EN BANC

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

REPUBLIC OF THE PHILIPPINES, GENERAL ROMEO ZULUETA,

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

RESOLUTION
SANDOVAL-GUTIERREZ, J.:

Justice is the first virtue of social institutions.[1] When the state wields its
power of eminent domain, there arises a correlative obligation on its part to
pay the owner of the expropriated property a just compensation. If it fails,
there is a clear case of injustice that must be redressed. In the present case,
fifty-seven (57) years have lapsed from the time the Decision in the subject
expropriation proceedings became final, but still the Republic of the
Philippines, herein petitioner, has not compensated the owner of the property.
To tolerate such prolonged inaction on its part is to encourage distrust and
resentment among our people the very vices that corrode the ties of civility
and tempt men to act in ways they would otherwise shun.
A revisit of the pertinent facts in the instant case is imperative.
On September 5, 1938, the Republic of the Philippines (Republic)
instituted a special civil action for expropriation with the Court of First Instance
(CFI) of Cebu, docketed as Civil Case No. 781, involving Lots 932 and 939 of
the Banilad Friar Land Estate, Lahug, Cebu City, for the purpose of
establishing a military reservation for the Philippine Army. Lot 932 was
registered in the name of Gervasia Denzon under Transfer Certificate of Title
(TCT) No. 14921 with an area of 25,137 square meters, while Lot 939 was in
the name of Eulalia Denzon and covered by TCT No. 12560 consisting of
13,164 square meters.
After depositing P9,500.00 with the Philippine National Bank, pursuant to
the Order of the CFI dated October 19, 1938, the Republic took possession of
the lots. Thereafter, or on May 14, 1940, the CFI rendered its Decision
ordering the Republic to pay the Denzons the sum of P4,062.10 as just
compensation.
The Denzons interposed an appeal to the Court of Appeals but it was
dismissed on March 11, 1948. An entry of judgment was made on April 5,
1948.
In 1950, Jose Galeos, one of the heirs of the Denzons, filed with the
National Airports Corporation a claim for rentals for the two lots, but it denied
knowledge of the matter. Another heir, Nestor Belocura, brought the claim to
the Office of then President Carlos Garcia who wrote the Civil Aeronautics
Administration and the Secretary of National Defense to expedite action on
said claim. On September 6, 1961, Lt. Manuel Cabal rejected the claim but
expressed willingness to pay the appraised value of the lots within a
reasonable time.
For failure of the Republic to pay for the lots, on September 20, 1961, the
Denzons successors-in-interest, Francisca Galeos-Valdehueza and
Josefina Galeos-Panerio, filed with the same CFI an action for recovery of
[2]

possession with damages against the Republic and officers of the Armed
Forces of the Philippines in possession of the property. The case was
docketed as Civil Case No. R-7208.
In the interim or on November 9, 1961, TCT Nos. 23934 and 23935
covering Lots 932 and 939 were issued in the names of Francisca
Valdehueza and Josefina Panerio, respectively. Annotated thereon was the
phrase subject to the priority of the National Airports Corporation to acquire
said parcels of land, Lots 932 and 939 upon previous payment of a
reasonable market value.
On July 31, 1962, the CFI promulgated its Decision in favor of Valdehueza
and Panerio, holding that they are the owners and have retained their right as
such over Lots 932 and 939 because of the Republics failure to pay the
amount of P4,062.10, adjudged in the expropriation proceedings. However, in
view of the annotation on their land titles, they were ordered to execute a
deed of sale in favor of the Republic. In view of the differences in money value
from 1940 up to the present, the court adjusted the market value
at P16,248.40, to be paid with 6% interest per annum from April 5, 1948, date
of entry in the expropriation proceedings, until full payment.
After their motion for reconsideration was denied, Valdehueza and Panerio
appealed from the CFI Decision, in view of the amount in controversy, directly
to this Court. The case was docketed as No. L-21032.[3] On May 19, 1966, this
Court rendered its Decision affirming the CFI Decision. It held that
Valdehueza and Panerio are still the registered owners of Lots 932 and 939,
there having been no payment of just compensation by the Republic.
Apparently, this Court found nothing in the records to show that the Republic
paid the owners or their successors-in-interest according to the CFI decision.
While it deposited the amount of P9,500,00, and said deposit was allegedly
disbursed, however, the payees could not be ascertained.
Notwithstanding the above finding, this Court still ruled that Valdehueza
and Panerio are not entitled to recover possession of the lots but may only
demand the payment of their fair market value, ratiocinating as follows:

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

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

The points in dispute are whether such payment can still be made and, if so, in
what amount. Said lots have been the subject of expropriation proceedings. By
final and executory judgment in said proceedings, they were condemned for
public use, as part of an airport, and ordered sold to the Government. In fact, the
abovementioned title certificates secured by plaintiffs over said lots contained
annotations of the right of the National Airports Corporation (now CAA) to pay
for and acquire them. It follows that both by virtue of the judgment, long final,
in the expropriation suit, as well as the annotations upon their title certificates,
plaintiffs are not entitled to recover possession of their expropriated lots which
are still devoted to the public use for which they were expropriated but only to
demand the fair market value of the same.
 Meanwhile, in 1964, Valdehueza and Panerio mortgaged Lot 932
to Vicente Lim, herein respondent,[4] as security for their loans. For their
failure to pay Lim despite demand, he had the mortgage foreclosed in 1976.
Thus, TCT No. 23934 was cancelled, and in lieu thereof, TCT No. 63894 was
issued in his name.
On August 20, 1992, respondent Lim filed a complaint for quieting of
title with the Regional Trial Court (RTC), Branch 10, Cebu City, against
General Romeo Zulueta, as Commander of the Armed Forces of the
Philippines, Commodore Edgardo Galeos, as Commander of Naval District V
of the Philippine Navy, Antonio Cabaluna, Doroteo Mantos and Florencio
Belotindos, herein petitioners. Subsequently, he amended the complaint to
implead the Republic.
On May 4, 2001, the RTC rendered a decision in favor of respondent,
thus:

WHEREFORE, judgment is hereby rendered in favor of plaintiff Vicente Lim and

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

Petitioners elevated the case to the Court of Appeals, docketed therein as

CA-G.R. CV No. 72915. In its Decision[5] dated September 18, 2003, the
Appellate Court sustained the RTC Decision, thus:

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

xxxxxx

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

WHEREFORE, in view of the foregoing, and finding no reversible error in the

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

Undaunted, petitioners, through the Office of the Solicitor General, filed

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

Sec. 2. Second motion for reconsideration. No second motion for reconsideration of a

judgment or final resolution by the same party shall be entertained.

Consequently, as mentioned earlier, we simply noted without action the

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

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

We feel the same way in the instant case.

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

Title to property which is the subject of condemnation proceedings does not vest
the condemnor until the judgment fixing just compensation is entered and
paid, but the condemnors title relates back to the date on which the petition under the
Eminent Domain Act, or the commissioners report under the Local Improvement Act,
is filed.

x x x Although the right to appropriate and use land taken for a canal is
complete at the time of entry, title to the property taken remains in the owner
until payment is actually made. (Emphasis supplied.)

In Kennedy v. Indianapolis, the US Supreme Court cited several cases holding that
title to property does not pass to the condemnor until just compensation had actually
been made. In fact, the decisions appear to be uniform to this effect. As early as 1838,
in Rubottom v. McLure, it was held that actual payment to the owner of the
condemned property was a condition precedent to the investment of the title to
the property in the State albeit not to the appropriation of it to public
use. In Rexford v. Knight, the Court of Appeals of New York said that the
construction upon the statutes was that the fee did not vest in the State until the
payment of the compensation although the authority to enter upon and appropriate the
land was complete prior to the payment. Kennedy further said that both on principle
and authority the rule is . . . that the right to enter on and use the property is
complete, as soon as the property is actually appropriated under the authority of
law for a public use, but that the title does not pass from the owner without his
consent, until just compensation has been made to him.

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

If the laws which we have exhibited or cited in the preceding discussion are
attentively examined it will be apparent that the method of expropriation
adopted in this jurisdiction is such as to afford absolute reassurance that no piece
of land can be finally and irrevocably taken from an unwilling owner until
compensation is paid...(Emphasis supplied.)

Clearly, without full payment of just compensation, there can be no

transfer of title from the landowner to the expropriator. Otherwise stated, the
Republics acquisition of ownership is conditioned upon the full payment of just
compensation within a reasonable time.[14]
Significantly, in Municipality of Bian v. Garcia[15] this Court ruled that the
expropriation of lands consists of two stages, to wit:

x x x The first is concerned with the determination of the authority of the plaintiff to
exercise the power of eminent domain and the propriety of its exercise in the context
of the facts involved in the suit. It ends with an order, if not of dismissal of the action,
of condemnation declaring that the plaintiff has a lawful right to take the property
sought to be condemned, for the public use or purpose described in the complaint,
upon the payment of just compensation to be determined as of the date of the filing of
the complaint x x x.

The second phase of the eminent domain action is concerned with the determination
by the court of the just compensation for the property sought to be taken. This is done
by the court with the assistance of not more than three (3) commissioners. x x x.

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

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

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

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

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

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

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

In summation, while the prevailing doctrine is that the non-payment of just

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

EN BANC

G.R. No. L-2929 February 28, 1950

THE CITY OF MANILA, plaintiff-appellant,

vs.
THE ARRELANO LAW COLLEGES, INC., defendant-appellee.

City Fiscal Eugenio Angeles and Assistant City Fiscal Arsenio Nañawa for appellant.
Emmanuel Pelaez for appellee.

TUASON, J.:

Section 1 of Republic Act No. 267 provides:

Cities and municipalities are authorized to contract loans from the Reconstruction
Finance Corporation, the Philippine National Bank, and/or other entity or person
at the rate of interest not exceeding eight per cent annum for the purpose of
purchasing or expropriating homesites within their respective territorial
jurisdiction and reselling them at cost to residents of the said cities and
municipalities.

The court below ruled that this provision empowers cities to purchase but not to
expropriate lands for the purpose of subdivision and resale, and so dismissed the
present action, which seeks to condemn, for the purpose just stated, several parcels of
land having a combined area of 7,270 square meters and situated on Legarda Street,
City of Manila.

In the cases of Guido vs. Rural Progress Administration (G. R. No. L-

2089)1 and Commonwealth of the Philippines vs. De Borja (G. R. No. L-1496),2 we
discussed at great length the extent of the Philippine Government's power to condemn
private property for resale. Among other things, we said:

It has been truly said that the assertion of the right on the part of the legislature to
take the property of one citizen and transfer it to another, even for a full
compensation, when the public interest is not promoted thereby, is claiming a
despotic power, and one inconsistent with every just principle and fundamental
maxim of a free government. (29 C. J. S., 820.)

In a broad sense, expropriation of large estates, trusts in perpetuity, and land that
embraces a whole town, or large section of a town or city, bears direct relation to
the public welfare. The size of the land expropriated, the large number of people
benefited, and the extent of social and economic reform secured by the
condemnation, clothes the expropriation with public interest and public use. The
expropriation in such cases tends to abolish economic slavery, feudalistic
practices, endless conflicts between landlords and tenants, and other evils
inimical to community prosperity and contentment and public peace and order.
Although courts are not in agreement as to the tests to applied in determining
whether the use is public or not, some go so far in the direction of a liberal
construction as to hold that public use is synonymous with public benefit, public
utility, or public advantage, and to authorize the exercise of the power of eminent
domain to promote such public benefit, etc., especially where the interest
involved are of considerable magnitude. (29 C. J. S.; 823, 824; see also People
of Puerto Rico vs. Eastern Sugar Associate et al., 156 Fed. [2d], 316.) In some
instances, slumsites have been acquired by condemnation. The highest court of
New York State has ruled that slum clearance and erection of houses for low-
income families were public purpose for which New York City Housing authorities
could exercise the power of condemnation. and this decision was followed by
similar ones in other states. The underlying reasons for these decisions are that
the destruction of congested areas and unsanitary dwellings diminished the
potentialities of epidemics, crime and waste, prevents the spread of crime and
diseases to unaffected areas, enhances the physical and moral value of the
surrounding communities, and promote the safety and welfare of the public in
general. (Murray et al. vs. La Guardia, 52 N. e. [2d], 884; General Development
Coop. vs. City of Detroit, 33 N. W. [2d], 919; Weizner vs. Stichman, 64 N. Y. S.
[2d], 50.) But it will be noted that in all these cases and of similar nature
extensive areas were involved and numerous people and the general public
benefited by the action taken.

The condemnation of a small property in behalf of 10, 20 or 50 persons and their

families does not insure to the benefit of the public to a degree sufficient to give
the use public character. The expropriation proceedings at bar have been
instituted for the economic relief of a few families devoid of any consideration of
public peace and order, or other public advantage. What is proposed to be done
is to take plaintiff's property, which for all we know she acquired by sweat and
sacrifices for her and her family's security, and sell it at cost to a few lessees who
refuse to pay the stipulated rent or leave the premises.

No fixed line of demarcation between what taking is for public use and what is
not can made; each case has to be judged according to its peculiar
circumstances. It suffices to say for the purpose of this decision that the case
under consideration is far wanting in those elements which make for public
convenience or public use. It is patterned upon an ideology far removed from the
majority of the citizens of this country. If upheld, this case would open the gates
to more oppressive expropriations. If this expropriation be constitutional, we see
no reason why a 10-, 15-, or 25-hectare farm land might not be expropriated and
subdivided, and sold to those who want to own a portion of it. to make the
analogy closer, we find no reason why the Rural Progress Administration could
 not take by condemnation an urban lot containing and area of 1,000 or 2,000
square meters for subdivision into tiny lots for resale to its occupations or those
who want to build thereon.

We are inclined to believe that Act No. 267 empowers cities to expropriate as well as to
purchase lands for homesites. The word "expropriating," taken singly or with the text, is
susceptible of only meaning. But this power to expropriate is necessarily subject to the
limitations and conditions noted in the decisions above cited. The National Government
may not confer its instrumentalities authority which itself may not exercise. A stream can
not run higher than its source.

Viewed from another angle, the case at bar is weaker for the condemnor. In the first
place, the land that is the subject of the present expropriation is only one-third of the
land sought to be taken in the Guido case, and about two-thirds of that involved in the
Borja condemnation proceeding. In the second place, the Arellano Colleges' land is
situated in a highly commercial section of the city and is occupied by persons who are
not bona fide tenants. Lastly, this land was brought by the defendant for a university site
to take the place of rented buildings that are unsuitable for schools of higher learning.

To authorize the condemnation of any particular land by a grantee of the power of

eminent domain, a necessity must exist for the taking thereof for the proposed uses and
purposes. (29 C. J. S., 884-885.) In City of Manila vs. Manila Chinese Community (40
Phil., 349), this Court, citing American decision, laid done this rule:

The very foundation of the right to exercise eminent domain is a genuine

necessity, and that necessity must be of a public character. The ascertainment of
the necessity must precede or accompany, and not follow, the taking of the land.
(Morrison vs. Indianapolis, etc. Ry. Co., 166 Ind., 511; Stearns vs. Barre, 73 Vt.,
281; Wheeling, etc. R. R. Co. vs. Toledo, Ry. etc. Co., 72 Ohio St., 368.)

And this passage in Blackstone's Commentaries on the English Law is cited in that
decision: "So great is the regard of the law for private property that it will not authorize
the least violation of it, even for the public good, unless there exist a very great
necessity thereof."

Perhaps modern decisions are not so exigent. Necessity within the rule that the
particular property to be expropriated must be necessary. does not mean an absolute
but only a reasonable or practical necessity, such as would combine the greatest benefit
to the public with the least inconvenience and expense to the condemning party and
property owner consistent with such benefits. (29 C. J. S., 386.) But measured even by
this standard, and forgetting for a moment the private character of the intended use,
necessity for the condemnation has not been shown. The land in question has cost the
owner P140,000. The people for whose benefit the condemnation is being undertaken
are so poor they could ill afford to meet this high price, unless they intend to borrow the
money with a view to disposing of the property later for a profits. Cheaper lands not
dedicated to a purpose so worthy as a school and more suited to the occupants' needs
and means, if really they only want to own their own homes, are plenty elsewhere. On
the other hand, the defendant not only has invested a considerable amount for its
property but had the plans for construction ready and would have completed the project
a long time ago had it not been stopped by the city authorities. And again, while a
handful of people stand to profits by the expropriation, the development of a university
that has a present enrollment of 9,000 students would be sacrificed. Any good that
would accrue to the public from providing homes to a few families fades into
insignificance in comparison with the preparation of a young men and young women for
useful citizenship and for service to the government and the community, a task which
the government alone is not in a position to undertake. As the Rural Progress
Administration, the national agency lands for resale as homesites and to which the
petition to purchase the land in question on behalf of the occupants was referred by the
President, turning down the occupants request after proper investigation, commented
that "the necessity of the Arellano Law College to acquire a permanent site of its own is
imperative not only because denial of the same would hamper the objectives of that
educational institution, but it would likewise be taking a property intended already for
public benefit." The Mayor of the City of Manila himself confessed that he believes the
plaintiff is entitled to keep this land.

The order of the Court of First Instance of Manila is affirmed without costs.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-14355 October 31, 1919

THE CITY OF MANILA, plaintiff-appellant,

vs.
CHINESE COMMUNITY OF MANILA, ET AL., defendants-appellees.

City Fiscal Diaz for appellant.

Crossfield and O'Brien, Williams, Ferrier and Sycip, Delgado and Delgado, Filemon
Sotto, and Ramon Salinas for appellees.

JOHNSON, J.:

The important question presented by this appeal is: In expropriation proceedings by the
city of Manila, may the courts inquire into, and hear proof upon, the necessity of the
expropriation?

That question arose in the following manner:

On the 11th day of December, 1916, the city of Manila presented a petition in the Court
of First Instance of said city, praying that certain lands, therein particularly described, be
expropriated for the purpose of constructing a public improvement. The petitioner, in the
second paragraph of the petition, alleged:

That for the purpose of constructing a public improvement, namely, the extension
of Rizal Avenue, Manila, it is necessary for the plaintiff to acquire ownership in
fee simple of certain parcels of land situated in the district of Binondo of said city
within Block 83 of said district, and within the jurisdiction of this court.

The defendant, the Comunidad de Chinos de Manila [Chinese Community of Manila],

answering the petition of the plaintiff, alleged that it was a corporation organized and
existing under and by virtue of the laws of the Philippine Islands, having for its purpose
the benefit and general welfare of the Chinese Community of the City of Manila; that it
was the owner of parcels one and two of the land described in paragraph 2 of the
complaint; that it denied that it was either necessary or expedient that the said parcels
be expropriated for street purposes; that existing street and roads furnished ample
means of communication for the public in the district covered by such proposed
expropriation; that if the construction of the street or road should be considered a public
necessity, other routes were available, which would fully satisfy the plaintiff's purposes,
at much less expense and without disturbing the resting places of the dead; that it had a
Torrens title for the lands in question; that the lands in question had been used by the
defendant for cemetery purposes; that a great number of Chinese were buried in said
cemetery; that if said expropriation be carried into effect, it would disturb the resting
places of the dead, would require the expenditure of a large sum of money in the
transfer or removal of the bodies to some other place or site and in the purchase of
such new sites, would involve the destruction of existing monuments and the erection of
new monuments in their stead, and would create irreparable loss and injury to the
defendant and to all those persons owning and interested in the graves and monuments
which would have to be destroyed; that the plaintiff was without right or authority to
expropriate said cemetery or any part or portion thereof for street purposes; and that the
expropriation, in fact, was not necessary as a public improvement.

The defendant Ildefonso Tambunting, answering the petition, denied each and every
allegation of the complaint, and alleged that said expropriation was not a public
improvement; that it was not necessary for the plaintiff to acquire the parcels of land in
question; that a portion of the lands in question was used as a cemetery in which were
the graves of his ancestors; that monuments and tombstones of great value were found
thereon; that the land had becomequasi-public property of a benevolent association,
dedicated and used for the burial of the dead and that many dead were buried there;
that if the plaintiff deemed it necessary to extend Rizal Avenue, he had offered and still
offers to grant a right of way for the said extension over other land, without cost to the
plaintiff, in order that the sepulchers, chapels and graves of his ancestors may not be
disturbed; that the land so offered, free of charge, would answer every public
necessity on the part of the plaintiff.

The defendant Feliza Concepcion de Delgado, with her husband, Jose Maria Delgado,
and each of the other defendants, answering separately, presented substantially the
same defense as that presented by the Comunidad de Chinos de Manila and Ildefonso
Tambunting above referred to.

The foregoing parts of the defense presented by the defendants have been inserted in
order to show the general character of the defenses presented by each of the
defendants. The plaintiff alleged that the expropriation was necessary. The defendants
each alleged (a) that no necessity existed for said expropriation and (b) that the land in
question was a cemetery, which had been used as such for many years, and was
covered with sepulchres and monuments, and that the same should not be converted
into a street for public purposes.

Upon the issue thus presented by the petition and the various answers, the Honorable
Simplicio del Rosario, judge, in a very elucidated opinion, with very clear and explicit
reasons, supported by ambulance of authorities, decided that there was no necessity for
the expropriation of the particular strip of land in question, and absolved each and all of
the defendants from all liability under the complaint, without any finding as to costs.
From that judgment the plaintiff appealed and presented the above question as its
principal ground of appeal.

The theory of the plaintiff is, that once it has established the fact, under the law, that it
has authority to expropriate land, it may expropriate any land it may desire; that the only
function of the court in such proceedings is to ascertain the value of the land in
question; that neither the court nor the owners of the land can inquire into the advisible
purpose of purpose of the expropriation or ask any questions concerning the necessities
therefor; that the courts are mere appraisers of the land involved in expropriation
proceedings, and, when the value of the land is fixed by the method adopted by the law,
to render a judgment in favor of the defendant for its value.

That the city of Manila has authority to expropriate private lands for public purposes, is
not denied. Section 2429 of Act No. 2711 (Charter of the city of Manila) provides that
"the city (Manila) . . . may condemn private property forpublic use."

The Charter of the city of Manila contains no procedure by which the said authority may
be carried into effect. We are driven, therefore, to the procedure marked out by Act No.
190 to ascertain how the said authority may be exercised. From an examination of Act
No. 190, in its section 241, we find how the right of eminent domain may be exercised.
Said section 241 provides that, "The Government of the Philippine Islands, or of any
province or department thereof, or of any municipality, and any person, or public or
private corporation having, by law, the right to condemn private property for public
use, shall exercise that right in the manner hereinafter prescribed."

Section 242 provides that a complaint in expropriation proceeding shall be presented;

that the complaint shall state with certainty the right of condemnation, with a description
of the property sought to be condemned together with the interest of each defendant
separately.

Section 243 provides that if the court shall find upon trial that the right to expropriate the
land in question exists, it shall then appoint commissioners.

Sections 244, 245 and 246 provide the method of procedure and duty of the
commissioners. Section 248 provides for an appeal from the judgment of the Court of
First Instance to the Supreme Court. Said section 248 gives the Supreme Court
authority to inquire into the right of expropriation on the part of the plaintiff. If the
Supreme Court on appeal shall determine that no right of expropriation existed, it shall
remand the cause to the Court of First Instance with a mandate that the defendant be
replaced in the possession of the property and that he recover whatever damages he
may have sustained by reason of the possession of the plaintiff.

It is contended on the part of the plaintiff that the phrase in said section, "and if the court
shall find the right to expropriate exists," means simply that, if the court finds that there
is some law authorizing the plaintiff to expropriate, then the courts have no other
function than to authorize the expropriation and to proceed to ascertain the value of the
land involved; that the necessity for the expropriation is a legislative and not a judicial
question.

Upon the question whether expropriation is a legislative function exclusively, and that
the courts cannot intervene except for the purpose of determining the value of the land
in question, there is much legal legislature. Much has been written upon both sides of
that question. A careful examination of the discussions pro and con will disclose the fact
that the decisions depend largely upon particular constitutional or statutory provisions. It
cannot be denied, if the legislature under proper authority should grant the expropriation
of a certain or particular parcel of land for some specified public purpose, that the courts
would be without jurisdiction to inquire into the purpose of that legislation.

If, upon the other hand, however, the Legislature should grant general authority to a
municipal corporation to expropriate private land for public purposes, we think the courts
have ample authority in this jurisdiction, under the provisions above quoted, to make
inquiry and to hear proof, upon an issue properly presented, concerning whether or not
the lands were private and whether the purpose was, in fact, public. In other words,
have no the courts in this jurisdiction the right, inasmuch as the questions relating to
expropriation must be referred to them (sec. 241, Act No. 190) for final decision, to ask
whether or not the law has been complied with? Suppose in a particular case, it should
be denied that the property is not private property but public, may not the courts hear
proof upon that question? Or, suppose the defense is, that the purpose of the
expropriation is not public but private, or that there exists no public purpose at all, may
not the courts make inquiry and hear proof upon that question?

The city of Manila is given authority to expropriate private lands for public purposes.
Can it be possible that said authority confers the right to determine for itself that the land
is private and that the purpose is public, and that the people of the city of Manila who
pay the taxes for its support, especially those who are directly affected, may not
question one or the other, or both, of these questions? Can it be successfully contended
that the phrase used in Act No. 190, "and if the court upon trial shall find that
such right exists," means simply that the court shall examine thestatutes simply for the
purpose of ascertaining whether a law exists authorizing the petitioner to exercise the
right of eminent domain? Or, when the case arrives in the Supreme Court, can it be
possible that the phrase, "if the Supreme Court shall determine that no right of
expropriation exists," that that simply means that the Supreme Court shall also examine
the enactments of the legislature for the purpose of determining whether or not a law
exists permitting the plaintiff to expropriate?

We are of the opinion that the power of the court is not limited to that question. The right
of expropriation is not an inherent power in a municipal corporation, and before it can
exercise the right some law must exist conferring the power upon it. When the courts
come to determine the question, they must only find (a) that a law or authority exists for
the exercise of the right of eminent domain, but (b) also that the right or authority is
being exercised in accordance with the law. In the present case there are two conditions
imposed upon the authority conceded to the City of Manila: First, the land must be
private; and, second, the purpose must be public. If the court, upon trial, finds that
neither of these conditions exists or that either one of them fails, certainly it cannot be
contended that the right is being exercised in accordance with law.

Whether the purpose for the exercise of the right of eminent domain is public, is a
question of fact. Whether the land is public, is a question of fact; and, in our opinion,
when the legislature conferred upon the courts of the Philippine Islands the right to
ascertain upon trial whether the right exists for the exercise of eminent domain, it
intended that the courts should inquire into, and hear proof upon, those questions. Is it
possible that the owner of valuable land in this jurisdiction is compelled to stand mute
while his land is being expropriated for a use not public, with the right simply to beg the
city of Manila to pay him the value of his land? Does the law in this jurisdiction permit
municipalities to expropriate lands, without question, simply for the purpose of satisfying
the aesthetic sense of those who happen for the time being to be in authority?
Expropriation of lands usually calls for public expense. The taxpayers are called upon to
pay the costs. Cannot the owners of land question the public use or the public
necessity?

As was said above, there is a wide divergence of opinion upon the authority of the court
to question the necessity or advisability of the exercise of the right of eminent domain.
The divergence is usually found to depend upon particular statutory or constitutional
provisions.

It has been contended — and many cases are cited in support of that contention, and
section 158 of volume 10 of Ruling Case Law is cited as conclusive — that the
necessity for taking property under the right of eminent domain is not a judicial question.
But those who cited said section evidently overlooked the section immediately following
(sec. 159), which adds: "But it is obvious that if the property is taken in the ostensible
behalf of a public improvementwhich it can never by any possibility serve, it is being
taken for a use not public, and the owner's constitutional rights call for protection by the
courts. While many courts have used sweeping expression in the decisions in which
they have disclaimed the power of supervising the power of supervising the selection of
the sites of public improvements, it may be safely said that the courts of the various
states would feel bound to interfere to prevent an abuse of the discretion delegated by
the legislature, by an attempted appropriation of land in utter disregard of the possible
necessity of its use, or when the alleged purpose was a cloak to some sinister scheme."
(Norwich City vs. Johnson, 86 Conn., 151; Bell vs. Mattoon Waterworks, etc. Co., 245
Ill., 544; Wheeling, etc. R. R. Co. vs. Toledo Ry. etc. Co., 72 Ohio St., 368; State vs.
Stewart, 74 Wis., 620.)

Said section 158 (10 R. C. L., 183) which is cited as conclusive authority in support of
the contention of the appellant, says:

The legislature, in providing for the exercise of the power of eminent

domain, may directly determine the necessity for appropriating private property
for a particular improvement for public use, and it may select the exact location of
 the improvement. In such a case, it is well settled that the utility of the proposed
improvement, the extent of the public necessity for its construction, the
expediency of constructing it, the suitableness of the location selected and the
consequent necessity of taking the land selected for its site, are all questions
exclusively for the legislature to determine, and the courts have no power to
interfere, or to substitute their own views for those of the representatives of the
people.

Practically every case cited in support of the above doctrine has been examined, and
we are justified in making the statement that in each case the legislature directly
determined the necessity for the exercise of the right of eminent domain in the particular
case. It is not denied that if the necessity for the exercise of the right of eminent domain
is presented to the legislative department of the government and that department
decides that there exists a necessity for the exercise of the right in a particular case,
that then and in that case, the courts will not go behind the action of the legislature and
make inquiry concerning the necessity. But, in the case of Wheeling, etc. R. R. Co. vs.
Toledo, Ry, etc., Co. (72 Ohio St., 368 [106 Am. St. rep., 622, 628]), which was cited in
support of the doctrine laid down in section 158 above quoted, the court said:

But when the statute does not designate the property to be taken nor how may
be taken, then the necessity of taking particular property is a question for the
courts. Where the application to condemn or appropriate is made directly to
the court, the question (of necessity) should be raised and decided in limene.

The legislative department of the government was rarely undertakes to designate the
precise property which should be taken for public use. It has generally, like in the
present case, merely conferred general authority to take land for public use when a
necessity exists therefor. We believe that it can be confidently asserted that, under such
statute, the allegation of the necessity for the appropriation is an issuable allegation
which it is competent for the courts to decide. (Lynch vs. Forbes, 161 Mass., 302 [42
Am. St. Rep., 402, 407].)

There is a wide distinction between a legislative declaration that a municipality is given

authority to exercise the right of eminent domain, and a decision by the municipality that
there exist a necessity for the exercise of that right in a particular case. The first is a
declaration simply that there exist reasons why the right should be conferred upon
municipal corporation, while the second is the application of the right to a particular
case. Certainly, the legislative declaration relating to the advisability of granting the
power cannot be converted into a declaration that a necessity exists for its exercise in a
particular case, and especially so when, perhaps, the land in question was not within
the territorial authority was granted.

Whether it was wise, advisable, or necessary to confer upon a municipality the power to
exercise the right of eminent domain, is a question with which the courts are not
concerned. But when that right or authority is exercised for the purpose of depriving
citizens of their property, the courts are authorized, in this jurisdiction, to make inquiry
and to hear proof upon the necessity in the particular case, and not the general
authority.

Volume 15 of the Cyclopedia of Law and Procedure (Cyc.), page 629, is cited as a
further conclusive authority upon the question that the necessity for the exercise of the
right of eminent domain is a legislative and not a judicial question. Cyclopedia, at the
page stated, says:

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

the necessity and expediency of exercising the right of eminent domain are
questions essentially political and not judicial in their character. The
determination of those questions (the necessity and the expediency) belongs to
the sovereign power; the legislative department is final and conclusive, and the
courts have no power to review it (the necessity and the expediency) . . . . It (the
legislature) may designate the particular property to be condemned, and its
determination in this respect cannot be reviewed by the courts.

The volume of Cyclopedia, above referred to, cites many cases in support of the
doctrine quoted. While time has not permitted an examination of all of said citations,
many of them have been examined, and it can be confidently asserted that said cases
which are cited in support of the assertion that, "the necessity and expediency of
exercising the right of eminent domain are questions essentially political and not
judicial," show clearly and invariably that in each case the legislature itself usually, by a
special law, designated the particular case in which the right of eminent domain might
be exercised by the particular municipal corporation or entity within the state. (Eastern
R. Co. vs.Boston, etc., R. Co., 11 Mass., 125 [15 Am. Rep., 13]; Brooklyn Park
Com'rs vs. Armstrong, 45 N.Y., 234 [6 Am. Rep., 70]; Hairston vs. Danville, etc. Ry. Co.,
208 U. S. 598; Cincinnati vs. Louisville, etc. Ry. Co., 223 U. S., 390; U.S. vs. Chandler-
Dunbar Water Power Co., 229 U. S., 53; U.S. vs. Gettysburg, etc. Co., 160 U. S., 668;
Traction Co. vs. Mining Co., 196 U.S., 239; Sears vs. City of Akron, 246 U.S., 351
[erroneously cited as 242 U.S.].)

In the case of Traction Co. vs. Mining Co. (196 U.S., 239), the Supreme Court of the
United States said: "It is erroneous to suppose that the legislature is beyond the control
of the courts in exercising the power of eminent domain, either as to the nature of the
use or the necessity to the use of any particular property. For if the use be not public or
no necessity for the taking exists, the legislature cannot authorize the taking of private
property against the will of the owner, notwithstanding compensation may be required."

In the case of School Board of Carolina vs. Saldaña (14 Porto Rico, 339, 356), we find
the Supreme Court of Porto Rico, speaking through Justice MacLeary, quoting
approvingly the following, upon the question which we are discussing: "It is well settled
that although the legislature must necessarily determine in the first instance whether the
use for which they (municipalities, etc.) attempt to exercise the power is a public one or
not, their (municipalities, etc.) determination is not final, but is subject to correction by
the courts, who may undoubtedly declare the statute unconstitutional, if it shall clearly
appear that the use for which it is proposed to authorize the taking of private property is
in reality not public but private." Many cases are cited in support of that doctrine.

Later, in the same decision, we find the Supreme Court of Porto Rico says: "At any rate,
the rule is quite well settled that in the cases under consideration the determination of
the necessity of taking a particular piece or a certain amount of land rests ultimately with
the courts." (Spring Valley etc. Co. vs. San Mateo, etc. Co., 64 Cal., 123.) .

In the case of Board of Water Com'rs., etc. vs. Johnson (86 Conn., 571 [41 L. R. A., N.
S., 1024]), the Supreme Court of Connecticut approvingly quoted the following doctrine
from Lewis on Eminent Domain (3d ed.), section 599: "In all such cases the necessity of
public utility of the proposed work or improvement is a judicial question. In all such
cases, where the authority is to take property necessary for the purpose, the necessity
of taking particular property for a particular purpose is a judicial one, upon which the
owner is entitled to be heard." (Riley vs.Charleston, etc. Co., 71 S. C., 457, 489 [110
Am. St. Rep., 579]; Henderson vs. Lexington 132 Ky., 390, 403.)

The taking of private property for any use which is not required by the necessities or
convenience of the inhabitants of the state, is an unreasonable exercise of the right of
eminent domain, and beyond the power of the legislature to delegate.
(Bennett vs. Marion, 106 Iowa, 628, 633; Wilson vs. Pittsburg, etc. Co., 222 Pa. St.,
541, 545; Greasy, etc. Co. vs. Ely, etc. Co., 132 Ky., 692, 697.)

In the case of New Central Coal Co. vs. George's etc. Co. (37 Md., 537, 564), the
Supreme Court of the State of Maryland, discussing the question before us, said: "To
justify the exercise of this extreme power (eminent domain) where the legislature has
left it to depend upon the necessity that may be found to exist, in order to accomplish
the purpose of the incorporation, as in this case, the party claiming the right to the
exercise of the power should be required to show at least a reasonable degree of
necessity for its exercise. Any rule less strict than this, with the large and almost
indiscriminate delegation of the right to corporations, would likely lead to oppression and
the sacrifice of private right to corporate power."

In the case of Dewey vs. Chicago, etc. Co. (184 Ill., 426, 433), the court said: "Its right
to condemn property is not a general power of condemnation, but is limited to cases
where a necessity for resort to private property is shown to exist. Such necessity must
appear upon the face of the petition to condemn. If the necessary is denied the burden
is upon the company (municipality) to establish it." (Highland, etc. Co. vs. Strickley, 116
Fed., 852, 856; Kiney vs.Citizens' Water & Light Co., 173 Ind., 252, 257 ;
Bell vs. Mattoon Waterworks, etc. Co., 245 Ill., 544 [137 Am. St. Rep. 338].)

It is true that naby decisions may be found asserting that what is a public use is a
legislative question, and many other decisions declaring with equal emphasis that it is a
judicial question. But, as long as there is a constitutional or statutory provision denying
the right to take land for any use other than a public use, it occurs to us that the
question whether any particular use is a public one or not is ultimately, at least, a
judicial question. The legislative may, it is true, in effect declare certain uses to be
public, and, under the operation of the well-known rule that a statute will not be declared
to be unconstitutional except in a case free, or comparatively free, from doubt, the
courts will certainly sustain the action of the legislature unless it appears that the
particular use is clearly not of a public nature. The decisions must be understood with
this limitation; for, certainly, no court of last resort will be willing to declare that any and
every purpose which the legislative might happen to designate as a public use shall be
conclusively held to be so, irrespective of the purpose in question and of its manifestly
private character Blackstone in his Commentaries on the English Law remarks that, so
great is the regard of the law for private property that it will not authorize the least
violation of it, even for the public good, unless there exists a very great necessity
therefor.

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

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

The exercise of the right of eminent domain, whether directly by the State, or by its
authorized agents, is necessarily in derogation of private rights, and the rule in that case
is that the authority must be strictly construed. No species of property is held by
individuals with greater tenacity, and none is guarded by the constitution and laws more
sedulously, than the right to the freehold of inhabitants. When the legislature interferes
with that right, and, for greater public purposes, appropriates the land of an individual
without his consent, the plain meaning of the law should not be enlarged by doubtly
interpretation. (Bensely vs. Mountainlake Water Co., 13 Cal., 306 and cases cited [73
Am. Dec., 576].)

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

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

The Charter of the city of Manila authorizes the taking of private property for public use.
Suppose the owner of the property denies and successfully proves that the taking of his
property serves no public use: Would the courts not be justified in inquiring into that
question and in finally denying the petition if no public purpose was proved? Can it be
denied that the courts have a right to inquire into that question? If the courts can ask
questions and decide, upon an issue properly presented, whether the use is public or
not, is not that tantamount to permitting the courts to inquire into the necessity of the
appropriation? If there is no public use, then there is no necessity, and if there is no
necessity, it is difficult to understand how a public use can necessarily exist. If the
courts can inquire into the question whether a public use exists or not, then it seems
that it must follow that they can examine into the question of the necessity.
The very foundation of the right to exercise eminent domain is a genuine necessity, and
that necessity must be of a public character. The ascertainment of the necessity must
precede or accompany, and not follow, the taking of the land. (Morrison vs. Indianapolis,
etc. Ry. Co., 166 Ind., 511; Stearns vs. Barre, 73 Vt., 281; Wheeling, etc. R. R.
Co. vs. Toledo, Ry. etc. Co., 72 Ohio St., 368.)

The general power to exercise the right of eminent domain must not be confused with
the right to exercise it in aparticular case. The power of the legislature to confer, upon
municipal corporations and other entities within the State, general authority to exercise
the right of eminent domain cannot be questioned by the courts, but that general
authority of municipalities or entities must not be confused with the right to exercise it in
particular instances. The moment the municipal corporation or entity attempts to
exercise the authority conferred, it must comply with the conditions accompanying the
authority. The necessity for conferring the authority upon a municipal corporation to
exercise the right of eminent domain is admittedly within the power of the legislature.
But whether or not the municipal corporation or entity is exercising the right in a
particular case under the conditions imposed by the general authority, is a question
which the courts have the right to inquire into.

The conflict in the authorities upon the question whether the necessity for the exercise
of the right of eminent domain is purely legislative and not judicial, arises generally in
the wisdom and propriety of the legislature in authorizing the exercise of the right of
eminent domain instead of in the question of the right to exercise it in a particular case.
(Creston Waterworks Co. vs. McGrath, 89 Iowa, 502.)

By the weight of authorities, the courts have the power of restricting the exercise of
eminent domain to the actual reasonable necessities of the case and for the purposes
designated by the law. (Fairchild vs. City of St. Paul. 48 Minn., 540.)

And, moreover, the record does not show conclusively that the plaintiff has definitely
decided that their exists a necessity for the appropriation of the particular land described
in the complaint. Exhibits 4, 5, 7, and E clearly indicate that the municipal board
believed at one time that other land might be used for the proposed improvement,
thereby avoiding the necessity of distributing the quiet resting place of the dead.

Aside from insisting that there exists no necessity for the alleged improvements, the
defendants further contend that the street in question should not be opened through the
cemetery. One of the defendants alleges that said cemetery is public property. If that
allegations is true, then, of course, the city of Manila cannot appropriate it for public use.
The city of Manila can only expropriate private property.

It is a well known fact that cemeteries may be public or private. The former is a
cemetery used by the general community, or neighborhood, or church, while the latter is
used only by a family, or a small portion of the community or neighborhood. (11 C. J.,
50.)
Where a cemetery is open to public, it is a public use and no part of the ground can be
taken for other public uses under a general authority. And this immunity extends to the
unimproved and unoccupied parts which are held in good faith for future use. (Lewis on
Eminent Domain, sec. 434, and cases cited.)

The cemetery in question seems to have been established under governmental

authority. The Spanish Governor-General, in an order creating the same, used the
following language:

The cemetery and general hospital for indigent Chinese having been founded
and maintained by the spontaneous and fraternal contribution of their protector,
merchants and industrials, benefactors of mankind, in consideration of their
services to the Government of the Islands its internal administration, government
and regime must necessarily be adjusted to the taste and traditional practices of
those born and educated in China in order that the sentiments which animated
the founders may be perpetually effectuated.

It is alleged, and not denied, that the cemetery in question may be used by the general
community of Chinese, which fact, in the general acceptation of the definition of a public
cemetery, would make the cemetery in question public property. If that is true, then, of
course, the petition of the plaintiff must be denied, for the reason that the city of Manila
has no authority or right under the law to expropriate public property.

But, whether or not the cemetery is public or private property, its appropriation for the
uses of a public street, especially during the lifetime of those specially interested in its
maintenance as a cemetery, should be a question of great concern, and its
appropriation should not be made for such purposes until it is fully established that the
greatest necessity exists therefor.

While we do not contend that the dead must not give place to the living, and while it is a
matter of public knowledge that in the process of time sepulchres may become the seat
of cities and cemeteries traversed by streets and daily trod by the feet of millions of
men, yet, nevertheless such sacrifices and such uses of the places of the dead should
not be made unless and until it is fully established that there exists an eminent necessity
therefor. While cemeteries and sepulchres and the places of the burial of the dead are
still within
the memory and command of the active care of the living; while they are still devoted to
pious uses and sacred regard, it is difficult to believe that even the legislature would
adopt a law expressly providing that such places, under such circumstances, should be
violated.

In such an appropriation, what, we may ask, would be the measure of damages at law,
for the wounded sensibilities of the living, in having the graves of kindred and loved
ones blotted out and desecrated by a common highway or street for public travel? The
impossibility of measuring the damage and inadequacy of a remedy at law is too
apparent to admit of argument. To disturb the mortal remains of those endeared to us in
life sometimes becomes the sad duty of the living; but, except in cases of necessity, or
for laudable purposes, the sanctity of the grave, the last resting place of our friends,
should be maintained, and the preventative aid of the courts should be invoked for that
object. (Railroad Company vs. Cemetery Co., 116 Tenn., 400; Evergreen Cemetery
Association vs. The City of New Haven, 43 Conn., 234; Anderson vs. Acheson, 132
Iowa, 744; Beatty vs. Kurtz, 2 Peters, 566.)

In the present case, even granting that a necessity exists for the opening of the street in
question, the record contains no proof of the necessity of opening the same through the
cemetery. The record shows that adjoining and adjacent lands have been offered to the
city free of charge, which will answer every purpose of the plaintiff.

For all of the foregoing, we are fully persuaded that the judgment of the lower court
should be and is hereby affirmed, with costs against the appellant. So ordered.

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

Separate Opinions

MALCOLM, J., concurring:

The Government of the Philippine Islands is authorized by the Philippine Bill to acquire
real estate for public use by the exercise of the right of eminent domain. (Act of
Congress of July 1, 1902, sec. 63.) A portion of this power has been delegated by the
Philippine Legislature to the city of Manila, which is permitted to "condemn private
property for public use." (Administrative Code of 1917, sec. 2429.) The Code of Civil
Procedure, in prescribing how the right of eminent domain may be exercised, also limits
the condemnation to "private property for public use." (Sec. 241.) As under the facts
actually presented, there can be no question that a public street constitutes a public
use, the only remaining question is whether or not the Chinese Cemetery and the other
property here sought to be taken by the exercise of the right of eminent domain is
"private property."

As narrowing our inquiry still further, let it be noted that cemeteries are of two classes,
public and private. A public cemetery is one used by the general community, or
neighborhood, or church; while a private cemetery is one used only by a family, or small
portion of a community. (Lay vs. State, 12 Ind. App., 362; Cemetery
Association vs.Meninger [1875], 14 Kan., 312.) Our specific question, then, is, whether
the Chinese Cemetery in the city of Manila is a public, or a private graveyard. If it be
found to be the former, it is not subject to condemnation by the city of Manila; if it be
found to be the latter, it is subject to condemnation.

The Chinese Cemetery of Manila was established during the Spanish administration in
the Philippines by public spirited Chinese. The order of the Governor-General giving
governmental recognition to the cemetery reads as follows: "The cemetery and general
hospital for indigent Chinese having been founded and maintained by the spontaneous
and fraternal contribution of their protectors, merchants and industrials, benefactors of
mankind, in consideration of their services to the Government of the Islands, its internal
administration, government and regime, must necessarily be adjusted to the taste and
traditional practices of those born and educated in China in order that the sentiments
which animated the founders may be perpetually effectuated." Sometimes after the
inauguration of the new regime in the Philippines, a corporation was organized to
control the cemetery, and a Torrens title for the lands in question was obtained.

From the time of its creation until the present the cemetery has been used by the
Chinese community for the burial of their dead. It is said that not less than four hundred
graves, many of them with handsome monuments, would be destroyed by the proposed
street. This desecration is attempted as to the las t resting places of the dead of a
people who, because of their peculiar and ingrained ancestral workship, retain more
than the usual reverence for the departed. These facts lead us straight to the conclusion
that the Chinese Cemetery is not used by a family or a small portion of a community but
by a particular race long existing in the country and of considerable numbers. The case,
then, is one of where the city of Manila, under a general authority permitting it to
condemn private property for public use, is attempting to convert a property already
dedicated to a public use to an entirely different public use; and this, not directly
pursuant to legislative authority, but primarily through the sole advice of the consulting
architect.

Two well considered decisions coming from the American state courts on almost
identical facts are worthy of our consideration. The first is the case of The Evergreen
Cemetery Association vs. The City of New Haven ([1875], 43 Conn., 234), of cited by
other courts. Here the City of New Haven, Connecticut, under the general power
conferred upon it to lay out, construct, and maintain all necessary highways within its
limits, proceeded to widen and straighten one of its streets and in so doing took a small
piece of land belonging to the Evergreen Cemetery Association. This association was
incorporated under the general statute. The city had no special power to take any part
of the cemetery for such purposes. It was found that the land taken was needed for the
purposes of the cemetery and was not needed for the purpose of widening and
straightening the avenue. The court said that it is unquestionable that the Legislature
has the power to authorize the taking of land already applied to one public use and
devote it to another. When the power is granted to municipal or private corporations in
express words, no question can arise. But, it was added, "The same land cannot
properly be used for burial lots and for a public highway at the same time. . . . Land
therefore applied to one use should not be taken for the other except in cases on
necessity. . . . There is no difficulty in effecting the desired improvement by taking land
on the other side of the street. . . . The idea of running a public street, regardless of
graves, monuments, and the feelings of the living, through one of our public cemeteries,
would be shocking to the moral sense of the community, and would not be tolerated
except upon the direst necessity." It was then held that land already devoted to a public
use cannot be taken by the public for another use which is inconsistent with the first,
without special authority from the Legislature, or authority granted by necessary and
reasonable implication.

The second decision is that of Memphis State Line Railroad Company vs. Forest Hill
Cemetery Co. ([1906], 116 Tenn., 400.) Here the purpose of the proceedings was to
condemn a right of way for the railway company through the Forest Hill Cemetery. The
railroad proposed to run through the southeast corner of the cemetery where no bodies
were interred. The cemetery had been in use for about eight years, and during this
period thirteen hundred bodies had been buried therein. The cemetery was under the
control of a corporation which, by its character, held itself out as being willing to sell lots
to any one who applies therefor and pays the price demanded, except to members of
the Negro race. 1awph!l.net

It was found that there were two other routes along which the railroad might be located
without touching the cemetery, while the present line might be pursued without
interfering with Forest Hill Cemetery by making a curve around it. In the court below the
railroad was granted the right of condemnation through the cemetery and damages
were assessed. On appeal, the certiorari applied for was granted, and the supersedeas
awarded. The court, in effect, found that the land of the Cemetery Company was
devoted to a public purpose, and that under the general language of the Tennessee
statute of eminent domain it could not be taken for another public purpose. The court
said that in process of time the sepulchres of the dead "are made the seats of cities,
and are traversed by streets, and daily trodden by the feet of man. This is inevitable in
the course of ages. But while these places are yet within the memory and under the
active care of the living, while they are still devoted to pious uses, they are sacred, and
we cannot suppose that the legislature intended that they should be violated, in the
absence of special provisions upon the subject authorizing such invasion, and indicating
a method for the disinterment, removal, and reinterment of the bodies buried, and
directing how the expense thereof shall be borne." Two members of the court, delivering
a separate concurring opinion, concluded with this significant and eloquent sentence:
"The wheels of commerce must stop at the grave."

For the foregoing reasons, and for others which are stated in the principal decision, I am
of the opinion that the judgment of the lower court should be affirmed.

STREET, J., dissenting:

It may be admitted that, upon the evidence before us, the projected condemnation of
the Chinese Cemetery is unnecessary and perhaps ill-considered. Nevertheless I
concur with Justice Moir in the view that the authorities of the city of Manila are the
proper judges of the propriety of the condemnation and that this Court should have
nothing to do with the question of the necessity of the taking.

MOIR, J., dissenting:

I dissent from the majority opinion in this case, which has not yet been written, and
because of the importance of the question involved, present my dissent for the record.

This is an action by the city of Manila for the expropriation of land for an extension of
Rizal Avenue north. The petition for condemnation was opposed by the "Comunidad de
Chinos de Manila" and Ildefonso Tambunting and various other who obtained
permission of the trial court to intervene in the case.

All of the defendants allege in their opposition that the proposed extension of Rizal
Avenue cuts through a part of the Chinese Cemetery, North of Manila, and necessitates
the destruction of many monuments and the removal of many graves.

The Court of First Instance of Manila, Honorable S. del Rosario, judge after hearing the
parties, decided that there was no need for constructing the street as and where
proposed by the city, and dismissed the petition.

The plaintiff appealed and sets up the following errors:

1. The court erred in deciding that the determination of the necessity and
convenience of the expropriation of the lands of the defendants lies with the court
and not with the Municipal Board of the city of Manila.

2. The court erred in permitting the presentation of proofs over the objection and
exception of the plaintiff tending to demonstrate the lack of necessity of the
projected street and the need of the lands in question.

3. The court erred in declaring that the plaintiff had no right to expropriate the
lands in question.

4. The court erred in dismissing the complaint.

The right of the plaintiff to expropriate property for public use cannot be denied. The
"right of eminent domain is inherent in all sovereignties and therefore would exist
without any constitutional recognition . . . . The right of eminent domain antedates
constitutions . . . . The right can only be denied or restricted by fundamental law and is
right inherent in society." (15 Cyc., pp. 557-8.) .

This general right was recognized in the Philippine Code of Civil Procedure effective
October 1st, 1901, which prescribed the manner of exercising the right. (Sections 241 et
seq.)
It was further recognized in the Organic Act of July 1st, 1902, which provides in section
74 "that the Government of the Philippine Islands may grant franchises . . . including the
authority to exercise the right of eminent domain for the construction and operation of
works of public utility and service, and may authorize said works to be constructed and
maintained over and across the public property of the United States including . . .
reservations." This provisions is repeated in the Jones Law of August, 1916.

The legislature of the Islands conferred the right on the city of Manila. (Section 2429,
Administrative Code of 1917; section 2402, Administrative Code of 1916.)

Clearly having the right of expropriation, the city of Manila selected the line of its street
and asked the court by proper order to place the plaintiff in possession of the land
described in the complaint, and to appoint Commissioners to inspect the property,
appraise the value, and assess the damages. Instead of doing so, the court entered
upon the question of the right of the city to take the property and the necessity for the
taking.

The court says:

The controversy relates to whether or not the Chinese Cemetery, where a great
majority of this race is buried and other persons belonging to other nationalities
have been formerly inhumed, is private or public; whether or not said cemetery,
in case it is public, would be susceptible to expropriation for the purpose of public
improvements proposed by the city of Manila; whether or not the latter is justified
of the necessity and expediency of similar expropriation before its right to the
same would be upheld by the courts of justice; and whether or not the
appreciation of said necessity pertains to the legislative or the judicial department
before which the expropriation proceedings have been brought.

Relative to the first point, it is not necessary for the court to pass upon its
consideration, in view of the conclusion it has arrived at the appreciation of the
other points connected with each other.

From the testimony of two reputable engineers produced by some of the

defendants, it appears that the land chosen by the plaintiff for the extension of
Rizal Avenue to the municipality of Caloocan is not the best or the less
expensive, although upon it there may be constructed a straight road, without
curves or winding; but that in order to construct said road upon said land, the city
of Manila would have to remove and transfer to other places about four hundred
graves and monuments, make some grubbings, undergo some leveling and build
some bridges — the works thereon, together with the construction of the road
and the value of the lands expropriated, would mean an expenditure which will
not be less than P180,000.

Beside that considerable amount, the road would have a declivity of 3 per cent
which, in order to cover a distance of one kilometer, would require an energy
 equivalent to that which would be expanded in covering a distance of two and
one-half kilometers upon a level road.

On the other hand, if the road would be constructed with the deviation proposed
by Ildefonso Tambunting, one of the defendants, who even offered to donate
gratuitously to the city of Manila part of the land upon which said road will have to
be constructed, the plaintiff entity would be able to save more than hundreds of
thousand of pesos, which can be invested in other improvements of greater
pressure and necessity for the benefit of the taxpayers; and it will not have to
employ more time and incur greater expenditures in the removal and transfer of
the remains buried in the land of the Chinese Community and of Sr. Tambunting,
although with the insignificant disadvantage that the road would be little longer by
a still more insignificant extension of 426 meters and 55 centimeters less than
one-half kilometer, according to the plan included in the records; but it would
offer a better panorama to those who would use it, and who would not have to
traverse in their necessary or pleasure-making trips or walks any cemetery
which, on account of its nature, always deserves the respect of the travellers. It
should be observed that the proposed straight road over the cemetery, which the
city of Manila is proposing to expropriate, does not lead to any commercial,
industrial, or agricultural center, and if with said road it is endeavored to benefit
some community or created interest, the same object may be obtained by the
proposed deviation of the road by the defendants. The road traced by the
plaintiffs has the disadvantage that the lands on both sides thereof would not
serve for residential purposes, for the reason that no one has the pleasure to
construct buildings upon cemeteries, unless it be in very overcrowded cities, so
exhausted of land that every inch thereof represents a dwelling house.

And it is against the ruling, that it lies with the court to determine the necessity of the
proposed street and not with the municipal board, that the appellant directs its first
assignment of error.

It is a right of the city government to determine whether or not it will construct streets
and where, and the court's sole duty was to see that the value of the property was paid
the owners after proper legal proceedings ascertaining the value.

The law gives the city the right to take private property for public use. It is assumed it is
unnecessary to argue that a public road is a public use.

But it is argued that plaintiff must show that it is necessary to take this land for a public
improvement. The law does not so read, and it is believed that the great weight of
authority, including the United States Supreme Court, is against the contention.

The question of necessity is distinct from the question of public use, and former
question is exclusively for the legislature, except that if the constitution or statute
authorizes the taking of property only in cases of necessity, then the
 necessity becomes a judicial question. (McQuillen Municipal Corporations, Vol.
IV, pp. 3090-3091.)

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

necessity and expediency of exercising the right of eminent domain are
questions essentially political and not judicial in their character. The
determination of those questions belongs to the sovereign power; the legislative
determination is final and conclusive, and the courts have no power to review it. It
rests with the legislature not only to determine when the power of eminent
domain may be exercised, but also the character, quality, method, and extent of
such exercise. And this power is unqualified, other than by the necessity of
providing that compensation shall be made. Nevertheless, under the express
provisions of the constitution of some states the question of necessity is made a
judicial one, to be determined by the courts and not by the legislature.

While the legislature may itself exercise the right of determining the necessity for
the exercise of the power of eminent domain, it may, unless prohibited by the
constitution, delegate this power to public officers or to private corporations
established to carry on enterprises in which the public are interested, and their
determination that a necessity for the exercise of the power exists is conclusive.
There is no restraint upon the power except that requiring compensation to be
made. And when the power has been so delegated it is a subject of legislative
discretion to determine what prudential regulations shall be established to secure
a discreet and judicious exercise of the authority. It has been held that in the
absence of any statutory provision submitting the matter to a court or jury the
decision of the question of necessity lies with the body of individuals to whom the
state has delegated the authority to take, and the legislature may be express
provision confer this power on a corporation to whom the power of eminent
domain is delegated unless prohibited by the constitution. It is of course
competent for the legislature to declare that the question shall be a judicial one,
in which case the court and not the corporation determines the question of
necessity. (15 Cyc., pp. 629-632.)

To the same effect is Lewis on Eminen Domain (3d Edition, section 597).

I quote from the notes to Vol. 5, Encyclopedia of United States Supreme Court Reports,
p. 762, as follows:

Neither can it be said that there is any fundamental right secured by the
constitution of the United States to have the questions of compensation and
necessity both passed upon by one and the same jury. In many states the
question of necessity is never submitted to the jury which passes upon the
question of compensation. It is either settled affirmatively by the legislature, or
left to the judgment of the corporation invested with the right to take property by
condemnation. The question of necessity is not one of a judicial character, but
rather one for determination by the lawmaking branch of the government. (Boom
 Co. vs.Patterson, 98 U.S., 403, 406 [25 L. ed., 206]; United States vs. Jones, 109
U.S., 513 [27 L. ed., 1015]; Backus vs. Fort Street Union Depot Co., 169 U.S.,
557, 568 [42 L. ed., 853].)

Speaking generally, it is for the state primarily and exclusively, to declare for
what local public purposes private property, within its limits may be taken upon
compensation to the owner, as well as to prescribe a mode in which it may be
condemned and taken. (Madisonville Tract. Co. vs. St. Bernard Min. Co., 196
U.S., 239, 252 [49 L. ed., 462].)

Courts have no power to control the legislative authority in the exercise of their
right to determine when it is necessary or expedient to condemn a specific piece
of property for public purposes. (Adirondack R. Co. vs.New York States, 176
U.S., 335 [44 L. ed., 492].)

10 R. C. L. (p. 183), states the law as follows:

158. Necessity for taking ordinarily not judicial question. — The legislature, in
providing for the exercise the power of eminent domain, may directly determine
the necessity for appropriating private property for a particular improvement or
public use, and it may select the exact location of the improvement. In such a
case, it is well settled that the utility of the proposed improvement, the extent of
the public necessity for its construction, the expediency of constructing it, the
suitableness of the location selected and the consequent necessity of taking the
land selected for its site, are all questions exclusively for the legislature to
determine, and the courts have no power to interfere, or to substitute their own
views for these of the representatives of the people. Similarly, when the
legislature has delegated the power of eminent domain to municipal or public
service corporation or other tribunals or bodies, and has given them discretion as
to when the power is to be called into exercise and to what extent, the court will
not inquire into the necessity or propriety of the taking.

The United States Supreme Court recently said:

The uses to which this land are to be put are undeniably public uses. When that
is the case the propriety or expediency of the appropriation cannot be called in
question by any other authority. (Cinnati vs. S. & N. R. R. Co., 223 U.S., 390,
quoting U.S. vs. Jones, 109, U.S., 519.)

And in Sears vs. City of Akron (246 U.S., 242), decided March 4th, 1918, it said:

Plaintiff contends that the ordinance is void because the general statute which
authorized the appropriation violates both Article 1, paragraph 10, of the Federal
Constitution, and the Fourteenth Amendment, in that it authorizes the
municipality to determine the necessity for the taking of private property without
the owners having an opportunity to be hear as to such necessity; that in fact no
 necessity existed for any taking which would interfere with the company's project;
since the city might have taken water from the Little Cuyahoga or the
Tuscarawas rivers; and furthermore, that it has taken ten times as much water as
it can legitimately use. It is well settled that while the question whether the
purpose of a taking is a public one is judicial (Hairston vs.Danville & W. R. Co.,
208 U.S. 598 [52 L. ed., 637; 28 Sup. Ct. Rep., 331; 13 Ann. Cas., 1008]),
the necessityand the proper extent of a taking is a legislative
question. (Shoemaker vs. United States, 147 U.S., 282, 298 [57 L. ed., 170, 184;
13 Supt. Ct. Rep., 361]; United States vs. Gettysburg Electric R. Co., 160 U.S.
668, 685 [40 L. ed., 576, 582; 16 Sup. Ct. Rep., 427]; United
States vs. Chandler-Dunbar Water Power Co., 229 U.S., 53, 65 [57 L. ed., 1063,
1076; 33 Sup. Ct. Rep., 667].)

I think the case should be decided in accordance with foregoing citations, but one other
point has been argued so extensively that it ought to be considered.

It is contended for the defense that this Chinese Cemetery is a public cemetery and that
it cannot therefore be taken for public use. In its answer the "Comunidad de Chinos de
Manila" says it is "a corporation organized and existing under and by virtue of the laws
of the Philippine Islands," and that it owns the land which plaintiff seeks to acquire. The
facts that it is private corporation owning land would seem of necessity to make the land
it owns private land. The fact that it belongs to the Chinese community deprives it of any
public character.

But admitting that it is a public cemetery, although limited in its use to the Chinese
Community of the city of Manila, can it not be taken for public use? Must we let the
reverence we feel for the dead and the sanctity of their final resting-place obstruct the
progress of the living? It will be instructive to inquire what other jurisdictions have held
on that point.

On the Application of Board of Street Openings of New York City to acquire St. Johns
Cemetery (133 N.Y., 329) the court of appeal said:

. . . The board instituted this proceeding under the act to acquire for park
purposes the title to land below One Hundred and Fifty-fifth street known as St.
John's cemetery which belonged to a religious corporation in the city of New
York, commonly called Trinity Church. It was established as a cemetery as early
as 1801, and used for that purpose until 1839, during which time about ten
thousand human bodies had been buried therein. In 1839 an ordinance was
passed by the city of New York forbidding interments south of Eighty-sixth street,
and since that time no interments have been made in the cemetery, but Trinity
Church has preserved and kept it in order and prevented any disturbance
thereof.

It is contended on behalf of Trinity Church that under the general authority given
by statute of 1887, this land which had been devoted to cemetery purposes could
 not be taken for a park. The authority conferred upon the board by the act is
broad and general. It is authorized to take for park purposes any land south of
One Hundred and Fifty-fifth street. . . . .

The fact that lands have previously been devoted to cemetery purposes does not
place them beyond the reach of the power of eminent domain. That is an
absolute transcendent power belonging to the sovereign which can be exercised
for the public welfare whenever the sovereign authority shall determine that a
necessity for its exercise exists. By its existence the homes and the dwellings of
the living, and the resting-places of the dead may be alike condemned.

It seems always to have been recognized in the laws of this state, that under the
general laws streets and highways could be laid out through cemeteries, in the
absence of special limitation or prohibition. . . .

In Re Opening of Twenty-second Street (102 Penn. State Reports, 108) the Supreme
Court of the State said:

This was an action for the opening of a street through a cemetery in the City of
Philadelphia. It was contended for the United American Mechanics and United
Daughters of America Cemetery Association that by an act of the legislature of
the State approved March 20th, 1849, they were forever exempt from the taking
of any their property for streets, roads or alleys and this Act was formally
accepted by the Cemetery Company on April 9th, 1849, and there was,
therefore, a contract between the Cemetery Company and the State of
Pennsylvania, which would be violated by the taking of any part of their property
for street purposes. It was further contended that there were 11,000 persons
buried in the cemetery.

The court held that property and contracts of all kinds must yield to the demand
of the sovereign and that under the power of eminent domain all properties could
be taken, and that if there was a contract between the State of Pennsylvania and
the Cemetery Association, the contract itself could be taken for public use, and
ordered the opening of the street through the cemetery.

In Vol. 5, Encyclopedia of United States Supreme Court Reports (p. 759), it is said:

Although it has been held, that where a state has delegated the power of eminent
domain to a person or corporation and where by its exercise lands have been
subject to a public use, they cannot be applied to another public use without
specific authority expressed or implied to that effect, yet, the general rule seems
to be that the fact that property is already devoted to a public use, does not
exempt it from being appropriated under the right of eminent domain but it may
be so taken for a use which is clearly superior or paramount to the one to which it
is already devoted. (Citing many United States Supreme Court decisions.)
A few cases have been cited where the courts refused to allow the opening of streets
through cemeteries, but in my opinion they are not as well considered as the cases and
authorities relied upon herein.

The holding of this court in this case reverses well settled principles of law of long
standing and almost universal acceptance.

The other assignments of error need not be considered as they are involved in the
foregoing.

The decision should be reversed and the record returned to the Court of First Instance
with instructions to proceed with the case in accordance with this decision.
 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

ANUNCIACION VDA. DE G.R. No. 168770

OUANO, MARIO P. OUANO,
LETICIA OUANO ARNAIZ, and
CIELO OUANO MARTINEZ, Present:
Petitioners,
CORONA, C.J., Chairperson,
- versus - VELASCO, JR.,
LEONARDO-DE CASTRO,
THE REPUBLIC OF DEL CASTILLO,
THE PHILIPPINES, THE PEREZ, JJ.
MACTAN-CEBU
INTERNATIONAL AIRPORT
AUTHORITY, and THE
REGISTER OF DEEDS FOR THE
CITY OF CEBU,
Respondents.
x-------------------------------------------x G.R. No. 168812

MACTAN-
CEBUINTERNATIONAL
AIRPORT AUTHORITY
(MCIAA),
Petitioner,

- versus -

RICARDO L. INOCIAN, in his

personal capacity and as Attorney-
in-Fact of OLYMPIA E. ESTEVES,
EMILIA E. BACALLA,
RESTITUTA E. MONTANA, and
RAUL L. INOCIAN; and ALETHA
SUICO MAGAT, in her personal
capacity and as Attorney-in-Fact of
PHILIP M. SUICO, DORIS S.
DELA CRUZ, JAMES M. SUICO, Promulgated:
EDWARD M. SUICO, ROSELYN February 9, 2011
SUICO-LAWSIN, REX M. SUICO,
KHARLA SUICO-GUTIERREZ,
ALBERT CHIONGBIAN, and
JOHNNY CHAN,
Respondents.
x-----------------------------------------------------------------------------------------x

DECISION

VELASCO, JR., J.:

At the center of these two (2) Petitions for Review on Certiorari under Rule 45 is
the issue of the right of the former owners of lots acquired for the expansion of
the Lahug Airport in Cebu City to repurchase or secure reconveyance of their
respective properties.

In the first petition, docketed as G.R. No. 168770, petitioners Anunciacion

vda. de Ouano, Mario Ouano, Leticia Ouano Arnaiz and Cielo Ouano Martinez
(the Ouanos) seek to nullify the Decision[1] dated September 3, 2004 of the Court
of Appeals (CA) in CA-G.R. CV No. 78027, affirming the Order dated December
9, 2002 of the Regional Trial Court (RTC), Branch 57 in Cebu City, in Civil Case
No. CEB-20743, a suit to compel the Republic of the Philippines and/or the
Mactan-Cebu International Airport Authority (MCIAA) to reconvey to the Ouanos
a parcel of land.

The second petition, docketed as G.R. No. 168812, has the MCIAA seeking
principally to annul and set aside the Decision[2] and Resolution[3] dated January
14, 2005 and June 29, 2005, respectively, of the CA in CA-G.R. CV No. 64356,
sustaining the RTC, Branch 13 in Cebu City in its Decision of October 7, 1988 in
Civil Case No. CEB-18370.
Per its October 19, 2005 Resolution, the Court ordered the consolidation of both
cases.

Except for the names of the parties and the specific lot designation involved, the
relevant factual antecedents which gave rise to these consolidated petitions are, for
the most part, as set forth in the Courts Decision[4] of October 15, 2003, as
reiterated in a Resolution[5] dated August 9, 2005, in G.R. No.
156273 entitled Heirs of Timoteo Moreno and Maria Rotea v. Mactan-Cebu
International Airport Authority (Heirs of Moreno), and in other earlier related
cases.[6]

In 1949, the National Airport Corporation (NAC), MCIAAs predecessor

agency, pursued a program to expand the Lahug Airport in Cebu City. Through its
team of negotiators, NAC met and negotiated with the owners of the properties
situated around the airport, which included Lot Nos. 744-A, 745-A, 746, 747, 761-
A, 762-A, 763-A, 942, and 947 of the Banilad Estate. As the landowners would
later claim, the government negotiating team, as a sweetener, assured them that
they could repurchase their respective lands should the Lahug Airport expansion
project do not push through or once the Lahug Airport closes or its operations
transferred to Mactan-Cebu Airport. Some of the landowners accepted the
assurance and executed deeds of sale with a right of repurchase. Others, however,
including the owners of the aforementioned lots, refused to sell because the
purchase price offered was viewed as way below market, forcing the hand of the
Republic, represented by the then Civil Aeronautics Administration (CAA), as
successor agency of the NAC, to file a complaint for the expropriation of Lot Nos.
744-A, 745-A, 746, 747, 761-A, 762-A, 763-A, 942, and 947, among others,
docketed as Civil Case No. R-1881 entitled Republic v. Damian Ouano, et al.

On December 29, 1961, the then Court of First Instance (CFI)

of Cebu rendered judgment for the Republic, disposing, in part, as follows:
IN VIEW OF THE FOREGOING, judgment is hereby rendered:

1. Declaring the expropriation of Lots Nos. 75, 76, 76, 89, 90, 91, 92,
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, 762-A, 763-A, 951, 942,
720-A, x x x and 947, included in the Lahug Airport, Cebu City, justified
in and in lawful exercise of the right of eminent domain.

xxxx
3. After the payment of the foregoing financial obligation to the
landowners, directing the latter to deliver to the plaintiff the
corresponding Transfer Certificates of Title to their respective lots; and
upon the presentation of the said titles to the Register of Deeds, ordering
the latter to cancel the same and to issue, in lieu thereof, new Transfer
Certificates of Title in the name of the plaintiff.[7]

In view of the adverted buy-back assurance made by the government, the

owners of the lots no longer appealed the decision of the trial court.[8] Following
the finality of the judgment of condemnation, certificates of title for the covered
parcels of land were issued in the name of the Republic which, pursuant to
Republic Act No. 6958,[9] were subsequently transferred to MCIAA.

At the end of 1991, or soon after the transfer of the aforesaid lots to
MCIAA, Lahug Airport completely ceased operations, Mactan Airport having
opened to accommodate incoming and outgoing commercial flights. On the
ground, the expropriated lots were never utilized for the purpose they were taken
as no expansion of Lahug Airport was undertaken. This development prompted the
former lot owners to formally demand from the government that they be allowed to
exercise their promised right to repurchase. The demands went unheeded. Civil
suits followed.

G.R. No. 168812 (MCIAA Petition)

On February 8, 1996, Ricardo L. Inocian and four others (all children of Isabel
Limbaga who originally owned six [6] of the lots expropriated); and Aletha Suico
Magat and seven others, successors-in-interest of Santiago Suico, the original
owner of two (2) of the condemned lots (collectively, the Inocians), filed before the
RTC in Cebu City a complaint for reconveyance of real properties and
damages against MCIAA. The complaint, docketed as Civil Case No. CEB-18370,
was eventually raffled to Branch 13 of the court.

On September 29, 1997, one Albert Chiongbian (Chiongbian), alleging to be the

owner of Lot Nos. 761-A and 762-A but which the Inocians were now claiming,
moved and was later allowed to intervene.

During the pre-trial, MCIAA admitted the following facts:

1. That the properties, which are the subject matter of Civil Case
No. CEB-18370, are also the properties involved in Civil Case R-1881;

2. That the purpose of the expropriation was for the expansion of

the old Lahug Airport; that the Lahug Airport was not expanded;

3. That the old Lahug Airport was closed sometime in June 1992;
4. That the price paid to the lot owners in the expropriation case is
found in the decision of the court; and

5. That some properties were reconveyed by the MCIAA because

the previous owners were able to secure express waivers or riders
wherein the government agreed to return the properties should the
expansion of the Lahug Airport not materialize.

During trial, the Inocians adduced evidence which included the testimony of
Ricardo Inocian (Inocian) and Asterio Uy (Uy). Uy, an employee of the CAA,
testified that he was a member of the team which negotiated for the acquisition of
certain lots in Lahug for the proposed expansion of the Lahug Airport. He recalled
that he acted as the interpreter/spokesman of the team since he could speak the
Cebuano dialect. He stated that the other members of the team of negotiators were
Atty. Pedro Ocampo, Atty. Lansang, and Atty. Saligumba. He recounted that, in
the course of the negotiation, their team assured the landowners that their
landholdings would be reconveyed to them in the event the Lahug Airport would
be abandoned or if its operation were transferred to the Mactan Airport. Some
landowners opted to sell, while others were of a different bent owing to the
inadequacy of the offered price.

Inocian testified that he and his mother, Isabel Lambaga, attended a meeting
called by the NAC team of negotiators sometime in 1947 or 1949 where he and the
other landowners were given the assurance that they could repurchase their lands at
the same price in the event the Lahug Airport ceases to operate. He further testified
that they rejected the NACs offer. However, he said that they no longer appealed
the decree of expropriation due to the repurchase assurance adverted to.

The MCIAA presented Michael Bacarizas (Bacarizas), who started working

for MCIAA as legal assistant in 1996. He testified that, in the course of doing
research work on the lots subject of Civil Case No. CEB-18370, he discovered that
the same lots were covered by the decision in Civil Case No. R-1881. He also
found out that the said decision did not expressly contain any condition on the
matter of repurchase.

Ruling of the RTC

On October 7, 1998, the RTC rendered a Decision in Civil Case No. CEB-
18370, the dispositive portion of which reads as follows:
 WHEREFORE, in view of the foregoing, judgment is hereby
rendered directing defendant Mactan Cebu International Airport
Authority (MCIAA) to reconvey (free from liens and encumbrances) to
plaintiffs Ricardo Inocian, Olimpia E. Esteves, Emilia E. Bacalla,
Restituta E. Montana and Raul Inocian Lots No. 744-A, 745-A, 746,
762-A, 747, 761-A and to plaintiffs Aletha Suico Magat, Philip M.
Suico, Doris S. dela Cruz, James M. Suico, Edward M. Suico, Roselyn
S. Lawsin, Rex M. Suico and Kharla Suico-Gutierrez Lots No. 942 and
947, after plaintiffs shall have paid MCIAA the sums indicated in the
decision in Civil Case No. R-1881. Defendant MCIAA is likewise
directed to pay the aforementioned plaintiffs the sum or P50,000.00 as
and for attorneys fees and P10,000.00 for litigation expenses.

Albert Chiongbians intervention should be, as it is

hereby DENIED for utter lack of factual basis.
With costs against defendant MCIAA.[10]

Therefrom, MCIAA went to the CA on appeal, docketed as CA-G.R. CV

No. 64356.
Ruling of the CA

On January 14, 2005, the CA rendered judgment for the Inocians, declaring
them entitled to the reconveyance of the questioned lots as the successors-in-
interest of the late Isabel Limbaga and Santiago Suico, as the case may be, who
were the former registered owners of the said lots. The decretal portion of the CAs
Decision reads:

WHEREFORE, in view of the foregoing premises, judgment is hereby

rendered by us DISMISSING the appeal filed in this
case and AFFFIRMING the decision rendered by the court a quo on
October 7, 1998 in Civil Case No. CEB-18370.

SO ORDERED.
 The CA, citing and reproducing excerpts from Heirs of Moreno,[11] virtually
held that the decision in Civil Case No. R-1881 was conditional, stating that the
expropriation of [plaintiff-appellees] lots for the proposed expansion of the Lahug
Airport was ordered by the CFI of Cebu under the impression that Lahug Airport
would continue in operation.[12] The condition, as may be deduced from the CFIs
decision, was that should MCIAA, or its precursor agency, discontinue altogether
with the operation of Lahug Airport, then the owners of the lots expropriated may,
if so minded, demand of MCIAA to make good its verbal assurance to allow the
repurchase of the properties. To the CA, this assurance, a demandable agreement
of repurchase by itself, has been adequately established.

On September 21, 2005, the MCIAA filed with Us a petition for review of the CAs
Decision, docketed as G.R. No. 168812.

G.R. No. 168770 (Ouano Petition)

Soon after the MCIAA jettisoned the Lahug Airport expansion project, informal
settlers entered and occupied Lot No. 763-A which, before its expropriation,
belonged to the Ouanos. The Ouanos then formally asked to be allowed to exercise
their right to repurchase the aforementioned lot, but the MCIAA ignored the
demand. On August 18, 1997, the Ouanos instituted a complaint before the Cebu
City RTC against the Republic and the MCIAA for reconveyance, docketed as
Civil Case No. CEB-20743.

Answering, the Republic and MCIAA averred that the Ouanos no longer
have enforceable rights whatsoever over the condemned Lot No. 763-A, the
decision in Civil Case No. R-1881 not having found any reversionary condition.

Ruling of the RTC

 By a Decision dated November 28, 2000, the RTC, Branch 57
in Cebu City ruled in favor of the Ouanos, disposing as follows:

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

judgment in favor of the plaintiffs, Anunciacion Vda. De Ouano, Mario
P. Ouano, Leticia Ouano Arnaiz and Cielo Ouano Martinez and against
the Republic of the Philippines and Mactan Cebu International Airport
Authority (MCIAA) to restore to plaintiffs, the possession and
ownership of their land, Lot No. 763-A upon payment of the
expropriation price to defendants; and

2. Ordering the Register of Deeds to effect the transfer of the Certificate

of Title from defendant Republic of the Philippines on Lot 763-A,
canceling TCT No. 52004 in the name of defendant Republic of the
Philippines and to issue a new title on the same lot in the names of
Anunciacion Vda. De Ouano, Mario P. Ouano, Leticia Ouano Arnaiz
and Cielo Ouano Martinez.

No pronouncement as to costs.[13]

Acting on the motion of the Republic and MCIAA for reconsideration, however,
the RTC, Branch 57 in Cebu City, presided this time by Judge Enriqueta L.
Belarmino, issued, on December 9, 2002, an Order[14] that reversed its earlier
decision of November 28, 2000 and dismissed the Ouanos complaint.

Ruling of the CA

In time, the Ouanos interposed an appeal to the CA, docketed as CA-G.R. CV No.
78027. Eventually, the appellate court rendered a Decision[15] dated September 3,
2004, denying the appeal, thus:

WHEREFORE, premises considered, the Order dated December 9,

2002, of the Regional Trial Court, 7th Judicial Region, Branch
57, Cebu City, in Civil Case No. CEB-20743, is hereby AFFIRMED. No
pronouncement as to costs.
 SO ORDERED.

Explaining its case disposition, the CA stated that the decision in Civil Case No. R-
1881 did not state any condition that Lot No. 763-A of the Ouanosand all covered
lots for that matterwould be returned to them or that they could repurchase the
same property if it were to be used for purposes other than for
the Lahug Airport. The appellate court also went on to declare the inapplicability
of the Courts pronouncement in MCIAA v. Court of Appeals, RTC, Branch 9, Cebu
City, Melba Limbago, et al.,[16] to support the Ouanos cause, since the affected
landowners in that case, unlike the Ouanos, parted with their property not through
expropriation but via a sale and purchase transaction.

The Ouanos filed a motion for reconsideration of the CAs Decision, but was
denied per the CAs May 26, 2005 Resolution.[17] Hence, they filed this petition in
G.R. No. 168770.

The Issues

G.R. No. 168812

GROUNDS FOR ALLOWANCE OF THE PETITION

l. THE ASSAILED ISSUANCES ILLEGALLY STRIPPED THE

REPUBLIC OF ITS ABSOLUTE AND UNCONDITIONAL TITLE
TO THE SUBJECT EXPROPRIATED PROPERTIES.

ll. THE IMPUNGED DISPOSITIONS INVALIDLY

OVERTURNED THIS HONORABLE COURTS FINAL RULINGS
IN FERY V. MUNICIPALITY OF CABANATUAN, MCIAA V. COURT
OF APPEALS AND REYES V. NATIONAL HOUSING AUTHORITY.
 lll. THE COURT OF APPEALS GRAVELY ERRED IN APPLYING
THIS HONORABLE COURTS RULING IN MORENO, ALBEIT IT
HAS NOT YET ATTAINED FINALITY.[18]

G.R. No. 168770

Questions of law presented in this Petition

Whether or not the testimonial evidence of the petitioners proving the

promises, assurances and representations by the airport officials and
lawyers are inadmissbale under the Statute of Frauds.

Whether or not under the ruling of this Honorable Court in the heirs of
Moreno Case, and pursuant to the principles enunciated therein,
petitioners herein are entitiled to recover their litigated property.

Reasons for Allowances of this Petition

Respondents did not object during trial to the admissibility of petitioners

testimonial evidence under the Statute of Frauds and have thus waived
such objection and are now barred from raising the same. In any event,
the Statute of Frauds is not applicable herein. Consequently, petitioners
evidence is admissible and should be duly given weight and credence, as
initially held by the trial court in its original Decision.[19]

While their respective actions against MCIAA below ended differently, the Ouanos
and the Inocians proffered arguments presented before this Court run along parallel
lines, both asserting entitlement to recover the litigated property on the strength of
the Courts ruling in Heirs of Moreno. MCIAA has, however, formulated in its
Consolidated Memorandum the key interrelated issues in these consolidated cases,
as follows:
I
WHETHER ABANDONMENT OF THE PUBLIC USE FOR WHICH
THE SUBJECT PROPERTIES WERE EXPROPRIATED ENTITLES
PETITIONERS OUANOS, ET AL. AND RESPONDENTS INOCIAN,
ET AL. TO REACQUIRE THEM.
 II

WHETHER PETITIONERS OUANOS, ET AL. AND RESPONDENTS

INOCIAN, ET AL. ARE ENTITLED TO RECONVEYANCE OF THE
SUBJECT PROPERTIES SIMPLY ON THE BASIS OF AN
ALLEGED VERBAL PROMISE OR ASSURANCE OF SOME NAC
OFFICIALS THAT THE SUBJECT PROPERTIES WILL BE
RETUNRED IF THE AIRPORT PROJECT WOULD BE
ABANDONED.

The Courts Ruling

The Republic and MCIAAs petition in G.R. No. 168812 is bereft of merit, while
the Ouano petition in G.R. No. 168770 is meritorious.

At the outset, three (3) fairly established factual premises ought to be emphasized:

First, the MCIAA and/or its predecessor agency had not actually used the lots
subject of the final decree of expropriation in Civil Case No. R-1881 for the
purpose they were originally taken by the government, i.e., for the expansion and
development of Lahug Airport.

Second, the Lahug Airport had been closed and abandoned. A significant
portion of it had, in fact, been purchased by a private corporation for development
as a commercial complex.[20]

Third, it has been preponderantly established by evidence that the NAC,

through its team of negotiators, had given assurance to the affected landowners that
they would be entitled to repurchase their respective lots in the event they are no
longer used for airport purposes.[21] No less than Asterio Uy, the Court noted
in Heirs of Moreno, one of the members of the CAA Mactan Legal Team, which
interceded for the acquisition of the lots for the Lahug Airports expansion,
affirmed that persistent assurances were given to the landowners to the effect that
as soon as the Lahug Airport is abandoned or transferred to Mactan, the lot owners
would be able to reacquire their properties.[22] In Civil Case No. CEB-20743,
Exhibit G, the transcript of the deposition[23] of Anunciacion vda. de Ouano
covering the assurance made had been formally offered in evidence and duly
considered in the initial decision of the RTC Cebu City.In Civil Case No. CEB-
18370, the trial court, on the basis of testimonial evidence, and later the CA,
recognized the reversionary rights of the suing former lot owners or their
successors in interest[24] and resolved the case accordingly. In point with respect to
the representation and promise of the government to return the lots taken should
the planned airport expansion do not materialize is what the Court said in Heirs of
Moreno, thus:
This is a difficult case calling for a difficult but just solution. To
begin with there exists an undeniable historical narrative that the
predecessors of respondent MCIAA had suggested to the landowners of
the properties covered by the Lahug Airport expansion scheme that they
could repurchase their properties at the termination of the airports
venue. Some acted on this assurance and sold their properties; other
landowners held out and waited for the exercise of eminent domain to
take its course until finally coming to terms with respondents
predecessors that they would not appeal nor block further judgment of
condemnation if the right of repurchase was extended to them. A handful
failed to prove that they acted on such assurance when they parted with
ownership of their land.[25] (Emphasis supplied; citations omitted.)

For perspective, Heirs of Morenolater followed by MCIAA

v. Tudtud (Tudtud)[26] and the consolidated cases at baris cast under the same
factual setting and centered on the expropriation of privately-owned lots for the
public purpose of expanding the Lahug Airport and the alleged promise of
reconveyance given by the negotiating NAC officials to the private lot owners. All
the lots being claimed by the former owners or successors-in-interest of the former
owners in the Heirs of Moreno, Tudtud, and the present cases were similarly
adjudged condemned in favor of the Republic in Civil Case No. R-1881. All the
claimants sought was or is to have the condemned lots reconveyed to them upon
the payment of the condemnation price since the public purpose of
the expropriation was never met. Indeed, the expropriated lots were never used and
were, in fact, abandoned by the expropriating government agencies.
In all then, the issues and supporting arguments presented by both sets of
petitioners in these consolidated cases have already previously been passed upon,
discussed at length, and practically peremptorily resolved in Heirs of Moreno and
the November 2008 Tudtud ruling. The Ouanos, as petitioners in G.R. No. 168770,
and the Inocians, as respondents in G.R. No. 168812, are similarly situated as the
heirs of Moreno in Heirs of Moreno and Benjamin Tudtud in Tudtud. Be that as it
may, there is no reason why the ratio decidendi in Heirs of
Moreno and Tudtud should not be made to apply to petitioners Ouanos and
respondents Inocians such that they shall be entitled to recover their or their
predecessors respective properties under the same manner and arrangement as the
heirs of Moreno and Tudtud. Stare decisis et non quieta movere (to adhere to
precedents, and not to unsettle things which are established).[27]

Just like in Tudtud and earlier in Heirs of Moreno, MCIAA would foist the theory
that the judgment of condemnation in Civil Case No. R-1881 was without
qualification and was unconditional. It would, in fact, draw attention to the fallo of
the expropriation courts decision to prove that there is nothing in the decision
indicating that the government gave assurance or undertook to reconvey the
covered lots in case the Lahug airport expansion project is aborted. Elaborating on
this angle, MCIAA argues that the claim of the Ouanos and the Inocians regarding
the alleged verbal assurance of the NAC negotiating team that they can reacquire
their landholdings is barred by the Statute of Frauds.[28]

Under the rule on the Statute of Frauds, as expressed in Article 1403 of the
Civil Code, a contract for the sale or acquisition of real property shall be
unenforceable unless the same or some note of the contract be in writing and
subscribed by the party charged. Subject to defined exceptions, evidence of the
agreement cannot be received without the writing, or secondary evidence of its
contents.

MCIAAs invocation of the Statute of Frauds is misplaced primarily because

the statute applies only to executory and not to completed, executed, or partially
consummated contracts.[29] Carbonnel v. Poncio, et al., quoting Chief Justice
Moran, explains the rationale behind this rule, thusly:

x x x The reason is simple. In executory contracts there is a wide field

for fraud because unless they may be in writing there is no palpable
evidence of the intention of the contracting parties. The statute has been
precisely been enacted to prevent fraud. x x x However, if a contract has
been totally or partially performed, the exclusion of parol evidence
would promote fraud or bad faith, for it would enable the defendant to
keep the benefits already derived by him from the transaction in
litigation, and at the same time, evade the obligations, responsibilities or
liabilities assumed or contracted by him thereby.[30] (Emphasis in the
original.)

Analyzing the situation of the cases at bar, there can be no serious objection
to the proposition that the agreement package between the government and the
private lot owners was already partially performed by the government through the
acquisition of the lots for the expansion of the Lahug airport. The parties, however,
failed to accomplish the more important condition in the CFI decision decreeing
the expropriation of the lots litigated upon: the expansion of the Lahug Airport.
The projectthe public purpose behind the forced property takingwas, in fact, never
pursued and, as a consequence, the lots expropriated were abandoned. Be that as it
may, the two groups of landowners can, in an action to compel MCIAA to make
good its oral undertaking to allow repurchase, adduce parol evidence to prove the
transaction.
 At any rate, the objection on the admissibility of evidence on the basis of the
Statute of Frauds may be waived if not timely raised. Records tend to support the
conclusion that MCIAA did not, as the Ouanos and the Inocians posit, object to the
introduction of parol evidence to prove its commitment to allow the former
landowners to repurchase their respective properties upon the occurrence of certain
events.

In a bid to deny the lot owners the right to repurchase, MCIAA, citing
cases,[31] points to the dispositive part of the decision in Civil Case R-1881 which,
as couched, granted the Republic absolute title to the parcels of land declared
expropriated. The MCIAA is correct about the unconditional tone of the
dispositive portion of the decision, but that actuality would not carry the day for
the agency. Addressing the matter of the otherwise absolute tenor of the CFIs
disposition in Civil Case No. R-1881, the Court, in Heirs of Moreno, after taking
stock of the ensuing portion of the body of the CFIs decision, said:

As for the public purpose of the expropriation proceeding, it cannot now

be doubted. Although Mactan Airport is being constructed, it does not
take away the actual usefulness and importance of the Lahug Airport: it
is handling the air traffic of both civilian and military. From it aircrafts
fly to Mindanao and Visayas and pass thru it on their flights to the North
and Manila. Then, no evidence was adduced to show how soon is
the Mactan Airport to be placed in operation and whether
the Lahug Airport will be closed immediately thereafter. It is up to the
other departments of the Government to determine said matters. The
Court cannot substitute its judgments for those of the said departments or
agencies. In the absence of such showing, the court will presume that
the Lahug Airport will continue to be in operation.[32] (Emphasis
supplied.)

We went on to state as follows:

While the trial court in Civil Case No. R-1881 could have simply
acknowledged the presence of public purpose for the exercise of eminent
domain regardless of the survival of the Lahug Airport, the trial court in
 its Decision chose not to do so but instead prefixed its finding of public
purpose upon its understanding that Lahug Airport will continue to be in
operation. Verily, these meaningful statements in the body of
the Decision warrant the conclusion that the expropriated properties
would remain to be so until it was confirmed that Lahug Airport was no
longer in operation. This inference further implies two (2) things: (a)
after the Lahug Airport ceased its undertaking as such and the
expropriated lots were not being used for any airport expansion project,
the rights vis--vis the expropriated lots x x x as between the State and
their former owners, petitioners herein, must be equitably adjusted; and
(b) the foregoing unmistakable declarations in the body of
the Decision should merge with and become an intrinsic part of
the fallo thereof which under the premises is clearly inadequate since the
dispositive portion is not in accord with the findings as contained in the
body thereof.[33]

Not to be overlooked of course is what the Court said in its Resolution

disposing of MCIAAs motion to reconsider the original ruling in Heirs
of Moreno. In that resolution, We stated that the fallo of the decision in Civil Case
R-1881 should be viewed and understood in connection with the entire text, which
contemplated a return of the property taken if the airport expansion project were
abandoned. For ease of reference, following is what the Court wrote:

Moreover, we do not subscribe to the [MCIAAs] contention that

since the possibility of the Lahug Airports closure was actually
considered by the trial court, a stipulation on reversion or repurchase was
so material that it should not have been discounted by the court a quo in
its decision in Civil Case No. R-1881, if, in fact, there was one. We find
it proper to cite, once more, this Courts ruling that the fallo of the
decision in Civil Case No. R-1881 must be read in reference to the other
portions of the decision in which it forms a part. A reading of the Courts
judgment must not be confined to the dispositive portion alone; rather it
should be meaningfully construed in unanimity with the ratio
decidendi thereof to grasp the true intent and meaning of a decision.[34]
The Court has, to be sure, taken stock of Fery v. Municipality of Cabanatuan,[35] a
case MCIAA cites at every possible turn, where the Court made these
observations:

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. x x x If, upon the contrary, however the decree of
expropriation gives to the entity a fee simple title, then, of course, the
land becomes the absolute property of the expropriator x x x and in that
case the non-user does not have the effect of defeating the title acquired
by the expropriation proceedings x x x.

Fery notwithstanding, MCIAA cannot really rightfully say that it has absolute title
to the lots decreed expropriated in Civil Case No. R-1881. The correct lesson
of Fery is captured by what the Court said in that case, thus: the government
acquires only such rights in expropriated parcels of land as may be allowed by the
character of its title over the properties. In light of our disposition in Heirs of
Moreno and Tudtud, the statement immediately adverted to means that in the event
the particular public use for which a parcel of land is expropriated is abandoned,
the owner shall not be entitled to recover or repurchase it as a matter of right,
unless such recovery or repurchase is expressed in or irresistibly deducible from
the condemnation judgment. But as has been determined below, the decision in
Civil Case No. R-1881 enjoined MCIAA, as a condition of approving
expropriation, to allow recovery or repurchase upon abandonment of the Lahug
airport project. To borrow from our underlying decision in Heirs of Moreno, [n]o
doubt, the return or repurchase of the condemned properties of petitioners could
readily be justified as the manifest legal effect of consequence of the trial courts
underlying presumption that Lahug Airport will continue to be in operation when it
granted the complaint for eminent domain and the airport discontinued its
activities.[36]
Providing added support to the Ouanos and the Inocians right to repurchase is what
in Heirs of Moreno was referred to as constructive trust, one that is akin to the
implied trust expressed in Art. 1454 of the Civil Code,[37] the purpose of which is
to prevent unjust enrichment.[38] In the case at bench, the Ouanos and the Inocians
parted with their respective lots in favor of the MCIAA, the latter obliging itself to
use the realties for the expansion of Lahug Airport; failing to keep its end of the
bargain, MCIAA can be compelled by the former landowners to reconvey the
parcels of land to them, otherwise, they would be denied the use of their properties
upon a state of affairs that was not conceived nor contemplated when the
expropriation was authorized. In effect, the government merely held the properties
condemned in trust until the proposed public use or purpose for which the lots
were condemned was actually consummated by the government. Since the
government failed to perform the obligation that is the basis of the transfer of the
property, then the lot owners Ouanos and Inocians can demand the reconveyance
of their old properties after the payment of the condemnation price.

Constructive trusts are fictions of equity that courts use as devices to remedy any
situation in which the holder of the legal title, MCIAA in this case, may not, in
good conscience, retain the beneficial interest. We add, however, as in Heirs of
Moreno, that the party seeking the aid of equitythe landowners in this instance, in
establishing the trustmust himself do equity in a manner as the court may deem just
and reasonable.

The Court, in the recent MCIAA v. Lozada, Sr., revisited and abandoned
the Fery ruling that the former owner is not entitled to reversion of the property
even if the public purpose were not pursued and were abandoned, thus:

On this note, we take this opportunity to revisit our ruling in Fery,

which involved an expropriation suit commenced upon parcels of land to
be used as a site for a public market. Instead of putting up a public
market, respondent Cabanatuan constructed residential houses for lease
on the area. Claiming that the municipality lost its right to the property
taken since it did not pursue its public purpose, petitioner Juan Fery, the
former owner of the lots expropriated, sought to recover his properties.
However, as he had admitted that, in 1915, respondent Cabanatuan
acquired a fee simple title to the lands in question, judgment was
rendered in favor of the municipality, following American jurisprudence,
particularly City of Fort Wayne v. Lake Shore & M.S. RY.
Co.,McConihay v. Theodore Wright, and Reichling v. Covington Lumber
Co., all uniformly holding that the transfer to a third party of the
expropriated real property, which necessarily resulted in the
abandonment of the particular public purpose for which the property was
taken, is not a ground for the recovery of the same by its previous owner,
the title of the expropriating agency being one of fee simple.

Obviously, Fery was not decided pursuant to our now sacredly

held constitutional right that private property shall not be taken for
public use without just compensation. It is well settled that the taking of
private property by the Governments power of eminent domain is subject
to two mandatory requirements: (1) that it is for a particular public
purpose; and (2) that just compensation be paid to the property owner.
These requirements partake of the nature of implied conditions that
should be complied with to enable the condemnor to keep the property
expropriated.

More particularly, with respect to the element of public use,

the expropriator should commit to use the property pursuant to the
purpose stated in the petition for expropriation filed, failing which,
it should file another petition for the new purpose. If not, it is then
incumbent upon the expropriator to return the said property to its
private owner, if the latter desires to reacquire the same. Otherwise,
the judgment of expropriation suffers an intrinsic flaw, as it would lack
one indispensable element for the proper exercise of the power of
eminent domain, namely, the particular public purpose for which the
property will be devoted. Accordingly, the private property owner would
be denied due process of law, and the judgment would violate the
property owners right to justice, fairness, and equity.

In light of these premises, we now expressly hold that the taking

of private property, consequent to the Governments exercise of its power
of eminent domain, is always subject to the condition that the property
be devoted to the specific public purpose for which it was taken.
 Corollarily, if this particular purpose or intent is not initiated or not at all
pursued, and is peremptorily abandoned, then the former owners, if they
so desire, may seek the reversion of the property, subject to the return of
the amount of just compensation received. In such a case, the exercise of
the power of eminent domain has become improper for lack of the
required factual justification.[39] (Emphasis supplied.)

Clinging to Fery, specifically the fee simple concept underpinning it, is no longer
compelling, considering the ensuing inequity such application entails. Too, the
Court resolved Fery not under the cover of any of the Philippine Constitutions,
each decreeing that private property shall not be taken for public use without just
compensation. The twin elements of just compensation and public purpose are, by
themselves, direct limitations to the exercise of eminent domain, arguing, in a way,
against the notion of fee simple title. The fee does not vest until payment of just
compensation.[40]
In esse, expropriation is forced private property taking, the landowner being really
without a ghost of a chance to defeat the case of the expropriating agency. In other
words, in expropriation, the private owner is deprived of property against his
will. Withal, the mandatory requirement of due process ought to be strictly
followed, such that the state must show, at the minimum, a genuine need, an
exacting public purpose to take private property, the purpose to be specifically
alleged or least reasonably deducible from the complaint.

Public use, as an eminent domain concept, has now acquired an expansive meaning
to include any use that is of usefulness, utility, or advantage, or what is productive
of general benefit [of the public].[41] If the genuine public necessitythe very reason
or condition as it wereallowing, at the first instance, the expropriation of a private
land ceases or disappears, then there is no more cogent point for the governments
retention of the expropriated land. The same legal situation should hold if the
government devotes the property to another public use very much different from
the original or deviates from the declared purpose to benefit another private person.
It has been said that the direct use by the state of its power to oblige landowners to
renounce their productive possession to another citizen, who will use it
predominantly for that citizens own private gain, is offensive to our laws.[42]

A condemnor should commit to use the property pursuant to the purpose

stated in the petition for expropriation, failing which it should file another petition
for the new purpose. If not, then it behooves the condemnor to return the said
property to its private owner, if the latter so desires. The government cannot
plausibly keep the property it expropriated in any manner it pleases and, in the
process, dishonor the judgment of expropriation. This is not in keeping with the
idea of fair play,

The notion, therefore, that the government, via expropriation proceedings,

acquires unrestricted ownership over or a fee simple title to the covered land, is no
longer tenable. We suggested as much in Heirs of Moreno and in Tudtud and more
recently in Lozada, Sr. Expropriated lands should be differentiated from a piece of
land, ownership of which was absolutely transferred by way of an unconditional
purchase and sale contract freely entered by two parties, one without obligation to
buy and the other without the duty to sell. In that case, the fee simple concept
really comes into play. There is really no occasion to apply the fee simple concept
if the transfer is conditional. The taking of a private land in expropriation
proceedings is always conditioned on its continued devotion to its public purpose.
As a necessary corollary, once the purpose is terminated or peremptorily
abandoned, then the former owner, if he so desires, may seek its reversion, subject
of course to the return, at the very least, of the just compensation received.
To be compelled to renounce dominion over a piece of land is, in itself, an
already bitter pill to swallow for the owner. But to be asked to sacrifice for the
common good and yield ownership to the government which reneges on its
assurance that the private property shall be for a public purpose may be too
much. But it would be worse if the power of eminent domain were deliberately
used as a subterfuge to benefit another with influence and power in the political
process, including development firms. The mischief thus depicted is not at all far-
fetched with the continued application of Fery. Even as the Court deliberates on
these consolidated cases, there is an uncontroverted allegation that the MCIAA is
poised to sell, if it has not yet sold, the areas in question to Cebu Property
Ventures, Inc. This provides an added dimension to abandon Fery.

Given the foregoing disquisitions, equity and justice demand the

reconveyance by MCIAA of the litigated lands in question to the Ouanos and
Inocians. In the same token, justice and fair play also dictate that the Ouanos and
Inocian return to MCIAA what they received as just compensation for the
expropriation of their respective properties plus legal interest to be computed from
default, which in this case should run from the time MCIAA complies with the
reconveyance obligation.[43] They must likewise pay MCIAA the necessary
expenses it might have incurred in sustaining their respective lots and the monetary
value of its services in managing the lots in question to the extent that they, as
private owners, were benefited thereby.

In accordance with Art. 1187 of the Civil Code on mutual compensation,

MCIAA may keep whatever income or fruits it may have obtained from the parcels
of land expropriated. In turn, the Ouanos and Inocians need not require the
accounting of interests earned by the amounts they received as just
compensation.[44]

Following Art. 1189 of the Civil Code providing that [i]f the thing is
improved by its nature, or by time, the improvement shall inure to the benefit
of the creditor x x x, the Ouanos and Inocians do not have to settle the
appreciation of the values of their respective lots as part of the reconveyance
process, since the value increase is merely the natural effect of nature and time.
 Finally, We delete the award of PhP 50,000 and PhP 10,000, as attorneys
fees and litigation expenses, respectively, made in favor of the Inocians by the
Cebu City RTC in its judgment in Civil Case No. CEB-18370, as later affirmed by
the CA. As a matter of sound policy, no premium should be set on the right to
litigate where there is no doubt about the bona fides of the exercise of such
right,[45] as here, albeit the decision of MCIAA to resist the former landowners
claim eventually turned out to be untenable.

WHEREFORE, the petition in G.R. No.

168770 is GRANTED. Accordingly, the CA Decision dated September 3, 2004 in
CA-G.R. CV No. 78027 is REVERSED and SET ASIDE. Mactan-Cebu
International Airport Authority is ordered to reconvey subject Lot No. 763-A to
petitioners Anunciacion vda. de Ouano, Mario P. Ouano, Leticia Ouano Arnaiz,
and Cielo Ouano Martinez. The Register of Deeds of Cebu City is ordered to effect
the necessary cancellation of title and transfer it in the name of the petitioners
within fifteen (15) days from finality of judgment.
The petition of the Mactan-Cebu International Airport Authority in G.R. No.
168812 is DENIED, and the CAs Decision and Resolution dated January 14, 2005
and June 29, 2005, respectively, in CA-G.R. CV No. 64356
are AFFIRMED, except insofar as they awarded attorneys fees and litigation
expenses that are hereby DELETED. Accordingly, Mactan-Cebu International
Airport Authority is ordered to reconvey to respondents Ricardo L. Inocian,
Olympia E. Esteves, Emilia E. Bacalla, Restituta E. Montana, and Raul L. Inocian
the litigated Lot Nos. 744-A, 745-A, 746, 762-A, 747, and 761-A; and to
respondents Aletha Suico Magat, Philip M. Suico, Dolores S. dela Cruz, James M.
Suico, Edward M. Suico, Roselyn S. Lawsin, Rex M. Suico, and Kharla Suico-
Gutierrez the litigated Lot Nos. 942 and 947. The Register of Deeds of Cebu City
is ordered to effect the necessary cancellation of title and transfer it in the name of
respondents within a period of fifteen (15) days from finality of judgment.
 The foregoing dispositions are subject to QUALIFICATIONS, to apply to
these consolidated petitions, when appropriate, as follows:

(1) Petitioners Ouano, et al. in G.R. No. 168770 and respondents Ricardo L
Inocian, et al. in G.R. No. 168812 are ordered to return to the MCIAA the just
compensation they or their predecessors-in-interest received for the expropriation
of their respective lots as stated in Civil Case No. R-1881, within a period of sixty
(60) days from finality of judgment;

(2) The MCIAA shall be entitled to RETAIN whatever fruits and income it
may have obtained from the subject expropriated lots without any obligation to
refund the same to the lot owners; and

(3) Petitioners Ouano, et al. in G.R. No. 168770 and respondents Ricardo L.
Inocian, et al. in G.R. No. 168812 shall RETAIN whatever interests the amounts
they received as just compensation may have earned in the meantime without any
obligation to refund the same to MCIAA.
SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

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

REPUBLIC OF THE PHILIPPINES, plaintiff-appellant,

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

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

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

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

The plaintiff, Republic of the Philippines, is a political entity exercising governmental

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

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

(a) To operate and maintain existing wire-telegraph and radio-telegraph offices,

stations, and facilities, and those to be established to restore the pre-war
telecommunication service under the Bureau of Posts, as well as such additional
offices or stations as may hereafter be established to provide telecommunication
service in places requiring such service;

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

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

(c) To prescribe, subject to approval by the Department Head, equitable rates of

charges for messages handled by the system and/or for time calls and other
services that may be rendered by said system;

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

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

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

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

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

On 5 March 1958, the plaintiff, through the Director of Telecommunications, entered

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

On 7 April 1958, the defendant Philippine Long Distance Telephone Company,

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

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

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

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

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

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

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

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

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

Both parties appealed.

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

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

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

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

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

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

and the determination of state policy is not vested in the Commission (Utilities Com.
vs. Bartonville Bus Line, 290 Ill. 574; 124 N.E. 373).

Defendant PLDT, as appellant, contends that the court below was in error in not
holding that the Bureau of Telecommunications was not empowered to engage in
commercial telephone business, and in ruling that said defendant was not justified in
disconnecting the telephone trunk lines it had previously leased to the Bureau. We find
that the court a quo ruled correctly in rejecting both assertions.

Executive Order No. 94, Series of 1947, reorganizing the Bureau of

Telecommunications, expressly empowered the latter in its Section 79, subsection (b),
to "negotiate for, operate and maintain wire telephone or radio telephone
communication service throughout the Philippines", and, in subsection (c), "to prescribe,
subject to approval by the Department Head, equitable rates of charges for messages
handled by the system and/or for time calls and other services that may be rendered by
the system". Nothing in these provisions limits the Bureau to non-commercial activities
or prevents it from serving the general public. It may be that in its original prospectuses
the Bureau officials had stated that the service would be limited to government offices:
but such limitations could not block future expansion of the system, as authorized by the
terms of the Executive Order, nor could the officials of the Bureau bind the Government
not to engage in services that are authorized by law. It is a well-known rule that
erroneous application and enforcement of the law by public officers do not block
subsequent correct application of the statute (PLDT vs. Collector of Internal Revenue,
90 Phil. 676), and that the Government is never estopped by mistake or error on the
part of its agents (Pineda vs. Court of First Instance of Tayabas, 52 Phil. 803, 807;
Benguet Consolidated Mining Co. vs. Pineda, 98 Phil. 711, 724).

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

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

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

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

The acceptance by the defendant of the payment of rentals, despite its knowledge that
the plaintiff had extended the use of the trunk lines to commercial purposes,
continuously since 1948, implies assent by the defendant to such extended use. Since
this relationship has been maintained for a long time and the public has patronized both
telephone systems, and their interconnection is to the public convenience, it is too late
for the defendant to claim misuse of its facilities, and it is not now at liberty to unilaterally
sever the physical connection of the trunk lines.

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

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

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

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

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

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

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

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

REPUBLIC OF THE G.R. No. 157847

PHILIPPINES, represented by
the AIR TRANSPORTATION Present:
OFFICE (ATO),
Petitioner, PANGANIBAN, J., Chairman
SANDOVAL-GUTIERREZ,
CORONA,
CARPIO MORALES, and
GARCIA, JJ.
- versus -

LEODIGARIO SARABIA,
HERMENIGILDO DE LA CRUZ,
DELIA REBUTAR, MILDRED
ROSE, ANITA DE LA CRUZ, Promulgated:
ERLINDA LUCERIO, GEORGIE
DE LA CRUZ, FELMA DE LA
CRUZ, FELINO DE LA CRUZ, August 25, 2005
TERESITA
SAMSON, and EVANGELINE
COLOMER,
Respondents.

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

DECISION

GARCIA, J.:

Before the Court is this petition for review on certiorari under Rule 45 of the
Rules of Court, assailing the decision[1] dated November 18, 2002 of the
Court of Appeals in CA-G.R. CV No. 66124, which affirmed the November
26, 1999 decision of the Regional Trial Court at Aklan, Branch 5, in an
expropriation case thereat filed by the petitioner. The affirmed decision of
the trial court dispositively reads:

WHEREFORE, judgment is hereby rendered:

1. Fixing the amount of P800.00 per square meter as just compensation

to be paid by plaintiff to defendants for the taking of the subject property
indicated as Lot 6068-A in the Sketch Plan (Annex B, complaint)
containing an area of 4,901 square meters which is a portion of the
bigger parcel of land covered by Original Certificate of Title No. P-
15596. The aggregate amount shall earn legal interest of 6% per annum
commencing from November 11, 1999 until the finality of this Decision,
thereafter, 12% interest per annum from the finality of the Decision on
the remaining unpaid amount until full payment.

2. Ordering the defendants to withdraw the amount of P50,000.00

deposited provisionally with the Land Bank Kalibo Branch, Kalibo,
Aklan, by the Air Transportation Office under Savings Account No.
0452-1084-45 to be deducted therefrom the costs of P10,600.00 and
balance shall be deducted from the aggregate amount of the just
compensation; and

3. Declaring the plaintiffs lawful right to retain possession of the subject

property and to appropriate it for the public purpose it was intended for,
i.e., the operations of the airport control tower, Kalibo crash fire rescue
station, airport terminal and headquarters of the PNP Aviation Security,
upon full payment of the just compensation thereat as fixed in paragraph
1 hereof.

Plaintiff is directed to pay the costs of P9,600.00 representing the

Commissioners fees equivalent to P800.00 per session for each
commissioner, and P1,000.00 to Mr. Remegio M. Bautista as the
designated secretary of the commissioners.

SO ORDERED.[2]
Sometime in 1956, the Air Transportation Office (ATO) took possession
and control of some 4,901 square-meter portion of Lot 6068, a 10,468
square-meter lot located at Pook Kalibo, Aklan. Lot 6068 is covered by
Original Certificate of Title No. P-15596 of the Register of Deeds of Aklan in
the names of the private respondents who are heirs of the late Segundo De
la Cruz.

Initially, the ATO utilized the subject occupied portion of Lot 6068 as
an airport parking area. In time, several structures were erected thereon,
including the control tower, the Kalibo crash fire rescue station, the Kalibo
airport terminal and the headquarters of the PNP Aviation Security Group.

In 1995, stores and restaurants made of light materials were

constructed on the area outside the 4,901 square-meter portion occupied
by ATO. In 1997, private respondents filed a complaint for Recovery of
Possession with Damages before the Municipal Trial Court of Kalibo. The
case, docketed as Civil Case No. 1644, is now pending in said court. ATO
intervened in that case and alleged that the occupants of the stores and
restaurants are its lessees.

Petitioner assured private respondents that they would be paid the

fair market value of the subject land. However, the parties did not agree on
the amount of compensation therefor.

On June 25, 1998, petitioner Republic of the Philippines, represented by

the Air Transportation Office, filed with the Regional Trial Court at Aklan an
action for the expropriation of the entire Lot 6068, thereat docketed as Civil
Case No. 5543.

On August 6, 1999, the trial court appointed three (3) commissioners to

ascertain the just compensation for the subject property.
Upon conduct of ocular inspection and hearing, the commissioners
submitted a report to the trial court with the following recommendation:
NOW THEREFORE, after a brief discussion and in consideration of the
premises herein above presented, the Commissioners hereby
recommends (sic) and fix the value of 4,901 sq. m. at P800.00 pesos per
square meter and the remaining area of 5,567 square meters at P500.00
per square meter as offered by the defendants.

On pre-trial, petitioner submitted a sketch plan of Lot 6068, showing

the relative location of the 4,901 square-meter portion it actually occupied.

During the hearing of September 3, 1999, the trial court directed petitioner
to present evidence to prove that the remaining portion not actually and
physically occupied by the government is still needed for public purpose.
However, petitioner countered that there is no need to present evidence
thereon considering that almost one-half (1/2) of the entire property subject
of the case has already been in fact occupied and devoted to public
purpose.

The trial court ignored petitioners posturing and issued an

order[3] disposing, as follows:
WHEREFORE, the Court finds and so holds that the additional area
consisting of 5,567 square meters or Lot 6068-B (unshaded portion in
Annex B- Complaint) is not needed by the plaintiff for public use or
purpose, but only the shaded portion, Lot 6068-A, containing an area of
4,901 square meters.

SO ORDERED.

Eventually, in a decision dated November 26, 1999,[4] the trial court

adopted the aforestated commissioners report which fixed the just
compensation for the 4,901 square-meter portion of Lot 6068 at P800.00
per square meter, the current market value of the property in 1999.

In so adjudging, the trial court relied on Republic vs. Honorable Lucerito

Tagle, et al.,[5] and thus fixed the just compensation for the 4,901 square-
meter portion based on the current market value not at the time of the
taking which was in 1956, but at the time of the issuance of the writ of
possession on November 11, 1999. To the trial court, the date of the
issuance of the writ has to be considered in fixing the just compensation
because the same signified petitioners proper acquisition and taking of the
property which involves not only physical possession but also the legal right
to possess and own the same.

Unable to accept the trial courts decision for allegedly being contrary to law
and established jurisprudence, petitioner Republic filed a notice of appeal
and record on appeal, which the trial court approved on January 18, 2000.
Hence, the entire records of the case were transmitted to the Court of
Appeals, whereat the Republics appeal was docketed as CA-G.R. CV No.
66124.

In the herein assailed decision[6] dated November 18, 2002, the Court of
Appeals AFFIRMED the appealed decision of the trial court, thus:

WHEREFORE, premises considered, the assailed decision dated

November 26, 1999 of the Regional Trial Court, Branch 5, Kalibo,
Aklan in Civil Case No. 5543 is hereby AFFIRMED.

SO ORDERED.

In its decision, the appellate court placed emphasis on the alleged failure of
petitioner prove that the taking of the occupied 4,901 square-meter portion
of Lot 6068 occurred in 1956. More specifically, it ruled:
 Granting that indeed plaintiff-appellants possession took place in
1956, said possession pertained to a portion of said lot. The admission of
plaintiff-appellant that the encroachment covered a wider and wider area
as time passed, puts into issue the character of said possession. Was it
taking in the sense of expropriation?

The expropriation of real property does not include mere physical entry
or occupation of land. The physical entry and occupation of the property
in 1956 should include all the rights that may be exercised by an owner
of the subject property. Plaintiff-appellant failed to show that it intended
to acquire physical possession but also the legal right to possess and
ultimately to own the subject property.

Disconsolately, the assailed decision reveals inaction of plaintiff-

appellant in proving its present claim which should have been done the
earliest possible opportunity. It was stated that:

The plaintiff, despite receipt of copy of aforesaid report and

the expiration of the prescribed period to file any comment
thereto, opted not to file any pleading relative thereto.
Upon the other hand, the defendants interposed no
objection to said report.

Hence, there appears no error in the lower courts ruling that the taking
for the purposes of fixing just compensation be considered on November
11, 1999, the date of the issuance of the writ of possession, as well as the
lower courts adherence to the recommendation of the commissioners.

Petitioner moved for a reconsideration of the appellate courts decision but

its motion was denied by said court in its resolution of April 1, 2003.

Hence, petitioners present recourse.

As we see it, the sole question presented herein involves the precise
time at which just compensation should be fixed: whether as of the time of
actual taking of possession by the expropriating entity, as insisted by
petitioner Republic, or at the issuance of the writ of possession pursuant to
the expropriation proceedings, as maintained by the respondents and
sustained by both the trial court and the Court of Appeals.

Before going any further, however, we take exception to the appellate

courts finding that evidence is wanting on the fact of petitioners taking
possession of the disputed 4,901 square-meter portion in 1956.

Petitioner contends that contrary to what the appellate court found, the
taking of the property in 1956 or at least a wide portion thereof, was
adequately established.

We agree with petitioner Republic that sufficient evidence exists to prove

that the taking occurred sometime in 1956.

As borne by the records, private respondents Answer and Pre-Trial Brief

contain irrefutable admissions. Thus, in their Answer,[7] respondents
declared, among others, as follows:

1. That they admit each and every allegation in paragraphs 1,2,3,4,5 and
6 of the complaint. They admit that the portion of the land sought
to be expropriated which is indicated by the white shaded of the
sketch plan which is attached as ANNEX B of the complaint with
an area of 4,901 square meters, more or less, has been in the
possession of the plaintiff since 1956 up to the present.

Significantly, paragraph 6 of the complaint[8] which is among those admitted

by the respondents, reads:
6. The subject property has been in possession and control of ATO since
1956 and was initially devoted to parking area. At present, several
structures, are erected on the area, to wit: the control tower,
Kalibo crash fire rescue station, the Kalibo airport terminal and
 the headquarters of the Philippine National Police (PNP) Aviation
Security Group. Also, a part of the lot is leased to concessionaires
selling local products and souvenir items. The remaining portion
is intended for the expansion and other improvement of the
airport.

Besides, respondents no less averred in their Pre-Trial Brief:[9]

I. BRIEF STATEMENT OF THE RESPONDENTS CLAIM

1. That the defendants are the owners of that certain

parcel of land located at Pook, Kalibo, Aklan,
Philippines, which is covered by Original
Certificate Title No. T-1559-6. A portion of
the land has been occupied by the plaintiff for
many years now which portion of land is
indicated on the sketch plan which is
marked Annex B of the complaint.

xxx xxx xxx

I1. ADMISSION

xxx xxx xxx

2. That this land has been in the possession of the

plaintiff for many years now without paying
any rental to the defendants. (Emphasis
supplied)

xxx xxx xxx

Surely, private respondents admissions in their Answer and Pre-Trial Brief

are judicial admissions which render the taking of the lot in 1956 conclusive
or even immutable. And well-settled is the rule that an admission, verbal or
written, made by a party in the course of the proceedings in the same case,
does not require proof.[10] A judicial admission is an admission made by a
party in the course of the proceedings in the same case, for purposes of
the truth of some alleged fact, which said party cannot thereafter
disprove.[11] Indeed, an admission made in the pleading cannot be
controverted by the party making such admission and are conclusive as to
him, and that all proofs submitted by him contrary thereto or inconsistent
therewith should be ignored whether objection is interposed by a party or
not.[12]

This Court is thus convinced that the taking of the occupied 4,901 square-
meter portion of Lot 6068 occurred in 1956.

In the context of the States inherent power of eminent domain, there is a

taking when the owner is actually deprived or dispossessed of his property;
where there is a practical destruction or a material impairment of the value
of his property; or when he is deprived of the ordinary use thereof.[13] There
is a taking in this sense when the expropriator enters private property not
only for a momentary period but for a more permanent duration, for the
purpose of devoting the property to a public use in such a manner as to
oust the owner and deprive him of all beneficial enjoyment thereof.[14] After
all, ownership is nothing without the inherent rights of possession, control
and enjoyment. Where, as here, the owner is deprived of the ordinary and
beneficial use of his property or of its value by its being diverted to public
use, there is taking within the constitutional sense.[15]
This brings us to the issue of when the just compensation for the property
taken should be reckoned.

Petitioner argues, and rightly so, that the just compensation fixed by the
trial court based on the market value of the property after the
commencement of the expropriation proceedings contradicts established
jurisprudence that the value of the property as it was when the government
took possession of the land represents its true value.
In a long line of cases, we have consistently ruled that compensation for
property expropriated must be determined as of the time the expropriating
authority takes possession thereof and not as of the institution of the
proceedings.[16]

So it is that in Republic vs. Lara, et al,[17] this Court, quoting from its earlier
decision in Provincial Government vs. Caro,[18] ruled:

The value of the property should be fixed as of the date when it was
taken and not the date of the filing of the proceedings. For where
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 the 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 xxx.

The instant case is akin to that of Jose Ma. Ansaldo vs. Francisco S.
Tantuico, Jr. and Baltazar Aquino,[19] decided 1990, where two (2) lots of
private ownership were taken by the government and used for the widening
of a road more than 40 years without the benefit of any action of eminent
domain or agreement with its owners, albeit without protest by the latter. In
a decision in that case, penned by then Chief Justice Andres Narvasa, this
Court, citing the earlier case of Republic vs. PNB,[20] wrote:

Normally, of course, where the institution of an expropriation action

precedes the taking of the property subject thereof, the just compensation
 is fixed as of the time of the filing of the complaint. This is so provided
by the Rules of Court, the assumption of possession by the expropriator
ordinarily being conditioned on its deposits with the National or
Provincial Treasurer of the value of the property as provisionally
ascertained by the court having jurisdiction of the proceedings.

There are instances, however, where the expropriating agency takes over
the property prior to the expropriation suit, as in this case although, to
repeat, the case at bar is quite extraordinary in that possession was taken
by the expropriator more than 40 years prior to suit. In these instances,
this Court has ruled that the just compensation shall be determined as of
the time of taking, not as of the time of filing of the action of eminent
domain.

xxx xxx xxx

(W)hen plaintiff takes possession before the institution of the

condemnation proceedings, the value should be fixed as of the time of
the taking of said possession, not of filing of the complaint and the latter
should be the basis for the determination of the value, when the taking of
the property involved coincides with or is subsequent to, the
commencement of the proceedings. Indeed, otherwise, the provision of
Rule 69, Section 3, directing that compensation be determined as of the
date of the filing of the complaint would never be operative.

We are not, however, in accord with petitioners assertion that the just
compensation for the entire Lot 6068 should be fixed in the amount based
on its assessed value in 1956. There is nothing on record that petitioner
occupied the remaining 5,567 square-meter portion of Lot 6068, neither did
it ever present proof that said unoccupied portion is necessary for public
use, except for its self-serving allegation that said portion is needed for the
expansion and other improvement of the airport.

WHEREFORE, the petition is PARTIALLY GRANTED. The November 18,

2002 decision of the Court of Appeals in CA-G.R CV No. 66124
is MODIFIED in the sense that the computation of just compensation for
the 4,901 square-meter portion of Lot 6860 should be based on its fair
market value in 1956.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-20232 September 30, 1964

MUNICIPALITY OF LA CARLOTA, plaintiff-appellee,

vs.
NATIONAL WATERWORKS and SEWERAGE AUTHORITY (NAWASA), defendant-
appellant.

Rodolfo M. Uriarte, Rolando N. Medalla, Ernesto Ma. Uriarte and Abundio B. Huelar for
plaintiff-appellee.
Government Corporate Counsel for defendant-appellant.

MAKALINTAL, J.:

The municipality of La Carlota was the owner of the waterworks system serving its
inhabitants until the enactment of Republic Act No. 1383 on June 28, 1955, when, by
virtue of its provisions, the National Waterworks and Sewerage Authority (NAWASA)
assumed ownership and took over the supervision, administration and control of the
said system, including the collection of water rentals from the consumers. On April 5,
1960 the municipality commenced this action in the Court of First Instance of Negros
Occidental against the NAWASA for recovery and accounting. On September 27, 1961
judgment was rendered as follows:

EN VIRTUD DE LO EXPUESTO, el Juzgado falla esta causa condenando a la

demandada para que restituya al demandante el dominio y titulo, asi como la
posesion, supervision, administracion y control del sistema de traida de aguas
del Municipio la Carlota.

Se ordena, asimismo, a la demandada para que dentro del plazo de 30 dias a

contar desde la fecha en que esta decision quede firme y ejecutoria, rinda una
cuenta detallada de todas las cantidades cobradas por ella de los consumidores
del sistema durante el periodo de tiempo desde que se hizo cargo del sistema
hasta la fecha en que actualmente haya restituido al demandante dicho sistema.

Por falta de pruebas, so sobresee la reconvencion interpuesta por la

demandada.

Las costas del juicio se tasaran en contra de la demandada. 1awphîl.nèt

In the present appeal by the defendant it assigns one error in the judgment, namely, "in
holding that the possession, administration, supervision and maintenance of the La
Carlota water system is vested in the municipality of La Carlota ... even on the
assumption that ownership of said system belongs to the municipality."

The appellant concedes, on the authority of City of Baguio vs. NAWASA, 57 O.G. No. 9,
p. 1584, and City of Cebu vs. NAWASA, G.R. No. 12892, April 20, 1960, that in so far
as Republic Act No. 1383 transfers ownership of the water system of the appellee to the
appellant the said Act is unconstitutional because it does not provide for the payment of
just compensation as required by the Constitution, the transfer being in the nature of
expropriation of private (patrimonial) property. However, it is contended that although
ownership may not thus be transferred, the law (Sec. 1) also authorizes the NAWASA to
"have jurisdiction, supervision and control over ... all areas now served by existing
government-owned waterworks and sewarage and drainage systems within the
boundaries of cities, municipalities, and municipal districts in the Philippines ... . On this
ground the appellant prays that the judgment appealed from be reversed in part and
that the return to it of the "possession, supervision, administration and control of the La
Carlota waterworks system" be ordered.

In City of Cebu vs. NAWASA, supra, which was an action for declaratory relief, this
Court did not squarely pass upon the question of whether, apart from ownership, the
defendant could exercise "jurisdiction, supervision and control" over the Cebu
waterworks system without paying just compensation. It is true that the trial court upheld
the exercise of such right in its decision, leaving for future determination the question of
what would constitute acts of ownership and what would be considered as an exercise
of jurisdiction, supervision and control, but this Court on appeal did not treat the
particular matter as an issue before it and neither passed upon it nor rendered a ruling
thereon. That case is therefore no authority for the position of the appellant here as
presented in its lone assignment of error. Neither may it find support in the statement in
our decision in City of Baguio vs. NAWASA, supra, that "unless this aspect of the law
(concerning payment of just compensation) is clarified and appellee is given its due
compensation, appellee cannot be deprived of its property even if appellant desires to
take over the administration in line with the spirit of the law." This Court, in said
decision, took note of the authorities cited by the appellant therein to sustain its
contention that Congress has the power, without impairing vested rights, to transfer
property of a municipal corporation from one government agency to another as long as
such property continues to be devoted to its original purpose. But the decision precisely
pointed out that those authorities are not in point, since the transfers involved therein
were merely for purposes of administration, the ownership of and benefits from the
property being retained by the municipal corporations concerned, whereas the clear
intent of Republic Act No. 1383 "is to effect a real transfer of the ownership of the
waterworks ... and does not merely encompass a transfer of administration."

It is hard to conceive how the jurisdiction, supervision and control of the appellee's
waterworks system may be vested in the appellant without destroying the integrity of the
appellee's right of dominion. Ownership is nothing without the inherent rights of
possession, control and enjoyment. Where the owner is deprived of the ordinary and
beneficial use of his property or of its value by its being diverted to public use, there is
taking within the constitutional sense. Tañada & Fernando, Constitution of the
Philippines, 4th ed., Vol. I, pp. 215-216. Such deprivation would be the certain
consequence if, as prayed for by the appellant, it should be allowed to assume
jurisdiction, supervision and control over the waterworks system of the appellee. That
would be little less than an assumption of ownership itself and not of mere
administration.

The judgment appealed from is affirmed, with costs.

 Republic of the Philippines
Supreme Court
Manila
FIRST DIVISION

NATIONAL POWER G.R. No. 165828

CORPORATION,
Petitioner, Present:

CORONA, C.J., Chairperson,

- versus - LEONARDO-DE CASTRO,
BERSAMIN,
DEL CASTILLO, and
HEIRS OF MACABANGKIT VILLARAMA, JR., JJ.
SANGKAY, namely: CEBU,
BATOWA-AN, SAYANA, Promulgated:
NASSER, MANTA, EDGAR,
PUTRI , MONGKOY*, and AMIR,
all surnamed MACABANGKIT, August 24, 2011
Respondents.
x-----------------------------------------------------------------------------------------x

DECISION

BERSAMIN, J.:
Private property shall not be taken for public use without just
compensation.
Section 9, Article III, 1987 Constitution

The application of this provision of the Constitution is the focus of this appeal.

Petitioner National Power Corporation (NPC) seeks the review on certiorari of the
decision promulgated on October 5, 2004,[1] whereby the Court of Appeals (CA)
affirmed the decision dated August 13, 1999 and the supplemental decision dated
August 18, 1999, ordering NPC to pay just compensation to the respondents, both
rendered by the Regional Trial Court, Branch 1, in Iligan City (RTC).
 Antecedents

Pursuant to its legal mandate under Republic Act No. 6395 (An Act Revising the
Charter of the National Power Corporation), NPC undertook the Agus River
Hydroelectric Power Plant Project in the 1970s to generate electricity for
Mindanao. The project included the construction of several underground tunnels to
be used in diverting the water flow from the Agus River to the hydroelectric
plants.[2]

On November 21, 1997, the respondents, namely: Cebu, Bangowa-an, Sayana,

Nasser, Manta, Edgar, Putri, Mongkoy and Amir, all surnamed Macabangkit (Heirs
of Macabangkit), as the owners of land with an area of 221,573 square meters
situated in Ditucalan, Iligan City, sued NPC in the RTC for the recovery of
damages and of the property, with the alternative prayer for the payment of just
compensation.[3] They alleged that they had belatedly discovered that one of the
underground tunnels of NPC that diverted the water flow of the Agus River for the
operation of the Hydroelectric Project in Agus V, Agus VI and Agus VII traversed
their land; that their discovery had occurred in 1995 after Atty. Saidali C.
Gandamra, President of the Federation of Arabic Madaris School, had rejected
their offer to sell the land because of the danger the underground tunnel might pose
to the proposed Arabic Language Training Center and Muslims Skills
Development Center; that such rejection had been followed by the withdrawal by
Global Asia Management and Resource Corporation from developing the land into
a housing project for the same reason; that Al-Amanah Islamic Investment Bank of
the Philippines had also refused to accept their land as collateral because of the
presence of the underground tunnel; that the underground tunnel had been
constructed without their knowledge and consent; that the presence of the tunnel
deprived them of the agricultural, commercial, industrial and residential value of
their land; and that their land had also become an unsafe place for habitation
because of the loud sound of the water rushing through the tunnel and the constant
shaking of the ground, forcing them and their workers to relocate to safer grounds.
In its answer with counterclaim,[4] NPC countered that the Heirs of Macabangkit
had no right to compensation under section 3(f) of Republic Act No. 6395, under
which a mere legal easement on their land was established; that their cause of
action, should they be entitled to compensation, already prescribed due to the
tunnel having been constructed in 1979; and that by reason of the tunnel being an
apparent and continuous easement, any action arising from such easement
prescribed in five years.

Ruling of the RTC

On July 23, 1998, an ocular inspection of the land that was conducted by
RTC Judge Mamindiara P. Mangotara and the representatives of the parties
resulted in the following observations and findings:

a. That a concrete post which is about two feet in length from the ground which
according to the claimants is the middle point of the tunnel.

b. That at least three fruit bearing durian trees were uprooted and as a result of
the construction by the defendant of the tunnel and about one hundred
coconuts planted died.

c. That underground tunnel was constructed therein.[5]

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

Macabangkit),[6] decreeing:

WHEREFORE, premises considered:

1. The prayer for the removal or dismantling of defendants tunnel is

denied. However, defendant is hereby directed and ordered:

a)To pay plaintiffs land with a total area of 227,065 square meters, at the
rate of FIVE HUNDRED (P500.00) PESOS per square meter, or a total of
ONE HUNDRED THIRTEEN MILLION FIVE HUNDRED THIRTY
 TWO THOUSAND AND FIVE HUNDRED (P113,532,500.00), PESOS,
plus interest, as actual damages or just compensation;

b) To pay plaintiff a monthly rental of their land in the amount of

THIRTY THOUSAND (P30,000.00) PESOS from 1979 up to July 1999
with 12% interest per annum;

c)To pay plaintiffs the sum of TWO HUNDRED THOUSAND

(P200,000.00) PESOS, as moral damages;

d) To pay plaintiffs, the sum of TWO HUNDRED THOUSAND

(P200,000.00) PESOS, as exemplary damages;

e)To pay plaintiffs, the sum equivalent to 15% of the total amount
awarded, as attorneys fees, and to pay the cost.

SO ORDERED.

The RTC found that NPC had concealed the construction of the tunnel in 1979
from the Heirs of Macabangkit, and had since continuously denied its existence;
that NPC had acted in bad faith by taking possession of the subterranean portion of
their land to construct the tunnel without their knowledge and prior consent; that
the existence of the tunnel had affected the entire expanse of the land, and had
restricted their right to excavate or to construct a motorized deep well; and that
they, as owners, had lost the agricultural, commercial, industrial and residential
value of the land.

The RTC fixed the just compensation at P500.00/square meter based on the
testimony of Dionisio Banawan, OIC-City Assessor of Iligan City, to the effect
that the appraised value of the adjoining properties ranged from P700.00
to P750.00, while the appraised value of their affected land ranged from P400.00
to P500.00. The RTC also required NPC to pay rentals from 1979 due to its bad
faith in concealing the construction of the tunnel from the Heirs of Macabangkit.
On August 18, 1999, the RTC issued a supplemental decision,[7] viz:
 Upon a careful review of the original decision dated August 13, 1999, a sentence
should be added to paragraph 1(a) of the dispositive portion thereof, to bolster,
harmonize, and conform to the findings of the Court, which is quoted hereunder,
to wit:

Consequently, plaintiffs land or properties are hereby condemned in

favor of defendant National Power Corporation, upon payment of the
aforesaid sum.
Therefore, paragraph 1(a) of the dispositive portion of the original decision should
read, as follows:

a) To pay plaintiffs land with a total area of 227,065 square meters, at the
rate of FIVE HUNDRED (P500.00) PESOS per square meter, or a total
of ONE HUNDRED THIRTEEN MILLION FIVE HUNDRED
THIRTY TWO THOUSAND AND FIVE HUNDRED
(P113,532,500.00) PESOS, plus interest, as actual damages or just
compensation; Consequently, plaintiffs land or properties are hereby
condemned in favor of defendant National Power Corporation, upon
payment of the aforesaid sum;

This supplemental decision shall be considered as part of paragraph 1(a) of the

dispositive portion of the original decision.

Furnish copy of this supplemental decision to all parties immediately.

SO ORDERED.

On its part, NPC appealed to the CA on August 25, 1999.[8]

Earlier, on August 18, 1999, the Heirs of Macabangkit filed an urgent

motion for execution of judgment pending appeal.[9] The RTC granted the motion
and issued a writ of execution,[10] prompting NPC to assail the writ by petition
for certiorari in the CA. On September 15, 1999, the CA issued a temporary
restraining order (TRO) to enjoin the RTC from implementing its decision. The
Heirs of Macabangkit elevated the ruling of the CA (G.R. No. 141447), but the
Court upheld the CA on May 4, 2006.[11]

Ruling of the CA
NPC raised only two errors in the CA, namely:
 I
THE COURT A QUO SERIOUSLY ERRED IN RULING THAT NAPOCORS
UNDERGROUND TUNNEL IN ITS AGUS RIVER HYDRO-ELECTRIC
PLANT PROJECT TRAVERSED AND/OR AFFECTED APPELLEES
PROPERTY AS THERE IS NO CLEAR EVIDENCE INDUBITABLY
ESTABLISHING THE SAME

II
THE COURT A QUO SERIOUSLY ERRED IN GRANTING APPELLEES
CLAIMS IN THEIR ENTIRETY FOR GRANTING ARGUENDO THAT
NAPOCORS UNDERGROUND TUNNEL INDEED TRAVERSED
APPELLEES PROPERTY, THEIR CAUSE OF ACTION HAD ALREADY
BEEN BARRED BY PRESCRIPTION, ESTOPPEL AND LACHES
On October 5, 2004, the CA affirmed the decision of the RTC, holding that the
testimonies of NPCs witness Gregorio Enterone and of the respondents witness
Engr. Pete Sacedon, the topographic survey map, the sketch map, and the ocular
inspection report sufficiently established the existence of the underground tunnel
traversing the land of the Heirs of Macabangkit; that NPC did not substantiate its
defense that prescription already barred the claim of the Heirs of Macabangkit; and
that Section 3(i) of R.A. No. 6395, being silent about tunnels, did not apply, viz:

As regard Section 3(i) of R.A. No. 6395 (An Act Revising the Charter of the
National Power Corporation), it is submitted that the same provision is not
applicable. There is nothing in Section 3(i) of said law governing claims
involving tunnels. The same provision is applicable to those projects or facilities
on the surface of the land, that can easily be discovered, without any mention
about the claims involving tunnels, particularly those surreptitiously constructed
beneath the surface of the land, as in the instant case.

Now, while it is true that Republic Act No. 6395 authorizes NAPOCOR to take
water from any public stream, river, creek, lake, spring or waterfall in the
Philippines for the realization of the purposes specified therein for its creation; to
intercept and divert the flow of waters from lands of riparian owners (in this case,
the Heirs), and from persons owning or interested in water which are or may be
necessary to said purposes, the same Act expressly mandates the payment of just
compensation.

WHEREFORE, premises considered, the instant appeal is hereby DENIED for

lack of merit. Accordingly, the appealed Decision dated August 13, 1999, and the
supplemental Decision dated August 18, 1999, are hereby AFFIRMED in toto.
 SO ORDERED.[12]

Issue

NPC has come to the Court, assigning the lone error that:

THE APPELLATE COURT ERRED ON A QUESTION OF LAW WHEN IT

AFFIRMED THE DECISION AND SUPPLEMENTAL DECISION OF THE
COURT A QUO DIRECTING AND ORDERING PETITIONER TO PAY JUST
COMPENSATION TO RESPONDENTS.

NPC reiterates that witnesses Enterone and Sacedon lacked personal knowledge
about the construction and existence of the tunnel and were for that reason not
entitled to credence; and that the topographic and relocation maps prepared by
Sacedon should not be a basis to prove the existence and location of the tunnel due
to being self-serving.
NPC contends that the CA should have applied Section 3(i) of Republic Act No.
6395, which provided a period of only five years from the date of the construction
within which the affected landowner could bring a claim against it; and that even if
Republic Act No. 6395 should be inapplicable, the action of the Heirs of
Macabangkit had already prescribed due to the underground tunnel being
susceptible to acquisitive prescription after the lapse of 10 years pursuant to Article
620 of the Civil Code due to its being a continuous and apparent legal easement
under Article 634 of the Civil Code.
The issues for resolution are, therefore, as follows:

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

(2) Whether the Heirs of Macabangkits right to claim just

compensation had prescribed under section 3(i) of Republic Act No.
6395, or, alternatively, under Article 620 and Article 646 of the Civil
Code.
 Ruling

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

1.
Factual findings of the RTC,
when affirmed by the CA, are binding

The existence of the tunnel underneath the land of the Heirs of Macabangkit, being
a factual matter, cannot now be properly reviewed by the Court, for questions of
fact are beyond the pale of a petition for review on certiorari. Moreover, the
factual findings and determinations by the RTC as the trial court are generally
binding on the Court, particularly after the CA affirmed them.[13] Bearing these
doctrines in mind, the Court should rightly dismiss NPCs appeal.

NPC argues, however, that this appeal should not be dismissed because the Heirs
of Macabangkit essentially failed to prove the existence of the underground tunnel.
It insists that the topographic survey map and the right-of-way map presented by
the Heirs of Macabangkit did not at all establish the presence of any underground
tunnel.

NPC still fails to convince.

Even assuming, for now, that the Court may review the factual findings of the CA
and the RTC, for NPC to insist that the evidence on the existence of the tunnel was
not adequate and incompetent remains futile. On the contrary, the evidence on the
tunnel was substantial, for the significance of the topographic survey map and the
sketch map (as indicative of the extent and presence of the tunnel construction) to
the question on the existence of the tunnel was strong, as the CA correctly
projected in its assailed decision, viz:

Among the pieces of documentary evidence presented showing the existence

of the said tunnel beneath the subject property is the topographic survey map. The
topographic survey map is one conducted to know about the location and
 elevation of the land and all existing structures above and underneath it. Another
is the Sketch Map which shows the location and extent of the land traversed or
affected by the said tunnel. These two (2) pieces of documentary evidence
readily point the extent and presence of the tunnel construction coming from
the power cavern near the small man-made lake which is the inlet and
approach tunnel, or at a distance of about two (2) kilometers away from the
land of the plaintiffs-appellees, and then traversing the entire and the whole
length of the plaintiffs-appellees property, and the outlet channel of the
tunnel is another small man-made lake. This is a sub-terrain construction, and
considering that both inlet and outlet are bodies of water, the tunnel can hardly be
noticed. All constructions done were beneath the surface of the plaintiffs-
appellees property. This explains why they could never obtain any knowledge of
the existence of such tunnel during the period that the same was constructed and
installed beneath their property.[14]

The power cavern and the inlet and outlet channels established the presence of the
underground tunnel, based on the declaration in the RTC by Sacedon, a former
employee of the NPC.[15] It is worthy to note that NPC did not deny the existence of
the power cavern, and of the inlet and outlet channels adverted to and as depicted
in the topographic survey map and the sketch map. The CA cannot be faulted for
crediting the testimony of Sacedon despite the effort of NPC to discount his credit
due to his not being an expert witness, simply because Sacedon had personal
knowledge based on his being NPCs principal engineer and supervisor tasked at
one time to lay out the tunnels and transmission lines specifically for the
hydroelectric projects,[16] and to supervise the construction of the Agus 1
Hydroelectric Plant itself[17] from 1978 until his retirement from NPC.[18] Besides,
he declared that he personally experienced the vibrations caused by the rushing
currents in the tunnel, particularly near the outlet channel .[19] Under any
circumstances, Sacedon was a credible and competent witness.

The ocular inspection actually confirmed the existence of the tunnel

underneath the land of the Heirs of Macabangkit. Thus, the CA observed:

More so, the Ocular inspection conducted on July 23, 1998 further bolstered such
claim of the existence and extent of such tunnel. This was conducted by a team
composed of the Honorable Presiding Judge of the Regional Trial Court, Branch
01, Lanao del Norte, herself and the respective lawyers of both of the parties
 and found that, among others, said underground tunnel was constructed
beneath the subject property.[20]

It bears noting that NPC did not raise any issue against or tender any
contrary comment on the ocular inspection report.

2.
Five-year prescriptive period under Section 3(i) of Republic Act
No. 6395 does not apply to claims for just compensation

The CA held that Section 3(i) of Republic Act No. 6395 had no application to this
action because it covered facilities that could be easily discovered, not tunnels that
were inconspicuously constructed beneath the surface of the land.[21]

NPC disagrees, and argues that because Article 635[22] of the Civil
Code directs the application of special laws when an easement, such as the
underground tunnel, was intended for public use, the law applicable was Section
3(i) of Republic Act No. 6395, as amended, which limits the action for recovery of
compensation to five years from the date of construction. It posits that the five-year
prescriptive period already set in due to the construction of the underground tunnel
having been completed in 1979 yet.
Without necessarily adopting the reasoning of the CA, we uphold its conclusion
that prescription did not bar the present action to recover just compensation.

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

Section 3. Powers and General Functions of the Corporation. The powers,

functions, rights and activities of the Corporation shall be the following:

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

A cursory reading shows that Section 3(i) covers the construction of works across,
or otherwise, any stream, watercourse, canal, ditch, flume, street, avenue, highway
or railway of private and public ownership, as the location of said works may
require. It is notable that Section 3(i) includes no limitation except those
enumerated after the term works. Accordingly, we consider the term works as
embracing all kinds of constructions, facilities, and other developments that can
enable or help NPC to meet its objectives of developing hydraulic power expressly
provided under paragraph (g) of Section 3.[23] The CAs restrictive construal of
Section 3(i) as exclusive of tunnels was obviously unwarranted, for the provision
applies not only to development works easily discoverable or on the surface of the
earth but also to subterranean works like tunnels. Such interpretation accords with
the fundamental guideline in statutory construction that when the law does not
distinguish, so must we not.[24] Moreover, when the language of the statute is plain
and free from ambiguity, and expresses a single, definite, and sensible meaning,
that meaning is conclusively presumed to be the meaning that the Congress
intended to convey.[25]
Even so, we still cannot side with NPC.
 We rule that the prescriptive period provided under Section 3(i) of Republic
Act No. 6395 is applicable only to an action for damages, and does not extend to
an action to recover just compensation like this case. Consequently, NPC cannot
thereby bar the right of the Heirs of Macabangkit to recover just compensation for
their land.

The action to recover just compensation from the State or its expropriating
agency differs from the action for damages. The former, also known as inverse
condemnation, has the objective to recover the value of property taken in fact by
the governmental defendant, even though no formal exercise of the power of
eminent domain has been attempted by the taking agency.[26] Just compensation is
the full and fair equivalent of the property taken from its owner by the
expropriator. The measure is not the takers gain, but the owners loss. The
word just is used to intensify the meaning of the word compensation in order to
convey the idea that the equivalent to be rendered for the property to be taken shall
be real, substantial, full, and ample.[27] On the other hand, the latter action seeks to
vindicate a legal wrong through damages, which may be actual, moral, nominal,
temperate, liquidated, or exemplary. When a right is exercised in a manner not
conformable with the norms enshrined in Article 19[28] and like provisions on
human relations in the Civil Code, and the exercise results to the damage of
another, a legal wrong is committed and the wrongdoer is held responsible.[29]

The two actions are radically different in nature and purpose. The action to
recover just compensation is based on the Constitution[30] while the action for
damages is predicated on statutory enactments. Indeed, the former arises from the
exercise by the State of its power of eminent domain against private property for
public use, but the latter emanates from the transgression of a right. The fact that
the owner rather than the expropriator brings the former does not change the
essential nature of the suit as an inverse condemnation,[31] for the suit is not based
on tort, but on the constitutional prohibition against the taking of property without
just compensation.[32] It would very well be contrary to the clear language of the
Constitution to bar the recovery of just compensation for private property taken for
a public use solely on the basis of statutory prescription.

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

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

This was what NPC was ordered to do in National Power Corporation v.

Ibrahim,[33] where NPC had denied the right of the owners to be paid just
compensation despite their land being traversed by the underground tunnels for
siphoning water from Lake Lanao needed in the operation of Agus II, Agus III,
Agus IV, Agus VI and Agus VII Hydroelectric Projects in Saguiran, Lanao del
Sur, in Nangca and Balo-I in Lanao del Norte and in Ditucalan and Fuentes in
Iligan City. There, NPC similarly argued that the underground tunnels constituted a
mere easement that did not involve any loss of title or possession on the part of the
property owners, but the Court resolved against NPC, to wit:

Petitioner contends that the underground tunnels in this case constitute an

easement upon the property of the respondents which does not involve any loss of
title or possession. The manner in which the easement was created by petitioner,
however, violates the due process rights of respondents as it was without notice
and indemnity to them and did not go through proper expropriation proceedings.
Petitioner could have, at any time, validly exercised the power of eminent domain
 to acquire the easement over respondents property as this power encompasses not
only the taking or appropriation of title to and possession of the expropriated
property but likewise covers even the imposition of a mere burden upon the
owner of the condemned property. Significantly, though, landowners cannot be
deprived of their right over their land until expropriation proceedings are
instituted in court. The court must then see to it that the taking is for public use,
that there is payment of just compensation and that there is due process of law.[34]

3.
NPCs construction of the tunnel
constituted taking of the land, and
entitled owners to just compensation

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

In disregarding this procedure and failing to recognize respondents

ownership of the sub-terrain portion, petitioner took a risk and exposed itself to
greater liability with the passage of time. It must be emphasized that the
acquisition of the easement is not without expense. The underground tunnels
impose limitations on respondents use of the property for an indefinite period and
deprive them of its ordinary use. Based upon the foregoing, respondents are
clearly entitled to the payment of just compensation. Notwithstanding the fact
that petitioner only occupies the sub-terrain portion, it is liable to pay not
merely an easement fee but rather the full compensation for land. This is so
because in this case, the nature of the easement practically deprives the
owners of its normal beneficial use. Respondents, as the owner of the
property thus expropriated, are entitled to a just compensation which should
be neither more nor less, whenever it is possible to make the assessment, than
the money equivalent of said property.[35]

Here, like in National Power Corporation v. Ibrahim, NPC constructed a tunnel

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

Did such consequence constitute taking of the land as to entitle the owners to just
compensation?

We agree with both the RTC and the CA that there was a full taking on the
part of NPC, notwithstanding that the owners were not completely and actually
dispossessed. It is settled that the taking of private property for public use, to be
compensable, need not be an actual physical taking or appropriation. [36] Indeed, the
expropriators action may be short of acquisition of title, physical possession, or
occupancy but may still amount to a taking.[37] Compensable taking includes
destruction, restriction, diminution, or interruption of the rights of ownership or of
the common and necessary use and enjoyment of the property in a lawful manner,
lessening or destroying its value.[38] It is neither necessary that the owner be wholly
deprived of the use of his property,[39] nor material whether the property is removed
from the possession of the owner, or in any respect changes hands.[40]

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

We affirm the CA, considering that NPC did not assail the valuation in the CA and
in this Court. NPCs silence was probably due to the correctness of the RTCs
valuation after careful consideration and weighing of the parties evidence, as
follows:

The matter of what is just compensation for these parcels of land is a matter
of evidence. These parcels of land is (sic) located in the City of Iligan, the
Industrial City of the South. Witness Dionisio Banawan, OIC- City Assessors
Office, testified, Within that area, that area is classified as industrial and
residential. That plaintiffs land is adjacent to many subdivisions and that is within
 the industrial classification. He testified and identified Exhibit AA and AA-1, a
Certification, dated April 4, 1997, showing that the appraised value of plaintiffs
land ranges from P400.00 to P500.00 per square meter (see, TSN, testimony of
Dionisio Banawan, pp. 51, 57, and 71, February 9, 1999). Also, witness Banawan,
testified and identified Two (2) Deeds of Sale, marked as Exhibit AA-2 and AA-
3,[] showing that the appraised value of the land adjoining or adjacent to plaintiff
land ranges from P700.00 to P750.00 per square meter. As between the much
lower price of the land as testified by defendants witness Gregorio Enterone, and
that of the City Assessor of Iligan City, the latter is more credible. Considering
however, that the appraised value of the land in the area as determined by the City
Assessors Office is not uniform, this Court, is of the opinion that the reasonable
amount of just compensation of plaintiffs land should be fixed at FIVE
HUNDRED (500.00) PESOS, per square meter. xxx.[41]

The RTC based its fixing of just compensation ostensibly on the prevailing market
value at the time of the filing of the complaint, instead of reckoning from the time
of the taking pursuant to Section 3(h) of Republic Act No. 6395. The CA did not
dwell on the reckoning time, possibly because NPC did not assign that as an error
on the part of the RTC.

We rule that the reckoning value is the value at the time of the filing of the
complaint, as the RTC provided in its decision. Compensation that is reckoned on
the market value prevailing at the time either when NPC entered or when it
completed the tunnel, as NPC submits, would not be just, for it would compound
the gross unfairness already caused to the owners by NPCs entering without the
intention of formally expropriating the land, and without the prior knowledge and
consent of the Heirs of Macabangkit. NPCs entry denied elementary due process of
law to the owners since then until the owners commenced the inverse
condemnation proceedings. The Court is more concerned with the necessity to
prevent NPC from unjustly profiting from its deliberate acts of denying due
process of law to the owners. As a measure of simple justice and ordinary fairness
to them, therefore, reckoning just compensation on the value at the time the owners
commenced these inverse condemnation proceedings is entirely warranted.
 In National Power Corporation v. Court of Appeals,[42] a case that involved
the similar construction of an underground tunnel by NPC without the prior
consent and knowledge of the owners, and in which we held that the basis in fixing
just compensation when the initiation of the action preceded the entry into the
property was the time of the filing of the complaint, not the time of taking, [43] we
pointed out that there was no taking when the entry by NPC was made without
intent to expropriate or was not made under warrant or color of legal authority.
4.
Awards for rentals, moral damages, exemplary
damages, and attorneys fees are deleted
for insufficiency of factual and legal bases

The CA upheld the RTCs granting to the Heirs of Macabangkit of rentals

of P 30,000.00/month from 1979 up to July 1999 with 12% interest per annum by
finding NPC guilty of bad faith in taking possession of the land to construct the
tunnel without their knowledge and consent.

Granting rentals is legally and factually bereft of justification, in light of the

taking of the land being already justly compensated. Conformably with the ruling
in Manila International Airport Authority v. Rodriguez,[44] in which the award of
interest was held to render the grant of back rentals unwarranted, we delete the
award of back rentals and in its place prescribe interest of 12% interest per
annum from November 21, 1997, the date of the filing of the complaint, until the
full liability is paid by NPC. The imposition of interest of 12% interest per
annum follows a long line of pertinent jurisprudence,[45] whereby the Court has
fixed the rate of interest on just compensation at 12% per annum whenever the
expropriator has not immediately paid just compensation.

The RTC did not state any factual and legal justifications for awarding to the Heirs
of Macabangkit moral and exemplary damages each in the amount of P200,000.00.
The awards just appeared in the fallo of its decision. Neither did the CA proffer
any justifications for sustaining the RTC on the awards. We consider the omissions
of the lower courts as pure legal error that we feel bound to correct even if NPC
did not submit that for our consideration. There was, to begin with, no factual and
legal bases mentioned for the awards. It is never trite to remind that moral and
exemplary damages, not by any means liquidated or assessed as a matter of
routine, always require evidence that establish the circumstances under which the
claimant is entitled to them. Moreover, the failure of both the RTC and the CA to
render the factual and legal justifications for the moral and exemplary damages in
the body of their decisions immediately demands the striking out of the awards for
being in violation of the fundamental rule that the decision must clearly state the
facts and the law on which it is based. Without the factual and legal justifications,
the awards are exposed as the product of conjecture and speculation, which have
no place in fair judicial adjudication.

We also reverse and set aside the decree of the RTC for NPC to pay to the Heirs of
Macabangkit the sum equivalent to 15% of the total amount awarded, as attorneys
fees, and to pay the cost. The body of the decision did not state the factual and
legal reasons why NPC was liable for attorneys fees. The terse statement found at
the end of the body of the RTCs decision, stating: xxx The contingent attorneys fee
is hereby reduced from 20% to only 15% of the total amount of the claim that may
be awarded to plaintiffs, without more, did not indicate or explain why and how
the substantial liability of NPC for attorneys fees could have arisen
and been determined.

In assessing attorneys fees against NPC and in favor of the respondents, the
RTC casually disregarded the fundamental distinction between the two concepts of
attorneys fees the ordinary and the extraordinary. These concepts were aptly
distinguished in Traders Royal Bank Employees Union-Independent v.
NLRC,[46] thuswise:
 There are two commonly accepted concepts of attorneys fees, the so-called
ordinary and extraordinary. In its ordinary concept, an attorneys fee is the
reasonable compensation paid to a lawyer by his client for the legal services he
has rendered to the latter. The basis of this compensation is the fact of his
employment by and his agreement with the client.

In its extraordinary concept, an attorneys fee is an indemnity for damages

ordered by the court to be paid by the losing party in a litigation. The basis of this
is any of the cases provided by law where such award can be made, such as those
authorized in Article 2208, Civil Code, and is payable not to the lawyer but to the
client, unless they have agreed that the award shall pertain to the lawyer as
additional compensation or as part thereof.

By referring to the award as contingency fees, and reducing the award from
20% to 15%, the RTC was really referring to a supposed agreement on attorneys
fees between the Heirs of Macabangkit and their counsel. As such, the concept of
attorneys fees involved was the ordinary. Yet, the inclusion of the attorneys fees in
the judgment among the liabilities of NPC converted the fees to extraordinary. We
have to disagree with the RTC thereon, and we express our discomfort that the
CA did not do anything to excise the clearly erroneous and unfounded grant.

An award of attorneys fees has always been the exception rather than the
rule. To start with, attorneys fees are not awarded every time a party prevails in a
suit.[47] Nor should an adverse decision ipso facto justify an award of attorneys fees
to the winning party.[48] The policy of the Court is that no premium should be
placed on the right to litigate.[49] Too, such fees, as part of damages, are assessed
only in the instances specified in Art. 2208, Civil Code.[50]Indeed, attorneys fees are
in the nature of actual damages.[51] But even when a claimant is compelled to
litigate with third persons or to incur expenses to protect his rights, attorneys fees
may still be withheld where no sufficient showing of bad faith could be reflected in
a partys persistence in a suit other than an erroneous conviction of the
righteousness of his cause.[52] And, lastly, the trial court must
make express findings of fact and law that bring the suitwithin the exception. What
this demands is that the factual, legal or equitable justifications for the award must
be set forth

not only in the fallo but also in the text of the decision, or else, the award should be
thrown out for being speculative and conjectural.[53]

Sound policy dictates that even if the NPC failed to raise the issue of
attorneys fees, we are not precluded from correcting the lower
courts patently erroneous application of the law.[54] Indeed, the Court, in
supervising the lower courts, possesses the ample authority to
review legal matters like this one even if not specifically raised or assigned as error
by the parties.

5.
Attorneys fees under quantum meruit principle
are fixed at 10% of the judgment award

Based on the pending motions of Atty. Macarupung Dibaratun and Atty.

Manuel D. Ballelos to assert their respective rights to attorneys fees, both
contending that they represented the Heirs of Macabangkit in this case, a conflict
would ensue from the finality of the judgment against NPC.

A look at the history of the legal representation of the Heirs of Macabangkit

herein provides a helpful predicate for resolving the conflict.

Atty. Dibaratun was the original counsel of the Heirs of Macabangkit. When the
appeal was submitted for decision in the CA,[55] Atty. Ballelos filed his entry of
appearance,[56] and a motion for early decision.[57] Atty. Ballelos
subsequently filed also a manifestation,[58] supplemental manifestation,[59]
reply,[60] and ex parte motion reiterating the motion for early decision.[61] It appears
that a copy of the CAs decision was furnished solely to Atty. Ballelos. However,
shortly before the rendition of the decision, Atty. Dibaratun filed in the CA a
motion to register attorneys lien,[62] alleging that he had not withdrawn his
appearance and had not been aware of the entry of appearance by Atty. Ballelos. A
similar motion was also received by the Court from Atty. Dibaratun a few days
after the petition for review was filed.[63] Thus, on February 14, 2005,[64] the Court
directed Atty. Dibaratun to enter his appearance herein. He complied upon filing
the comment.[65]

Amir Macabangkit confirmed Atty. Dibaratuns representation through an ex

parte manifestation that he filed in his own behalf and on behalf of his siblings
Mongkoy and Putri.[66] Amir reiterated his manifestation on March 6, 2006,[67]and
further imputed malpractice to Atty. Ballelos for having filed an entry of
appearance bearing Amirs forged signature and for plagiarism, i.e., copying
verbatim the arguments contained in the pleadings previously filed by Atty.
Dibaratun.[68]

On September 11, 2008, Atty. Ballelos submitted two motions, to wit: (a) a
manifestation and motion authorizing a certain Abdulmajeed Djamla to receive his
attorneys fees equivalent of 15% of the judgment award,[69] and (b) a motion to
register his attorneys lien that he claimed was contingent.[70]

Both Atty. Dibaratun and Atty. Ballelos posited that their entitlement to attorneys
fees was contingent. Yet, a contract for a contingent fees is an agreement in
writing by which the fees, usually a fixed percentage of what may be recovered in
the action, are made to depend upon the success in the effort to enforce or defend a
supposed right. Contingent fees depend upon an express contract, without which
the attorney can only recover on the basis of quantum meruit.[71] With neither Atty.
Dibaratun nor Atty. Ballelos presenting a written agreement bearing upon their
supposed contingent fees, the only way to determine their right to appropriate
attorneys fees is to apply the principle of quantum meruit.

Quantum meruit literally meaning as much as he deserves is used as basis for

determining an attorneys professional fees in the absence of an express
agreement.[72] The recovery of attorneys fees on the basis of quantum meruit is a
device that prevents an unscrupulous client from running away with the fruits of
the legal services of counsel without paying for it and also avoids unjust
enrichment on the part of the attorney himself.[73] An attorney must show that he is
entitled to reasonable compensation for the effort in pursuing the clients cause,
taking into account certain factors in fixing the amount of legal fees.[74]

Rule 20.01 of the Code of Professional Responsibility lists the guidelines for
determining the proper amount of attorney fees, to wit:

Rule 20.1 A lawyer shall be guided by the following factors in determining

his fees:

a) The time spent and the extent of the services rendered or required;

b) The novelty and difficult of the questions involved;

c) The important of the subject matter;

d) The skill demanded;

e) The probability of losing other employment as a result of acceptance of

the proffered case;

f) The customary charges for similar services and the schedule of fees of
the IBP chapter to which he belongs;

g) The amount involved in the controversy and the benefits resulting to the
client from the service;

h) The contingency or certainty of compensation;

i) The character of the employment, whether occasional or established;

and
 j) The professional standing of the lawyer.

In the event of a dispute as to the amount of fees between the attorney and
his client, and the intervention of the courts is sought, the determination requires
that there be evidence to prove the amount of fees and the extent and value of the
services rendered, taking into account the facts determinative
thereof.[75] Ordinarily, therefore, the determination of the attorneys fees on quantum
meruit is remanded to the lower court for the purpose. However, it will be just and
equitable to now assess and fix the attorneys fees of both attorneys in order that the
resolution of a comparatively simple controversy, as Justice Regalado put it
in Traders Royal Bank Employees Union-Independent v. NLRC,[76]would not be
needlessly prolonged, by taking into due consideration the accepted guidelines and
so much of the pertinent data as are extant in the records.

Atty. Dibaratun and Atty. Ballelos each claimed attorneys fees equivalent to 15%
of the principal award of P113,532,500.00, which was the amount granted by the
RTC in its decision. Considering that the attorneys fees will be defrayed by the
Heirs of Macabangkit out of their actual recovery from NPC, giving to each of the
two attorneys 15% of the principal award as attorneys fees would be excessive and
unconscionable from the point of view of the clients. Thus, the Court, which holds
and exercises the power to fix attorneys fees on a quantum meruit basis in the
absence of an express written agreement between the attorney and the client, now
fixes attorneys fees at 10% of the principal award of P113,532,500.00.
Whether it is Atty. Dibaratun or Atty. Ballelos, or both, who should receive
attorneys fees from the Heirs of Macabangkit is a question that the Court must next
determine and settle by considering the amount and quality of the work each
performed and the results each obtained.

Atty. Dibaratun, the attorney from the outset, unquestionably carried the bulk of
the legal demands of the case. He diligently prepared and timely filed in behalf of
the Heirs of Macabangkit every pleading and paper necessary in the full resolution
of the dispute, starting from the complaint until the very last motion filed in this
Court. He consistently appeared during the trial, and examined and cross-examined
all the witnesses presented at that stage of the proceedings. The nature, character,
and substance of each pleading and the motions he prepared for the Heirs of
Macabangkit indicated that he devoted substantial time and energy in researching
and preparing the case for the trial. He even advancedP250,000.00 out of his own
pocket to defray expenses from the time of the filing of the motion to execute
pending appeal until the case reached the Court.[77] His representation of all the
Heirs of Macabangkit was not denied by any of them.

We note that Atty. Dibaratun possessed some standing in the legal

profession and in his local community. He formerly served as a member of
the Board of Director of the Integrated Bar of the Philippines (IBP), Lanao del
Norte-Iligan City Chapter, and was an IBP national awardee as Best Legal Aid
Committee Chairman. He taught at Mindanao State University College of Law
Extension. He was a Municipal Mayor of Matungao, Lanao del Norte, and was
enthroned Sultan a Gaus.

In contrast, not much about the character and standing of Atty. Ballelos, as well as
the nature and quality of the legal services he rendered for the Heirs of
Macabangkit are in the records. The motions he filed in the

Court and in the CA lacked enlightening research and were insignificant to the
success of the clients cause. His legal service, if it can be called that, manifested no
depth or assiduousness, judging from the quality of the pleadings from him. His
written submissions in the case appeared either to have been lifted verbatim from
the pleadings previously filed by Atty. Dibaratun, or to have been merely quoted
from the decisions and resolutions of the RTC and the CA. Of the Heirs of
Macabangkit, only Cebu, Batowa-an, Sayana, Nasser, Manta, Mongkoy[78] and
Edgar gave their consent to Atty. Ballelos to appear in their behalf in the CA,
which he did despite Atty. Dibaratun not having yet filed any withdrawal of his
appearance. The Court did not receive any notice of appearance for the Heirs of
Macabangkit from Atty. Ballelos, but that capacity has meanwhile become
doubtful in the face of Amirs strong denial of having retained him.

In fairness and justice, the Court accords full recognition to Atty. Dibaratun
as the counsel de parte of the Heirs of Macabangkit who discharged his
responsibility in the prosecution of the clients cause to its successful end. It is he,
not Atty. Ballelos, who was entitled to the full amount of attorneys fees that the
clients ought to pay to their attorney. Given the amount and quality of his legal
work, his diligence and the time he expended in ensuring the success of his
prosecution of the clients cause, he deserves the recognition, notwithstanding that
some of the clients might appear to have retained Atty. Ballelos after the rendition
of a favorable judgment.[79]

Atty. Ballelos may claim only from Cebu, Batowa-an, Sayana, Nasser, Manta and
Edgar, the only parties who engaged him. The Court considers his work in the case
as very minimal. His compensation under the quantum meruitprinciple is fixed
at P5,000.00, and only the Heirs of Macabangkit earlier named are liable to him.

WHEREFORE, the Court AFFIRMS the decision promulgated on October 5,

2004 by the Court of Appeals, subject to the following MODIFICATIONS, to
wit:

(a) Interest at the rate of 12% per annum is IMPOSED on the

principal amount of P113,532,500.00 as just compensation,
reckoned from the filing of the complaint on November 21, 1997
until the full liability is paid;
 (b) The awards of P30,000.00 as rental fee, P200,000.00 as moral
damages, and P200,000.00 as exemplary damages are DELETED;
and

(c) The award of 15% attorneys fees decreed to be paid by National

Power Corporation to the Heirs of Macabangkit is DELETED.
The Court PARTLY GRANTS the motion to register attorneys lien filed by Atty.
Macarupung Dibaratun, and FIXES Atty. Dibaratuns attorneys fees on the basis
of quantum meruit at 10% of the principal award of P113,532,500.00.

The motion to register attorneys lien of Atty. Manuel D. Ballelos

is PARTLY GRANTED, and Atty. Ballelos is DECLARED ENTITLED TO
RECOVER from Cebu, Batowa-an, Sayana, Nasser, Manta and Edgar, all
surnamed Macabangkit, the amount of P5,000.00 as attorneys fees on the basis
of quantum meruit.

Costs of suit to be paid by the petitioner.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

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

REPUBLIC OF THE PHILIPPINES, plaintiff-appellant,

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

Office of the Solicitor General for plaintiff-appellant.

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

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

Plaintiff-appellant, the Republic of the Philippines, (hereinafter referred to as the

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

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

and against defendant-appellee Maria Nieves Toledo Gozun (hereinafter referred to as

Toledo-Gozun over two parcels of land described as follows:

A parcel of land (Portion Lot Blk-1, Bureau of Lands Plan Psd, 26254.
Bounded on the NE by Lot 3, on the SE by Lot 3; on the SW by Lot 1-B,
Blk. 2 (equivalent to Lot 199-B Swo 23666; on the NW by AFP military
reservation. Containing an area of 450,273 square meters, more or less
and registered in the name of Maria Nieves Toledo-Gozun under TCT No.
8708 of the Register of Deeds of Pampanga. ..., and
 A parcel of land (Portion of lot 3, Blk-1, Bureau of Lands Plan Psd 26254.
Bounded on the NE by Lot No. 3, on the SE by school lot and national
road, on the SW by Lot 1-B Blk 2 (equivalent to Lot 199-B Swo 23666), on
the NW by Lot 1-B, Blk-1. Containing an area of 88,772 square meters,
more or less, and registered in the name of Maria Nieves Toledo Gozun
under TCT No. 8708 of the Register of Deeds of Pampanga, ....

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

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

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

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

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

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

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

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

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

On March 15,1961 the Commissioners submitted their report and recommendation,

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

After the parties-defendants and intervenors had filed their respective memoranda, and
the Republic, after several extensions of time, had adopted as its memorandum its
objections to the report of the Commissioners, the trial court, on May 26, 1961,
rendered its decision6 the dispositive portion of which reads as follows:
 WHEREFORE, taking into account all the foregoing circumstances, and
that the lands are titled, ... the rising trend of land values ..., and the
lowered purchasing power of the Philippine peso, the court finds that the
unanimous recommendation of the commissioners of ten (P10.00) pesos
per square meter for the three lots of the defendants subject of this action
is fair and just.

xxx xxx xxx

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

In respect to the defendant Castellvi, interest at 6% per annum will also be

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

The costs shall be charged to the plaintiff.

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

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

The Republic filed various ex-parte motions for extension of time within which to file its
record on appeal. The Republic's record on appeal was finally submitted on December
6, 1961.
Defendants Castellvi and Toledo-Gozun filed not only a joint opposition to the approval
of the Republic's record on appeal, but also a joint memorandum in support of their
opposition. The Republic also filed a memorandum in support of its prayer for the
approval of its record on appeal. On December 27, 1961 the trial court issued an order
declaring both the record on appeal filed by the Republic, and the record on appeal filed
by defendant Castellvi as having been filed out of time, thereby dismissing both
appeals.

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

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

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

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

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

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

---------

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

1. In finding the price of P10 per square meter of the lands subject of the
instant proceedings as just compensation;
 2. In holding that the "taking" of the properties under expropriation
commenced with the filing of this action;

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

of the Castellvi property to start from July of 1956;

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

discovered evidence.

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

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

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

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

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

CONTRACT OF LEASE
 This AGREEMENT OF LEASE MADE AND ENTERED into by and
between INTESTATE ESTATE OF ALFONSO DE CASTELLVI,
represented by CARMEN M. DE CASTELLVI, Judicial Administratrix ...
hereinafter called the LESSOR and THE REPUBLIC OF THE
PHILIPPINES represented by MAJ. GEN. CALIXTO DUQUE, Chief of
Staff of the ARMED FORCES OF THE PHILIPPINES, hereinafter called
the LESSEE,

WITNESSETH:

1. For and in consideration of the rentals hereinafter reserved and the

mutual terms, covenants and conditions of the parties, the LESSOR has,
and by these presents does, lease and let unto the LESSEE the following
described land together with the improvements thereon and
appurtenances thereof, viz:

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

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

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

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

Pampanga ...

of which premises, the LESSOR warrants that he/she/they/is/are the registered

owner(s) and with full authority to execute a contract of this nature.

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

3. The LESSOR hereby warrants that the LESSEE shall have quiet,
peaceful and undisturbed possession of the demised premises throughout
the full term or period of this lease and the LESSOR undertakes without
cost to the LESSEE to eject all trespassers, but should the LESSOR fail to
do so, the LESSEE at its option may proceed to do so at the expense of
the LESSOR. The LESSOR further agrees that should he/she/they sell or
encumber all or any part of the herein described premises during the
period of this lease, any conveyance will be conditioned on the right of the
LESSEE hereunder.
 4. The LESSEE shall pay to the LESSOR as monthly rentals under this
lease the sum of FOUR HUNDRED FIFTY-FIVE PESOS & 58/100
(P455.58) ...

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

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

7. The LESSEE should not be responsible, except under special

legislation for any damages to the premises by reason of combat
operations, acts of GOD, the elements or other acts and deeds not due to
the negligence on the part of the LESSEE.

8. This LEASE AGREEMENT supersedes and voids any and all

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

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

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

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

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

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

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

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

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

Taking' under the power of eminent domain may be defined generally as

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

Pursuant to the aforecited authority, a number of circumstances must be present in the

"taking" of property for purposes of eminent domain.

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

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

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

Fourth, the property must be devoted to a public use or otherwise informally

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

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

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

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

We hold, therefore, that the "taking" of the Castellvi property should not be reckoned as
of the year 1947 when the Republic first occupied the same pursuant to the contract of
lease, and that the just compensation to be paid for the Castellvi property should not be
determined on the basis of the value of the property as of that year. The lower court did
not commit an error when it held that the "taking" of the property under expropriation
commenced with the filing of the complaint in this case.
Under Section 4 of Rule 67 of the Rules of Court, 16 the "just compensation" is to be
determined as of the date of the filing of the complaint. This Court has ruled that when
the taking of the property sought to be expropriated coincides with the commencement
of the expropriation proceedings, or takes place subsequent to the filing of the complaint
for eminent domain, the just compensation should be determined as of the date of the
filing of the complaint. (Republic vs. Philippine National Bank, L-14158, April 12, 1961, 1
SCRA 957, 961-962). In the instant case, it is undisputed that the Republic was placed
in possession of the Castellvi property, by authority of the court, on August 10, 1959.
The "taking" of the Castellvi property for the purposes of determining the just
compensation to be paid must, therefore, be reckoned as of June 26, 1959 when the
complaint for eminent domain was filed.

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

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

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

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

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

In determining the value of land appropriated for public purposes, the

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

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

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

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

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

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

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

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

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

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

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

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

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

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

... This expropriation case is specially pointed out, because the

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

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

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

From the above and considering further that the lowest as well as the
highest price per square meter obtainable in the market of Pampanga
relative to subdivision lots within its jurisdiction in the year 1959 is very
well known by the Commissioners, the Commission finds that the lowest
price that can be awarded to the lands in question is P10.00 per square
meter. 26
The lower court did not altogether accept the findings of the Commissioners based on
the documentary evidence, but it considered the documentary evidence as basis for
comparison in determining land values. The lower court arrived at the conclusion that
"the unanimous recommendation of the commissioners of ten (P10.00) pesos per
square meter for the three lots of the defendants subject of this action is fair and
just". 27 In arriving at its conclusion, the lower court took into consideration, among other
circumstances, that the lands are titled, that there is a rising trend of land values, and
the lowered purchasing power of the Philippine peso.

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

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

The report of the commissioners of appraisal in condemnation proceedings are not

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

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

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

In ordering the Republic to pay 6% interest on the total value of the land of Castellvi
from July 1, 1956 to July 10, 1959, the lower court held that the Republic had illegally
possessed the land of Castellvi from July 1, 1956, after its lease of the land had expired
on June 30, 1956, until August 10, 1959 when the Republic was placed in possession of
the land pursuant to the writ of possession issued by the court. What really happened
was that the Republic continued to occupy the land of Castellvi after the expiration of its
lease on June 30, 1956, so much so that Castellvi filed an ejectment case against the
Republic in the Court of First Instance of Pampanga. 31 However, while that ejectment
case was pending, the Republic filed the complaint for eminent domain in the present
case and was placed in possession of the land on August 10, 1959, and because of the
institution of the expropriation proceedings the ejectment case was later dismissed. In
the order dismissing the ejectment case, the Court of First Instance of Pampanga said:

Plaintiff has agreed, as a matter of fact has already signed an agreement

with defendants, whereby she had agreed to receive the rent of the lands,
subject matter of the instant case from June 30, 1956 up to 1959 when the
Philippine Air Force was placed in possession by virtue of an order of the
Court upon depositing the provisional amount as fixed by the Provincial
Appraisal Committee with the Provincial Treasurer of
Pampanga; ...

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

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

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

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

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

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

The lower court, in a well-reasoned order, found that the sales made by Serafin
Francisco to Pablo Narciso and that made by Jesus Toledo to the Land Tenure
Administration were immaterial and irrelevant, because those sales covered sugarlands
with sugar quotas, while the lands sought to be expropriated in the instant case are
residential lands. The lower court also concluded that the land sold by the spouses
Laird to the spouses Aguas was a sugar land.

We agree with the trial court. In eminent domain proceedings, in order that evidence as
to the sale price of other lands may be admitted in evidence to prove the fair market
value of the land sought to be expropriated, the lands must, among other things, be
shown to be similar.
But even assuming, gratia argumenti, that the lands mentioned in those deeds of sale
were residential, the evidence would still not warrant the grant of a new trial, for said
evidence could have been discovered and produced at the trial, and they cannot be
considered newly discovered evidence as contemplated in Section 1(b) of Rule 37 of
the Rules of Court. Regarding this point, the trial court said:

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

The land described in the deed of sale executed by Serafin Francisco,

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

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

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

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

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

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

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

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

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

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

(d) the Republic must pay appellee Toledo-Gozun the sum of

P2,695,225.00 as the just compensation for her two parcels of land that
have a total area of 539,045 square meters, minus the sum of
P107,809.00 that she withdrew out of the amount that was deposited in
court as the provisional value of her lands, with interest at the rate of 6%,
per annum from July 10, 1959 until the day full payment is made or
deposited in court; (e) the attorney's lien of Atty. Alberto Cacnio is
enforced; and

(f) the costs should be paid by appellant Republic of the Philippines, as

provided in Section 12, Rule 67, and in Section 13, Rule 141, of the Rules
of Court.

IT IS SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-26400 February 29, 1972

VICTORIA AMIGABLE, plaintiff-appellant,

vs.
NICOLAS CUENCA, as Commissioner of Public Highways and REPUBLIC OF THE
PHILIPPINES, defendants-appellees.

MAKALINTAL, J.:p
This is an appeal from the decision of the Court of First Instance of Cebu in its Civil Case No. R-5977, dismissing the plaintiff's complaint.

Victoria Amigable, the appellant herein, is the registered owner of Lot No. 639 of the
Banilad Estate in Cebu City as shown by Transfer Certificate of Title No. T-18060,
which superseded Transfer Certificate of Title No. RT-3272 (T-3435) issued to her by
the Register of Deeds of Cebu on February 1, 1924. No annotation in favor of the
government of any right or interest in the property appears at the back of the certificate.
Without prior expropriation or negotiated sale, the government used a portion of said lot,
with an area of 6,167 square meters, for the construction of the Mango and Gorordo
Avenues.

It appears that said avenues were already existing in 1921 although "they were in bad
condition and very narrow, unlike the wide and beautiful avenues that they are now,"
and "that the tracing of said roads was begun in 1924, and the formal construction in
1925." *
On March 27, 1958 Amigable's counsel wrote the President of the Philippines, requesting payment of the portion of her lot which had been
appropriated by the government. The claim was indorsed to the Auditor General, who disallowed it in his 9th Indorsement dated December 9,
1958. A copy of said indorsement was transmitted to Amigable's counsel by the Office of the President on January 7, 1959.

On February 6, 1959 Amigable filed in the court a quo a complaint, which was later
amended on April 17, 1959 upon motion of the defendants, against the Republic of the
Philippines and Nicolas Cuenca, in his capacity as Commissioner of Public Highways
for the recovery of ownership and possession of the 6,167 square meters of land
traversed by the Mango and Gorordo Avenues. She also sought the payment of
compensatory damages in the sum of P50,000.00 for the illegal occupation of her land,
moral damages in the sum of P25,000.00, attorney's fees in the sum of P5,000.00 and
the costs of the suit.
Within the reglementary period the defendants filed a joint answer denying the material
allegations of the complaint and interposing the following affirmative defenses, to wit: (1)
that the action was premature, the claim not having been filed first with the Office of the
Auditor General; (2) that the right of action for the recovery of any amount which might
be due the plaintiff, if any, had already prescribed; (3) that the action being a suit
against the Government, the claim for moral damages, attorney's fees and costs had no
valid basis since as to these items the Government had not given its consent to be
sued; and (4) that inasmuch as it was the province of Cebu that appropriated and used
the area involved in the construction of Mango Avenue, plaintiff had no cause of action
against the defendants.

During the scheduled hearings nobody appeared for the defendants notwithstanding
due notice, so the trial court proceeded to receive the plaintiff's evidence ex parte. On
July 29, 1959 said court rendered its decision holding that it had no jurisdiction over the
plaintiff's cause of action for the recovery of possession and ownership of the portion of
her lot in question on the ground that the government cannot be sued without its
consent; that it had neither original nor appellate jurisdiction to hear, try and decide
plaintiff's claim for compensatory damages in the sum of P50,000.00, the same being a
money claim against the government; and that the claim for moral damages had long
prescribed, nor did it have jurisdiction over said claim because the government had not
given its consent to be sued. Accordingly, the complaint was dismissed. Unable to
secure a reconsideration, the plaintiff appealed to the Court of Appeals, which
subsequently certified the case to Us, there being no question of fact involved.

The issue here is whether or not the appellant may properly sue the government under
the facts of the case.

In the case of Ministerio vs. Court of First Instance of Cebu,1 involving a claim for
payment of the value of a portion of land used for the widening of the Gorordo Avenue
in Cebu City, this Court, through Mr. Justice Enrique M. Fernando, held that where the
government takes away property from a private landowner for public use without going
through the legal process of expropriation or negotiated sale, the aggrieved party may
properly maintain a suit against the government without thereby violating the doctrine of
governmental immunity from suit without its consent. We there said: .

... . If the constitutional mandate that the owner be compensated for

property taken for public use were to be respected, as it should, then a
suit of this character should not be summarily dismissed. 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 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.

Considering that no annotation in favor of the government appears at the back of her
certificate of title and that she has not executed any deed of conveyance of any portion
of her lot to the government, the appellant remains the owner of the whole lot. As
registered owner, she could bring an action to recover possession of the portion of land
in question at anytime because possession is one of the attributes of ownership.
However, since restoration of possession of said portion by the government is neither
convenient nor feasible at this time because it is now and has been used for road
purposes, the only relief available is for the government to make due compensation
which it could and should have done years ago. To determine the due compensation for
the land, the basis should be the price or value thereof at the time of the taking. 2

As regards the claim for damages, the plaintiff is entitled thereto in the form of legal
interest on the price of the land from the time it was taken up to the time that payment is
made by the government.3 In addition, the government should pay for attorney's fees,
the amount of which should be fixed by the trial court after hearing.

WHEREFORE, the decision appealed from is hereby set aside and the case remanded
to the court a quo for the determination of compensation, including attorney's fees, to
which the appellant is entitled as above indicated. No pronouncement as to costs.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. Nos. L-60549, 60553 to 60555 October 26, 1983

HEIRS OF JUANCHO ARDONA (represented by Gloria Ardona) ANASTACIO C.

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

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

The Solicitor General for respondent Judge.

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

GUTIERREZ, JR., J.:

This is a petition for certiorari with preliminary injunction challenging the constitutionality
of Presidential Decree No. 564, the Revised Charter of the Philippine Tourism Authority,
and Proclamation No. 2052 declaring the barangays of Sibugay, Malubog, Babag and
Sirao including the proposed Lusaran Dam in the City of Cebu and in the municipalities
of Argao and Dalaguete in the province of Cebu as tourist zones. The petitioners ask
that we restrain respondent Court of First Instance of Cebu and the Philippine Tourism
Authority (PTA) from enforcing and implementing the writs of possession issued in four
(4) expropriation cases filed by PTA against the petitioners: Civil Cases Nos. R-19562,
R-19684, R-20701, and R-21608 of the Court of First Instance of Cebu (Branch 1).

The Philippine Tourism Authority filed four (4) Complaints with the Court of First
Instance of Cebu City for the expropriation of some 282 hectares of rolling land situated
in barangays Malubog and Babag, Cebu City, under PTA's express authority "to acquire
by purchase, by negotiation or by condemnation proceedings any private land within
and without the tourist zones" for the purposes indicated in Section 5, paragraph B(2),
of its Revised Charter (PD 564), more specifically, for the development into integrated
resort complexes of selected and well-defined geographic areas with potential tourism
value. As uniformly alleged in the complaints, the purposes of the expropriation are:

xxx xxx xxx

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

The development plan, covering approximately 1,000 hectares, includes

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

Complimentary and support facilities for the project will be constructed,

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

xxx xxx xxx

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

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

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

On May 25, 1982, petitioners filed this petition questioning the orders of the respondent
Judge, The respondents have correctly restated the grounds in the petition as follows:

xxx xxx xxx

A. The complaints for expropriation lack basis because the Constitution

does not provide for the expropriation of private property for tourism or
other related purposes;

B. The writs of possession or orders authorizing PTA to take immediate

possession is premature because the "public use" character of the taking
has not been previously demonstrated;

C. The taking is not for public use in contemplation of eminent domain law;

D. The properties in question have been previously declared a land reform

area; consequently, the implementation of the social justice pro- ,vision of
the Constitution on agrarian reform is paramount to the right of the State
to expropriate for the purposes intended;
 E. Proclamation No. 2052 declaring certain barangays in Cebu City, which
include the lands subject of expropriation as within a tourist zone, is
unconstitutional for it impairs the obligation of contracts; "F. Since the
properties are within a land reform area, it is the Court of Agrarian
Relations, not the lower court, that has jurisdiction pursuant to Pres.
Decree No. 946;

F. The forcible ejectment of defendants from the premises constitutes a

criminal act under Pres. Decree No. 583;

In their memorandum, the petitioners have summarized the issues as follows:

I. Enforcement of the Writ of Possession is Premature:

II. Presidential Decree 564 Amending Presidential Decree l89 is

Constitutionally Repugnant:

III. The Condemnation is not for Public Use, Therefore, Unconstitutional:

IV. The Expropriation for Tourism Purposes of Lands Covered by the Land
Reform Program Violates the Constitution:

V. Presidential Proclamation 2052 is Unconstitutional:

VI. Presidential Decree No 1533 is Unconstitutional:

VII. The Court of First Instance has no Jurisdiction:

VIII. The Filing of the Present Petition is not Premature.

The issues raised by the petitioners revolve around the proposition that the actions to
expropriate their properties are constitutionally infirm because nowhere in the
Constitution can a provision be found which allows the taking of private property for the
promotion of tourism.

The petitioners' arguments in their pleadings in support of the above proposition are
subsumed under the following headings:

1. Non-compliance with the "public use" requirement under the eminent

domain provision of the Bill of Rights.

2. Disregard of the land reform nature of the property being expropriated.

3. Impairment of the obligation of contracts.

There are three provisions of the Constitution which directly provide for the exercise of
the power of eminent domain. Section 2, Article IV states that private property shall not
be taken for public use without just compensation. Section 6, Article XIV allows the
State, in the interest of national welfare or defense and upon payment of just
compensation to transfer to public ownership, utilities and other private enterprises to be
operated by the government. Section 13, Article XIV states that the Batasang
Pambansa may authorize upon payment of just compensation the expropriation of
private lands to be subdivided into small lots and conveyed at cost to deserving citizens.

While not directly mentioning the expropriation of private properties upon payment of
just compensation, the provisions on social justice and agrarian reforms which allow the
exercise of police power together with the power of eminent domain in the
implementation of constitutional objectives are even more far-reaching insofar as taking
of private property is concerned.

Section 6, Article II provides:

Sec. 6. The State shall promote social justice to ensure the dignity,
welfare, and security of all the people. Towards its end, the State shall
regulate the acquisition, ownership, use, enjoyment, and disposition of
private property, and equitably diffuse property ownership and profits.

xxx xxx xxx

Section 12, Article XIV provides:

See. 12. The State shall formulate and implement an agrarian reform
program aimed at emancipating the tenant from the bondage of the soil
and achieving the goals enunciated in this Constitution.

The equitable diffusion of property ownership in the promotion of social justice implies
the exercise, whenever necessary, of the power to expropriate private property.
Likewise there can be no meaningful agrarian reform program unless the power to
expropriate is utilized.

We cite all the above provisions on the power to expropriate because of the petitioners'
insistence on a restrictive view of the eminent domain provision. The thrust of all
constitutional provisions on expropriation is in the opposite direction.

As early as 1919, this Court in Visayan Refining Co. v. Samus (40 Phil. 550)
categorized the restrictive view as wholly erroneous and based on a misconception of
fundamentals.

The petitioners look for the word "tourism" in the Constitution. Understandably the
search would be in vain. The policy objectives of the framers can be expressed only in
general terms such as social justice, local autonomy, conservation and development of
the national patrimony, public interest, and general welfare, among others. The
programs to achieve these objectives vary from time to time and according to place, To
freeze specific programs like Tourism into express constitutional provisions would make
the Constitution more prolix than a bulky code and require of the framers a prescience
beyond Delphic proportions. The particular mention in the Constitution of agrarian
reform and the transfer of utilities and other private enterprises to public ownership
merely underscores the magnitude of the problems sought to be remedied by these
programs. They do not preclude nor limit the exercise of the power of eminent domain
for such purposes like tourism and other development programs.

In the leading case of Visayan Refining Co. v. Camus (supra), this Court emphasized
that the power of eminent domain is inseparable from sovereignty being essential to the
existence of the State and inherent in government even in its most primitive forms. The
only purpose of the provision in the Bill of Rights is to provide some form of restraint on
the sovereign power. It is not a grant of authority -

The power of eminent domain does not depend for its existence on a
specific grant in the constitution. It is inherent in sovereignty and exists in
a sovereign state without any recognition of it in the constitution. The
provision found in most of the state constitutions relating to the taking of
property for the public use do not by implication grant the power to the
government of the state, but limit a power which would otherwise be
without limit.

The constitutional restraints are public use and just compensation.

Do the purposes of the taking in this case constitute "public use"?

The petitioners ask us to adopt a strict construction and declare that "public use" means
literally use by the public and that "public use" is not synonymous with "public interest",
"public benefit", or "public welfare" and much less "public convenience. "

The petitioners face two major obstacles. First, their contention which is rather
sweeping in its call for a retreat from the public welfare orientation is unduly restrictive
and outmoded. Second, no less than the lawmaker has made a policy determination
that the power of eminent domain may be exercised in the promotion and development
of Philippine tourism.

The restrictive view of public use may be appropriate for a nation which circumscribes
the scope of government activities and public concerns and which possesses big and
correctly located public lands that obviate the need to take private property for public
purposes. Neither circumstance applies to the Philippines. We have never been a
laissez faire State, And the necessities which impel the exertion of sovereign power are
all too often found in areas of scarce public land or limited government resources.
Certain aspects of parliamentary government were introduced by the 1973 amendments
to the Constitution with further modifications in the 1976 and 1981 amendments. Insofar
as the executive and legislative departments are concerned, the traditional concept of
checks and balances in a presidential form was considerably modified to remove some
roadblocks in the expeditious implementation of national policies. There was no such
change for the judiciary. We remain as a checking and balancing department even as
all strive to maintain respect for constitutional boundaries. At the same time, the
philosophy of coordination in the pursuit of developmental goals implicit in the
amendments also constrains in the judiciary to defer to legislative discretion iii the
judicial review of programs for economic development and social progress unless a
clear case of constitutional infirmity is established. We cannot stop the legitimate
exercise of power on an invocation of grounds better left interred in a bygone age and
time.* As we review the efforts of the political departments to bring about self-
sufficiency, if not eventual abundance, we continue to maintain the liberal approach
because the primary responsibility and the discretion belong to them.

There can be no doubt that expropriation for such traditions' purposes as the
construction of roads, bridges, ports, waterworks, schools, electric and
telecommunications systems, hydroelectric power plants, markets and slaughterhouses,
parks, hospitals, government office buildings, and flood control or irrigation systems is
valid. However, the concept of public use is not limited to traditional purposes. Here as
elsewhere the Idea that "public use" is strictly limited to clear cases of "use by the
public" has been discarded.

In the United States, the rule was enunciated in Berman v. Parker (348 U.S. 25; 99 L.
ed. 27) as follows:

We do not sit to determine whether a particular housing project is or is not

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

Once the object is within the authority of Congress, the right to realize it
through the exercise of eminent domain is clear. For the power of eminent
domain is merely the means to the end. See Luxton v. North River Bridge
Co. 153 US 525, 529, 530, 38 L ed 808, 810, 14 S Ct 891; United States
v. Gettysburg Electric R. Co. 160 US 668, 679, 40 L ed 576, 580, 16 S Ct
427.
In an earlier American case, where a village was isolated from the rest of North Carolina
because of the flooding of the reservoir of a dam thus making the provision of police,
school, and health services unjustifiably expensive, the government decided to
expropriate the private properties in the village and the entire area was made part of an
adjoining national park. The district court and the appellate court ruled against the
expropriation or excess condemnation. The Court of Appeals applied the "use by the
public" test and stated that the only land needed for public use was the area directly
flooded by the reservoir. The village may have been cut off by the dam but to also
condemn it was excess condemnation not valid under the "Public use" requirement. The
U.S. Supreme Court in United States ex rel TVA v. Welch (327 U.S, 546; 90 L. ed 843)
unanimously reversed the lower courts. It stated:

The Circuit Court of Appeals, without expressly relying on a compelling

rule of construction that would give the restrictive scope to the T.V.A. Act
given it by the district court, also interpreted the statute narrowly. It first
analyzed the facts by segregating the total problem into distinct parts, and
thus came to the conclusion that T.V.A.'s purpose in condemning the land
in question was only one to reduce its liability arising from the destruction
of the highway. The Court held that use of the lands for that purpose is a
"private" and not a "public use" or, at best, a "public use" not authorized by
the statute. we are unable to agree with the reasoning and conclusion of
the Circuit Court of Appeals.

We think that it is the function of Congress to decide what type of taking is

for a public use and that the agency authorized to do the taking may do so
to the still extent of its statutory authority, United States v. Gettysburg
Electric R. Co. 160 US 668, 679, 40 L ed 576, 580, 16 S Ct 427. ...

xxx xxx xxx

... But whatever may be the scope of the judicial power to determine what
is a "public use" in Fourteenth Amendment controversies, this Court has
said that when Congress has spoken on this subject "Its decision is
entitled to deference until it is shown to involve an impossibility." Old
Dominion Land Co. v. United States, 269, US 55, 66, 70 L ed 162, 46 S Ct
39. Any departure from this judicial restraint would result in courts deciding
on what is and is not a governmental function and in their invalidating
legislation on the basis of their view on that question at the moment of
decision, a practice which has proved impracticable in other fields. See
Case v. Bowles decided February 4, 1946, 437 US 92, 101, ante, 552,
559, 66 S Ct 438. New York v. United States, 326 US 572 ante 326, 66 S
Ct 310). We hold that the T.V.A. took the tracts here involved for a public
purpose, if, as we think is the case, Congress authorized the Authority to
acquire, hold, and use the lands to carry out the purposes of the T.V.A.
Act.
In the Philippines, Chief Justice Enrique M. Fernando has aptly summarized the
statutory and judicial trend as follows:

The taking to be valid must be for public use. There was a time when it
was felt that a literal meaning should be attached to such a requirement.
Whatever project is undertaken must be for the public to enjoy, as in the
case of streets or parks. Otherwise, expropriation is not allowable. It is not
any more. As long as the purpose of the taking is public, then the power of
eminent domain comes into play. As just noted, the constitution in at least
two cases, to remove any doubt, determines what is public use. One is the
expropriation of lands to be subdivided into small lots for resale at cost to
individuals. The other is in the transfer, through the exercise of this power,
of utilities and other private enterprise to the government. It is accurate to
state then that at present whatever may be beneficially employed for the
general welfare satisfies the requirement of public use. (Fernando, The
Constitution of the Philippines, 2nd ed., pp. 523-524)

The petitioners' contention that the promotion of tourism is not "public use" because
private concessioners would be allowed to maintain various facilities such as
restaurants, hotels, stores, etc. inside the tourist complex is impressed with even less
merit. Private bus firms, taxicab fleets, roadside restaurants, and other private
businesses using public streets end highways do not diminish in the least bit the public
character of expropriations for roads and streets. The lease of store spaces in
underpasses of streets built on expropriated land does not make the taking for a private
purpose. Airports and piers catering exclusively to private airlines and shipping
companies are still for public use. The expropriation of private land for slum clearance
and urban development is for a public purpose even if the developed area is later sold
to private homeowners, commercial firms, entertainment and service companies, and
other private concerns.

The petitioners have also failed to overcome the deference that is appropriately
accorded to formulations of national policy expressed in legislation. The rule in Berman
u. Parker (supra) of deference to legislative policy even if such policy might mean taking
from one private person and conferring on another private person applies as well as in
the Philippines.

... Once the object is within the authority of Congress, the means by which
it will be attained is also for Congress to determine. Here one of the
means chosen is the use of private enterprise for redevelopment of the
area. Appellants argue that this makes the project a taking from one
businessman for the benefit of another businessman. But the means of
executing the project are for Congress and Congress alone to determine,
once the public purpose has been established. Selb Luxton v. North River
Bridge Co. (US) supra; cf. Highland v. Russel Car & Snow Plow Co. 279
US 253, 73 L ed 688, 49 S Ct 314. The public end may be as well or
better served through an agency of private enterprise than through a
 department of government-or so the Congress might conclude. We cannot
say that public ownership is the sole method of promoting the public
purposes of community redevelopment projects. What we have said also
disposes of any contention concerning the fact that certain property
owners in the area may be permitted to repurchase their properties for
redevelopment in harmony with the over-all plan. That, too, is a legitimate
means which Congress and its agencies may adopt, if they choose.
(Berman v. Parker, 99 L ed 38, 348 US 33, 34)

An examination of the language in the 1919 cases of City of Manila v. Chinese

Community of Manila (40 Phil, 349) and Visayan Refining Co. vs. Camus, earlier cited,
shows that from the very start of constitutional government in our country judicial
deference to legislative policy has been clear and manifest in eminent domain
proceedings.

The expressions of national policy are found in the revised charter of the Philippine
Tourism Authority, Presidential Decree No. 564:

WHEREAS, it is the avowed aim of the government to promote Philippine

tourism and work for its accelerated and balanced growth as well as for
economy and expediency in the development of the tourism plant of the
country;

xxx xxx xxx

SECTION 1. Declaration of Policy. - It is hereby declared to be the policy

of the State to promote, encourage, and develop Philippine tourism as an
instrument in accelerating the development of the country, of
strengthening the country's foreign exchange reserve position, and of
protecting Philippine culture, history, traditions and natural beauty,
internationally as well as domestically.

The power of eminent domain is expressly provided for under Section 5 B(2) as follows:

xxx xxx xxx

2. Acquisition of Private Lands, Power of Eminent Domain. — To acquire

by purchase, by negotiation or by condemnation proceedings any private
land within and without the tourist zones for any of the following reasons:
(a) consolidation of lands for tourist zone development purposes, (b)
prevention of land speculation in areas declared as tourist zones, (c)
acquisition of right of way to the zones, (d) protection of water shed areas
and natural assets with tourism value, and (e) for any other purpose
expressly authorized under this Decree and accordingly, to exercise the
power of eminent domain under its own name, which shall proceed in the
manner prescribed by law and/or the Rules of Court on condemnation
 proceedings. The Authority may use any mode of payment which it may
deem expedient and acceptable to the land owners: Provided, That in
case bonds are used as payment, the conditions and restrictions set forth
in Chapter III, Section 8 to 13 inclusively, of this Decree shall apply.

xxx xxx xxx

The petitioners rely on the Land Reform Program of the government in raising their
second argument. According to them, assuming that PTA has the right to expropriate,
the properties subject of expropriation may not be taken for the purposes intended since
they are within the coverage of "operation land transfer" under the land reform program.
Petitioners claim that certificates of land transfer (CLT'S) and emancipation patents
have already been issued to them thereby making the lands expropriated within the
coverage of the land reform area under Presidential Decree No. 2; that the agrarian
reform program occupies a higher level in the order of priorities than other State policies
like those relating to the health and physical well- being of the people; and that property
already taken for public use may not be taken for another public use.

We have considered the above arguments with scrupulous and thorough

circumspection. For indeed any claim of rights under the social justice and land reform
provisions of the Constitution deserves the most serious consideration. The Petitioners,
however, have failed to show that the area being developed is indeed a land reform
area and that the affected persons have emancipation patents and certificates of land
transfer.

The records show that the area being developed into a tourism complex consists of
more than 808 hectares, almost all of which is not affected by the land reform program.
The portion being expropriated is 282 hectares of hilly and unproductive land where
even subsistence farming of crops other than rice and corn can hardly survive. And of
the 282 disputed hectares, only 8,970 square meters-less than one hectare-is affected
by Operation Land Transfer. Of the 40 defendants, only two have emancipation patents
for the less than one hectare of land affected. And this 8,970 square meters parcel of
land is not even within the sports complex proper but forms part of the 32 hectares
resettlement area where the petitioners and others similarly situated would be provided
with proper housing, subsidiary employment, community centers, schools, and essential
services like water and electricity-which are non-existent in the expropriated lands. We
see no need under the facts of this petition to rule on whether one public purpose is
superior or inferior to another purpose or engage in a balancing of competing public
interests. The petitioners have also failed to overcome the showing that the taking of the
8,970 square meters covered by Operation Land Transfer forms a necessary part of an
inseparable transaction involving the development of the 808 hectares tourism complex.
And certainly, the human settlement needs of the many beneficiaries of the 32 hectares
resettlement area should prevail over the property rights of two of their compatriots.

The invocation of the contracts clause has no merit. The non-impairment clause has
never been a barrier to the exercise of police power and likewise eminent domain. As
stated in Manigault v. Springs (199 U.S. 473) "parties by entering into contracts may not
stop the legislature from enacting laws intended for the public good."

The applicable doctrine is expressed in Arce v. Genato (69 SCRA 544) which involved
the expropriation of land for a public plaza. The Court stated:

xxx xxx xxx

... What is claimed is that there must be a showing of necessity for such
condemnation and that it was not done in this case in support of such a
view, reliance is placed on City of Manila v. Arenano Law Colleges. (85
Phil. 663 [1950]) That doctrine itself is based on the earlier case of City of
Manila v. Chinese Community of Manila, (50 Phil. 349) also, like Camus, a
1919 decision. As could be discerned, however, in the Arellano Law
Colleges decision. it was the antiquarian view of Blackstone with its
sanctification of the right to one's estate on which such an observation
was based. As did appear in his Commentaries: "So great is the regard of
the law for private property that it will not, authorize the least violation of it,
even for the public good, unless there exists a very great necessity
thereof." Even the most , cursory glance at such well-nigh absolutist
concept of property would show its obsolete character at least for
Philippine constitutional law. It cannot survive the test of the 1935
Constitution with its mandates on social justice and protection to labor.
(Article II, Section 5 of the 1935 Constitution reads: "The promotion of
social justice to unsure the well-being and economic security of all the
people should be the concern of the State." Article XI, Section 6 of the
same Constitution provides: "The State shall afford protection to labor,
especially to working women and minors, and shall regulate the relation
between landowner and tenant, and between labor and capital in industry
and in agriculture. The State may provide for compulsory arbitration.")
What is more, the present Constitution pays even less heed to the claims
of property and rightly so. After stating that the State shall promote social
justice, it continues: "Towards this end, the State shall regulate the
acquisition, ownership, use, enjoyment, and disposition of private
property, and equitably diffuse property ownership and profits." (That is
the second sentence of Article II, Section 6 of the Constitution) If there is
any need for explicit confirmation of what was set forth in Presidential
Decree No. 42, the above provision supplies it. Moreover, that is merely to
accord to what of late has been the consistent course of decisions of this
Court whenever property rights are pressed unduly. (Cf. Alalayan v.
National Power Corporation, L-24396, July 29, 1968, 24 SCRA 172;
Agricultural Credit and Cooperative Financing Administration v.
Confederation of Unions, L-21484, Nov. 29, 1969, 30 SCRA 649; Edu v.
Ericta, L-32096, Oct. 24, 1970, 35 SCRA 481; Phil. Virginia Tobacco
Administration v. Court of Industrial Relations, L-32052, July 25, 1975, 65
SCRA 416) The statement therefore, that there could be discerned a
 constitutional objection to a lower court applying a Presidential Decree,
when it leaves no doubt that a grantee of the power of eminent domain
need not prove the necessity for the expropriation, carries its own
refutation.

xxx xxx xxx

The issue of prematurity is also raised by the petitioners. They claim that since the
necessity for the taking has not been previously established, the issuance of the orders
authorizing the PTA to take immediate possession of the premises, as well as the
corresponding writs of possession was premature.

Under Presidential Decree No. 42, as amended by Presidential Decree No. 1533, the
government, its agency or instrumentality, as plaintiff in an expropriation proceedings is
authorized to take immediate possession, control and disposition of the property and the
improvements, with power of demolition, notwithstanding the pendency of the issues
before the court, upon deposit with the Philippine National Bank of an amount
equivalent to 10% of the value of the property expropriated. The issue of immediate
possession has been settled in Arce v. Genato (supra). In answer to the issue:

... whether the order of respondent Judge in an expropriation case

allowing the other respondent, ... to take immediate possession of the
parcel of land sought to be condemned for the beautification of its public
plaza, without a prior hearing to determine the necessity for the exercise
of the power of eminent domain, is vitiated by jurisdictional defect, ...

this Court held that:

... It is not disputed that in issuing such order, respondent Judge relied on
Presidential Decree No. 42 issued on the 9th of November, 1972.
(Presidential Decree No. 42 is entitled "Authorizing the Plaintiff in Eminent
Domain Proceedings to Take Possession of the Property involved Upon
Depositing the Assessed Value for Purposes of Taxation.") The question
as thus posed does not occasion any difficulty as to the answer to be
given. This petition for certiorari must fail, there being no showing that
compliance with the Presidential Decree, which under the Transitory
Provisions is deemed a part of the law of the land, (According to Article
XVII, Section 3 par. (2) of the Constitution: "All proclamations, orders,
decrees, instructions and acts promulgated, issued, or done by the
incumbent President shall be part of the law of the land, and shall remain
valid, legal, binding, and effective even after lifting of martial law or the
ratification of this Constitution, unless modified, revoked, or superseded by
subsequent proclamations. orders, decrees instructions, or other acts of
the incumbent President, or unless expressly and explicitly modified or
repealed by the regular National Assembly") would be characterized as
 either an act in excess of jurisdiction or a grave abuse of discretion. So we
rule.

Likewise in Ramos v. Philippine Tourism Authority (G.R. Nos. 52449-50, June 9, 1980),
this Court held:

... condemnation or expropriation proceedings is in the nature of one that

is quasi-in-rem wherein the fact that the owner of the property is made a
party is not essentially indispensable insofar was least as it conncerns is
the immediate taking of possession of the property and the preliminary
determination of its value, including the amount to be deposited.

In their last argument, the petitioners claim that a consequence of the expropriation
proceedings would be their forcible ejectment. They contend that such forcible
ejectment is a criminal act under Presidential Decree No. 583. This contention is not
valid. Presidential Decree No. 583 prohibits the taking cognizance or implementation of
orders designed to obstruct the land reform program. It refers to the harassment of
tenant- farmers who try to enforce emancipation rights. It has nothing to do with the
expropriation by the State of lands needed for public purposes. As a matter of fact, the
expropriated area does not appear in the master lists of the Ministry of Agrarian
Reforms as a teranted area. The petitioners' bare allegations have not been supported
with particulars pointing to specific parcels which are subject of tenancy contracts. The
petitioners may be owner-tillers or may have some form of possessory or ownership
rights but there has been no showing of their being tenants on the disputed lands.

The petitioners have failed to overcome the burden of anyone trying to strike down a
statute or decree whose avowed purpose is the legislative perception is the public good.
A statute has in its favor the presumption of validity. All reasonable doubts should be
resolved in favor of the constitutionality of a law. The courts will not set aside a law as
violative of the Constitution except in a clear case (People v. Vera, 65 Phil. 56). And in
the absence of factual findings or evidence to rebut the presumption of validity, the
presumption prevails (Ermita-Malate Hotel, etc. v. Mayor of Manila, 20 SCRA 849;
Morfe v. Mutuc, 22 SCRA 424).

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

WHEREFORE, the instant petition for certiorari is hereby DISMISSE D for lack of merit.

SO ORDERED.
Fernando, C.J, Concepcion, Jr., Guerrero, Melencio-Herrera, Plana, Escolin and
Relova, JJ., concur.

Aquino, J, concurs in the result.

De Castro, J, is on leave.

Separate Opinions

MAKASIAR, J, concurring and dissenting:

It appearing that the petitioners are not tenants of the parcels of land in question and
therefore do not fall within the purview of the Land Reform Code, the petition should be
dismissed on that score alone.

There is no need to decide whether the power of the Philippine Tourism Authority to
expropriate the land in question predicated on the police power of the State shall take
precedence over the social justice guarantee in favor of tenants and the landless. The
welfare of the landless and small land owners should prevail over the right of the PTA to
expropriate the lands just to develop tourism industry, which benefit the wealthy only.
Such a position would increase the disenchanted citizens and drive them to dissidence.
The government is instituted primarily for the welfare of the governed and there are
more poor people in this country than the rich The tourism industry is not essential to
the existence of the government, but the citizens are, and their right to live in dignity
should take precedence over the development of the tourism industry.

Teehankee and Abad Santos, JJ., dissent.

Separate Opinions

MAKASIAR, J, concurring and dissenting:

It appearing that the petitioners are not tenants of the parcels of land in question and
therefore do not fall within the purview of the Land Reform Code, the petition should be
dismissed on that score alone.
There is no need to decide whether the power of the Philippine Tourism Authority to
expropriate the land in question predicated on the police power of the State shall take
precedence over the social justice guarantee in favor of tenants and the landless. The
welfare of the landless and small land owners should prevail over the right of the PTA to
expropriate the lands just to develop tourism industry, which benefit the wealthy only.
Such a position would increase the disenchanted citizens and drive them to dissidence.
The government is instituted primarily for the welfare of the governed and there are
more poor people in this country than the rich The tourism industry is not essential to
the existence of the government, but the citizens are, and their right to live in dignity
should take precedence over the development of the tourism industry.

Teehankee and Abad Santos, JJ., dissent.

Footnotes

* Cf. Matter of New York City Housing Authority v. Muller, 1 NE 2d 153,

Over many years and in a multitude of cases the courts have vainly
attempted to define comprehensively the concept of a public use and to
formulate a universal test. They have found here as elsewhere that to
formulate anything ultimate, even though it were possible, would, in an
inevitably changing world, be unwise if not futile. Lacking a controlling
precedent, we deal with the question as it presents itself on the facts at
the present point of time. "The law of each age is ultimately what the age
thinks should be the law." People ex rel. Durham Realty Corporation v.
Fetra 230 N.Y. 429, 450; 130 N.E. 601, 608. Board of Education v. Pace
College, 50 Misc. 2d 806, 807, 271 N.Y. S 2d 773, 775 Sup Ct.
Westchester Country 1966).
 [Synopsis/Syllabi]

FIRST DIVISION

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

ALEJANDRO MANOSCA, ASUNCION MANOSCA and LEONICA

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

DECISION
VITUG, J.:

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

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

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

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

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

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

This view of petitioners is much too limitative and restrictive.

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

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

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

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

We do not sit to determine whether a particular housing project is or is not

desirable. The concept of the public welfare is broad and inclusive. See DayBrite
Lighting, Inc. v. Missouri, 342 US 421, 424, 96 L. Ed. 469, 472, 72 S Ct 405. The
values it represents are spiritual as well as physical, aesthetic as well as monetary. It is
within the power of the legislature to determine that the community should be
beautiful as well as healthy, spacious as well as clean, well-balanced as well as
carefully patrolled. In the present case, the Congress and its authorized agencies have
made determinations that take into account a wide variety of values. It is not for us to
reappraise them. If those who govern the District of Columbia decide that the Nations
Capital should be beautiful as well as sanitary, there is nothing in the Fifth
Amendment that stands in the way.
Once the object is within the authority of Congress, the right to realize it through the
exercise of eminent domain is clear. For the power of eminent domain is merely the
means to the end. See Luxton v. North River Bridge Co. 153 US 525, 529, 530, 38 L.
ed. 808, 810, 14 S Ct 891; United States v. Gettysburg Electric R. Co. 160 US 668,
679, 40 L. ed. 576, 580, 16 S Ct 427.

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

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

Chief Justice Enrique M. Fernando states:

The taking to be valid must be for public use. There was a time when it was felt that a
literal meaning should be attached to such a requirement. Whatever project is
undertaken must be for the public to enjoy, as in the case of streets or parks.
Otherwise, expropriation is not allowable. It is not so any more. As long as the
purpose of the taking is public, then the power of eminent domain comes into play. As
just noted, the constitution in at least two cases, to remove any doubt, determines what
is public use. One is the expropriation of lands to be subdivided into small lots for
resale at cost to individuals. The other is the transfer, through the exercise of this
power, of utilities and other private enterprise to the government. It is accurate to state
then that at present whatever may be beneficially employed for the general welfare
satisfies the requirement of public use.[20]

Chief Justice Fernando, writing the ponencia in J.M. Tuason & Co. vs. Land Tenure
Administration,[21] has viewed the Constitution a dynamic instrument and one that is not
to be construed narrowly or pedantically so as to enable it to meet adequately whatever
problems the future has in store. Fr. Joaquin Bernas, a noted constitutionalist himself,
has aptly observed that what, in fact, has ultimately emerged is a concept of public use
which is just as broad as public welfare.[22]
Petitioners ask: But (w)hat is the so-called unusual interest that the expropriation of
(Felix Manalos) birthplace become so vital as to be a public use appropriate for the
exercise of the power of eminent domain when only members of the Iglesia ni
Cristo would benefit? This attempt to give some religious perspective to the case
deserves little consideration, for what should be significant is the principal objective of,
not the casual consequences that might follow from, the exercise of the power.The
purpose in setting up the marker is essentially to recognize the distinctive contribution of
the late Felix Manalo to the culture of the Philippines, rather than to commemorate his
founding and leadership of the Iglesia ni Cristo. The practical reality that greater benefit
may be derived by members of the Iglesia ni Cristo than by most others could well be
true but such a peculiar advantage still remains to be merely incidental and secondary
in nature. Indeed, that only a few would actually benefit from the expropriation of
property does not necessarily diminish the essence and character of public use.[23]
Petitioners contend that they have been denied due process in the fixing of the
provisional value of their property. Petitioners need merely to be reminded that what the
law prohibits is the lack of opportunity to be heard;[24] contrary to petitioners argument,
the records of this case are replete with pleadings[25] that could have dealt, directly or
indirectly, with the provisional value of the property.
Petitioners, finally, would fault respondent appellate court in sustaining the trial
courts order which considered inapplicable the case of Noble v. City of Manila.[26] Both
courts held correctly. The Republic was not a party to the alleged contract of exchange
between the Iglesia ni Cristo and petitioners which (the contracting parties) alone, not
the Republic, could properly be bound.
All considered, the Court finds the assailed decision to be in accord with law and
jurisprudence.
WHEREFORE, the petition is DENIED. No costs.
SO ORDERED.
Padilla, Bellosillo, Kapunan, and Hermosisima, Jr., JJ., concur.

Penned by Justice Nathanael De Pano, Jr., with the concurrence of Justices Luis Victor and Fortunato
[1]

Vailoces.
The National Museum and the National Historical Commission are hereby vested with the right to
[2]

declare other such historical and cultural sites as National Shrines, Monuments, and/or Landmarks, in
accordance with the guidelines set forth in R.A. 4846 and the spirit of this Decree.
[3]
Rollo, pp. 77-82.
[4]
Rollo, pp. 66-67.
[5]
Sec. 29. xxx.
(2) No public money or property shall be appropriated, applied, paid, or employed, directly or indirectly,
for the use, benefit, or support of any sect, church, denomination, sectarian institution, or system of
religion, or of any priest, preacher, minister, or other religious teacher, or dignitary as such, except when
such priest, preacher, minister, or dignitary is assigned to the armed forces, or to any penal institution, or
government orphanage or leprosarium.
[6]
Rollo, pp. 68-69.
[7]
Rollo, p. 70.
[8]
Rollo, pp. 71-76.
[9]
Blacks Law Dictionary, 6th ed., p. 523.
[10]
Visayan Refining Company vs. Camus, 40 Phil. 550.
[11]
Sec. 9, Art. III, 1987 Constitution.
[12]
84 Phil. 847.
[13]
Rollo, pp. 38-39.
[14]
Rollo, p.42.
[15]
See Province of Camarines Sur vs. Court of Appeals, 222 SCRA 173.
[16]
See U.S. vs. Toribio, 15 Phil. 85.
[17]
Blacks Law Dictionary, p. 1232.
[18]
125 SCRA 220.
[19]
42 Phil. 102.
[20]
Enrique Fernando, The Constitution of the Philippines, 2nd ed., pp. 523-524.
[21]
31 SCRA 413.
[22]
Joaquin Bernas, The Constitution of the Republic of the Philippines, Vol. 1, 1987 ed., p. 282.
[23]
Philippine Columbian Association v. Panis, 228 SCRA 668.
[24]
Capuno v. Jaramillo, 234 SCRA 212.
[25]
Those pleadings include:
(a) An urgent motion that the hearing on the fixing of the propertys provisional value and the taking of
possession by the Republic over the same be held in abeyance until after petitioners shall have received
a copy of the complaint and summons (Rollo, pp. 86-88;
(b) A motion to dismiss, dated 08 August 1989, seeking to dismiss the complaint instituted by the
Republic on the ground that the expropriation in question is not for a public purpose and contrary to
Section 29(a), Article VI, of the 1987 Constitution (Rollo, pp. 90-91);
(c) A motion for reconsideration and/or suspension of the implementation of the 03 August
1989 Order (Rollo, pp. 93-95); and
(d) A motion for reconsideration of the orders dated 15 and 20 February, 1990 (Rollo, pp. 103-111).
The Noble case holds that where there is a valid and subsisting contract between the owners of the
[26]

property and the expropriating authority, there is no need or reason for expropriation (67 Phil. 1).
 EN BANC

MACTAN-CEBU INTERNATIONAL AIRPORT G.R. No. 176625

AUTHORITY and AIR TRANSPORTATION
OFFICE, Present:
Petitioners,

PUNO, C.J.,

CARPIO,

CORONA,

CARPIO MORALES,VELASCO,
JR., NACHURA, LEONARDO-
- versus -
DE CASTRO,

BRION,

PERALTA,*

BERSAMIN,

DEL CASTILLO,
BERNARDO L. LOZADA, SR., and the
ABAD,
HEIRS OF ROSARIO MERCADO, namely,
VILLARAMA, JR.,
VICENTE LOZADA, MARIO M. LOZADA,
MARCIA L. GODINEZ, VIRGINIA L. FLORES, PEREZ, and
BERNARDO LOZADA, JR., DOLORES
MENDOZA, JJ.
GACASAN, SOCORRO CAFARO and
ROSARIO LOZADA, represented by MARCIA
LOZADA GODINEZ,
Promulgated:
Respondents.
 February 25, 2010

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

DECISION

NACHURA, J.:

This is a petition for review on certiorari under Rule 45 of the Rules of Court,
seeking to reverse, annul, and set aside the Decision[1] dated February 28, 2006
and the Resolution[2] dated February 7, 2007 of the Court of Appeals (CA)
(Cebu City), Twentieth Division, in CA-G.R. CV No. 65796.

The antecedent facts and proceedings are as follows:

Subject of this case is Lot No. 88-SWO-25042 (Lot No. 88), with an area of 1,017
square meters, more or less, located in Lahug, Cebu City. Its original owner was
Anastacio Deiparine when the same was subject to expropriation proceedings,
initiated by the Republic of the Philippines (Republic), represented by the then
Civil Aeronautics Administration (CAA), for the expansion and improvement of the
Lahug Airport. The case was filed with the then Court of First Instance of Cebu,
Third Branch, and docketed as Civil Case No. R-1881.
As early as 1947, the lots were already occupied by the U.S. Army. They were
turned over to the Surplus Property Commission, the Bureau of Aeronautics, the
National Airport Corporation and then to the CAA.

During the pendency of the expropriation proceedings, respondent Bernardo L.

Lozada, Sr. acquired Lot No. 88 from Deiparine. Consequently, Transfer Certificate
of Title (TCT) No. 9045 was issued in Lozadas name.

On December 29, 1961, the trial court rendered judgment in favor of the Republic
and ordered the latter to pay Lozada the fair market value of Lot No. 88, adjudged
at P3.00 per square meter, with consequential damages by way of legal interest
computed from November 16, 1947the time when the lot was first occupied by
the airport. Lozada received the amount of P3,018.00 by way of payment.

The affected landowners appealed. Pending appeal, the Air Transportation Office
(ATO), formerly CAA, proposed a compromise settlement whereby the owners of
the lots affected by the expropriation proceedings would either not appeal or
withdraw their respective appeals in consideration of a commitment that the
expropriated lots would be resold at the price they were expropriated in the
event that the ATO would abandon the Lahug Airport, pursuant to an established
policy involving similar cases. Because of this promise, Lozada did not pursue his
appeal. Thereafter, Lot No. 88 was transferred and registered in the name of the
Republic under TCT No. 25057.

The projected improvement and expansion plan of the old Lahug Airport,
however, was not pursued.
Lozada, with the other landowners, contacted then CAA Director Vicente Rivera,
Jr., requesting to repurchase the lots, as per previous agreement. The CAA replied
that there might still be a need for the Lahug Airport to be used as an emergency
DC-3 airport. It reiterated, however, the assurance that should this Office dispose
and resell the properties which may be found to be no longer necessary as an
airport, then the policy of this Office is to give priority to the former owners
subject to the approval of the President.

On November 29, 1989, then President Corazon C. Aquino issued a Memorandum

to the Department of Transportation, directing the transfer of general aviation
operations of the Lahug Airport to the Mactan International Airport before the
end of 1990 and, upon such transfer, the closure of the Lahug Airport.

Sometime in 1990, the Congress of the Philippines passed Republic Act (R.A.) No.
6958, entitled An Act Creating the Mactan-Cebu International Airport Authority,
Transferring Existing Assets of the Mactan International Airport and the Lahug
Airport to the Authority, Vesting the Authority with Power to Administer and
Operate the Mactan International Airport and the Lahug Airport, and For Other
Purposes.

From the date of the institution of the expropriation proceedings up to the

present, the public purpose of the said expropriation (expansion of the airport)
was never actually initiated, realized, or implemented. Instead, the old airport
was converted into a commercial complex. Lot No. 88 became the site of a jail
known as Bagong Buhay Rehabilitation Complex, while a portion thereof was
occupied by squatters.[3] The old airport was converted into what is now known as
the Ayala I.T. Park, a commercial area.

Thus, on June 4, 1996, petitioners initiated a complaint for the recovery of

possession and reconveyance of ownership of Lot No. 88. The case was docketed
as Civil Case No. CEB-18823 and was raffled to the Regional Trial Court (RTC),
Branch 57, Cebu City. The complaint substantially alleged as follows:

(a) Spouses Bernardo and Rosario Lozada were the registered owners of Lot No. 88
covered by TCT No. 9045;

(b) In the early 1960s, the Republic sought to acquire by expropriation Lot No. 88,
among others, in connection with its program for the improvement and expansion
of the Lahug Airport;

(c) A decision was rendered by the Court of First Instance in favor of the Government
and against the land owners, among whom was Bernardo Lozada, Sr. appealed
therefrom;

(d) During the pendency of the appeal, the parties entered into a compromise
settlement to the effect that the subject property would be resold to the original
owner at the same price when it was expropriated in the event that the
Government abandons the Lahug Airport;

(e) Title to Lot No. 88 was subsequently transferred to the Republic of

the Philippines (TCT No. 25057);

(f) The projected expansion and improvement of the Lahug Airport did not materialize;
 (g) Plaintiffs sought to repurchase their property from then CAA Director Vicente
Rivera. The latter replied by giving as assurance that priority would be given to the
previous owners, subject to the approval of the President, should CAA decide to
dispose of the properties;

(h) On November 29, 1989, then President Corazon C. Aquino, through a Memorandum
to the Department of Transportation and Communications (DOTC), directed the
transfer of general aviation operations at the Lahug Airport to the Mactan-Cebu
International Airport Authority;

(i) Since the public purpose for the expropriation no longer exists, the property must be
returned to the plaintiffs.[4]

In their Answer, petitioners asked for the immediate dismissal of the

complaint. They specifically denied that the Government had made assurances to
reconvey Lot No. 88 to respondents in the event that the property would no
longer be needed for airport operations. Petitioners instead asserted that the
judgment of condemnation was unconditional, and respondents were, therefore,
not entitled to recover the expropriated property notwithstanding non-use or
abandonment thereof.

After pretrial, but before trial on the merits, the parties stipulated on the
following set of facts:

(1) The lot involved is Lot No. 88-SWO-25042 of the Banilad Estate, situated in the City
of Cebu, containing an area of One Thousand Seventeen (1,017) square meters,
more or less;
 (2) The property was expropriated among several other properties in Lahug in favor of
the Republic of the Philippines by virtue of a Decision dated December 29, 1961 of
the CFI of Cebu in Civil Case No. R-1881;

(3) The public purpose for which the property was expropriated was for the purpose of
the Lahug Airport;

(4) After the expansion, the property was transferred in the name of MCIAA; [and]

(5) On November 29, 1989, then President Corazon C. Aquino directed the Department
of Transportation and Communication to transfer general aviation operations of
the Lahug Airport to the Mactan-Cebu International Airport Authority and to close
the Lahug Airport after such transfer[.][5]

During trial, respondents presented Bernardo Lozada, Sr. as their lone witness,
while petitioners presented their own witness, Mactan-Cebu International Airport
Authority legal assistant Michael Bacarisas.

On October 22, 1999, the RTC rendered its Decision, disposing as follows:

WHEREFORE, in the light of the foregoing, the Court hereby renders judgment in favor
of the plaintiffs, Bernardo L. Lozada, Sr., and the heirs of Rosario Mercado, namely,
Vicente M. Lozada, Marcia L. Godinez, Virginia L. Flores, Bernardo M. Lozada, Jr.,
Dolores L. Gacasan, Socorro L. Cafaro and Rosario M. Lozada, represented by their
attorney-in-fact Marcia Lozada Godinez, and against defendants Cebu-Mactan
International Airport Authority (MCIAA) and Air Transportation Office (ATO):
 1. ordering MCIAA and ATO to restore to plaintiffs the possession and
ownership of their land, Lot No. 88 Psd-821 (SWO-23803), upon payment of the
expropriation price to plaintiffs; and

2. ordering the Register of Deeds to effect the transfer of the Certificate of Title
from defendant[s] to plaintiffs on Lot No. [88], cancelling TCT No. 20357 in the name of
defendant MCIAA and to issue a new title on the same lot in the name of Bernardo L.
Lozada, Sr. and the heirs of Rosario Mercado, namely: Vicente M. Lozada, Mario M.
Lozada, Marcia L. Godinez, Virginia L. Flores, Bernardo M. Lozada, Jr., Dolores L.
Gacasan, Socorro L. Cafaro and Rosario M. Lozada.

No pronouncement as to costs.

SO ORDERED.[6]

Aggrieved, petitioners interposed an appeal to the CA. After the filing of the
necessary appellate briefs, the CA rendered its assailed Decision dated February
28, 2006, denying petitioners appeal and affirming in toto the Decision of the RTC,
Branch 57, Cebu City. Petitioners motion for reconsideration was, likewise, denied
in the questioned CA Resolution dated February 7, 2007.

Hence, this petition arguing that: (1) the respondents utterly failed to prove that
there was a repurchase agreement or compromise settlement between them and
the Government; (2) the judgment in Civil Case No. R-1881 was absolute and
unconditional, giving title in fee simple to the Republic; and (3) the respondents
claim of verbal assurances from government officials violates the Statute of
Frauds.
The petition should be denied.

Petitioners anchor their claim to the controverted property on the supposition

that the Decision in the pertinent expropriation proceedings did not provide for
the condition that should the intended use of Lot No. 88 for the expansion of
the Lahug Airport be aborted or abandoned, the property would revert to
respondents, being its former owners. Petitioners cite, in support of this
position, Fery v. Municipality of Cabanatuan,[7] which declared that the
Government acquires only such rights in expropriated parcels of land as may be
allowed by the character of its title over the properties

If x x x land is expropriated for a particular purpose, with the condition that when that
purpose is ended or abandoned the property shall return to its former owner, then, of
course, when the purpose is terminated or abandoned the former owner reacquires the
property so expropriated. If x x x land is expropriated for a public street and the
expropriation is granted upon condition that the city can only use it for a public street,
then, of course, when the city abandons its use as a public street, it returns to the
former owner, unless there is some statutory provision to the contrary. x x x. If, upon
the contrary, however, the decree of expropriation gives to the entity a fee simple title,
then, of course, the land becomes the absolute property of the expropriator, whether it
be the State, a province, or municipality, and in that case the non-user does not have
the effect of defeating the title acquired by the expropriation proceedings. x x x.

When land has been acquired for public use in fee simple, unconditionally,
either by the exercise of eminent domain or by purchase, the former owner retains no
right in the land, and the public use may be abandoned, or the land may be devoted to a
different use, without any impairment of the estate or title acquired, or any reversion to
the former owner. x x x.[8]
 Contrary to the stance of petitioners, this Court had ruled otherwise
in Heirs of Timoteo Moreno and Maria Rotea v. Mactan-Cebu International Airport
Authority,[9] thus

Moreover, respondent MCIAA has brought to our attention a significant and telling
portion in the Decision in Civil Case No. R-1881 validating our discernment that the
expropriation by the predecessors of respondent was ordered under the running
impression that Lahug Airport would continue in operation

As for the public purpose of the expropriation proceeding, it cannot

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

While in the trial in Civil Case No. R-1881 [we] could have simply acknowledged the
presence of public purpose for the exercise of eminent domain regardless of the survival
of Lahug Airport, the trial court in its Decision chose not to do so but instead prefixed its
finding of public purpose upon its understanding that Lahug Airport will continue to be
in operation. Verily, these meaningful statements in the body of the Decision warrant
the conclusion that the expropriated properties would remain to be so until it was
confirmed that Lahug Airport was no longer in operation. This inference further implies
two (2) things: (a) after the Lahug Airport ceased its undertaking as such and the
expropriated lots were not being used for any airport expansion project, the rights vis--
vis the expropriated Lots Nos. 916 and 920 as between the State and their former
owners, petitioners herein, must be equitably adjusted; and (b) the foregoing
unmistakable declarations in the body of the Decision should merge with and become
an intrinsic part of the fallo thereof which under the premises is clearly inadequate since
 the dispositive portion is not in accord with the findings as contained in the body
thereof.[10]

Indeed, the Decision in Civil Case No. R-1881 should be read in its entirety,
wherein it is apparent that the acquisition by the Republic of the expropriated lots
was subject to the condition that the Lahug Airport would continue its
operation. The condition not having materialized because the airport had been
abandoned, the former owner should then be allowed to reacquire the
expropriated property.[11]

On this note, we take this opportunity to revisit our ruling in Fery, which involved
an expropriation suit commenced upon parcels of land to be used as a site for a
public market. Instead of putting up a public market,
respondent Cabanatuan constructed residential houses for lease on the
area. Claiming that the municipality lost its right to the property taken since it did
not pursue its public purpose, petitioner Juan Fery, the former owner of the lots
expropriated, sought to recover his properties. However, as he had admitted that,
in 1915, respondent Cabanatuan acquired a fee simple title to the lands in
question, judgment was rendered in favor of the municipality, following American
jurisprudence, particularly City of Fort Wayne v. Lake Shore & M.S. RY.
Co.,[12] McConihay v. Theodore Wright,[13] and Reichling v. Covington Lumber
Co.,[14] all uniformly holding that the transfer to a third party of the expropriated
real property, which necessarily resulted in the abandonment of the particular
public purpose for which the property was taken, is not a ground for the recovery
of the same by its previous owner, the title of the expropriating agency being one
of fee simple.
Obviously, Fery was not decided pursuant to our now sacredly held constitutional
right that private property shall not be taken for public use without just
compensation.[15] It is well settled that the taking of private property by the
Governments power of eminent domain is subject to two mandatory
requirements: (1) that it is for a particular public purpose; and (2) that just
compensation be paid to the property owner. These requirements partake of the
nature of implied conditions that should be complied with to enable the
condemnor to keep the property expropriated.[16]

More particularly, with respect to the element of public use, the expropriator
should commit to use the property pursuant to the purpose stated in the petition
for expropriation filed, failing which, it should file another petition for the new
purpose. If not, it is then incumbent upon the expropriator to return the said
property to its private owner, if the latter desires to reacquire the
same. Otherwise, the judgment of expropriation suffers an intrinsic flaw, as it
would lack one indispensable element for the proper exercise of the power of
eminent domain, namely, the particular public purpose for which the property
will be devoted. Accordingly, the private property owner would be denied due
process of law, and the judgment would violate the property owners right to
justice, fairness, and equity.

In light of these premises, we now expressly hold that the taking of private
property, consequent to the Governments exercise of its power of eminent
domain, is always subject to the condition that the property be devoted to the
specific public purpose for which it was taken. Corollarily, if this particular
purpose or intent is not initiated or not at all pursued, and is peremptorily
abandoned, then the former owners, if they so desire, may seek the reversion of
the property, subject to the return of the amount of just compensation
received. In such a case, the exercise of the power of eminent domain has
become improper for lack of the required factual justification.[17]

Even without the foregoing declaration, in the instant case, on the question of
whether respondents were able to establish the existence of an oral compromise
agreement that entitled them to repurchase Lot No. 88 should the operations of
the Lahug Airport be abandoned, we rule in the affirmative.

It bears stressing that both the RTC, Branch 57, Cebu and the CA have passed
upon this factual issue and have declared, in no uncertain terms, that a
compromise agreement was, in fact, entered into between the Government and
respondents, with the former undertaking to resell Lot No. 88 to the latter if the
improvement and expansion of the Lahug Airport would not be pursued. In
affirming the factual finding of the RTC to this effect, the CA declared

Lozadas testimony is cogent. An octogenarian widower-retiree and a resident of Moon

Park, California since 1974, he testified that government representatives verbally
promised him and his late wife while the expropriation proceedings were on-going that
the government shall return the property if the purpose for the expropriation no longer
exists. This promise was made at the premises of the airport. As far as he could
remember, there were no expropriation proceedings against his property in 1952
because the first notice of expropriation he received was in 1962. Based on the promise,
he did not hire a lawyer. Lozada was firm that he was promised that the lot would be
reverted to him once the public use of the lot ceases. He made it clear that the verbal
promise was made in Lahug with other lot owners before the 1961 decision was handed
down, though he could not name the government representatives who made the
promise. It was just a verbal promise; nevertheless, it is binding. The fact that he could
not supply the necessary details for the establishment of his assertions during cross-
examination, but that When it will not be used as intended, it will be returned back, we
just believed in the government, does not dismantle the credibility and truthfulness of
his allegation.This Court notes that he was 89 years old when he testified in November
1997 for an incident which happened decades ago. Still, he is a competent witness
capable of perceiving and making his perception known. The minor lapses are
 immaterial. The decision of the competency of a witness rests primarily with the trial
judge and must not be disturbed on appeal unless it is clear that it was erroneous. The
objection to his competency must be made before he has given any testimony or as
soon as the incompetency becomes apparent. Though Lozada is not part of the
compromise agreement,[18] he nevertheless adduced sufficient evidence to support his
claim.[19]

As correctly found by the CA, unlike in Mactan Cebu International Airport

Authority v. Court of Appeals,[20] cited by petitioners, where respondent therein
offered testimonies which were hearsay in nature, the testimony of Lozada was
based on personal knowledge as the assurance from the government was
personally made to him. His testimony on cross-examination destroyed neither
his credibility as a witness nor the truthfulness of his words.

Verily, factual findings of the trial court, especially when affirmed by the
CA, are binding and conclusive on this Court and may not be reviewed. A petition
for certiorari under Rule 45 of the Rules of Court contemplates only questions of
law and not of fact.[21] Not one of the exceptions to this rule is present in this case
to warrant a reversal of such findings.

As regards the position of petitioners that respondents testimonial evidence

violates the Statute of Frauds, suffice it to state that the Statute of Frauds
operates only with respect to executory contracts, and does not apply to
contracts which have been completely or partially performed, the rationale
thereof being as follows:

In executory contracts there is a wide field for fraud because unless they be in writing
there is no palpable evidence of the intention of the contracting parties. The statute has
 precisely been enacted to prevent fraud. However, if a contract has been totally or
partially performed, the exclusion of parol evidence would promote fraud or bad faith,
for it would enable the defendant to keep the benefits already delivered by him from
the transaction in litigation, and, at the same time, evade the obligations,
responsibilities or liabilities assumed or contracted by him thereby.[22]

In this case, the Statute of Frauds, invoked by petitioners to bar the claim of
respondents for the reacquisition of Lot No. 88, cannot apply, the oral
compromise settlement having been partially performed. By reason of such
assurance made in their favor, respondents relied on the same by not pursuing
their appeal before the CA. Moreover, contrary to the claim of petitioners, the
fact of Lozadas eventual conformity to the appraisal of Lot No. 88 and his seeking
the correction of a clerical error in the judgment as to the true area of Lot No. 88
do not conclusively establish that respondents absolutely parted with their
property. To our mind, these acts were simply meant to cooperate with the
government, particularly because of the oral promise made to them.

The right of respondents to repurchase Lot No. 88 may be enforced based on a

constructive trust constituted on the property held by the government in favor of
the former. On this note, our ruling in Heirs of Timoteo Moreno is instructive, viz.:

Mactan-Cebu International Airport Authority is correct in stating that one would not find
an express statement in the Decision in Civil Case No. R-1881 to the effect that the
[condemned] lot would return to [the landowner] or that [the landowner] had a right to
repurchase the same if the purpose for which it was expropriated is ended or abandoned
or if the property was to be used other than as the Lahug Airport. This omission
notwithstanding, and while the inclusion of this pronouncement in the judgment of
condemnation would have been ideal, such precision is not absolutely necessary nor is it
fatal to the cause of petitioners herein. No doubt, the return or repurchase of the
condemned properties of petitioners could be readily justified as the manifest legal
effect or consequence of the trial courts underlying presumption that Lahug Airport will
continue to be in operation when it granted the complaint for eminent domain and the
airport discontinued its activities.

The predicament of petitioners involves a constructive trust, one that is akin to the
implied trust referred to in Art. 1454 of the Civil Code, If an absolute conveyance of
property is made in order to secure the performance of an obligation of the grantor
toward the grantee, a trust by virtue of law is established. If the fulfillment of the
obligation is offered by the grantor when it becomes due, he may demand the
reconveyance of the property to him. In the case at bar, petitioners conveyed Lots No.
916 and 920 to the government with the latter obliging itself to use the realties for the
expansion of Lahug Airport; failing to keep its bargain, the government can be
compelled by petitioners to reconvey the parcels of land to them, otherwise, petitioners
would be denied the use of their properties upon a state of affairs that was not
conceived nor contemplated when the expropriation was authorized.

Although the symmetry between the instant case and the situation contemplated by
Art. 1454 is not perfect, the provision is undoubtedly applicable. For, as explained by an
expert on the law of trusts: The only problem of great importance in the field of
constructive trust is to decide whether in the numerous and varying fact situations
presented to the courts there is a wrongful holding of property and hence a threatened
unjust enrichment of the defendant. Constructive trusts are fictions of equity which are
bound by no unyielding formula when they are used by courts as devices to remedy any
situation in which the holder of legal title may not in good conscience retain the
beneficial interest.

In constructive trusts, the arrangement is temporary and passive in which the trustees
sole duty is to transfer the title and possession over the property to the plaintiff-
beneficiary. Of course, the wronged party seeking the aid of a court of equity in
establishing a constructive trust must himself do equity. Accordingly, the court will
exercise its discretion in deciding what acts are required of the plaintiff-beneficiary as
conditions precedent to obtaining such decree and has the obligation to reimburse the
trustee the consideration received from the latter just as the plaintiff-beneficiary would
if he proceeded on the theory of rescission. In the good judgment of the court, the
trustee may also be paid the necessary expenses he may have incurred in sustaining the
property, his fixed costs for improvements thereon, and the monetary value of his
services in managing the property to the extent that plaintiff-beneficiary will secure a
benefit from his acts.
 The rights and obligations between the constructive trustee and the beneficiary, in this
case, respondent MCIAA and petitioners over Lots Nos. 916 and 920, are echoed in Art.
1190 of the Civil Code, When the conditions have for their purpose the extinguishment of
an obligation to give, the parties, upon the fulfillment of said conditions, shall return to
each other what they have received x x x In case of the loss, deterioration or
improvement of the thing, the provisions which, with respect to the debtor, are laid
down in the preceding article shall be applied to the party who is bound to return x x
x.[23]

On the matter of the repurchase price, while petitioners are obliged to reconvey
Lot No. 88 to respondents, the latter must return to the former what they
received as just compensation for the expropriation of the property, plus legal
interest to be computed from default, which in this case runs from the time
petitioners comply with their obligation to respondents.

Respondents must likewise pay petitioners the necessary expenses they may have
incurred in maintaining Lot No. 88, as well as the monetary value of their services
in managing it to the extent that respondents were benefited thereby.

Following Article 1187[24] of the Civil Code, petitioners may keep whatever income
or fruits they may have obtained from Lot No. 88, and respondents need not
account for the interests that the amounts they received as just compensation
may have earned in the meantime.

In accordance with Article 1190[25] of the Civil Code vis--vis Article 1189, which
provides that (i)f a thing is improved by its nature, or by time, the improvement
shall inure to the benefit of the creditor x x x, respondents, as creditors, do not
have to pay, as part of the process of restitution, the appreciation in value of Lot
No. 88, which is a natural consequence of nature and time.[26]

WHEREFORE, the petition is DENIED. The February 28, 2006 Decision of the Court
of Appeals, affirming the October 22, 1999 Decision of the Regional Trial Court,
Branch 87, Cebu City, and its February 7, 2007 Resolution
are AFFIRMED with MODIFICATION as follows:

1. Respondents are ORDERED to return to petitioners the just compensation they

received for the expropriation of Lot No. 88, plus legal interest, in the case of
default, to be computed from the time petitioners comply with their obligation to
reconvey Lot No. 88 to them;

2. Respondents are ORDERED to pay petitioners the necessary expenses the latter
incurred in maintaining Lot No. 88, plus the monetary value of their services to
the extent that respondents were benefited thereby;

3. Petitioners are ENTITLED to keep whatever fruits and income they may
have obtained from Lot No. 88; and

4. Respondents are also ENTITLED to keep whatever interests the amounts they
received as just compensation may have earned in the meantime, as well as the
appreciation in value of Lot No. 88, which is a natural consequence of nature and
time;
In light of the foregoing modifications, the case is REMANDED to the Regional
Trial Court, Branch 57, Cebu City, only for the purpose of receiving evidence on
the amounts that respondents will have to pay petitioners in accordance with this
Courts decision. No costs.

SO ORDERED.

ANTONIO EDUARDO B. NACHURA

Associate Justice

WE CONCUR:

REYNATO S. PUNO

Chief Justice

ANTONIO T. CARPIO RENATO C. CORONA

Associate Justice Associate Justice

 CONCHITA CARPIO MORALES PRESBITERO J. VELASCO, JR.

Associate Justice Associate Justice

TERESITA J. LEONARDO-DE CASTRO ARTURO D. BRION

Associate Justice Associate Justice

(on official leave)

DIOSDADO M. PERALTA LUCAS P. BERSAMIN

Associate Justice Associate Justice

MARIANO C. DEL CASTILLO ROBERTO A. ABAD

Associate Justice Associate Justice

MARTIN S. VILLARAMA, JR. JOSE PORTUGAL PEREZ

Associate Justice Associate Justice

JOSE CATRAL MENDOZA

Associate Justice

CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, I hereby certify that the
conclusions in the above Decision were reached in consultation before the case
was assigned to the writer of the opinion of the Court.

REYNATO S. PUNO
Chief Justice

*
On official leave.
[1]
Penned by Associate Justice Enrico A. Lanzanas, with Associate Justices Pampio A. Abarintos and Apolinario D.
Bruselas, Jr., concurring; rollo, pp. 46-65.
[2]
Rollo, pp. 67-68.
[3]
TSN, June 25, 1998, p. 7.
[4]
Rollo, pp. 20-21.
[5]
Id. at 22-23.
[6]
Records, p. 178.
[7]
42 Phil. 28 (1921).
[8]
Id. at 29-30.
[9]
G.R. No. 156273, October 15, 2003, 413 SCRA 502.
[10]
Id. at 509-510.
[11]
Ruling on the Motion for Reconsideration affirming the Decision; Heirs of Timoteo Moreno and Maria Rotea v.
Mactan-Cebu International Airport Authority, G.R. No. 156273, August 9, 2005, 466 SCRA 288, 305.
[12]
132 Ind. 558, November 5, 1892.
[13]
121 U.S. 932, April 11, 1887.
[14]
57 Wash. 225, February 4, 1910.
[15]
CONSTITUTION, Art. III, Sec. 9.
[16]
Supra note 11, at 302; Vide Republic v. Lim, G.R. No. 161656, June 29, 2005, 462 SCRA 265.
[17]
Vide the Separate Concurring Opinion of Associate Justice Presbitero J. Velasco, Jr.
[18]
Petitioners witness Michael Bacarisas testified that three other lot owners entered into a written compromise
agreement with the government but Lozada was not part of it.
[19]
Rollo, pp. 58-59.
[20]
G.R. No. 121506, October 30, 1996, 263 SCRA 736.
[21]
Caluag v. People, G.R. No. 171511, March 4, 2009, 580 SCRA 575, 583; Gregorio Araneta University
Foundation v. Regional Trial Court of Kalookan City, Br. 120, G.R. No. 139672, March 4, 2009, 580 SCRA 532,
544; Heirs of Jose T. Calo v. Calo, G.R. No. 156101, February 10, 2009, 578 SCRA 226, 232.
[22]
Mactan-Cebu International Airport Authority v. Tudtud, G.R. No. 174012, November 14, 2008, 571 SCRA 165,
175.
[23]
Supra note 9, at 512-514.
[24]
Art. 1187. The effects of a conditional obligation to give, once the condition has been fulfilled, shall retroact to
the day of the constitution of the obligation. Nevertheless, when the obligation imposes reciprocal prestations upon
the parties, the fruits and interests during the pendency of the condition shall be deemed to have been mutually
compensated. x x x.
[25]
Art. 1190. When the conditions have for their purpose the extinguishment of an obligation to give, the parties,
upon the fulfillment of said conditions, shall return to each other what they have received.
In case of the loss, deterioration or improvement of the thing, the provisions which, with respect to the debtor, are
laid down in the preceding article (Article 1189) shall be applied to the party who is bound to return.
[26]
Mactan-Cebu International Airport Authority v . Tudtud, supra note 22, at 177.
NATIONAL POWER CORPORATION, petitioner, vs. SPOUSES
IGMEDIO and LIWAYWAY CHIONG and the HEIRS OF AGRIFINA
ANGELES, represented by FRANCISCO
MERCURIO, respondents.

DECISION
QUISUMBING, J.:

This is a petition for review of the decision of the Court of Appeals, dated
[1]

October 26, 2001, in CA-G.R. SP No. 60716, affirming the Order of the
Regional Trial Court (RTC) of Iba, Zambales, Branch 71, dated June 7, 2000
in Civil Case No. 1442-I. The trial court directed petitioner National Power
Corporation (NPC) to pay the value of the land expropriated from respondents
herein for use in NPCs Northwestern Luzon Transmission Line Project.
Likewise assailed in this petition is the resolution of the appellate court, dated
[2]

February 26, 2002, denying herein petitioners motion for reconsideration.

The undisputed facts of this case are as follows:
Petitioner is a government owned and controlled corporation, created and
existing pursuant to Republic Act No. 6395, as amended, for the purpose of
[3]

undertaking the development of hydroelectric power, the production of

electrical power from any source, particularly by constructing, operating, and
maintaining power plants, auxiliary plants, dams, reservoirs, pipes, mains,
transmission lines, power stations, and similar works to tap the power
generated from any river, creek, lake, spring, or waterfall in the country and
supplying such power to the inhabitants thereof. In order to carry out said
purposes, NPC is authorized to exercise the power of eminent domain.
On February 19, 1998, NPC filed a complaint for eminent domain with the
RTC of Iba, Zambales. It sought the acquisition of an easement of right-of-way
and certain portions of agricultural lands owned by Igmedio and Liwayway
Chiong and the Heirs of Agrifina Angeles, as represented by Francisco
[4]

Mercurio, to be used in its Northwestern Luzon Transmission Line Project.

The complaint, which was docketed as Civil Case No. 1442-I, prayed for the
issuance of a writ of possession and an order of expropriation, the
appointment of three (3) commissioners to determine the just compensation,
and to adjudge NPC as having a lawful right to enter, take, and acquire an
easement of right-of-way over portions of the properties owned by herein
respondents.
In their answer, the Heirs of Agrifina Angeles did not dispute the purpose
of NPC in instituting the expropriation proceedings. However, they pointed out
that NPC had already entered and taken possession of a portion of their realty
with an area of 4,000 square meters, more or less (Lot A) and wanted to
occupy another 4,000 square meters of the adjacent property (Lot B).
Respondents averred that the fair market value for both properties
was P1,100.00 per square meter or a total of P8,800,000.00 and prayed that
the trial court direct NPC to pay them said amount.
On March 31, 1998, NPC filed an ex parte motion for the issuance of a writ
of possession, which the trial court granted.
At the pre-trial conference, the parties agreed that the controversy would
be limited to determining the actual land area taken by NPC and the just
compensation to be paid by petitioner.
On September 28, 1999, the trial court appointed as commissioners, Atty.
Henry P. Alog, Atty. Regalado Castillo, and Ms. Roselyn B. Regadio, Legal
Researcher of the trial court, to determine the fair market value of the land, as
well as the total area taken by NPC from respondents.
On March 9, 2000, Atty. Castillo and Ms. Ragadio submitted their report to
the court finding that the property classified as unirrigated riceland shall have
a fair market value of P500.00 per square meter considering that the property
[5]

is situated at Baytan, Babali, Lomboy, Sta. Cruz, Zambales which is more

than 900 meters from the town proper. [6]

On May 5, 2000, Atty. Alog submitted his report recommending that NPC
pay the Heirs of Agrifina Angeles an easement fee of P20,957.88 and the
Spouses Chiong be paid total easement fees of P9,187.05. The affected[7]

properties of the Heirs of Agrifina Angeles were assessed by Atty. Alog to

have a fair market value of P22.50 per square meter, while those of the
Spouses Chiong were assigned a fair market value of P15.75 per square
meter. [8]

After considering the reports of the Commissioners, the trial court on June
7, 2000 decreed as follows:

The Commissioners Report dated March 9, 2000 filed by Commissioner Roselyn B.

Ragadio and Atty. Regalado Castillo is given due course.

WHEREFORE, the plaintiff is directed to pay the defendants Mercurio their land
containing an area of 4,000 square meters at P500.00 per square meter and an interest
of six (6%) percent per annum from April 16, 1998 until fully paid.

SO ORDERED. [9]
 Dissatisfied, NPC filed a special civil action for certiorari with the appellate
court, docketed as CA-G.R. SP No. 60716. NPC averred that the trial court
committed grave abuse of discretion amounting to excess or want of
jurisdiction when it: (a) directed NPC to pay just compensation for the land
taken without first issuing an order of expropriation; (b) adopted the
compensation recommended by the two commissioners without a hearing;
and (c) directed petitioner to pay the full market value of the property instead
of a mere easement fee.
On October 26, 2001, the appellate court decided CA-G.R. SP No. 60716
as follows:

WHEREFORE, in view of the foregoing, the instant petition is hereby DISMISSED

for lack of merit.

SO ORDERED. [10]

In holding that NPC was not entitled to a writ of certiorari, the Court of
Appeals found that the trial court did not commit a grave abuse of discretion
when it failed to issue an expropriation order. The appellate court pointed out
that as early as the pre-trial, respondents did not question NPCs right to
expropriate their properties. Hence, the only matter to be addressed by the
trial court was the amount of just compensation to be paid. Second, NPC
could not claim that it was denied due process because the trial court issued
the order without first conducting a hearing on the commissioners report. The
court a quo noted that formal-type hearings are not necessary in expropriation
proceedings, as long as the parties are afforded a fair and reasonable
opportunity to be heard before the order to pay compensation is issued. NPC
was afforded ample time or opportunity to object to the commissioners report
before said order was issued. This it failed to do. It likewise failed to move for
reconsideration or to appeal the trial courts order. Hence, NPC was now
estopped from claiming that it had been denied due process. The appellate
court likewise found the assessed value of P500.00 per square meter to be
fair as opposed to the NPC-appointed commissioners valuation of P22.50 per
square meter. Finally, the CA held that as NPC failed to appeal the trial courts
order, certiorari could not be a substitute for a lost or lapsed right to appeal.
NPC moved for reconsideration, but this was denied by the appellate court
in its resolution of February 26, 2002.
Hence, the instant recourse to this Court, with petitioner submitting the
following issues for our resolution:
I
WHETHER OR NOT THE COURT OF APPEALS COMMITTED A GRAVE
ERROR IN UPHOLDING THE DECISION OF THE COURT A QUO IN
DIRECTING THE PETITIONER TO PAY THE COMPENSATION FOR THE
LAND SOUGHT TO BE EXPROPRIATED WITHOUT FIRST ORDERING ITS
EXPROPRIATION.

II

WHETHER OR NOT THE COURT OF APPEALS COMMITTED A GRAVE

ERROR WHEN IT UPHELD THE DECISION OF THE TRIAL COURT
ADOPTING IN TOTO THE UNSUBSTANTIATED REPORT OF THE
APPOINTED COMMISSIONERS MS. REGADIO AND ATTY. CASTILLO,
WITHOUT CONSIDERING THE THIRD COMMISSIONER, ATTY. ALOG AND
WITHOUT CONDUCTING A HEARING.

III

WHETHER OR NOT THE COURT OF APPEALS COMMITTED A GRAVE

ERROR WHEN IT UPHELD THE DECISION OF THE TRIAL COURT IN
DIRECTING PETITIONER TO PAY THE FULL MARKET VALUE OF THE
LAND INSTEAD OF THE EASEMENT FEE AS PRAYED FOR IN THE
COMPLAINT AND PROVIDED UNDER REPUBLIC ACT NO. 6395 AS
AMENDED, WHICH IS OTHERWISE KNOWN AS THE REVISED NPC
CHARTER. [11]

In sum, we find that the pertinent issues before us are the following: (1)
whether petitioner NPC was deprived of due process; and (2) whether the
Court of Appeals erred in sustaining the Order of the RTC of Iba, Zambales,
dated June 7, 2000, by dismissing NPCs petition for certiorari.
On the first issue, petitioner contends that the appellate court gravely
erred in affirming the trial courts order directing it to pay the respondent the
compensation recommended by the majority report of the commissioners.
Petitioner points out that there were two reports submitted by the
commissioners, with conflicting findings as to the market values of the
expropriated properties. It insists that, given said situation, the trial court
should have conducted hearings on the two reports, as required by Rule 67,
Sections 7 and 8 of the 1997 Rules of Civil Procedure, before accepting the
[12] [13]

majority report. In failing to do so, the trial court not only blatantly violated the
Rules; it likewise denied petitioner due process, as the latter was not afforded
a chance to raise its objections to the majority report in a hearing held for that
purpose. It was, thus, grievous error for the appellate court to have sustained
the trial court.
 The respondents, Heirs of Agrifina Angeles, point out that the petitioners
contentions are without basis, since it was given ample time and/or
opportunity by the trial court to object to the questioned order. The
respondents assert that the petitioner, had it been so minded, could have
moved for reconsideration or filed an appeal therefrom within the
reglementary period, but it did not. Instead, it opted for the wrong remedy by
filing a special civil action for certiorari with the Court of Appeals, after the
period to appeal had lapsed. Having made an erroneous choice in its
remedies, petitioner cannot now come to this Tribunal crying that it was
denied due process.
On record we find that the majority report of Commissioners Ragadio and
Atty. Castillo was submitted to the trial court on March 9, 2000, while the
minority report of Commissioner Atty. Alog, was submitted on May 5, 2000. It
is not disputed that petitioner was furnished copies of said reports. After
petitioner NPC obtained its copy of the majority report, it did nothing. The
records do not disclose any objection thereto or any comment opposing the
findings and recommendations of the two commissioners in their report.
The majority report was submitted on March 9, 2000. The trial court issued
its order adopting the majority report on June 7, 2000. Clearly, petitioner had
ample time to make its objections or ventilate its opposition to the majority
report before the trial court. A formal hearing or trial was not required for the
petitioner to avail of its opportunity to object and oppose the majority report.
Petitioner could have filed a motion raising all possible grounds for objecting
to the findings and recommendations of the commissioners. It could have
moved the trial court to remand the report to the commissioners for additional
facts. Or it could have moved to expunge the majority report, for reasons
petitioner could muster. Petitioner, however, failed to seize the opportunity to
register its opposition or objections before the trial court. It is a bit too late in
the day now to be asking for a hearing on the pretext that it had not been
afforded due process.
The elements of due process are well established, viz:

(1) There must be a court or tribunal clothed with judicial power to hear and
determine the matter before it;

(2) Jurisdiction must be lawfully acquired over the person of the defendant or
property which is the subject of the proceedings;

(3) The defendant must be given an opportunity to be heard; and

 (4) Judgment must be rendered upon lawful hearing. [14]

What is repugnant to due process is the denial of the opportunity to be

heard. As pointed out that the petitioner was afforded this opportunity is
[15]

beyond question. Having failed to make use of this opportunity, the petitioner
cannot justifiably claim now that its right to due process has been violated.
The duty of the court in considering the commissioners report is to satisfy
itself that just compensation will be made to the defendant by its final
judgment in the matter, and in order to fulfill its duty in this respect, the court
will be obliged to exercise its discretion in dealing with the report as the
particular circumstances of the case may require. Rule 67, Section 8, of the
[16]

1997 Rules of Civil Procedure clearly shows that the trial court has the
discretion to act upon the commissioners report in any of the following
ways: (1) it may accept the same and render judgment therewith; or (2) for
cause shown, it may: [a] recommit the report to the commissioners for further
report of facts; or [b] set aside the report and appoint new commissioners; or
[c] 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. [17]

From March 9, 2000 to June 7, 2000, petitioner did not object to the
majority report. On record, it did not, at the time, signify its opposition thereto,
or specify that not all of the evidence, pertinent and material thereto, had been
considered by the commissioners or presented to the court. The option of
recommitting the report of the commissioners, which petitioner now claims,
was not ventilated before the trial court. No claim appears on record that fraud
or prejudice tainted the majority report.When it still had the opportunity below,
herein petitioner did not challenge the majority report on the ground that the
commissioners concerned disregarded the evidence before them, or used an
improper rule of assessment, in their submission to the trial court. As
previously held, where there was no opposition filed to the Commissioners
Report in the lower court, the findings in said Report will not be
disturbed. Absent the objections raised by the petitioner, it became the duty
[18]

of the trial court to make a final order and judgment in which the proper award
will be made and thus end the controversy.
Moreover, after its receipt of the trial courts order dated June 7, 2000,
which decided the issue of compensation as delineated at the pre-trial,
petitioner resorted to a special civil action, rather than an appeal before the
Court of Appeals. As aptly pointed out, petitioner could not utilize certiorari as
a substitute for its lost right of appeal. We also agree that the trial court did not
abuse its discretion in ruling on the very issue of just compensation for the
land taken, as delineated by the party themselves at the pre-trial.
Nevertheless, we shall now take up the matter of valuation and just
compensation if only to avoid any further delay in its resolution.
The fair market value of the 4,000 square meters occupied by the
petitioner was fixed by the trial court in its order of June 7, 2000 at P500.00
per square meter. The appellate court affirmed the said valuation.
In contesting the valuation, petitioner argues now that the Court of
Appeals gravely erred in upholding the RTC order requiring it to pay the full
market value of the expropriated properties, notwithstanding the fact that the
petitioner was only acquiring an easement of right-of-way. The petitioner
points out under Section 3-A of RA No. 6395, where only an easement of
[19]

right-of-way shall be acquired, with the principal purpose for which the land is
actually devoted is unimpaired, the compensation should not exceed ten
percent (10%) of the market value of the property. Thus, in sustaining the
order of the lower court directing the petitioner to pay the respondents the full
recommended value of their properties, the Court of Appeals completely
violated and disregarded RA No. 6395, as amended.
Petitioner averred in its complaint in Civil Case No. 1442-I, that it sought to
acquire an easement of right-of-way over portions of the properties owned by
respondents, for a total of 10,950 square meters. However, a perusal of its
[20]

complaint shows that petitioner also stated that it would erect structures for its
transmission lines on portions of the expropriated property. In other words, the
expropriation was not to be limited for the purpose of easement of right-of-
way. In fact, in their Answer, the Heirs of Agrifina Angeles, alleged that
petitioner had actually occupied an area of 4,000 square meters wherein it
constructed structures for its transmission lines and was seeking to occupy
another 4,000 square meters. Petitioner failed to controvert this material
[21]

allegation. Justifiably, the market value of these 4,000 square meters

allegedly occupied by the petitioner has became the very crux of the present
case.
In eminent domain or expropriation proceedings, the general rule is that
the just compensation to which the owner of condemned property is entitled to
is the market value. Market value is that sum of money which a person
[22]

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. The [23]

aforementioned rule, however, is modified where only a part of a certain

property is expropriated. In such a case the owner is not restricted to
compensation for the portion actually taken. In addition to the market value of
the portion taken, he is also entitled to recover for the consequential damage,
if any, to the remaining part of the property. At the same time, from the total
compensation must be deducted the value of the consequential benefits. [24]

In fixing the valuation at P500.00 per square meter, the Court of Appeals
noted that the trial court had considered the reports of the commissioners and
the proofs submitted by the parties. This included the fair market value
of P1,100.00 per square meter proffered by the respondents. This valuation
[25]

by owners of the property may not be binding upon the petitioner or the court,
although it should at least set a ceiling price for the compensation to be
awarded. The trial court found that the parcels of land sought to be
[26]

expropriated are agricultural land, with minimal improvements. It is the nature

and character of the land at the time of its taking that is the principal criterion
to determine just compensation to the landowner. Hence, the trial court
[27]

accepted not the owners valuation of P1,100 per square meter but only P500
as recommended in the majority report of the commissioners.
As to the price of P22.50 per square meter recommended by the minority
report of Commissioner Atty. Alog, the Court of Appeals found it
unconscionably inadequate. It was rightly rejected by the trial court.
In finding that the trial court did not abuse its authority in evaluating the
evidence and the reports placed before it nor did it misapply the rules
governing fair valuation, the Court of Appeals found the majority reports
valuation of P500 per square meter to be fair. Said factual finding of the Court
of Appeals, absent any showing that the valuation is exorbitant or otherwise
unjustified, is binding on the parties as well as this Court.
WHEREFORE, the instant petition is DENIED for lack of merit. The
decision of the Court of Appeals, dated October 26, 2001 as well as its
resolution of February 26, 2002, denying the petitioners motion for
reconsideration, in CA-G.R. SP No. 60716 are AFFIRMED. Costs against
petitioner.
SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 156093 February 2, 2007

NATIONAL POWER CORP., Petitioner,

vs.
SPOUSES NORBERTO AND JOSEFINA DELA CRUZ, METROBANK, Dasmariñas,
Cavite Branch, REYNALDO FERRER, and S.K. DYNAMICS MANUFACTURER
CORP., Respondents.

DECISION

VELASCO, JR., J.:

The Case

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
Decision1 of the Court of Appeals (CA) in CA-G.R. CV No. 67446, which affirmed the
December 28, 1999 Order2 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
PhP 10,000.00 per square meter.

The Facts

Petitioner NAPOCOR is a government-owned 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-of-way over portions of
land within the areas of Dasmariñas and Imus, Cavite for the construction and
maintenance of the proposed Dasmariñas-Zapote 230 kV Transmission Line Project.3

On November 27, 1998, petitioner filed a Complaint4 for eminent domain and
expropriation of an easement of right-of-way against respondents as registered owners
of the parcels of land sought to be expropriated, which were covered by Transfer
Certificates of Title (TCT) Nos. T-313327, 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 PhP 5,788.50 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 nominated the
Municipal Assessor of Dasmariñas, 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:

I. PROPERTY LOCATION

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) Dasmariñas-Zapote 230KV
Transmission Lines Project, located within Barangay Salitran,
Dasmariñas, Cavite registered in the name of S.K. Dynamic[s]
Manufacture[r], Corp., under Transfer Certificate of Title No. T-454278.

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 Dasmariñas 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

Golden City Subdivision

Southfield Subdivisions

Arcontica Sports Complex

Max’s Restaurant

Waltermart Shopping Mall

UMC Medical Center

Several savings and Commercial Banks as well as several

Gasoline stations.

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].

xxxx

IV. HIGHEST AND MOST PROFITABLE USE

xxxx

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 are
on the opinion that the highest and most profitable use of the property is good for
residential and commercial purposes.

V. VALUATION OF LAND MARKET DATA

 xxxx

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 PhP 10,000.00 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.

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.

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 PhP 10,000.00 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 Dasmariñas-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
8.55-square meter portion of its property included in the computation of just
compensation. 1awphi1.net

The Ruling of the Regional Trial Court

As previously stated, in its December 28, 1999 Order, the trial court fixed the just
compensation to be paid by petitioner at PhP 10,000.00 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 Dasmariñas, 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 ₧10,000.00 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.
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 x x x which fixed the fair market
value of lots located along Gen. Aguinaldo Highway, Dasmariñas, 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 Procedure11 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 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 x x x."

The CA ultimately rendered its judgment, as follows:

WHEREFORE, premises considered, 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;14thus, 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 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.
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
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.

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

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
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 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."

We are not persuaded.

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 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 PhP 10,000.00 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. x x x

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.

Furthermore, the commissioners’ report itself is flawed considering that its

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.

PRESBITERO J. VELASCO, JR.

Associate Justice

WE CONCUR:

LEONARDO A. QUISUMBING
Associate Justice
Chairperson
 ANTONIO T. CARPIO CONCHITA CARPIO MORALES
Associate Justice Asscociate Justice

DANTE O. TINGA
Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation
before the case was assigned to the writer of the opinion of the Court’s Division.

LEONARDO A. QUISUMBING
Associate Justice
Chairperson

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairperson’s
Attestation, I certify that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the Court’s
Division.

REYNATO S. PUNO
Chief Justice

Footnotes

1
Rollo, pp. 31-37. The Decision was penned by Associate Justice B.A. Adefuin-
Dela Cruz, and concurred in by Associate Justices Mercedes Gozo-Dadole and
Mariano C. Del Castillo.

2
Id. at 66-67. The Order was rendered by Executive Judge Lucenito N. Tagle.

3
Id. at 40-42.

4
Id. at 40-46.

5
SEC. 2. Entry of plaintiff upon depositing value with authorized government
depositary.––Upon the filing of the complaint or at any time thereafter and after
due notice to the defendant, the plaintiff shall have the right to take or enter upon
the possession of the real property involved if he deposits with the authorized
government depositary an amount equivalent to the assessed value of the
property for purposes of taxation to be held by such bank subject to the orders of
the court. Such deposit shall be in money, unless in lieu thereof the court
authorizes the deposit of a certificate of deposit of a government bank of the
Republic of the Philippines payable on demand to the authorized government
depositary.

If personal property is involved, its value shall be provisionally ascertained

and the amount to be deposited shall be promptly fixed by the court.

After such deposit is made the court shall order the sheriff or other proper
officer to forthwith place the plaintiff in possession of the property involved
and promptly submit a report thereof to the court with service of copies to
the parties.

6
Rollo, p. 60.

7
Id. at 64-65.

8 Id. at 35.

9 Supra note 2.

10
Rollo, pp. 75-76.

11 SEC. 4. Order of expropriation.––If the objections to and the defenses against

the right of the plaintiff to expropriate the property are overruled, or when no
party appears to defend as required by this Rule, the court may issue an order of
expropriation declaring that the plaintiff has a lawful right to take the property
sought to be expropriated, for the public use or purpose described in the
complaint, upon the payment of just compensation to be determined as of the
date of the taking of the property or the filing of the complaint, whichever came
first (emphasis supplied).
12 Supra note 1, at 37.

13 Rollo, p. 18.

14 Rules of Court, Rule 45, Sec. 1.

15 Manila Electric Company v. Pineda, G.R. No. 59791, February 13, 1992, 206 SCRA 196, 204.

16 Supra note 1, at 37.

17 Supra note 16.

18 G.R. No. 89980, December 14, 1992, 216 SCRA 584, 586-587, citations omitted.
 [Syllabus]

THIRD DIVISION

[G.R. No. 113194. March 11, 1996]

NATIONAL POWER CORPORATION, petitioner, vs. COURT OF

APPEALS and MACAPANTON MANGONDATO, respondents.

DECISION
PANGANIBAN, J.:

At what point in time should the value of the land subject of expropriation be
computed: at the date of the taking or the date of the filing of the complaint for eminent
domain? This is the main question posed by the parties in this petition for review on
certiorari assailing the Decision[1] of the Court of Appeals[2] which affirmed in toto the
decision of the Regional Trial Court of Marawi City.[3] The dispositive portion of the
decision of the trial court reads:[4]

WHEREFORE, the prayer in the recovery case for Napocors surrender of the property
is denied but Napocor is ordered to pay monthly rentals in the amount of P15,000.00
from 1978 up to July 1992 with 12% interest per annum from which sum the amount
of P2,199,500.00 should be deducted; and the property is condemned in favor of
Napocor effective July 1992 upon payment of the fair market value of the property at
One Thousand (P1,000.00) Pesos per square meter or a total of Twenty-One Million
Nine Hundred Ninety-Five Thousand (P21,995,000.00) Pesos.

SO ORDERED. Costs against NAPOCOR.

The Facts

The facts are undisputed by both the petitioner and the private respondent, [5] and
are quoted from the Decision of the respondent Court,[6] as follows:

In 1978, National Power Corporation (NAPOCOR), took possession of a 21,995

square meter land which is a portion of Lot 1 of the subdivision plan (LRC) Psd-
116159 situated in Marawi City, owned by Mangondato, and covered by Transfer
Certificate of Title No. T-378-A, under the mistaken belief that it forms part of the
public land reserved for use by NAPOCOR for hydroelectric power purposes under
Proclamation No. 1354 of the President of the Philippines dated December 3, 1974.

NAPOCOR alleged that the subject land was until then possessed and administered by
Marawi City so that in exchange for the citys waiver and quitclaim of any right over
the property, NAPOCOR had paid the city a financial assistance of P40.00 per square
meter.

In 1979, when NAPOCOR started building its Agus I HE (Hydroelectric Plant)

Project, Mangondato demanded compensation from NAPOCOR. NAPOCOR refused
to compensate insisting that the property is public land and that it had already paid
financial assistance to Marawi City in exchange for the rights over the property.

Mangondato claimed that the subject land is his duly registered private property
covered by Transfer Certificate of Title No. T-378-A in his name, and that he is not
privy to any agreement between NAPOCOR and Marawi City and that any payment
made to said city cannot be considered as payment to him.

More than a decade later NAPOCOR acceded to the fact that the property belongs to
Mangondato.

At the outset, in March, 1990, NAPOCORs regional legal counsel, pursuant to

Executive Order No. 329 dated July 11, 1988 requested Marawi Citys City Appraisal
Committee to appraise the market value of the property in
Saduc, Marawi City affected by the infrastructure projects of NAPOCOR without
specifying any particular land-owner. The City Appraisal Committee in its Minutes
dated March 8, 1990, fixed the fair market value as follows:
[7]

Land Fair Market Value Per Sq. M.

Price Per Sq. M Price per Sq. M.

Along the City Not in the City
National Highway National Highway

P150 Residential Lot P100

P250 Commercial Lot P180
P300 Industrial Lot P200

(Records, Civil Case No. 610-92, p. 20).

On July 13, 1990, NAPOCORs National Power Board (hereafter NAPOCORs board)
passed Resolution No. 90-225 resolving to pay Mangondato P100.00 per square meter
for only a 12,132 square meter portion of the subject property plus 12% interest per
annum from 1978. However, in the August 7, 1990 board meeting, confirmation of
said resolution was deferred to allow NAPOCORs regional legal counsel to determine
whether P100.00 per square meter is the fair market value. (Records, Civil Case No.
605-92, p. 45).

On August 14, 1990, NAPOCORs board passed Resolution No. 90-316 resolving that
Mangondato be paid the base price of P40.00 per square meter for the 12,132 square
meter portion (P485,280.00) plus 12% interest per annum from 1978 (P698,808.00)
pending the determination whether P100.00 per square meter is the fair market value
of the property (id.).

Pursuant to the aforementioned resolution Mangondato was paid

P1,184,088.00 (Id., p. 58).

NAPOCORs regional legal counsels findings embodied in 2 memoranda to

NAPOCORs general counsel (dated January 29, 1991 and February 19, 1991) state
that Mangondatos property is classified as industrial, that the market value of
industrial lots in Marawi City when NAPOCOR took possession is P300.00 for those
along the national highway and P200.00 for those not along the highway and that on
the basis of recent Supreme Court decisions, NAPOCOR has to pay not less than
P300.00 per square meter. NAPOCORs general counsel incorporated the foregoing
findings in his report to the board plus the data that the area possessed by NAPOCOR
is 21,995 square meters, and that the legal rate of interest per annum from the time of
the taking of the property alleged to be in 1978, is 12%, but recommended to the
board that the fair market value of the property is P 100.00 per square meter;
NAPOCORs board on May 17, 1991 passed Resolution No. 91-247 resolving to pay
Mangondato P100.00 per square meter for the property excluding 12% interest per
annum (id., pp. 50-52).

In a letter dated December 17, 1991, Mangondato disagreed with the NAPOCOR
boards Resolution No. 91-247 pegging the compensation for his land at P 100.00 per
square meter without interest from 1978. Mangondato submitted that the fair market
value of his land is even more than the P300.00 (per) square meter stated in the City
Appraisal Report but that for expediency, he is willing to settle for P300.00 per square
meter plus 12% interest per annum from 1978 (id., pp. 53-59).

In another letter dated February 4, 1992, Mangondato reiterated his disagreement to

the P100.00 per square meter compensation without interest. At the same time, to get
partial payment, he asked that he be paid in the meantime, P 100.00 per square meter
without prejudice to pursuing his claim for the proper and just compensation plus
interest thereon (id., p. 60).
On February 12, 1992, NAPOCORs general counsel filed a memorandum for its
president finding no legal impediment if they, in the meantime were to pay
Mangondato P100.00 per square meter without prejudice to the final determination of
the proper and just compensation by the board inasmuch as the regional counsel
submitted to him (general counsel) 2 memoranda stating that the appraisal of
industrial lots in Marawi City when NAPOCOR took possession is P300.00 per
square meter for those along the national highway and P200.00 per square meter for
those not along the highway, and that NAPOCOR has to pay not less than P300.00 per
square meter plus 12% interest on the basis of recent Supreme Court decisions.
Further, the general counsel submitted that since the board has already set the
purchase price at P100.00 per square meter (Resolution No. 91-247), NAPOCOR
would not be prejudiced thereby (id., pp 60-62)

In March, 1992, the parties executed a Deed of Sale Of A Registered Property where
NAPOCOR acceded to Mangondatos request of provisional payment of P100.00 per
square meter excluding interest and without prejudice to Mangondatos pursuance of
claims for just compensation and interest. Mangondato was paid P1,015,412.00 in
addition to the P1,184,088.00 earlier paid to him by NAPOCOR which payments total
P2,199,500.00 for the 12,995 square meter land (Records, Civil Case No. 610-92, pp.
85-87).

In his letter to NAPOCORs president dated April 20, 1992, Mangondato asked for the
payment of P300.00 per square meter plus 12% interest per annum from 1978.
NAPOCORs president, in his memorandum to the board dated April 24,
1992 recommended the approval of Mangondatos request (Records, Civil Case No.
605-92, pp. 63-69).

On May 25, 1992, NAPOCORs board passed Resolution No. 92-121 granting its
president the authority to negotiate for the payment of P100.00 per square meter for
the land plus 12% interest per annum from 1978 less the payments already made to
Mangondato and to Marawi City on the portion of his land and with the provisos that
said authorized payment shall be effected only after Agus I HE Project has been
placed in operation and that said payment shall be covered by a deed of absolute sale
with a quitclaim executed by Mangondato (Id., pp. 70-71).

On July 7, 1992, Mangondato filed before the lower court Civil Case No. 605-92
against NAPOCOR seeking to recover the possession of the property described in the
complaint as Lots 1 and 3 of the subdivision plan (LRC) Psd-116159 against
NAPOCOR, the payment of a monthly rent of P15,000.00 from 1978 until the
surrender of the property, attorneys fees and costs, and the issuance of a temporary
restraining order and a writ of preliminary mandatory injunction to restrain
NAPOCOR from proceeding with any construction and/or improvements on
Mangondatos land or from committing any act of dispossession (id., pp. 1-8).

The temporary restraining order was issued by the lower court. Anent the prayer for
the writ of preliminary mandatory injunction, NAPOCOR filed its Opposition thereto
on July 23, 1992 (Id., pp. 17-20).

Before the lower court could resolve the pending incident on the writ of preliminary
mandatory injunction, and instead of filing a motion to dismiss, NAPOCOR, on July
27, 1992, filed also before the lower court, Civil Case No. 610-92 which is a
Complaint for eminent domain against Mangondato over the subject property
(Records, Civil Case No. 610-92, pp. 1-3).

On the same date Mangondato filed his Manifestation in Lieu of Answer contending
that the negotiations for payment made by NAPOCOR were virtual dictations on a
take it or leave it basis; that he was given the run-around by NAPOCOR for 15 years;
so that there was no agreement reached as to payment because of NAPOCORs
insistence of its own determination of the price; that he treats the P2,199.500.00 so far
received by him as partial payment for the rent for the use of his property.
Mangondato prayed that he be compensated in damages for the unauthorized taking
and continued possession of his land from 1978 until the filing of the Complaiant (sic)
in the expropriation case; that should the lower court order the expropriation of the
subject property, that the just compensation for the land be reckoned from the time of
the filing of the expropriation case; that the expropriation case be consolidated with
the recovery of possession case; that the restraining order issued in the recovery of
possession case be maintained and a writ of preliminary injunction be at once issued
against NAPOCOR; and that NAPOCOR be ordered to deposit the value of the land
as provisionally determined by the lower court (id., pp. 4-5).

Upon agreement of the parties, the 2 cases were ordered consolidated and the lower
court appointed the following commissioners: Atty. Saipal Alawi, representing the
lower court; Atty. Connie Doromal, representing NAPOCOR; and Mr. Alimbsar A.
Ali, from the City Assessors Office to ascertain and report to the court the just
compensation (id., pp. 6-7).

The lower court ordered NAPOCOR to deposit with the Philippine National Bank the
amount of P10,997,500.00, provisionally fixing the value of the land at P500.00 per
square meter P100.00 lower than the assessed value of the land appearing in Tax
Declaration No. 0873 for 1992 which was used as basis by the lower court (id., p. 8).

In its Motion for Reconsideration of the Order For Provisional Deposit[,] NAPOCOR
opposed the provisional value quoted by the lower court saying that the basis of the
provisional value of the land should be the assessed value of the property as of the
time of the taking which in this case is 1978 when the assessed value of the land under
Tax Declaration No. 7394 was P100.00 per square meter (id., pp. 28-32). In reply,
Mangondato filed his Opposition To Motion For Reconsideration Of the Order For
Provisional Deposit (id., pp. 44-46). However, the lower court did not rule on the
provisional value to be deposited and chose to go right into the determination of just
compensation on the ground that the provisional valuation could not be decided
without going into the second phase of expropriation cases which is the determination
by the court of the just compensation for the property soguht (sic) to be taken
(NPC vs. Jocson, supra) (Decision, p. 5).

On August 5, 1992, Mangondato filed a Motion To Dismiss in the expropriation case

alleging that NAPOCOR filed its Complaint for eminent domain not for the legitimate
aim of pursuing NAPOCORs business and purpose but to legitimize a patently illegal
possession and at the same time continue dictating its own valuation of the property.
Said motion was however, later withdrawn by Mangondato (id., pp. 37-39 and 47).

In the meanwhile, the commissioners filed their respective reports. On July 28, 1992,
Commissioner Doromal filed his report recommending a fair market value of P300.00
per square meter as of November 23, 1978, (Id., pp. 11-27). On August 6, 1992,
Commissioners Alawi and Ali filed their joint report recommending a fair market
value of P1,000.00 per square meter as of 1992 (id., pp. 40-42).

After the parties filed their respective comments to the commissioners reports, on
August 21, 1992, the lower court rendered its decision denying Mangondato recovery
of possession of the property but ordering NAPOCOR to pay a monthly rent of
P15,000.00 from 1978 up to July 1992 with 12% interest per annum and condemning
the property in favor of NAPOCOR effective July, 1992 upon the payment of
P1,000.00 per square meter or a total of P2 1,995,000.00 as just compensation.

Mangondato filed a Motion For Partial Execution Pending Appeal which was granted
by the lower court in an Order dated September 15, 1992 (id., pp. 151-152 and 157-
160). However, on appeal by NAPOCOR via a Petition For Certiorari in CA-G.R. SP
No. 28971 to this Court, said Order was annulled and set aside (Rollo, pp. 30-37).

NAPOCOR filed a Motion For Reconsideration of the decision alleging that the fair
market value of the property at the time it was taken allegedly in 1978 is P40.00 per
square meter. After Mangondato filed his Opposition To Motion For Reconsideration
the lower court denied NAPOCORs motion for reconsideration in an Order
dated September 15, 1992 (Records, Civil Case No. 610-92, pp. 145-149).
In the meanwhile, on August 7, 1992, Mangondato filed an Ex-Parte Manifestation
To Correct Clerical Error of Description of Property submitting that Lot 3 which does
not form part of the subject property was included in the Complaint because of a
clerical error inadvertently committed by the typist who continuously copied the
description of the property covered by Transfer Certificate of Title No. T-378-A, and
thus praying that the portion of the Complaint describing Lot 3 be deleted (Records,
Civil Case No. 605-92, p. 22).

On August 12, 1992, the intervenors filed their Motion For Intervention and
Intervention claiming interest against each of the parties on the ground that Lot 3
which is included in the Complaint has since been conveyed by Mangondato to their
predecessors-in-interest and that they are entitled to just compensation from
NAPOCOR should the lower court decide that NAPOCOR is entitled to expropriate
the entire area described in the Complaint (id., pp. 23-34).

In an Order dated August 19, 1992 the lower court granted intervenors Motion For
Intervention (id., p. 72).

On August 25, 1992, the lower court ordered the deletion of the portion in the
Complaint describing Lot 3 and declared that intervenors Motion For Intervention has
become moot (id., p. 82).

On October 13, 1992 the intervenors filed their Motion To Reconsider The Order
Of August 25, 1992 and The Decision Dated August 21, 1992 which was however
denied by the lower court in an Order dated November 26, 1992 (id., pp. 162-184).

The Issues

Two errors were raised before this Court by the petitioner, thus:[8]
ASSIGNMENT OF ERRORS

THE RESPONDENT COURT ERRED IN AFFIRMING THAT THE JUST

COMPENSATION FOR THE PROPERTY IS ITS VALUE IN 1992, WHEN THE
COMPLAINT WAS FILED, AND NOT ITS VALUE IN 1978, WHEN THE
PROPERTY WAS TAKEN BY PETITIONER.

THE COURT ERRED IN FIXING THE VALUE OF JUST COMPENSATION AT P

1,000.00 PER SQUARE METER INSTEAD OF P40.00 PER SQUARE METER.

The petitioner summarized the two issues it raised by asking whether or not the
respondent court was justified in deviating from the well-settled doctrine that just
compensation is the equivalent of the value of the property taken for public use
reckoned from the time of taking.[9] In his Comment, private respondent worded the
issues as follows:[10]

x x x As stated by the respondent court, Napocor, in its appeal

x x x avers that the taking of the proerty (sic) should not be reckoned as of the year
1992 when NAPOCOR filed its Complaint for eminent domain but as of the year
1978 when it took possession of the property, and that the just compensation,
determined as it should be, on the basis of the value of the property as of 1978, as
P40.00 per square meter.

The petitioner, after failing to persuade both lower courts, reiterated before us its
proposition (with cited cases) that when the taking of property precedes the filing of the
judicial proceeding, the value of the property at the time it was taken shall be the basis
for the payment of just compensation.[11]

The First Issue: Date of Taking or Date of Suit?

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, as follows:[12]

Sec. 4. 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 x x x (Italics supplied).

Normally, the time of the taking coincides with the filing of the complaint for
expropriation. Hence, many rulings of this Court have equated just compensation with
the value of the property as of the time of filing of the complaint consistent with the
above provision of the Rules. So too, where the institution of the action precedes entry
into the property, the just compensation is to be ascertained as of the time of the filing of
the complaint.[13]
The general rule, however, admits of an exception: where this Court fixed the value
of the property as of the date it was taken and not at the date of the commencement of
the expropriation proceedings.
In the old case of Provincial Government of Rizal vs. Caro de Araullo,[14] the Court
ruled that x x x the owners of the land have no right to recover damages for this
unearned increment resulting from the construction of the public improvement
(lengthening of Taft Avenue from Manila to Pasay) for which the land was taken. To
permit them to do so would be to allow them to recover more than the value of the land
at the time when it was taken, which is the true measure of the damages, or just
compensation, and would discourage the construction of important public
improvements.
In subsequently cases,[15] the Court, following the above doctrine, invariably held that
the time of taking is the critical date in determining lawful or just compensation.
Justifying this stance, Mr. Justice (later Chief Justice) Enrique Fernando, speaking for
the Court in Municipality of La Carlota vs. The Spouses Felicidad Baltazar and Vicente
Gan,[16] said, x x x the owner as is the constitutional intent, is paid what he is entitled to
according to the value of the property so devoted to public use as of the date of the
taking. From that time, he had been deprived thereof. He had no choice but to submit.
He is not, however, to be despoiled of such a right. No less than the fundamental law
guarantees just compensation. It would be an injustice to him certainly if from such a
period, he could not recover the value of what was lost. There could be on the other
hand, injustice to the expropriator if by a delay in the collection, the increment in price
would accrue to the owner. The doctrine to which this Court has been committed is
intended precisely to avoid either contingency fraught with unfairness.
Simply stated, the exception finds application where the owner would be given
undue incremental advantages arising from the use to which the government devotes
the property expropriated -as for instance, the extension of a main thoroughfare as was
the case in Caro de Araullo. In the instant case, however, it is difficult to conceive of
how there could have been an extra-ordinary increase in the value of the owners land
arising from the expropriation, as indeed the records do not show any evidence that the
valuation of P1,000.00 reached in 1992 was due to increments directly caused by
petitioners use of the land. Since the petitioner is claiming an exception to Rule 67,
Section 4,[17] it has the burden of proving its claim that its occupancy and use - not
ordinary inflation and increase in land values - was the direct cause of the increase in
valuation from 1978 to 1992.

Side Issue: When is There Taking of Property?

But there is yet another cogent reason why this petition should be denied and why
the respondent Court should be sustained. An examination of the undisputed factual
environment would show that the taking was not really made in 1978.
This Court has defined the elements of taking as the main ingredient in the exercise
of power of eminent domain,[18] in the following words:

A number of circumstances must be present in the taking of property for purposes of

eminent domain: (1) the expropriator must enter a private property; (2) the entrance
into private property must be for more than a momentary period; (3) the entry into the
property should be under warrant or color of legal authority; (4) the property must be
devoted to a public use or otherwise informally appropriated or injuriously affected;
and (5) the utilization of the property for public use must be in such a way to oust the
owner and deprive him of all beneficial enjoyment of the property. (Italics supplied)

In this case, the petitioners entrance in 1978 was without intent to expropriate or was
not made under warrant or color of legal authority, for it believed the property was
public land covered by Proclamation No. 1354. When the private respondent raised
his claim of ownership sometime in 1979, the petitioner flatly refused the claim for
compensation, nakedly insisted that the property was public land and wrongly
justified its possession by alleging it had already paid financial assistance
to Marawi City in exchange for the rights over the property. Only in 1990, after more
than a decade of beneficial use, did the petitioner recognize private respondents
ownership and negotiate for the voluntary purchase of the property. A Deed of Sale
with provisional payment and subject to negotiations for the correct price was then
executed.

Clearly, this is not the intent nor the expropriation contemplated by law. This is a simple
attempt at a voluntary purchase and sale. Obviously, the petitioner neglected and/or
refused to exercise the power of eminent domain.
Only in 1992, after the private respondent sued to recover possession and petitioner
filed its Complaint to expropriate, did petitioner manifest its intention to exercise the
power of eminent domain. Thus, the respondent Court correctly held: [19]

If We decree that the fair market value of the land be determined as of 1978, then We
would be sanctioning a deceptive scheme whereby NAPOCOR, for any reason other
than for eminent domain would occupy anothers property and when later pressed for
payment, first negotiate for a low price and then conveniently expropriate the property
when the land owner refuses to accept its offer claiming that the taking of the property
for the purpose of eminent domain should be reckoned as of the date when it started to
occupy the property and that the value of the property should be computed as of the
date of the taking despite the increase in the meantime in the value of the property.

In Noble vs. City of Manila,[20] the City entered into a lease-purchase agreement of a
building constructed by the petitioners predecessor-in-interest in accordance with the
specifications of the former. The Court held that being bound by the said contract, the
City could not expropriate the building. Expropriation could be resorted to only when it is
made necessary by the opposition of the owner to the sale or by the lack of any
agreement as to the price. Said the Court:

The contract, therefore, in so far as it refers to the purchase of the building, as we have
interpreted it, is in force, not having been revoked by the parties or by judicial
decision. This being the case, the city being bound to buy the building at an agreed
price, under a valid and subsisting contract, and the plaintiff being agreeable to its
sale, the expropriation thereof, as sought by the defendant, is baseless. Expropriation
lies only when it is made necessary by the opposition of the owner to the sale or by the
lack of any agreement as to the price. There being in the present case a valid and
subsisting contract, between the owner of the building and the city, for the purchase
thereof at an agreed price, there is no reason for the expropriation. (Italics supplied)

In the instant case, petitioner effectively repudiated the deed of sale it entered into
with the private respondent when it passed Resolution No. 92-121
on May 25, 1992 authorizing its president to negotiate, inter alia, that payment shall be
effected only after Agus I HE project has been placed in operation. It was only then that
petitioners intent to expropriate became manifest as private respondent disagreed and,
barely a month after, filed suit.

The Second Issue: Valuation

We now come to the issue of valuation.

The fair market value as held by the respondent Court, is the amount of P1,000.00
per square meter. In an expropriation case where the principal issue is the
determination of just compensation, as is the case here, a trial before Commissioners is
indispensable to allow the parties to present evidence on the issue of just
compensation.[21] Inasmuch as the determination of just compensation in eminent
domain cases is a judicial function[22] and factual findings of the Court of Appeals are
conclusive on the parties and reviewable only when the case falls within the recognized
exceptions,[23] which is not the situation obtaining in this petition, we see no reason to
disturb the factual findings as to valuation of the subject property. As can be gleaned
from the records, the court-and-the-parties-appointed commissioners did not abuse their
authority in evaluating the evidence submitted to them nor misappreciate the clear
preponderance of evidence. The amount fixed and agreed to by the respondent
appellate Court is not grossly exorbitant.[24] To quote:[25]

Commissioner Ali comes from the Office of the Register of Deeds who may well be
considered an expert, with a general knowledge of the appraisal of real estate and the
prevailing prices of land in the vicinity of the land in question so that his opinion on
the valuation of the property cannot be lightly brushed aside.

The prevailing market value of the land is only one of the determinants used by the
commissioners report the others being as herein shown:

xxx xxx xxx

Commissioner Doromals report, recommending P300.00 per square meter, differs

from the 2 commissioners only because his report was based on the valuation as of
1978 by the City Appraisal Committee as clarified by the latters chairman in response
to NAPOCORs general counsels query (id., pp. 128-129).

In sum, we agree with the Court of Appeals that petitioner has failed to show why it
should be granted an exemption from the general rule in determining just compensation
provided under Section 4 of Rule 67. On the contrary, private respondent has convinced
us that, indeed, such general rule should in fact be observed in this case.
WHEREFORE, the petition is hereby DISMISSED and the judgment appealed from
AFFIRMED, except as to the interest on the monthly rentals, which is hereby reduced
from twelve percent (12%) to the legal rate of six percent (6%) per annum. Costs
against the petitioner.
SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. L-64037 August 27, 1987

PROVINCIAL GOVERNMENT OF SORSOGON, petitioner,

vs.
ROSA E. VDA. DE VILLAROYA, et. al., GODOFREDO VILLAROYA, et al., AURORA
VILLAROYA, et. al., and NICOLAS GALING, Presiding Judge of the Court of First
Instance, Branches II & III, of the Province of Sorsogon (Now the Regional Trial
Court No. 54 and 52, respectively), respondents.

GUTIERREZ, JR., J.:

The main issue in this petition centers on the manner of execution of the final judgment
of the then Court of First Instance of Sorsogon in Civil Case No. 50 for recovery of real
property .

The subject matter of Civil Case No. 50 was a 16,500 square meter lot occupied by the
Gubat High School and developed as its athletic ground.

On March 28, 1974, the lower court promulgated a decision in the recovery of real
property case in favor of the plaintiffs and intervenors, the private respondents herein,
and against the defendant, the petitioner herein. The dispositive portion of the decision
reads:

WHEREFORE, the Court hereby renders judgment: (a) declaring the

plaintiffs and the two sets of intervenors, the owners of the land in litigation
indicated in the sketch plan (Exhibits "A" and "A-I" ); (b) ordering the
Province of Sorsogon to pay to the plaintiffs and intervenors the sum of
Forty- Nine Thousand Five Hundred P49,500.00) Pesos representing the
value of the land at P3.30 per square meter, within one (1) year from
receipt of this Decision, or in alternative, if the said defendant fails to pay,
the plaintiffs and intervenors within the period granted, then the defendant
Province of Sorsogon is hereby ordered to vacate the land in litigation and
deliver the same to the plaintiffs and intervenors; (c) ordering the plaintiffs
and intervenors to execute a conveyance in favor of the defendant
Province of Sorsogon over the land in litigation upon payment of the value
of the land; (d) ordering a division of the amount of P49,500.00
representing the value of the land on a two-to-one (2 to 1) basis, or two
shares each for the acknowledged natural children, or if the defendant
 shall fail to pay to the plaintiffs and intervenors the amount representing
the value of the land on the same ratio of two-to-one (2 to 1), and each
heir entitled to take possession of his/her share - should the heirs so
desire. they may avail of the services of a surveyor for purposes of an
accurate partition of the land on a proportionate sharing of the survey
expenses; and (e) dismissing the complaint as to the defendant
Municipality of Gubat. With costs against the defendant Province of
Sorsogon. (Rollo p. 2)

The decision became final and executory.

Shortly afterwards, the petitioner manifested its willingness to pay to the private
respondents the value of the subject parcels of land as mandated in the court's
decision. On September 13, 1974, the Provincial Board of Sorsogon enacted Resolution
No. 340 appropriating the amount of P49,500.00 for the payment of the subject parcel of
land. (p. 44, Rollo)

In turn, the writs of execution issued by the lower court ordered the petitioner to pay
P49,500.00 to the private respondents. However, the writ of execution issued on July
27, 1975 and the alias writ of execution issued on November 24, 1975 were returned
unsatisfied.

The delay in the payment was caused by the requirements prescribed by the Provincial
Auditor before payment could be effected. The private respondents questioned the
requirements prompting the Provincial Auditor to refer the matter to the Acting Chairman
of the Commission on Audit (COA).

In a lst indorsement dated October 14, 1975, the Acting Chairman of COA through Raul
C. Ferrer, Assistant Manager, Local Government Audit Office wrote the Provincial
Auditor stating that the following requirements should be complied with:

1. Submission of competent documentation to show ownership of the

properties including the covering tax declarations of the same issued in
the name of the vendors;

2. Submission of evidence that taxes on the properties have been fully

paid or that the properties are free from any lien or encumbrance;

3. Submission of the corresponding Deed of Sale of subject properties in

favor of the Province of Sorsogon executed by the claimants as basis for
payment thereof;

4. Submission of the corresponding sketch plan of the portions, being

sold, which should be attached to and made an integral part of the Deed
of Sale;
 5. Submission of a copy of the Provincial Board resolution appropriating
the amount of P49,500.00 for payment of the land; and

6. Submission of the certificate as to the availability of funds to cover the

total consideration. (Rollo, p. 137).

In an order dated August 24, 1977, the lower court through then Presiding Judge
Aquilino Bonto ordered the private respondents to comply with the requirements set up
by the COA. The lower court stated that the requirements were made purely in
consonance with auditing rules and regulations and were not a whim or caprice
designed to cause a protracted delay in the actual payment. Moreover, the lower court
stated that the requirements were not beyond compliance considering that some of the
required documents were available in the records of the case.

Notwithstanding the private respondents' compliance with the stated requirements, no

payment was effected by the petitioner.

Instead, in a 2nd Indorsement dated January 15, 1980 the COA imposed additional
requirements to wit:

RE: Three (3) Deeds of Quitclaim and Conveyance of Real Property

executed by Rosita, Rosa and Clemente, all surnamed Villaroya
respectively, in favor of the Province of Sorsogon.

2nd Indorsement

January 15,1980

Respectfully returned to the Regional Director, COA Regional Office No.

V, Legaspi City, requesting that the following requirement be caused to be
complied with:

1. Consolidation of the herein three (3) Deeds of Quitclaim and

Conveyance by all the claimants into one (1) agreement in order to
facilitate processing thereof and for reasons of economy; and

2. Submission of a certificate of availability of funds, duly verified by the

Auditor concerned, indicating the particular source and nature of the funds
to be used in the within transaction. (Rollo, P. 119)

Upon representations of the Provincial Auditor and the COA Regional Director, the
requirement regarding the consolidation of quitclaim was abandoned by the COA. The
COA Regional Director, in a 3rd Indorsement dated October 28, 1980 forwarded the
required certificate of availability of funds duly verified by the Provincial Auditor.
Despite all these efforts, the private respondents waited in vain for the payment of the
subject parcels of land.

In a 5th Indorsement dated November 5, 1980, the COA Director informed the
Provincial Auditor, of a 4th Indorsement dated October 30, 1980 from the COA General
Counsel "Allowing payment thereof, subject to the availability of funds and the usual
audit, provided that the Deed of Conveyance and the affidavit of quitclaim are registered
with the Register of Deeds and that steps are taken to have the corresponding title
issued in the name of the Municipality free from all liens and encumbrances." (p.122,
Rollo, Emphasis supplied)

The last requirement was an additional and a new requirement imposed on the private
respondents.

This was the last straw. The private respondents (plaintiffs) in the belief that the
petitioner was not serious in paying for the parcel of land it had acquired, took
possession of some portions of the land, using the decision as basis for their action.

When the petitioner tried to disturb the respondents' possession of the land they had re-
entered, the latter, on July 15, 1982, filed a "MOTION TO RESTRAIN INTERFERENCE
BY DEFENDANTS WITH POSSESSION OF PLAINTIFFS" before the lower court.

In their Comment to the Motion, the private respondents-intervenors manifested that the
status quo in this case should be observed, namely, that the parcel of land remains in
the possession of the petitioner but conditioned on the payment by the petitioner of the
value of the land; provided however, that in the event that the petitioner fails to pay, the
definite shares in the property of each heir should first be determined before the
possession is delivered to the plaintiffs and intervenors.

The petitioner filed an Opposition to the Motion and at the same time filed a "Motion to
Order the plaintiffs to file their claim with the office of the Provincial Auditor."

In an Order dated October 7, 1982, the lower court through Presiding Judge Nicolas
Galing granted the private respondents' Motion. The dispositive portion of the Order
reads:

WHEREFORE, the defendants are hereby restrained from interfering with

the possession of the property in question by the plaintiffs and the
intervenors who are hereby required to cause a partition thereof on a two-
to-one basis as stated in the decision. (Rollo, p. 69).

The petitioner questions the jurisdiction of the lower court to act on the motion to
restrain filed by the private respondents. It cites two grounds: (1) by virtue of the finality
of judgment, the lower court no longer had jurisdiction to rule on said motion; and (2) the
decision having became final in 1974 and not having been enforced for almost eight (8)
years due to the fault of the private respondents, it had already become dormant; hence
it can no longer be enforced by a mere motion but requires an independent action
pursuant to section 6, in Rule 39 of the Revised Rules of Court.'

These arguments are not well-taken.

At the time the private respondents filed the questioned motion, the judgment in Civil
Case No. 50 was yet to be executed. In fact, the motion entitled "A MOTION TO
RESTRAIN INTERFERENCE BY DEFENDANTS WITH POSSESSION OF
PLAINTIFFS" was precisely intended to enforce the judgment. Hence. the lower court at
this stage of the proceedings was not divested of its jurisdiction over the case. In the
case of Cabrias v. Adil (135 SCRA 354) we ruled:

... every court having jurisdiction to render a particular judgment has

inherent power and authority to enforce it, and to exercise equitable
control over such enforcement. The court has authority to inquire whether
its judgment has been executed, and will remove obstructions to the
enforcement thereof. Such authority extends not only " to such orders and
such writs as may be necessary to carry out the judgment into effect and
render it binding and operative, but also to -such orders as may be
necessary to prevent an improper enforcement of the judgment. If a
judgment is sought to be perverted and made the medium of
consummating a wrong the court on proper application can prevent it, (31
Am. Jur., Judgments, Sec. 882, pp. 363-364).

In the eight (8) years that elapsed from the time the judgment became final until the
filing of the restraining motion by the private respondents, the judgment never became
dormant. Section 6, Rule 39 of the Revised Rules of Court does not apply. We have
outlined in detail the incidents which transpired from the issuance of the writ of
execution to the filing by the private respondents of the restraining motion with the lower
court. The records indicate that the delay in the execution of the judgment, more
specifically, in the payment of the land by the petitioner to the private respondents was
due to the piecemeal requirements imposed by the COA as condition for effecting
payment.

When the alias writ of execution was returned, the accompanying report stated that the
parties had chosen to await the opinion of the COA in connection with the additional
requirements questioned is the private respondents. In fact, in the return of service of
the writ of execution, the Deputy, Sheriff reported that on two occasions in the Office of
the Provincial Auditor, the latter in the presence of a board member and the board
secretary verbally told him to await the opinion of the COA. This controversy, reached
the court. Upon order of the court, the private respondents complied with the
requirements imposed by the COA. However, after complying with these requirements,
more requirements were imposed anew by the COA. This necessarily prolonged the
already delayed payment by the petitioner. All these delays transpired between
November 24, 1975, when the alias writ of execution was issued, until 1980 when the
COA through the Provincial Auditor imposed another requirement upon the private
respondents before payments could be released to them.

It was the new condition requiring the private respondents "to take steps to have the
corresponding title issued in the municipality, free from all liens and encumbrances"
which impelled them to conclude that the petitioner was not serious in paying and which
led them to take possession of some portions of the subject parcel of land pursuant,
according to them, to the terms of the judgment.

Was the petitioners' restraining motion filed within the 5-year period to execute
judgment by motion pursuant to Section 6, Rule 39 of the Revised Rules of Court?

We rule that under the circumstances of this case, the delays occasioned by the
controversy over the auditor's requirements before payment could be effected should
not be included in computing the 5-year period to execute a judgment by motion. The
delays were through no fault of the private respondents.

Excluding, therefore the period between 1975 and 1980, the restraining motion filed by
the petitioner on July 15, 1982 was well within the 5-year period to execute a judgment
by motion. This conclusion is in consonance with our ruling in Republic v. Court of
Appeals, (137 SCRA 220) citing the earlier cases of Bien v. Sunga, 117 SCRA
249); Potenciano v. Hon. Mariano, ([96 SCRA 463] and Lanchita v. Magbanua (117
SCRA 39). We ruled that:

In computing the time limited for suing out an execution, although there is
authority to the contrary, the general rule is that there should not be
included the time when execution is stayed, either by agreement of the
parties for a definite time, by injunction, by the taking of an appeal or writ
of error so as to operate as a supersedeas by the death of a party, or
otherwise. Any interruption or delay occasioned by the debtor will extend
the time within which the writ may be issued without scire facias.(at pp.
227-228).

We, however, agree with the petitioner that the procedure undertaken by the private
respondents (plaintiffs) in executing the judgment which was condoned by the lower
court is not sanctioned by law.

When, on the basis of successive new requirements imposed on them, the private
respondents "lost hope" that the petitioner would ever pay them, they should have filed
a motion to declare the petitioner in default of payment and asked for an alias writ of
execution for the enforcement of the other alternative found in the judgment. The
decision states that after the failure of the petitioner to pay within one (1) year from
receipt of the decision, the petitioner is ordered to vacate the land in litigation and
deliver the same to the plaintiffs and intervenors after which the subject land would be
partitioned among them on the ratio of 2 to 1.
Another option which the private respondents could have taken when the COA issued
another new requirement to take steps in titling the subject parcel of land in the name of
the petitioner was to file a motion to declare such requirement unreasonable. It must be
noted that the judgment only ordered the respondents to execute a conveyance in favor
of the Province of Sorsogon upon payment of the value of the land. It was the problem
of Sorsogon to have the title registered in its name.

Whatever feelings they had against the petitioner in relation to the shabby treatment
accorded them by the COA cannot justify the respondents taking the law into their
hands and taking possession of some portions of the subject parcel of land, much less
allowing third persons to occupy the property.

Consequently, the lower court's questioned Order granting the restraining motion of the
private respondents, the end result of which was the execution of the judgment, appears
to be improper and irregular.

At the same time, we cannot blame the private respondents for their drastic action. As
aptly summarized by the lower court:

..... a writ of execution was issued on July 21, 1975, upon motion of
plaintiffs, but said writ was returned unsatisfied, although with the report
that the parties had chosen to await the opinion of the Commission on
Audit. Even so, the plaintiffs exerted efforts to comply with the
requirements which were allowed by the court. Be that as it may,
additional requirements were imposed one after the other to the extent of
asking for absurd, (sic) i.e., "to have the corresponding title issued in the
name of the Municipality, free from all liens and encumbrances." This was
in the later part of 1980, or more than six (6) years after defendant
province's receipt of the decision by which it was ordered to effect
payment within one (1) year only from said receipt. Clearly, we have here
an instance of a suitor who, instead of wooing his heartthrob, would rather
dictate his wish to the latter in pursuing his interest. He would rather
impose upon the object of his concern such terms and conditions that
would suit him, even if in so doing time inexorably marches on against his
favor. Certainly, this cannot be allowed to remain unreined.

It should be noted that the last communication the defendant province

admits to have knowledge of relative to this matter is an indorsement to
the General Counsel of the Commission on Audit dated October 27, 1980.
Yet, it never bothered to follow up with an inquiry as to the action that was
taken thereon. On the contrary, it blames the plaintiffs for its non-receipt of
any reply thereto. This supine attitude is hardly in keeping with human
experience relative to the exercise of one's duty to protect his interest.
Here the defendant province harps on its allegation that the land at issue
involves public interest. This being so, it should have helped facilitate the
approval of the vouchers, considering that it has the bounded (sic) duty to
 uphold and protect public interest. This the defendant never did, despite
the time element that it had to meet inasmuch as item (b) in the above-
quoted dispositive portion of the decision expressly states that payment
was to be made within one (1) year from receipt, in failure of which said
defendant had to vacate and deliver the land to the prevailing parties. This
alternative should have alerted the defendant to take the necessary steps
to comply with the decision if only to preserve its prior right and thus
uphold public interest. It opted, on the other hand, to reverse its side of the
coin and place the obligation on the plaintiffs shoulders. (Rollo, pp. 66-67).

The complaint in the instant case was filed on March 30, 1957. lt was only on March,
1974 or seventeen years later that a decision was promulgated. When the private
respondents expected the payment of the value of their land occupied by the Gubat
High School, they still were unable to collect such payment eight years after the
promulgation of the decision.

For these reasons and in the interest of justice, we resolve the remaining issue and
facilitate the execution of the final judgment in Civil Case No. 50. Hence, we declare as
unreasonable the additional requirement charging the private respondents with the duty
to have the corresponding title issued in the name of the municipality free from all liens
and encumbrances as a condition before the release of the payment for the value of the
land. The dispositive portion of the decision explicitly states that in case the petitioner
favors payment of the value of the land, the private respondents are ordered to execute
a conveyance in favor of the petitioner. The respondents have complied with all the
requirements originally imposed by COA. The petitioner cannot, therefore, deny
payment to the private respondents.

This case is a classic example of a common problem besetting hapless citizens in

varying degrees. Because of insistent but distorted application of administrative rules
and regulations, persons dealing with government are often placed in unfair
predicaments which require needless expenditure of their time, money, and patience.

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.

Under ordinary circumstances, immediate return to the owners of the unpaid property is
the obvious remedy. In cases where land is taken for public use, public interest
however, must, be considered. The children of Gubat, Sorsogon have been using the
disputed land as their high school athletic grounds for thirty years.
In the execution of this decision, the Provincial Government of Sorsogon is expected to
immediately pay as directed. Should any further delays be encountered, the trial court is
directed to seize any of the patrimonial property or cash savings of the province in the
amount necessary to implement this decision.

WHEREFORE, the questioned order of the then Court of First Instance of Sorsogon is
SET ASIDE. The original judgment dated March 28, 1974 is REINSTATED. The
Regional Trial Court of Sorsogon is ordered to immediately execute the final judgment
in Civil Case No. 50 and effect payment of the P49,500.00 with interests at the legal
rate from March 27, 1975. The court is further ordered to restore possession to the
Gubat High School of any portion of the disputed property which was taken away from
it.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-22061 January 31, 1968

DALMACIO URTULA, ET AL., plaintiffs-appellants,

vs.
REPUBLIC OF THE PHILIPPINES, (represented by the Land Tenure
Administration), defendant-appellant.

Luciano M. Maggay for plaintiffs-appellants.

Judicial Cases Division of Land Tenure Administration for defendant-appellant.

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

Direct appeals, by both the plaintiffs, Dalmacio Urtula, et al. and the defendant Republic
of the Philippines, represented by the Land Tenure Administration, now Land Authority,
from a judgment of the Court of First Instance of Camarines Sur, in its Civil Case No.
5306, ordering the defendant to pay interest upon a sum determined by final judgment
as compensation for the property expropriated in a previous case of eminent domain
between the same parties, Civil Case No. 3837 of the same court.

The facts, as stipulated by the parties, and as found by the court a quo are as follows:

The Court of First Instance had rendered judgment on 16 November 1957 in its Civil
Case No. 3837, for the expropriation of the Hacienda Quitang, owned by Dalmacio
Urtula by the Republic of the Philippines, for the sum of P213,094.00, "and upon making
the payment the plaintiff shall take full possession of the land." The Republic appealed
the decision to the Court of Appeals, raising the sole issue of whether the amount fixed
by the trial court was a just compensation for the property. While the appeal was
pending before the Court of Appeals, the Republic of the Philippines deposited on 29
July 1958, with the Philippine National Bank the sum of P117,690.00 as provisional
value of the land, in accordance with an order of the trial court dated 3 January 1958,
and this deposit was withdrawn by Dalmacio Urtula in August of 1958.

Thereafter, on 10 September 1958, the Court of Appeals granted the Republic's petition
to be placed in possession of the property; and under a writ of possession issued by the
provincial sheriff of the province, the Land Tenure Administration took actual physical
possession of the land on 11 October 1958.
Subsequently, the Court of Appeals found that the issue between the parties was purely
one of law and thereby elevated the appeal to the Supreme Court. This Court rendered
judgment thereon on 29 November 1960 in case No. L-16028, affirming the appealed
judgment of the Court of First Instance, without modification.

The Supreme Court had affirmed, as aforesaid, the decision of the trial court fixing the
amount of just compensation for P213,094.00; thus, at the time the decision became
final, the balance still due was P95,404.00. Of this balance, the Republic paid Dalmacio
Urtula the sum of P5,404.00 on 17 April 1961; but on the same day, Urtula deposited
same amount with the Land Tenure Administration in payment of taxes and penalties for
prior years up to 1958 on the expropriated land and for the surveyor's fee for
segregating one hectare donated by condemnee Urtula for a school site. On liquidation
at a later date, an excess in the amount of P423.38 was found, and the Republic
refunded this excess to Urtula on 25 September 1961. On 3 May 1961, the Republic
paid the remaining balance of P90,000.00.

The taxes due and unpaid, including penalties, on the land for the years 1959, 1960 and
70% of 1961 were computed at a total of P3,534.23 as of 28 February 1962. The
interest of 6% on P95,404.00 from 11 October 1958, the date when the condemnor
Republic took possession of the land to May 1961, when the final balance was paid to
Urtula was also computed at a total of P14,633.52.

On 26 January 1961, the plaintiff demanded payment of said interest (P14,633.52) but
the defendant Republic refused, on the ground that no payment of interest had been
ordered in the decision in Civil Case No. 3837, the expropriation proceedings, or in the
affirmatory decision of the Supreme Court in G.R. No. L-16028.

The parties further stipulated as a fact that the plaintiff had agreed to pay his counsel
10% of the amount recoverable from the defendant, as attorney's fees.

Upon the foregoing stipulated facts, the trial court rendered judgment for plaintiff Urtula
and ordered the defendant Republic to pay P14,633.52 as interest on the balance of
P95,404.00 from 11 October 1958 to 3 May 1961 and to pay the costs, but denied the
plaintiff's claim on the land taxes 1 and attorney's fees.

Both parties were not satisfied with the decision; hence, both appealed to this Court. 1äwphï1.ñët

Against the defendant Republic's defense that the final judgment in the expropriation
case, which did not provide for interest, operates to bar the present case, by res
judicata, the theory of plaintiff Urtula is that there is no identity of causes of action in the
said cases.

Thus, Urtula relates his predicaments as follows: that while the expropriation case was
pending before the trial court, he could not claim interest because the Republic had not
as yet taken possession of the land and the rule is that interest accrues from the time of
such taking; but when the Republic took possession, the case was already on appeal
and he could not ask relief because he was not an appellant nor could he raise the
issue of interest for the first time on appeal, aside from his being impeded by the rule
that proof with respect to the taking of possession had to be adduced before the trial
court, not the appellate court.

Urtula's dilemma lies in his mistaken concept of the nature of the interest that he failed
to claim in the expropriation case and which he now claims in this separate case. Said
interest is not contractual, nor based on delict or quasi-delict, but one that —

runs as a matter of law and follows as a matter of course from the right of the
landowner to be placed in as good a position as money can accomplish, as of the
date of the taking (30 C.J.S. 230).

Understood as such, Urtula, as defendant in the expropriation case, could have raised
the matter of interest before the trial court even if there had been no actual taking yet by
the Republic and the said court could have included the payment of interest in its
judgment but conditioned upon the actual taking, because the rate of interest upon the
amount of just compensation (6%) is a known factor, and it can reasonably be expected
that at some future time, the expropriator would take possession of the property, though
the date be not fixed. In this way, multiple suits would be avoided. Moreover, nothing
prevented appellee from calling the attention of the appellate courts (even by motion to
reconsider before judgment became final) to the subsequent taking of possession by
the condemnor, and asking for allowance of interest on the indemnity, since that
followed the taking as a matter of course, and raised no issue requiring remand of the
records to the Court of origin.

As the issue of interest could have been raised in the former case but was not
raised, res judicata blocks the recovery of interest in the present case. (Tejedor vs.
Palet, 61 Phil. 494; Phil. Engineering Corp., et al. vs. Ceniza, etc., et al., L-17834, 29
Sept. 1962). It is settled that a former judgment constitutes a bar, as between the
parties, not only as to matters expressly adjudged, but all matters that could have been
adjudged at the time (Rule 39, sec. 49; Corda vs. Maglinti, L-17476, Nov. 30, 1961;
Rodriguez vs. Tan, 48 Off. Gaz. 3330). It follows that interest upon the unrecoverable
interest, which plaintiff also seeks, cannot, likewise, be granted.

It is not amiss to note that Section 3 of Rule 67 of the Revised Rules of Court (Sec. 4,
Rule 69 of the old Rules), in fact, directs the defendant in an expropriation case to
"present in a single motion to dismiss or for other appropriate relief, all of his objections
and defenses . . ." and if not so presented "are waived." (Emphasis Supplied.) 2 As it is,
the judgment allowing the collection of interest, now under appeal in effect amends the
final judgment in the expropriation case, a procedure abhorrent to orderly judicial
proceedings.

The Republic took possession on 11 October 1958. From this date, therefore, the
owner, while retaining the naked title, was deprived of the benefits from the land and it
is just and fair that realty taxes for the years 1959 and onward should be borne by the
entity exercising the right of eminent domain. (City of Manila vs. Roxas, 60 Phil. 215).

Costs in cases of eminent domain, except those of rival claimants litigating their claims,
are charged against the plaintiff. (Sec. 12, Rule 67, Rules of Court; Sec. 13, Rule 67 of
the old Rules.) But the present case is not one of eminent domain but an ordinary civil
action where the Republic of the Philippines is a party. Section 1 of Rule 142 provides
that no costs shall be allowed against it, unless otherwise provided by law. No provision
of law providing the contrary has been cited; hence, costs should be charged against
Urtula.

FOR THE FOREGOING REASONS, the appealed judgment is reversed and the case
dismissed, with costs against the plaintiffs Dalmacio Urtula, et al.

Concepcion, C.J., Dizon, Makalintal, Bengzon, J.P., Zaldivar, Sanchez, Castro, Angeles
and Fernando, JJ., concur.

Footnotes

1The defendant Republic was the one that prayed, in a counterclaim, for the
payment of land taxes. (Rec. on App., pp. 21-23 ).

2Such a provision was not provided in the old Code of Civil Procedure, Act 190.
 EN BANC

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

REPUBLIC OF THE PHILIPPINES, GENERAL ROMEO ZULUETA,

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

RESOLUTION
SANDOVAL-GUTIERREZ, J.:

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

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

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

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

Meanwhile, in 1964, Valdehueza and Panerio mortgaged Lot 932 to Vicente

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

WHEREFORE, judgment is hereby rendered in favor of plaintiff Vicente Lim and

against all defendants, public and private, declaring plaintiff Vicente Lim the
absolute and exclusive owner of Lot No. 932 with all the rights of an absolute
owner including the right to possession. The monetary claims in the complaint and
in the counter claims contained in the answer of defendants are ordered Dismissed.
 Petitioners elevated the case to the Court of Appeals, docketed therein as CA-G.R.
CV No. 72915. In its Decision[5] dated September 18, 2003, the Appellate Court
sustained the RTC Decision, thus:

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

xxxxxx

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

WHEREFORE, in view of the foregoing, and finding no reversible error in the

appealed May 4, 2001 Decision of Branch 9, Regional Trial Court of Cebu City, in
Civil Case No. CEB-12701, the said decision is UPHELD AND
AFFIRMED. Accordingly, the appeal is DISMISSED for lack of merit.
 Undaunted, petitioners, through the Office of the Solicitor General, filed with this
Court a petition for review on certiorari alleging that the Republic has remained the
owner of Lot 932 as held by this Court in Valdehueza vs. Republic.[6]
In our Resolution dated March 1, 2004, we denied the petition outright on the
ground that the Court of Appeals did not commit a reversible error. Petitioners filed an
urgent motion for reconsideration but we denied the same with finality in our
Resolution of May 17, 2004.
On May 18, 2004, respondent filed an ex-parte motion for the issuance of an entry
of judgment. We only noted the motion in our Resolution of July 12, 2004.
On July 7, 2004, petitioners filed an urgent plea/motion for clarification, which is
actually a second motion for reconsideration. Thus, in our Resolution of September
6, 2004, we simply noted without action the motion considering that the instant petition
was already denied with finality in our Resolution of May 17, 2004.
On October 29, 2004, petitioners filed a very urgent motion for leave to file a motion
for reconsideration of our Resolution dated September 6, 2004 (with prayer to refer the
case to the En Banc). They maintain that the Republics right of ownership has been
settled in Valdehueza.
The basic issue for our resolution is whether the Republic has retained ownership of
Lot 932 despite its failure to pay respondents predecessors-in-interest the just
compensation therefor pursuant to the judgment of the CFI rendered as early as May
14, 1940.
Initially, we must rule on the procedural obstacle.
While we commend the Republic for the zeal with which it pursues the present
case, we reiterate that its urgent motion for clarification filed on July 7, 2004 is actually a
second motion for reconsideration. This motion is prohibited under Section 2, Rule 52,
of the 1997 Rules of Civil Procedure, as amended, which provides:

Sec. 2. Second motion for reconsideration. No second motion for reconsideration of a

judgment or final resolution by the same party shall be entertained.

Consequently, as mentioned earlier, we simply noted without action the motion

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

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

We feel the same way in the instant case.

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

Title to property which is the subject of condemnation proceedings does not vest
the condemnor until the judgment fixing just compensation is entered and
paid, but the condemnors title relates back to the date on which the petition under the
Eminent Domain Act, or the commissioners report under the Local Improvement Act,
is filed.

x x x Although the right to appropriate and use land taken for a canal is
complete at the time of entry, title to the property taken remains in the owner
until payment is actually made. (Emphasis supplied.)

In Kennedy v. Indianapolis, the US Supreme Court cited several cases holding that
title to property does not pass to the condemnor until just compensation had actually
been made. In fact, the decisions appear to be uniform to this effect. As early as 1838,
in Rubottom v. McLure, it was held that actual payment to the owner of the
condemned property was a condition precedent to the investment of the title to
the property in the State albeit not to the appropriation of it to public
use. In Rexford v. Knight, the Court of Appeals of New York said that the
construction upon the statutes was that the fee did not vest in the State until the
payment of the compensation although the authority to enter upon and appropriate the
land was complete prior to the payment. Kennedy further said that both on principle
and authority the rule is . . . that the right to enter on and use the property is
complete, as soon as the property is actually appropriated under the authority of
law for a public use, but that the title does not pass from the owner without his
consent, until just compensation has been made to him.

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

If the laws which we have exhibited or cited in the preceding discussion are
attentively examined it will be apparent that the method of expropriation
adopted in this jurisdiction is such as to afford absolute reassurance that no piece
of land can be finally and irrevocably taken from an unwilling owner until
compensation is paid...(Emphasis supplied.)

Clearly, without full payment of just compensation, there can be no transfer of title
from the landowner to the expropriator. Otherwise stated, the Republics acquisition of
ownership is conditioned upon the full payment of just compensation within a
reasonable time.[14]
Significantly, in Municipality of Bian v. Garcia[15] this Court ruled that the
expropriation of lands consists of two stages, to wit:

x x x The first is concerned with the determination of the authority of the plaintiff to
exercise the power of eminent domain and the propriety of its exercise in the context
of the facts involved in the suit. It ends with an order, if not of dismissal of the action,
of condemnation declaring that the plaintiff has a lawful right to take the property
sought to be condemned, for the public use or purpose described in the complaint,
upon the payment of just compensation to be determined as of the date of the filing of
the complaint x x x.

The second phase of the eminent domain action is concerned with the determination
by the court of the just compensation for the property sought to be taken. This is done
by the court with the assistance of not more than three (3) commissioners. x x x.

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

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

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

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

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

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

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

In summation, while the prevailing doctrine is that the non-payment of just

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

[1] Rawls, A Theory of Justice (1971) at 4.

[2] They were joined by their husbands, Angel Valdehueza and Pablo Panerio, and father, Jose Galeos.
[3] May 19, 1966, 17 SCRA 107.
[4] The mortgage was duly annotated at the back of the mortgagors title in 1964, while the Decision of this
Court in Valdehueza vs. Republic was annotated in 1974.
[5] Penned by Justice Sergio L. Pestao (retired) and concurred in by Justices Perlita J. Tria Tirona and
Jose C. Mendoza.
[6] Supra.
[7] Coscuella vs. Court of Appeals, No. L-77765, August 15, 1988, 164 SCRA 393, citing Province of
Pangasinan vs. CFI Judge of Pangasinan, Branch VIII, 80 SCRA 117, 120-121 (1977).
[8] Law of Eminent Domain, Third Edition, Volume II 931 citing Cushman vs. Smith, 34 Me. 247; and
see Davis vs. Russel, 47 Me. 443.
[9] No. L-64037, August 27, 1987, 153 SCRA 291.
[10] 26 Am Jur 2d 168.
[11] Ibid.
[12] Cruz, Constitutional Law, 1995 Ed., at 58-59.
[13] G.R. No. 78742, July 14, 1989, 175 SCRA 343.
[14] Just compensation is described as a full and fair equivalent of the property taken from the private
owner by the expropriator. This is intended to indemnify the owner fully for the loss he has
sustained as a result of the expropriation. The measure of this compensation is not the takers
gain but the owners loss. The word just is used to intensify the meaning of the word
compensation, to convey the idea that the equivalent to be rendered for the property taken shall
be real, substantial, full, ample. (Manila Railroad Co. vs. Velasquez, 32 Phil. 286).
[15] G.R. No. 69260, December 22, 1989, 180 SCRA 576, 583-584.
[16] G.R. No. 137569, June 23, 2000, 334 SCRA 320, 329.
[17] G.R. No. 146587, July 2, 2002, 383 SCRA 611.
[18] G.R. No. 147511, January 20, 2003, 395 SCRA 494.
[19] Law of Eminent Domain, Third Edition, Volume II 927 citing Robinson vs. Southern California Ry.Co.,
129 Cal. 8, 61 Pac. 947; Meeker vs. Chicago, 23 Ill. App. 23; Wilson vs. Muskegon etc. R.R. Co.,
132 Mich. 469, 93 N.W. 1059; Illinois Cent.R.R. Co. vs. Hoskins, 80 Miss. 730, 32 So. 150, 92
Am St. Rep. 612; McClinton vs. Pittsburg etc. Ry Co., 66 Pa St. 404
[20] Id., citing White vs. Wabash, St. Louis & Pacific Ry. Co., 64 Ia. 281,20 N.W. 436; St. Joseph & Denver
City R.R. Co. vs. Callender, 13 Kan. 496; Blackshire vs. Atchison,Topeka and Sta. Fe R.R. Co.,
13 Kan. 514; Kanne v. Minneapolis & St. Louis Ry.Co., 30 Minn. 423; Bartleson vs. Minneapolis,
33 Minn. 468; Wheeling etc. R.R.Co. vs. Warrell, 122 Pa St. 613, 16 Alt 20
[21] Id., citing Connellsville Gas Coal Co. vs. Baltimore, etc. R.R. Co., 216 Pa St.309, 65 Atl. 669.
[22] Law of Eminent Domain, Third Edition, Volume II 929 citing Hooper vs. Columbus & Western Ry.Co.,
78 Ala. 213; Stratten vs. Great Western & Bradford Ry.Co., 40 L.J. Eq. 50. In the latter case the
court says. With regard to what is said as to public interests, I am not inclined to listen to any
suggestion of public interest as against private rights acquired in a lawful way. I do not think that
the interest of the public in using something that is provided for their convenience is to be upheld
at the price of saying that a persons property is to be confiscated for that purpose. A man who
comes to this court is entitled to have his rights ascertained and declared, however, inconvenient
it may be to third persons to whom it may be a convenience to have the use of his property.
[23] Supra at 375-376.
[24] Supra.
[25] Paras, Civil Code of the Philippines Annotated, 14th Ed., Book V, at 1021.
[26] Republic of the Philippines vs. Court of Appeals, supra. and Reyes vs. National Housing
Authority, supra.
[27] Section 6, Rule 39 provides that: A final and executory judgment or order may be executed on motion
within five (5) years from the date of its entry. After the lapse of such time, and before it is barred
by the statute of limitations, a judgment may be enforced by action. The revived judgment may
also be enforced by motion within (5) years from the date of its entry and thereafter by action
before it is barred by the statute of limitations.
[28] Commissioner of Public Highways v. San Diego, No. L-30098, February 18, 1970.
[29] No. L-77765, August 15, 1988, 164 SCRA 393.

FIRST DIVISION
 [G.R. No. 127820. July 20, 1998]

MUNICIPALITY OF PARAAQUE, petitioner, vs. V.M. REALTY

CORPORATION, respondent.

DECISION
PANGANIBAN, J.:

A local government unit (LGU), like the Municipality of Paraaque, cannot authorize
an expropriation of private property through a mere resolution of its lawmaking
body. The Local Government Code expressly and clearly requires an ordinance or a
local law for the purpose. A resolution that merely expresses the sentiment or opinion of
the Municipal Council will not suffice. On the other hand, the principle of res
judicata does not bar subsequent proceedings for the expropriation of the same
property when all the legal requirements for its valid exercise are complied with.

Statement of the Case

These principles are applied by this Court in resolving this petition for review
on certiorari of the July 22, 1996 Decision[1] of the Court of Appeals[2] in CA GR CV No.
48048, which affirmed in toto[3] the Regional Trial Courts August 9, 1994
Resolution.[4] The trial court dismissed the expropriation suit as follows:

The right of the plaintiff to exercise the power of eminent domain is not
disputed. However, such right may be exercised only pursuant to an Ordinance (Sec.
19, R.A. No. 7160). In the instant case, there is no such ordinance passed by the
Municipal Council of Paraaque enabling the Municipality, thru its Chief Executive, to
exercise the power of eminent domain. The complaint, therefore, states no cause of
action.

Assuming that plaintiff has a cause of action, the same is barred by a prior
judgment. On September 29, 1987, the plaintiff filed a complaint for expropriation
involving the same parcels of land which was docketed as Civil Case No. 17939 of
this Court (page 26, record). Said case was dismissed with prejudice on May 18, 1988
(page 39, record). The order of dismissal was not appealed, hence, the same became
final. The plaintiff can not be allowed to pursue the present action without violating
the principle of [r]es [j]udicata. While defendant in Civil Case No. 17939 was
Limpan Investment Corporation, the doctrine of res judicata still applies because the
judgment in said case (C.C. No. 17939) is conclusive between the parties and their
successors-in-interest (Vda. de Buncio vs. Estate of the late Anita de Leon).The herein
defendant is the successor-in-interest of Limpan Investment Corporation as shown by
the Deed of Assignment Exchange executed on June 13, 1990.

WHEREFORE, defendants motion for reconsideration is hereby granted. The order

dated February 4, 1994 is vacated and set aside.

This case is hereby dismissed. No pronouncement as to costs.

SO ORDERED. [5]

Factual Antecedents

Pursuant to Sangguniang Bayan Resolution No. 93-95, Series of 1993,[6] the

Municipality of Paraaque filed on September 20, 1993, a Complaint for
expropriation[7] against Private Respondent V.M. Realty Corporation over two parcels of
land(Lots 2-A-2 and 2-B-1 of Subdivision Plan Psd-17917), with a combined area of
about 10,000 square meters, located at Wakas, San Dionisio, Paraaque, Metro Manila,
and covered by Torrens Certificate of Title No. 48700. Allegedly, the complaint was filed
for the purpose of alleviating the living conditions of the underprivileged by providing
homes for the homeless through a socialized housing project.[8] Parenthetically, it was
also for this stated purpose that petitioner, pursuant to its Sangguniang
Bayan Resolution No. 577, Series of 1991,[9] previously made an offer to enter into a
negotiated sale of the property with private respondent, which the latter did not accept. [10]
Finding the Complaint sufficient in form and substance, the Regional Trial Court of
Makati, Branch 134, issued an Order dated January 10, 1994,[11] giving it due
course. Acting on petitioners motion, said court issued an Order dated February 4,
1994,[12] authorizing petitioner to take possession of the subject property upon deposit
with its clerk of court of an amount equivalent to 15 percent of its fair market value
based on its current tax declaration.
On February 21, 1994, private respondent filed its Answer containing affirmative
defenses and a counterclaim,[13] alleging in the main that (a) the complaint failed to state
a cause of action because it was filed pursuant to a resolution and not to an ordinance
as required by RA 7160 (the Local Government Code); and (b) the cause of action, if
any, was barred by a prior judgment or res judicata. On private respondents motion, its
Answer was treated as a motion to dismiss.[14] On March 24, 1994,[15] petitioner filed its
opposition, stressing that the trial courts Order dated February 4, 1994 was in accord
with Section 19 of RA 7160, and that the principle of res judicata was not applicable.
Thereafter, the trial court issued its August 9, 1994 Resolution[16] nullifying its
February 4, 1994 Order and dismissing the case. Petitioners motions for
reconsideration and transfer of venue were denied by the trial court in a Resolution
dated December 2, 1994.[17] Petitioner then appealed to Respondent Court, raising the
following issues:
 1. Whether or not the Resolution of the Paraaque Municipal Council No. 93-
95, Series of 1993 is a substantial compliance of the statutory
requirement of Section 19, R.A. 7180 [sic] in the exercise of the power
of eminent domain by the plaintiff-appellant.

2. Whether or not the complaint in this case states no cause of action.

3. Whether or not the strict adherence to the literal observance to the rule of
procedure resulted in technicality standing in the way of substantial
justice.

4. Whether or not the principle of res judicata is applicable to the present case. [18]

As previously mentioned, the Court of Appeals affirmed in toto the trial courts
Decision. Respondent Court, in its assailed Resolution promulgated on January 8,
1997,[19] denied petitioners Motion for Reconsideration for lack of merit.
Hence, this appeal.[20]

The Issues

Before this Court, petitioner posits two issues, viz.:

1. A resolution duly approved by the municipal council has the same force and effect
of an ordinance and will not deprive an expropriation case of a valid cause of action.

2. The principle of res judicata as a ground for dismissal of case is not applicable
when public interest is primarily involved. [21]

The Courts Ruling

The petition is not meritorious.

First Issue:

Resolution Different from an Ordinance

Petitioner contends that a resolution approved by the municipal council for the
purpose of initiating an expropriation case substantially complies with the requirements
of the law[22] because the terms ordinance and resolution are synonymous for the
purpose of bestowing authority [on] the local government unit through its chief executive
to initiate the expropriation proceedings in court in the exercise of the power of eminent
domain.[23] Petitioner seeks to bolster this contention by citing Article 36, Rule VI of the
Rules and Regulations Implementing the Local Government Code, which provides: If
the LGU fails to acquire a private property for public use, purpose, or welfare through
purchase, the LGU may expropriate said property through a resolution of
the Sanggunian authorizing its chief executive to initiate expropriation
proceedings. (Italics supplied.)
[24]

The Court disagrees. The power of eminent domain is lodged in the legislative
branch of government, which may delegate the exercise thereof to LGUs, other public
entities and public utilities.[25] An LGU may therefore exercise the power to expropriate
private property only when authorized by Congress and subject to the latters control and
restraints, imposed through the law conferring the power or in other legislations. [26] In this
case, Section 19 of RA 7160, which delegates to LGUs the power of eminent domain,
also lays down the parameters for its exercise. It provides 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 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. (Emphasis supplied)

Thus, the following essential requisites must concur before an LGU can exercise
the power of eminent domain:
1. An ordinance is enacted by the local legislative council authorizing the local chief
executive, in behalf of the LGU, to exercise the power of eminent domain or pursue
expropriation proceedings over a particular private property.
2. The power of eminent domain is exercised for public use, purpose or welfare, or for
the benefit of the poor and the landless.
3. There is payment of just compensation, as required under Section 9, Article III of the
Constitution, and other pertinent laws.
4. A valid and definite offer has been previously made to the owner of the property
sought to be expropriated, but said offer was not accepted.[27]
 In the case at bar, the local chief executive sought to exercise the power of eminent
domain pursuant to a resolution of the municipal council. Thus, there was no
compliance with the first requisite that the mayor be authorized through an
ordinance. Petitioner cites Camarines Sur vs. Court of Appeals[28] to show that a
resolution may suffice to support the exercise of eminent domain by an LGU. [29] This
case, however, is not in point because the applicable law at that time was BP 337,[30] the
previous Local Government Code, which had provided that a mere resolution would
enable an LGU to exercise eminent domain. In contrast, RA 7160,[31] the present Local
Government Code which was already in force when the Complaint for expropriation was
filed, explicitly required an ordinance for this purpose.
We are not convinced by petitioners insistence that the terms resolution and
ordinance are synonymous. A municipal ordinance is different from a resolution. An
ordinance is a law, but a resolution is merely a declaration of the sentiment or opinion of
a lawmaking body on a specific matter.[32] An ordinance possesses a general and
permanent character, but a resolution is temporary in nature. Additionally, the two are
enacted differently -- a third reading is necessary for an ordinance, but not for a
resolution, unless decided otherwise by a majority of all the Sanggunian members.[33]
If Congress intended to allow LGUs to exercise eminent domain through a mere
resolution, it would have simply adopted the language of the previous Local
Government Code. But Congress did not. In a clear divergence from the previous Local
Government Code, Section 19 of RA 7160 categorically requires that the local chief
executive act pursuant to an ordinance. Indeed, [l]egislative intent is determined
principally from the language of a statute. Where the language of a statute is clear and
unambiguous, the law is applied according to its express terms, and interpretation
would be resorted to only where a literal interpretation would be either impossible or
absurd or would lead to an injustice.[34] In the instant case, there is no reason to depart
from this rule, since the law requiring an ordinance is not at all impossible, absurd, or
unjust.
Moreover, the power of eminent domain necessarily involves a derogation of a
fundamental or private right of the people.[35] Accordingly, the manifest change in the
legislative language -- from resolution under BP 337 to ordinance under RA 7160 --
demands a strict construction. No species of property is held by individuals with greater
tenacity, and is guarded by the Constitution and laws more sedulously, than the right to
the freehold of inhabitants. When the legislature interferes with that right and, for greater
public purposes, appropriates the land of an individual without his consent, the plain
meaning of the law should not be enlarged by doubtful interpretation. [36]
Petitioner relies on Article 36, Rule VI of the Implementing Rules, which requires
only a resolution to authorize an LGU to exercise eminent domain. This is clearly
misplaced, because Section 19 of RA 7160, the law itself, surely prevails over said rule
which merely seeks to implement it.[37] It is axiomatic that the clear letter of the law is
controlling and cannot be amended by a mere administrative rule issued for its
implementation. Besides, what the discrepancy seems to indicate is a mere oversight in
the wording of the implementing rules, since Article 32, Rule VI thereof, also requires
that, in exercising the power of eminent domain, the chief executive of the LGU must act
pursuant to an ordinance.
In this ruling, the Court does not diminish the policy embodied in Section 2, Article X
of the Constitution, which provides that territorial and political subdivisions shall enjoy
local autonomy. It merely upholds the law as worded in RA 7160. We stress that an
LGU is created by law and all its powers and rights are sourced therefrom. It has
therefore no power to amend or act beyond the authority given and the limitations
imposed on it by law. Strictly speaking, the power of eminent domain delegated to an
LGU is in reality not eminent but inferior domain, since it must conform to the limits
imposed by the delegation, and thus partakes only of a share in eminent
domain.[38] Indeed, the national legislature is still the principal of the local government
units, which cannot defy its will or modify or violate it.[39]

Complaint Does Not State a Cause of Action

In its Brief filed before Respondent Court, petitioner argues that its Sanguniang
Bayan passed an ordinance on October 11, 1994 which reiterated its Resolution No. 93-
35, Series of 1993, and ratified all the acts of its mayor regarding the subject
expropriation.[40]
This argument is bereft of merit. In the first place, petitioner merely alleged the
existence of such an ordinance, but it did not present any certified true copy thereof. In
the second place, petitioner did not raise this point before this Court. In fact, it was
mentioned by private respondent, and only in passing. [41] In any event, this allegation
does not cure the inherent defect of petitioners Complaint for expropriation filed on
September 23, 1993. It is hornbook doctrine that:

x x x in a motion to dismiss based on the ground that the complaint fails to state a
cause of action, the question submitted before the court for determination is the
sufficiency of the allegations in the complaint itself. Whether those allegations are
true or not is beside the point, for their truth is hypothetically admitted by the
motion. The issue rather is: admitting them to be true, may the court render a valid
judgment in accordance with the prayer of the complaint? [42]

The fact that there is no cause of action is evident from the face of the Complaint for
expropriation which was based on a mere resolution. The absence of an ordinance
authorizing the same is equivalent to lack of cause of action. Consequently, the Court of
Appeals committed no reversible error in affirming the trial courts Decision which
dismissed the expropriation suit.

Second Issue:
 Eminent Domain Not Barred by Res Judicata

As correctly found by the Court of Appeals[43] and the trial court,[44] all the requisites
for the application of res judicata are present in this case. There is a previous final
judgment on the merits in a prior expropriation case involving identical interests, subject
matter and cause of action, which has been rendered by a court having jurisdiction over
it.
Be that as it may, the Court holds that the principle of res judicata, which finds
application in generally all cases and proceedings,[45] cannot bar the right of the State or
its agent to expropriate private property. The very nature of eminent domain, as an
inherent power of the State, dictates that the right to exercise the power be absolute
and unfettered even by a prior judgment or res judicata. The scope of eminent domain
is plenary and, like police power, can reach every form of property which the State
might need for public use.[46] All separate interests of individuals in property are held of
the government under this tacit agreement or implied reservation. Notwithstanding the
grant to individuals, the eminent domain, the highest and most exact idea of property,
remains in the government, or in the aggregate body of the people in their sovereign
capacity; and they have the right to resume the possession of the property whenever
the public interest requires it.[47] Thus, the State or its authorized agent cannot be forever
barred from exercising said right by reason alone of previous non-compliance with any
legal requirement.
While the principle of res judicata does not denigrate the right of the State to
exercise eminent domain, it does apply to specific issues decided in a previous
case. For example, a final judgment dismissing an expropriation suit on the ground that
there was no prior offer precludes another suit raising the same issue; it cannot,
however, bar the State or its agent from thereafter complying with this requirement, as
prescribed by law, and subsequently exercising its power of eminent domain over the
same property.[48] By the same token, our ruling that petitioner cannot exercise its
delegated power of eminent domain through a mere resolution will not bar it from
reinstituting similar proceedings, once the said legal requirement and, for that
matter, all others are properly complied with. Parenthetically and by parity of reasoning,
the same is also true of the principle of law of the case. In Republic vs De Knecht,[49] the
Court ruled that the power of the State or its agent to exercise eminent domain is not
diminished by the mere fact that a prior final judgment over the property to be
expropriated has become the law of the case as to the parties. The State or its
authorized agent may still subsequently exercise its right to expropriate the same
property, once all legal requirements are complied with. To rule otherwise will not only
improperly diminish the power of eminent domain, but also clearly defeat social justice.
WHEREFORE, the petition is hereby DENIED without prejudice to petitioners
proper exercise of its power of eminent domain over subject property. Costs against
petitioner.
SO ORDERED.
Davide, Jr., (Chairman), Bellosillo, Vitug, and Quisumbing, JJ., concur.
[1]
Rollo, pp. 21-25.
Special Sixth Division, composed of J. Antonio M. Martinez (now an Associate Justice of the Supreme
[2]

Court), ponente and chairman; and JJ. Ricardo P. Galvez and Hilarion L. Aquino, concurring.
[3]
See Rollo, p. 25.
[4]
Penned by acting Presiding Judge Paul T. Arcangel.
[5]
Resolution of the Regional Trial Court, p. 2; Rollo, p. 70.
[6]
Rollo, pp. 41-43.
[7]
Ibid., pp. 27-32.
[8]
Petitioners Memorandum, p. 1; Rollo, p. 184.
[9]
Rollo, pp. 37-38.
[10]
Complaint, p. 3; Rollo, p. 29.
[11]
Rollo, p. 45.
[12]
Ibid., p. 47.
[13]
Ibid., pp. 48-51.
[14]
Private respondents Memorandum, pp. 1-2; Rollo, pp. 197-198.
[15]
Rollo, pp. 66-68.
[16]
Ibid., pp. 69-70.
[17]
Ibid., pp. 71-72.
[18]
Ibid., pp. 78-79.
[19]
Ibid., p. 26.
The case was deemed submitted for resolution on March 13, 1998, when the Court received private
[20]

respondents Memorandum.
[21]
Petitioners Memorandum, p. 3; Rollo, p. 187.
[22]
Ibid., p. 4; Rollo, p. 188.
[23]
Ibid.
[24]
Paragraph A.
[25]
Moday vs. Court of Appeals, 268 SCRA 586, 592, February 20, 1997.
Province of Camarines Sur vs. Court of Appeals, 222 SCRA 173, 179-180, May 17, 1993, per
[26]

Quiason, J.
Senator Aquilino Q. Pimentel, Jr., The Local Government Code of 1991: The Key To National
[27]

Development, 1993 ed., p. 110.

[28]
Supra.
[29]
Petitioners Memorandum, p. 6; Rollo, p. 189.
Approved on February 10, 1983 and published in 79 O.G. No. 7. See Moday vs. Court of
[30]

Appeals, supra, p. 593. Sec. 9 of BP 337 reads:

SEC. 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.
[31]
Effective January 1, 1992.
Mascuana vs. Provincial Board of Negros Occidental, 79 SCRA 399, 405, October 18, 1977; cited in
[32]

private respondents Memorandum, p. 5.

Article 107, pars. a and c, Implementing Rules and Regulations of RA 7160; cited in Pimentel,
[33]

Jr., supra, pp. 163-164.

 Azarcon vs. Sandiganbayan, 268 SCRA 747, 762, February 26, 1997, per Panganiban, J.; citing
[34]

Ramirez vs. Court of Appeals, 248 SCRA 590, 596, September 28, 1995.
City of Manila vs. Chinese Community of Manila, 40 Phil 349, 366 (1919), and Arriete vs. Director of
[35]

Public Works, 58 Phil 507, 511 (1933). See also Bernas, Joaquin G., The 1987 Constitution of the
Republic of the Philippines: A Commentary, 1996 ed., p. 348.
[36]
Justice Isagani A. Cruz, Constitutional Law, 1993 ed., p. 59.
See Villa vs. Llanes, Jr., 120 SCRA 81, 84, January 21, 1983, and Wise & Co. vs. Meer, 78 Phil 655,
[37]

676 (1947). See also Art. 7, Civil Code of the Philippines.

[38]
Bernas, supra, pp. 348-349.
[39]
Magtajas vs. Pryce Properties, Corp., Inc., 234 SCRA 255, 272-273, July 20, 1994, per Cruz, J.
[40]
Rollo, pp. 81-82.
[41]
See private respondents Memorandum, pp. 5-6; Rollo, pp. 201-202.
Travel Wide Associated Sales (Phils.), Inc. vs. Court of Appeals, 199 SCRA 205, 210, July 15,
[42]

1991, per Cruz, J.; citing The Heirs of Juliana Clavano vs. Genato, 80 SCRA 217, 222, October 28,
1977.
[43]
Decision, p. 5; Rollo, p. 25.
[44]
Resolution of the Regional Trial Court, p. 2; Rollo, p. 70.
[45]
Republic vs. Director of Lands, 99 SCRA 651, 657, September 11, 1980.
[46]
Bernas, supra, p. 349.
[47]
Ibid.
[48]
See National Power Corporation vs. Court of Appeals, 254 SCRA 577, March 11, 1996.
[49]
182 SCRA 142, 147-148, February 12, 1990.