the vicinity, we
122
are on the opinion that the highest

and most profitable use of the
property is good for residential and
commercial purposes.
Upon the submission of the commissioners'

report, petitioner was not notified of the
completion or filing of it nor given any
opportunity to file its objections to it.
8.55-square meter portion of its property

included in the computation of just
compensation.
The Ruling of the Regional Trial Court
V. VALUATION
MARKET DATA
OF
LAND
xxx xxx xxx

Based on the analysis of data
gathered and making the proper
adjustments with respect to the
location, area, shape, accessibility,
and the highest and best use of the
subject properties, it is the opinion of
the herein commissioners that the
fair market value of the subject real
properties is P10,000.00 per square
meter, as of this date, October 05,
1999. 7
Thus, both commissioners recommended
that the property of S.K. Dynamics to be
expropriated by petitioner be valued at
PhP10,000.00 per square meter.
The records show that the commissioners
did not afford the parties the opportunity to
introduce evidence in their favor, nor did
they conduct hearings before them. In fact,
the commissioners did not issue notices to
the parties to attend hearings nor provide the
concerned parties the opportunity to argue
their respective causes.
On December 1, 1999, respondent Ferrer

filed a motion adopting in toto the
commissioners' report with respect to the
valuation of his property. 8 On December
28, 1999, the trial court consequently issued
the Order approving the commissioners'
report, and granted respondent Ferrer's
motion to adopt the subject report.
Subsequently, the just compensation for the
disparate properties to be expropriated by
petitioner for its project was uniformly
pegged at PhP10,000.00 per square meter.
Incidentally, on February 11, 2000,
respondent S.K. Dynamics filed a motion
informing the trial court that in addition to
the portion of its property covered by TCT
No. T-454278 sought to be expropriated by
petitioner, the latter also took possession of
an 8.55-square meter portion of S.K.
Dynamics' property covered by TCT No.
503484 for the same purpose to acquire
an easement of right-of-way for the
construction and maintenance of the
proposed Dasmarias-Zapote 230 kV
Transmission Line Project. Respondent S.K.
Dynamics prayed that said portion be
included in the computation of the just
compensation to be paid by petitioner.
On the same date, the Imus, Cavite RTC
granted S.K. Dynamics' motion to have the
As previously stated, in its December 28,

1999 Order, the trial court fixed the just
compensation to be paid by petitioner at
PhP10,000.00 per square meter. The relevant
portion of the said Order reads as follows:
On
October
8,
1999,
a
Commissioner's Valuation Report
was submitted in Court by the
Provincial Assessor of Cavite and by
the
Municipal
Assessor
of
Dasmarias, Cavite. Quoting from
said Report, thus:
"Based on the analysis of
data gathered and making the
proper adjustments with
respect to location, area,
shape, accessibility, and the
highest and best use of the
subject properties, it is the
opinion
of
herein
commissioners that the fair
market value of the subject
real properties is P10,000.00
per square meter, as of this
date, October 05, 1999."
Finding the opinion of the
Commissioners to be in order, this
Court
approves
the
same.
123
Accordingly, the Motion filed by

[respondent]
Reynaldo
Ferrer
adopting said valuation report is
granted.
SO ORDERED. 9
On January 20, 2000, petitioner filed a
Motion for Reconsideration of the
abovementioned Order, but said motion was
denied in the trial court's March 23, 2000
Order, which states that:
The basis of [petitioner] in seeking to
set aside the Order dated December
28, 1999 is its claim that the
Commissioners' Report fixing the
just compensation at P10,000.00 per
square meter is exorbitant, unjust and
unreasonable. To support its
contention, [petitioner] invoked
Provincial Appraisal Committee
Report No. 08-95 dated October 25,
1995
which
set
the
just
compensation of lots along Gen.
Aguinaldo Highway at P3,000.00 per
sq.m. only.
By way of opposition, [respondent]
Dynamics countered that the
valuation of a lot under expropriation
is reckoned at the time of its taking
by the government. And since in the
case at bar, the writ of possession
was issued on March 10, 1999, the
price or value for 1999 must be the
one to be considered.
We find for the defendant.

The PAR Resolution alluded to by
[petitioner] was passed in 1995 or
four (4) years [before] the lot in
question was taken over by the
government. This explains why the
price or cost of the land has
considerably increased. Besides, the
valuation of P10,000.00 per sq.m.
was the one recommended by the
commissioner
designated
by
[petitioner] itself and concurred in by
the Provincial Assessor of Cavite.
Be that as it may, the Motion for
Reconsideration is denied.
SO ORDERED. 10
The Ruling of the Court of Appeals
Unsatisfied with the amount of just
compensation, petitioner filed an appeal
before the CA. In resolving the appeal, the
CA made the following findings:
We find nothing on record which
would warrant the reversal of the
Order dated December 28, 1999 of
the court a quo.
[Petitioner] submits that the order of
the court a quo adopting the
Commissioners
[sic]
Valuation
Report, fixing the just compensation

for the subject lots in the amount of
P10,000.00 per square meter is
exhorbitant [sic], highly speculative
and without any basis. In support
thereto, [petitioner] presented before
the court a quo the Provincial
Appraisal Committee of Cavite
Resolution No. 08-95 . . . which
fixed the fair market value of lots
located along Gen. Aguinaldo
Highway, Dasmarias, Cavite, which
incidentally includes the lots subject
of this proceedings [sic], in the
amount of P3,000.00 per square
meter.
We do not agree.
"The nature and character of the land
at the time of its taking is the
principal criterion to determine just
compensation to the land owner."
(National Power Corporation vs.
Henson, 300 SCRA 751-756).
The CA then cited Section 4, Rule 67 of the
1997 Rules of Civil Procedure 11 to explain
why Resolution No. 08-95 could not "be
used as [a] basis for determining the just
compensation of the subject lots, which by
reason of the changed commercial
conditions in the vicinity, could have
increased its value greater than its value
three (3) years ago." The said resolution,
which fixed the fair market value of the lots,
including that of the disputed lots along
124
Gen. Aguinaldo Highway, was approved on

October 25, 1995, while petitioner filed the
Complaint for the expropriation of the
disputed lots on November 27, 1998, or
more than three (3) years had elapsed after
said resolution was approved. Reflecting on
the commissioners' report, the CA noted that
since the property underwent important
changes and improvements, "the highest and
most profitable use of the property is good
for residential and commercial purposes."
As regards the commissioners' failure to
conduct a hearing "to give the parties the
opportunity to present their respective
evidence," as alleged by petitioner, the CA
opined that "[t]he filing by [petitioner] of a
motion for reconsideration accorded it
ample opportunity to dispute the findings of
the commissioners, so that [petitioner] was
as fully heard as there might have been
hearing actually taken place . . . ."
The CA ultimately rendered its judgment, as
follows:
the
present
appeal
is
hereby DISMISSED for lack of
merit. The Order dated December 28,
1999 and March 23, 2000 of the
court
a
quo
are
hereby AFFIRMED by this Court.
SO ORDERED. 12
Significantly, petitioner did not file a Motion

for Reconsideration of the CA November
18, 2002 Decision, but it directly filed a
petition for review before us.
The Issues
In this petition for review, the issues are the
following:
PETITIONER WAS DENIED DUE
PROCESS WHEN IT WAS NOT
ALLOWED
TO
PRESENT
EVIDENCE
ON
THE
REASONABLE VALUE OF THE
EXPROPRIATED
PROPERTY
BEFORE THE BOARD OF
COMMISSIONERS.
THE VALUATION OF JUST
COMPENSATION HEREIN WAS
NOT
BASED
FROM
THE
EVIDENCE ON RECORD AND
OTHER
AUTHENTIC
DOCUMENTS. 13
The Court's Ruling
We find this petition meritorious.
It is beyond question that petitions for
review may only raise questions of law
which must be distinctly set forth; 14 thus,
this Court is mandated to only consider
purely legal questions in this petition, unless
called for by extraordinary circumstances.
In this case, petitioner raises the issue of

denial of due process because it was
allegedly deprived of the opportunity to
present its evidence on the just
compensation of properties it wanted to
expropriate, and the sufficiency of the legal
basis or bases for the trial court's Order on
the
matter
of
just
compensation.
Unquestionably, a petition for review under
Rule 45 of the Rules of Court is the proper
vehicle to raise the issues in question before
this Court.
In view of the significance of the issues
raised in this petition, because this case
involves the expenditure of public funds for
a clear public purpose, this Court will
overlook the fact that petitioner did not file a
Motion for Reconsideration of the CA
November 18, 2002 Decision, and brush
aside this technicality in favor of resolving
this case on the merits.
First Issue: Petitioner was deprived of
due process when it was not given the
opportunity to present evidence before
the commissioners
It is undisputed that the commissioners
failed to afford the parties the opportunity to
introduce evidence in their favor, conduct
hearings before them, issue notices to the
parties to attend hearings, and provide the
opportunity for the parties to argue their
respective causes. It is also undisputed that
petitioner was not notified of the completion
or filing of the commissioners' report, and
125
that petitioner was also not given any

opportunity to file its objections to the said
report.
A re-examination of the pertinent provisions
on expropriation, under Rule 67 of the Rules
of Court, reveals the following:
SEC.
6. Proceedings
by
commissioners. Before entering
upon the performance of their duties,
the commissioners shall take and
subscribe an oath that they will
faithfully perform their duties as
commissioners, which oath shall be
filed in court with the other
proceedings in the case. Evidence
may be introduced by either party
before the commissioners who are
authorized to administer oaths on
hearings before them, and the
commissioners shall, unless the
parties consent to the contrary, after
due notice to the parties to attend,
view and examine the property
sought to be expropriated and its
surroundings, and may measure the
same, after which either party may,
by himself or counsel, argue the
case. The commissioners shall assess
the consequential damages to the
property not taken and deduct from
such consequential damages the
consequential benefits to be derived
by the owner from the public use or
purpose of the property taken, the
operation of its franchise by the
corporation or the carrying on of the

business of the corporation or person
taking the property. But in no case
shall the consequential benefits
assessed exceed the consequential
damages assessed, or the owner be
deprived of the actual value of his
property so taken.
SEC. 7. Report by commissioners
and judgment thereupon. The
court may order the commissioners
to report when any particular portion
of the real estate shall have been
passed upon by them, and may
render judgment upon such partial
report, and direct the commissioners
to proceed with their work as to
subsequent portions of the property
sought to be expropriated, and may
from time to time so deal with such
property. The commissioners shall
make a full and accurate report to the
court of all their proceedings, and
such proceedings shall not be
effectual until the court shall have
accepted their report and rendered
judgment in accordance with their
recommendations.
Except
as
otherwise expressly ordered by the
court, such report shall be filed
within sixty (60) days from the date
the commissioners were notified of
their appointment, which time may
be extended in the discretion of the
court. Upon the filing of such report,
the clerk of the court shall serve
copies thereof on all interested

parties, with notice that they are
allowed ten (10) days within which
to file objections to the findings of
the report, if they so desire.
SEC. 8. Action upon commissioners'
report. 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 expropriation,
and
to
the
defendant
just
compensation for the property so
taken. STHAID
Based on these provisions, it is clear that in
addition to the ocular inspection performed
by the two (2) appointed commissioners in
this case, they are also required to conduct a
hearing or hearings to determine just
compensation; and to provide the parties the
126
following: (1) notice of the said hearings

and the opportunity to attend them; (2) the
opportunity to introduce evidence in their
favor during the said hearings; and (3) the
opportunity for the parties to argue their
respective causes during the said hearings.
disregard the commissioners' findings. The

absence of such trial or hearing constitutes
reversible error on the part of the trial court
because the parties' (in particular,
petitioner's) right to due process was
violated.
The appointment of commissioners to

ascertain just compensation for the property
sought to be taken is a mandatory
requirement in expropriation cases. In the
instant expropriation case, where the
principal issue is the determination of just
compensation, a hearing before the
commissioners is indispensable to allow the
parties to present evidence on the issue of
just compensation. While it is true that the
findings of commissioners may be
disregarded and the trial court may
substitute its own estimate of the value, the
latter may only do so for valid reasons, that
is, where the commissioners have applied
illegal principles to the evidence submitted
to them, where they have disregarded a clear
preponderance of evidence, or where the
amount allowed is either grossly inadequate
or excessive. Thus, "trial with the aid of the
commissioners is a substantial right that may
not be done away with capriciously or for no
reason at all." 15
The Court of Appeals erred in ruling

that the petitioner was not deprived of
due process when it was able to file a
motion for reconsideration
In ruling that petitioner was not deprived of
due process because it was able to file a
Motion for Reconsideration, the CA had this
to say:
[Petitioner], further, asserts that "the
appointed commissioners failed to
conduct a hearing to give the parties
the opportunity to present their
respective evidence. According to
[petitioner], the Commissioners
Valuation Report was submitted on
October 8, 1999 in violation of the
appellant's right to due process as it
was deprived of the opportunity to
present
evidence
on
the
determination
of
the
just
compensation."
In this case, the fact that no trial or hearing

was conducted to afford the parties the
opportunity to present their own evidence
should have impelled the trial court to
The filing by [petitioner] of a motion

for reconsideration accorded it ample
opportunity to dispute the findings of
the
commissioners,
so
that
[petitioner] was as fully heard as

there might have been hearing
actually taken place. "Denial of due
process cannot be successfully
invoked by a party who has had the
opportunity to be heard on his
motion for reconsideration." (Vda.
De Chua vs. Court of Appeals, 287
SCRA 33, 50). 16
In this respect, we are constrained to
disagree with the CA ruling, and therefore,
set it aside.
While it is true that there is jurisprudence
supporting the rule that the filing of a
Motion for Reconsideration negates
allegations of denial of due process, it is
equally true that there are very specific rules
for expropriation cases that require the strict
observance of procedural and substantive
due process, 17 because expropriation cases
involve the admittedly painful deprivation of
private property for public purposes and the
disbursement of public funds as just
compensation for the private property taken.
Therefore, it is insufficient to hold that a
Motion for Reconsideration in an
expropriation case cures the defect in due
process.
As a corollary, the CA's ruling that "denial
of due process cannot be successfully
invoked by a party who has had the
opportunity to be heard on his motion for
reconsideration," citing Vda. de Chua v.
Court of Appeals, is not applicable to the
127
instant case considering that the cited case

involved a lack of notice of the orders of the
trial court in granting letters of
administration. It was essentially a private
dispute and therefore, no public funds were
involved. It is distinct from this
expropriation
case
where
grave
consequences attached to the orders of the
trial court when it determined the just
compensation.
The Court takes this opportunity to elucidate
the ruling that the opportunity to present
evidence incidental to a Motion for
Reconsideration will suffice if there was no
chance to do so during the trial. We find
such situation to be the exception and not
the general rule. The opportunity to present
evidence during the trial remains a vital
requirement in the observance of due
process. The trial is materially and
substantially different from a hearing on a
Motion for Reconsideration. At the trial
stage, the party is usually allowed several
hearing dates depending on the number of
witnesses who will be presented. At the
hearing of said motion, the trial court may
not be more accommodating with the grant
of hearing dates even if the movant has
many available witnesses. Before the
decision is rendered, a trial court has an
open mind on the merits of the parties'
positions. After the decision has been issued,
the trial court's view of these positions might
be inclined to the side of the winning party
and might treat the Motion for
Reconsideration and the evidence adduced
during the hearing of said motion

perfunctorily and in a cavalier fashion. The
incident might not receive the evaluation
and judgment of an impartial or neutral
judge. In sum, the constitutional guarantee
of due process still requires that a party
should be given the fullest and widest
opportunity to adduce evidence during trial,
and the availment of a motion for
reconsideration will not satisfy a party's
right to procedural due process, unless
his/her inability to adduce evidence during
trial was due to his/her own fault or
negligence.
Second Issue: The legal basis for the
determination of just compensation was
insufficient
In this case, it is not disputed that the
commissioners recommended that the just
compensation be pegged at PhP10,000.00
per square meter. The commissioners arrived
at the figure in question after their ocular
inspection of the property, wherein they
considered the surrounding structures, the
property's location and, allegedly, the prices
of the other, contiguous real properties in the
area.
Furthermore,
based
on
the
commissioners' report, the recommended
just compensation was determined as of the
time of the preparation of said report on
October 5, 1999.
In B.H. Berkenkotter & Co. v. Court of
Appeals, we held, thus:
Just compensation is defined as the

full and fair equivalent of the
property sought to be expropriated.
The measure is not the taker's gain
but
the
owner's
loss.
The
compensation, to be just, must be fair
not only to the owner but also to the
taker. Even as undervaluation would
deprive the owner of his property
without due process, so too would its
overvaluation unduly favor him to
the prejudice of the public.
To determine just compensation, the
trial court should first ascertain the
market value of the property, to
which should be added the
consequential
damages
after
deducting
therefrom
the
consequential benefits which may
arise from the expropriation. If the
consequential benefits exceed the
consequential damages, these items
should be disregarded altogether as
the basic value of the property
should be paid in every case.
The market value of the property is
the price that may be agreed upon by
parties willing but not compelled to
enter into the contract of sale. Not
unlikely, a buyer desperate to acquire
a piece of property would agree to
pay more, and a seller in urgent need
of funds would agree to accept less,
than what it is actually worth. . . .
128
Among the factors to be considered

in arriving at the fair market value of
the property are the cost of
acquisition, the current value of like
properties, its actual or potential
uses, and in the particular case of
lands, their size, shape, location, and
the tax declarations thereon.
It is settled that just compensation is
to be ascertained as of the time of the
taking, which usually coincides with
the
commencement
of
the
expropriation proceedings. 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. 18
We note that in this case, the filing of the
complaint for expropriation preceded the
petitioner's entry into the property.
Therefore, it is clear that in this case, the
sole basis for the determination of just
compensation was the commissioners' ocular
inspection of the properties in question, as
gleaned from the commissioners' October 5,
1999 report. The trial court's reliance on the
said report is a serious error considering that
the recommended compensation was highly
speculative and had no strong factual
moorings. For one, the report did not
indicate the fair market value of the lots
occupied by the Orchard Golf and Country
Club, Golden City Subdivision, Arcontica
Sports Complex, and other business

establishments cited. Also, the report did not
show how convenience facilities, public
transportation, and the residential and
commercial zoning could have added value
to the lots being expropriated.
Moreover, the trial court did not amply
explain the nature and application of the
"highest and best use" method to determine
the just compensation in expropriation cases.
No attempt was made to justify the
recommended "just price" in the subject
report through other sufficient and reliable
means such as the holding of a trial or
hearing at which the parties could have had
adequate opportunity to adduce their own
evidence, the testimony of realtors in the
area concerned, the fair market value and tax
declaration, actual sales of lots in the
vicinity of the lot being expropriated on or
about the date of the filing of the complaint
for expropriation, the pertinent zonal
valuation derived from the Bureau of
Internal Revenue, among others.
More so, the commissioners did not take
into account that the Asian financial crisis in
the second semester of 1997 affected the fair
market value of the subject lots. Judicial
notice can be taken of the fact that after the
crisis hit the real estate market, there was a
downward trend in the prices of real estate
in the country.
recommended just compensation was

pegged as of October 5, 1999, or the date
when the said report was issued, and not the
just compensation as of the date of the filing
of the complaint for expropriation, or as of
November 27, 1998. The period between the
time of the filing of the complaint (when just
compensation
should
have
been
determined), and the time when the
commissioners' report recommending the
just compensation was issued (or almost one
[1] year after the filing of the complaint),
may have distorted the correct amount of
just compensation.
Clearly, the legal basis for the determination
of just compensation in this case is
insufficient as earlier enunciated. This being
so, the trial court's ruling in this respect
should be set aside.
WHEREFORE, the petition is GRANTED.
The December 28, 1999 and March 23, 2000
Orders of the Imus, Cavite RTC and the
November 18, 2002 Decision of the CA are
hereby SET ASIDE. This case is remanded
to the said trial court for the proper
determination of just compensation in
conformity with this Decision. No costs.
SO ORDERED.
||| (National Power Corp. v. Spouses dela
Cruz, G.R. No. 156093, [February 2, 2007],
543 PHIL 53-72)
Furthermore, the commissioners' report

itself is flawed considering that its
129
[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.
The Solicitor General for petitioner.
Public Attorney's Office for respondent.
SYNOPSIS
Subject matter of this petition is a lot known
as Lot 1210-A-Pad-11-000586, with an area
of 39,512 square meters covered by TCT
No. T-22121 registered in the Registry
Office of Koronadal, South Cotabato, in the
name of Clarita Vda. de Onorio, herein
respondent, and her late husband.
Respondent secured title over the property
by virtue of a homestead patent. The
National
Irrigation Authority (NIA)
subsequently took 24,660 meters of the said
lot for construction of an irrigation canal.
Petitioner, in his capacity as Project
Manager of the NIA, through the Office of
the Solicitor General, brought this petition
for review before the Supreme Court
assailing the decision of the Court of
Appeals which affirmed the decision of the
Regional Trial Court of Surallah, South

Cotabato ordering the NIA to pay
respondent the amount of P107,517.60 as
just compensation for the questioned portion
of respondent's property taken by NIA
which it used it for its main canal. Among
others, it was contended that an
encumbrance was imposed on the land in
question in view of 39 of the Land
Registration Act (now P.D. 1529, Sec. 44).
owner thereof before it could be taken for

public use.
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. 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, the Court ruled that prior
expropriation proceedings should have been
filed and just compensation paid to the
SYLLABUS
The Court, therefore, affirmed the decision

of the Court of Appeals but modified it to
the extent that the value of the questioned
property must be determined either as of the
date of the taking of the property or the
filing of the complaint, "whichever came
first."
1. REMEDIAL
LAW;
CIVIL
PROCEDURE;
ACTIONS;
CERTIFICATION AGAINST FORUM
SHOPPING; REQUIREMENT APPLIES
TO FILING OF PETITIONS FOR REVIEW
ON CERTIORARI. 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."
2. ID.; ID.; ID.; ID.; MUST BE SIGNED
BY THE PRINCIPAL; PETITION IS
DEFECTIVE WHERE CERTIFICATION
WAS SIGNED BY COUNSEL ALONE;
CASE AT BAR. The requirement in Rule
130
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. 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 forumshopping 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.
3. CIVIL LAW; LAND REGISTRATION;
CERTIFICATE OF TITLE ISSUED TO A
LAND PREVIOUSLY GRANTED BY
VIRTUE OF HOMESTEAD PATENT AND
SUBSEQUENTLY REGISTERED UNDER
THE
TORRENS
SYSTEM
IS
CONCLUSIVE AND INDEFEASIBLE.
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 owner's
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.
4. ID.; PROPERTY; EASEMENT; MUST
BE PRE-EXISTING AT TIME OF
REGISTRATION OF LAND IN ORDER
THAT OWNER THEREOF MAY BE
COMPELLED TO RESPECT IT; CASE AT
BAR. As 39 of the Land Registration
Act 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 preexisting 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. 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.
4. CONSTITUTIONAL LAW; POWER OF
EMINENT DOMAIN; ACQUISITION OF
PRIVATE PROPERTY FOR PUBLIC USE
IS SUBJECT TO PAYMENT OF JUST
COMPENSATION. 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. 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.
5. ID.; ID.; JUST COMPENSATION;
EXPLAINED. 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
131
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." 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.
Nevertheless, as noted in Ansaldo v.
Tantuico, Jr., 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.
6. ID.; ID.; ID.; HOW DETERMINED;
CASE AT BAR. 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 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, 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. SATDEI
DECISION
MENDOZA, J p:
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
just compensation for the taking of the
latter's property.
The facts are as follows:

Respondent Clarita Vda. de Enorio is the
owner of a lot in Barangay M. Roxas, Sto.
Nino, South Cotabato with an area of 39,512
square meters. The lot, known as Lot 1210A-Pad-11-000586, is covered by TCT No. T22121 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. Respondent's 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
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-ofway 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 assessor's office
concerned.
132
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
133
filed therewith: (a) that he has not

theretofore commenced any action or
filed any claim involving the same
issues in any court, tribunal or quasijudicial 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 forumshopping. 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 forumshopping 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 owner's 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
134
from all encumbrances except those

noted on said certificate, and any of
the following encumbrances which
may be subsisting, namely:
xxx xxx xxx
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
135
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.
(Italics 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
inCommissioner 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. Nino,
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
136
any amount for damages caused on

the improvements/crops within the
appellee's 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
appellee's
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.
SO ORDERED.
||| (Eslaban, Jr. v. Vda. de Onorio, G.R. No.

146062, [June 28, 2001], 412 PHIL 667680)
[G.R. No. 129998. December 29, 1998.]

NATIONAL
POWER
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.
SYLLABUS
1. POLITICAL LAW; INHERENT POWER
OF THE STATE; EMINENT DOMAIN;
JUST COMPENSATION; CRITERION IN
DETERMINATION THEREOF. 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
reclassified 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.
2. ID.; ID.; ID.; ID.; PRICE OF P375.00
PER SQUARE METER CONSIDERED
JUST
COMPENSATION
FOR
UNDEVELOPED RAW LAND IN CASE
AT BAR. 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 Atienza's report
that the fair market value of subject parcels
of land be fixed at P375.00 per square meter.
3. ID.; ID.; ID.; ID.; PAYMENT OF LEGAL
INTEREST
ON
COMPENSATION
AWARDED FROM DATE PETITIONER
WAS PLACED IN POSSESSION OF THE
LAND, PROPER IN CASE AT BAR.
The trial court and the Court of Appeals
correctly required petitioner to pay legal
interest 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 Treasurer's Office.
4. ID.; ID.; ID.; DOUBLE PAYMENT FOR
3,611 SQUARE METERS OF LOT 5 NOT
137
PROPER IN CASE AT BAR. 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.
5. ID.; ID.; ID.; AREA OF COMMUNAL
IRRIGATION
CANAL
MUST
BE
EXCLUDED FROM EXPROPRIATION IN
CASE AT BAR. 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.
6. ADMINISTRATIVE
LAW;
ADMINISTRATIVE
AGENCY;
NATIONAL POWER CORPORATION;
EXEMPT FROM PAYMENT OF COSTS
OF PROCEEDINGS. We, however, rule
that petitioner is under its charter exempt
from payment of costs of the proceedings.
DECISION
PARDO, J p:
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:
"Parcel 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-03017121 (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-030017121 (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
Henson Family
2. Lot 2-A = 6,823
Alfredo Tanchiatco,
encumbered with
Land Bank of the
Phil. (LBP)
3. Lot 3-A = 3,057
Bienvenido David,
encumbered with LBP
4. Lot 4-A = 1,438 sq. m.
Bondoc
Capili, encumbered
with LBP
5. Lot 5-A = 3,461
Miguel Manoloto
and Henson Family
Total A = 58,311 sq. m."
sq. m.
sq.
m.
sq.
m.
Maria
sq.
m.
and cover by Transfer Certificate of

Title No. 557 in the name of Henson,
et al.; Transfer Certificate of title No.
7131/Emancipation Patent No. A277216 in the name of Alfredo
Tanchiatco; Transfer Certificate of
138
Title No. 7111/Emancipation Patent

No. A-278086 in the name of
Bienvenido
David;
Transfer
Certificate
of
Title
No.
7108/Emancipation Patent No. A278089 in the name of Maria B.
Capili; Certificate of Land Transfer
No. 4550 in the name of Miguel C.
Manoloto, and Subdivision Plan Psd03-017121 (OLT), which is a
subdivision of Lot 212, Mexico
Cadastre as surveyed for Josefina
Katigbak, et al. Said five (5) parcels
of land 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, respondent filed a
motion to dismiss. 4 They did not challenge
petitioner's 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
Provisional Treasurer of Pampanga.
Petitioner deposited the amount on August
29, 1990. 8
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 Oracio, in his
report dated April 28, 1993, recommended
that the fair market value be fixed at
P170.00 per square meter. 11
On September 5, 1990, the trial court issued

a writ of possession in favor of petitioner,
and, on September 11, 1990, the court's
deputy sheriff placed petitioner in
possession of the subject land. 9
However, the trial court did not conduct a

hearing on any of the reports.
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
Provisional Treasurer of Pampanga. 10
On May 19, 1993, the trial court rendered

judgment fixing the amount of just
compensation to be paid by the petitioner for
the taking of the entire area of 63,220
squares 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
attorney's fees of P20,000.00, and costs of
the proceedings. 12
On April 5, 1991, the trial court issued an

order appointing three (3) commissioners to
aid the in the reception of evidence to
determine just compensation for the taking
of subject property. After receiving the
evidence and conducting an ocular
inspection, the commissioners submitted to
the court their individual reports.
In due time, petitioner appealed to the Court

of Appeals. 13
Commissioner Mariano C. Tiglao, in his

report dated September 10, 1992,
recommended that their fair market value of
the entire 63,220 square meters property be
Hence, this petition for review. 15
On July 23, 1997, the Court Appeals

rendered decision affirming that of the
Regional Trial Court, except that the award
of P20,000.00 as attorney's fees was
deleted. 14
By resolution adopted on October 8, 1997,

the Court required respondents to comment
139
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 petitioner's
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 NPC's
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 reclassified 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
reclassified 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 of
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
Atienza's 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 Treasurer's 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
140
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;
and Henson Family

(3,311 square meters),
Zosa & Quijano Law Office for respondents.

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.
SO ORDERED.
c. Lot 3-A, with an area of

3,057 square meters
belonging to Bienvenido
David (TCT No. 7111)
||| (NAPOCOR v. Henson, G.R. No. 129998,

[December 29, 1998], 360 PHIL 922-931)
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
City Attorney for petitioner.
[G.R. No. 142971. May 7, 2002.]

THE
CITY
OF
CEBU, petitioner, vs.
SPOUSES
APOLONIO
and
BLASA
DEDAMO, respondents.
SYNOPSIS
Petitioner filed the instant petition for
review on certiorari assailing the decision of
the Court of Appeals which affirmed in
toto the decision of the Regional Trial Court
of Cebu City in Civil Case No. CEB-14632,
a case for eminent domain, which fixed the
valuation of the land subject thereof on the
basis of the recommendation of the
commissioners appointed by it. Petitioner
questioned the land valuation asserting that
just compensation should be determined as
of the date of the filing of the complaint,
which in this case should be 17 September
1993, and not at the time the property was
actually taken in 1994, pursuant to the
Court's decision in "National Power
Corporation vs. Court of Appeals." In their
Comment, respondents maintained that the
trial court decided the case on the basis of
the agreement of the parties that just
compensation
shall
be
fixed
by
commissioners appointed by the court; that
the petitioner did not interpose any serious
objection to the commissioners' report;
hence, it was estopped from attacking the
report on which the decision was based.
In denying the petition, the Court held that
the applicable law as to the point of
reckoning for the determination of just
compensation is Section 19 of Republic Act
141
No. 7160, which expressly provides that just

compensation shall be determined as of the
time of actual taking. The petitioner had
misread the Court's ruling in the abovementioned case. The Court did not
categorically rule in that case that just
compensation should be determined as of
the filing of the complaint. The Court
explicitly stated therein that although the
general
rule
in
determining
just
compensation in eminent domain is the
value of the property as of the date of the
filing of the complaint, the rule "admits of
an exception: where the Court fixed the
value of the property as of the date it was
taken, and not at the date of the
proceedings."
purpose. However, the Government must

pay the owner thereof just compensation as
consideration therefor.
Moreover, it was too late for petitioner to

question the valuation without violating the
principle of equitable estoppel. Records
showed that petitioner consented to conform
with the valuation recommended by the
commissioners. It cannot detract from its
agreement now and assail the correctness of
the commissioners' assessment.
3. ID.; ID.; ID.; ID.; GENERAL RULE;

EXCEPTION. The petitioner has misread
our ruling in The National Power Corp. vs.
Court of Appeals. We did not categorically
rule in that case that just compensation
should be determined as of the filing of the
complaint. We explicitly stated therein that
although the general rule in determining just
an exception: where this Court fixed the
taken and not at the date of the
proceedings."
SYLLABUS
1. POLITICAL
LAW;
POWER
OF
EMINENT DOMAIN; EXPLAINED.
Eminent domain is a fundamental State
power that is inseparable from sovereignty.
It is the Government's right to appropriate,
in the nature of a compulsory sale to the
State, private property for public use or
2. ID.; ID.; THE LOCAL GOVERNMENT

CODE OF
1991,
SECTION
19,
APPLICABLE TO THE CASE AT BAR;
ASCERTAINMENT
OF
JUST
COMPENSATION;
JUST
COMPENSATION
SHALL
BE
DETERMINED AS OF THE TIME OF
ACTUAL TAKING. In the case at bar,
the applicable law as to the point of
reckoning for the determination of just
compensation is Section 19 of R.A. No.
7160, which expressly provides that just
time of actual taking.
4. ID.; ID.; SECTION 4, RULE 67 OF THE

RULES OF COURT, A PROCEDURAL
LAW CANNOT PREVAIL OVER R.A. NO.
7160, A SUBSTANTIVE LAW. While
Section 4, Rule 67 of the Rules of Court
provides that just compensation shall be
determined at the time of the filing of the
complaint for expropriation, such law cannot
prevail over R.A. 7160, which is a
substantive law.
5. CIVIL LAW; ESTOPPEL IN PAIS;
PETITIONER IS ESTOPPED FROM
QUESTIONING THE VALUATION OF
COMMISSIONERS DUE TO ITS PNOC
AGREEMENT
TO
CONFORM
THEREWITH. Furthermore, during the
hearing on 22 November 1996, petitioner
did not interpose a serious objection. It is
therefore too late for petitioner to question
the valuation now without violating the
principle of equitable estoppel. Estoppel in
pais arises when one, by his acts,
representations or admissions, or by his own
silence when he ought to speak out,
intentionally or through culpable negligence,
induces another to believe certain facts to
exist and such other rightfully relies and acts
on such belief, so that he will be prejudiced
if the former is permitted to deny the
existence of such facts. Records show that
petitioner consented to conform with the
valuation
recommended
by
the
commissioners. It cannot detract from its
agreement now and assail correctness of the
commissioners' assessment.
142
6. ID.; CONTRACTS HAVE THE FORCE

OF LAW BETWEEN PARTIES AND
SHOULD BE COMPLIED WITH IN
GOOD FAITH. More than anything else,
the parties, by a solemn document freely and
voluntarily agreed upon by them, agreed to
be bound by the report of the commission
and approved by the trial court. The
agreement is a contract between the parties.
It has the force of law between them and
should be complied with in good
faith.cdasia2005
Dedamo. The petitioner alleged therein that

it needed the following parcels of land of
respondents, to wit:
Lot No. 1527
Area 1,146 square meters
Tax Declaration 03472
Title No. 31833
Market value P240,660.00
Assessed Value P72,200.00
Lot No. 1528
DECISION
Area 793 square meters
Area sought to be 478 square
DAVIDE, JR., C.J p:

meters
In its petition for review on certiorari under
Rule 45 of the 1997 Rules of Civil
Procedure, petitioner City of Cebu assails
the decision of 11 October 1999 of the Court
of Appeals in CA-G.R. CV No.
59204 1 affirming the judgment of 7 May
1996 of the Regional Trial Court, Branch 13,
Cebu City, in Civil Case No. CEB-14632, a
case for eminent domain, which fixed the
valuation of the land subject thereof on the
basis of the recommendation of the
commissioners appointed by it.
The material
disputed.
operative
facts
are
not
On 17 September 1993, petitioner City of

Cebu filed in Civil Case No. CEB-14632 a
complaint for eminent domain against
respondents spouses Apolonio and Blasa
expropriated
Tax Declaration 03450
Title No. 31832
Market value for the whole
lot P1,666,530.00
Market value of the
Area
to
be
expropriated P100,380.00
Assessed Value P49,960.00
for a public purpose, i.e., for the
construction of a public road which shall
serve as an access/relief road of Gorordo
Avenue to extend to the General Maxilum
Avenue and the back of Magellan
International Hotel Roads in Cebu City.
The lots are the most suitable site for the
purpose. The total area sought to be
expropriated is 1,624 square meters with
an assessed value of P1,786,400.
Petitioner deposited with the Philippine

National Bank the amount of P51,156
representing 15% of the fair market value
of the property to enable the petitioner to
take immediate possession of the property
pursuant to Section 19 of R.A. No. 7160. 2
Respondents, filed a motion to dismiss the
complaint because the purpose for which
their property was to be expropriated was
not for a public purpose but for benefit of a
single private entity, the Cebu Holdings, Inc.
Petitioner could simply buy directly from
them the property at its fair market value if it
wanted to, just like what it did with the
neighboring lots. Besides, the price offered
was very low in light of the consideration of
P20,000 per square meter, more or less,
which petitioner paid to the neighboring lots.
Finally, respondents alleged that they have
no other land in Cebu City.
A pre-trial was thereafter had.
On 23 August 1994, petitioner filed a motion
for the issuance of a writ of possession
pursuant to Section 19 of R.A. No. 7160.
The motion was granted by the trial court on
21 September 1994. 3
On 14 December 1994, the parties executed
and submitted to the trial court an
Agreement 4 wherein they declared that they
have partially settled the case and in
consideration thereof they agreed:
143
1. That the SECOND PARTY hereby

conforms to the intention to
[sic] the FIRST PARTY in
expropriating their parcels of
land in the above-cited case as
for public purpose and for the
benefit of the general public;
2. That the SECOND PARTY agrees
to part with the ownership of
the subject parcels of land in
favor of the FIRST PARTY
provided the latter will pay just
compensation for the same in
the amount determined by the
court after due notice and
hearing;
3. That in the meantime the SECOND
PARTY agrees to receive the
amount of ONE MILLION
SEVEN HUNDRED EIGHTY
SIX
THOUSAND
FOUR
HUNDRED
PESOS
(1,786,400.00) as provisional
payment for the subject parcels
of land, without prejudice to the
final valuation as may be
determined by the court;
4. That the FIRST PARTY in the light
of the issuance of the Writ of
Possession
Order
dated
September 21, 1994 issued by
the Honorable Court, agreed to
take possession over that
portion of the lot sought to be
expropriated where the house of

the SECOND PARTY was
located only after fifteen (15)
days upon the receipt of the
SECOND PARTY of the
amount of P1,786,400.00;
5. That the SECOND PARTY upon
receipt
of
the
aforesaid
provisional amount, shall turn
over to the FIRST PARTY the
title of the lot and within the
lapse of the fifteen (15) days
grace period will voluntarily
demolish their house and the
other structure that may be
located thereon at their own
expense;
6. That the FIRST PARTY and the

SECOND
PARTY
jointly
petition the Honorable Court to
render judgment in said Civil
Case No. CEB-14632 in
accordance
with
this
AGREEMENT;
7. That the judgment sought to be
rendered under this agreement
shall be followed by a
supplemental judgment fixing
the just compensation for the
property of the SECOND
PARTY
after
the
Commissioners appointed by
this Honorable Court to

determine the same shall have
rendered their report and
approved by the court.
Pursuant to said agreement, the trial court
appointed three commissioners to determine
the just compensation of the lots sought to
be expropriated. The commissioners were
Palermo M. Lugo, who was nominated by
petitioner and who was designated as
Chairman; Alfredo Cisneros, who was
nominated by respondents; and Herbert E.
Buot, who was designated by the trial court.
The parties agreed to their appointment.
Thereafter, the commissioners submitted
their report, which contained their respective
assessments of and recommendation as to
the valuation of the property.
On the basis of the commissioners' report
and after due deliberation thereon, the trial
court rendered its decision on 7 May
1996, 5 the decretal portion of which reads:
WHEREFORE, in view of the
foregoing, judgment is hereby
rendered in accordance with the
report of the commissioners.
Plaintiff is directed to pay Spouses
Apolonio S. Dedamo and Blasa
Dedamo the sum of pesos:
TWENTY FOUR MILLION EIGHT
HUNDRED
SIXTY-FIVE
THOUSAND
AND
NINE
144
HUNDRED
THIRTY
(P24,865,930.00) representing the
compensation mentioned in the
Complaint.
Plaintiff and defendants are directed
to pay the following commissioner's
fee;
1. To Palermo Lugo - P21,000.00
2. To Herbert Buot - P19,000.00
3. To Alfredo Cisneros - P19,000.00
Without pronouncement as to cost.
SO ORDERED.
Petitioner filed a motion for reconsideration
on the ground that the commissioners' report
was inaccurate since it included an area
which was not subject to expropriation.
More specifically, it contended that Lot No.
1528 contains 793 square meters but the
actual area to be expropriated is only 478
square meters. The remaining 315 square
meters is the subject of a separate
expropriation proceeding in Civil Case No.
CEB-8348, then pending before Branch 9 of
the Regional Trial Court of Cebu City.
On 16 August 1996, the commissioners
submitted an amended assessment for the
478 square meters of Lot No. 1528 and fixed
it at P12,824.10 per square meter, or in the
amount of P20,826,339.50. The assessment
was approved as the just compensation

thereof by the trial court in its Order of 27
December
1996. 6 Accordingly,
the
dispositive portion of the decision was
amended to reflect the new valuation.
Petitioner elevated the case to the Court of
Appeals, which docketed the case as CAG.R. CV No. 59204. Petitioner alleged that
the lower court erred in fixing the amount of
just compensation at P20,826,339.50. The
just compensation should be based on the
prevailing market price of the property at the
proceedings.
The petitioner did not convince the Court of
Appeals. In its decision of 11 October
1999, 7 the Court of Appeals affirmed in
toto the decision of the trial court.
Still unsatisfied, petitioner filed with us the
petition for review in the case at bar. It raises
the sole issue of whether just compensation
should be determined as of the date of the
filing of the complaint. It asserts that it
should be, which in this case should be 17
September 1993 and not at the time the
property was actually taken in 1994,
pursuant to the decision in "National Power
Corporation vs. Court of Appeals." 8
In their Comment, respondents maintain that
the Court of Appeals did not err in affirming
the decision of the trial court because (1) the
trial court decided the case on the basis of
the agreement of the parties that just
compensation
shall
be
fixed
by
commissioners appointed by the court; (2)
petitioner did not interpose any serious
objection to the commissioners' report of 12
August 1996 fixing the just compensation of
the
1,624-square
meter
lot
at
P20,826,339.50; hence, it was estopped from
attacking the report on which the decision
was based; and (3) the determined just
compensation fixed is even lower than the
actual value of the property at the time of the
actual taking in 1994.
Eminent domain is a fundamental State
power that is inseparable from sovereignty.
It is the Government's right to appropriate,
in the nature of a compulsory sale to the
State, private property for public use or
purpose. 9However, the Government must
pay the owner thereof just compensation as
consideration therefor.
In the case at bar, the applicable law as to
the point of reckoning for the determination
of just compensation is Section 19 of R.A.
No. 7160, which expressly provides that just
time of actual taking. The Section reads as
follows:
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
145
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 petitioner has misread our ruling in The
National Power Corp. vs. Court of
Appeals. 10 We did not categorically rule in
that case that just compensation should be
determined as of the filing of the complaint.
We explicitly stated therein that although the
general
rule
in
determining
just
an exception: where this Court fixed the

taken and not at the date of the
proceedings."
Also, the trial court followed the then
governing procedural law on the matter,
which was Section 5 of Rule 67 of the Rules
of Court, which provided as follows:
SEC.
5. Ascertainment
of
compensation. 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.
More than anything else, the parties, by a
solemn document freely and voluntarily
agreed upon by them, agreed to be bound by
the report of the commission and approved
by the trial court. The agreement is a
contract between the parties. It has the force
of law between them and should be
complied with in good faith. Article 1159
and 1315 of the Civil Code explicitly
provides:
Art. 1159. Obligations arising from

contracts have the force of law
between the contracting parties and
should be complied with in good
faith.
Art. 1315. Contracts are perfected
by mere consent, and from that
moment the parties are bound not
only to the fulfillment of what has
been expressly stipulated but also
to all the consequences which,
according to their nature, may be in
keeping with good faith, usage and
law.
Furthermore, during the hearing on 22
November 1996, petitioner did not interpose
a serious objection. 11 It is therefore too late
for petitioner to question the valuation now
without violating the principle of equitable
estoppel. Estoppel in pais arises when one,
by his acts, representations or admissions, or
by his own silence when he ought to speak
out, intentionally or through culpable
negligence, induces another to believe
certain facts to exist and such other
rightfully relies and acts on such belief, so
that he will be prejudiced if the former is
permitted to deny the existence of such
facts. 12 Records show that petitioner
consented to conform with the valuation
recommended by the commissioners. It
cannot detract from its agreement now and
assail correctness of the commissioner's
assessment.
146
Finally, while Section 4, Rule 67 of the

Rules of Court provides that just
compensation shall be determined at the
time of the filing of the complaint for
expropriation, 13 such law cannot prevail
over R.A. 7160, which is a substantive
law. 14
WHEREFORE, finding no reversible error
in the assailed judgment of the Court of
Appeals in CA-G.R. CV No. 59204, the
petition in this case is hereby DENIED.
No pronouncement as to costs.
SO ORDERED.
||| (City of Cebu v. Spouses Dedamo, G.R.
No. 142971, [May 7, 2002], 431 PHIL 524535)
[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.
R ES OLUTIO N
SANDOVAL-GUTIERREZ, J p:
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
GaleosValdehueza
and
Josefina
GaleosPanerio, 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
147
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 Republic's
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 attorney's
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
148
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
1940's 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. . . . 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).
xxx xxx xxx

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
149
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 plaintiff's title must be
shown to be in fact invalid or
inoperative
despite
its prima
facieappearance 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.
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
samewith finality in our Resolution of May
17, 2004.
On May 18, 2004, respondent filed an exparte 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 asecond 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
Republic's 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 respondent's
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 Republic's 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
petitioner's 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
150
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
respondent's 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 respondent's predecessors-ininterest were given a "run around" by the
Republic's 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 respondent's 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 Republic's 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 government's 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 respondent's
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 Court's
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
151
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
individual's 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 respondent's claim,
the Republic is invoking this Court's
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 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.
. . . 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 Republic's acquisition
of ownership is conditioned upon the full
payment of just compensation within a
reasonable time. 14
152
Significantly, in Municipality of Bian v.

Garcia 15 this Court ruled that the
expropriation of lands consists of two
stages, to wit:
". . . 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
purpose described in the complaint,
upon
the
payment
of
just
complaint" . . .
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. . . .
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 Republic's
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
153
rest of the nation who would deny

him that right.
The 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."
The Republic's 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 Institute's 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 people's right,
will not stand still in the face of the
Republic's 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] . . . 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 respondent's title
was registered first, it would be the
Republic's 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 owner's
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
154
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 respondent's 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 Republic's 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.
SO ORDERED.
||| (Republic v. Lim, G.R. No. 161656, [June
29, 2005], 500 PHIL 652-672)
155
ruled in favor of Chiongbian and the same

was affirmed by the Court of Appeals.
[G.R. No. 139495. November 27, 2000.]

MACTAN-CEBU
INTERNATIONAL
AIRPORT
AUTHORITY
(MCIAA), petitioner, vs.
THE
HON. COURT OF APPEALS and
VIRGINIA
CHIONGBIAN, respondents.
Chiu Tangete & Gabumpa Law Office for
private respondent.
SYNOPSIS
Subject of the action is Lot 941, adjoining
the then Lahug Airport, registered in the
name of Mactan-Cebu International Airport
Authority (MCIAA). Said lot was
expropriated by the Republic of the
Philippines in 1961, through Civil Case No.
R-1881, for the expansion and improvement
of Lahug, Airport. Later, the assets of the
Lahug Airport, including Lot 941 were
transferred to MCIAA. Lahug Airport,
however, was closed and Chiongbian filed a
case for reconveyance alleging that she was
given the right of repurchase once the land is
longer needed for the airport. The trial court
SYLLABUS
expropriated is ended or abandoned or if the

property was to be used other than as the
Lahug airport. CHIONGBIAN cannot rely
on the ruling in Mactan Cebu International
Airport vs. Court of Appeals wherein the
presentation of parol evidence was allowed
to prove the existence of a written agreement
containing the right to repurchase. Said case
did not involve expropriation proceedings
but a contract of sale. . . [The parol evidence
rule] applies to written agreements and has
no application to a judgment of a court . . . .
To permit CHIONGBIAN to prove the
existence of a compromise settlement which
she claims to have entered into with the
Republic of the Philippines prior to the
rendition of judgment in the expropriation
case would result in a modification of the
judgment of a court which has long become
final and executory.
1. REMEDIAL LAW; EVIDENCE; RULES

OF ADMISSIBILITY; DOCUMENTARY
EVIDENCE; PAROL EVIDENCE RULE;
NOT APPLICABLE TO A JUDGMENT OF
THE COURT. Evidence reveals that Lot
No. 941 was appropriated by the Republic of
the Philippines through expropriation
proceedings in Civil Case No. R-1881. . . .
The terms of the judgment [therein] are clear
and unequivocal and grant 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
2. CIVIL
LAW;
CONTRACTS;
UNENFORCEABLE
CONTRACTS;
INADMISSIBLE TESTIMONIES UNDER
THE STATUTE OF FRAUDS TO PROVE
EXISTENCE OF ALLEGED SALE.
Under 1403 of the Civil Code, a contract for
the sale of real property shall be
unenforceable unless the same, or some note
or memorandum thereof, be in writing, and
subscribed by the party charged, or by his
agent; evidence, therefore of the agreement
cannot be received without the writing or a
secondary evidence of its contents. . . .
MCIAA objected to the purpose for which
the testimonies of CHIONGBIAN and
BERCEDE were offered, i.e. to prove the
Chiongbian cannot repurchase Lot 941. The

terms of the judgment in Civil Case No. R1881 are clear and unequivocal and grant
title to Lot 941 in fee simple to the Republic
of the Philippines. There was no condition
imposed to the effect 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.
Indeed, to allow the alleged compromise
agreement of reconveyance which was
supposedly made prior to the rendition of
judgment on the expropriation case is to
modify said judgment that has long become
156
existence of the alleged written agreement

evincing a right to repurchase Lot No. 941
in favor of CHIONGBIAN, for being in
violation of the Statute of Frauds. MCIAA
also objected to the purpose for which the
testimony
of
PASTRANA
was
offered, i.e. to prove the existence of the
alleged written agreement and an alleged
deed of sale, on the same ground.
Consequently, the testimonies of these
witnesses are inadmissible under the Statute
of Frauds to prove the existence of the
alleged sale.
meeting of the offer and the acceptance upon

the thing and the cause which are to
constitute the contract. A judicial
compromise has the force of law and is
conclusive between the parties and it is not
valid and binding on a party who did not
sign the same. Since CHIONGBIAN was
not a party to the compromise agreements,
she cannot legally invoke the same.
turned over to the Philippine

Government through the Surplus
Property Commission. Subsequently,
it was transferred to the Bureau of
Aeronautics which was succeeded by
the National Airports Corporation.
When the latter was dissolved, it was
replaced by the Civil Aeronautics
Administration (CAA).
DECISION
3. REMEDIAL LAW; EVIDENCE; RULES

OF ADMISSIBILITY; TESTIMONIAL
EVIDENCE; HEARSAY RULE.
[E]vidence is hearsay if its probative value
is not based on the personal knowledge of
the witness but on the knowledge of another
person who is not on the witness stand.
This Petition for Review on Certiorari seeks

the reversal of the Decision of the Court of
Appeals 1 in CA G.R. CV No. 56495
entitled "Virginia Chiongbian vs. MactanCebu International Airport Authority" which
affirmed the Decision of the Regional Trial
Court, 2 7th Judicial Region, Branch 24,
Cebu City.
On April 16, 1952, the Republic of

the Philippines, represented by the
CAA, filed
an expropriation
proceeding, Civil Case No. R-1881
(Court of First Instance of Cebu,
Third Branch), on several parcels of
land in Lahug, Cebu City, which
included Lot 941, for the expansion
and improvement of Lahug Airport.
4. POLITICAL
LAW;
EMINENT
DOMAIN; EXPROPRIATION; WHEN
PROPER. [E]xpropriation lies only when
it is made necessary by the opposition of the
owner to the sale or by the lack of
agreement as to the price.
5. CIVIL
LAW;
CONTRACTS;
COMPROMISE AGREEMENT; JUDICIAL
COMPROMISE. [A] compromise is a
contract whereby the parties, by making
reciprocal concessions, avoid litigation or
put an end to one already commenced.
Essentially. it is a contract perfected by mere
consent, the latter being manifested by the
GONZAGA-REYES, Jp:
The Court of Appeals rendered its decision

based on the following facts:
"Subject of the action is Lot 941
consisting of 13,766 square meters
located in Lahug, Cebu City,
adjoining the then Lahug Airport and
covered by TCT No. 120366 of the
Registry of Deeds of Cebu City, in
the name of MCIAA.
During the liberation, the Lahug
Airport was occupied by the United
States Army. Then, in 1947, it was
In June 1953, appellee Virginia

Chiongbian purchased Lot 941 from
its
original
owner, Antonina
Faborada, the original defendant in
the
expropriation
case,
for
P8,000.00. Subsequently, TCT No.
9919 was issued in her name (Exh.
D).
Then, on December 29, 1961,
judgment was rendered in the
expropriation case in favor of the
Republic of the Philippines which
was made to pay Virginia
Chiongbian
the
amount
of
P34,415.00 for Lot 941, with legal
interest computed from November
157
16, 1947, the date when the

government begun using it. Virginia
Chiongbian
did
not
appeal
therefrom.
Thereafter, absolute title to Lot 941
was transferred to the Republic of
the Philippines under TCT No.
27696 (Exhs. E and 2).
Then, in 1990, Republic Act No.
6958 was passed by Congress
creating
the
Mactan-Cebu
International Airport Authority to
which the assets of the Lahug Airport
was transferred. Lot 941 was then
transferred in the name of MCIAA
under TCT No. 120366 on May 8,
1992.
On July 24, 1995, Virginia
Chiongbian filed a complaint for
reconveyance of Lot 941 with the
Regional Trial Court of Cebu,
Branch 9, docketed as Civil Case No.
CEB-17650 alleging, that sometime
in 1949, the National Airport
Corporation (NAC) ventured to
expand the Cebu Lahug Airport. As a
consequence, it sought to acquire by
expropriation or negotiated sale
several parcels of lands adjoining the
Lahug Airport, one of which was Lot
941 owned by Virginia Chiongbian.
Since she and other landowners
could not agree with the NAC's offer
for the compensation of their lands, a
suit for eminent domain was

instituted on April 16, 1952, before
the then Court of First Instance of
Cebu (Branch III), against forty-five
(45) landowners, including Virginia
Chiongbian, docketed as Civil Case
No. R-1881, entitled "Republic of
the Philippine vs. Damian Ouano, et
al." It was finally decided on
December 29, 1961 in favor of the
Republic of the Philippines.
Some of the defendants-landowners,
namely, Milagros Urgello, Mamerto
Escao, Inc. and Ma. Atega Vda. de
Deen, appealed the decision to the
Court of Appeals under CA-G.R. No.
33045-R, which rendered a modified
judgment
allowing
them
to
repurchase
their
expropriated
properties. Virginia Chiongbian, on
the other hand, did not appeal and
instead, accepted the compensation
for Lot 941 in the amount of
P34,415, upon the assurance of the
NAC that she or her heirs would be
given the right of reconveyance for
the same price once the land would
no longer be used as (sic) airport.
Consequently, TCT No. 9919 of
Virginia Chiongbian was cancelled
and TCT No. 27696 was issued in
the name of the Republic of the
Philippines. Then, with the creation
of the MCIAA, it was cancelled and
TCT No. 120366 was issued in its

name.
However, no expansion of the Lahug
Airport was undertaken by MCIAA
and its predecessors-in-interest. In
fact, when Mactan International
Airport was opened for commercial
flights, the Lahug Airport was closed
at the end of 1991 and all its airport
activities were undertaken at and
transferred
to
the
Mactan
International Airport. Thus, the
purpose for which Lot 941 was taken
ceased to exist." 3
On June 3, 1997, the RTC rendered
judgment in favor of the respondent Virginia
Chiongbian (CHIONGBIAN) the dispositive
portion of the decision reads:
"WHEREFORE, in the light of the
foregoing, the Court hereby renders
judgment in favor of the plaintiff,
Virginia Chiongbian and against the
defendant,
Mactan
Cebu
International Authority (MCIAA),
ordering the latter to restore to
plaintiff
the
possession
and
ownership
of
the
property
denominated as Lot No. 941 upon
reimbursement of the expropriation
price paid to plaintiff.
158
The Register of Deeds is therefore

ordered to effect the Transfer of the
Certificate Title from the defendant
to the plaintiff on Lot No. 941,
cancelling Transfer Certificate of
Title No. 120366 in the name of
defendant MCIAA and to issue a
new title on the same lot in the name
of Virginia Chiongbian.
II.
No pronouncement as to cost.
THE COURT OF APPEALS

ERRED IN HOLDING THAT THE
MODIFIED JUDGMENT IN CAGR NO. 33045 SHOULD INURE
TO
THE
BENEFIT
OF
CHIONGBIAN EVEN IF SHE WAS
NOT A PARTY IN SAID
APPEALED CASE.
SO ORDERED." 4
Aggrieved by the holding of the trial court,
the petitioner Mactan Cebu International
Airport Authority (MCIAA) appealed the
decision to the Court of Appeals, which
affirmed the RTC decision. Motion for
Reconsideration was denied 5 hence this
petition where MCIAA raises the following
grounds in support of its petition:
I.
ERRED IN UPHOLDING THE
TRIAL COURT'S JUDGMENT
THAT
THERE
WAS
A
REPURCHASE
AGREEMENT
AND IGNORING PETITIONER'S
PROTESTATIONS
THAT
ADMISSION OF RESPONDENT'S
ORAL EVIDENCE IS NOT
ALLOWED UNDER THE STATUE
OF FRAUDS.

ERRED IN HOLDING THAT THE
DECISION
IN LIMBACO IS
MATERIAL AND APPLICABLE
TO THE CASE AT BAR.
III.
IV.
ERRED IN RULING THAT THE
RIGHT
OF
VIRGINIA
CHIONGBIAN TO REPURCHASE
SHOULD BE UNDER THE SAME
TERMS AND CONDITIONS AS
THE OTHER LANDOWNERS
SUCH THAT HER REPURCHASE
PRICE IS ONLY P34,415.00." 6
MCIAA contends that the Republic of the
Philippines appropriated Lot No. 941
through expropriation proceedings in Civil
Case No. R-1881. The judgment rendered
therein was unconditional and did not
contain a stipulation that ownership thereof
would revert to CHIONGBIAN nor did it

give CHIONGBIAN the right to repurchase
the same in the event the lot was no longer
used for the purpose it was expropriated.
Moreover, CHIONGBIAN's claim that there
was a repurchase agreement is not supported
by documentary evidence. The mere fact
that twenty six (26) other landowners
repurchased their property located at the
aforementioned Lahug airport is of no
consequence
considering
that
said
landowners were able to secure a rider in
their contracts entitling them to repurchase
their property.
MCIAA also argues that the Court of
Appeals erroneously concluded that it did
not object to the evidence presented by
CHIONGBIAN to prove the alleged
repurchase agreement considering that the
transcript of stenographic notes shows that it
manifested its objections thereto for being in
violation of the Statute of Frauds.
MCIAA also faults the Court of Appeals for
applying the ruling in the case of Limbaco
vs. Court of Appeals. 7 It is the position of
MCIAA that the ruling in the case
of Limbaco is not squarely in point with
respect to the present case for the reason that
the Limbaco case involved a contract of sale
of real property and not an expropriation.
Moreover, MCIAA alleges that the Court of
Appeals erred in ruling that the case
of Escao, et. al. vs. Republic 8 proves the
existence of the repurchase agreement.
159
MCIAA claims that although the parties in

said case were CHIONGBIAN's codefendants in Civil Case No. R-1881,
CHIONGBIAN did not join in their appeal
of the judgment of condemnation. The
modified judgment in CA G.R. No. 33045-R
should
not
therefore
redound
to
CHIONGBIAN's benefit who was no longer
a party thereto or to the compromise
agreement which Escao et. al. entered into
with the Republic of the Philippines.
Finally, assuming for the sake of argument
that CHIONGBIAN has a right to
repurchase Lot No. 941, MCIAA claims that
the Court of Appeals erred in ruling that the
right of CHIONGBIAN to purchase said lot
should be under the same terms and
conditions given to the other landowners and
not at the prevailing market price. Such
ruling is grossly unfair and would result in
unjustly enriching CHIONGBIAN for the
reason that she received just compensation
for the property at the time of its taking by
the government and that the property is now
worth several hundreds of millions of pesos
due to the improvements introduced by
MCIAA. 9
On the other hand, aside from praying that
this Court affirm the decision of the Court of
Appeals,
the
private
respondent
CHIONGBIAN prays that the petition be
denied for the reason that it violates the
1997 Rules on Civil Procedure, more
specifically
the
requirement
of
a
certification of non-forum shopping.
CHIONGBIAN claims that the Verification

and Certification on Non-Forum Shopping
executed by the MCIAA on September 13,
1999 was signed by a Colonel Marcelino A.
Cordova whose appointment as Assistant
General Manager of MCIAA was
disapproved by the Civil Service
Commission as early as September 2, 1999.
It is CHIONGBIAN's position that since his
appointment
was
disapproved,
the
Verification attached to the petition for
review on certiorari cannot be considered as
having been executed by the "plaintiff" or
"principal party" who under Section 5, Rule
7 of the Rules of Court can validly make the
certification in the instant petition.
Consequently, the petition should be
considered as not being verified and as such
should not be considered as having been
filed at all.
After a careful consideration of the
arguments presented by the parties, we
resolve to grant the petition.
We first resolve the procedural issue.
We are not persuaded by CHIONGBIAN's
claim that the Verification and Certification
against forum shopping accompanying
MCIAA's petition was insufficient for
allegedly having been signed by one who
was not qualified to do so. As pointed out by
the MCIAA, Colonel Cordova signed the
Verification and Certification against forum
shopping as Acting General Manager of the
MCIAA, pursuant to Office Order No. 5322-
99 dated September 10, 1999 issued by the

General Manager of MCIAA, Alfonso
Allere. 10 Colonel Cordova did not sign the
Verification and Certification against forum
shopping pursuant to his appointment as
assistant General Manager of the MCIAA,
which was later disapproved by the
Commission on Appointments. This fact has
not been disputed by CHIONGBIAN.
We come now to the substantive aspects of
the case wherein the issue to be resolved is
whether the abandonment of the public use
for which Lot No. 941 was expropriated
entitles CHIONGBIAN to reacquire it.
In Fery
vs. Municipality
of
Cabanatuan, 11 this Court had occasion to
rule on the same issue as follows:
"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
160
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. Many other
similar examples might be given. 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. DCATHS
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. 12
In the present case, evidence reveals that Lot
No. 941 was appropriated by the Republic of
the Philippines through expropriation
proceedings in Civil Case No. R-1881. The
dispositive portion of the decision in said
case reads insofar as pertinent as follows:
"IN VIEW OF THE FOREGOING,

judgment is hereby rendered:
1. Declaring the expropriation of
Lots Nos. 75, 76, 89, 90, 91, 105,
106, 107, 108, 104, 921-A, 88, 93,
913-B, 72, 77, 916, 777-A, 918, 919,
920, 764-A, 988, 744-A, 745-A, 746,
747, 752-A, 263-A, 941, 942, 740-A,
743, 985, 956, 976-A, 984, 989-A;
and 947, including in the Lahug
Airport, Cebu City, justified and in
lawful exercise of the right of
eminent domain;
2. Declaring the fair market values of
the lots thus taken and condemning
the plaintiff to pay the same to the
respective owners with legal interest
from the dates indicated therein, as
follows: Lots Nos. 75, 76, 89, 90, 91,
92, 105, 106, 107, 108-P31, 977
(minus P10,639 or P21,278 as
balance in favor of Mamerto Escao,
Inc., with legal interest from
November 16, 1947 until fully paid; .
. . Lot No. 941-P34,415.00 in favor
of Virginia Chiongbian, 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 Certificate of
Title to their representative 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.
NO COST.
SO
supplied)
ORDERED." 13 (Italics
The terms of the judgment are clear and

unequivocal and grant 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.
CHIONGBIAN cannot rely on the ruling

in Mactan Cebu International Airport
vs. Court of Appeals 14 wherein the
presentation of parol evidence was allowed
to prove the existence of a written agreement
containing the right to repurchase. Said case
did not involve expropriation proceedings
but a contract of sale. This Court
consequently allowed the presentation of
parol evidence to prove the existence of an
161
agreement allowing the right of repurchase

based on the following ratiocination:
"Under the parol evidence rule, when
the terms of an agreement have been
reduced into writing, it is considered
as containing all the terms agreed
upon, and there can be, between the
parties and their successors-ininterest, no evidence of such terms
other than the contents of the written
agreement. However, a party may
present evidence to modify, explain
or add to the terms of the written
agreement if he puts in issue in his
pleading, the failure of the written
agreement to express the true intent
of the parties thereto. In the case at
bench, the fact which private
respondents seek to establish by
parol evidence consists of the
agreement or representation made by
the NAC that induced Inez Ouano to
execute the deed of sale; that the
vendors and their heirs are given the
right of repurchase should the
government no longer need the
property.
Where
a
parol
contemporaneous agreement was the
moving cause of the written contract,
or where the parol agreement forms
part of the consideration of the
written contract, and it appears that
the written contract was executed on
the faith of the parol contract or
representation, such evidence is
admissible. It is recognized that
proof is admissible of any collateral

parol agreement that is not
inconsistent with the terms of the
written contract though it may relate
to the same subject matter. The rule
excluding parol evidence to vary or
contradict a writing does not extend
so far as to preclude the admission of
existing evidence to show prior or
contemporaneous collateral parol
agreements between the parties, but
such evidence may be received,
regardless of whether or not the
written agreement contains any
reference
to
such
collateral
agreement, and whether the action is
at law or in equity.
More importantly, no objection was
made by petitioner when private
respondents introduced evidence to
show the right of repurchase granted
by the NAC to Inez Ouano. It has
been repeatedly laid down as a rule
of evidence that a protest or
objection against the admission of
any evidence must be made at the
proper time, and if not so made, it
will be understood to have been
waived." 15
This pronouncement is not applicable to the
present case since the parol evidence rule
which provides that "when the terms of a
written agreement have been reduced to
writing, it is considered as containing all the
terms agreed upon, and there can be,
between the parties and their successors-ininterest, no evidence of such terms other
than the contents of the written agreement"
applies to written agreements and has no
application to a judgment of a court. To
permit CHIONGBIAN to prove the
existence of a compromise settlement which
she claims to have entered into with the
Republic of the Philippines prior to the
rendition of judgment in the expropriation
case would result in a modification of the
judgment of a court which has long become
And even assuming for the sake of argument
that CHIONGBIAN could prove the
existence of the alleged written agreement
acknowledging her right to repurchase Lot
No. 941 through parol evidence, the Court of
Appeals erred in holding that the evidence
presented
by
CHIONGBIAN
was
admissible.
Under 1403 of the Civil Code, a contract for
the sale of real property shall be
unenforceable unless the same, or some note
or memorandum thereof, be in writing, and
subscribed by the party charged, or by his
agent;evidence, therefore of the agreement
cannot be received without the writing or a
secondary evidence of its contents.
Contrary to the finding of the Court of
Appeals, the records reveal that MCIAA
objected to the purpose for which the
testimonies
of
CHIONGBIAN 16 and
Patrosinio Berceder 17 (BERCEDE) were
162
offered, i.e. to prove the existence of the

alleged written agreement evincing a right to
repurchase Lot No. 941 in favor of
CHIONGBIAN, for being in violation of the
Statute of Frauds. MCIAA also objected to
the purpose for which the testimony of
Attorney Manuel Pastrana (PASTRANA)
was offered, i.e. to prove the existence of the
alleged written agreement and an alleged
deed
of
sale,
on
the
same
ground. 18 Consequently, the testimonies of
these witnesses are inadmissible under the
Statute of Frauds to prove the existence of
the alleged sale.
Aside from being inadmissible under the
provisions of the Statute of Frauds,
CHIONGBIAN's
and
BERCEDE's
testimonies are also inadmissible for being
hearsay in nature. Evidence is hearsay if its
probative value is not based on the personal
knowledge of the witness but on the
knowledge of another person who is not on
the
witness
stand. 19 CHIONGBIAN,
through deposition, testified that:
"ATTY. DUBLIN (To Witness)
Q: Mrs. Chiongbian, you said a while
ago that there was an assurance
by the government to return this
property to you in case Lahug
Airport will be no longer used,
is that correct?
WITNESS:
A: Yes, sir. That is true.
A: In my previous residence in
Mabolo.
ATTY. DUBLIN: (To witness)

DEPOSITION OFFICER:
Q: Can you recall when was this
verbal assurance made?
The assurance was made in my

previous residence at Mabolo.
A: I cannot remember anymore.

WITNESS:
Q: You cannot also remember the
year in which the alleged
assurance was made?
A: I cannot also remember because
I'm very forgetful.
Q: Now, can you tell us so far as you
can remember who was that
person or government authority
or employee that made the
alleged assurance?
A: The owner of the property.
Q: Now, how many times was this
assurance being made to you to
return this property in case the
Lahug Airport will no longer be
used?
A: I entrusted that to my lawyer, Atty.

Pedro Calderon.
ATTY. DUBLIN: (to witness)
Q: You mean the assurance was made
personally to your lawyer at that
time, Atty. Pedro Calderon?
A: Yes, sir.
Q: So you are now trying to tell us
that that assurance was never
made to you personally. Is that
right, Mam?
A: He assured me directly that the
property will be returned to me.
A: 2 or 3, I cannot recall.
Q: When you said "he," are you

referring to your lawyer at that
time, Atty. Pedro Calderon
Q: You cannot also remember in what

particular place or places was
this assurance being made?
A: Yes, sir.
Q: So, in effect, it was your lawyer,
Atty. Pedro Calderon, who
163
made the assurance to you that

the property will be returned in
case Lahug Airport will be
abandoned?
A: Yes, sir. 20
CHIONGBIAN's
testimony
shows that she had no personal
knowledge of the alleged assurance
made by the Republic of the Philippines
that Lot No. 941 would be returned to
her in the event that the Lahug Airport
was closed. She stated that she only
learned of the alleged assurance of the
Republic of the Philippines through her
lawyer, Attorney Calderon, who was not
presented as a witness.
BERCEDE's testimony regarding the
alleged agreement is likewise inadmissible
to prove the existence of the agreement for
also being hearsay in nature. Like
CHIONGBIAN, BERCEDE did not have
personal knowledge of the alleged assurance
made by the Republic of the Philippines to
his father that their land would be returned
should the Lahug Airport cease to operate
for he only learned of the alleged assurance
through his father.
PASTRANA's testimony does little to help
CHIONGBIAN's cause. He claims that
subsequent to the execution of the alleged
written agreement but prior to the rendition
of judgment in the expropriation case, the
Republic and CHIONGBIAN executed a
Deed of Sale over Lot No. 941 wherein

CHIONGBIAN sold the aforementioned lot
to the Republic of the Philippines. However,
CHIONGBIAN never mentioned the
existence of a deed of sale. 21 In fact, the
records disclose that Lot No. 941 was
transferred to the Republic of the Philippines
pursuant to the judgment of expropriation in
Civil
Case
No.
R-1881
which
CHIONGBIAN herself enforced by filing a
motion for withdrawal of the money after
the decision was rendered. 22 Moreover,
since the very terms of the judgment in Civil
Case No. R-1881 are silent regarding the
alleged deed of sale or of the alleged written
agreement acknowledging the right of
CHIONGBIAN to repurchase Lot No. 941,
the only logical conclusion is that no sale in
fact took place and that no compromise
agreement was executed prior to the
rendition
of
the
judgment.
Had
CHIONGBIAN and the Republic executed a
contract of sale as claimed by PASTRANA,
the Republic of the Philippines would not
have needed to pursue the expropriation case
inasmuch as it would be duplicitous and
would result in the Republic of the
Philippines expropriating something it had
already owned. Expropriation lies only when
it is made necessary by the opposition of the
owner to the sale or by the lack of
agreement as to the price. 23 Consequently,
CHIONGBIAN cannot compel MCIAA to
reconvey Lot No. 941 to her since she has
no cause of action against MCIAA.
Finally, CHIONGBIAN cannot invoke the

modified judgment of the Court of Appeals
in the case of Republic of the Philippines
vs. Escao,
et. al. 24 where
her
codefendants, Mamerto Escao, Inc., Milagros
Urgello and Maria Atega Vda. De Deen
entered into separate and distinct
compromise agreements with the Republic
of the Philippines wherein they agreed to
sell their land subject of the expropriation
proceedings to the latter subject to the
resolutory condition that in the event the
Republic of the Philippines no longer uses
said property as an airport, title and
ownership of said property shall revert to its
respective owners upon reimbursement of
the price paid therefor without interest.
MCIAA correctly points out that since
CHIONGBIAN did not appeal the judgment
of expropriation in Civil Case No. R-1881
and was not a party to the appeal of her codefendants, the judgment therein cannot
redound to her benefit. And even assuming
that CHIONGBIAN was a party to the
appeal, she was not a party to the
compromise agreements entered into by her
co-defendants. A compromise is a contract
whereby the parties, by making reciprocal
concessions, avoid litigation or put an end to
one already commenced. 25 Essentially, it is
a contract perfected by mere consent, the
latter being manifested by the meeting of the
offer and the acceptance upon the thing and
the cause which are to constitute the
contract. 26 A judicial compromise has the
force of law and is conclusive between the
parties 27 and it is not valid and binding on
164
a party who did not sign the same. 28 Since

CHIONGBIAN was not a party to the
compromise agreements, she cannot legally
invoke the same.
ACCORDINGLY, the Decision of the Court

of Appeals is hereby REVERSED and SET
ASIDE. The complaint of Virginia
Chiongbian against the Mactan-Cebu
International
Airport
Authority
for
reconveyance of Lot No. 941 is
DISMISSED.
SO ORDERED.
||| (Mactan-Cebu
International
Airport
Authority v. Court of Appeals, G.R. No.
139495, [November 27, 2000], 399 PHIL
695-712)
[G.R. No. 137152. January 29, 2001.]
CITY
OF
MANDALUYONG, petitioner, vs.
ANTONIO N., FRANCISCO N.,
THELMA N., EUSEBIO N.,
RODOLFO N., all surnamed
AGUILAR, respondents.
Jimmy D. Lacebal for petitioner.
Ricardo J. M. Rivera Law Office for private
respondents.
SYNOPSIS
Respondents Antonio, Francisco, Thelma,
Eusebio and Rodolfo, all surnamed Aguilar,
were the registered owners of three adjoining
parcels of land with an aggregate area of 1,847
square meters located at 9 de Febrero Street,
Brgy. Mauwag, City of Mandaluyong. Several
decades ago, on a portion of the said lots,
respondents constructed residential houses
which they leased out to tenants and on the
vacant portion, other families also constructed
residential structures which they likewise
occupied. In 1983, those lots were classified
by the Board of the Housing and Urban
Development Coordinating Counsel as an area
for priority development for urban land reform
under Proclamation Nos. 1967 and 2284. As a
result, the tenants and occupants of the said
lots offered to purchase those lots from
respondents but the latter refused. On
November 7, 1996, the Sangguniang
Panglungsod of the City of Mandaluyong
authorized Mayor Benjamin Abalos through a
resolution to initiate action for the
expropriation of the subject lots and the

construction of a medium-rise condominium
for qualified occupants therein. On January
10, 1996, Mayor Abalos sent a letter to
respondents offering to purchase the said lots,
but the latter did not answer. Thus, Mayor
Abalos filed a complaint for expropriation
before the Regional Trial Court, Branch 168 of
Pasig City. In their answer, respondents
alleged that the expropriation of their land is
arbitrary and capricious and is not for public
purpose. Moreover, the subject lots are their
only real property and are too small for
expropriation. On November 5, 1997,
petitioner filed an Amended Complaint. It
reduced the area sought to be expropriated to
two parcels of land only totalling 1,636 square
meters. At the preliminary hearing, Antonio
Aguilar testified and presented documentary
evidence to support their claims while
petitioner did not present any evidence. On
September 17, 1997, the trial court dismissed
the Amended Complaint. Hence, this petition.
The Court ruled that upon partition, four (4)
co-owners, namely, Francisco, Thelma,
Rodolfo and Antonio Aguilar each had a share
of 300 square meters under TCT Nos. 13849,
13852, 13850, 13851. Eusebio Aguilar's share
was 347 square meters under TCT No. 13853,
while Virginia Aguilar's was 89 square meters
under TCT No. 13854. Eusebio died on March
23, 1995, and, according to Antonio's
testimony, the former was survived by five (5)
children. Where there are several co-owners,
and some of them die, the heirs of those who
die, with respect to that part belonging to the
165
deceased, become also co-owners of the

property together with those who survive.
After Eusebio died; his five heirs became coowners of his 347 square-meter portion.
Dividing the 347 square meters among the
five would entitle each heir to 69.4 square
meters of the land subject of litigation.
Consequently, the share of each co-owner did
not exceed the 300 square meter limit set
in R.A. 7279. Finally, the Court noted that the
subject lots are now in the possession of
respondents. Antonio Aguilar testified that he
and the other co-owners filed ejectment cases
against the occupants of the land before the
Metropolitan Trial Court, Mandaluyong,
Branches 59 and 60. Orders of eviction were
issued and executed on September 17, 1997
which resulted in the eviction of the tenants
and other occupants from the land in question.
Petition was DISMISSED.
SYLLABUS
1. LABOR
AND
SOCIAL
LEGISLATION; PRESIDENTIAL DECREE
NO. 1517 (URBAN LAND REFORM ACT);
OPTIMUM USE OF LAND AS A
NATIONAL RESOURCE FOR PUBLIC
WELFARE. Presidential Decree (P.D.)
No. 1517, theUrban Land Reform Act, was
issued by then President Marcos in 1978. The
decree adopted as a State policy the liberation
of human communities from blight congestion
and hazard, and promotion of their
development and modernization, the optimum
use of land as a national resource for public
welfare. Pursuant to this law, Proclamation

No. 1893 was issued in 1979 declaring the
entire Metro Manila as Urban Land Reform
Zone for purposes of urban land reform. This
was amended in 1980 by Proclamation No.
1967 and in 1983 by Proclamation No.
2284 which identified and specified 245 sites
in Metro Manila as Areas for Priority
Development and Urban Land Reform Zones.
2. ID.; REPUBLIC ACT NO. 7279 (URBAN
DEVELOPMENT HOUSING ACT OF 1992);
PURPOSE. In 1992, the Congress of the
Philippines passed Republic Act No. 7279, the
"Urban Development and Housing Act of
1992." The law lays down as a policy that the
state, in cooperation with the private sector,
undertake a comprehensive and continuing
Urban Development and Housing Program;
uplift the conditions of the privileged and
homeless citizens in urban areas and
resettlement areas by making available to
them decent housing at affordable cost, basic
services and employment opportunities and
provide for the rational use and development
of urban land to bring about, among others,
equitable utilization of residential lands;
encourage
more
effective
people's
participation in the urban development process
and improve the capability of local
government units in undertaking urban
development and housing programs and
projects.
3. ID.;
ID.;
PROCEDURE
FOR
ACQUISITION
OF
LAND
FOR
SOCIALIZED HOUSING. Towards this
end, all city and municipal governments are

mandated to conduct an inventory of all lands
and improvements within their respective
localities, and in coordination with the
National Housing Authority, the Housing and
Land Use Regulatory Board, the National
Mapping Resource Information Authority, and
the Land management Bureau, identifylands
for socialized housing and resettlements areas
for the immediate and future needs of the
underprivileged and homeless in the urban
areas, acquire the lands and dispose of said
lands to the beneficiaries of the program.
4. ID.;
ID.;
PRIORITIES
IN
THE
ACQUISITION
OF
LAND
FOR
SOCIALIZED HOUSING. Lands for
socialized housing are to be acquired in the
following order: (1) government lands; (2)
alienable lands of public domain; (3)
unregistered or abandoned or idle lands within
the declared Areas for Priority Development
(APD), Zonal Improvement Program (ZIP)
sites, Slum Improvement and Resettlement
(SIR) sites which have not yet been acquired;
(5) BLISS sites which have not yet been
acquired; and (6) privately-owned lands.
5. ID.;
ID.;
MODES
OF
LAND
ACQUISITION. Lands for socialized
housing under R.A. 7279 are to be acquired in
several modes. Among these modes are the
following: (1) community mortgage; (2) land
swapping, (3) land assembly or consolidation;
(4) land banking; (5) donation to the
government; (6) joint venture agreement; (7)
negotiated purchase; and (8) expropriation.
166
The mode or expropriation is subject to two

conditions: (a) it shall be resorted to only
when the other modes of acquisition have
been exhausted; and (b) parcels of land owned
by small property owners are exempt from
such acquisition.
6. ID.; ID.; ACQUISITION OF THE LANDS
IN THE PRIORITY LIST MUST BE MADE
SUBJECT TO THE MODES AND
CONDITIONS AS REQUIRED THEREOF.
Section
9
of R.A.
7279 speaks
of priorities in the acquisition of lands. It
enumerates the type of lands to be acquired
and the hierarchy in their acquisition. Section
10 deals with the modes of land acquisition or
the process of acquiring lands for socialized
housing. These are two different things.They
mean that the type of lands that may be
acquired in the order of priority in Section 9
are to be acquired only in the modes
authorized under Section 10. The acquisition
of the lands in the priority list must be made
subject to the modes and conditions set forth
in the next provision. In other words, lands
that lies within the APD, such as in the instant
case, may be acquired only in the modes
under, and subject to the conditions of, Section
10.
7. ID.; ID.; EXPROPRIATION SHALL BE
RESORTED TO WHEN OTHER MODES OF
ACQUISITION HAVE BEEN EXHAUSTED;
NOT COMPLIED IN CASE AT BAR.
Petitioner claims that it had faithfully
observed the different modes of land
acquisition for socialized housing under R.A.
7279 and adhered to the priorities in the

acquisition for socialized housing under said
law. It, however, did not state with
particularity whether it exhausted the other
modes of acquisition in Section 9 of the law
before it decided to expropriate the subject
lots. The law states "expropriation shall be
resorted to when other modes of acquisition
have been exhausted." Petitioner alleged only
one mode of acquisition, i.e., by negotiated
purchase. Petitioner, through the City Mayor,
tried to purchase the lots from respondents but
the latter refused to sell. As to the other modes
of acquisition, no mention has been made. Not
even Resolution No. 516, Series of 1996 of the
Sangguniang Panlungsod authorizing the
Mayor of Mandaluyong to effect the
expropriation of the subject property states
whether the city government tried to acquire
the same by community mortgage, land
swapping, land assembly or consolidation,
land banking, donation to the government, or
joint venture agreement under Section 9 of the
law.
8. ID.; ID.; PARCELS OF LAND OWNED
BY SMALL-PROPERTY OWNERS ARE
EXEMPTED FROM EXPROPRIATION.
While we adhere to the expanded notion of
public use, the passage of R.A. No. 7279, the
1992" introduced a limitation on the size of
the land sought to be expropriated for
socialized housing. The law expressly
exempted "small property owners" from
expropriation of their land for urban land
reform. R.A. No. 7279 originated as Senate
Bill No. 234 authored by Senator Joey Lina

and House Bill No. 34310. Senate Bill No.
234 then provided that one of those lands not
covered by the urban land reform and housing
program was "land actually used by small
property owners within the just and equitable
retention limit as provided under this Act."
9. ID.;
ID.;
"SMALL-PROPERTY
OWNERS"; DEFINED. "Small-property
owners" are defined by two elements: (1)
those owners of real property, whose property
consists of residential lands with an area of not
more than 300 square meters in highly
urbanized cities and 800 square meters in
other urban areas; and (2) that they do not own
real property other than the same.
10. CIVIL
LAW;
PROPERTY;
COOWNERSHIP; NO INDIVIDUAL CAN
CLAIM TITLE TO ANY DEFINITE
PORTION OF COMMUNITY PROPERTY
UNTIL THE PARTITION THEREOF.
Under a co-ownership, the ownership of an
undivided thing or right belongs to different
persons. During the existence of the coownership, no individual can claim title to any
definite portion of the community property
until the partition thereof; and prior to the
partition, all that the co-owner has is an ideal
or abstract quota or proportionate share in the
entire land or thing.
11. ID.; ID.; ID.; CO-OWNER IS FREE TO
ALIENATE; ASSIGN OR MORTGAGE HIS
167
UNDIVIDED
INTEREST
IN
THE
COMMON PROPERTY. Article 493 of the
Civil Code however provides that: "Art. 493.
Each co-owner shall have the full ownership
of his part and of the fruits and benefits
pertaining thereto, and he may therefore
alienate assign or mortgage it, and even
substitute another person in its enjoyment,
except when personal rights are involved. But
the effect of the alienation or the mortgage,
with respect to the co-owners shall be limited
to the portion which may be allotted to him in
the division upon termination of the coownership." Before partition in a coownership, every co-owner has the absolute
ownership of his undivided interest in the
common property. The co-owner is free to
alienate, assign or mortgage his interest,
except as to purely personal rights. He may
also validly lease his undivided interest to a
third party independently of the other coowners. The effect of any such transfer is
limited to the portion which may be awarded
to him upon the partition of the property.
Article 493 therefore gives the owner of an
undivided interest in the property the right to
freely sell and dispose of his undivided
interest. The co-owner, however, has no right
to sell or alienate a concrete specific or
determinate part of the thing owned in
common, because his right over the thing is
represented by a quota or ideal portion without
any physical adjudication. If the co-owner
sells a concrete portion, this, nonetheless, does
not render the sale void. Such a sale affects
only his own share, subject to the results of the
partition but not those of the other co-owners

who did not consent to the sale.
12. ID.; ID.; ID.; PARTITION WAS
NECESSARY
INCIDENT
OF
COOWNERSHIP AND PRESUMED TO HAVE
BEEN DONE IN GOOD FAITH; CASE AT
BAR. In the instant case, the titles to the
subject lots were issued in respondents' names
as co-owners in 1997 ten (10) years before
the expropriation case was filed in 1997. As
co-owners all that the respondents had was an
ideal or abstract quota or proportionate share
in the lots. This, however, did not mean that
they could not separately exercise any rights
over the lots. Each respondent had the full
property. He could freely sell or dispose of his
interest independently of the other co-owners.
And this interest could even been attached by
his creditors. The partition in 1998, six (6)
months after the filing of the expropriation
case, terminated the co-ownership by
converting into certain and definite parts the
respective undivided shares of the co-owners.
The subject property is not a thing essentially
indivisible. The rights of the co-owners to
have the property partitioned and their share in
the same delivered to them cannot be
questioned for "[n]o co-owner shall be obliged
to remain in the co-ownership." The partition
was merely a necessary incident of the coownership; and absent any evidence to the
contrary, this partition is presumed to have
been done in good faith.
13. LABOR
AND
SOCIAL
LEGISLATION; REPUBLIC
ACT
NO.
7279 (URBAN
DEVELOPMENT
AND
HOUSING ACT OF 1992); "SMALLPROPERTY OWNER"; SHARE OF EACH
CO-OWNER OF THE PROPERTY SOUGHT
TO BE EXPROPRIATED DID NOT
EXCEED THE 300 SQUARE METER
LIMIT; CASE AT BAR. Upon partition,
four (4) co-owners, namely, Francisco,
Thelma, Rodolfo and Antonio Aguilar each
had a share of 300 square meters under TCT
Nos. 13849, 13852, 13850, 13851. Eusebio
Aguilar's share was 347 square meters under
TCT No. 13853 while Virginia Aguilar's was
89 square meters under TCT No. 13854. It is
noted that Virginia Aguilar, although granted
89 square meters only of the subject lots, is, at
the same time, the sole registered owner of the
TCT No. 59780, one of the three (3)
titles initially sought to be expropriated in the
original complaint. TCT No. 59780, with a
land area of 211 square meters, was dropped
in the amended complaint. Eusebio Aguilar
was granted 347 square meters, which is 47
square meters more than the maximum of 300
square meters set by R.A. 7279 for small
property owners. In TCT No. 13853, Eusebio's
title, however, appears the following
annotations; " . . . subject to . . . and to the
prov. of Sec. 4 Rule 74 of the Rules of Court
with respect to the inheritance left by the
deceased Eusebio N. Aguilar." Eusebio died
on March 23, 1995, and, according to
Antonio's testimony, the former was survived
by five (5) children. Where there are several
co-owners, and some of them die, the heirs of
168
those who die, with respect to that part

belonging to the deceased, become also coowners of the property together with those
who survive. After Eusebio died, his five heirs
became co-owners of his 347 square meters
portion. Dividing the 347 square meters
among the five entitled each heir to 69.4
square meters of the land subject of litigation.
in R.A. 7279.
14. ID.; ID.; ID.; PROPERTY OWNERS DO
NOT APPEAR TO OWN REAL PROPERTY
OTHER THAN THE LOTS SUBJECT OF
EXPROPRIATION; PRESENT IN THE
CASE AT BAR. Antonio Aguilar testified
that he and most of the original co-owners do
not reside on the subject property but in their
ancestral home in Paco, Manila. Respondents
therefore appear to own real property other
than the lots in litigation. Nonetheless, the
records do not show that the ancestral home in
Paco, Manila and the land on which it stands
are owned by respondent or any one of them.
Petitioner did not present any little or proof of
this fact despite Antonio Aguilar's testimony.
On the other hand, respondents claim that the
subject lots are their only real property and
that they, particularly two of the five heirs of
Eusebio Aguilar, are merely renting their
houses and therefore do not own any other real
property in Metro Manila. To prove this, they
submitted certifications from the offices of the
City and Municipal Assessors in Metro Manila
attesting to the fact that they have no
registered real property declared for taxation
purposes in the respective cities. Respondents

were certified by the City Assessor of Manila;
Quezon City; Makati City; Pasay City;
Paraaque; Caloocan City; Pasig City;
Muntinlupa; Marikina and the then
municipality of Las Pias and the municipality
of San Juan del Monte as having no real
property registered for taxation in their
individual names.
15. ID.;
ID.;
MODES
OF
LAND
ACQUISITION;
EXPROPRIATION;
PUBLIC PURPOSE WAS NEGATED BY
EVICTION OF TENANTS AND OTHER
OCCUPANTS FROM THE LAND IN
QUESTION. Finally, this court notes that
the subject lots are now in the possession of
respondents. Antonio Aguilar testified that he
and the other co-owners filed ejectment cases
against the occupants of the land before the
Metropolitan Trial Court, Mandaluyong,
Branches 59 and 60. Orders of eviction were
issued and executed on September 17, 1997
which resulted in the eviction of the tenants
and other occupants from the land in question.
DECISION
PUNO, J p:
This is a petition for review under Rule 45 of
the Rules of Court of the Orders dated
September 17, 1998 and December 29, 1998
of the Regional Trial Court, Branch 168, Pasig
City 1 dismissing the petitioner's Amended
Complaint in SCA No. 1427 for expropriation
of two (2) parcels of land in Mandaluyong

City.
The antecedent facts are as follows:
On August 4, 1997, petitioner filed with the
Regional Trial Court, Branch 168, Pasig City a
complaint for expropriation entitled "City of
Mandaluyong, plaintiff v. Antonio N.,
Francisco N., Thelma N., Eusebio N., Rodolfo
N., all surnamed Aguilar, defendants."
Petitioner sought to expropriate three (3)
adjoining parcels of land with an aggregate
area of 1,847 square meters registered under
Transfer Certificates of Title Nos. 59780,
63766 and 63767 in the names of the
defendants, herein respondents, located at 9 de
Febrero Street, Barangay Mauwag, City of
Mandaluyong; on a portion of the 3 lots,
respondents constructed residential houses
several decades ago which they had since
leased out to tenants until the present; on the
vacant portion of the lots, other families
constructed residential structures which they
likewise occupied; in 1983, the lots were
classified by Resolution No. 125 of the Board
of the Housing and Urban Development
Coordinating Council as an Area for Priority
Development for urban land reform under
Proclamation Nos. 1967 and 2284 of then
President Marcos; as a result of this
classification, the tenants and occupants of the
lots offered to purchase the land from
respondents, but the latter refused to sell; on
November 7, 1996, the Sangguniang
Panlungsod of petitioner, upon petition of the
Kapitbisig, an association of tenants and
169
occupants of the subject land, adopted

Resolution No. 516, Series of 1996
authorizing Mayor Benjamin Abalos of the
City of Mandaluyong to initiate action for the
expropriation of the subject lots and
construction of a medium-rise condominium
for qualified occupants of the land; on January
10, 1996, Mayor Abalos sent a letter to
respondents offering to purchase the said
property at P3,000.00 per square meter;
respondents did not answer the letter.
Petitioner thus prayed for the expropriation of
the said lots and the fixing of just
compensation at the fair market value of
P3,000.00 per square meter. 2
of the complaint for lack of jurisdiction over

the person of the defendants and lack of cause
of action. Respondents prayed that the
affirmative defenses be set for preliminary
hearing and that the complaint be
dismissed. 4 Petitioner replied.
In their answer, respondents, except Eusebio

N. Aguilar who died in 1995, denied having
received a copy of Mayor Abalos' offer to
purchase their lots. They alleged that the
expropriation of their land is arbitrary and
capricious, and is not for a public purpose; the
subject lots are their only real property and are
too small for expropriation, while petitioner
has several properties inventoried for
socialized housing; the fair market value of
P3,000.00 per square meter is arbitrary
because the zonal valuation set by the Bureau
of Internal Revenue is P7,000.00 per square
meter. As counterclaim, respondents prayed
for damages of P21 million. 3
The Amended Complaint was admitted by the

trial court on December 18, 1997.
Respondents, who, with the exception of
Virginia Aguilar and the Heirs of Eusebio
Aguilar had yet to be served with summons
and copies of the Amended Complaint, filed a
"Manifestation and Motion" adopting their
"Answer with Counterclaim" and "Motion for
Preliminary Hearing" as their answer to the
Amended Complaint. 6
Respondents filed a "Motion for Preliminary

Hearing" claiming that the defenses alleged in
their Answer are valid grounds for dismissal
On November 5, 1997, petitioner filed an

Amended Complaint and named as an
additional defendant Virginia N. Aguilar and,
at the same time, substituted Eusebio Aguilar
with his heirs. Petitioner also excluded from
expropriation TCT No. 59870 and thereby
reduced the area sought to be expropriated
from three (3) parcels of land to two (2)
parcels totalling 1,636 square meters under
TCT Nos. 63766 and 63767. 5
The motion was granted. At the hearing of

February 25, 1998, respondents presented
Antonio Aguilar who testified and identified
several documentary evidence. Petitioner did
not present any evidence. Thereafter, both
parties filed their respective memoranda. 7
On September 17, 1998, the trial court issued

an order dismissing the Amended Complaint
after declaring respondents as "small property
owners" whose land is exempt from
expropriation under Republic Act No. 7279.
The court also found that the expropriation
was not for a public purpose for petitioner's
failure to present any evidence that the
intended beneficiaries of the expropriation are
landless
and
homeless
residents
of
Mandaluyong. The court thus disposed of as
follows:
"WHEREFORE,
the
Amended
Complaint is hereby ordered
dismissed without pronouncement as
to cost.
SO ORDERED." 8
Petitioner moved for reconsideration. On
December 29, 1998, the court denied the
motion. Hence this petition.
Petitioner claims that the trial court erred
"IN
UPHOLDING
RESPONDENT'S CONTENTION
THAT THEY QUALIFY AS
SMALL PROPERTY OWNERS
AND ARE THUS EXEMPT FROM
EXPROPRIATION." 9
Petitioner mainly claims that the size of the
lots in litigation does not exempt the same
from expropriation in view of the fact that the
said lots have been declared to be within the
170
Area for Priority Development (APD) No. 5 of

Mandaluyong by virtue of Proclamation No.
1967, as amended by Proclamation No.
2284 in relation to Presidential Decree No.
1517. 10 This declaration allegedly authorizes
petitioner to expropriate the property, ipso
facto, regardless of the area of the land.
Presidential
Decree
(P.D.)
No. 1517, the Urban Land Reform Act, was
issued by then President Marcos in 1978. The
decree adopted as a State policy the liberation
of human communities from blight,
congestion and hazard, and promotion of their
development and modernization, the optimum
use of land as a national resource for public
welfare. 11 Pursuant to this law, Proclamation
No. 1893 was issued in 1979 declaring the
entire Metro Manila as Urban Land Reform
Zone for purposes of urban land reform. This
was amended in 1980 by Proclamation No.
1967 and in 1983 by Proclamation No.
2284 which identified and specified 245 sites
in Metro Manila as Areas for Priority
Development and Urban Land Reform Zones.
In 1992, the Congress of the Philippines
passed Republic Act No. 7279, the "Urban
Development and Housing Act of 1992." The
law lays down as a policy that the state, in
cooperation with the private sector, undertake
a comprehensive and continuing Urban
Development and Housing Program; uplift the
conditions of the underprivileged and
homeless citizens in urban areas and
resettlement areas by making available to
them decent housing at affordable cost, basic
services and employment opportunities and

provide for the rational use and development
of urban land to bring about, among others,
equitable utilization of residential lands;
encourage
more
effective
people's
participation in the urban development process
and improve the capability of local
government units in undertaking urban
development and housing programs and
projects. 12 Towards this end, all city and
municipal governments are mandated to
conduct an inventory of all lands and
improvements
within
their
respective
localities, and in coordination with the
National Housing Authority, the Housing and
Land Use Regulatory Board, the National
Mapping Resource Information Authority, and
the Land Management Bureau, identify lands
for socialized housing and resettlement areas
for the immediate and future needs of the
underprivileged and homeless in the urban
areas, acquire the lands, and dispose of said
lands to the beneficiaries of the program. 13
The acquisition of lands for socialized housing
is governed by several provisions in the law.
Section 9 of R.A. 7279 provides:
"SECTION 9. Priorities in the
Acquisition of Land. Lands for
socialized housing shall be acquired
in the following order:
(a) Those owned by the
Government or any of
its
subdivisions,
instrumentalities,
or
agencies,
including
government-owned or
controlled corporations
and their subsidiaries;
(b) Alienable lands of the
public domain;
(c) Unregistered
abandoned
lands;
and
or
idle
(d) Those within the declared

Areas
for
Priority
Development,
Zonal
Improvement Program
sites,
and
Slum
Improvement
and
Resettlement Program
sites which have not yet
been acquired;
(e) Bagong
Lipunan
Improvement of Sites
and Services or BLISS
Sites which have not yet
been acquired;
(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 on171
site development of government

lands."
Lands for socialized housing are to be
acquired in the following order: (1)
government lands; (2) alienable lands of the
public domain; (3) unregistered or abandoned
or idle lands; (4) lands within the declared
Areas for Priority Development (APD), Zonal
Improvement Program (ZIP) sites, Slum
Improvement and Resettlement (SIR) sites
which have not yet been acquired; (5) BLISS
sites which have not yet been acquired; and
(6) privately-owned lands.
There is no dispute that the two lots in
litigation are privately-owned and therefore
last in the order of priority acquisition.
However, the law also provides that lands
within the declared APD's which have not yet
been acquired by the government are fourth in
the order of priority. According to petitioner,
since the subject lots lie within the declared
APD, this fact mandates that the lots be given
priority in acquisition. 14
swapping,
land
assembly
or
consolidation,
land
banking,
donation to the Government, jointventure
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. 15
Section 9, however, is not a single provision

that can be read separate from the other
provisions of the law. It must be read together
with Section 10 of R.A. 7279 which also
provides:
For the purposes 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."
"SECTION 10. Modes of Land

Acquisition. The modes of
acquiring lands for purposes of this
Act shall include, among others,
community
mortgage,
land
Lands for socialized housing under R.A.

7279 are to be acquired in several modes.
Among these modes are the following: (1)
community mortgage; (2) land swapping, (3)
land assembly or consolidation; (4) land
banking; (5) donation to the government; (6)

joint venture agreement; (7) negotiated
purchase; and (8) expropriation. The mode of
expropriation is subject to two conditions: (a)
it shall be resorted to only when the other
modes of acquisition have been exhausted;
and (b) parcels of land owned by small
property owners are exempt from such
acquisition.
Section 9 of R.A. 7279 speaks of priorities in
the acquisition of lands. It enumerates the type
of lands to be acquired and the hierarchy in
their acquisition. Section 10 deals with
the modes of land acquisition or the process of
acquiring lands for socialized housing. These
are two different things. They mean that the
type of lands that may be acquired in the
order of priority in Section 9 are to be
acquired only in the modes authorized under
Section 10. The acquisition of the lands in the
priority list must be made subject to the modes
and conditions set forth in the next provision.
In other words, land that lies within the APD,
such as in the instant case, may be acquired
only in the modes under, and subject to the
conditions of, Section 10.
Petitioner claims that it had faithfully

observed the different modes of land
acquisition for socialized housing under R.A.
7279 and adhered to the priorities in the
acquisition for socialized housing under said
law. 16 It, however, did not state with
particularity whether it exhausted the other
172
modes of acquisition in Section 9 of the law

before it decided to expropriate the subject
lots. The law states "expropriation shall be
resorted to when other modes of acquisition
have been exhausted." Petitioner alleged only
one mode of acquisition, i.e., by negotiated
purchase. Petitioner, through the City Mayor,
tried to purchase the lots from respondents but
the latter refused to sell. 17As to the other
modes of acquisition, no mention has been
made. Not even Resolution No. 516, Series of
1996 of the Sangguniang Panlungsod
authorizing the Mayor of Mandaluyong to
effect the expropriation of the subject property
states whether the city government tried to
acquire the same by community mortgage,
land
swapping,
land
assembly
or
consolidation, land banking, donation to the
government, or joint venture agreement under
Section 9 of the law.
Section 9 also exempts from expropriation
parcels of land owned by small property
owners. 18 Petitioner argues that the exercise
of the power of eminent domain is not
anymore conditioned on the size of the land
sought to be expropriated. 19 By the expanded
notion of public use, present jurisprudence has
established the concept that expropriation is
not anymore confined to the vast tracts of land
and landed estates, but also covers small
parcels of land. 20 That only a few could
actually benefit from the expropriation of the
property does not diminish its public use
character. 21 It simply is not possible to
provide, in one instance, land and shelter for
all who need them. 22
While we adhere to the expanded notion of

public use, the passage of R.A. No. 7279, the
1992" introduced a limitation on the size of
the land sought to be expropriated for
socialized housing. The law expressly
exempted "small property owners" from
expropriation of their land for urban land
reform. R.A. No. 7279 originated as Senate
Bill No. 234 authored by Senator Joey
Lina 23 and House Bill No. 34310. Senate Bill
No. 234 then provided that one of those lands
not covered by the urban land reform and
housing program was "land actually used by
small property owners within the just and
equitable retention limit as provided under this
Act." 24 Small property owners" were defined
in Senate Bill No. 234 as:
"4. Small Property Owners are
those whose rights are protected
under Section 9, Article XIII of the
Constitution of the Philippines, who
own small parcels of land within the
fair and just retention limit provided
under this Act and which are
adequate to meet the reasonable
needs of the small property owner's
family and their means of
livelihood." 25
The exemption from expropriation of lands of
small-property owners was never questioned
on the Senate floor. 26 This exemption,
although with a modified definition, was
actually retained in the consolidation of Senate
Bill No. 234 and House Bill No. 34310 which

became R.A. No. 7279. 27
The question now is whether respondents
qualify as "small property owners" as defined
in Section 3 (q) of R.A. 7279. Section 3 (q)
provides:
"SECTION 3 . . . (q). "Small
property owners" refers to those
whose only real property consists of
residential lands not exceeding three
hundred square meters (300 sq.m.) in
highly urbanized cities and eight
hundred square meters (800 sq.m.) in
other urban areas."
"Small-property owners" are defined by two
elements: (1) those owners of real property
whose property consists of residential lands
with an area of not more than 300 square
meters in highly urbanized cities and 800
square meters in other urban areas; and (2)
that they do not own real property other than
the same.
The case at bar involves two (2) residential
lots in Mandaluyong City, a highly urbanized
city. The lot under TCT No. 63766 is 687
square meters in area and the second under
TCT No. 63767 is 949 square meters, both
totalling 1,636 square meters in area. TCT No.
63766 was issued in the names of herein five
(5) respondents, viz:
"FRANCISCO
N.
AGUILAR,
widower; THELMA N. AGUILAR,
173
single; EUSEBIO N. AGUILAR,

JR., widower; RODOLFO N.
AGUILAR, single and ANTONIO
N. AGUILAR, married to Teresita
Puig; all of legal age, Filipinos." 28
TCT No. 63767 was issued in the names of the
five (5) respondents plus Virginia Aguilar,
thus:
"FRANCISCO
N.
AGUILAR,
widower; THELMA N. AGUILAR,
single; EUSEBIO N. AGUILAR,
JR., widower; RODOLFO N.
AGUILAR, single and ANTONIO
N. AGUILAR, married to Teresita
Puig; and VIRGINIA N. AGUILAR,
single, all of legal age, Filipinos." 29
Respondent Antonio Aguilar testified that he
and the other registered owners are all siblings
who inherited the subject property by intestate
succession from their parents. 30 Their father
died in 1945 and their mother in 1976.31 Both
TCT's were issued in the siblings' names on
September 2, 1987. 32 In 1986, however, the
siblings agreed to extrajudicially partition the
lots among themselves, but no action was
taken by them to this end. It was only eleven
(11) years later, on November 28, 1997 that a
survey of the two lots was made 33 and on
February 10, 1998, a consolidation
subdivision plan was approved by the Lands
Management Service of the Department of
Environment and Natural Resources. 34 The
co-owners signed a Partition Agreement on
February 24, 1998 35 and on May 21, 1998,
TCT Nos. 63766 and 63767 were cancelled

and new titles issued in the names of the
individual owners pursuant to the Partition
Agreement.
Petitioner argues that the consolidation of the
subject lots and their partition was made more
than six (6) months after the complaint for
expropriation was filed on August 4, 1997,
hence, the partition was made in bad faith, for
the purpose of circumventing the provisions
of R.A. 7279. 36
At the time of filing of the complaint for
expropriation, the lots subject of this case
were
owned
in
common
by
respondents. Under a co-ownership, the
ownership of an undivided thing or right
belongs to different persons. 37During the
existence of the co-ownership, no individual
can claim title to any definite portion of the
community property until the partition thereof;
and prior to the partition, all that the co-owner
has is an ideal or abstract quota or
proportionate share in the entire land or
thing. 38 Article 493 of the Civil Code
however provides that:
"ARTICLE 493. Each co-owner shall
have the full ownership of his part
and of the fruits and benefits
pertaining thereto, and he may
therefore
alienate,
assign
or
mortgage it, and even substitute
another person in its enjoyment,
except when personal rights are
involved. But the effect of the
alienation or the mortgage, with

respect to the co-owners shall be
limited to the portion which may be
allotted to him in the division upon
termination of the co-ownership." 39
Before partition in a co-ownership, every coowner has the absolute ownership of his
undivided interest in the common property.
The co-owner is free to alienate, assign or
mortgage his interest, except as to purely
personal rights. 40 He may also validly lease
his undivided interest to a third party
independently of the other co-owners. 41 The
effect of any such transfer is limited to the
portion which may be awarded to him upon
the partition of the property. 42
Article 493 therefore gives the owner of an
undivided interest in the property the right to
freely sell and dispose of his undivided
interest. 43 The co-owner, however, has no
right to sell or alienate a concrete specific or
determinate part of the thing owned in
common, because his right over the thing is
represented by a quota or ideal portion without
any physical adjudication. 44 If the co-owner
sells a concrete portion, this, nonetheless, does
not render the sale void. Such a sale affects
only his own share, subject to the results of the
partition but not those of the other co-owners
who did not consent to the sale. 45
In the instant case, the titles to the subject lots
were issued in respondents' names as coowners in 1987ten (10) years before the
expropriation case was filed in 1997. As co174
owners, all that the respondents had was an

ideal or abstract quota or proportionate share
in the lots. This, however, did not mean that
they could not separately exercise any rights
over the lots. Each respondent had the full
property. He could freely sell or dispose of his
interest independently of the other co-owners.
And this interest could have even been
attached by his creditors. 46 The partition in
1998, six (6) months after the filing of the
expropriation case, terminated the coownership by converting into certain and
definite parts the respective undivided shares
of the co-owners. 47 The subject property is
not a thing essentially indivisible. The rights
of the co-owners to have the property
partitioned and their share in the same
delivered to them cannot be questioned for
"[n]o co-owner shall be obliged to remain in
the co-ownership." 48 The partition was
merely a necessary incident of the coownership; 49 and absent any evidence to the
contrary, this partition is presumed to have
been done in good faith.
Upon partition, four (4) co-owners, namely,
Francisco, Thelma, Rodolfo and Antonio
Aguilar each had a share of 300 square meters
under TCT Nos. 13849, 13852, 13850,
13851. 50 Eusebio Aguilar's share was 347
square meters under TCT No. 13853 51 while
Virginia Aguilar's was 89 square meters under
TCT No. 13854. 52
It is noted that Virginia Aguilar, although

granted 89 square meters only of the subject
lots, is, at the same time, the sole registered
owner of TCT No. 59780, one of the three (3)
titles initially sought to be expropriated in the
original complaint. TCT No. 59780, with a
land area of 211 square meters, was dropped
in the amended complaint. Eusebio Aguilar
was granted 347 square meters, which is 47
square meters more than the maximum of 300
square meters set by R.A. 7279 for small
property owners. In TCT No. 13853, Eusebio's
title, however, appears the following
annotation:
". . . subject to . . . , and to the prov.
of Sec. 4 Rule 74 of the Rules of
Court with respect to the inheritance
left by the deceased Eusebio N.
Aguilar." 53
Eusebio died on March 23, 1995, 54 and,
according to Antonio's testimony, the former
was survived by five (5) children. 55 Where
there are several co-owners, and some of them
die, the heirs of those who die, with respect to
that part belonging to the deceased, become
also co-owners of the property together with
those who survive. 56 After Eusebio died, his
five heirs became co-owners of his 347
square-meter portion. Dividing the 347 square
meters among the five entitled each heir to
69.4 square meters of the land subject of
litigation.
in R.A. 7279. The second question, however,

is whether the subject property is the only real
property of respondents for them to comply
with the second requisite for small property
owners.
Antonio Aguilar testified that he and most of
the original co-owners do not reside on the
subject property but in their ancestral home in
Paco,
Manila. 57 Respondents
therefore
appear to own real property other than the lots
in litigation. Nonetheless, the records do not
show that the ancestral home in Paco, Manila
and the land on which it stands are owned by
respondents or any one of them. Petitioner did
not present any title or proof of this fact
despite Antonio Aguilar's testimony.
On the other hand, respondents claim that the
subject lots are their only real property 58 and
that they, particularly two of the five heirs of
Eusebio Aguilar, are merely renting their
houses and therefore do not own any other real
property in Metro Manila. 59 To prove this,
they submitted certifications from the offices
of the City and Municipal Assessors in Metro
Manila attesting to the fact that they have no
registered real property declared for taxation
purposes in the respective cities. Respondents
were certified by the City Assessor of
Manila;60
Quezon
City;61 Makati
City;62 Pasay City;63 Paraaque;64 Caloocan
City;65 Pasig
City;66 Muntinlupa; 67 Marikina;68 and the
then municipality of Las Pias 69 and the
municipality of San Juan del Monte 70 as
175
having no real property registered for taxation

in their individual names.
Finally, this court notes that the subject lots
are now in the possession of respondents.
Antonio Aguilar testified that he and the other
co-owners filed ejectment cases against the
occupants of the land before the Metropolitan
Trial Court, Mandaluyong, Branches 59 and
60. Orders of eviction were issued and
executed on September 17, 1997 which
resulted in the eviction of the tenants and other
occupants from the land in question. 71
IN VIEW WHEREOF, the petition is DENIED
and the orders dated September 17, 1998 and
December 29, 1998 of the Regional Trial
Court, Branch 168, Pasig City in SCA No.
1427 are AFFIRMED.
TEODORO Z. ZABALLERO, in
substitution of LEONARDO M.
ZABALLERO; AUGUSTO M.
ZABALLERO;
FRINE
A.
ZABALLERO; ELENA FRONDA
ZABALLERO;
VICTOR
GREGORIO F. ZABALLERO;
MARIA ELENA F. ZABALLERO;
LOURDES ZABALLERO-LAVA;
SOCORRO
EMILIA
ZABALLERO-YAP;
and
TERESITA
F.
ZABALLERO, petitioners, vs.
NATIONAL
HOUSING
AUTHORITY, respondent.
Renato G. Dela Cruz & Associates for
petitioners.
SYNOPSIS
SO ORDERED.
||| (City of Mandaluyong v. Aguilar, G.R. No.
137152, [January 29, 2001], 403 PHIL 404428)
[G.R. No. 147511. January 20, 2003.]
MARINA Z. REYES; ALFREDO
A. FRANCISCO; ANGELITA Z.
GARCIA;
ALFREDO
Z.
FRANCISCO, JR; ARMANDO Z.
FRANCISCO;
ALMA
C.
FRANCISCO;
EUGENIA
Z.
LUNA;
CLARITA
Z.
ZABALLERO, LEONARDO Z.
ZABALLERO,
JR.,
and
Petitioners' lots were ordered expropriated in

favor of the NHA for the public purpose of
expansion of the Dasmarias Resettlement
Project to accommodate the squatters
relocated from the Metropolitan Manila
area. The NHA, however, had failed to
relocate the squatters on the expropriated
lands and had not fully paid petitioners the
just compensation fixed by the court. Hence,
petitioners prayed for the forfeiture of
NHA's rights under the expropriation
judgment.
The Court found the petition not impressed
with merit. Public purpose was not
abandoned by failure to relocate the
squatters to the expropriated lands. The lowcost housing project of the NHA on the
subject lots to be sold to qualified low
income beneficiaries is not a deviation from
public purpose; it is in furtherance of social
justice. Further, non-payment of just
compensation is not a ground to recover
possession of the expropriated lots. At any
rate, petitioners are entitled to the full
payment of the just compensation with legal
interest of 12% per annum computed from
the taking of the property until full payment.
SYLLABUS
1. POLITICAL
LAW;
INHERENT
POWERS OF THE STATE; EMINENT
DOMAIN;
TAKING
OF
PRIVATE
PROPERTY FOR PUBLIC USE; NOT
DEVIATED BY HAVING LOW COST
HOUSING
PROJECT.
The
1987 Constitution explicitly provides for the
exercise of the power of eminent domain
over private properties upon payment of just
compensation. More specifically, Section 9,
Article III states that private property shall
not be taken for public use without just
compensation. The constitutional restraints
are public use and just compensation.
Petitioners cannot insist on a restrictive view
of the eminent domain provision of
the Constitution by contending that the
contract for low cost housing is a deviation
from the stated public use. It is now settled
doctrine that the concept of public use is no
longer limited to traditional purposes. Here,
as elsewhere, the idea that "public use" is
176
strictly limited to clear cases of "use by the

public" has been abandoned. The term
"public use" has now been held to be
synonymous with "public interest," "public
benefit," "public welfare," and "public
convenience." Thus, in Heirs of Juancho
Ardona, et al. vs. Reyes, et al., it was
specified that . . . It is accurate to state then
that at present whatever may be beneficially
employed for the general welfare satisfies
the
requirement
of
public
use."
The Constitutionitself allows the State to
undertake, for the common good and in
cooperation with the private sector, a
continuing program of urban land reform
and housing which will make at affordable
cost decent housing and basic services to
underprivileged and homeless citizens in
urban centers and resettlement areas. The
expropriation of private property for the
purpose of socialized housing for the
marginalized sector is in furtherance of the
social justice provision under Section 1,
Article XIII of the Constitution.
2. ID.; ID.; ID.; ID.; "TAKING" THEREOF
IS ABSOLUTE. We likewise do not
subscribe to petitioners' contention that the
stated public purpose was abandoned when
respondent NHA failed to occupy the
expropriated lots by relocating squatters
from the Metro Manila area. The
expropriation judgment declared that
respondent NHA has a lawful right to take
petitioners properties "for the public use or
purpose of expanding the Dasmarias
Resettlement Project." The taking here is
absolute, without any condition, restriction

or qualification. Contrary to petitioners'
submission, the ruling enunciated in the
early case of Fery vs. Municipality of
Cabanatuan, is still good and sound
doctrine, viz.: ". . . 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."
3. ID.; ID.; ID.; ID.; ALTHOUGH NONPAYMENT OF JUST COMPENSATION
DOES
NOT
ENTITLE
THE
LANDOWNERS
TO
RECOVER
POSSESSION OF THE EXPROPRIATED
LOTS,
PAYMENT
THEREOF
IS
NECESSARY FOR TITLE TO PASS
FROM
THE
OWNER
TO
THE
EXPROPRIATOR. In the recent case
of Republic of the Philippines vs. Court of
Appeals, et al., the Court ruled that nonpayment of just compensation does not
entitle the private landowners to recover
possession of their expropriated lots.
However, the refusal of respondent NHA to
pay just compensation, allegedly for failure
of petitioners to pay capital gains tax and
surrender the owners' duplicate certificates
of title, is unfounded and unjustified. First,
under the expropriation judgment the
payment of just compensation is not subject
to any condition. Second, it is a recognized

rule that although the right to enter upon and
appropriate the land to public use is
completed prior to payment, title to the
property expropriated shall pass from the
owner to the expropriator only upon full
payment of the just compensation.
In Republic, et al. vs. Court of Appeals, et
al., the Court imposed interest at 12% per
annum in order to help eliminate the issue of
the constant fluctuation and inflation of the
value of the currency over time. Perforce,
while petitioners are not entitled to the
return of the expropriated property, they are
entitled to be paid the balance of
P1,218,574.35 with legal interest thereon at
12% per annum computed from the taking of
the property in 1977 until the due amount
shall have been fully paid.
DECISION
PUNO, J p:
This is an appeal by certiorari from the
decision of the Court of Appeals in CA-GR
CV No. 51641, dated September 29,
2000 1 affirming the judgment of the
Regional Trial Court of Quezon City, Branch
79 which dismissed the complaint for
forfeiture of rights filed by herein
petitioners, as well as the Resolution dated
March 13, 2001 denying petitioners' motion
for reconsideration.
Records show that in 1977, respondent
National Housing Authority (NHA) filed
177
separate complaints for the expropriation of

sugarcane lands, particularly Lot Nos. 6450,
6448-E, 6198-A and 6199 of the cadastral
survey of Dasmarias, Cavite belonging to
the petitioners, before the then Court of First
Instance of Cavite, and docketed as Civil
Case Nos. T.G.-392, T.G.-396 and T.G.-417.
The stated public purpose of the
expropriation was the expansion of the
Dasmarias Resettlement Project to
accommodate the squatters who were
relocated from the Metropolitan Manila
area. The trial court rendered judgment
ordering the expropriation of these lots and
the payment of just compensation. This was
affirmed by the Supreme Court in a decision
rendered on October 29, 1987 in the case
of NHA vs. Zaballero 2 and which became
final on November 26, 1987. 3
On February 24, 1989, the expropriation
court (now Branch 18, Regional Trial Court
of Tagaytay City) issued an Order 4 the
dispositive
portion
of
which
reads: HEDCAS
"WHEREFORE, and resolving thus,
let an Alias Writ of Execution be
immediately issued and that:
(1) The Register of Deeds of
the Province of Cavite is
hereby ordered to transfer, in
the name of the plaintiff
National Housing Authority,
the following:
(a) Transfer Certificate No.

RT-638 containing an
area of 79,167 square
meters situated in
Barrio
Bangkal,
Dasmarias, Cavite;
(b) Transfer Certificate of
Title No. T-55702
containing an area of
20,872 square meters
situated in Barrio
Bangkal, Dasmarias,
Cavite;
(c) Transfer Certificate of
Title No. RT-639 and
RT-4641 covering Lot
Nos. 6198-A and
6199
with
an
aggregate area of
159,985
square
meters also situated in
Barrio
Bangkal,
Dasmarias, Cavite.
(2) Plaintiff National Housing
Authority is likewise hereby
ordered, under pain of
contempt, to immediately pay
the defendants, the amounts
stated in the Writ of
Execution as the adjudicated
compensation
of
their
expropriated
properties,
which process was received
by it according to the records,
on September 26, 1988,

segregating therefrom, and in
separate check, the lawyer's
fees in favor of Atty. Bobby
P. Yuseco, in the amount of
P322,123.05, as sustained by
their contract as gleaned from
the records, with no other
deduction, paying on its own
(NHA)
account,
the
necessary legal expenses
incident to the registration or
issuance of new certificates
of title, pursuant to the
provisions of the Property
Registration Law (PD 1529);
(3) Defendants, however, are
directed
to
pay
the
corresponding capital gains
tax on the subject properties,
directing them additionally,
to coordinate with the
plaintiff NHA in this regard,
in order to facilitate the
termination of this case, put
an end to this controversy and
consign the same to its final
rest."
For the alleged failure of respondent NHA to
comply with the above order, petitioners
filed on April 28, 1992 a complaint 5 for
forfeiture of rights before the Regional Trial
Court of Quezon City, Branch 79, in Civil
Case No. Q-92-12093. They alleged that
respondent NHA had not relocated squatters
178
from the Metropolitan Manila area on the

expropriated lands in violation of the stated
public purpose for expropriation and had not
paid the just compensation fixed by the
court. They prayed that respondent NHA be
enjoined from disposing and alienating the
expropriated properties and that judgment be
rendered forfeiting all its rights and interests
under the expropriation judgment. In its
Answer, 6 respondent NHA averred that it
had already paid a substantial amount to
herein petitioners and that the expropriation
judgment could not be executed in view of
several issues raised by respondent NHA
before the expropriation court (now Branch
18, RTC, Tagaytay City) concerning capital
gains tax, registration fees and other
expenses for the transfer of title to
respondent NHA, as well as the claims for
attorney's fees of Atty. Joaquin Yuseco, Jr.,
collaborating counsel for petitioners.
Ocular inspections 7 conducted by the trial

court on the subject properties show that:
"1. 80% of Lot No. 6198-A with an
area of 120,146 square meters is
already occupied by relocatees
whose houses are made of light
materials with very few houses
partly made of hollow blocks.
The relocatees were relocated
only on (sic) March of 1994;
2. Most of the area covered by Lot

No. 2075 is almost occupied by
houses and structures, most of
which are made of concrete
materials. These houses are not
being occupied by squatters
relocated to the said lot by the
defendant NHA;
3. Lot No. 6199 is also occupied by
concrete houses and structures
but likewise there are no
relocatees in said lot. A large
area of the same is still
unoccupied."
On September 29, 1995, the trial court
rendered
judgment
dismissing
the
complaint. Finding that the failure of
respondent NHA to pay just compensation
and of petitioners to pay capital gains tax are
both unjustified and unreasonable, the trial
court held that: (1) respondent NHA is not
deemed to have abandoned the public
purpose for which the subject properties
were expropriated because the relocation of
squatters involves a long and tedious
process. It ruled that respondent NHA
actually pursued the public purpose of the
expropriation when it entered into a contract
with Arceo C. Cruz involving the
construction of low cost housing on the
expropriated lots to be sold to qualified low
income beneficiaries; (2) there is no
condition imposed in the expropriation
judgment that the subject properties shall
revert back to its original owners in case the
purpose of expropriation is terminated or

abandoned; (3) the payment of just
compensation is independent of the
obligation of herein petitioners to pay capital
gains tax; and (4) in the payment of just
compensation, the basis should be the value
at the time the property was taken. On
appeal, the Court of Appeals affirmed the
decision of the trial court.
Petitioners are now before us raising the
following assignment of errors:
"1. The Honorable Court of Appeals
had decided a question of
substance not in accord with
justice and equity when it ruled
that, as the judgment of the
expropriation court did not
contain a condition that should
the expropriated property be not
used for the intended purpose it
would revert to the condemnee,
the action to declare the
forfeiture of rights under the
expropriation judgment can not
prosper;
2. The Honorable Court of Appeals
decided a question of substance
not
in
accord
with
jurisprudence, justice and equity
when it ruled that the nonpayment is not a ground for
forfeiture;
179
3. The Honorable Court of Appeals

erred in not declaring the
judgment
of
expropriation
forfeited in light of the failure
of respondent to use the
expropriated property for the
intended purpose but for a
totally different purpose."
The petition is not impressed with merit.
Petitioners contend that respondent NHA
violated the stated public purpose for the
expansion of the Dasmarias Resettlement
Project when it failed to relocate the
squatters from the Metro Manila area, as
borne out by the ocular inspection conducted
by the trial court which showed that most of
the
expropriated
properties
remain
unoccupied. Petitioners likewise question
the public nature of the use by respondent
NHA when it entered into a contract for the
construction of low cost housing units,
which is allegedly different from the stated
public purpose in the expropriation
proceedings. Hence, it is claimed that
respondent NHA has forfeited its rights and
interests by virtue of the expropriation
judgment and the expropriated properties
should now be returned to herein petitioners.
The 1987 Constitution explicitly provides
for the exercise of the power of eminent
domain over private properties upon
payment of just compensation. More
specifically, Section 9, Article III states that
private property shall not be taken for public

use without just compensation. The
constitutional restraints are public use and
just compensation.
found in areas of scarce public land

or limited government resources.
Petitioners cannot insist on a restrictive view

of the eminent domain provision of
the Constitution by contending that the
contract for low cost housing is a deviation
from the stated public use. It is now settled
doctrine that the concept of public use is no
longer 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 abandoned. The term
"public use" has now been held to be
synonymous with "public interest," "public
benefit," "public welfare," and "public
convenience." 8 The rationale for this new
approach is well explained in the case
of Heirs of Juancho Ardona, et al. vs. Reyes,
et a1., 9 to wit:
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." (italics supplied)
"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
xxx xxx xxx
The act of respondent NHA in entering into

a contract with a real estate developer for the
construction of low cost housing on the
expropriated lots to be sold to qualified low
income beneficiaries cannot be taken to
180
mean as a deviation from the stated public

purpose of their taking. Jurisprudence has it
that 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,
commercials firms, entertainment and
service companies, and other private
concerns. 10
Moreover, the Constitution itself allows the
State to undertake, for the common good
and in cooperation with the private sector, a
continuing program of urban land reform
and housing which will make at affordable
cost decent housing and basic services to
underprivileged and homeless citizens in
urban centers and resettlement areas. 11 The
expropriation of private property for the
purpose of socialized housing for the
marginalized sector is in furtherance of the
social justice provision under Section 1,
Article XIII of the Constitution which
provides that:
"SECTION 1. 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 require
the acquisition, ownership, use and
disposition of property and its

increments."
It follows that the low cost housing project
of respondent NHA on the expropriated lots
is compliant with the "public use"
requirement.
We likewise do not subscribe to petitioners'
contention that the stated public purpose was
abandoned when respondent NHA failed to
occupy the expropriated lots by relocating
squatters from the Metro Manila area. The
expropriation judgment declared that
respondent NHA has a lawful right to take
petitioners properties "for the public use or
purpose of expanding the Dasmarias
Resettlement Project." The taking here is
absolute, without any condition, restriction
or qualification. Contrary to petitioners'
submission, the ruling enunciated in the
early case of Fery vs. Municipality of
Cabanatuan, 12 is still good and sound
doctrine, viz.:
". . . 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, 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 . . . .
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."
Petitioners further aver that the continued
failure of respondent NHA to pay just
compensation for a long period of time
justifies the forfeiture of its rights and
interests over the expropriated lots. They
demand the return of the expropriated lots.
Respondent NHA justifies the delay to pay
just compensation by reason of the failure of
petitioners to pay the capital gains tax and to
surrender the owners' duplicate certificates
of title.
In the recent case of Republic of the
Philippines vs. Court of Appeals, et
al., 13 the Court ruled that non-payment of
just compensation does not entitle the
private landowners to recover possession of
their expropriated lots. Thus:
181
"Thus,
in Valdehueza
vs. Republic where
the
private
landowners had remained unpaid ten
years after the termination of the
expropriation proceedings, this Court
ruled
'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. . . . . 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 market value of the
same.
Said relief may be granted under
plaintiffs' prayer for such other
remedies, which may be deemed just
and equitable under the premises.'
The Court proceeded to reiterate its
pronouncement in Alfonso vs. Pasay
City where
the
recovery
of
possession of property taken for
public use prayed for by the unpaid
landowner was denied even while no

requisite expropriation proceedings
were first instituted. The landowner
was merely given the relief of
recovering compensation for his
property computed at its market
value at the time it was taken and
appropriated by the State.
The judgment rendered by the
Bulacan RTC in 1979 on the
expropriation proceedings provides
not only for the payment of just
compensation to herein respondents
but likewise adjudges the property
condemned in favor of petitioner
over which parties, as well as their
privies, are bound. Petitioner has
occupied, utilized and, for all intents
and purposes, exercised dominion
over the property pursuant to the
judgment. The exercise of such rights
vested to it as the condemnee indeed
has amounted to at least a partial
compliance or satisfaction of the
1979 judgment, thereby preempting
any claim of bar by prescription on
grounds
of
non-execution. In
arguing for the return of their
property on the basis of nonpayment, respondents ignore the fact
that the right of the expropriating
authority is far from that of an
unpaid seller in ordinary sales, to
which the remedy of rescission might
perhaps apply. An in rem
proceeding, condemnation acts upon
the property. After condemnation,

the paramount title is in the public
under a new and independent title;
thus, by giving notice to all claimants
to a disputed title, condemnation
proceedings provide a judicial
process for securing better title
against all the world than may be
obtained by voluntary conveyance."
(italics supplied)
We, however, likewise find the refusal of
respondent NHA to pay just compensation,
allegedly for failure of petitioners to pay
capital gains tax and surrender the owners'
duplicate certificates of title, to be
unfounded and unjustified.
First, under the expropriation judgment the
payment of just compensation is not subject
to any condition. Second, it is a recognized
rule that although the right to enter upon and
appropriate the land to public use is
completed prior to payment, title to the
property expropriated shall pass from the
owner to the expropriator only upon full
payment of the just compensation. In the
case of Association of Small Landowners in
the Phils., Inc., et al. vs. Secretary of
Agrarian Reform, 14 it was held that:
"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
182
date on which the petition under the

Eminent Domain Act, or the
commissioner's report under the
Local Improvement Act, is filed.
. . . 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. HDTSIE
be uniformly to this effect. As early
as 1838, in Rubottom v. McLure, it
was held that 'actual payment to the
in the State' albeit 'not to the
appropriation of it to public use.'
until
the
payment
of
the
'both on principle and authority the
rule is . . . that the right to enter on

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. . . . ."
(italics supplied)
With respect to the amount of the just
compensation still due and demandable from
respondent NHA, the lower courts erred in
not awarding interest computed from the
time the property is actually taken to the
time when compensation is actually paid or
deposited in court. In Republic, et
al. vs. Court of Appeals, et al., 15 the Court
imposed interest at 12% per annum in order
to help eliminate the issue of the constant
fluctuation and inflation of the value of the
currency over time, thus:
"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 being fixed at the time of the actual
taking by the government. Thus, if
property is taken for public use
before compensation is deposited
with the court having jurisdiction
over the case, the final compensation
must include interests on its just
value to be computed from the time
the property is taken to the time
when compensation is actually paid
or deposited with the court. In fine,
between the taking of the property
and the actual payment, legal
interests accrue in order to place the
owner in a position as good as (but
not better than) the position he was
in before the taking occurred.
. . . This allowance of interest on the
amount found to be the value of the
property as of the time of the taking
computed, being an effective
forbearance, at 12% per annum
should help eliminate the issue of the
constant fluctuation and inflation of
the value of the currency over time.
Article 1250 of the Civil Code,
183
providing
that,
in
case
of
extraordinary inflation or deflation,
the value of the currency at the time
of the establishment of the obligation
shall be the basis for the payment
when no agreement to the contrary is
stipulated, has strict application only
to contractual obligations. In other
words, a contractual agreement is
needed
for
the
effects
of
extraordinary inflation to be taken
into account to alter the value of the
currency."
Records show that there is an outstanding
balance of P1,218,574.35 that ought to be
paid to petitioners. 16 It is not disputed that
respondent NHA took actual possession of
the
expropriated
properties
in
1977. 17 Perforce, while petitioners are not
entitled to the return of the expropriated
property, they are entitled to be paid the
balance of P1,218,574.35 with legal interest
thereon at 12% per annum computed from
the taking of the property in 1977 until the
due amount shall have been fully paid.
WHEREFORE, the appealed judgment is
modified as follows:
1. Ordering respondent National
Housing Authority to pay
petitioners the amount of
P1,218,574.35 with legal
interest thereon at 12% per
annum computed from the
taking of the expropriated
properties in 1997 until the

amount due shall have been
fully paid;
2. Ordering petitioners to pay the
capital gains tax; and
3. Ordering petitioners to surrender
to
respondent
National
Housing
Authority
the
owners' duplicate certificates
of title of the expropriated
properties upon full payment
of just compensation.
SO ORDERED.
||| (Reyes v. National Housing Authority,
G.R. No. 147511, [January 20, 2003], 443
PHIL 603-617)
[G.R. No. 137569. June 23, 2000.]

REPUBLIC
OF
THE
PHILIPPINES, plaintiff-appellee, v
s.
SALEM
INVESTMENT
CORPORATION, MARIA DEL
CARMEN
ROXAS
DE
ELIZALDE,
CONCEPCION
CABARRUS VDA. DE SANTOS,
defendants-appellees MILAGROS
AND INOCENTES DE LA
RAMA, petitioners, ALFREDO
GUERRERO, respondent.
The Solicitor General for plaintiff-appellee.
M.M. Lazaro & Associates for petitioners.
Arturo S. Santos for respondent A. Guerrero.
SYNOPSIS
Declaring Alfredo Guerrero the rightful
owner of a 920-square meter expropriated
property, the Pasay City Regional Trial
Court ordered payment to him of just
compensation for the taking of the land. The
Court of Appeals affirmed this decision.
Hence, this action, petitioner spouses
Milagros and Inocentes De La Rama
claiming that when they agreed to sell a
parcel of land in 1988 to Guerrero, it did not
include the portion expropriated by the
Republic. According to said spouses, at that
time, such portion had been expropriated by
the government by virtue of B.P. Blg.
340 which took effect on February 17, 1983.
It is only upon payment of just
compensation that title over the property
passes to the government. Until then,
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
184
to the power of the State to ultimately

acquire it through expropriation.
The government filed a petition for the
determination of just compensation in 1990.
At that point, title to the expropriated
property remained with the De la Ramas and
did not pass to the government. Thus, in
1988, the De la Ramas still had authority to
transfer ownership of their land and convey
all rights, including the right to receive just
compensation, to Guerrero.
The contention of the De la Ramas that the
Deed of Absolute Sale excluded the portion
expropriated by the government is
untenable. Guerrero bought the entire
property free from all claims of third
persons except those of the government.
SYLLABUS
1. CONSTITUTIONAL LAW; POWER OF
EMINENT
DOMAIN;
INHERENT
POWERS OF STATE; LIMITATION.
The power of eminent domain is an inherent
power of the State. No constitutional
conferment is necessary to vest it in the
State. The constitutional provision on
eminent domain, Art. III, 9, provides a
limitation rather than a basis for the exercise
of such power by the government. Thus, it
states that "Private property shall not be
compensation."
2. ID.; ID.; HOW INITIATED.

Expropriation may be initiated by court
action or by legislation. In both instances,
just compensation is determined by the
courts.
3. ID.; ID.; STAGES. The expropriation
of lands consists of two stages. As explained
in Municipality of Bian v. Garcia: 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
complaint." . . . 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. 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.
4. ID.; ID.; ID.; ID.; ID.; CASE AT BAR.
In the case at hand, the first stage of
expropriation was completed when B.P. Blg.
340 was enacted providing for the
expropriation of 1,380 square meters of the
land in question. The constitutionality of this
law was upheld in the case of Republic v. De
Knecht. In 1990, the government
commenced
the
second
stage
of
expropriation through the filing of a petition
for the determination of just compensation.
This stage was not completed, however,
because of the intervention of Guerrero
which gave rise to the question of ownership
of the subject land. Therefore, the title to the
expropriated property of the De la Ramas
remained with them and did not at that point
pass to the government.
5. CIVIL
LAW;
PROPERTY;
OWNERSHIP; WHAT CONSTITUTES
EFFECTIVE CONVEYANCE THEREOF.
It is true that the contract to sell did not
convey to Guerrero the subject parcel of
land described therein. However, it created
an obligation on the part of the De la Ramas
to convey the land, subject to the fulfillment
of the suspensive conditions therein stated.
The declaration of this contract's validity,
which paved the way for the subsequent
execution of the Deed of Absolute Sale on
March 8, 1994, following the order of the
Regional Trial Court for its execution, by the
Clerk of Court, Branch 113, Pasay City,
185
effectively conveyed ownership of said

parcel of land to Guerrero.
6. ID.; OBLIGATION AND CONTRACTS;
SUBROGATION; EFFECTS THEREOF.
Lot 834 was conveyed in 1994 to Guerrero
by virtue of the Deed of Absolute Sale. This
contract was registered in the Register of
Deeds and, accordingly, a new transfer
certificate of title was issued to Guerrero.
Pursuant thereto, and by virtue of
subrogation, the latter became the rightful
owner entitled to receive the just
compensation from the Republic.
7. ID.; HUMAN RELATIONS; UNJUST
ENRICHMENT; CASE AT BAR. We
take note of the fact that the De la Ramas
have withdrawn and appropriated for
themselves the amount paid by Guerrero.
This amount represented the purchase price
of the entire 4,075 square meters of land,
including the expropriated portion, which
was the subject of their agreement. The
payment, therefore, to them of the value of
the expropriated portion would unjustly
enrich them.
8. REMEDIAL
LAW;
CIVIL
PROCEDURE; FINAL AND EXECUTORY
JUDGMENT CAN NO LONGER BE
QUESTIONED. Petitioners can no
longer question a judgment which has
already become final and executory. The
order of the Regional Trial Court on the
payment of legal interest was issued on
September 18, 1991 in the case for specific
performance against the De la Ramas (Civil

Case No. 6974-P). Hence, they are already
barred from questioning it now in this
proceeding.
DECISION
entire property covered by TCT No. 16213,

consisting of 4,075 square meters for the
amount of P11,800,000.00. The De la Ramas
received the sum of P2,200,000.00 as partial
payment of the purchase price, the balance
thereof to be paid upon release of the title by
the Philippine Veterans Bank
MENDOZA, J p:
The main petition in this case is for
determination of just compensation for the
expropriation of lands under B.P. Blg. 340.
Alfredo Guerrero intervened in this
proceeding arguing that, instead of the De la
Ramas, he should receive the just
compensation for the subject land. The trial
court and the Court of Appeals declared him
the rightful recipient of the amount. This is
an appeal from the decision 1 of the Court of
Appeals. We affirm.
The facts are as follows:
On February 17, 1983, Batas Pambansa Blg.
340
was
passed
authorizing
the
expropriation of parcels of lands in the
names of defendants in this case, including a
portion of the land, consisting of 1,380
square meters, belonging to Milagros and
Inocentes De la Rama covered by TCT No.
16913.
On December 14, 1988, or five years
thereafter, Milagros and Inocentes De la
Rama entered into a contract 2 with
intervenor Alfredo Guerrero whereby the De
la Ramas agreed to sell to Guerrero the
On November 3, 1989, Guerrero filed in the

Regional Trial Court in Pasay City a
complaint for specific performance (Civil
Case No. 6974-P) to compel the De la
Ramas to proceed with the sale.
On July 10, 1990, while this case for
specific performance was pending, the
Republic of the Philippines filed the present
case (Civil Case No. 7327) for expropriation
pursuant to B.P. Blg. 340. 3 Among the
defendants named in the complaint were
Milagros and Inocentes De la Rama as
registered owners of Lot 834, a portion of
which (Lot 834-A) was part of the
expropriated property. Upon the deposit of
P12,970,350.00 representing 10 percent of
the approximate market value of the subject
lands, a writ of possession 4 was issued on
August 29, 1990 in favor of the government.
On May 2, 1991, Guerrero filed a motion for
intervention 5 alleging that the De la Ramas
had agreed to sell to him the entire Lot 834
(TCT No. 16213) on December 14, 1988
and that a case for specific performance had
been filed by him against the De la Ramas.
186
On September 9, 1991, based on the report

of the committee on appraisers appointed by
the court and the submissions of defendants,
the trial court approved payment to the De la
Ramas at the rate of P23,976.00 per square
meter for the taking of 920 square meters
out of the 1,380 square meters to be
expropriated under B.P. Blg. 340. 6
from releasing or paying to the De la Ramas

any amount corresponding to the payment of
the expropriated property and to compel the
trial court to resolve his two motions.
Meanwhile, on September 18, 1991, the trial

court rendered a decision in the case for
specific performance (Civil Case No. 6974P) 7 upholding the validity of the contract to
sell and ordering the De la Ramas to execute
the corresponding deed of sale covering the
subject property in favor of Guerrero. The
De la Ramas appealed to the Court of
Appeals (CA-G.R. No. CV-35116) but their
petition was dismissed on July 28, 1992.
They tried to appeal to this Court (G.R. No.
106488) but again they failed in their bid as
their petition for review was denied on
December 7, 1992.
Nonetheless, the De la Ramas filed on

March 17, 1993 a Motion for Authority to
Withdraw 11 the deposit made by the
Republic in 1991. This motion was denied
as the trial court, on May 7, 1993, allowed
the intervention of Guerrero and ordered the
Republic to deposit the amount of just
compensation with the Clerk of Court of
RTC, Pasay City. 12
Meanwhile, on October 2, 1991, Guerrero

filed an Omnibus Motion 8 praying that
the just compensation for the land be
deposited in court pursuant to Rule 67, 9 of
the Rules of Court. As his motion for
intervention and omnibus motion had not yet
been resolved, Guerrero filed with the Court
of
Appeals
a
petition
for mandamus, certiorari, and injunction
with temporary restraining order 9 (C.A.G.R. SP No. 28311) to enjoin the Republic
On June 22, 1993, the trial court denied the

motion of the De la Ramas holding that
there had been a change in the situation of
the parties, therefore, making the execution
of the September 9, 1991 Order inequitable,
impossible, or unjust. 15
On January 12, 1993, the Court of Appeals

rendered a decision granting the writ
of mandamus. 10
On June 16, 1993, the De la Ramas filed a

Motion for Execution 13 again praying that
the court's order dated September 9, 1991,
approving the recommendation of the
appraisal committee, be enforced. This was
duly opposed by Guerrero. 14
As if to further delay the proceedings of this

case, the De la Ramas then filed an Omnibus
Motion seeking clarification of the
September 18, 1991 decision of the trial
court in the case for specific performance,

upholding the validity of the contract to sell,
insofar as the area covered by the contract
was concerned, and asking that a restraining
order be issued until this motion was
granted.
In its order dated October 7, 1993, the trial
court clarified that the area of land covered
by the contract to sell included the portion
expropriated by the Republic. It stated:
WHEREFORE,
by
way
of
clarification, the court holds that the
transfer of title to the plaintiff under
the Contract to Sell dated December
14, 1988 covers the entire Lot 834
(including the expropriated portion);
that this change of owner over the
entire property is necessarily junior
or subject to the superior rights of the
REPUBLIC over the expropriated
portion (the metes and bounds of
which are clearly defined in Section
1 '6' of B.P. Blg. 340); that the
Contract to Sell dated December 14,
1988 executed by the parties is a
valid document that authorizes the
plaintiff to step into the shoes of the
defendants in relation to the property
covered by TCT No. 16213; and that
the transfer shall be free from all
liens and encumbrances except for
the expropriated portion of 1,380
square meters. 16
187
The decision in the action for specific

performance in Civil Case No. 6974-P
having become final, an order of
execution 17 was issued by the Pasay City
RTC, and as a result of which, a deed of
absolute sale 18 was executed by the Branch
Clerk of Court on March 8, 1994 in favor of
Guerrero upon payment by him of the sum
of P8,808,000.00 on January 11, 1994 and
the further sum of P1,608,900.00 on
February 1, 1994 as full payment for the
balance of the purchase price under the
contract to sell of December 14, 1988. The
entire amount was withdrawn and duly
received by the De la Ramas. 19
Thereafter, the De la Ramas sought the
nullification of the June 22, 1993 order of
the trial court in this case, denying their
motion for execution of the order approving
the recommendation of the appraisal
committee,
by
filing
a
petition
for certiorari and mandamus in the Court of
Appeals. This petition was, however,
dismissed in a decision dated July 29, 1994
of the appellate court. 20
On April 5, 1995, the Pasay City Regional
Trial Court, Branch 111, declared Guerrero
the rightful owner of the 920-square meter
expropriated property and ordered payment
to him of just compensation for the taking of
the land. The dispositive portion of its
decision reads:
WHEREFORE,
intervenor Alfredo
respondentGuerrero is
hereby declared as the rightful

person entitled to receive the just
compensation of the 920-square
meter portion of the property
described in TCT No. 16213 of the
Register of Deeds of Pasay City and
ordering the Philippine National
Bank to release and deliver to
Uniland Realty and Development
Corporation, the assignee of
Guerrero,
the
amount
of
P20,000,000.00 representing the
deposit made by the plaintiff through
the Department of Public Works and
Highways in the Philippine National
Bank, Escolta Branch with the check
solely payable to said Uniland Realty
and Development Corporation, as
assignee of Alfredo Guerrero. 21
This decision was subsequently affirmed by
the Court of Appeals. 22
Hence, this petition.
The De la Ramas contend:
I. THE COURT OF APPEALS
WRONGLY INTERPRETED
B.P. NO. 340 BY HOLDING
THAT BATAS PAMBANSA
BLG.
340
MERELY
AUTHORIZED
THE
EXPROPRIATION OF THE
LANDS
OF
THE
DEFENDANTS, INCLUDING
THAT
PORTION
BELONGING
TO
THE
HEREIN PETITIONERS DE
LA RAMAS COVERED BY
TCT NO. 16213.
II THE COURT OF APPEALS
WRONGLY INTERPRETED
THE CONTRACT TO SELL
BY HOLDING THAT THE
PETITIONERS
DE
LA
RAMAS HAD CONVEYED
TO
THE
RESPONDENT
GUERRERO THE WHOLE
PROPERTY COVERED BY
TCT NO. 16213, INCLUDING
THE EXPROPRIATED AREA.
III. THE HONORABLE COURT OF
APPEALS
WRONGLY
DECLARED
THAT
THE
PETITIONERS
DE
LA
RAMAS COULD STILL SELL
IN 1988 THEIR PROPERTY
AS TITLE THERETO HAD
NOT YET PASSED TO THE
GOVERNMENT IN 1983.
IV. THE COURT OF APPEALS
GRAVELY
ERRED
IN
WRONGLY INTERPRETING
THE CONTRACT TO SELL,
BY
HOLDING
THAT
PETITIONERS
DE
LA
RAMAS HAD CONVEYED
TO
THE
RESPONDENT
GUERRERO THE RIGHT TO
RECEIVE
THE
JUST
188
COMPENSATION FOR THE

EXPROPRIATED AREA.
compensation for the taking of 920 square

meters of the land in question?
V. THE COURT OF APPEALS

GRAVELY
ERRED
IN
HOLDING THAT THE RIGHT
TO RECEIVE THE JUST
COMPENSATION FOR THE
EXPROPRIATED
AREA
BECAME VESTED UPON
THE
RESPONDENT
GUERRERO
THROUGH
SUBROGATION.
The De la Ramas claim that they should

receive the amount of just compensation
because when they agreed to sell Lot 834 in
1988 to Guerrero, it did not include the
portion expropriated by the Republic since,
at that time, such portion had been
expropriated by the government by virtue
of B.P. Blg. 340, which took effect on
February 17, 1983. They state:
VI. THE COURT OF APPEALS

GRAVELY
ERRED
IN
HOLDING
THAT
THE
RESPONDENT GUERRERO
HAD PAID TO PETITIONERS
RAMAS
THE
FULL
PURCHASE
PRICE
OF
P11,800,000.00 STIPULATED
IN THE CONTRACT TO
SELL OF 14 DECEMBER
1988. 23
As already stated, the De la Ramas and
Guerrero entered into a contract to sell with
respect to Lot 834. This lot has an area of
4,075 square meters. This contract was
executed on, December 14, 1988, after B.P.
Blg. 340 was passed authorizing the
expropriation of a portion of the land,
consisting of 1,380 square meters, of the De
la Ramas. The only issue in this case is who,
between the De la Ramas and Guerrero,
is/are entitled to receive payment of just
In, 1988, the petitioners Ramas could

no longer agree to sell to another
person the expropriated property
itself. For one thing, the property
was already expropriated and
petitioners Ramas for not objecting
in effect conveyed the same to the
Government. Secondly, the physical
and juridical possession of the
property was already in the
Government. Thirdly, the equitable
and beneficial title over the property
was already vested in the
Government, and therefore the
property itself was already outside
the commerce of man. As a matter of
fact, the property was already part of
a Government infrastructure. 24
On the other hand, Alfredo Guerrero argues
that the title to the expropriated portion of
Lot 834 did not immediately pass to the
government upon the enactment of B.P. Blg.
340 in 1983, as payment of just
compensation was yet to be made before

ownership of the land was transferred to the
government. As a result, petitioners still
owned the entire Lot 834 at the time they
agreed to sell it to Guerrero. Therefore, since
Guerrero obtained ownership of Lot 834,
including
the
920
square
meters
expropriated by the government, he has the
right to receive the just compensation over
the said property.
We find the De la Ramas' contention without
merit. We hold that Guerrero is entitled to
receive payment of just compensation for
the taking of the land.
The power of eminent domain
The power of eminent domain is an inherent
power of the State. No constitutional
conferment is necessary to vest it in the
State. The constitutional provision on
eminent domain, Art. III, 9, provides a
limitation rather than a basis for the exercise
of such power by the government. Thus, it
states that "Private property shall not be
compensation."
Expropriation may be initiated by court
action or by legislation. 25 In both instances,
just compensation is determined by the
courts. 26
The expropriation of lands consists of two
stages. As explained in Municipality of
Bian v. Garcia: 27
189
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
purpose described in the complaint,
upon
the
payment
of
just
complaint" . . .
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. . .
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. 28Therefore, 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.
In the case at hand, the first stage of
expropriation was completed when B.P. Blg.
340 was enacted providing for the
expropriation of 1,380 square meters of the
land in question. The constitutionality of this
law was upheld in the case of Republic
v. De Knecht. 29 In 1990, the government
commenced
the
second
stage
of
expropriation through the filing of a petition
for the determination of just compensation.
This stage was not completed, however,
because of the intervention of Guerrero
which gave rise to the question of ownership
of the subject land. Therefore, the title to the
expropriated property of the De la Ramas
remained with them and did not at that point
pass to the government.
We see no point in distinguishing between

judicial and legislative expropriation as far
as the two stages mentioned above are
concerned. Both involve these stages and in
both the process is not completed until
payment of just compensation is made. The
Court of Appeals was correct in saying
that B.P. Blg. 340 did not effectively
expropriate the land of the De la Ramas. As
a matter of fact, it merely commenced the
expropriation of the subject property.
Thus, in 1988, the De la Ramas still had
authority to transfer ownership of their land
and convey all rights, including the right to
receive just compensation, to Guerrero.
The Contract to Sell and the Deed of
Absolute Sale
The contract to sell between the De la
Ramas and Guerrero, executed on December
14, 1988, reads:
CONTRACT TO SELL
The De la Ramas are mistaken in arguing

that the two stages of expropriation cited
above only apply to judicial, and not to
legislative,
expropriation.
Although
Congress has the power to determine what
land to take, it can not do so arbitrarily.
Judicial determination of the propriety of the
exercise of the power, for instance, in view
of allegations of partiality and prejudice by
those adversely affected, 30 and the just
compensation for the subject property is
provided in our constitutional system.
KNOW ALL MEN BY THESE

PRESENTS:
This CONTRACT is made and
executed by and between:
MILAGROS DE LA RAMA and
INOCENTES DE LA RAMA, of
legal age, both single, Filipinos
Citizen and with residence and postal
address at 2838 F.B. Harrison St.,
190
Pasay
City,
Metro
hereinafter referred to
SELLERS.
Manila,
as the
-andALFREDO S. GUERRERO, of legal

age, Filipino, married to SUSANA
C. PASCUAL and with residence
and postal address at No. 17
Mangyan, La Vista, Quezon City,
hereinafter referred to as the
BUYER.
WITNESSETH:
WHEREAS, the SELLERS are the
registered owners of a parcel of land
together with all the improvements
thereon situated at 2838 F.B.
Harrison St., Pasay City, covered by
Transfer Certificate of Title No.
16213 of the Registry of Deeds of
Pasay City and more particularly
described as follows:
A PARCEL OF LAND (Lot
834 of the Cadastral Survey
of Pasay, L.R.C. Cad. Rec.
No.), situated in the City of
Pasay. Bounded on the N.,
along line 1-2 by lot 835; and
along line 2-3 by Lot 836, on
the NE., and SE., along lines
3-4-5 by lot 833, all of Pasay
Cadastre; and on the SW.,
along lines 5-6-1 by Calle

F.B. Harrison. Beginning at a
point marked "1" on plan,
being N. 3 deg. 50'E., 100.44
m. from B.L.L.M. 5, Pasay
Cadastre; thence N. 84 deg.
19'E., 73.79 m. to point 2;
thence N. 84 deg. 19'E.,
14.47 m. to point 3; thence S.
93 deg. 11'E., 45.69 m. to
point 4; thence S. 33 deg.
10'W.,87.39 m. to point 5;
thence N. 10 deg. 46'W.,
11.82 m. to point 6; thence N.
10 deg. 46'W., 35.70 m. to
point
of
beginning;
containing an area of FOUR
THOUSAND
AND
SEVENTY FIVE (4,075)
SQUARE METERS. All
points referred to are
indicated on the plan and
marked on the ground by Old
Points; bearing true date of
the cadastral survey, Oct.,
1928 to Nov., 1930.
WHEREAS, the SELLERS offer to
sell and the BUYER agrees to buy
the above-described real property;
NOW, THEREFORE, for and in
consideration of the amount of
ELEVEN
MILLION
EIGHT
HUNDRED THOUSAND PESOS
(P11,800,000.00) the parties hereby
agree to enter unto the Contract
subject to such terms and conditions

as follows:
1. Upon execution of this
Contract, the BUYER shall
pay the SELLERS the sum of
TWO
MILLION
TWO
HUNDRED
TWO
THOUSAND
PESOS
(P2,200,000.00)
it
being
understood and agreed that
this payment shall be for the
purpose of liquidating in full
the mortgage indebtedness
and affecting the redemption
of the property subject of the
sale as annotated at the back
of the title;
2. The balance of EIGHT
MILLION
EIGHT
HUNDRED
THOUSAND
PESOS (P8,800,000.00) shall
be paid by the BUYER upon
release of the title by the Phil.
Veterans Bank and execution
of the Deed of Absolute Sale;
3. The amount of P800,000.00
shall be paid by the BUYER
upon payment of Capital
Gains Tax and documentary
sales stamp by the SELLERS
and their vacation of the
premises.
191
4. All existing improvements

shall be assigned to the
BUYER;
5. The SELLERS shall settle
all realty taxes up to the end
of 1988, water and electric
bills;
6. The SELLERS shall pay
three percent (3%) of the total
consideration as broker's
commission to be computed
in the purchase price of
P11,000,000.00;
7. It is hereby agreed and
covenanted and stipulated by
and between the parties hereto
that the SELLERS shall
execute and deliver to the
BUYER a formal Absolute
Deed of Sale free from all
liens and encumbrances;
8. That the SELLERS shall
vacate the premises and or
deliver
the
physical
possession of the property
within thirty (30) days from
the date of sale, that is upon
complete payment by the
BUYER of the agreed
purchase price and execution
of Deed of Sale;
9. That the execution of all

legal documents in connection
with this sale transaction shall
be done thru SELLERS' legal
counsel;
10. The BUYER shall assume
payment of transfer and
registration expenses.
IN WITNESS WHEREOF, the
parties have hereunto set their
hands this 14th day of December
1988 at Manila, Metro Manila. 31
The land, as described above in the Contract
to Sell, includes the land expropriated
under B.P. Blg. 340, to wit:
6. A parcel of land (a portion of
Lot No. 834 of the Cadastral
Survey of Pasay, Cadastral Case.
No. 23, G.L.R.O. Cadastral
Record No. 1368), situated in
the City of Pasay, bounded on
the southeast, along lines 1-2-3
by Lot No. 833, Pasay Cadastre;
and on the southwest, along
lines 3-4-5 by Calle F.B.
Harrison; and on the north,
points
5-17-17-1
by
the
remaining portion of Lot 834;
beginning at point marked "1"
on plan, being S. 32 deg. 17'
44"E., 267.187 meters from
BLLM No. 5, Pasay Cadastre;
thence S.9 deg. 11'E., 11.579 m.
to point "2"; thence S.82 deg.

10'W., 87.390 m. to point "3";
thence N. 10 deg. 45' 58"W.,
11.82 m. to point "4"; thence N.
10 deg. 46 W., 15,568.4 m. to
point "5"; thence S.15 deg. 37'
27"E., 3.287 m. to point "6";
thence S.34 deg.. 32'27"E.,
3.287 m. to point "7"; thence S.
53 deg. 26'50"E., 3.287 m. to
point "8"; thence S. 72 deg.
22'51"E., 3.287 m. to point "9";
thence N. 88 deg. 40'32"E.,
3.287 m. to point "10"; thence
N. 72 deg. 00'53"E., 6.480 m. to
point "11"; thence N. 84 deg. 55'
05"E., 10.375 m. to point "12";
N. 86 deg. 21' 10"E., 10.375 m.
to point "14"; thence N. 87 deg.
04' 18"E., 10.375 m. to point
"15"; thence N. 87 deg. 97'
06"E., 10.375 m. to point "16";
N. 89 deg. 12'56"E., 9.422 m. to
the
point
of
beginning,
containing an area of one
thousand three hundred eighty
square meters (1,380.00 Sq.M.),
more or less. 32
As the trial court in the case for specific
performance ruled, the contract to sell,
covered the entire Lot 834, including the
192
expropriated area, which was then owned by

the De la Ramas.
It is true that the contract to sell did not
convey to Guerrero the subject parcel of
land described therein. However, it created
an obligation on the part of the De la Ramas
to convey the land, subject to the fulfillment
of the suspensive conditions therein stated.
The declaration of this contract's validity,
which paved the way for the subsequent
execution of the Deed of Absolute Sale on
March 8, 1994, following the order of the
Regional Trial Court for its execution, by the
Clerk of Court, Branch 113, Pasay City,
effectively conveyed ownership of said
parcel of land to Guerrero.
The contention that the Deed of Absolute
Sale excluded the portion expropriated by
the government is untenable. The Deed of
Absolute Sale reads in pertinent parts:
That for and in consideration of the
sum of ELEVEN MILLION PESOS
(P11,000,000), Philippine Currency,
paid by the VENDEE, the
VENDORS, by these presents
hereby
SELL,
TRANSFER,
CONVEY and ASSIGN, unto the
herein
VENDEE,
his
heirs,
successors-in-interest and assigns, by
way of absolute sale, a parcel of land
located in 2838 F.B. Harrison Street,
Pasay City, formerly covered by
16213 of the land records of Pasay
City, presently covered by the new

132995,
together
with
all
improvements thereon, free from all
liens
and
encumbrances
whatsoever except over a portion
equal to one thousand three hundred
eighty (1,380) square meters
expropriated by the Republic of the
Philippines under and by virtue of
Batas Pambansa Blg. 340 which
took effect on February 17, 1983, the
technical description of which is
found therein, and which Lot 834 in
its entirety is more particularly
described as follows:
A PARCEL OF LAND
(Lot 834 of the Cadastral
Survey of Pasay, L.R.C.
Cad. Rec No.), situated in
the City of Pasay. Bounded
on the N. along line 1-2 by
Lot 835, and along line 2-3
by Lot 836; on the NE.,
and SE., along lines 3-4-5
by Lot 833; all of Pasay
Cadastre; and on the SW.,
along lines 5-6-1 by Calle
F.B. Harrison. Beginning
at a point marked "1" on
plan, being N. 3 deg. 50'E.,
100.44 from B.L.L.M. 5;
Pasay Cadastre; thence N.
84 deg. 19'E., 73.79 m. to
point 2; thence N. 84 deg.

19'E., 14.47 m. to point 3;
thence S. 9 deg. 11'E.,
45.69 m. to point 4; thence
S.53 deg. 10'W., 87.39 m.
to point 5; thence N. 10
deg. 46'W., 11.82 m. to
point 6; thence N. 10 deg.
46'W., 35.70 m. to point of
beginning; containing an
area
of
FOUR
THOUSAND
AND
SEVENTY FIVE (4,075)
SQUARE METERS. All
points referred to are
indicated on the plan and
are marked on the ground
by Old Points; bearing true
date of the Cadastral
Survey, Oct. 1928 to Nov.
1, 1930. 33
The underscored phrase does not say that the
expropriated portion of the lot was excluded
from the sale. Rather, it states that the entire
property, consisting of 4,075 square meters,
was being sold free from all liens and
encumbrances except the lien in favor of the
government over the portion being
expropriated by it. Stated in another way,
Guerrero was buying the entire property free
from all claims of third persons except those
of the government.
Evidently, Lot 834 was conveyed in 1994 to
Guerrero by virtue of the Deed of Absolute
Sale. This contract was registered in the
193
Register of Deeds and, accordingly, a new

transfer certificate of title was issued to
Guerrero. 34Pursuant thereto, and by virtue
of subrogation, the latter became the rightful
owner entitled to receive the just
compensation from the Republic.
The De la Ramas make much of the fact that
ownership of the land was transferred to the
government because the equitable and the
beneficial title was already acquired by it in
1983, leaving them with only the naked title.
However, as this Court held in Association
of Small Landowners in the Phil.,
Inc. v. Secretary of Agrarian Reform: 35
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:
. . . although the right to
expropriate 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.
(Italics
supplied).

be uniformly to this effect. As early
as 1838, in Rubottom v. McLure, it
was held that "actual payment to the
in the State" albeit "not to the
appropriation of it to public use."
until
the
payment
of
the
"both on principle and authority the
rule is . . . that the right to enter upon
him."
to sell. However, Guerrero explained in his

comment in this case:
In
making
such
misleading
allegations, petitioners withheld the
information that on January 25,
1994, Branch 114 of the Pasay City
Regional Trial Court had issued an
order which explained very clearly
why the sum of P7,417,000.00
deposited by Guerrero constitute full
payment of the agreed price, viz:
Plaintiff's
motion
is
meritorious. The decision
dated September 18,1991
rendered in this case has long
become final and executory.
Paragraph 4 of the dispositive
portion of said decision reads
as follows:
4. Ordering
defendants
Milagros dela Rama and
Inocentes dela Rama to
execute the corresponding
deed of sale conveying the
subject property, free from all
liens and encumbrances in
favor of the plaintiff upon
payment of the latter of his
balance of P8,800,000.00:
The amount paid by Guerrero

xxx xxx xxx
Lastly, the De la Ramas contend that
Guerrero only paid P7,417,000 00 and not
P8,800,000.00 as stipulated in the contract
194
6. Ordering both defendants,

jointly and severally, to pay
the plaintiff the following:
a. the sum of P500,000.00 by
way of moral damages;
b. the sum of P200,000.00 by
way of exemplary damages;
c. the sum of P100,000.00 by
way of attorney's fees;
d. legal interest of the amount
of
P2,200,000.00
from
August 2, 1989 until the deed
of absolute sale is executed in
favor of the plaintiff;
The plaintiff [Alfredo Guerrero] is
therefore entitled to collect from the
defendants [Milagros and Inocentes
de la Rama] the sum of P800,000.00
in damages and attorney's fees, and
interest at the legal rate. The earlier
computation of the court's Branch
Sheriff Edilberto Santiago is wrong.
The legal rate of interest for
damages, and even for loans where
interest was not stipulated, is 6% per
annum (Art. 2209, Civil Code). The
rate of 12% per annum was
established by the Monetary Board
when, under the power vested in it
by P.D. 116 to amend Act No. 2655
(more commonly known as the Anti
Usury Law), it amended Section 1 by
'increasing the rate of legal interest

for loans, renewals and forbearance
thereof, as well as for judgments,
from 6% per annum to 12% per
annum. Inasmuch as the Monetary
Board may not repeal or amend the
Civil Code, in the face of the
apparent conflict between Art. 2209
and Act No. 2655 as amended, it is
this court's persuasion that the ruling
of the Monetary Board applies only
to banks, financing companies,
pawnshops
and
intermediaries
performing quasi-banking functions,
all of which are under the control
and supervision of the Central Bank
and of the Monetary Board.
The
interest
rate
on
the
P2,200,000.00 paid to the defendants
by the plaintiff at the inception of the
transactions should be only 6% per
annum from August 2, 1989, and as
of January 2, 1994 this amounts to
the sum of P583,000.00 and
P11,000.00 every month thereafter
until the deed of absolute sale over
the property subject matter of this
case is executed. The amounts
payable by the defendants to the
plaintiff therefore stands at a total of
P1,383,000.00.
Offsetting
this
amount from the balance of
P8,800,000.00, the plaintiff must still
pay to the defendants the sum of
P7,417,000.00. The plaintiff has
already deposited with the Clerk of
Court of this court the sum of

P5,808,100.00 as of January 11,
1994; he should add to this the sum
of P1,608,900.00. 36
The De la Ramas question this ruling of the
lower court. They say:
That Petitioners do not agree with
the explanation of the lower Court,
which held that the Petitioners are
liable to pay legal interest on the
initial payment of P2,200.00 that
petitioners received under the
Contract To Sell as part of the
purchase
price.
Why
should
Petitioners pay legal interest on a
sum of money that was payable to
them and which they received as
initial payment of the purchase
price? This ruling is absurd and
preposterous. It
is
a legal
monstrosity. 37
Petitioners can no longer question a
judgment which has already become final
and executory. The order of the Regional
Trial Court on the payment of legal interest
was issued on September 18, 1991 in the
case for specific performance against the De
la Ramas (Civil Case No. 6974-P). Hence,
they are already barred from questioning it
now in this proceeding.
Finally, we take note of the fact that the De
la Ramas have withdrawn and appropriated
for themselves the amount paid by Guerrero.
195
This amount represented the purchase price

of the entire 4,075 square meters of land,
including the expropriated portion, which
was the subject of their agreement. The
payment, therefore, to them of the value of
the expropriated portion would unjustly
enrich them.
WHEREFORE, the decision of the Court
Appeals is AFFIRMED.
SO ORDERED.
||| (Republic v. Salem Investment Corp., G.R.
No. 137569, [June 23, 2000], 389 PHIL
658-676)
[G.R. No. 143643. June 27, 2003.]

NATIONAL
POWER
SPS. JOSE C. CAMPOS, JR. and
MA.
CLARA
CAMPOS, respondents.
LOPEZ-
to file an action for the claims for

compensation and/or damages does not even
commence to run.

SYLLABUS
Law Firm of R.V. Domingo & Associates for
respondents.
SYNOPSIS
Petitioner in this case claimed that under
Article 620 of the Civil Code, it had already
acquired by prescription the easement of
right-of-way over the portion of the subject
property where its wooden electric posts and
transmission lines were erected.
On appeal, the Supreme Court affirmed the
decision of the CA and the RTC which
ordered the petitioner to pay, among others,
actual, moral and nominal damages to the
respondents' spouses, for having violated or
invaded the latter's property. The Court also
held: that petitioner's possession of that
portion of subject property where it erected
the wooden posts and transmission lines was
merely upon the tolerance of the
respondents-owners, thus, it will not create
an easement of right-of-way by prescription.
Neither can petitioner invoke Section 34 (i)
of Rep. Act. No. 6395, as amended. The
five-year period provided thereunder, within
which all claims for compensation and
damages, should be reckoned from the time
that it acquired title over the private property
on which the right-of-way is sought to be
established. Prior thereto, respondent's right
1. CIVIL LAW; CIVIL CODE; PROPERTY;

PRESCRIPTION, AS A MODE OF
ACQUIRING OWNERSHIP; CASE AT
BAR. Prescription as a mode of
acquisition under Article 620 of the Civil
Code requires the existence of the following:
(1) capacity to acquire by prescription; (2) a
thing capable of acquisition by prescription;
(3) possession of the thing under certain
conditions; and (4) lapse of time provided by
law. Acquisitive prescription may either be
ordinary, in which case the possession must
be in good faith and with just title, or
extraordinary, in which case there is neither
good faith nor just title. In either case, there
has to be possession which must be in the
concept of an owner, public, peaceful and
uninterrupted. . . . In this case, the records
clearly reveal that the petitioner's possession
of that portion of the subject property where
it erected the wooden posts and transmission
lines was merely upon the tolerance of the
respondents. Accordingly, this permissive
use by the petitioner of that portion of the
subject property, no matter how long
continued, will not create an easement of
right-of-way by prescription.
2. ID.; ID.; ID.; ID.; POSSESSION OF
PROPERTY BY MERE TOLERANCE OF
THE OWNER WILL NOT CREATE AN
196
EASEMENT OF RIGHT-OF-WAY BY
PRESCRIPTION; CASE AT BAR. The
five-year period provided under Section 3(i)
of Rep. Act No. 6395, as amended, within
which all claims for compensation and/or
damages may be allowed against the
petitioner should be reckoned from the time
that it acquired title over the private property
on which the right-of-way is sought to be
established. Prior thereto, the claims for
compensation and/or damages do not
prescribe. . . . The petitioner instituted the
expropriation
proceedings
only
on
December 12, 1995. Indisputably, the
petitioner never acquired title to that portion
of the subject property where it erected the
wooden electrical posts and transmission
lines. Until such time, the five-year
prescriptive period within which the
respondents' right to file an action to claim
for compensation and/or damages for the
petitioner's use of their property does not
even commence to run. The CA thus
correctly ruled that Section 3(i) of Rep. Act
No. 6395, as amended, finds no application
in this case and that the respondents' action
against the petitioner has not prescribed.
3. ID.; ID.; ID.; DAMAGES AWARDED
FOR VIOLATION OF PROPERTY RIGHT;
CASE AT BAR. Nominal damages are
adjudicated in order that a right of the
plaintiff, which has been violated or invaded
by the defendant, may be vindicated or
recognized, and not for the purpose of
indemnifying the plaintiff for any loss
suffered by him. Similarly, the court may
award nominal damages in every case where

any property right has been invaded. The
petitioner, in blatant disregard of the
respondents' proprietary right, trespassed the
subject property and conducted engineering
surveys thereon. It even attempted to
deceive the respondents' caretaker by
claiming that its agents were authorized by
the respondents to enter the property when
in fact, the respondents never gave such
authority. Under the circumstances, the
award of nominal damages is likewise
warranted. Finally, the award of attorney's
fees as part of damages is deemed just and
equitable considering that by the petitioner's
unjustified acts, the respondents were
obviously compelled to litigate and incur
expenses to protect their interests over the
subject property.
DECISION
CALLEJO, SR., J p:
This is a petition for review of the
Decision 1 dated June 16, 2000 of the Court
of Appeals in CA-G.R. CV No. 54265. The
assailed decision affirmed in toto the
Decision 2 of the Regional Trial Court
(RTC) of Quezon City, Branch 98, which
ordered
petitioner
National
Power
Corporation to pay, among others, actual,
moral and nominal damages in the total
amount of P1,980,000 to respondents
Spouses Jose C. Campos, Jr. and Ma. Clara
A. Lopez-Campos.
The petition at bar stemmed from the

following antecedents:
On February 2, 1996, the respondents filed
with the court a quo an action for sum of
money and damages against the petitioner.
In their complaint, the respondents alleged
that they are the owners of a parcel of land
situated in Bo. San Agustin, Dasmarias,
Cavite, consisting of 66,819 square meters
("subject property") covered by Transfer
Certificate of Title (TCT) No. T-957323.
Sometime in the middle of 1970, Dr. Paulo
C. Campos, who was then the President of
the Cavite Electric Cooperative and brother
of respondent Jose C. Campos, Jr., verbally
requested the respondents to grant the
petitioner a right-of-way over a portion of
the subject property. Wooden electrical posts
and transmission lines were to be installed
for the electrification of Puerto Azul. The
respondents acceded to this request upon the
condition that the said installation would
only be temporary in nature. The petitioner
assured the respondents that the arrangement
would be temporary and that the wooden
electric posts would be relocated as soon as
permanent posts and transmission lines shall
have been installed. Contrary to the verbal
agreement of the parties, however, the
petitioner continued to use the subject
property for its wooden electrical posts and
transmission lines without compensating the
respondents therefor. 3
The complaint likewise alleged that some
time in 1994, the petitioner's agents
197
trespassed on the subject property and

conducted engineering surveys thereon. The
respondents' caretaker asked these agents to
leave the property. Thereafter, in 1995, a
certain "Mr. Raz," who claimed to be the
petitioner's agent, went to the office of
respondent Jose C. Campos, Jr., then
Associate Justice of the Supreme Court, and
requested permission from the latter to enter
the subject property and conduct a survey in
connection with the petitioner's plan to erect
an all-steel transmission line tower on a 24square meter area inside the subject
property. Respondent Jose Campos, Jr.,
refused to grant the permission and
expressed his preference to talk to the Chief
of the Calaca Sub-station or the head of the
petitioner's Quezon City office. The
respondents did not hear from "Mr. Raz" or
any one from the petitioner's office since
then. Sometime in July or August of 1995,
the petitioner's agents again trespassed on
the subject property, presenting to the
respondents' caretaker a letter of authority
purportedly written by respondent Jose C.
Campos, Jr. When the caretaker demanded
that the letter be given to him for
verification with respondent Jose C.
Campos, Jr. himself, the petitioner's agents
refused to do so. Consequently, the caretaker
ordered the agents to leave the subject
property. 4
The complaint further alleged that on
December 12, 1995, the petitioner instituted
an expropriation case involving the subject
property before the RTC of Imus, Cavite,
Branch 22. The case was docketed as Civil

Case No. 1174-95. The petitioner alleged in
its complaint therein that the subject
property was selected "in a manner
compatible with the greatest public good and
the least private injury" and that it
(petitioner) had tried to negotiate with the
respondents for the acquisition of the rightof-way easement on the subject property but
that the parties failed to reach an amicable
settlement. 5
The respondents maintained that, contrary to
the petitioner's allegations, there were other
more suitable or appropriate sites for the
petitioner's all-steel transmission lines and
that the petitioner chose the subject property
in a whimsical and capricious manner. The
respondents averred that the proposed rightof-way was not the least injurious to them as
the system design prepared by the petitioner
could be further revised to avoid having to
traverse the subject property. The
respondents vigorously denied negotiating
with the petitioner in connection with the
latter's acquisition of a right-of-way on the
subject property. 6
Finally, the complaint alleged that unaware
of the petitioner's intention to expropriate a
portion of the subject property, the
respondents sold the same to Solar
Resources, Inc. As a consequence, the
respondents stand to lose a substantial
amount of money derived from the proceeds
of the sale of the subject property should the
buyer (Solar Resources, Inc.) decide to
annul the sale because of the contemplated

expropriation of the subject property. 7
The complaint a quo thus prayed that the
petitioner be adjudged liable to pay the
respondents, among others, actual, nominal
and moral damages:

it is respectfully prayed that the
Honorable
Court
award
the
plaintiffs:
a. Actual damages for the use
of defendants' property
since middle 1970's,
including legal interest
thereon, as may be
established during the
trial;
b. P1,000,000.00 as nominal
damages;
c. P1,000,000.00
damages;
as
moral
d. Lost business opportunity

as may be established
during the trial;
e. P250,000.00 as attorney's
fees;
f. Costs of suit.
198
Plaintiffs pray for other, further and

different reliefs as may be just and
equitable under the premises. 8
Upon receipt of the summons and
complaint, the petitioner moved for
additional time to file its responsive
pleading. However, instead of filing an
answer to the complaint, the petitioner filed
a motion to dismiss on the ground that the
action had prescribed and that there was
another action pending between the same
parties for the same cause (litis pendencia).
The respondents opposed said motion. On
May 2, 1996, the RTC issued an order
denying the petitioner's motion to dismiss.
The
petitioner
then
moved
for
reconsideration of the aforesaid order. The
respondents opposed the same and moved to
declare the petitioner in default on the
ground that its motion for reconsideration
did not have the required notice of hearing;
hence, it did not toll the running of the
reglementary period to file an answer.
On July 15, 1996, the RTC issued an order
denying the petitioner's motion for
reconsideration. Subsequently, on July 24,
1996, it issued another order granting the
respondents' motion and declared the
petitioner in default for its failure to file an
answer. The petitioner filed a motion to set
aside the order of default but the same was
denied by the RTC.
The petitioner filed a petition for certiorari,

prohibition and preliminary injunction with
the Court of Appeals, docketed as CA-G.R.
SP No. 41782, assailing the May 2, 1996,
July 15, 1996 and July 24, 1996 Orders
issued by the RTC as having been issued
with grave abuse of discretion and to enjoin
it from proceeding with the case. On
February 13, 1996, the CA dismissed the
petition for certiorari, prohibition and
preliminary injunction filed by the petitioner
in CA-G.R. SP No. 41782.
In the meantime, the respondents adduced
their evidence ex parte in the RTC. As
synthesized by the trial court, the
respondents adduced evidence, thus:
From the evidence thus far
submitted, it appears that the
plaintiffs spouses, both of whom
professional of high standing in
society, are the absolute owners of a
certain parcel of land situated in Bo.
San Agustin, Dasmarias, Cavite,
consisting of 66,819 square meters,
more or less, covered and embraced
in TCT No. T-95732. Sometime in
the mid-1970, Dr. Paulo C. Campos,
brother of Justice Jose Campos, Jr.,
then President of the Cavite Electric
Cooperative, approached the latter
and confided to him the desire of the
National Power Corporation to be
allowed to install temporary wooden
electric posts on the portion of his
wife's property in order that the high-
tension transmission line coming

from Kaliraya passing thru that part
of Cavite can be continued to the
direction of Puerto Azul.
Having heard the plea of his brother
and the fact that National Power
Corporation was under pressure
because at the time that Puerto Azul
was being developed there was no
electricity nor was there electrical
lines towards that place and acting
on the belief that the installation of
wooden electric posts would be
temporary in nature, plaintiffs gave
oral permission for the NPC
personnel to enter the said parcel of
land. Dr. Paulo C. Campos, assured
him that it was just a temporary
measure to meet the emergency need
of the Puerto Azul and that the
wooden electric posts will be
relocated when a permanent posts
and transmission lines shall have
been installed. Pursuant to their
understanding, the National Power
Corporation installed wooden posts
across a portion of plaintiffs'
property occupying a total area of
about 2,000 square meters more or
less. To date, defendant NPC has
been using the plaintiffs' property for
its wooden electrical posts and
transmission lines; that the latter has
estimated that the aggregate rental
(which they peg at the conservative
rate of P1.00 per square meter) of the
199
2,000 square meters for twenty-four

(24) years period, would amount to
the aggregate sum of P480,000.00.
From the time National Power
Corporation
installed
those
temporary wooden posts, no notice
was ever served upon the plaintiffs
of their intention to relocate the same
or to install permanent transmission
line on the property. Also, there was
no personal contact between them.
However, in late 1994, plaintiffs'
overseer found a group of persons of
the defendant NPC conducting
survey inside the said property, and
were asked to leave the premises
upon being discovered that they have
no authority to do so from the
owners
thereof.
Subsequently
thereafter, or sometime in 1995, a
person by the name of Mr. Paz,
bearing a letter from Calaca
Regional Office, went to see Justice
Jose C. Campos, Jr. in his office,
informing the latter that he was
authorized by the National Power
Corporation to acquire private lands.
In the same breath, Mr. Paz
requested his permission to let NPC
men enter the subject property and to
conduct a survey in connection with
its plan to erect an all steel
transmission line tower on a 24
square meter area inside plaintiffs'
property, but same was denied.
Justice Campos, however, expressed
his preference to talk instead to the

Chief of the Calaca Sub-station or
the Head of the NPC, Quezon City
office. Since then, nothing however
transpired.
Sometime in July or August 1995,
plaintiffs learned that defendant's
agents again entered the subject
property. This time, they have
presented to the caretaker a letter of
authority supposedly from Justice
Jose C. Campos, Jr. And, when
prodded to see the letter for
verification,
defendant's
agents
refused to do so. So, they were
ordered out of the vicinity. Plaintiffs
stressed that defendant's repeated
intrusions into their property without
their expressed knowledge and
consent had impugned on their
constitutional right to protection over
their property.
Later, on December 12, 1995,
plaintiffs received copy of summons
and complaint in Civil Case No.
1174-95 filed by the defendant
before the Regional Trial Court,
Fourth Judicial Region, Branch 22,
Imus, Cavite for the expropriation of
5,320 square meters of plaintiffs'
above-described property to be used
as right-of-way for the all-steel
transmission line tower of the
Calaca-Dasmarias 230 KV T/L
Project. But what had caused
plaintiffs' discomfiture is the

allegation in said complaint stating
that the "parcel of land sought to be
expropriated has not been applied to
nor expropriated for any public use
and is selected by plaintiff in a
manner compatible with the greatest
good and the least private injury" and
that defendant "had negotiated with
(plaintiffs) for the acquisition of the
right-of-way easement over the
portion of the same for the public
purpose as above-stated at a price
prescribed by law, but failed to reach
an
agreement
with
them
notwithstanding
the
repeated
negotiations between the parties."
Plaintiffs' assert that at no instance
was there a negotiation between
them and the NPC or its
representative. The alleged "talk"
initiated by Mr. Paz with Justice
Campos, Jr. just ended in the latter's
remonstrance and in prevailing upon
the former of his preference to
discuss the matter with a more
responsible officer of the National
Power Corporation, such as the Chief
of the Calaca Sub-Station or the
Head of NPC's Office in Quezon
City. But plaintiffs' plea just fell on
the deaf ear. The next thing they
know was Civil Case No. Q-1174-95
already filed in court. A party to a
case shall not do falsehood nor shall
mislead or misrepresent the contents
200
of its pleading. That gross

misrepresentation had been made by
the National Power Corporation in
their said pleading is irrefutable.
Plaintiffs-spouses Campos declared
that there are other areas more
suitable or appropriate that can be
utilized as alternative sites for the
all-steel transmission line tower. Just
a few meters from the planned rightof-way is an abandoned road
occupied by squatters; it is a
government property and the
possession of which the NPC need
not compensate. The latter had not
exercised judiciously in the proper
selection of the property to be
appropriated.
Evidently,
NPC's
choice
was
whimsical
and
capricious. Such arbitrary selection
of plaintiffs' property despite the
availability of another property in a
manner compatible with the greatest
public good and the least private
injury, constitutes an impermissible
encroachment
of
plaintiffs'
proprietary rights and their right to
due process and equal protection.
Concededly, NPC's intention is to
expropriate a portion of plaintiffs'
property. This limitation on the right
of ownership is the paramount right
of the National Power Corporation
granted by law. But before a person
can be deprived of his property
through the exercise of the power of

eminent domain, the requisites of
law must strictly be complied with.
(Endencia vs. Lualhati, 9 Phil. 177)
No person shall be deprived of his
property except by competent
authority and for public use and
always upon payment of just
compensation.
Should
this
requirement be not first complied
with, the courts shall protect and, in
a proper case, restore the owner in
his possession. (Art. 433 Civil Code
of the Philippines)
Records disclose that in breach of
such verbal promise, defendant NPC
had not withdrawn the wooden
electrical posts and transmission
lines; said wooden electrical posts
and transmission lines still occupy a
portion of plaintiffs' property; that
the NPC had benefited from them for
a long period of time already, sans
compensation to the owners thereof.
Without first complying with the
primordial requisites appurtenant to
the exercise of the power of eminent
domain, defendant NPC again boldly
intruded into plaintiffs' property by
conducting engineering surveys with
the end in view of expropriating
5,320 square meters thereof to be
used as right-of-way for the all-steel
transmission line tower of the
Calaca-Dasmarias 230 KV T/L
Project. Such acts constitute a

deprivation of one's property for
public
use
without
due
compensation. It would therefore
seem that the expropriation had
indeed departed from its own
purpose and turns out to be an
instrument to repudiate compliance
with obligation legally and validly
contracted. 9
On September 26, 1996, the RTC rendered a

decision finding the petitioner liable for
damages to the respondents. The dispositive
portion of the RTC decision reads:
foregoing consideration, justment
[sic] is hereby rendered in favor of
the plaintiffs, condemning the
defendant to pay
(a) Actual
damages
of
P480,000.00 for the use of
plaintiff's property;
(b) One
Million
(P1,000,000.00) as
damages;
Pesos
moral
(c) Five Hundred Thousand

Pesos
(P500,000.00)
as
nominal damages;
201
(d) One
Hundred
Fifty
Thousand
Pesos
(P150,000.00) as attorney's
fees; and
(e) Costs of suit in
amount of P11,239.00.
the
but were already replaced by Solar

Resources, Inc., the buyer of the subject
property, as defendant therein.
The CA likewise found the damages
awarded by the RTC in favor of the
respondents just and reasonable under the
circumstances obtaining in the case.
SO ORDERED. 10
The petitioner appealed the decision to the
Court of Appeals which on June 16, 1990
rendered a decision affirming the ruling of
the RTC.
Essentially, the CA held that the
respondents' claim for compensation and
damages had not prescribed because Section
3(i) of the petitioner's Charter, Republic Act
No. 6395, as amended, is not applicable to
the case. The CA likewise gave scant
consideration to the petitioner's claim that
the respondents' complaint should be
dismissed on the ground of litis pendencia.
According to the CA, the complaint a
quo was the more appropriate action
considering that the venue for the
expropriation case (Civil Case No. 1174-95)
was initially improperly laid. The petitioner
filed the expropriation proceedings with the
RTC in Imus, Cavite, when the subject
property is located in Dasmarias, Cavite.
Moreover, the parties in the two actions are
not the same since the respondents were no
longer included as defendants in the
petitioner's amended complaint in the
expropriation case (Civil Case No. 1174-95)
The petitioner now comes to this Court

seeking to reverse and set aside the assailed
decision. The petitioner alleges as follows:
I
The Court of Appeals grievously
erred and labored under a gross
misapprehension of fact in finding
that the Complaint below should not
be dismissed on the ground of
prescription.
II
The Court of Appeals erred in
affirming the award of nominal and
moral damages, attorney's fees and
costs of litigation. 11
Citing Article 620 of the Civil Code, the
petitioner contends that it had already
acquired the easement of right-of-way over
the portion of the subject property by
prescription, the said easement having been
allegedly continuous and apparent for a
period of about twenty-three (23) years, i.e.,
from about the middle of 1970 to the early
part of 1994. The petitioner further invokes

Section 3(i) of its Charter in asserting that
the respondents already waived their right to
institute any action for compensation and/or
damages concerning the acquisition of the
easement of right-of-way in the subject
property. Accordingly, the petitioner
concludes that the award of damages in
favor of the respondents is not warranted.
The petition is bereft of merit.
The petitioner's claim that, under Article 620
of the Civil Code, it had already acquired by
prescription the easement of right-of-way
over that portion of the subject property
where its wooden electric posts and
transmission lines were erected is untenable.
Article 620 of the Civil Code provides that:
Art. 620. Continuous and apparent
easements are acquired either by
virtue of a title or by prescription of
ten years.
Prescription as a mode of acquisition
requires the existence of the following: (1)
capacity to acquire by prescription; (2) a
thing capable of acquisition by prescription;
(3) possession of the thing under certain
conditions; and (4) lapse of time provided by
law. 12 Acquisitive prescription may either
be ordinary, in which case the possession
must be in good faith and with just
title, 13 or extraordinary, in which case there
is neither good faith nor just title.In either
case, there has to be possession which must
202
be in the concept of an owner, public,

peaceful and uninterrupted. 14 As a
corollary, Article 1119 of the Civil Code
provides that:
Art. 1119. Acts of possessory
character executed in virtue of
license or by mere tolerance of the
owner shall not be available for the
purposes of possession.
In this case, the records clearly reveal that
the petitioner's possession of that portion of
the subject property where it erected the
wooden posts and transmission lines was
merely upon the tolerance of the
respondents. Accordingly, this permissive
use by the petitioner of that portion of the
subject property, no matter how long
continued, will not create an easement of
right-of-way by prescription. The case
of Cuaycong vs. Benedicto 15 is particularly
instructive. In that case, the plaintiffs for
more than twenty years made use of the road
that passed through the hacienda owned by
the defendants, being the only road that
connected the plaintiff's hacienda to the
public road. The defendants closed the road
in question and refused the use of the same
unless a toll was paid. The plaintiffs therein
brought an action to enjoin the defendants
from interfering with the use of the road. In
support of their action, the plaintiffs
presented evidence tending to show that they
have acquired the right-of-way through the
road by prescription. This Court rejected the
contention, holding as follows:
Had it been shown that the road had

been maintained at the public
expense, with the acquiescence of
the owners of the estates crossed by
it, this would indicate such adverse
possession by the government as in
course of time would ripen into title
or warrant the presumption of a grant
or of a dedication. But in this case
there is no such evidence, and the
claims of plaintiffs, whether
regarded as members of the public
asserting a right to use the road as
such, or as persons claiming a
private easement of way over the
land of another must be regarded as
resting upon the mere fact of user.
If the owner of a tract of land, to
accommodate his neighbors or the
public in general, permits them to
cross his property, it is reasonable to
suppose that it is not his intention, in
so doing, to divest himself of the
ownership of the land so used, or to
establish an easement upon it, and
that the persons to whom such
permission, tacit or express, is
granted, do not regard their privilege
of use as being based upon anything
more than the mere tolerance of the
owner. Clearly, such permissive use
is in its inception based upon an
essentially revocable license. If the
use continues for a long period of
time, no change being made in the
relations of the parties by any
express or implied agreement, does

the owner of the property affected
lose his right of revocation? Or,
putting the same question in another
form, does the mere permissive use
ripen into title by prescription?
It is a fundamental principle of the
law in this jurisdiction concerning
the possession of real property that
such possession is not affected by
acts of a possessory character which
are "merely tolerated" by the
possessor, which are or due to his
license (Civil Code, Arts. 444 and
1942). This principle is applicable
not only with respect to the
prescription of the dominium as a
whole, but to the prescription of
right in rem. In the case of Cortes vs.
Palanca Yu-Tibo(2 Phil. Rep., 24,
38), the Court said:
The provision of article 1942
of the Civil Code to the effect
that acts which are merely
tolerated produce no effect
with respect to possession is
applicable as much to the
prescription of real rights as
to the prescription of the fee,
it being a glaring and selfevident error to affirm the
contrary,
as
does
the
appellant in his motion
papers. Possession is the
fundamental
basis
of
203
prescription. Without it no
kind of prescription is
possible, not even the
extraordinary. Consequently,
if acts of mere tolerance
produce no effect with
respect to possession, as that
article
provides,
in
conformity with Article 444
of the same Code, it is
evident that they can produce
no effect with respect to
prescription,
whether
ordinary or extraordinary.
This is true whether the
prescriptive acquisition be of
a fee or of real rights, for the
same reason holds in one and
the other case; that is, that
there has been no true
possession in the legal sense
of the word. (Citations
omitted)
Possession, under the Civil Code, to
constitute the foundation of a
prescriptive
right,
must
be
possession under claim of title (en
concepto de dueo), or to use the
common law equivalent of the term,
it must be adverse. Acts of
possessory character performed by
one who holds by mere tolerance of
the owner are clearly not en
concepto de dueo, and such
possessory acts, no matter how long
so continued, do not start the running

of the period of prescription. 16
Following the foregoing disquisition, the
petitioner's claim that it had acquired the
easement of right-of-way by prescription
must perforce fail. As intimated above,
possession is the fundamental basis of
prescription,
whether
ordinary
or
extraordinary. The petitioner never acquired
the requisite possession in this case. Its use
of that portion of the subject property where
it erected the wooden poles and transmission
lines was due merely to the tacit license and
tolerance of the respondents. As such, it
cannot be made the basis of the acquisition
of an easement of right-of-way by
prescription.
Neither can the petitioner invoke Section
3(i) of its Charter (Rep. Act No. 6395, as
amended) to put up the defense of
prescription against the respondents. The
said provision reads in part:
Sec. 3(i). . . . The Corporation or its
representatives may also enter upon
private property in the lawful
performance or prosecution of its
business or purposes, including the
construction of transmission lines
thereon; Provided,that the owner of
such private property shall be paid
the just compensation therefor in
accordance with the provisions
hereinafter
provided; Provided,
further, that any action by any
person
claiming
compensation
and/or damages shall be filed within
five years after the right-of-way,
transmission
lines,
substations,
plants or other facilities shall have
been established: Provided, finally,
that after the said period no suit shall
be brought to question the said rightof-way,
transmission
lines,
substations, plants or other facilities
nor the amounts of compensation
and/or damages involved;
Two requisites must be complied before the

above provision of law may be invoked:
1. The petitioner entered upon the
private property in the lawful
performance or prosecution
of its businesses or purposes;
and
2. The owner of the private
property shall be paid the just
compensation therefor.
As correctly asserted by the respondents,
Section 3(i) of Rep. Act No. 6395, as
amended, presupposes that the petitioner had
already taken the property through a
negotiated sale or the exercise of the power
of eminent domain, and not where, as in this
case, the petitioner was merely temporarily
allowed to erect wooden electrical posts and
transmission lines on the subject property.
204
Significantly, the provision uses the term

"just compensation," implying that the
power of eminent domain must first be
exercised by the petitioner in accordance
with Section 9, Article III of the
Constitution, which provides that "no
private property shall be taken for public use
without just compensation."
This Court's ruling in Lopez vs. Auditor
General 17 is likewise in point:
The petitioner brought this case to
this Court on the sole issue of
prescription. He cites Alfonso vs.
Pasay City in which a lot owner was
allowed to bring an action to recover
compensation for the value of his
land, which the Government had
taken for road purposes, despite the
lapse of thirty years (1924-1954). On
the other hand, the respondents base
their defense of prescription on Jaen
vs. Agregado which held an action
for compensation for land taken in
building a road barred by
prescription because it was brought
after more than ten years (i.e., thirty
three years, from 1920 to 1953).
They argue that the ruling
in Alfonso cannot be applied to this
case because, unlike Alfonso who
made
repeated
demands
for
compensation within ten years,
thereby interrupting the running of
the period of prescription, the
petitioner here filed his claim only in

1959.
It is true that in Alfonso vs. Pasay
City this Court made the statement
that "registered lands are not subject
to prescription and that on grounds
of equity, the government should pay
for private property which it
appropriates though for the benefit of
the public, regardless of the passing
of time." But the rationale in that
case is that where private property is
taken by the Government for public
use without first acquiring title
thereto either through expropriation
or negotiated sale, the owner's action
to recover the land or the value
thereof does not prescribe. This is the
point that has been overlooked by
both parties.
On the other hand, where private
property is acquired by the
Government and all that remains is
the payment of the price, the owner's
action to collect the price must be
brought within ten years otherwise it
would be barred by the statute of
limitations. 18
Thus, the five-year period provided under
Section 3(i) of Rep. Act No. 6395, as
amended, within which all claims for
compensation and/or damages may be
allowed against the petitioner should be
reckoned from the time that it acquired title
over the private property on which the rightof-way is sought to be established. Prior
thereto, the claims for compensation and/or
damages do not prescribe. In this case, the
findings of the CA is apropos:
Undeniably, NPC never acquired title
over the property over which its
wooden
electrical
posts
and
transmission lines were erected. It
never filed expropriation proceedings
against such property. Neither did it
negotiate for the sale of the same. It
was merely allowed to temporarily
enter into the premises. As NPC's
entry was gained through permission,
it had no intention to acquire
ownership either by voluntary
purchase or by the exercise of
eminent domain. 19
The petitioner instituted the expropriation
proceedings only on December 12, 1995.
Indisputably, the petitioner never acquired
title to that portion of the subject property
where it erected the wooden electrical posts
and transmission lines. Until such time, the
five-year prescriptive period within which
the respondents' right to file an action to
claim for compensation and/or damages for
the petitioner's use of their property does not
even commence to run. The CA thus
correctly ruled that Section 3(i) of Rep. Act
No. 6395, as amended, finds no application
in this case and that the respondents' action
against the petitioner has not prescribed.
205
With respect to the damages awarded in

favor of the respondents, the petitioner
avers, thus:
The Court of Appeals erred in
affirming the award of nominal
and moral damages, attorney's fees
and costs of litigation.
It follows from Section 31(c) of R.A.
6395 that the award moral and
nominal damages, as well as
attorney's fees and costs are baseless.
The right to claim them has likewise
prescribed. 20
With our ruling that the claims of the
respondents had not prescribed, the
petitioner's contention that the respondents
are not entitled to moral and nominal
damages and attorney's fees must fail. In
affixing the award for moral and nominal
damages and attorney's fees, the CA
ratiocinated:
With respect to the fourth assignment
of error, this Court is not persuaded
to reverse much less modify the
court a quo's findings.
An award of moral damages would
require certain conditions to be met,
to wit: (1) first, there must be an
injury, whether physical, mental or
psychological, clearly sustained by
the claimant; (2) second, there must
be a culpable act or omission
factually established; (3) third, the

wrongful act or omission of the
defendant is the proximate cause of
the injury sustained by the claimant;
and (4) fourth, the award of damages
is predicated on any of the cases
stated in Article 2219 of the Civil
Code.
NPC made it appear that it
negotiated with the appellees when
no actual negotiations took place.
This allegation seriously affected the
ongoing sale of the property to Solar
Resources, Inc. as appellees seemed
to have sold the property knowing
fully well that a portion thereof was
being expropriated. Such an act falls
well within Article 21 of the Civil
Code. NPC's subterfuge certainly
besmirched the reputation and
professional standing of Justice Jose
C. Campos, Jr. and Professor Maria
Clara A. Lopez-Campos, and caused
them physical suffering, mental
anguish, moral shock and wounded
feelings.
The records show that Justice
Campos' career included, among
other[s], being a Professor of Law at
the University of the Philippines;
Acting Chairman of the Board of
Transportation; Presiding Judge of
the Court of First Instance of Pasay
City, and Associate Justice of the
Court of Appeals. Such career
reached its apex when he was

appointed Associate Justice of the
Supreme Court in 1992. Justice
Campos was a member of the
Judicial and Bar Council when NPC
filed its Civil Case No. 1174-95.
Professor Maria Clara A. LopezCampos is a noted authority in
Corporate and Banking Laws and is
a Professor Emerita of the University
of the Philippines from 1981 to the
present. She had taught more than
three decades at the College of Law.
Against such backdrop, it does not
take too much imagination to
conclude that the oppressive and
wanton manner in which NPC
sought to exercise its statutory right
of eminent domain warranted the
grant of moral damages.
On the award of nominal damages,
such are adjudicated in order that a
right of the plaintiff, which has been
violated or invaded by the defendant,
may be vindicated or recognized, and
not for the purpose of indemnifying
the plaintiff for any loss suffered by
him. As previously discussed, it does
not brood well for a government
entity such as NPC to disregard the
tenets of private property enshrined
in the Constitution. NPC not only
intentionally trespassed on appellees'
property and conducted engineering
surveys thereon but also sought to
fool the appellees' caretaker by
206
claiming that such entry was

authorized. Moreover, NPC even
justifies such trespass as falling
under its right to expropriate the
property. Under the circumstances,
the award of nominal damages is
sustained.
That NPC's highhanded exercise of
its right of eminent domain
constrained the appellees to engage
the services of counsel is obvious. As
testified upon, the appellees engaged
their counsel for an agreed fee of
P250,000.00. The trial
court
substantially
reduced
this
to
P150,000.00. Inasmuch as such
services included not only the
present action but also those for Civil
Case No. 1174-95 erroneously filed
by NPC with the Regional Trial
Court of Imus, Cavite, and the
Petition for Certiorari in CA-GR No.
41782, this Court finds such
attorney's fees to be reasonable and
equitable. 21
We agree with the CA.
The award of moral damages in favor of the
respondents
is
proper
given
the
circumstances obtaining in this case. As
found by the CA:
NPC made it appear that it
negotiated with the appellees when
no actual negotiation took place.
This allegation seriously affected the

ongoing sale of the property to Solar
Resources, Inc. as appellees seemed
to have sold the property knowing
fully well that a portion thereof was
being expropriated. Such an act falls
well within Article 21 of the Civil
Code. NPC's subterfuge certainly
besmirched the reputation and
professionally standing of Justice
Jose C. Campos, Jr. and Professor
Maria Clara A. Lopez-Campos, and
caused them physical suffering,
mental anguish, moral shock and
wounded feelings.
The records show that Justice
Campos' career included, among
other[s], being a Professor of Law at
the University of the Philippines;
Acting Chairman of the Board of
Transportation; Presiding Judge of
the Court of First Instance of Pasay
City, and Associate Justice of the
Court of Appeals. Such career
reached its apex when he was
appointed Associate Justice of the
Supreme Court in 1992. Justice
Campos was a member of the
Judicial and Bar Council when NPC
filed its Civil Case No. 1174-95.
Professor Maria Clara A. LopezCampos is a noted authority in
Corporate and Banking Laws and is
a Professor Emerita of the University
of the Philippines from 1981 to the
present. She had taught more than
three decades at the College of Law.

Against such backdrop, it does not
take too much imagination to
conclude that the oppressive and
wanton manner in which NPC
sought to exercise its statutory right
of eminent domain warranted the
grant of moral damages. 22
Further, nominal damages are adjudicated in

order that a right of the plaintiff, which has
been violated or invaded by the defendant,
may be vindicated or recognized, and not for
the purpose of indemnifying the plaintiff for
any loss suffered by him. 23 Similarly, the
court may award nominal damages in every
case where any property right has been
invaded. 24 The petitioner, in blatant
disregard of the respondents' proprietary
right, trespassed the subject property and
conducted engineering surveys thereon. It
even attempted to deceive the respondents'
caretaker by claiming that its agents were
authorized by the respondents to enter the
property when in fact, the respondents never
gave
such
authority.
Under
the
circumstances, the award of nominal
damages is likewise warranted.
Finally, the award of attorney's fees as part
of damages is deemed just and equitable
considering that by the petitioner's
unjustified acts, the respondents were
obviously compelled to litigate and incur
207
expenses to protect their interests over the

subject property. 25
DENIED for lack of merit. The assailed
Decision dated June 16, 2000 of the Court of
Appeals in CA-G.R. CV No. 54265 is
AFFIRMED in toto.
SO ORDERED.
||| (National Power Corp. v. Spouses
Campos, Jr., G.R. No. 143643, [June 27,
2003], 453 PHIL 79-97)
208

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CONSTITUTIONAL LAW 2 |

[G.R. No. 129098. December 6, 2006.]

Governor of Pampanga, Mayor of Sasmuan,

In her Complaint-Affidavit, petitioner stated

10 October 1995 by dynamite blasting.

In his Counter-Affidavit, 7 Governor Lapid

that the same was issued before the ocular

valid exercise of police power and in

VIOLATION OF THE SUBJECT

for certiorari under Rule 65, not a petition

Clearly, this is an appeal from the

But in this case, petitioner has taken the

Neither can petitioner avail of Sec.

Even if the Court treats the instant appeal as

that no violation of Section 3(e) 21 of

By grave abuse of discretion is meant

one where the act complained of was issued

swamped if they would be compelled to

[G.R. No. 166494. June 29, 2007.]

HEALTH (DOH), DEPARTMENT

The antecedents are as follows:

added tax if applicable, shall be

that the implementation of the tax

Effectively, a tax credit is a

income, based on the net cost

old law, more establishments

Net Tax Due -- x x

both prescription and non-prescription

Petitioners assert that Section 4 (a) of the

Examining petitioners' arguments, it is

Theoretically, the treatment of the discount

The Court believes so.

priority for the needs of the

exact definition, but has been purposely

nullification in view of the presumption of

Petitioners' computation is flawed. For

reproach the law for being oppressive,

continued implementation of the same

WHEREFORE, the petition is DISMISSED

[G.R. No. 118127. April 12, 2005.]

G. RIVERA, HON. MANUEL M.

I know only that what is moral is what

It is a moral and political axiom that

The antecedents are as follows:

VIOLATION THEREOF, AND FOR

SECTION 1.Any provision of existing

entertainment that cater to both

SEC. 5.This ordinance shall take effect

specifically declared portions of the ErmitaMalate area as a commercial zone with

(4)Regulate activities relative to the

entertainment, particularly those

xxx xxx xxx

cannot be denounced as class legislation as

On 11 January 1995, petitioners filed the

is violative of due process, confiscatory and

only be within the corporate powers of the

legislature is still the principal of the local

economic prosperity and social

unconstitutional and repugnant to general

The police power of the City Council,

SEC. 9.Private property shall not be

There is no controlling and precise

Procedural due process, as the phrase

its exercise is subject to a qualification,