REQUISITES

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 ToledoGozun 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 abovementioned 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 ToledoGozun for improvements found on her land; that legal interest on the compensation, computed from
August 10, 1959, be paid after deducting the amounts already paid to the owners, and that no
consequential damages be awarded. 4 The Commissioners' report was objected to by all the parties in
the case by defendants Castellvi and Toledo-Gozun, who insisted that the fair market value of their
lands should be fixed at P15.00 per square meter; and by the Republic, which insisted that the price to be
paid for the lands should be fixed at P0.20 per square meter. 5
After the parties-defendants and intervenors had filed their respective memoranda, and the
Republic, after several extensions of time, had adopted as its memorandum its objections to the
report of the Commissioners, the trial court, on May 26, 1961, rendered its decision 6 the dispositive
portion of which reads as follows:
WHEREFORE, taking into account all the foregoing circumstances, and that the
lands are titled, ... the rising trend of land values ..., and the lowered purchasing
power of the Philippine peso, the court finds that the unanimous recommendation of
the commissioners of ten (P10.00) pesos per square meter for the three lots of the
defendants subject of this action is fair and just.
xxx xxx xxx
The plaintiff will pay 6% interest per annum on the total value of the lands of
defendant Toledo-Gozun since (sic) the amount deposited as provisional value from
August 10, 1959 until full payment is made to said defendant or deposit therefor is
made in court.
In respect to the defendant Castellvi, interest at 6% per annum will also be paid by
the plaintiff to defendant Castellvi from July 1, 1956 when plaintiff commenced its
illegal possession of the Castellvi land when the instant action had not yet been
commenced to July 10, 1959 when the provisional value thereof was actually
deposited in court, on the total value of the said (Castellvi) land as herein adjudged.
The same rate of interest shall be paid from July 11, 1959 on the total value of the
land herein adjudged minus the amount deposited as provisional value, or
P151,859.80, such interest to run until full payment is made to said defendant or
deposit therefor is made in court. All the intervenors having failed to produce
evidence in support of their respective interventions, said interventions are ordered
dismissed.
The costs shall be charged to the plaintiff.

On June 21, 1961 the Republic filed a motion for a new trial and/or reconsideration, upon the
grounds of newly-discovered evidence, that the decision was not supported by the evidence, and
that the decision was against the law, against which motion defendants Castellvi and 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-ToledoGozun). 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 ToledoGozun 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 14Castellvi). 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 ToledoGozun 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.
NATIONAL POWER CORPORATION, petitioner,
vs.
COURT OF APPEALS and MACAPANTON MANGONDATO, respondents.

PANGANIBAN, J.:p
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 Napocor's 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 sun
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 TwentyOne Million Nine Hundred Ninety-five Thousand (P21,995.000.00) Pesos.
SO ORDERED. Cost 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) Psd116159 situated in Marawi City, owned by Mangondato, and covered by Transfer
Certificate 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 city's 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, NAPOCOR's regional legal counsel, pursuant to
Executive Order No. 329 dated July 11, 1988 requested Marawi City's 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
On July 13, 1990, NAPOCOR's National Power Board (hereafter NAPOCOR's 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 NAPOCOR's regional legal
counsel to determine whether P100.00 per square meter is the fair market value.
(Records, Civil Case No. 606-92 p. 45).
On August 14, 1990, NAPOCOR's 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 (P485,280,001 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).
NAPOCOR's regional legal counsel's findings embodied in 2 memoranda to
NAPOCOR's general counsel (dated January 29, 1991 and February 19, 1991) state
that Mangondato's 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 that on the basis of recent Supreme Court decisions,
NAPOCOR has to pay not less than P300.00 square meter. NAPOCOR's 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 P100.00 per square meter; NAPOCOR's board on May 17, 1991 passed
Resolution No. 91,247 resolving to pay Mangondato P100.00 per square meter for
the property excluding 12% interestper annum (id., pp. 50-52).
In a letter dated December 17, 1991, Mangondato disagreed with the NAPOCOR
board's Resolution No. 91-247 pegging the compensation for his land at P100.000
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, P100.00 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, NAPOCOR's 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 Mangondato's request of provisional payment of P100.00 per
square meter excluding interest and without prejudice to Mangondato's pursuance of
claims for just compensation and interest. Mangondato was paid P1,015,412.00 in
addition to the P,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 NAPOCOR's president dated April 20, 1992, Mangondato asked for
the payment of P300.00 per square meter plus 12% interest per annum from 1978.
NAPOCOR's president, in his memorandum to the board dated April 24, 1993
recommended the approval of Mangodato's request (Records, Civil Case No. 60592, pp. 63-69).
On May 25, 1992, NAPOCOR's 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, attorney's 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
Mangondato's 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
NAPOCOR's 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 can 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 the 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 Assessor's 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 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 that the "provisional valuation could not be decided without going
into the second phase of expropriation case 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 NAPOCOR's 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 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% interestper annum and condemning
the property in favor of NAPOCOR effective July, 1992 upon payment of P1,000.00
per square meter or a total of P21,995,000.00 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 157160). 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 NAPOCOR's motion for reconsideration in an Order date
September 15, 1992 (Records, Civil Case No. 610-92, pp. 145-149).
In the meanwhile, on August 7, 1992, Mangondato filed and 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 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 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 intervenor's Motion For
Intervention (id., p. 72).
On August 25, 1992, the lower court ordered the delegation 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 PETITION.
THE COURT ERRED IN FIXING THE VALUE OF JUST COMPENSATION AT
P1,000.00 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 wall-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:
. . . As stated by the respondent court, Napocor, in its appeal
. . .avers that the taking of the property (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 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. . . . (Emphasis 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 ". . . 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 subsequent 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, ". . . 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 guarantee's 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 owner's 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
petitioner's 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 1973.
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. (Emphasis supplied)
In this case, the petitioner's 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 respondent's 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 another's property and when later
pressed for payment, first negotiate for a low price and then conveniently expropriate
the property when the landowner 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 petitioner's 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 reported 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.
(Emphasis 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 petitioner's 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 the
evidence on the issue of just compensation. 21 Inasmuch as 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 record, 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. 24To 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 Doromal's 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 latter's chairman in
response to NAPOCOR's general counsel's 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 to the
legal rate of six percent (6%) per annum. Costs against the petitioner.
SO ORDERED.

WHAT MAY BE TAKEN

NATIONAL POWER CORPORATION, petitioner,
vs.
SPS. MISERICORDIA GUTIERREZ and RICARDO MALIT and THE HONORABLE COURT OF
APPEALS,respondents.
Pedro S. Dabu for private respondents.

BIDIN, J.:p
This is a petition for review on certiorari filed by the National Power Corporation (NPC) seeking the
reversal or modification of the March 9, 1986 Decision of the Court of Appeals in CA G.R. No.
54291-R entitled "National Power Corporation v. Sps. Misericordia Gutierrez and Ricardo Malit",
affirming the December 4, 1972 Decision of the then Court of First Instance of Pampanga, Fifth
Judicial District, Branch II, in Civil Case No. 2709, entitled National Power Corporation v. Matias
Cruz, et al.
The undisputed facts of the case, as found by the Court of Appeals, are as follows:
Plaintiff National Power Corporation, a government owned and controlled entity, in
accordance with Commonwealth Act No. 120, is invested with the power of eminent
domain for the purpose of pursuing its objectives, which among others is the
construction, operation, and maintenance of electric transmission lines for distribution
throughout the Philippines. For the construction of its 230 KV Mexico-Limay
transmission lines, plaintiff's lines have to pass the lands belonging to defendants
Matias Cruz, Heirs of Natalia Paule and spouses Misericordia Gutierrez and Ricardo
Malit covered by tax declarations Nos. 907, 4281 and 7582, respectively.
Plaintiff initiated negotiations for the acquisition of right of way easements over the
aforementioned lots for the construction of its transmission lines but unsuccessful in
this regard, said corporation was constrained to file eminent domain proceedings
against the herein defendants on January 20, 1965.
Upon filing of the corresponding complaint, plaintiff corporation deposited the amount
of P973.00 with the Provincial Treasurer of Pampanga, tendered to cover the
provisional value of the land of the defendant spouses Ricardo Malit and Misericordia
Gutierrez. And by virtue of which, the plaintiff corporation was placed in possession
of the property of the defendant spouses so it could immediately proceed with the
construction of its Mexico-Limay 230 KV transmission line. In this connection, by the
trial court's order of September 30, 1965, the defendant spouses were authorized to
withdraw the fixed provisional value of their land in the sum of P973.00.
The only controversy existing between the parties litigants is the reasonableness and
adequacy of the disturbance or compensation fee of the expropriated properties.

Meanwhile, for the purpose of determining the fair and just compensation due the
defendants, the court appointed three commissioners, comprised of one
representative of the plaintiff, one for the defendants and the other from the court,
who then were empowered to receive evidence, conduct ocular inspection of the
premises, and thereafter, prepare their appraisals as to the fair and just
compensation to be paid to the owners of the lots. Hearings were consequently held
before said commissioners and during their hearings, the case of defendant Heirs of
Natalia Paule was amicably settled by virtue of a Right of Way Grant (Exh. C)
executed by Guadalupe Sangalang for herself and in behalf of her co-heirs in favor of
the plaintiff corporation. The case against Matias Cruz was earlier decided by the
court, thereby leaving only the case against the defendant spouses Ricardo Malit and
Misericordia Gutierrez still to be resolved. Accordingly, the commissioners submitted
their individual reports. The commissioner for the plaintiff corporation recommended
the following:
. . . that plaintiff be granted right of way easement over the 760
square meters of the defendants Malit and Gutierrez land for plaintiff
transmission line upon payment of an easement fee of P1.00
therefor. . . . (Annex M)
The commissioner for the defendant spouses recommended the following:
. . . that Mr. and Mrs. Ricardo Malit be paid as disturbance
compensation the amount of P10.00 sq. meter or the total amount of
P7,600.00' (Annex K)
The Court's commissioner recommended the following:
. . . the payment of Five (P 5.OO) Pesos per square meter of the area covered by the
Right-of-way to be granted, . . .(Annex L)
The plaintiff corporation urged the Court that the assessment as recommended by
their commissioner be the one adopted. Defendant spouses, however, dissented and
objected to the price recommended by both the representative of the court and of the
plaintiff corporation.
With these reports submitted by the three commissioners and on the evidence
adduced by the defendants as well as the plaintiff for the purpose of proving the fair
market value of the property sought to be expropriated, the lower court rendered a
decision the dispositive portion of which reads as follows:
WHEREFORE, responsive to the foregoing considerations, judgment
is hereby rendered ordering plaintiff National Power Corporation to
pay defendant spouses Ricardo Malit and Misericordia Gutierrez the
sum of P10.00 per square meter as the fair and reasonable
compensation for the right-of-way easement of the affected area,
which is 760 squares, or a total sum of P7,600.00 and P800.00 as
attorney's fees' (Record on Appeal, p. 83)

Dissatisfied with the decision, the plaintiff corporation filed a motion for
reconsideration which was favorably acted upon by the lower court, and in an order
dated June 10, 1973, it amended its previous decision in the following tenor:
On the basis of an ocular inspection made personally by the
undersigned, this court finally classified the land of the spouses
Ricardo Malit and Misericordia to be partly commercial and partly
agricultural, for which reason the amount of P10.00 per sq. meter
awarded in the decision of December 4,1972 is hereby reduced to
P5.00 per square meter as the fair and reasonable market value of
the 760 square meters belonging to the said spouses.
There being no claim and evidence for attorney's fees, the amount of
P800.00 awarded as attorney's fees, in the decision of December 4,
1972 is hereby reconsidered and set aside. (Annex S)
Still not satisfied, an appeal was filed by petitioner (NPC) with the Court of Appeals but respondent
Court of Appeals in its March 9, 1982, sustained the trial court, as follows:
WHEREFORE, finding no reversible error committed by the court a quo, the
appealed judgment is hereby affirmed with costs against the plaintiff-appellant.
Hence, the instant petition.
The First Division of this Court gave due course to the petition and required both parties to submit
their respective memoranda (Resolution of January 12, 1983). It also noted in an internal resolution
of August 17, 1983 that petitioner flied its memorandum while the respondents failed to file their
memorandum within the period which expired on February 24,1983; hence, the case was considered
submitted for decision.
The sole issue raised by petitioner is
WHETHER PETITIONER SHOULD BE MADE TO PAY SIMPLE EASEMENT FEE
OR FULL COMPENSATION FOR THE LAND TRAVERSED BY ITS TRANSMISSION
LINES.
It is the contention of petitioner that the Court of Appeals committed gross error by adjudging the
petitioner liable for the payment of the full market value of the land traversed by its transmission
lines, and that it overlooks the undeniable fact that a simple right-of-way easement (for the passage
of transmission lines) transmits no rights, except that of the easement. Full ownership is retained by
the private respondents and they are not totally deprived of the use of the land. They can continue
planting the same agricultural crops, except those that would result in contact with the wires. On this
premise, petitioner submits that if full market value is required, then full transfer of ownership is only
the logical equivalent.
The petition is devoid of merit. The resolution of this case hinges on the determination of whether the
acquisition of a mere right-of-way is an exercise of the power of eminent domain contemplated by
law.

The trial court's observation shared by the appellate court show that ". . . While it is true that plaintiff
are (sic) only after a right-of-way easement, it nevertheless perpetually deprives defendants of their
proprietary rights as manifested by the imposition by the plaintiff upon defendants that below said
transmission lines no plant higher than three (3) meters is allowed. Furthermore, because of the
high-tension current conveyed through said transmission lines, danger to life and limbs that may be
caused beneath said wires cannot altogether be discounted, and to cap it all plaintiff only pays the
fee to defendants once, while the latter shall continually pay the taxes due on said affected portion of
their property."
The foregoing facts considered, the acquisition of the right-of-way easement falls within the purview
of the power of eminent domain. Such conclusion finds support in similar cases of easement of rightof-way where the Supreme Court sustained the award of just compensation for private property
condemned for public use (See National Power Corporation vs. Court of Appeals, 129 SCRA 665,
1984; Garcia vs. Court of Appeals, 102 SCRA 597,1981). The Supreme Court, in Republic of the
Philippines vs. PLDT, * thus held that:
Normally, of course, the power of eminent domain results in the taking or
appropriation of title to, and possession of, the expropriated property; but no cogent
reason appears why said power may not be availed of to impose only a burden upon
the owner of condemned property, without loss of title and possession. It is
unquestionable that real property may, through expropriation, be subjected to an
easement of right-of-way.
In the case at bar, the easement of right-of-way is definitely a taking under the power of eminent
domain. Considering the nature and effect of the installation of the 230 KV Mexico-Limay
transmission lines, the limitation imposed by NPC against the use of the land for an indefinite period
deprives private respondents of its ordinary use.
For these reasons, the owner of the property expropriated is entitled to a just compensation, which
should be neither more nor less, whenever it is possible to make the assessment, than the money
equivalent of said property. Just compensation has always been understood to be the just and
complete equivalent of the loss which the owner of the thing expropriated has to suffer by reason of
the expropriation (Province of Tayabas vs. Perez, 66 Phil. 467 [1938]; Assoc. of Small Land Owners
of the Phils., Inc. vs. Secretary of Agrarian Reform, G.R. No. 78742; Acuna vs. Arroyo, G.R. No.
79310; Pabrico vs. Juico, G.R. No. 79744; Manaay v. Juico, G.R. No. 79777,14 July 1989, 175
SCRA 343 [1989]). The price or value of the land and its character at the time it was taken by the
Government are the criteria for determining just compensation (National Power Corp. v. Court of
Appeals, 129 SCRA 665, [1984]). The above price refers to the market value of the land which may
be the full market value thereof. According to private respondents, the market value of their lot is
P50.00 per square meter because the said lot is adjacent to the National and super highways of
Gapan, Nueva Ecija and Olongapo City.
Private respondents recognize the inherent power of eminent domain being exercised by NPC when
it finally consented to the expropriation of the said portion of their land, subject however to payment
of just compensation. No matter how laudable NPC's purpose is, for which expropriation was sought,
it is just and equitable that they be compensated the fair and full equivalent for the loss sustained,
which is the measure of the indemnity, not whatever gain would accrue to the expropriating entity
(EPZA v. Dulay, 149 SCRA 305 [1987]; Mun. of Daet v. Court of Appeals, 93 SCRA 503 (1979]).

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

NATIONAL POWER CORPORATION, Petitioner,

vs.
OMAR G. MARUHOM, ELIAS G. MARUHOM, BUCAY G. MARUHOM, MAMOD G.
MARUHOM, FAROUK G. MARUHOM, HIDJARA G. MARUHOM, ROCANIA G. MARUHOM,
POTRISAM G. MARUHOM, LUMBA G. MARUHOM, SINAB G. MARUHOM, ACMAD G.
MARUHOM, SOLAYMAN G. MARUHOM, MOHAMAD M. IBRAHIM, CAIRORONESA M.
IBRAHIM, and LUCMAN IBRAHIM, represented by his heirs ADORA B. IBRAHIM, NASSER
B. IBRAHIM, JAMALODIN B. IBRAHIM, RAJID NABBEL B. IBRAHIM, AMEER B. IBRAHIM
and SARAH AIZAH B. IBRAHIM,* Respondents.
DECISION
NACHURA, J.:
Petitioner National Power Corporation (NPC) filed this Petition for Review on Certiorari, seeking
to nullify the May 30, 2008 Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 02065MIN, affirming the Order dated November 13, 2007 issued by Hon. Amer R. Ibrahim, which
granted respondents motion for issuance of a writ of execution.
The antecedents.
Lucman G. Ibrahim and his co-heirs Omar G. Maruhom, Elias G. Maruhom, Bucay G. Maruhom,
Mamod G. Maruhom, Farouk G. Maruhom, Hidjara G. Maruhom, Rocania G. Maruhom,
Potrisam G. Maruhom, Lumba G. Maruhom, Sinab G. Maruhom, Acmad G. Maruhom,
Solayman G. Maruhom, Mohamad M. Ibrahim and Cairoronesa M. Ibrahim (respondents) are
owners of a 70,000-square meter lot in Saduc, Marawi City. Sometime in 1978, NPC, without
respondents knowledge and consent, took possession of the subterranean area of the land and
constructed therein underground tunnels. The tunnels were used by NPC in siphoning the water
of Lake Lanao and in the operation of NPCs Agus II, III, IV, V, VI, and VII projects located in
Saguiran, Lanao del Sur; Nangca and Balo-i in Lanao del Norte; and Ditucalan and Fuentes in
Iligan City. Respondents only discovered the existence of the tunnels sometime in July 1992.

Thus, on October 7, 1992, respondents demanded that NPC pay damages and vacate the
subterranean portion of the land, but the demand was not heeded.
Hence, on November 23, 1994, respondents instituted an action for recovery of possession of
land and damages against NPC with the Regional Trial Court (RTC) of Lanao del Sur, docketed
as Civil Case No. 1298-94.
After trial, the RTC rendered a decision,2 the decretal portion of which reads:
WHEREFORE, judgment is hereby rendered:
1. Denying [respondents] prayer for [NPC] to dismantle the underground tunnels constructed
beneath the lands of [respondents] in Lots 1, 2, and 3 of Survey Plan FP (VII-5) 2278;
2. Ordering [NPC] to pay to [respondents] the fair market value of said 70,000 square meters
of land covering Lots 1, 2, and 3 as described in Survey Plan FP (VII-5) 2278 less the area of
21,995 square meters atP1,000.00 per square meter or a total of P48,005,000.00 for the
remaining unpaid portion of 48,005 square meters; with 6% interest per annum from the filing
of this case until paid;
3. Ordering [NPC] to pay [respondents] a reasonable monthly rental of P0.68 per square
meter of the total area of 48,005 square meters effective from its occupancy of the foregoing
area in 1978 or a total ofP7,050,974.40.
4. Ordering [NPC] to pay [respondents] the sum of P200,000.00 as moral damages; and
5. Ordering [NPC] to pay the further sum of P200,000.00 as attorneys fees and the costs.

SO ORDERED.3
Respondents then filed an Urgent Motion for Execution of Judgment Pending Appeal. On the
other hand, NPC filed a Notice of Appeal. Thereafter, it filed a vigorous opposition to the motion
for execution of judgment pending appeal with a motion for reconsideration of the RTC decision.
On August 26, 1996, NPC withdrew its Notice of Appeal to give way to the hearing of its motion
for reconsideration. On August 28, 1996, the RTC issued an Order granting execution pending
appeal and denying NPCs motion for reconsideration. The Decision of the RTC was executed
pending appeal and the funds of NPC were garnished by respondents.
On October 4, 1996, Lucman Ibrahim and respondents Omar G. Maruhom, Elias G. Maruhom,
Bucay G. Maruhom, Mamod G. Maruhom, Farouk G. Maruhom, Hidjara G. Maruhom, Potrisam
G. Maruhom and Lumba G. Maruhom filed a Petition for Relief from Judgment,4 asserting as
follows:
1. They did not file a motion to reconsider or appeal the decision within the reglementary
period of fifteen (15) days from receipt of judgment because they believed in good faith that
the decision was for damages and rentals and attorneys fees only as prayed for in the
complaint;

2. It was only on August 26, 1996 that they learned that the amounts awarded to the
respondents represented not only rentals, damages and attorneys fees but the greatest
portion of which was payment of just compensation which, in effect, would make the
petitioner NPC the owner of the parcels of land involved in the case;
3. When they learned of the nature of the judgment, the period of appeal had already
expired;
4. They were prevented by fraud, mistake, accident, or excusable negligence from taking
legal steps to protect and preserve their rights over their parcels of land insofar as the part of
the decision decreeing just compensation for respondents properties;
5. They would never have agreed to the alienation of their property in favor of anybody,
considering the fact that the parcels of land involved in this case were among the valuable
properties they inherited from their dear father and they would rather see their land crumble
to dust than sell it to anybody.5

After due proceedings, the RTC granted the petition and rendered a modified judgment dated
September 8, 1997, thus:
WHEREFORE, a modified judgment is hereby rendered:
1. Reducing the judgment award of [respondents] for the fair market value of P48,005,000.00
by [P]9,526,000.00 or for a difference [of] P38,479,000.00 and by the further sum
of P33,603,500.00 subject of the execution pending appeal leaving a difference of
[P]4,878,500.00 which may be the subject of execution upon the finality of this modified
judgment with 6% interest per annum from the filing of the case until paid.
2. Awarding the sum of P1,476,911.00 to herein [respondents] Omar G. Maruhom, Elias G.
Maruhom, Bucay G. Maruhom, Mahmod G. Maruhom, Farouk G. Maruhom, Hidjara G.
Maruhom, Portrisam G. Maruhom and Lumba G. Maruhom as reasonable rental deductible
from the awarded sum of P7,050,974.40 pertaining to [respondents].
3. Ordering [NPC] embodied in the August 7, 1996 decision to pay [respondents] the sum
of P200,000.00 as moral damages; and further sum of P200,000.00 as attorneys fees and
costs.

SO ORDERED.6
Lucman Ibrahim and NPC then filed their separate appeals with the CA, docketed as CA-G.R.
CV No. 57792. On June 8, 2005, the CA rendered a Decision,7 setting aside the modified
judgment and reinstating the original Decision, amending it further by deleting the award of
moral damages and reducing the amount of rentals and attorneys fees, thus:
WHEREFORE, premises considered, herein Appeals are hereby partially GRANTED, the
Modified Judgment is ordered SET ASIDE and rendered of no force and effect and the original
Decision of the court a quo dated 7 August 1996 is hereby RESTORED with the

MODIFICATION that the award of moral damages is DELETED and the amounts of rentals and
attorneys fees are REDUCED to P6,887,757.40 and P50,000.00, respectively.
In this connection, the Clerk of Court of RTC Lanao del Sur is hereby directed to reassess and
determine the additional filing fee that should be paid by Plaintiff-Appellant IBRAHIM taking into
consideration the total amount of damages sought in the complaint vis--vis the actual amount
of damages awarded by this Court. Such additional filing fee shall constitute as a lien on the
judgment.
SO ORDERED8
The above decision was affirmed by this Court on June 29, 2007 in G.R. No. 168732, viz.:
WHEREFORE, the petition is DENIED and the Decision of the Court of Appeals in C.A.-G.R. CV
No. 57792 dated June 8, 2005 is AFFIRMED.
No costs.
SO ORDERED.9
NPC moved for reconsideration of the Decision, but this Court denied it on August 29, 2007.
To satisfy the judgment, respondents filed with the RTC a motion for execution of its August 7,
1996 decision, as modified by the CA. On November 13, 2007, the RTC granted the motion,
and issued the corresponding writ of execution. Subsequently, a notice of garnishment was
issued upon NPCs depositary bank.
NPC then filed a Petition for Certiorari (with Urgent Prayer for the Immediate Issuance of a
Temporary Restraining Order and/or Writ of Preliminary Injunction) with the CA, docketed as
CA-G.R. SP No. 02065-MIN. It argued that the RTC gravely abused its discretion when it
granted
the motion for execution without ordering respondents to transfer their title in favor of NPC. By
allowing the payment of just compensation for a parcel of land without the concomitant right of
NPC to get title thereto, the RTC clearly varied the terms of the judgment in G.R. No. 168732,
justifying the issuance of a writ of certiorari. NPC also prayed for the issuance of a temporary
restraining order (TRO) to enjoin the implementation of the writ of execution and notice of
garnishment. On November 29, 2007, the CA granted NPCs prayer and issued a TRO,
enjoining the implementation of the writ of execution and the notice of garnishment.
On May 30, 2008, the CA rendered the now assailed Decision,10 dismissing NPCs petition for
certiorari. Rejecting NPCs argument, the CA declared that this Courts Decision in G.R. No.
168732 intended NPC to pay the full value of the property as compensation without ordering the
transfer of respondents title to the land. According to the CA, in a plethora of cases involving
lands traversed by NPCs transmission lines, it had been consistently ruled that an easement is
compensable by the full value of the property despite the fact that NPC was only after a right-ofway easement, if by such easement it perpetually or indefinitely deprives the land owner of his

proprietary rights by imposing restrictions on the use of the property. The CA, therefore, ordered
NPC to pay its admitted obligation to respondents amounting to P36,219,887.20.11
NPC is now before us faulting the CA for dismissing the formers petition for certiorari. It also
prayed for a TRO to enjoin respondents and all persons acting under their authority from
implementing the May 30, 2008 Decision of the CA. In its July 9, 2008 Resolution,12 this Court
granted NPCs prayer, and issued a TRO enjoining the execution of the assailed CA Decision.
In the main, NPC insists that the payment of just compensation for the land carries with it the
correlative right to obtain title or ownership of the land taken. It stresses that this Courts
Decision in G.R. No. 168732 is replete with pronouncements that the just compensation
awarded to respondents corresponds to compensation for the entire land and not just for an
easement or a burden on the property, thereby necessitating a transfer of title and ownership to
NPC upon satisfaction of judgment. NPC added that by granting respondents motion for
execution, and consequently issuing the writ of execution and notice of garnishment, the RTC
and the CA allowed respondents to retain title to the property even after the payment of full
compensation. This, according to NPC, was a clear case of unjust enrichment.
The petition lacks merit.
It is a fundamental legal axiom that a writ of execution must conform strictly to the dispositive
portion of the decision sought to be executed. A writ of execution may not vary from, or go
beyond, the terms of the judgment it seeks to enforce. When a writ of execution does not
conform strictly to a decisions dispositive portion, it is null and void.13
Admittedly, the tenor of the dispositive portion of the August 7, 1996 RTC decision, as modified
by the CA and affirmed by this Court, did not order the transfer of ownership upon payment of
the adjudged compensation. Neither did such condition appear in the text of the RTC decision,
and of this Courts Decision in G.R. No. 168732.
As aptly pointed out by the CA in its assailed Decision:
[NPC], by its selective quotations from the Decision in G.R. No. 168732, would have Us
suppose that the High Court, in decreeing that [NPC] pay the full value of the property as just
compensation, implied that [NPC] was entitled to the entire land, including the surface area and
not just the subterranean portion. No such inference can be drawn from [the] reading of the
entirety of the High Courts Decision. On the contrary, a perusal of the subject Decision yields to
this Court the unmistakable sense that the High Court intended [NPC] to pay the full value of the
subject property as just compensation without ordering the transfer o[f] respondents title to the
land. This is patent from the following language of the High Court as quoted by [NPC] itself:
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 [NPC] only occupies

the sub-terrain portion, it is liable to pay not merely an easement 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 owners 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.14
Clearly, the writ of execution issued by the RTC and affirmed by the CA does not vary, but is, in
fact, consistent with the final decision in this case. The assailed writ is, therefore, valid.
Indeed, expropriation is not limited to the acquisition of real property with a corresponding
transfer of title or possession. The right-of-way easement resulting in a restriction or limitation
on property rights over the land traversed by transmission lines also falls within the ambit of the
term expropriation.15
As we explained in Camarines Norte Electric Cooperative, Inc. v. Court of Appeals:16
The acquisition of an easement of a right-of-way falls within the purview of the power of eminent
domain. Such conclusion finds support in easements of right-of-way where the Supreme Court
sustained the award of just compensation for private property condemned for public use. The
Supreme Court, in Republic v. PLDT thus held that:
"Normally, of course, the power of eminent domain results in the taking or appropriation of title
to, and possession of, the expropriated property; but no cogent reason appears why said power
may not be availed of to impose only a burden upon the owner of condemned property, without
loss of title and possession. It is unquestionable that real property may, through expropriation,
be subjected to an easement of right-of-way."
However, a simple right-of-way easement transmits no rights, except the easement. Vines
Realty retains full ownership and it is not totally deprived of the use of the land. It can continue
doing what it wants to do with the land, except those that would result in contact with the wires.

1avvphi1

The acquisition of this easement, nevertheless, is not gratis. Considering the nature and effect
of the installation power lines, the limitations on the use of the land for an indefinite period
deprives private respondents of its ordinary use. For these reasons, Vines Realty is entitled to
payment of just compensation, which must be neither more nor less than the money equivalent
of the property.17
It is, therefore, clear that NPCs acquisition of an easement of right-of-way on the lands of
respondents amounted to expropriation of the portions of the latters property for which they are
entitled to a reasonable and just compensation.
The term just compensation had been defined as the full and fair equivalent of the property
taken from its owner by the expropriator. The measure is not the taker's gain, but the owner's
loss. The word just is used to intensify the meaning of the word compensation and to convey
thereby the idea that the equivalent to be rendered for the property to be taken shall be real,
substantial, full, and ample.18

In Camarines Norte Electric Cooperative, Inc. v. Court of Appeals19 and National Power
Corporation v. Manubay Agro-Industrial Development Corporation,20 this Court sustained the
award of just compensation equivalent to the fair and full value of the property even if petitioners
only sought the continuation of the exercise of their right-of-way easement and not the
ownership over the land. There is simply no basis for NPC to claim that the payment of fair
market value without the concomitant transfer of title constitutes an unjust enrichment.
In fine, the issuance by the RTC of a writ of execution and the notice of garnishment to satisfy
the judgment in favor of respondents could not be considered grave abuse of discretion. The
term grave abuse of discretion, in its juridical sense, connotes capricious, despotic, oppressive,
or whimsical exercise of judgment as is equivalent to lack of jurisdiction. The abuse must be of
such degree as to amount to an evasion of positive duty or a virtual refusal to perform a duty
enjoined by law, as where the power is exercised in an arbitrary and capricious manner by
reason of passion and hostility. The word capricious, usually used in tandem with the
term arbitrary, conveys the notion of willful and unreasoning action. Thus, when seeking the
corrective hand of certiorari, a clear showing of caprice and arbitrariness in the exercise of
discretion is imperative.21 In this case, NPC utterly failed to demonstrate caprice or arbitrariness
on the part of the RTC in granting respondents motion for execution. Accordingly, the CA
committed no reversible error in dismissing NPCs petition for certiorari.
It is almost trite to say that execution is the fruit and the end of the suit and is the life of the law.
A judgment, if left unexecuted, would be nothing but an empty victory for the prevailing party.
Litigation must end sometime and somewhere. An effective and efficient administration of justice
requires that once a judgment has become final, the winning party be not deprived of the fruits
of the verdict. Courts must, therefore, guard against any scheme calculated to bring about that
result. Constituted as they are to put an end to controversies, courts should frown upon any
attempt to prolong them.22 We, therefore, write finis to this litigation.
WHEREFORE, the petition is DENIED. The assailed Decision of the Court of Appeals in CAG.R. SP No. 02065-MIN is AFFIRMED. The temporary restraining order issued by this Court on
July 9, 2008 is LIFTED.
SO ORDERED.
NATIONAL POWER CORPORATION, petitioner,
vs.
LUCMAN G. IBRAHIM, OMAR G. MARUHOM, ELIAS G.MARUHOM, BUCAY G. MARUHOM,
FAROUK G. MARUHOM, HIDJARA G. MARUHOM, ROCANIA G. MARUHOM, POTRISAM G.
MARUHOM, LUMBA G. MARUHOM, SINAB G. MARUHOM, ACMAD G. MARUHOM,
SOLAYMAN G. MARUHOM, MOHAMAD M. IBRAHIM, and CAIRONESA M.
IBRAHIM, respondents.
DECISION
AZCUNA, J.:

This is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to annul
the Decision1 dated June 8, 2005 rendered by the Court of Appeals (CA) in C.A.-G.R. CV No.
57792.
The facts are as follows:
On November 23, 1994, respondent Lucman G. Ibrahim, in his personal capacity and in behalf
of his co-heirs Omar G. Maruhom, Elias G. Maruhom, Bucay G. Maruhom, Mamod G.
Maruhom, Farouk G. Maruhom, Hidjara G. Maruhom, Rocania G. Maruhom, Potrisam G.
Maruhom, Lumba G. Maruhom, Sinab G. Maruhom, Acmad G. Maruhom, Solayman G.
Maruhom, Mohamad M. Ibrahim and Caironesa M. Ibrahim, instituted an action against
petitioner National Power Corporation (NAPOCOR) for recovery of possession of land and
damages before the Regional Trial Court (RTC) of Lanao del Sur.
In their complaint, Ibrahim and his co-heirs claimed that they were owners of several parcels of
land described in Survey Plan FP (VII-5) 2278 consisting of 70,000 square meters, divided into
three (3) lots, i.e. Lots 1, 2, and 3 consisting of 31,894, 14,915, and 23,191 square meters each
respectively. Sometime in 1978, NAPOCOR, through alleged stealth and without respondents
knowledge and prior consent, took possession of the sub-terrain area of their lands and
constructed therein underground tunnels. The existence of the tunnels was only discovered
sometime in July 1992 by respondents and then later confirmed on November 13, 1992 by
NAPOCOR itself through a memorandum issued by the latters Acting Assistant Project
Manager. The tunnels were apparently being used by NAPOCOR in siphoning the water of Lake
Lanao and in the operation of NAPOCORs Agus II, III, IV, V, VI, VII projects located in Saguiran,
Lanao del Sur; Nangca and Balo-i in Lanao del Norte; and Ditucalan and Fuentes in Iligan City.
On September 19, 1992, respondent Omar G. Maruhom requested the Marawi City Water
District for a permit to construct and/or install a motorized deep well in Lot 3 located in Saduc,
Marawi City but his request was turned down because the construction of the deep well would
cause danger to lives and property. On October 7, 1992, respondents demanded that
NAPOCOR pay damages and vacate the sub-terrain portion of their lands but the latter refused
to vacate much less pay damages. Respondents further averred that the construction of the
underground tunnels has endangered their lives and properties as Marawi City lies in an area of
local volcanic and tectonic activity. Further, these illegally constructed tunnels caused them
sleepless nights, serious anxiety and shock thereby entitling them to recover moral damages
and that by way of example for the public good, NAPOCOR must be held liable for exemplary
damages.
Disputing respondents claim, NAPOCOR filed an answer with counterclaim denying the
material allegations of the complaint and interposing affirmative and special defenses, namely
that (1) there is a failure to state a cause of action since respondents seek possession of the
sub-terrain portion when they were never in possession of the same, (2) respondents have no
cause of action because they failed to show proof that they were the owners of the property, and
(3) the tunnels are a government project for the benefit of all and all private lands are subject to
such easement as may be necessary for the same.2

On August 7, 1996, the RTC rendered a Decision, the decretal portion of which reads as
follows:
WHEREFORE, judgment is hereby rendered:
1. Denying plaintiffs [private respondents] prayer for defendant [petitioner] National Power
Corporation to dismantle the underground tunnels constructed between the lands of plaintiffs in
Lots 1, 2, and 3 of Survey Plan FP (VII-5) 2278;
2. Ordering defendant to pay to plaintiffs the fair market value of said 70,000 square meters of
land covering Lots 1, 2, and 3 as described in Survey Plan FP (VII-5) 2278 less the area of
21,995 square meters at P1,000.00 per square meter or a total of P48,005,000.00 for the
remaining unpaid portion of 48,005 square meters; with 6% interest per annum from the filing of
this case until paid;
3. Ordering defendant to pay plaintiffs a reasonable monthly rental of P0.68 per square meter of
the total area of 48,005 square meters effective from its occupancy of the foregoing area in
1978 or a total of P7,050,974.40.
4. Ordering defendant to pay plaintiffs the sum of P200,000.00 as moral damages; and
5. Ordering defendant to pay the further sum of P200,000.00 as attorneys fees and the costs.
SO ORDERED.3
On August 15, 1996, Ibrahim, joined by his co-heirs, filed an Urgent Motion for Execution of
Judgment Pending Appeal. On the other hand, NAPOCOR filed a Notice of Appeal by registered
mail on August 19, 1996. Thereafter, NAPOCOR filed a vigorous opposition to the motion for
execution of judgment pending appeal with a motion for reconsideration of the Decision which it
had received on August 9, 1996.
On August 26, 1996, NAPOCOR filed a Manifestation and Motion withdrawing its Notice of
Appeal purposely to give way to the hearing of its motion for reconsideration.
On August 28, 1996, the RTC issued an Order granting execution pending appeal and denying
NAPOCORs motion for reconsideration, which Order was received by NAPOCOR on
September 6, 1996.
On September 9, 1996, NAPOCOR filed its Notice of Appeal by registered mail which was
denied by the RTC on the ground of having been filed out of time. Meanwhile, the Decision of
the RTC was executed pending appeal and funds of NAPOCOR were garnished by
respondents Ibrahim and his co-heirs.
On October 4, 1996, a Petition for Relief from Judgment was filed by respondents Omar G.
Maruhom, Elias G. Maruhom, Bucay G. Maruhom, Mamod G. Maruhom, Farouk G. Maruhom,
Hidjara G. Maruhom, Potrisam G. Maruhom and Lumba G. Maruhom asserting as follows:

1) they did not file a motion to reconsider or appeal the decision within the reglementary period
of fifteen (15) days from receipt of judgment because they believed in good faith that the
decision was for damages and rentals and attorneys fees only as prayed for in the complaint:
2) it was only on August 26, 1996 that they learned that the amounts awarded to the plaintiffs
represented not only rentals, damages and attorneys fees but the greatest portion of which was
payment of just compensation which in effect would make the defendant NPC the owner of the
parcels of land involved in the case;
3) when they learned of the nature of the judgment, the period of appeal has already expired;
4) they were prevented by fraud, mistake, accident, or excusable negligence from taking legal
steps to protect and preserve their rights over their parcels of land in so far as the part of the
decision decreeing just compensation for petitioners properties;
5) they would never have agreed to the alienation of their property in favor of anybody,
considering the fact that the parcels of land involved in this case were among the valuable
properties they inherited from their dear father and they would rather see their land crumble to
dust than sell it to anybody.4
The RTC granted the petition and rendered a modified judgment dated September 8, 1997,
thus:
WHEREFORE, a modified judgment is hereby rendered:
1) Reducing the judgment award of plaintiffs for the fair market value of P48,005,000.00 by
9,526,000.00 or for a difference by P38,479,000.00 and by the further sum of P33,603,500.00
subject of the execution pending appeal leaving a difference of 4,878,500.00 which may be the
subject of execution upon the finality of this modified judgment with 6% interest per annum from
the filing of the case until paid.
2) Awarding the sum of P1,476,911.00 to herein petitioners Omar G. Maruhom, Elias G.
Maruhom, Bucay G. Maruhom, Mahmod G. Maruhom, Farouk G. Maruhom, Hidjara G.
Maruhom, Portrisam G. Maruhom and Lumba G. Maruhom as reasonable rental deductible from
the awarded sum of P7,050,974.40 pertaining to plaintiffs.
3) Ordering defendant embodied in the August 7, 1996 decision to pay plaintiffs the sum
of P200,000.00 as moral damages; and further sum of P200,000.00 as attorneys fees and
costs.
SO ORDERED.5
Subsequently, both respondent Ibrahim and NAPOCOR appealed to the CA.
In the Decision dated June 8, 2005, the CA set aside the modified judgment and reinstated the
original Decision dated August 7, 1996, amending it further by deleting the award of moral
damages and reducing the amount of rentals and attorneys fees, thus:

WHEREFORE, premises considered, herein Appeals are hereby partially GRANTED, the
Modified Judgment is ordered SET ASIDE and rendered of no force and effect and the original
Decision of the court a quo dated 7 August 1996 is hereby RESTORED with the
MODIFICATION that the award of moral damages is DELETED and the amounts of rentals and
attorneys fees are REDUCED to P6,888,757.40 and P50,000.00, respectively.
In this connection, the Clerk of Court of RTC Lanao del Sur is hereby directed to reassess and
determine the additional filing fee that should be paid by Plaintiff-Appellant IBRAHIM taking into
consideration the total amount of damages sought in the complaint vis--vis the actual amount
of damages awarded by this Court. Such additional filing fee shall constitute a lien on the
judgment.
SO ORDERED.6
Hence, this petition ascribing the following errors to the CA:
(a) RESPONDENTS WERE NOT DENIED THE BENEFICIAL USE OF THEIR SUBJECT
PROPERTIES TO ENTITLE THEM TO JUST COMPENSATION BY WAY OF DAMAGES;
(b) ASSUMING THAT RESPONDENTS ARE ENTITLED TO JUST COMPENSATION BY WAY
OF DAMAGES, NO EVIDENCE WAS PRESENTED ANENT THE VALUATION OF
RESPONDENTS PROPERTY AT THE TIME OF ITS TAKING IN THE YEAR 1978 TO JUSTIFY
THE AWARD OF ONE THOUSAND SQUARE METERS (P1000.00/SQ. M.) EVEN AS
PAYMENT OF BACK RENTALS IS ITSELF IMPROPER.
This case revolves around the propriety of paying just compensation to respondents, and, by
extension, the basis for computing the same. The threshold issue of whether respondents are
entitled to just compensation hinges upon who owns the sub-terrain area occupied by petitioner.
Petitioner maintains that the sub-terrain portion where the underground tunnels were
constructed does not belong to respondents because, even conceding the fact that respondents
owned the property, their right to the subsoil of the same does not extend beyond what is
necessary to enable them to obtain all the utility and convenience that such property can
normally give. In any case, petitioner asserts that respondents were still able to use the subject
property even with the existence of the tunnels, citing as an example the fact that one of the
respondents, Omar G. Maruhom, had established his residence on a part of the property.
Petitioner concludes that the underground tunnels 115 meters below respondents property
could not have caused damage or prejudice to respondents and their claim to this effect was,
therefore, purely conjectural and speculative.7
The contention lacks merit.
Generally, in an appeal by certiorari under Rule 45 of the Rules of Court, the Court does not
pass upon questions of fact. Absent any showing that the trial and appellate courts gravely
abused their discretion, the Court will not examine the evidence introduced by the parties below
to determine if they correctly assessed and evaluated the evidence on record.8 The jurisdiction

of the Court in cases brought to it from the CA is limited to reviewing and revising the errors of
law imputed to it, its findings of fact being as a rule conclusive and binding on the Court.
In the present case, petitioner failed to point to any evidence demonstrating grave abuse of
discretion on the part of the CA or to any other circumstances which would call for the
application of the exceptions to the above rule. Consequently, the CAs findings which upheld
those of the trial court that respondents owned and possessed the property and that its
substrata was possessed by petitioner since 1978 for the underground tunnels, cannot be
disturbed. Moreover, the Court sustains the finding of the lower courts that the sub-terrain
portion of the property similarly belongs to respondents. This conclusion is drawn from Article
437 of the Civil Code which provides:
ART. 437. The owner of a parcel of land is the owner of its surface and of everything under it,
and he can construct thereon any works or make any plantations and excavations which he may
deem proper, without detriment to servitudes and subject to special laws and ordinances. He
cannot complain of the reasonable requirements of aerial navigation.
Thus, the ownership of land extends to the surface as well as to the subsoil under it. In Republic
of the Philippines v. Court of Appeals,9 this principle was applied to show that rights over lands
are indivisible and, consequently, require a definitive and categorical classification, thus:
The Court of Appeals justified this by saying there is "no conflict of interest" between the owners
of the surface rights and the owners of the sub-surface rights. This is rather strange doctrine, for
it is a well-known principle that the owner of a piece of land has rights not only to its surface but
also to everything underneath and the airspace above it up to a reasonable height. Under the
aforesaid ruling, the land is classified as mineral underneath and agricultural on the surface,
subject to separate claims of title. This is also difficult to understand, especially in its practical
application.
Under the theory of the respondent court, the surface owner will be planting on the land while
the mining locator will be boring tunnels underneath. The farmer cannot dig a well because he
may interfere with the mining operations below and the miner cannot blast a tunnel lest he
destroy the crops above. How deep can the farmer, and how high can the miner go without
encroaching on each others rights? Where is the dividing line between the surface and the subsurface rights?
The Court feels that the rights over the land are indivisible and that the land itself cannot be half
agricultural and half mineral. The classification must be categorical; the land must be either
completely mineral or completely agricultural.
Registered landowners may even be ousted of ownership and possession of their properties in
the event the latter are reclassified as mineral lands because real properties are
characteristically indivisible. For the loss sustained by such owners, they are entitled to just
compensation under the Mining Laws or in appropriate expropriation proceedings.10
Moreover, petitioners argument that the landowners right extends to the sub-soil insofar as
necessary for their practical interests serves only to further weaken its case. The theory would

limit the right to the sub-soil upon the economic utility which such area offers to the surface
owners. Presumably, the landowners right extends to such height or depth where it is possible
for them to obtain some benefit or enjoyment, and it is extinguished beyond such limit as there
would be no more interest protected by law.11
In this regard, the trial court found that respondents could have dug upon their property
motorized deep wells but were prevented from doing so by the authorities precisely because of
the construction and existence of the tunnels underneath the surface of their property.
Respondents, therefore, still had a legal interest in the sub-terrain portion insofar as they could
have excavated the same for the construction of the deep well. The fact that they could not was
appreciated by the RTC as proof that the tunnels interfered with respondents enjoyment of their
property and deprived them of its full use and enjoyment, thus:
Has it deprived the plaintiffs of the use of their lands when from the evidence they have already
existing residential houses over said tunnels and it was not shown that the tunnels either
destroyed said houses or disturb[ed] the possession thereof by plaintiffs? From the evidence, an
affirmative answer seems to be in order. The plaintiffs and [their] co-heirs discovered [these] big
underground tunnels in 1992. This was confirmed by the defendant on November 13, 1992 by
the Acting Assistant Project Manager, Agus 1 Hydro Electric Project (Exh. K). On September 16,
1992, Atty. Omar Maruhom (co-heir) requested the Marawi City Water District for permit to
construct a motorized deep well over Lot 3 for his residential house (Exh. Q). He was refused
the permit "because the construction of the deep well as (sic) the parcels of land will cause
danger to lives and property." He was informed that "beneath your lands are constructed the
Napocor underground tunnel in connection with Agua Hydroelectric plant" (Exh. Q-2). There in
fact exists ample evidence that this construction of the tunnel without the prior consent of
plaintiffs beneath the latters property endangered the lives and properties of said plaintiffs. It
has been proved indubitably that Marawi City lies in an area of local volcanic and tectonic
activity. Lake Lanao has been formed by extensive earth movements and is considered to be a
drowned basin of volcano/tectonic origin. In Marawi City, there are a number of former
volcanoes and an extensive amount of faulting. Some of these faults are still moving. (Feasibility
Report on Marawi City Water District by Kampsa-Kruger, Consulting Engineers, Architects and
Economists, Exh. R). Moreover, it has been shown that the underground tunnels [have]
deprived the plaintiffs of the lawful use of the land and considerably reduced its value. On March
6, 1995, plaintiffs applied for a two-million peso loan with the Amanah Islamic Bank for the
expansion of the operation of the Ameer Construction and Integrated Services to be secured by
said land (Exh. N), but the application was disapproved by the bank in its letter of April 25, 1995
(Exh. O) stating that:
"Apropos to this, we regret to inform you that we cannot consider your loan application due to
the following reasons, to wit:
That per my actual ocular inspection and verification, subject property offered as collateral has
an existing underground tunnel by the NPC for the Agus I Project, which tunnel is traversing
underneath your property, hence, an encumbrance. As a matter of bank policy, property with an
existing encumbrance cannot be considered neither accepted as collateral for a loan."

All the foregoing evidence and findings convince this Court that preponderantly plaintiffs have
established the condemnation of their land covering an area of 48,005 sq. meters located at
Saduc, Marawi City by the defendant National Power Corporation without even the benefit of
expropriation proceedings or the payment of any just compensation and/or reasonable monthly
rental since 1978.12
In the past, the Court has held that if the government takes property without expropriation and
devotes the property to public use, after many years, the property owner may demand payment
of just compensation in the event restoration of possession is neither convenient nor
feasible.13 This is in accordance with the principle that persons shall not be deprived of their
property except by competent authority and for public use and always upon payment of just
compensation.14
Petitioner contends that the underground tunnels in this case constitute an easement upon the
property of 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.15 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.16
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.17 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 owners 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.18
The entitlement of respondents to just compensation having been settled, the issue now is on
the manner of computing the same. In this regard, petitioner claims that the basis for the
computation of the just compensation should be the value of the property at the time it was
taken in 1978. Petitioner also impugns the reliance made by the CA upon National Power
Corporation v. Court of Appeals and Macapanton Mangondato19 as the basis for computing the
amount of just compensation in this action. The CA found that "the award of damages is not
excessive because the P1000 per square meter as the fair market value was sustained in a
case involving a lot adjoining the property in question which case involved an expropriation by

[petitioner] of portion of Lot 1 of the subdivision plan (LRC) PSD 116159 which is adjacent to
Lots 2 and 3 of the same subdivision plan which is the subject of the instant controversy."20
Just compensation has been understood to be the just and complete equivalent of the loss21 and
is ordinarily determined by referring to the value of the land and its character at the time it was
taken by the expropriating authority.22 There is a "taking" in this sense when the owners are
actually deprived or dispossessed of their property, where there is a practical destruction or a
material impairment of the value of their property, or when they are deprived of the ordinary use
thereof. There is a "taking" in this context when the expropriator enters private property not only
for a momentary period but for 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.23Moreover, "taking" of the property for purposes of eminent domain entails
that the entry into the property must be under warrant or color of legal authority.24
Under the factual backdrop of this case, the last element of taking mentioned, i.e., that the entry
into the property is under warrant or color of legal authority, is patently lacking. Petitioner
justified its nonpayment of the indemnity due respondents upon its mistaken belief that the
property formed part of the public dominion.
This situation is on all fours with that in the Mangondato case. NAPOCOR in that case took the
property of therein respondents in 1979, using it to build its Aqua I Hydroelectric Plant Project,
without paying any compensation, allegedly under the mistaken belief that it was public land. It
was only in 1990, after more than a decade of beneficial use, that NAPOCOR recognized
therein respondents ownership and negotiated for the voluntary purchase of the property.
In Mangondato, this Court held:
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:
"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 ruling 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 to the property, the just compensation is to be
ascertained as of the time of filing of the complaint.
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 the date of the commencement of the expropriation
proceedings.

In the old case of Provincial Government of Rizal vs. Caro de Araullo, 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) from 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 it was taken, which is the true measure of
the damages, or just compensation, and would discourage the construction of important public
improvements."
In subsequent cases, 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, 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 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 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 the 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 in 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, it has the burden in 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, in the following words:
"A number of circumstances must be present in "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:
"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 the 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, 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 effective 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, filed suit.25
In the present case, to allow petitioner to use the date it constructed the tunnels as the date of
valuation would be grossly unfair. First, it did not enter the land under warrant or color of legal
authority or with intent to expropriate the same. In fact, it did not bother to notify the owners and
wrongly assumed it had the right to dig those tunnels under their property. Secondly, the
"improvements" introduced by petitioner, namely, the tunnels, in no way contributed to an
increase in the value of the land. The trial court, therefore, as affirmed by the CA, rightly
computed the valuation of the property as of 1992, when respondents discovered the
construction of the huge underground tunnels beneath their lands and petitioner confirmed the
same and started negotiations for their purchase but no agreement could be reached.26
As to the amount of the valuation, the RTC and the CA both used as basis the value of the
adjacent property, Lot 1 (the property involved herein being Lots 2 and 3 of the same
subdivision plan), which was valued at P1,000 per sq. meter as of 1990, as sustained by this
Court in Mangondato, thus:
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. Inasmuch as the determination of
just compensation in eminent domain cases is a judicial function and factual findings of the
Court of Appeals are conclusive on the parties and reviewable only when the case falls within
the recognized exceptions, 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. To quote:
"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 other being as herein shown:
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."
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.27
Petitioner has not shown any error on the part of the CA in reaching such a valuation.
Furthermore, these are factual matters that are not within the ambit of the present review.
WHEREFORE, the petition is DENIED and the Decision of the Court of Appeals in C.A.-G.R. CV
No. 57792 dated June 8, 2005 is AFFIRMED.
No costs.
SO ORDERED.
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.t

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 noncommercial 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.

WHEN TAKING IS NOT COMPENSABLE

CARLOS SUPERDRUG vs. DSWD (2007)

MARINE RADIO COMMUNICATIONS ASSOCIATION OF THE PHILIPPINES, INC.

(MARCAPI), ROBERTO GAYA, DAVID ZAFRA and SEGUNDO P. LUSTRE, JR., petitioners,
vs.
HON. RAINERIO O. REYES, in his capacity as Secretary of the Department of
Transportation and Communications (DOTC), HON. JOSE LUIS ALCUAZ, as
Commissioner of the National Telecommunications Commission (NTC), and HON.
ROSAURO SIBAL, as Chief of the Telecommunications Office (TELOF) of
DOTC, respondents.
F. Reyes Cabigao for petitioners.

SARMIENTO, J.:
The petitioners are self-described "Filipino enterpreneurs deeply involved in the business of marine
radio communications in the country. 1 They are also operators of "shore-to-ship and ship-to-shore
public marine coastal radio stations, 2 and are holders of certificates of public convenience duly issued by
the National Telecommunications Commission. Among other things, they handle correspondence
between vessel passengers or crew and the public. 3

Sometime in July, 1988, the Department of Transportation and Communications unveiled an P880million maritime coastal communications system project, designed to "ensure safety of lives at sea
(SOLAS) through the establishment of efficient communication facilities between coast stations and
ship stations and the improvement of safety in navigational routes at sea." 4 It was set out to provide,
among other things, ship-to- shore and shore-to-ship public corresponding, free of charge. 5
On August 1, 1988, Atty. F. Reyes Cabigao, in his capacity as counsel for the petitioner, Marine
Radio Communications Association of the Philippines, Inc., addressed an appeal to then Secretary
Rainerio Reyes, in the tenor as follows:
xxx xxx xxx
But you undoubtedly would understand their fears. It was their feeling that entry of
the government into their line of business would certainly spell for them financial ruin
as it would put into serious doubt the viability of the entire marine radio
communications industry. They say that, as it is today, the industry is not viable
enough. What more, they ask, if the government steps in and eventually dips its
strong fingers into the pie? 6
xxx xxx xxx

On August 17, 1988, the Secretary forwarded a reply, denying Atty. Cabigao's request, for the
following reasons:
xxx xxx xxx
MARCAPI's main business concern is public correspondence. This means that
MARCAPI handles only correspondence between passengers or crew on board ship
and their respective offices or residences. On the other hand, the Maritime Coastal
Communications System Project to be implemented by 1989 will offer services in
watch and distress signal, medical and meteorological services, port services, and
public correspondence, in their order of priority.
You will note that public correspondence is only fourth in the order of priority of
services to be offered by the present maritime project. Primarily, it will offer distress
and safety communications service which is obligatory in the maritime mobile
service. This consists of monitoring by coast stations of distress signal from ships in
trouble and relaying the messages to the Philippine Coast Guard which will
undertake the search and rescue operations. It also includes safety communication
which refers to weather broadcast and typhoon signals that will be broadcast by the
coast stations regularly. These services are offered to the public for free.
It is worth noting, as it is significant, that the confidence of the public in the
competence of private firms to carry out the aforecited objectives has already been
eroded. After that tragic incident of the sinking of MV Dona Paz, the National
Telecommunications Commission and MARINA conducted constant monitoring by
sending distress signals. Out of 1,000 licensed private operators only one (1)
responded to the signal. 7

On February 20, 1989, the petitioners brought the instant suit, alleging, in essence, that Secretary
Rainerio Reyes had been guilty of a grave abuse of discretion.
On June 7, 1990, the Court issued a Resolution, in view of the departure of Secretary Rainerio
Reyes, requiring the present incumbent, Secretary Oscar Orbos, to inform the Court whether or not
the Department is adopting the action of Secretary Reyes. On August 16, 1990, Assistant Secretary
Wilfredo Trinidad informed us that Secretary Orbos is adopting the action complained of.
The petitioners hold that the Department can not compete in the business of public correspondence,
and rely on the provisions of Section 20, of Article II, of the Constitution, which states:
Sec. 20. The State recognizes the indispensable role of the private sector,
encourages private enterprise, and provides incentives to needed investments.
The Solicitor General, on the other hand, submits that in spite of the above provision, the
Government "cannot abandon its ministerial functions of rendering public services to the citizenry
which private capital would not ordinarily undertake, or which by its very nature is better equipped to
administer for the public welfare than by any private individual or entity. 8
There is no merit in this petition.
The duty of the State is preeminently "to serve . . . the people, 9 and so also, to "promote a just and
dynamic social order . . . through policies that provide adequate social services. . . . and an improved
quality of life for all. 10
The objectives of government, as expressed in the Charter, are, among other things, "a more
equitable distribution of opportunities, income, and wealth . . . [and] a sustained increase in the
amount of goods and services produced by the nation for the benefit of the people . . . " 11 With
respect in particular to property, the Constitution decrees:
Sec. 6. The use of property bears a social function, and all economic agents shall
contribute to the common good. Individuals and private groups, including
corporations, cooperatives, and similar collective organizations, shall have the right
to own, establish, and operate economic enterprises, subject to the duty of the State
to promote distributive justice and to intervene when the common good so
demands. 12
There can hardly be any valid argument against providing for public corresponding, free of charge. It
is compatible with State aims to serve the people under the Constitution, and certainly, amid these
hard times, the State can do no less.
The petitioners can not legitimately rely on the provisions of Section 20, of Article II, of the
Constitution, to defeat the act complained of. The mandate "recogni[zing] the indispensable role of
the private sector" is no more than an acknowledgment of the importance of private initiative in
building the nation. However, it is not a call for official abdication of duty to citizenry.
The novel provisions of the Charter prescribing private sector participation, especially in the field of
economic activity, 13 come, indeed, no more as responses to State monopoly of economic forces which
has unfairly kept individual initiative from the economic processes and has held back competitiveness in

the market. The Constitution does not bar, however, the Government from undertaking its own initiatives,
especially in the domain of public service, and neither does it repudiate its primacy as chief economic
caretaker of the nation.

The principle of laissez faire has long been denied validity in this jurisdiction. In 1969, the Court
promulgatedAgricultural Credit and Cooperative Financing Administration v. Confederation of Unions
in Government Corporations and offices, 14 where it was held:
xxx xxx xxx
... The areas which used to be left to private enterprise and initiative and which the
government was called upon to enter optionally and only because it was better
equipped to administer for the public welfare than in any private individual or group of
individuals," continue to lose their well-defined boundaries and to be absorbed within
activities that the government must undertake in its sovereign capacity if it is to meet
the increasing social challenges of the times. Here as almost everywhere else the
tendency is undoubtedly towards a greater socialization of economic forces. Here of
course this development was envisioned, indeed adopted as a national policy, by the
Constitution itself in its declaration of principle concerning the promotion of social
justice. 15
The requirements of social justice and the necessity for a redistribution of the national wealth and
economic opportunity find in fact a greater emphasis in the 1987 Constitution, notwithstanding the
novel concepts inscribed there. 16 And two decades after this Court wrote it, ACCFAs message remains
the same and its lesson holds true as ever.
The Court is not of the thinking that the act complained of is equivalent to a taking without just
compensation. Albeit we have held that "[w]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, 17 it does not seem to us that the Department of Transportation and Communication,
by providing for free public correspondence, is guilty of an uncompensated taking. Rather, the
Government merely built a bridge that made the boat obsolete, although not entirely useless. Certainly,
the owner of the boat can not charge the builder of the bridge for lost income. And certainly, the
Government has all the right to build the bridge.
WHEREFORE, the petition is DISMISSED. No costs.
SO ORDERED.